Leo Caires is shown in this image from The Maui News archives. Courtesy photo

A lawsuit filed Friday in Hawaii’s 2nd Circuit Court alleges that Maui County Mayor Richard Bissen fired his former chief of staff for sounding alarms about suspected fraud in the mayor’s office.

The Fujiwara and Rosenbaum law firm based in Honolulu is suing the county on behalf of Leo Caires, alleging Bissen wrongfully terminated Caires’ employment in violation of the Hawaii Whistleblowers’ Protection Act.

“Leo Caires did what any responsible public servant should do: He reported suspected fraud involving public funds,” said Caires’ attorney Joseph Rosenbaum in a news release. “Mr. Caires looks forward to presenting his case in court.”

In a statement, Bissen strongly rebuked the accusations.

“Mr. Caires’ allegations are inaccurate, and the county is confident it will prevail in court,” Bissen said. “The concerns he raises were identified by others at the time, and we reject any attempt to revise history.”

Bissen added that because the matter is in active litigation, the county will reserve further comment for courtroom proceedings.

Maui County Mayor Richard Bissen. Courtesy photo

The lawsuit alleges Bissen fired Caires after he reported suspected fraud involving employees in the mayor’s office obtaining tens of thousands of dollars from grants through the Mayor’s Office of Economic Development.

According to the lawsuit, after Caires reported the concerns, his job duties were steadily reduced, he was demoted, and he was ultimately fired in December 2024 while on approved medical leave.

Caires’ attorneys are seeking a jury trial and damages, as well as attorneys’ fees and costs. “Our law firm has a practice of not putting (damage figures) inside the lawsuit, so I can’t tell you what damages we will be seeking,” Rosenbaum said over the phone.

Public service

The lawsuit describes a close working relationship between Caires and Bissen dating back to 2022, when Bissen reached out to say he had followed Caires’ career and viewed him as a community leader.

The two spoke frequently about ideas to improve lives on Maui, and Bissen later told Caires he was considering a run for mayor. Caires supported Bissen’s campaign, according to the lawsuit.

After Bissen was elected in November 2022, Caires left the private sector to become Bissen’s chief of staff and was sworn in in January 2023.

As chief of staff, Caires oversaw staff in the mayor’s office, worked on safety training and policy initiatives, fielded calls, drafted letters, attended budget meetings and represented the mayor at events.

“Mayor Bissen often sought advice from Mr. Caires and had him sit in on candidate interviews for positions within Mayor Bissen’s office and in meetings with other government leaders such as governors, U.S. senators and military leadership,” the lawsuit says, adding that Caires’ job was essentially to “watch Mayor Bissen’s six.”

The lawsuit says Caires had no reprimands or negative performance reviews until about two days before Christmas 2024, when he opened a termination letter dated Dec. 18.

Suspected fraud

According to the lawsuit, the relationship between the two deteriorated after Caires began investigating potential fraud involving employees in the mayor’s office.

The lawsuit says Caires entered the public sector after a successful career as a commercial banking officer and owner of a well-performing business. He graduated from Maui High and earned a bachelor’s degree from the University of Wyoming, a Master of Business Administration from Chadron State University and a Ph.D. in education from St. Thomas University, where he wrote his dissertation on the financial literacy of Native Hawaiians.

The lawsuit says Caires’ experience in finance and his education gave him a unique understanding of financial agreements and money transactions that eventually led him to investigate grant activity in the mayor’s office.

In March 2024, Caires reportedly noticed suspicious activity with a grant awarded by the Office of Economic Development to a grantee listed in the lawsuit as “AVS.”

While looking into the grant, Caires allegedly noticed a suspicious invoice for $45,532 from a company named “RTFEX Depot,” along with unverifiable debit and credits of money to the mayor’s executive assistant at the time, whom the lawsuit names as “MA.”

The lawsuit says Caires picked up on discrepancies in the RTFEX Depot invoice, as well as other red flags, such as he could not find a suite number for the business’ address in Scottsdale, Arizona, and calls to the business’ phone number went to an answering machine that did not mention RTFEX Depot by name.

Caires also searched the internet and could not find any company by that name, and he called an administrator at the Arizona Corporation Commission, who told him that “none of the information on the invoice was associated or registered to any address in Arizona.”

‘Following the money’

The lawsuit says Caires contacted the Maui County Department of Corporation Counsel to report suspected fraud and to seek guidance, and continued investigating on the department’s advice.

He then contacted the AVS grantee, identified as “RC,” who told him he was a friend of MA and that MA handled equipment purchases because MA said he could get military discounts, according to the lawsuit. The lawsuit says Caires did not find evidence of military discounts referenced in the purchases.

Afterward, the lawsuit says Caires contacted MA, who told him the equipment was obtained from a third party in Target’s parking lot in Kahului.

