AAA-Answer to Award

BOBBY N. HARMON

Louisville, Kentucky 40229

Respondent, pro se

THE ARBITRATION TRIBUNALS OF THE

AMERICAN ARBITRATION ASSOCIATION

-----------------------------

In the matter of the Arbitration between MARY LOU WOO, Trustee, Claimant, and BOBBY N. HARMON, Respondent

Case No. 74 166 00491 03 JAFA

Arbitration Dates

June 14 and 15, 2004

Arbitrator

Judith Neustadter, Esq.

_____________________________

RESPONDENT’S ANSWER TO ARBITRATORS’S INTERIM FINDINGS OF FACT, CONCLUSIONS OF LAW, AND AWARD

Respondent BOBBY N. HARMON hereby submits this ANSWER TO ARBITRATOR’S INTERIM FINDINGS OF FACT, CONCLUSIONS OF LAW, AND AWARD.

THE UNDERSIGNED RESPONDENT maintains that the following statements, among others, contained in the Arbitrator’s Findings of Fact are incomplete, not factual, or are not supported by written evidence:

Page 8: “7. Respondent and his bankruptcy estate, through Claimant as trustee, and the parties in the Underlying Litigation, among others, agreed to settle any and all claims between them, arising out of or based upon or otherwise related to any act or omission occurring on or before the effective date of the Settlement Agreement.”

Answer: The exception to this would be that this statement does NOT APPLY in cases of material FRAUD, UNDUE INTIMIDATION, OR EXTORTION being committed against the Respondent by any of the parties to the Agreement. Respondent continues to maintain that:

1. One or more of the signatures on the Agreement were forgeries.

2. Claimant, and her attorney, committed fraud due to the fact that the Settlement Agreement was incomplete at the time Claimant filed it with the Court for Judge Lloyd King’s signature and approval. In particular, the Agreement was missing Exhibit 5.

3. The Arbitrator has either erred, or wrongfully conspired with, Claimant by not requiring her to produce Exhibit 5 for these Hearings, despite the fact that Respondent’s repeated requests for this exhibit was the direct cause for many of the letters in Respondent’s so-called “letter writing campaign” which was at issue in this Arbitration. Respondent maintains his belief that the names and dates shown on Exhibit 5 would prove to the Arbitrator that the Settlement Agreement was incomplete at the time it was presented to the Court for approval and signature.

5. Arbitrator has either erred, or wrongfully conspired with, Claimant by not requiring her to produce the names of all of the Signatories to the Agreement, despite the fact that Respondent had repeatedly requested this information and has consistently maintained that one or more of the signatures on the Agreement were forgeries.

Page 10: “b. An agreement to not disclose the fact of the Settlement Agreement, or the terms of or payments under the Settlement Agreement, directly or indirectly, or in any manner whatsoever to any person or entity, with the sole permissible disclosure being the statement that ‘all matters between the parties have been satisfactorily resolved,’ unless the disclosure is made in one of the following limited circumstances: to institute a claim to enforce the Settlement Agreement; to a party’s attorneys or accountants; or, when compelled to do so by judicial order;”

Answer: Based upon the advice of his attorney, Arnold Phillips, and based upon his own research, Respondent has the understanding and belief that the terms of this Settlement Agreement would not prohibit him from reporting crimes, of which he had knowledge, to any law enforcement or regulatory authorities, or from voluntarily giving information or testimony to any of these authorities. At the time Respondent signed the Agreement, he was voluntarily providing information to Hugh Jones and Dorothy Sellers, Deputy Attorneys in the Office of the Attorney General; to Janet S. Hughes, of the Internal Revenue Service; the FBI; the U.S. Justice Department; the Insurance Commissioners of Hawaii and California, and others. Harmon was later subpoenaed by Hawaii Attorney General Margery Bronster to provide testimony in Equity 2048, the case for removal of the former Kamehameha Schools/Bishop Estate Trustees. It was because of these ongoing investigations that Harmon specifically asked his Attorney if the Settlement Agreement would prohibit him from continuing to provide such information to law enforcement and regulatory agencies. His answer was that it would not. While the Agreement states that one of the exceptions to disclosure is in order to institute a claim to enforce the Settlement Agreement; it only stands to reason that the party being claimed against would have the same right to disclose information in order to defend against the claim. The Respondents insurance carrier would, likewise, be entitled to the same disclosure privileges.

