The Aug. 18 show was scheduled to benefit the university's cash-strapped athletic department, but now officials are trying to recoup the $200,000 paid to local promoter Bob Peyton.
Peyton tells KHON-TV the money went to Wonder's booking agent in Spain because Hawaii is often considered an international venue.
UH Athletic Director Jim Donovan says the concert was booked by an unauthorized third party and that Wonder's representatives had no knowledge of it.
"Obviously it's well known that we're having financial struggles, and we were using it to offset some of the issues we're facing from the Department. So we estimated it could do anywhere from $100K-$250K, and so that was the pull to try and do something like this," he said.
The Honolulu Star-Advertiser reports Donovan said he couldn't speculate about whether the university has been scammed.
"Everybody will be refunded and we'll move on," Donovan said.
But university officials have now put Donovan on indefinite paid administrative leave while it does an investigation of the canceled concert, reports The Honolulu Star-Advertiser.
Wonder's representatives could not immediately be reached for comment.
The 62-year-old singer does have one upcoming show on his itinerary. He will headline the Bestival, slated to take place on England's Isle of Wight in September.