The lawsuit further alleges that Caires found MA and AVS “likely submitted false cashier’s checks made out to a fake company” to obtain reimbursement.

‘Sounding alarms’

The lawsuit claims Caires told Mayor Bissen he was investigating the appearance of fraud between AVS and MA in relation to the Office of Economic Development.

It says Bissen directed him to speak with the director of the Office of Economic Development, identified as “LM,” who said MA had a letter from the Maui County Board of Ethics dated Oct. 27, 2023, allowing MA’s participation in the grant. However, the lawsuit says the transaction of the AVS grant money to MA took place prior to any letter being issued.

The lawsuit says LM also showed Caires a photo of equipment allegedly purchased, but the image did not verify its origin. LM also allegedly admitted she was “just trying to help” MA regarding the AVS grant.

On March 19, Caires drafted a notice of an internal workplace investigation for MA with assistance from county attorneys and provided a copy to Bissen.

“Mayor Bissen indicated that he did not want anything to do with the notice and appeared agitated by it,” the lawsuit says.

The lawsuit says Caires recommended MA be terminated, but Bissen instead wanted MA reassigned to a position in the Office of Economic Development. However, MA ultimately resigned from the county after Caires objected to the reassignment, the lawsuit states.

The lawsuit also alleges Caires later reviewed additional grants and found that LM appeared to be using her position to benefit family members.

Leo Caires, former chief of staff for Mayor Richard Bissen, sits next to Hawaii Lt. Gov. Sylvia Luke during a blessing for the new Hana Health Rehabilitation and Support Center in East Maui in this photo from The Maui News archives. Brittany Arisumi-Rodrigues photos

Alleged retaliation

The lawsuit says that after the relationship deteriorated, Bissen reduced Caires’ responsibilities, removed him from meetings and took other actions to limit Caires’ involvement.

In May 2024, Bissen allegedly told Caires to shift his focus to serving as Energy Commissioner and working on a contract with Johnson Controls, according to the lawsuit. “Bissen also stated that he was eliminating the Chief of Staff position due to budgeting issues,” the lawsuit says.

The lawsuit alleges this reassignment redirected Caires away from his investigation of grant activity.

“Mayor Bissen stated that if Mr. Caires did not accept the position, then the only other option was that he would be terminated,” the lawsuit says.

Caires was demoted around Oct. 1, 2024, and accepted the position so he could continue to support his family, despite a lower salary, according to the lawsuit.

The lawsuit says Caires continued working while taking intermittent medical leave beginning around September 2024. On Dec. 23, after returning from approved medical leave, Caires found a termination letter dated Dec. 18.

It said in part: “This letter is to inform you that your at-will employment as the Maui County Energy Commissioner will terminate effective the close of business January 15, 2025. Although our agreement clearly was for your time to end on December 31, 2024, I will extend you this final courtesy.”

“You have served as Energy Commissioner since May 2024, but I have not observed the level of expertise, management skills, attention to detail, or enthusiasm for energy efficiency required to ensure the success of these initiatives. … Unfortunately, I do not have the confidence in your ability to fulfill this responsibility.”

The lawsuit disputes that Caires failed to perform his duties and says he had not been reprimanded or notified of performance issues before his termination. It also claims Bissen attempted to “bribe” Caires into resigning, asking him, “What would it take?”

Risk report

The lawsuit references a February report that found county controls were inadequate to guard against some types of fraud.

The report by Spire Hawaii LLC assessed 20 of 21 executive departments and identified “significant coverage gaps in the current controls,” including the lack of a countywide nepotism policy and weaknesses in oversight of overtime and procurement during emergency proclamations.

It also found insufficient safeguards to prevent fraud among vendors providing outsourced services and concluded that corruption was the most likely type of fraud risk.

‘Disappointed’ but ‘confident’

Rosenbaum said he “can’t speak to” questions about whether the allegations in the lawsuit could qualify as criminal activity, but he said it’s important for Maui County residents to know “they have some members of their government who are willing to stand up, even against their own boss, to expose issues of fraud and waste of taxpayers’ money.”

In his statement, Bissen painted a very different picture of the chain of events.

The mayor described the decision to “part ways” with Caires as one of the more difficult calls of his tenure. Bissen said he was “disappointed” he had to fire Caires, but Bissen remains “confident” it was the right decision for the community.

“I made significant efforts to support his success, including mentorship, training, and an opportunity to continue serving as Energy Commissioner based on his prior experience,” Bissen said. “Lahaina’s recovery placed extraordinary demands on everyone in public service. Ultimately, it came down to an inability to meet the expectations required. As mayor, I have a fiduciary responsibility to ensure our team delivers for the people of Maui County. That responsibility requires making difficult decisions.”