A sharp eyed reader asked a good question regarding the Miske case after seeing the reference to Miske’s accountant filing false corporate tax returns in which “Miske’s personal living expenses were improperty deducted as business expenses.
“For example,” according to the Memorandum of Plea Agreement of the accountant, Tricia Castro, “portions of an $11.5 million renovation to Miske’s personal residence were expensed as business expenses.”
Today’s article begged for a follow-up article on the $11 million renovations to Miske’s home. Previous Miske reporting never specifically indicated that kind of wealth, but it would make sense from all of the illegal activity that has been reported. I’d be interested in more details on the house. You could probably uncover a lot of money-laundering using cash from criminal activities to pay workmen and selling/refinancing the home to have that equity “cleaned.”
I don’t know where the $11.5 million figure comes from. However, since Miske’s bank account and business records were subpoenaed or seized by federal investigators in the course of this investigation, the estimated renovation value would appear to be based on the government’s tracking of the movement of funds.
I couldn’t find anything in the public records to support that $11.5 million estimate. Perhaps it will eventually be made public as the government’s case continues to be revealed. But here’s what I have found so far.
Here is the property description when last listed for sale in 2010.
Rare opportunity to purchase one of few remaining oceanfront lots in prestigious Koko Kai/Portlock. Cliffs at Koko Kai overlook famous spitting cave, best whale watching loc on Oahu, incredible Diamond Head, Sunset/Sunrise views, tranquil & majestic atmosphere that is irreplaceable. Unheard of price at $2,950,000, $77.85/sqft. Your dream oceanfront estate at a price you never dreamed possible.
Miske purchased it on April 14, 2010 for $2,350,000, property records show.
Part of the purchase price was covered by a $1,175,000 conventional mortgage loan from Pacific Rim Bank. The mortgage loan was to Miske as trustee of the Michael J. Miske Revocable Living Trust.
A building permit was issued in August 2012 for construction of a new 2 story 7,454 sq ft single family dwelling with pool, new building, fence, retaining wall, plumbing, solar, electrical. The accepted value of work was $2,000,000. Construction was not finished until August 2017, according to city permit records. Perhaps that estimate grossly underestimated the work to be done, which would have meant significant savings in permit fees due to the city, but there’s no evidence on the record at this point.
Miske’s Kamaaina Plumbing replaced Ozzy’s Construction, a Waimanalo-based company, as general contractor for this project mid-way through the job, according to city’s online building permit database. To the extent that Miske used his own or related companies on these jobs, thewe would offer potential for padding costs and payrolls, as suggested by the comment that prompted this post.
Contractor-Electrical: Hui Electric LLC, replaced 5/8/2014 by Austech Electrical Services LLC
Contractor-Plumbing: Kamaaina Plumbing Company LLC
Contractor: Ozzy’s Construction, replaced 4/13/2015 by Kamaaina Plumbing Company LLC
During the five year period of construction from 2012-2017, several other building permits were issued.
Permit 764639
New Pool deck and fire pit, rear of building
Accepted value $35,000
Permit issued 4/16/2015 Job completed 12/28/2017Contractor-Electrical: Hui Electric LLC
Contractor-Plumbing: Kamaaina Plumbing Company LLC
Contractor: Ozzy’s Construction Inc.Permit 786773
New PV installation.
Accepted value $201,756
Permit issued 5/16/2016 Job completed 12/28/2016Contractor-Electrical: Kamaaina Energy LLC
Contractor-Plumbing: None
Contractor: Kamaaina Energy LLCPermit 788288
Electrical upgrade 200 to 600 amps in same location
Accepted value of work $20,000
Permit issued 6/17/2016 Job completed 12/28/2016Contractor-Electrical: Kamaaina Energy LLC
Contractor-Plumbing: None
Contractor: NonePermit 806952
Alteration/Addition to Existing Single-Family Dwelling (622 sq ft)
Accepted value $135,000
Permit issued 8/1/2017 Job completed 12/28/2017Contractor-Electrical: Austech Electrical Services LLC
Contractor-Electrical: Kamaaina Energy LLC
Contractor-Plumbing: Kamaaina Plumbing Company LLC
Contractor: Makana Pacific Development LLC
Miske later obtained additional financing beyond the original mortgage loan at the time of purchase, real estate records show.
