Sword's Contracts and Federal Grant Raise Red Flags

July 31, 2013

Serious questions continue to be raised about grants that were issued to Rosemond Santos and her husband, Gerhard (Gary) Sword.

Gerhard (Gary) Sword's Electronic Express, LTD received $402,000 in federal grant money in 2008 from the Department of Interior to provide the NMI Retirement Fund computer software. The software program turned out to be "defective and nonfunctioning" according to two Retirement Fund members who filed a 2010 lawsuit against Sword and the Fund.  The lawsuit claims that the Fund awarded the contract to Sword even though there were more qualified and lower bidders who applied for the contract.

In 2012 the NMI Retirement Fund also filed a lawsuit against Sword and Express Electronics, accusing them of "breach of contract and unjust enrichment." Fund meeting notes detail the problems.

From the onset there were questions about the contract, including why the only signatures on the contract were those of Gary Sword and former Fund board Chair Juan Guerrero and why Sword got the contract.

Another question may be why the contract was awarded without doing a background check on the company. Sword also had a 2005 contract with the Marshall Islands Government to "install, equip and maintain" a border security system. The Marshalls paid him $579,380, but according to the Marshall Islands Attorney General Office, Sword failed to fulfill the contract. The office accused the software "expert" of "flagrantly breaching the trust reposed on them by the people of Marshall Islands."

In 2004, Sword also received a $400,000 DOI grant to install the immigration computer system for the government of Palau.

In 2005, Sword's Electronic Express partnered with Brian Clayton's MEGAbyte of Saipan to win a $580,000 DOI grant to provide a computer system for the CNMI Division of Customs to track imports and assess tariffs. That system is also allegedly defective,. It is reported that the ineffective software program has wasted hundreds of thousands of federal taxpayer dollars and thousands in CNMI tax dollars that were not collected as a result of the unusable system.

No lawsuit has been filed to recover funds lost in the custom system debacle.

Latest Grant Questioned
Sword has diversified from computer software to a radio station and aquaculture project with his business partner and wife, Rosemond Santos. Both of those endeavors are also under investigation.

Concerning the radio station owned by Sword and wife, Rosemond Santos the Saipan Tribune reported:
In 2011, a lawmaker also asked OPA and the Office of the Attorney General to look into Sword’s KKMP radio station’s use of the Emergency Management Office tower on Mt. Tapuchau for allegedly being given “improper access” to the EMO tower for free.
What became of those investigations, if they were actually conducted, is unknown.

The latest scandal involved the federally-funded trip to Pagan by Sword and Santos' new nonprofit, Guihan Pasifiku. The recently established nonprofit received a federal grant from the Department of Lands and Natural Resources to establish an aquaculture business.

A KSPN News interview with Arnold Palacios, the Director of DLNR questioned the legitimacy of the Pagan trip and some of the participants. The grant stated that aquaculture experts from Hawaii would be consultants, but no experts took the trip. He also stated that Neal has absolutely no role in the grant.

However, it is not known if the trip was actually business or pleasure. Also on the trip was former Office of Attorney General investigator James Ayuyu, Chief Prosector Shelli Neal and criminal defendant Ambrosio Ogumoro who, at the time, Neal was charged with prosecuting and investigating.

Minutes from the March 2012 Western Pacific Regional Fisheries Management Council describe the role of Guihan-Pasifiku:
Gary Sword, from Guihan-Pasifiku (GP), reported on the recent efforts to develop open ocean aquaculture in CNMI, which stemmed from a symposium on the subject that was sponsored by the Council and Northern Marianas College (NMC) Cooperative Research, Extension and Education Service (CREES) Program.
The vision of GP is to create jobs for the CNMI through ecologically responsible, economically sustainable aquaculture and provide healthy food for today’s community without compromising provisions for future generations. The members consist of local indigenous community members. The current economic status and the unhealthy diet consumed in CNMI are some of the challenges GP faces. GP believes a solution to the health and economic challenges would be open ocean aquaculture, which has minimal environmental impacts. 
The operation consists of wild-harvested fingerlings are stocked in cages, fed daily, tended, cleaned and harvested after eight to twelve months. The submergible net pens are secured during hurricanes. It will provide alternative employment for displaced fishermen as well as relieves pressure on wild stocks. No electricity is required. Export markets are accessible. It increases food security, a healthy food source and it is indigenous. GP plans to work with local farmers to provide the food source for the fish and work with the CNMI Government to produce legislation to assure that the aquaculture development is sustainable and environmentally friendly. Community buy-in is a priority and GP plans to ensure no one is displaced and accommodated for in the plan. 
GP plans to begin as a nonprofit to conduct studies, gain local buy-in, and seeks $3 million in grant funding over three years to fund the studies and training and achieve commercial stability, and establish a link with the farmers for food growth. After three years, GP plans to become commercial, Pacific Fisheries, at which time will seek $10 million in investment to develop the commercial side of the fishery. The CNMI Aquaculture Development Plan is being implemented. Four small Aquapod cages are planned to be used to hold the giant grouper and a species of rabbitfish. They look forward to being able to share the lessons learned during the operation Pacific-wide. Sword briefly summarized funding and budgetary items. He reiterated the goal, to create a healthy, sustainable food.
Guihan-Pasifiku is seeking $3 million in grant funds? Should they be eligible for even one additional federal grant until all of the previous grants and contracts with Sword are thoroughly investigated? His track record calls for investigations!

