Republican state Rep.
David Alcos III — who is running for reelection Nov. 5 for his House District 41 seat — has been fined $12,500 by the state Ethics Commission for an unprecedented volume of campaign financial disclosure violations, including failing to report more than $3 million in liens against him by the IRS and state Tax Department.
Although the administrative penalty was hardly the highest against a political candidate in Hawaii, Robert Harris — the commission’s executive director — told the Honolulu Star-Advertiser on Thursday that the number of financial disclosure
violations by Alcos “was greater than what we’ve seen in the past.”
“It is a high fine for a financial disclosure,” Harris said. “However, I’m not sure we’ve seen a case like this. There’s no apples-to-apples comparison.”
In a statement to the Star-Advertiser, Alcos (R, Ocean Pointe-Barbers Point) called himself “a dedicated advocate for ethical conduct and fairness” who “resolutely” defends “his integrity against accusations of an ethics violation.”
At the same time, Alcos said he “takes responsibility for certain oversights” that “were unintended and not made with malicious intent. The complexities surrounding the requirement to fill out specific forms were not fully understood, leading to inadvertent errors in compliance.”
He blamed “a significant portion of these challenges to the detrimental actions of mainland contractors who have exploited and harmed local business owners. The impact of these unscrupulous practices has had far-reaching consequences, resulting in financial hardship and the closure of his company, D.A. Builders LLC.”
The Ethics Commission on Thursday said Alcos listed only one creditor
on his financial disclosure forms going back to his
initial, unsuccessful 2020 run for office.
And in subsequent
disclosure forms in 2022 and 2023, Alcos failed to disclose how many creditors were actually linked to him and his construction company, D.A. Builders, which the Ethics Commission said Alcos is the “President and sole member of.”
The company, the commission said, “is a party to various lawsuits connected to disputes arising from D.A. Builders, LLC’s work on the International Market Place in 2015 and 2016, for which it was not paid,” leading to “numerous creditors” that Alcos failed to disclose as he campaigned for the House.
Among the omissions, the commission said Alcos failed to disclose that:
>> In 2017 the IRS recorded two liens against
Alcos in the Bureau of Conveyances for unpaid taxes assessed against D.A.
Builders of $1,970,715
and $60,322.
“Respondent Alcos disputes that he is liable for this debt of D.A. Builders,” the commission said.
>> In 2021 the state recorded a tax lien against
Alcos for $1,176,155 for unpaid withholding taxes and general excise taxes of D.A. Builders.
>> The IRS also recorded
a tax lien of $58,851 against Alcos with the state Bureau of Conveyances in February 2017.
>> In January 2018 the IRS then recorded a tax lien of $40,466 against Alcos in the Bureau of Conveyances.
>> In August 2019 the state Tax Department recorded a $29,732 lien against Alcos in the Bureau of Conveyances for unpaid state
income tax liability.
>> In 2019, Pacific Gypsum Supply Inc. recorded “a stipulated judgment” of $41,067 in the Bureau of Conveyances against Alcos and D.A. Builders that he agreed to pay.
>> Alcos admitted that he failed to disclose on his 2022 and 2023 financial disclosure forms that he had failed to pay the Cades Schutte LLP law firm for representing him and his construction company to represent him in multiple lawsuits going back to 2016, according to the commission.
Cades Schutte then
“recorded a Uniform Commercial Code financing statement in the Bureau
of Conveyances indicating that it was a creditor and was claiming as collateral ‘any and all monies or proceeds obtained by or on behalf of (D.A. Builders and David Alcos)’ in several pending lawsuits in October 2021,” according to the Ethics Commission.
>> The Ethics Commission said that some creditors allege “Alcos is personally liable for debts of D.A. Builders, LLC, which Respondent Alcos disputes.”
The creditors include World Business Lenders LLC, which gave D.A. Builders a $400,000 business line of credit in 2015; and an
affiliated entity of World Business Lenders that “is attempting to foreclose on real property owned by Respondent Alcos in a pending lawsuit in the Circuit Court of the First Circuit. Respondent Alcos disputes that he is liable for this debt of D.A. Builders,” according to the Ethics Commission.
>> Alcos admitted that
he did not disclose on his 2022 and 2023 disclosure forms that the state Tax
Department alleges that “Alcos is personally liable for debts of D.A. Builders, LLC, which Respondent Alcos disputes,” according to the commission.
>> Alcos also admitted that he failed to disclose
on his 2020, 2022 and 2023
financial disclosure forms that in January 2018 Allied Building Productions Corp. had obtained a stipulated judgment against him and D.A. Builders of $8,093.
>> In August 2018, Bank
of Hawaii obtained a default judgment against Alcos and D.A. Builders for $45,318.
>> In January 2019, A&B Properties Hawaii LLC
obtained a default judgment against Alcos and D.A. Builders of $18,455.
>> Alcos volunteered that he also failed to disclose his state salary as income on his 2023 disclosure form.
>> And Alcos volunteered that he did not disclose his “100%” ownership of two businesses — D.A. Builders and D A Builders LLC — on his 2020, 2022 and 2023 disclosure forms.
“Although Respondent
Alcos disputes some of the above debts, he admits that, to comply with the Financial Disclosure law and promote public transparency, he should have disclosed the above information on the applicable financial disclosure statements filed in 2020, 2022, and 2023,” the commission said.
It referred its findings to the speaker of the House “for disciplinary action as appropriate.”
Current House Speaker Scott Saiki was voted out of office in the August Democratic primary election and will leave the House on the same day as the Nov. 5 general election.
Saiki told the Star-
Advertiser on Thursday that he had not reviewed the commission’s findings and penalties against Alcos and could not immediately comment on how to proceed, which could leave
any disciplinary action against Alcos up to Saiki’s successor.
The House has a Standard of Conduct Committee to consider discipline for a fellow member, but it has never met during Saiki’s seven years as speaker.
“The committee has not convened during my time,” Saiki said. “I don’t know if it’s ever been convened.”
Alcos is one of three Republican House freshmen from the West side of Oahu facing reelection.
He won his Republican primary election on Aug. 10 with 1,183 votes.
In the Nov. 5 general election, Alcos faces Democrat John Clark III, who won his Democratic Party primary with 1,452 votes.
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