Page 10: “c. An agreement that Respondent would be solely responsible for any and all taxes imposed or generated as a result of the Settlement Agreement;”

Answer: Respondent has always understood that he would be responsible for any and all taxes imposed upon him as a result of the Settlement. Respondent, in fact, declared the full amount of the settlement proceeds he received as “Wage Income,” and paid his taxes in full based upon this wage declaration to the IRS and the Hawaii State Tax Collector. Respondent reported this amount as Wage Income based upon the advice of his then-attorney, Bradley Tamm. However, Respondent, based upon his reading of IRS tax instructions, has always believed that this clause in the Agreement did NOT require HIM to be responsible for the tax obligations of his EMPLOYER - such as Social Security and employment taxes - regardless of any “plain language” reading of the Settlement Agreement. In other words, IRS regulations trump anyone’s interpretation of a contract.

Page 11: “13. There was no language in the Settlement Agreement declaring or to the effect that any payment to be made to Respondent under the terms of the Settlement Agreement would be deemed wages.”

Answer: Respondent agrees that there was no language in the Agreement to the effect that the payment would be deemed wages; however, there is nothing in the Agreement to indicate that the payment did NOT include wages. My letter dated March 30, 2002, to Gregory Dunn, Esq., (Respondent’s Exhibit 24) quotes an excerpt from authoritative magazine article regarding the pitfalls of improperly classifying lawsuit settlement proceeds. Similar letters were sent by me to Steven Guttman, Matt Tsukazaki and Susan Tius - all intentionally without cc’s being provided to any of the other parties. None of these attorneys replied to my letter regarding this major unresolved issue. Had I received a reasonable reply to this one letter from any of the four attorneys, I am of the belief that I probably would have been agreeable to settling this, and all other, outstanding issues at that time. Instead of replying to me, however, as one might expect, my attorney, Mr. Tam, sent a fax to each of the other three attorneys stating: “TRANSMITTED HEREWITH IS A COPY A LETTER RECENTLY RECEIVED FROM MR. HARMON. APPARENTLY, HE IS SENDING NEARLY IDENTICAL LETTERS TO ALL OF US. I WOULD REQUEST THAT MR. TSUKAZAKI RELEASE TO ME, A COPY OF ANY SIMILAR LETTERS SENT TO HIM, MS. TIUS, OR BISHOP ESTATES. I BELIEVE WE SHOULD ALL COOPERATE IN EXCHANGING SUCH INFORMATION FOR OUR MUTUAL BENEFIT AND THE PRESERVATION OF OUR CARRIER’S INTERESTS.” This document provides a strong basis for one or more of my NEW claims against Trustee Mary Lou Woo, and the named attorneys and their law firms.

Page 11: “14. Shortly after reaching settlement, Respondent started writing and sending letters to other parties to the Settlement Agreement, as well as other persons and entities, including federal, State of Hawaii, and other governmental agencies.”