In March 2018, after construction was completed Miske took out a Bank of Hawaii loan for $1,999,999 secured by the new home, this time borrowing as an individual. The previous year, “several financial institutions terminated banking relationships with Mr. Miske and KTPC, without explanation,” and Miske then retained a criminal defense lawyer, according to a declaration filed in federal court last year.
Then on June 14, 2019, just a month before Miske was named in a sealed indictment charging him with conspiracy to distribute five kilograms or more of cocaine, he received a $500,000 line of credit from Hawaii Central FCU. This loan was again made to Miske as trustee for his revocable living trust.
As an aside: Miske’s home was the location for several weeks of shooting for the upcoming Amazon series, “I Know What You Did Last Summer,” based on the original 1997 slasher movie. The location is probably more appropriate than the series’ producers ever imagined, given its connection to Miske and the gruesome details disclosed in recent government allegations. I suppose this could eventually provide a bit of social media buzz to the new series.
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This post raises an interesting question. How much are Honolulu’s high real estate prices fueled by money laundering. Maybe a close look at the spin cycle? You have $x million dollars in dirty money. You can pay cash for real estate and you convert your dirty cash to an asset, in fact a lot of high end real estate deals are paid in cash. Some localities, like Miami, actually report these. But it doesn’t stop there. You could try and flip the property and pull clean cash out. Ooor you can use it as collateral to borrow money. So you get more clean money by borrowing and pay off the loan with dirty money. And that continues , he borrows another $1.9 million maybe as an individual, but I suspect his assets qualified him for that loan. I think that this can be pyramided tyo get at how much money was being laundered. So $1.175 million in equity on the purchase, $1.175 for the mortgage, then $1.9 million for another loan and then $0.5 million for what appears to be a HELOC. That’s roughly $5 million in cleaned money. The whole purpose of laundering is to take your dirty money ande turn it into taxable income. And 2 of those loans allow him to deduct interest on his income tax. The $11 million might have been a step too far, or couldn’t it have been paid to one of his companies, like a construction company. Right here, with one property we are looking at $16 million in potentially laundered money. He had 2 other properties as well.
How much of this laundered money goes towards political campaigns? One can only understand why politicians stop representing us, the citizens who voted them in.
I have been able to find very little in the way of campaign contributions by Miske, his companies, or anyone connected with his businesses. I believe there were connections, but it doesn’t appear campaign contributions were how he was gaining influence.
We’ll have to ask Trevor Ozawa what light he can shed on the Miske-political influence question.
Yes, donations can pay your personal campaign loans off, as in the case of our present mayor. Or in the case of Collen our present Hart leader she charged herself 9% in interest and pocketed the interest money as income. Now you know why she keeps on running for office. You also know why she endorsed Rick for mayor. Her job is a form of payback.
Very interesting. He had a number of other properties.
Ian, keep us updated on the hearing Today!
Great writing as always.
Weird how Makana Pacific Development isn’t listed on any of the permits issued by the C&C. Unless the 940 Queen Street address is a super coincidence, along with the renovation work in Portlock & Kailua showcased by that entity on line?
Of note here
Austech Electrical owner, Kerry Kitteringham, was, together with Mike Miske, the co-owner of Kamaaina Energy (formerly Kaamaina Solar) from the start in 2013.
This persisted until Delia Fabro-Miske took Mike Miske off the company in 2016, when Mike Miske started transferring all of the companies to her. That particular company persisted up until November 2019, which is when the Grand Jury started becoming more aggressive their interviews.
Looks like they were paying themselves to do the work under multiple permits, at times on the same permit. While in itself may be legal, Does kind of point to a possibility of the spin cycle.