������Ƶ

Kamaaina Termite and Pest Control Inc., the most widely known of the companies founded and controlled by accused racketeering kingpin Michael J. Miske Jr., relied on phony company documents submitted to state regulators to win their approval of the company’s initial pest control operator’s license, according to the affidavit of an IRS criminal investigator.

Falsified documents were created and submitted to support the company’s license application, including fraudulent stockholder and officer lists, as well as faked minutes of a stockholders meeting, in order to obtain the company’s initial pest control license, and the company then doubled-down on the fraud during its periodic license renewals over nearly 20 years in business.

The affidavit by IRS Special Agent Mark MacPherson provides details of several different types of fraud carried out by Kamaaina Termite and other companies Miske owned or controlled.

MacPherson, who worked on the Miske investigation for two years, originally submitted his affidavit under seal in July 2020 in support of search warrants for Miske’s residences and offices. These warrants were executed at about the same time Miske and his co-defendants were being swept up in a series of pre-dawn raids.

The affidavit was among search warrant applications and related documents the past two months by order of federal Judge Derrick Watson, who is presiding over the Miske case. Additional disclosures are expected in early November.

Additional documents remain sealed because they relate to ongoing investigations that could result in criminal charges against additional Miske-related defendants.

The allegations of fraud have naturally been overshadowed in news coverage by the violent offenses charged in the indictment, including murder-for-hire, kidnapping, armed robbery, assault and weapons offenses.

However, the several examples of fraud alleged in MacPherson’s affidavit are likely to be key elements prosecutors will rely on to show the pattern of racketeering activity allegedly carried out at Miske’s direction.

Building A Business

For much of its corporate life, Kamaaina Termite and Pest Control Inc. was the most visible and well known of the group of companies Miske founded and owned.

It was not Miske’s first company, but it grew quickly and soon became the most prominent of his businesses. It advertised heavily, and built its public stature by tackling large and highly visible projects, including tenting and fumigating landmarks like Kaumakapili Church, the Waikiki Shell, Poinciana Manor Condominium in Kailua, and the company’s largest tenting job, the Mauna Kea Beach Hotel, which was completed just two months before Miske’s arrest and indictment in mid-2020.

Although the job didn’t involve tenting the entire building, Kamaaina was selected in 2010 to treat the 43-story, 352-unit Keola La’i Condominium when termites were discovered in the cabinets of many apartments of the two year-old building.

In the process, Kamaaina Termite’s gross revenues grew from approximately $5.2 million in 2015 to $8.2 million in 2017 and 2018.

Kamaaina was consistently rated among the top pest control companies in the state, and was voted Hawaii’s Best by readers of the Honolulu Star-Advertiser in 2014 and again in 2019.

“KTPC, including Mr. Miske as its owner, is a good, caring, employer who makes important positive contributions in the lives of KTPC’s employees and their families,” Lynn Panagakos said in a court filing following Miske’s indictment in 2020.

But federal prosecutors allege that while the company did provide some legitimate termite and pest control services, it “also served as a headquarters for the planning of criminal activities, the laundering of illicit proceeds, and the fraudulent ‘employment’ of individuals whose ‘work’ consisted of engaging in acts of violence or fraud on behalf of the Miske Enterprise.”

The trial of Miske and six remaining defendants is scheduled to begin in April and expected to last at least three months.

Six original defendants in the case have already pleaded guilty and are cooperating with prosecutors. At least eight others who were charged separately have also pleaded guilty and admitted to participating in Miske’s racketeering conspiracy. Most have agreed to testify against their former associates, and will be sentenced once their trial testimony has concluded.

Miske filed articles of incorporation creating the new company in June 2000, with himself as president, secretary, and treasurer and a Kuliouou man as vice president.

Miske was 26, and had been on probation for five years after being convicted on charges that included fraudulent use of a credit card, and several counts of felony theft.

While on probation, Miske had been employed by Oahu Termite and Pest Control, where he learned the basics of the termite business from its owner, Harry Kansaki, according to a declaration Miske filed in a court case years later.

Exactly how Miske made the transition from 21-year-old convicted felon in 1995 to 26-year-old business owner just five years later isn’t known.

However, a cooperating witness who worked for Kamaaina Termite for about a dozen years told investigators that in or around 2003, Miske disclosed he had started the company using money made by dealing cocaine, according to MacPherson’s affidavit.