Answer: As stated above, Respondent was advised by his attorney, and is of the belief that he has the legal right, and moral obligation, to report known illegal activities to law enforcement and regulatory authorities, and to report racketeering, illegal political campaign contributions, breach of IRS regulations, theft of his prior employer’s assets, and other wrongdoing to these authorities and to Kamehameha School’s current administration. In the case of his letters to Kamehameha Schools’ former CEO, Dr. Hamilton McCubbin, I was INVITED by him to come to his office to give information to representatives from the law firms of Miller & Chevalier and Morgan, Lewis & Bockius, relating to their internal investigation of the alleged illegal activities of the former trustees, staff members, and outside contractors – law firms in particular. I was never told by Dr. McCubbin, or by any other party, that the information I provided was to be treated as confidential. The persons that I named in that interview as being involved in the wrongdoing at the Estate included, Nathan Aipa; Louanne Kam; Colleen Wong; Lyn Anzai; Matt Tsukazaki and Robert Katz of Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington, among others. The ONLY witness called by Claimant at the Arbitration Hearings was Louanne Kam, who was represented by Matt Tsukazaki. Besides being named as Defendants in my RICO lawsuit, I currently have outstanding claims against these two individuals for fraud, money-laundering, racketeering and other causes of action. This, I believe, would cause Louanne Kam’s testimony at these hearings to be self-serving and giving rise to further suspicion of racketeering, fraud, obstruction of justice, and other wrongful acts.

Page 11: “15. In these letters, Respondent raised two main issues:

a. Respondent’s belief that attorneys representing other parties in the Underlying Litigation had conflicts of interest, which conflicts of interest had not been properly disclosed; and,

b. Respondent’s requests that the settlement money he received be treated as wages and that he, therefore, be given tax documents flowing from that treatment.”

Answer: I continue to believe that, considering all the factual evidence available to me, I had the legal right to question whether or not the litigation involved fraud and undisclosed conflicts of interests, and to request the appropriate tax documents from my former employer to enable me to file proper tax returns. I consider these to be legitimate questions and requests which did not, in any way, violate the terms of the Settlement Agreement. Furthermore, these questions were originally presented to my attorneys, Bradley Tamm, Gregg Dunn, Roy Hughes, and Arnold Phillips. It was not until these attorneys resigned from the case, that I was forced to act on my own behalf and write directly to Steven Guttman for answers to these questions -which I was advised by Mr. Tamm that I would have the right to do. When Mr. Guttman did not provide authoritative or reasonable answers to the question regarding the treatment of the settlement as wages, I therefore believed I had the right - and no other alternative - but to write directly to my previous employer requesting the proper tax forms.

Page 12: “16. With respect to Respondent’s conflict of interest issue, Respondent was told, among other things, no parties were complaining about their legal representation, or alleging any injury therefrom, and, hence, there was no conflict of interest. With respect to Respondent’s treatment of settlement money as wages issue, Respondent was told, among other things, the money was paid as general damages, general damages are not taxable, and, hence, there was no obligation to deliver the tax documents Respondent was requesting.”

Answer: Mr. Guttman is confusing two separate issues here. The fact that the main defendants and co-conspirators in this case were not complaining about their legal representation was clearly self-serving, and was not important or material under these circumstances. The parties being injured in this case clearly are the Respondents and the creditors of the bankruptcy estate - not the multi-billion dollar estate or attorneys drawing large fees on a time-and-expense basis.

The Exhibits in this case will show that the major part of my so-called “letter-writing” campaign was an attempt to obtain assurance that the attorneys for Kamehameha Schools and P&C Insurance Company were properly retained by these entities. Since these cases were covered by insurance policies that I, myself, had obtained for the protection of officers and directors of the company, I wanted to ascertain that their appointments had been approved by those insurance companies as required under the terms and conditions of their policies. This is not so much a “conflict of interest” issue, as it is a “fraud” and “bad-faith” issue

The main “conflict of interest” issue that I had with the Trustee, was her undisclosed working relationship with Susan Tius, Esq., who I later learned is the wife of Guido Giacometti, a principle executive with Kamehameha Schools, and who was named in my RICO lawsuit as being one of the co-investors in the “McKenzie Methane deal” which was being investigated by the Attorney General’s Office, and regarding which I was providing testimony to the AG, the IRS, and the FBI.

