Prominent labor leader convicted of mortgage fraud

by Malia Zimmerman, Watchdog.org, January 16, 2014 

HONOLULU — Perry Artates was with his wife, Ronnette,in U.S. District Court as Chief Judge Susan Oki Mollway sent both to prison Jan. 10.

Perry Artates, a former Maui Hawaiian Homeland commissioner and prominent labor leader, will spend 45 days in federal prison for his role in a mortgage fraud case that left a Maui family homeless.

Ronnette Artates, a Maui real estate agent and mortgage professional, will spend five months in prison for initiating the scam, which led to the convictions of the Artateses on federal wire fraud and false loan application charges in June.

The case centered around a 2007 mortgage transaction, from which both Artateses benefitted. According to a 2012 federal indictment, Perry and Ronnette Artates approached Pedro Oliveros and his wife. The couple was facing foreclosure on their home in Makawao, Maui, and the Artateses offered to buy it. They promised to let the couple live in the home for six months while paying rent and then buy it back when their financial situation improved.

The deal went through, the indictment said, but Perry Artates claimed in two legal documents he would be the owner and occupant of the home, which helped him get a loan for 100 percent of the transaction. This amounted to a false statement to a financial institution, the indictment says. Ronnette Artates collected a commission for the sale, federal records show.

About six months later, Pedro Oliveros fell behind on the rent and, court records show, the Artateses evicted them.

Civil litigation followed in 2009; neither party would discuss the terms with Watchdog.org.

Federal agents in 2012 indicted Perry and Ronnette Artates on charges of conspiracy, wire fraud and making a false loan application. In June 2013, the couple pleaded guilty to the reduced charges. Sentencing hearings are scheduled Sept. 23.

Maui Attorney Phillip Lowenthal argued the Artateses had good intentions and were only trying to help their close friends save their home.

When Perry Artates addressed the court he focused on the effect of the criminal case on his own life, saying he has been publicly humiliated by the family’s accusation against him, and it has led to the “loss of his dignity.” He said he was only trying to give the family a second chance, the case has been a “cancer” eating him up inside and has caused him “seven years of torture.” He said he forgave the family for what they did, maintained he never gained anything from them and said he’s keeping his head held high despite what he lost. He said he was sorry if  he did anything wrong.

Perry Artates’ remarks startled both the judge and the prosecutor.

“I am still absorbing what he said, judge,” Assistant U.S. Attorney Larry Tong said, pointing out Artates appeared to be blaming the victims.

“He has a lot of pride and dignity but shows no remorse,” said Tong, noting that instead of saying he lied and committed a crime Artates focused on the idea he lost his dignity and “feels really bad.”

Tong said evidence shows Perry Artates and his wife “lied to the bank,” signed paperwork that said he would live in the house, took all of the equity from the property and then kicked the family out of their home when they could not keep up with the rent — “all in a plan to get property to profit.”

Oliveros addressed the court, saying the Artateses took advantage of his family, charging them for things the bank didn’t charge the Artateses for, including property taxes, which had already been paid through escrow. “From the beginning they were out to get us,” Oliveros said. “They are not good people.”

Ironically, Artates and his wife were affiliated with organizations that helped people get homes.

Perry Artates was a member of the Hawaiian Homes Commission, a board that oversees the Department of Hawaiian Homelands, and helped native Hawaiians with 50 percent or more blood quantum to secure homes through long-term leases on state land.

Gov. Neil Abercrombie asked him to resign in August after the learning of the conviction from Watchdog.org.

“Governor Abercrombie was not aware of this matter until today,” Louise Kim McCoy, his press secretary, said in August. “The governor has received and accepted a letter of resignation from Mr. Artates.”

Perry Artates also lost his job as the executive director of the Hawaii Operating Engineers Stabilization Fund, an organization that lobbies for union-backed legislation related to construction and development and has been a primary advocate for the Honolulu rail project. The organization campaigns and raises money for Democratic candidates who support their agenda.

Ronette Artates was a real estate agent and mortgage professional when court records said she orchestrated the scheme, a fact the judge noted when she sentenced her.

Ronnette Artates tearfully apologized for her “bad choices,” and said she “learned a great lesson” and lost her “dear friends” as a result of the deal.

Her attorney, Clarence McCurdy Virtue, said his client felt “genuine pain and sorrow for her actions,” but he, too, blamed the victims, saying they didn’t have “clean hands.”

Both Artateses will be responsible for paying $284,804 in restitution to the victims. The judge did not impose further fines.

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Background: Lawsuit: Gangsters Terrorize Union Members Forced to Fund Illegal Pro-Rail PAC Headed by Hawaiian Homes Commissioner