DBAS files suit against former AG, 8 others in 1602 debacle
The Development Bank of American Samoa has filed civil litigation in High Court against some of its customers who failed to comply with conditions of the section 1602 housing program contract. To date there are nine cases, with the first cases filed on January 31, 2014 while others were filed on Feb. 3 & 4, 2014. The cases are against those who did not complete their projects by the mandated deadline of December 31, 2012.
According to court filings, defendants failed to comply with the US Department of Treasury rules, pursuant to federal law and policies allowed under construction of 1602 projects in American Samoa to be completed and placed in service no later than December 31, 2012.
DBAS is seeking the return or to recapture the full amounts, which will then be forwarded to the US Treasury.
DBAS Attorney, Fainu’ulelei Alailima Utu represents the plaintiff in the matter and has filed six cases in the local court, according to court filings. The six cases include former Attorney General Fepulea’i Arthur Ripley — Ripley Development Company was awarded the highest amount of the 1602 funds at $1,081,680.
The other five individuals DBAS has filed litigation claims against are John Kruse and Elaine Kruse in the amount of $864,095.04; Jane Taufete’e Neru for the amount of $187,386.75; Michael Tolmie for $753,102.21; Andrew Sunia at $597,091 and Leon Malaulu for $221,877.50.
(Samoa News notes John Kruse is the Chief Procurement Officer for the current administration.)
There were also three cases filed by Sharron Rancourt, and they are against Nuanuaolefeagaiga Saoluaga and Usu Nua for $351,124.80; Komesina and Carlene Afalava for $167,801.90 and Joe and Eleanor Hollister in the amount of $426,846.20.
Samoa News understands the three cases filed by Rancourt, a private attorney, were due to a conflict of interest with DBAS — in particular Nuanuaolefeagaiga Saoluaga is the current chairman of the DBAS board and Komesina Afalava works for DBAS.
According to the court documents obtained by Samoa News, in accordance with each of those receiving the funding allowed under the 1602 Grant Award, DBAS and the customer entered into an agreement for the Section 1602 program.
The agreement contained terms and conditions ensuring that each owner is to execute a declaration of restrictive covenants and mortgage.
The court documents say that this declaration was duly filed and recorded at the American Samoa Territorial Registrars office containing a DBAS mortgage of the individual land or lease on which the 1602 building is constructed and this declaration also allows judicial foreclosure and/or non judicial foreclosure by power of sale of the mortgage.
PRAYER FOR RELIEF
DBAS is seeking court order findings that each defendant is in breach of the agreement. It is also seeking judgment against defendants and in favor of DBAS for the full amount of the section 1602 grant award plus judgment and post judgment interest and any other amount in accordance with the US Treasury guidelines to be determined at trial.
DBAS is also asking the court for a judicial order to foreclose the DBAS mortgage or security. It also seeks that amounts paid by defendants to DBAS as a result of the monetary judgment or proceeds DBAS receives from a judicial or non-judicial foreclosure sale, except attorney fees and costs, shall be forwarded to the US Treasury, an award to DBAS to cover its attorney’s fees and costs and any other relief the court deems appropriate and just.
In early 2012, then president of the Development Bank of American Samoa, Lolo M. Moliga went before the Fono to explain the federal low income housing grant for low income families called Section 1602, after rumors surfaced in the community that the program was not being properly administered by DBAS.
During the hearing, Lolo told lawmakers that a total of $30,778,499 received by American Samoa had been spent on 132 projects. A report provided to lawmakers at the time stated that from the 132 projects, 512 units had been created. Lolo said 65% to 70% of the units were complete.
“Several homes are now occupied and the owners of the units are collecting rent already, however, the delay of incomplete units is that homeowners are waiting for ASPA to connect the water and electricity”, he said.
The DBAS president said people who are complaining about DBAS regarding the 1602 grant program are those whose applications were denied.
Lolo also said that 65% to 70% of projects have been completed and the remaining incomplete units have up until December 31, 2012 to be finished.
He added that there are two major projects still underway, and most of the unfinished units are in their final phases of construction.
“The bank is pushing for the completion of these units by the end of the year, which is the deadline. According to law, the units that are incomplete have to reimburse the US Treasury for the monies used for the housing.”
He explained that every applicant was informed about the terms of their project — the bank provides 85% while it was a requirement that the home owner put up 15% of the costs, (which, according to the 1602 summary, could be in the form of cash, loans from Builders, Credit Lines with Building Suppliers, or labor contracts, etc.)
Lolo said the grant program has abided by every regulation and every policy since it was first approved by the US treasury and the American Samoa Economic Stimulus and Recovery Office.
The written report provided to lawmakers by the DBAS President included a list of names of the developers/ owners who received funds to construct the low-income units under the program. No grant amounts to individual developers were made public.
Issues with the 1602 projects once again surfaced, in 2013, and at that time, a fact-finding mission into the program is why agents with the Federal Bureau of Investigation (FBI) came to the territory, in July 2013, according to Special Agent Tom Simon, a spokesman for the Bureau in Honolulu, Hawai’i.
Agent Simon told Samoa News the agents were here to ensure that alleged misuse of federal funds in American Samoa will be fully investigated.
"There are currently a few federal agents in American Samoa speaking to community members we view as potential witnesses in our cases, including our investigation of low-income housing grants commonly known as the 1602 Program. This is simply a fact-finding mission."
Samoa News reported at the time it understands the agents are on island looking into four 1602 projects under the names of a former Director, an American Samoa Power Authority (ASPA) official and two members of the current Legislature.
The former Director received from the 1602 program a total of $1,081,680, the ASPA official received $106,250 and a member of the Senate received $457,781 while the House member received $189,210.
Samoa News understands the agents are looking into possible misappropriation of the money.
Lolo M. Moliga was elected governor of American Samoa in 2012 and took office in January of 2013. He is serving for four years, and is expected to run for re-election in 2016.