The failure of Nathan Aipa, Colleen Wong, Louanne Kam, and Lyn Anzai to report large liability claims, such as the McKenzie Methane case, to the insurance companies, and their non-compliance with the terms and conditions of their insurance policies, were primary reasons for my “whistle-blowing” to the authorities. These improper actions by the legal staff, in collusion with favored outside attorneys, cost the estate millions of dollars in lost recoveries from their insurance policies. These improper actions were described in my RICO lawsuit, and later in the “Richard’s Report” which was commissioned by the Attorney General’s office in their investigations of the estate. Despite my repeated requests to Steven Guttman for evidence that the purported attorneys for KSBE and P&C were properly authorized to negotiate the Settlement of my RICO lawsuit, he refused to provide ANY documentation evidencing this fact, using the unacceptable and erroneous excuse that this was “attorney-client privileged” information. The reason for his evasiveness became known to me only AFTER this arbitration had commenced and Claimant submitted certain documents in her Exhibits. Keeping in mind that I signed the Agreement on January 27, 2000, and the Court approved the Order Granting Trustee’s Motion to Approve Settlement on March 24, 2000, and the Order became effective on April 24, 2000, the chronology of the following Claimant’s Exhibits provide clear evidence that the attorneys for KSBE and P&C were NOT AUTHORIZED by the insurance companies to negotiate the settlement of my RICO lawsuit:

EXHIBIT 23 - Letter dated June 2, 2000, from Steven Guttman to Arnold T. Phillips, II: “This letter is being sent in furtherance of our meeting this morning and your facsimile letter of this date. As to your $7, 500.00 fee from Mr. Harmon, I understand that you were going to accompany him to the bank and work out the logistics of your payment. As we discussed, the Trustee could only issue the check to Mr. Harmon, and not make it a jointly payable check.

“Your letter asked for a settlement statement. Mr. Harmon has requested copies of the settlement checks. As to the former, the settlement agreement has the total amount being paid and except as to the $--------- paid over to your client this morning pursuant to his exemption claim, the balance is with the Trustee, subject to appropriate court orders for distribution. As of this date, Federal Insurance has not fully paid its portion of the settlement [emphasis added]. Based on communications from Jeff Sia, my impression is that you are aware of the issue they have raised and the coordination being done by Bob Katz as to the resolution of the issue. I have confirmed with Lissa Andrews that she has received the check from her client and is authorized to issue it upon receiving the fully signed side letter. I am uncertain as to who has been requested to sign the side letter and of those individuals, who has not signed off on it. ... As to producing copies of the checks, I will take another look at the confidentiality provision. I know that until we started to receive payments, we did not know the specific payment allocation among the parties.

“Is the federal action officially still pending? ... In my last conversation with Mr. Sia, there were 3 parties who had not paid the settlement amount, including Federal Insurance and the process to resolve the Federal Insurance matter was still under discussion. I intend to place a call to Mr. Sia and ask him the same questions that are set forth in this paragraph.

“In accordance with Mr. Harmon’s request, I checked the claims roster and there was no filing by the State of Hawaii for excise taxes. The unemployment division filed a proof of claim and, as we discussed, so did the IRS....”