Additionally, an investigation should be conducted to determine the true purpose of the federally-funded trip to Pagan and whether or not the couple should reimburse the federal government, in part or entirely, for the federally-funded fishing trip.

Palacios stated that there was no funding identified for a Pagan trip. However, in the Guihan-Pasifiku application, grant funding was requested for trips to Hawaii, Japan and China for "consulting" purposes. Santos and Sword claimed that the 5-day Pagan trip was for a "site evaluation" and the findings of that investigation will be under scrutiny.

Palacios told KSPN that he was concerned that scientists/consultants were not part of the Pagan trip. He also said that one reason that the grant was approved was because it mentioned partnerships with credible aquaculture experts, including John Corbin, President of Aquaculture Planning and Advocacy, LLC. Corbin was formerly affiliated with the Oceanic Institute in Hawaii. He specializes in open aquaculture planning and development. In the KSPN interview, Corbin said that he has not been contacted by Guihan Pasifiku since March 2012.

The Office of Attorney General said that the Pagan trip is under investigation.

Who is Gerhard (Gary) Sword?
In 2005 the Department of Interior hosted an island business conference intended to explore economic opportunities for the insular islands in the Pacific. The conference brochure contains a description of key participants. Sword description from the pamphlet details his experience:
Gerhard "Gary" Sword, who was born and raised in American Samoa, is the senior vice-president for Express Electronics (American Samoa). The company designs and builds software solutions for the Pacific islands. 
Having spent fourteen years in the electric and water utility sector as a senior manager, Gary has built strong working relationships throughout the Pacific. He is currently conducting business in the Commonwealth of the Northern Mariana Islands, the Republic of Palau, the Republic of the Marshall Islands, the Kingdom of Tonga, Samoa and American Samoa. He is a leader in innovative software solutions for use in the Pacific region. 
Company Profile 
Express Electronics, Inc., was founded in American Samoa in 2001. It has grown from a simple computer hardware supplier to a "design and build" software producing company with its products being utilized throughout the Pacific region. It is now looking to expand even further, perhaps into China and the Pacific Rim. 
The company's simple formula for success is "partnering." So far it has developed partnership arrangements in the Commonwealth of the Northern Mariana Islands, the Republic of Palau, the Republic of the Marshall Islands, the Kingdom of Tonga, American Samoa and Samoa. The company encourages its partners to participate and assist in the development of its software, and it trains them to maintain the software. Further, it rewards those partners who help develop software by enabling them to share in the success and profits of the company. 
Trade Mission Goals 
Gary Sword's goal in participating in the Mission is to identify partners in the Information Technology (IT) and communications arena.
Gary Sword sounds credible. But is he? He seems to make a living off of projects that are funded by federal grants.

Clearly, the Department of Interior should be monitoring grant funds and investigating fraud and waste in each and every grant that they award or have awarded. The fact that both the CNMI and Federal Governments missed the red flags in Sword previous contracts and deliverables on grants is unacceptable.


Anonymous said...

Yes the grants are a major concern especially since nothing worked (and it was never intended to) Why would the Interior hand out a lump sum payment ? Most of the time only a certain percentage for mobilization is given then and only then if everything works the rest of the funds are released. Here is the half million dollar question: Who in the Interior was bribed ? How far down the rabbit hole will this go ? Knowing the Feds they will sweep this under the plywood due to the astonishing stupidity in hiring these incompetent people.

Oh just one more thing in regards to the product that was never intended to work: There was probably some sort of multi year maintenance agreement so having the system not work paid off.

Wendy Doromal said...

