Allegations about Damien could impact taxes for families, alumni and school

HONOLULU (HawaiiNewsNow) - Alleged financial wrongdoing at Damien Memorial School could threaten its accreditation and non-profit tax exemption, as well as its championship football program.

Fired President Arnold Laanui made the allegations in a whistleblower lawsuit last week and in an exclusive interview with Hawaii News Now.

A spokesperson for Damien School said the administration has no comment and that they are still looking into the information in the lawsuit.

But the allegations — especially that certain football players were having their tuition paid by the Alumni Association — could mean consequences for the football team and the school.

Although he said payments to players are becoming more common in college and even in some elite private high schools on the continent, longtime player and coach and football advisor Rich Miano said if the allegations are true, there needs to be consequences.

“It is cheating if you do pay for a players use, because you are therefore almost guaranteeing an unfair competitive advantage,” Miano said. “There has to be ramifications and there has to be stronger rules put in place moving forward, obviously, and there has to be enforcement.”

The Interscholarstic League of Honolulu (ILH), which oversees private school athletics in Hawaii, specifically bans scholarships or grants “solely or primarily on the basis of athletic ability.”

But at Damien, former President Arnold Laanui said money from alumni association fundraising was specifically earmarked for certain athletes only on the football team.

“Then very shortly, we realized that this has been going on for a number of years. This has been going back for a long time,” Laanui said.

The Damien Alumni Association remained a fundraising machine after Laanui was fired in February. He said he discovered that funds from the association were being funneled to accounting, and the families refused to pay tuition.

“Telling the school business office that they didn’t want to pay the tuition because they were expecting money to come from the head coach,” Laanui said, adding that the money amounted to tens of thousands of dollars.

Experts say if they received improper payments, athletes could be ruled ineligible and games forfeited.

Former Deputy Attorney General Hugh Jones, who oversaw charity regulations, said their families, the alumni and the school could face tax consequences.

“That can result in what is considered private benefit, and that can threaten the exempt status of the Alumni Association and possibly the school itself,” he said.

The Damien Alumni Association also led the fight to reinstate two coaches Laanui fired for what he called a fraudulent invoice to collect bonuses for themselves. The coaches claimed that the bonuses were promised and they’d been advised to submit the invoice.

After the board fired Laanui, the coaches were reinstated and Laanui said the school also reinstated four players that were expelled for sexual misconduct on campus.

Miano said if what Laanui said is true, it also harms the kids.

“Kids that really need love and they need discipline and they need guidance so therefore you have to make sure you strictly enforce the rules,” he said.

With news of the lawsuit so fresh, most of the officials Hawaii News Now spoke to for this story said all of Laanui’s allegations will have to be independently verified before action can be taken.

Laanui said verification won’t be difficult, everything he included in the lawsuit is in the schools’ records and in audit reports.

The Damien Alumni Association issued the following statement:

The Damien Alumni Association (DAA) denies any wrong doing in the allegations made by the former president of the school.

We are saddened and disappointed that he once again chose a path of division rather than healing and strengthening the school and our community.

The DAA will continue to selflessly support Damien Memorial School and honor the values of Saint Damien.

Mahalo nui for your continued support of Damien Memorial School and our alumni community.