BY JIM DOOLEY AND MALIA ZIMMERMAN – State officials have declined comment on allegations that two public housing residents have been collecting welfare benefits while running a lucrative  illegal lottery business out of their homes.

Federal agents and police staged Monday night raids at the apartments of two sisters living in the Palolo Valley Homes low-income housing complex, seizing evidence in an investigation of an illegal lottery operation.

Sources told Hawaii Reporter that the sisters, Khemma Pannga Xoumanivong, 63, and Bounkouam Khamphilavanh, 47, are receiving welfare benefits administered through the state Department of Human Services. Neighbors at the housing complex said one of the sisters formerly drove a BMW automobile and more recently has been parking a 2012 Mercedes Benz at her unit.

Law enforcement also found and opened a portable safe inside one of the units, Hawaii Reporter learned.

Similar raids were conducted Monday and Tuesday at retail businesses in Chinatown and the Thai House restaurant in Kaimuki.

The sisters have family ties to the restaurant, sources said.

During a six-month independent investigation of the lottery business, Hawaii Reporter used hidden

Maunakea Marketplace

cameras to record purchases of lottery tickets at several of the same businesses and at Khamphilavanh’s apartment.

FBI Special Agent Tom Simon has declined to discuss details of the case other than to say that it involves allegations of illegal gambling and that no suspects have been charged.

Patricia McManaman and Pankaj Bhanot, director and deputy director of the Department of Human Services, cited confidentiality laws in declining comment on whether Khamphilavanh and Xoumanivong are receiving public assistance benefits.

They also cautioned that automobiles are excluded from calculations of public assistance eligibility, depending on details of their ownership and work-related usage.

McManaman said DHS investigators welcome tips and complaints about possible welfare fraud and abuse.

Hakim Ouansafi, recently appointed executive director of the Hawaii Public Housing Authority, also declined to comment on questions about the sisters’ eligibility to reside in Palolo Valley Homes, which HPHA oversees.

Generally, he said, public housing residents are required to complete annual reports on their financial eligibility for housing benefits. Significant changes in personal finances must be reported within a 10-day deadline, Ouansafi said.

Louise Kim McCoy, press secretary for Mayor Peter Carlisle, said the city is aware of the law enforcement raids at Maunakea Marketplace, which is located on city-owned land leased to a private developer.

“We will be informing the lessee of the raid and asking the lessee to provide the city with their plan to address the situation,” Kim McCoy said.

See our video reports

Hawaii Reporter Undercover Investigation Exposes Illegal Chinatown Lottery

Federal investigators raid chinatown gambling ring

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Jim Dooley joined the Hawaii Reporter staff as an investigative reporter in October 2010. Before that, he has worked as a print and television reporter in Hawaii since 1973, beginning as a wire service reporter with United Press International. He joined Honolulu Advertiser in 1974, working as general assignment and City Hall reporter until 1978. In 1978, he moved to full-time investigative reporting in for The Advertiser; he joined KITV news in 1996 as investigative reporter. Jim returned to Advertiser 2001, working as investigative reporter and court reporter until 2010. Reach him at Jim@hawaiireporter.com