This letter gives clear proof that Robert Katz, Matt Tsukazaki and Jeffrey Sia were negotiating the settlement of this claim without the required pre-approval of authority from Federal Insurance Company, and that Mr. Guttman and Mr. Phillips were aware that this was the case. By-the-way, Federal Insurance was not only the primary liability insurance carrier for KSBE and P&C in the RICO case, but they were also a Defendant in the same case. Under these unusual circumstances, the combined Defendant/Insurance Company would NEVER permit other defendants in the same case to act as the claims administrator and negotiate the settlement. The insurance company, as is their policy, would have assigned an INDEPENDENT CLAIMS ADJUSTER in this case to co-ordinate the various claims-handling duties. The evidence is clear for all the Exhibits provided by Claimant. There was never an independent claims adjuster involved in this case. Otherwise, the various attorneys for KSBE and P&C would have been reporting to the independent adjuster instead of reporting to Nathan Aipa, Louanne Kam, and Colleen Wong. The independent, licensed adjuster and the outside attorneys would have been under written contract and paid directly by the insurance company - not by KSBE’s legal department. The final settlement would have had to be approved by the insurance company BEFORE the agreement was signed. There is no evidence in any of the Exhibits filed by the Claimant that there was an independent, licensed claims adjuster involved in this case, or that the insurance carrier pre-approved the Settlement. In fact, just the opposite is true. All exhibits show that the attorneys in this case were always reporting to each other - never to an independent claims adjuster. There is never the mention of a Policy Number, Claim File Number, or Claims Made Date in any correspondence originating from any of KSBE’s or P&C’s purported attorneys.

Also, Federal’s policy was only the PRIMARY LIABILITY POLICY which was applicable to this case. There was an EXCESS LIABILITY POLICY written through XL Insurance Company (affiliated with Marsh & McLennan, and, I believe, with KSBE). Both of these policies applied to both my RICO case and the State’s EQ 2048. Documents from the AG’s office indicate that XL’s policy coverage was probably voided due to the fact that Louanne Kam falsified the renewal application by not disclosing the pending claims against the Trustees.

These misrepresentations of the attorneys for KSBE and P&C are the basis for my current fraud and racketeering claims against them. The clear failure of Claimant to require proper documentation from the attorneys indicating that they were, in fact, authorized by the insurance companies to negotiate the settlement in this case, is inexcusable and is one of the major reasons I have filed the current claims against the Trustee and her attorney. As of this date, I have received no response from the insurance carriers for any of these filed claims, with the exception of ALPS, the insurance carrier for Bradley Tamm and Greg Dunn. These NEW CLAIMS, I would point out, primarily arose from the fraudulent actions of only certain attorneys in this case, and are not against the former trustees or other parties involved in my original RICO lawsuit. Also, these NEW CLAIMS were not an issue to be decided in the instant Arbitration, as stated by the Arbitrator herself.

EXHIBIT 24 - Letter dated June 29, 2000, from Joell H. Yuen, Secretary to Lissa H. Andrews, Esq., Chun & Nagatani, to Steven Guttman, which states that he is enclosing a “Faxed copy of Lissa H. Andrews’ executed Scope of Release Agreement; Faxed copy of Eugene Dominique’s executed Settlement, Release and Indemnification Agreement; and a check for $6,875.00 from Federal Insurance Company.” Note that the signature of Lissa Andrews on the Scope of Release Agreement is not dated; while the signature of an unidentified Assistant Vice President for Federal Insurance Company, is shown as June 29, 2000. This again provides clear evidence that Robert Katz, Matt Tsukazaki and Jeffrey Sia were all acting without the proper authorization of Federal Insurance Company during the time they were negotiating the settlement with the Trustee, and at the time the Settlement was approved by the Court.

With respect to the treatment of the settlement money as wages issue, I soundly dispute Mr. Guttman’s statement that “Respondent was told, among other things, the money was paid as general damages, general damages are not taxable, and hence, there was no obligation to deliver the tax documents Respondent was requesting.” I was never told by anyone, prior to my signing the documents and for many months afterward, that monies awarded as general damages were not taxable. Contrary to Mr. Guttman’s statement, my attorney Bradley Tamm told me, and all others in attendance at the settlement conference held in the judges quarters, that 100% of the settlement proceeds were to be characterized as wages. All parties at the conference agreed with this characterization. As Mr. Guttman has pointed out, parole evidence is not admissible in this case. Therefore, I would ask that he identify the exhibit, or exhibits, which show that I was informed about these issues prior to my signing the agreement. If I had, in fact, been told by anyone about these tax issues, even verbally, prior to my filing our 2000 tax returns, I would not have declared 100% of the settlement as wage income, and paid taxes on this full amount, which can be verified by copies of my tax returns.

