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Two City and County of Honolulu employees who blew the whistle on their supervisor for running an overtime scam in 2008 claim city officials failed to pursue similar claims two years earlier. The city says an investigation was kept internal.

The 2008 allegations, which were investigated by the , led to the sentencing of Manuel Castro, a street sweeper supervisor in the city’s Department of Facility Maintenance.

Castro was found guilty of running an overtime scheme in which he would assign bogus overtime and receive kickbacks, as well as giving himself unearned overtime pay. He was convicted of bribery, second-degree theft and tampering with a government record, and sentenced in January to a one-year prison term. Four other city employees — three subordinates and another supervisor — pleaded guilty or no contest to theft in connection with the case. They received probation with no jail time.

The whistleblowers¹, who were not involved in the case, claimed they told department officials in mid-2006 that Castro was getting kickbacks for assigning unearned overtime, according to police criminal investigation reports obtained by Civil Beat. They said in the 2008 investigation that their claims were never pursued by the city or reported to police.

An investigation in 2006 could have revealed that Castro had been convicted of theft in 1986 and robbery in 1987, while he was working for the city. He was hired in 1979. Jim Fulton of Mayor Peter Carlisle’s office said the city wouldn’t have known about the convictions unless Castro came forward with them.

Even after the overtime convictions were obtained, a Civil Beat investigation found what appeared to be excessive overtime in the road division. Records show that a small group of people in the Honolulu Road Maintenance Division — which includes the street sweeping baseyard — made big bucks in overtime. A review of two years of overtime records also found possible double-charging, with workers claiming overtime twice on the same day for different jobs performed at overlapping times — after the whistleblowers raised their concerns and after Castro was charged.

Honolulu Prosecuting Attorney Keith Kaneshiro, in response to Civil Beat’s series, said: “As a general rule, the Office of the Prosecuting Attorney cannot comment on a pending investigation. That would apply in this case as well.”

Regarding the 2006 claims, one of the whistleblowers said he reported to the city’s that false overtime work was being submitted and kickbacks were being paid out. The complaint included names, dates and times of incidents, according to police records. The other whistleblower said he took his claims directly to Larry Leopardi, who was then-director of Facility Maintenance, and Tyler Sugihara, chief of the Road Maintenance Division.

During the 2008 investigation, one whistleblower told police that an internal investigation in 2006 “fell through the cracks” because the city lacked the “knowledge and the manpower to do a thorough investigation.”

Here’s an excerpt from a transcript of a Dec. 17, 2008 interview between a Honolulu police detective and one of the whistleblowers:

City employee: We reported it, a similar incident about three years ago, but they didn’t find nothing.

Detective: And you reported it to your department?

City employee: I actually reported it directly to that hotline.

Detective: Oh, okay, okay. And as a result of that one, though, did anybody, was there any kind of a retaliation or anything, or…

City employee: No.

Detective: Nobody ever found out?

City employee: No.

Detective: Okay. Did anybody ever tell you what the result was other than there’s nothing happening or…

City employee: The one three years ago, they…they couldn’t find nothing.

Detective: Is that what they told you, or…

City employee: That’s what they, that’s what Tyler Sugihara told us, our department head.

And here’s a similar interview by the detective of the other whistleblower:

Detective: In the past, have you ever reported anything to any person in the city regarding, uh, any kind of, uh, wrongdoing?

City employee: Yes.

Detective: Okay. And when was this?

City employee: June of 2006.

Detective: And when you reported all of this, um, what happened or what was done?

City employee: Um, they tried to do an investigation but they didn’t have the current, I guess, the knowledge and the manpower to do a thorough investigation. So it just fell through the cracks.

Detective: And was it ever reported to the police?

City employee: I’m not sure what, what the upstairs did.

Detective: I mean, but no police officer came to you and asked you questions about…

City employee: No. No, not came to me.

The city disputes that claim and says an investigation was opened and closed in 2006. But Fulton of the mayor’s office told Civil Beat the city can’t elaborate on the results, citing the state’s privacy laws: “It implicates a significant privacy interest in information identifiable as part of an investigation into a possible violation of criminal law and it does not relate to employment misconduct that resulted in suspension or discharge,” Fulton wrote in a statement in response to questions from Civil Beat.

Former employees who were involved in the case said Castro would apply unearned overtime hours to their payroll sheets without their knowledge. Castro, they said, would then tell the employee on pay day what he had done, and ask for a kickback.

The police report stated that while Castro had falsified the time sheets, the employees were at fault for not returning the unearned compensation to the city knowing it was stolen. The three subordinates were paid for between 203 and 620 unearned overtime hours, according to police reports.

Fulton of the mayor’s office says the city has since implemented stronger controls to monitor overtime use at the Department of Facility Maintenance. He said the department now requires overtime be preapproved in an effort to “scrutinize overtime requests and ensure any requested overtime actually needs to be performed.”

Fulton said the department also does frequent “spot checks” of overtime work being performed and employees are required to prepare and sign their own timesheets that then need to be approved by a supervisor.

“The (department) has also taken steps to fill vacant supervisory positions to provide greater oversight of staff,” Fulton said. “A suggestion box is being set up to provide another means to provide feedback from DFM employees.”

Read a related article: Fired Honolulu Employee: Lax Oversight Led to Overtime ‘Free-for-All’