Another person who said they had been involved in drug dealing on Oahu with Miske in the 1990s told investigators Miske, at that time, would purchase half kilograms of cocaine for redistribution.

The identities of these two witnesses were not disclosed in the affidavit.

Pest Control: A Highly Regulated Industry

The company’s alleged long-running licensing fraud started when Miske was apparently unable to find a qualified and eligible “Responsible Managing Employee” when the company first applied for a pest control license, according to the affidavit.

In order to get started in the pest control business, Kamaaina Termite had to comply with state rules requiring it to designate a Responsible Managing Employee with sufficient training and experience to hold a pest control operator license and manage the company’s use of dangerous and highly regulated chemicals.

“The RME’s PCO license is what qualifies a pest control entity for licensing, and it is the Principal RME through whom the business license is maintained,” according to MacPherson’s affidavit. “For this reason, if the RME does not have a proper license, then the pest control business itself does not have a proper license.”

Further, even a properly licensed pest control operator may not be eligible to serve as RME unless they directly manage the pest control business.

State rules require that the RME must either be “principally employed” by the licensee, “or the entity relying on the RME’s license must have at least 51% common ownership as the entity that principally employs the RME.”

This ownership requirement proved to be a significant hurdle to get over.

Kamaaina’s first application for a pest control license was submitted in August 2000, and was rejected by the state Pest Control Board, which found the person proposed as the company’s RME lacked sufficient experience.

Two months later, Kamaaina submitted a new license application which designated a different RME, identified in the affidavit only as “Individual-5.”

However, the affidavit further describes Individual-5 as the owner and RME of Oahu Termite and Pest Control, positions held by Harry Kansaki, Miske’s former employer and mentor, who was now being put forward to serve as RME for both companies.

This new application said Kansaki was the majority owner of Kamaaina with 51% of the stock. Miske held 24% of the new company, while a third person, not identified, held the remaining 25%.

Kansaki’s claimed 51% interest in Kamaaina satisfied the legal requirement and allowed him to serve as RME for both companies, and a license was quickly issued authorizing Kamaaina Termite to operate as a pest control business under his direction.

Records show Kansaki remained as Kamaaina’s RME, and later Principal RME, from Oct. 26, 2000, until Aug. 11, 2015.

But Kamaaina Termite’s required annual filings with the Business Registration Division of the Department of Commerce and Consumer Affairs told a different story. Kansaki was never named as an officer, director, partner, manager or member of Kamaaina Termite, according to the MacPherson affidavit.

Further, a review of KTPC’s tax returns by federal authorities showed that Miske had been 100% owner of KTPC at least since 2004.

This meant that over the entire period, Kansaki was ineligible to be Kamaaina’s RME because he was the owner and RME of Oahu Termite, was not principally employed by KTPC, and did not in fact own at least 51% of both companies.

This was the beginning of a long running fraud, according to the search warrant application.

“During the period from October 26, 2000 to August 11, 2015, whenever KTPC represented to others, including its customers, that it had a legitimate RME or that it was operating lawfully, that was a false statement,” MacPherson stated in his affidavit. “Moreover … I believe there is probable cause to conclude that customers likely would not hire a pest control company for a job of any significance if they were aware that the company’s license was not valid because it did not have a qualified RME.”

Harry Kansaki could not be reached for comment on the alleged RME fraud.

Court records in a 2019 lawsuit say Kansaki had been suffering unspecific medical issues that contributed to Oahu Termite’s deep financial problems, leading to a December 2016 verbal agreement to sell the business to Miske and Kamaaina.

Although this RME fraud was serious and long running, it wasn’t the only example uncovered by the lengthy federal investigation of Miske’s businesses.

In 2005, Miske applied for his own pest control field representative license, based on paperwork signed by Kansaki which certified Miske had received the training and experience to qualify as a field rep. Two years later, Kansaki signed an application to qualify Miske as a responsible managing employee for Kamaaina. In both instances, Kansaki signed as the RME and licensed pest control operator for Kamaaina, positions he was not eligible to hold.

MacPherson’s affidavit is silent about whether the statements regarding Miske’s training and experience were as phony as the claim that Kansaki was the majority owner of both companies.

