HONOLULU (HawaiiNewsNow) - The FBI is investigating the local electrical workers’ and plumbers’ unions over a $6 million investment in a private company, Hawaii News Now has learned.
Back in December, FBI agents subpoenaed the financial records and board meeting minutes of the IBEW Local 1186 and the Plumbers & Fitters union, Local 675.
Local 1186 is headed by Damien Kim, who also serves as the chairman of the board of the Honolulu Authority for Rapid Transportation.
There is an ongoing federal investigation into the project, but the investigation into the union situation is happening independently of any investigation into rail.
Sources said the feds want to know why Kim and Reginald Castanares, the former leader of the plumber’s union, each invested $3 million in union funds into a company called Pegasus LLC.
Sources tell Hawaii News Now that the investigation was prompted by complaints filed by union members who were worried about the size of the investment and the apparent lack of transparency.
Kim told Hawaii News Now he’s been upfront with members about the union’s involvement in Pegasus.
He added that union officials on the private company’s board aren’t paid by Pegasus, which the unions helped form in 2010. He said Pegasus has saved union members a lot of money.
The company provides discounts on banking and financial services, air fares and even movie tickets for members of the IBEW, the plumbers and other unions.
Investigative reporter and political watchdog Ian Lind said these kinds of services are usually handled in-house. He said using a third-party, private company can hide how union money is being used.
“The way it’s structured leaves a lot to the imagination, it leaves a lot of wiggle room if there were someone putting their own interest above the union’s interest,” Lind said.
He said lack of disclosure has led to legal troubles for other local labor leaders in the past. For instance, former UPW head Gary Rodrigues was convicted of embezzlement in 2002.
Kim said the IBEW is cooperating with the federal investigation and has turned over the records requested.