8:17 Possibly DOI gave the grant money to DLNR to distribute?

Anonymous said...

These "computer system" contract scams and are easy to manipulate, steal from and basically just get the money and dole it out to familia. Computer software coding contracts are kind of like selling the air around you for a high price. You can breathe it in but never see it. There isn't anything tangible to be had so of course nothing ever worked. Clayton was a taxi driver before starting MegaByte...Rosemund is a lawyer who never really practiced anything...and they all got a piece of almost a half million dollars. So the question remains: who in the Interior was bribed ?

Anonymous said...

I don't have time to get inot this now, I know Gary from A. Samoa. (not good)
My question at first glance would be if these two (Santos and Gary) ever paid any taxes on any of their ill gains.
Fussiness gross, personal and joint filings etc.
All of this stinks of Santos connections and scams.

Anonymous said...

@ 2:34

Good point. Federal taxes ? I have to hand it this group of miscreants they actually pocketed a lot of money for having done very little if nothing at all ! Reminds me of a lawyer that got over 300k to write zoning guidelines and they never used it ! This happened under Juan Babauta's administration. If any of this money was deposited in an FDIC bank then the FBI can get involved.

Anonymous said...

Gary S came to reside here after David Cohen wanted CUC fixed like Am Samoa. He came with Abe M and Fletcher although he was simply a body in the grant, and they sayed a couple years in Aquarius (2400. mon) plus per diem. Gary once stated, after a fishing trip with Tim V. that most contracts in Micronesia were resolved on the boat. The more disturbing grant than the computer fraud or the Ambrosio boat trip was the MILLION PLUS contract from the feds through BEN FITIAL to help the NMI stop alcohol and tabacco which involved only barring those from the 2012 Liberation festival and standing around with some signs.

Anonymous said...

5:29, you are saying that this Fletcher, the interim head of CUC today, was here prior to landing the job for the water division and also Abe Malae?

Abe Malae was the one that was instrumental in fixing ASPA, I was there at that time when he came on board as I had some contracts with ASPA and also did warrantee work on the Cat Gensets for Hawthorn Cat.
I also did work for the A. Samoa Govt for PW under Willy Sword then later was talked into going on a one year contract for them to attempt to straighten out their mess.(that was an experience almost as bad as here)
Gary was a useless character at that time and was always attempting to scam and ride on other name and influence.

Anonymous said...

and this is why the the DOI have needed a strong field rep to monitor the grant awards. the last one didn't do anything. the primary focus of the new field rep will be to monitor the money the feds award. hopefully we will get a good one and the days of the free ride here in the CNMI will be over.

Anonymous said...

Most of the previous focus on an assumed relationship between OAG Criminal Chief Shelli Latrice Neal and former DPS Deputy Commissioner Ambrosio Tagabuel Ogumoro should be directed to the extent and nature of the ties, if any, between Ms. Neal and former CNMI Congresswoman Rosemond Blanco Santos. Rep. Santos served in the 16th Commonwealth Legislature (Jan 2008 to Jan 2010) with former Congresswoman Christina-Marie Elise Sablan before becoming Chief of the Criminal Division at the OAG for a brief time (Jan to June 2010) under former Attorney General Edward Taylor Buckingham, III.

Anonymous said...

...then there was Jeff Shor who sat at Wild Bills every day for the last fifteen years watching the games. When he finally "retired" it took about six months before anyone actually noticed. These old fossils operated under the radar far too long. Look closer at these DOI contracts. If the Feds had any time they would go back to Juan Babauta's days and piece together a treasure trove of corruption. How did Adam get that lucrative contract anyway ? Look closer at no bid contracts doled out to spouses of political appointees (MSC). Look closer at how the current Governor's daughter is head of the CNMI renewable energy division - has been for a few years. Out of all the Federal money that poured in to that department how much of it went to friends and familia ?

Anonymous said...

DOI had lacked oversite on several of its responsible parties. That is changing, Tony Babauta out, New field rep being hired, OMB office closing. These are all because the DOI hadn't been keeping a close eye on them and issues arose. At least they have identified the issues and shut them down. Now they need an aggressive field rep, someone with no ties to the CNMI who can come in and keep a close eye on every U.S. tax dollar that is awarded to the CNMI in the form of grants and other funding. It will be a full time job to track down where the dollars go and make sure that every penny is used exactly what is meant for. I wish this person a lot of luck, after generations of being used to getting money and no follow up changing the way the CNMI does business is going to be an uphill battle for them........