Oahu Termite And Bank Fraud

In December 2016, Miske entered into a verbal contract to purchase Kansaki’s company, Oahu Termite and Pest Control. On Jan. 1, 2017, Miske took control of the company, and reported to the IRS and the state department of taxation that it was a 100%-owned sole proprietorship.

But within days, the company’s business registration with the state was changed, and now listed Delia-Anne Mele Fabro, also known as Delia-Anne Fabro-Miske, as Oahu Termite’s sole officer and director.

Fabro-Miske had been married to Mike Miske’s son and only child, Caleb, who died in March 2016 as the result of complications from injuries received in a high-speed crash several months before.

Mike Miske is charged with engineering a murder-for-hire plot that took the life of 21-year-old Jonathan Fraser, who had been Caleb Miske’s best friend. Both were critically injured, but Fraser survived the crash. Following the accident, Miske mistakenly believed Fraser had been in the driver’s seat when the accident occurred, and blamed him for Caleb’s death. The indictment alleges this was the motive behind the murder plot.

Following Caleb’s death, Fabro-Miske replaced Mike Miske on business registration updates filed with the state, which now listed her as sole officer of several Miske companies, including Kamaaina Termite.

Just a few months later, between April and July 2017, Fabro-Miske and Oahu Termite were part of a scheme to obtain a loan from Bank of Hawaii using “materially false documents,” the government alleges.

A person identified in the MacPherson affidavit only as “CW-7” told investigators Miske and others “would falsely misrepresent the ownership status of several of Miske’s businesses in order to receive loans.”

Although CW-7 is not identified by name, she is described as a person who provided accounting services to Miske and his companies from 2009 through about 2019, and is cooperating with prosecutors in hopes of leniency at sentencing.

Based on this additional information, CW-7 appears to be Tricia Castro, an accountant who pleaded guilty in June 2021 to conspiracy to commit bank fraud, and also admitted preparing false tax returns for Miske, his companies and several individuals, including Fabro-Miske. Castro also admitted assisting them in securing loans using false statements in the application process.

One of these loans was obtained from Bank of Hawaii between April and July 2017, according to the indictment of Miske and his co-defendants.

In April 2017, according to the MacPherson affidavit, Miske sent a text message to CW-7, aka Castro, requesting she “provide a Servco car sales representative with documents showing that another individual (Individual-6) was an owner and employee of Oahu Termite, so that Individual-6 would be listed as the guarantor.”

On the same day, according to MacPherson’s affidavit, Fabro-Miske submitted a document to state regulators “representing that she and Individual-6 were the two ‘member-managers’ for Oahu Termite.”

State business registration records show Fabro-Miske submitted a document on April 21, 2017, adding a second person as a member/manager of Oahu Termite.

In two loan applications submitted to Bank of Hawaii, “Individual-6 represented that he/she was a manager of Oahu Termite and a guarantor for the purchase of a vehicle. These representations were material because they showed that Individual-6 was a suitable guarantor for the vehicle that was being purchased.”

The affidavit does not indicate the identify of the buyer whose loan was being guaranteed.

In fact, this person was not an owner or officer, and the loan application was false.

A review of Oahu Termite’s employee records by federal investigators showed that Individual-6 was never reported as the owner or even an employee of Oahu Termite. And Miske’s 2017 tax continued to claim he was the sole owner of Oahu Termite.

Although the person did some work for two other Miske companies, Kamaaina Termite and Hawaii Partners, it “did not rise to the level of being a  manager,” and was described simply as running errands, according to the affidavit.

The fraudulent Bank of Hawaii loan is the basis for Count 22 in the Miske indictment, which charges Miske and Fabro-Miske with bank fraud, an offense which carries a maximum sentence of 30 years in prison.

Another Round Of Licensing Fraud

In December 2017, Fabro-Miske submitted an application to be licensed as a pest control field representative. Her application was accompanied by job logs from Kamaaina Termite certifying she had worked on 25 fumigation jobs during 2016, along with a “confirmation of employment” certification signed by a person identified in the affidavit only as “Individual-9.”

However, in testimony before a federal grand jury, Individual-9 could not verify Fabro-Miske had been trained or had ever showed up at worksites.

“Moreover, Individual-9 testified in the grand jury that Fabro-Miske showed up to work only two to three days a week,” according to MacPherson’s affidavit.

Similarly, another witness identified only as “Individual-10,” who was the job scheduler for KTPC at the time, said in grand jury testimony “Fabro-Miske was never scheduled to perform any fumigation jobs and that, to Individual-10’s knowledge, Fabro-Miske never went out in the field, but instead did office work.”

Meeting minutes show the Pest Control board approved Fabro-Miske’s license as a pest control field representative at its regular meeting on Jan. 29, 2018.

On March 18, less than two months later, she filed paperwork seeking licensing as a pest control operator, which would qualify her to serve as responsible managing employee.

Then, on June 20, 2018, “after receiving these false experience certifications and job logs,” the Pest Control Board approved her application and issued her a new PCO license.

Finally, on November 20, 2018, Fabro-Miske applied to be the dual RME for both KTPC and Oahu Termite, taking over the positions previously filled by Harry Kansaki.

Her application claimed Fabro-Miske now owned the 51% share of both companies formerly attributed to Kansaki. Based on that information, her application was approved by the Pest Control Board.

However, as was the case with the claim that Kansaki had an ownership interest in Kamaaina 18 years earlier, Fabro-Miske’s claim was false and fraudulently submitted, according to the affidavit.

Mike Miske continued to control 100% of both Oahu Termite and Kamaaina, according to a review of personal and corporate tax returns by federal investigators, making Fabro-Miske ineligible to serve as dual RME.

Federal investigators concluded she then fraudulently operated as RME for both companies from January 2019 to July 2020, when Miske was arrested and both companies were shuttered.

Fabro-Miske was added as a defendant in a second superseding indictment made public in July 2021. She is charged with participating in Miske’s racketeering conspiracy, and bank fraud.

More Fraud: ‘The Hollywood’

Sometimes Kamaaina duped unsuspecting clients with a bit of acting.

After KTPC fumigated a home, customers often wanted to know when it would be safe to reenter. An employee would be sent to the home with an instrument designed to detect whether there was still a dangerous level of Vikane gas, used in termite treatment. Vikane is odorless and doesn’t irritate the eyes or skin, so it is hard to determine when a home has aired out sufficiently to be safe.

The problem, federal investigators were told by a longtime employee, is that sometimes they took a broken testing instrument which hadn’t been replaced because Miske allegedly said it would be too expensive.

The employee “would go to visit with the ‘broken machine’ and do what employees at KTPC called the ‘Hollywood,’ in which they would pretend they were using the machine and say that it showed the Vikane levels were safe,” according to the former employee.

It was a silly but potentially dangerous bit of play acting, which exposed the public to possible dangers while there was no experienced pest control operator at the helm to be sure federal regulations were followed.

In other cases, KTPC allegedly substituted less expensive chemicals for the brand names they claimed to be using for treatment of ground termites, sometimes transferring it into the bags of the costlier product in order to  deceive customers.

In another example cited in the affidavit, the company’s fumigation jobs sometimes omitted use of the chemical chloropicrin, which is used as a warning agent to deter people or pets from entering a structure being treated with the lethal but odorless chemical, Vikane.

“KTPC would often skip the step of using chloropicrin so that its teams could more quickly wrap up the jobs, and thus do more jobs in a day (and make more money) than the typical fumigation business,” federal investigators allege. “At the same time, customers were told that chloropicrin was being used. Miske knew that this fraudulent practice was sometimes even carried out on federal contracts.”

Skipping the use of chloropicrin would have also created a supply outside the regulated inventory that could be tapped for illegal uses, such as the 2017 gas attacks on two nightclubs that were competing with Miske’s Encore Nightclub, a successor to the M Nightclub. Three defendants who were involved in those attacks — Jacob “Jake” Smith, Kaulana Freitas and Ashlin Akau — have already pleaded guilty and are cooperating with prosecutors.

Another individual, who was a a certified applicator for Kamaaina Termite, told investigators the company frequently used unlicensed employees to fumigate houses. On one occasion in 2013, this person, at Miske’s request, told Department of Agriculture inspectors he had done a particular fumigation job even though it had been done by an unlicensed employee.

The owner of another pest control business, who often hired former Kamaaina employees, told investigators he “routinely found that individuals who had been performing roles at KTPC that required licenses were, in fact, not licensed to perform those roles.”