EXHIBIT 25 - This exhibit consists of my letters dated October 26, November 2, and November 3, 2000 to my attorneys Roy Hughes and Arnold Phillips, and my letter of November 4, 2000, to Bradley Tamm, Esq. In the latter letter, I wrote:

“In October, I received copies of several Settlement Documents which were forwarded to me by Roy Hughes. In the course of reviewing these documents, I noted several serious discrepancies which I recently pointed out to my attorneys, Roy Hughes and Arnold T. Phillips. ... I also have a question which perhaps should be directed to you rather that to Mr. Hughes or Mr. Phillips. The notation on the Exhibit 5 cover sheet of the documents reads: ‘TO BE PROVIDED BY STEVEN GUTTMAN, ESQ.’ Do you know approximately when Mr. Guttman is expected to provide this exhibit?

“Also, will you be notifying Mr. Guttman of my concerns regarding possible misrepresentations in this case? I believe it may not be proper for me to do so. If I am wrong about this, please advise and I will contact him directly.”

This brief excerpt gives clear evidence that I had not received a copy of Exhibit 5 until at least eight months AFTER I had signed the Agreement. It was only AFTER I had received this incomplete copy of the Agreement that I began to question certain discrepancies, and these questions were directed to my own attorneys. It was not until my attorneys had abandoned me that I began to write directly to Steven Guttman for answers to these legitimate concerns. As Mr. Guttman’s answers to my questions were usually evasive, inaccurate, and incomplete (if he answered at all), I was eventually obliged to seek answers to my questions directly from Matt Tsukazaki, Kenneth Hipp, Jeffrey Sia and other purported attorneys for KSBE and P&C in this case; and directly from KSBE with regard to my request for the tax forms for tax-year 2000.

Instead of Kamehameha Schools issuing the requested IRS Forms W-2 and 1099-R, however, Claimant, in another wrongful act, issued a 1099-MISC tax form - which I did not request - and which I believe was improper, if not illegal.

Page 12: “The explanations given to Respondent on these issues were factually supported and legally correct.”

Answer: As stated in the preceding answer, the alleged explanations regarding the tax issues were never given to Respondent prior to his signing the Agreement, much less being “factually supported and legally correct.” In fact, I was told by my attorneys that they did not give tax advice, that it was my responsibility to seek such advice from a tax attorney, and that I would be responsible for any tax consequences from the settlement.

Page 13: “19. After Mr. Tamm’s withdrawal, Respondent continued to disagree with the explanations he was given on these issues. Respondent continued to engage in a letter writing campaign, writing and sending many letters to Claimant, her counsel, and other individuals and entities. Respondent’s letter writing campaign extended to the Trustees and Chief Executive Officer of KS, the Internal Revenue Service, the Hawaii Department of Taxation, the Insurance Commissioners in the States of California and Hawaii, the United States Department of Justice, KS’s insurance carriers and agents, and government employees in the States of New Jersey and New York. Many of Respondent’s letters extended beyond the two main points, setting forth other matter related to the Settlement Agreement and his former employment with KS and relationship with P&C.”

Answer: I continue to maintain that my letters were for a legitimate purpose, and that I have the Constitutional right to report crimes and misdeeds to law enforcement and regulatory agencies. I maintain that, under the circumstances, and my involvement as a named witness in EQ 2048, and other investigations of wrongdoing at KSBE, I had every legal right to provide information and testimony in these investigations. Under the circumstances I have described, I consider the actions of Claimant and other parties involved - especially Nathan Aipa, Colleen Wong, Louanne Kam, Matt Tsukazaki, Robert Katz, Jeffrey Sia, Susan Tius, and Kenneth Hipp - to be egregious, fraudulent, self-serving, conspiratorial, and designed to obstruct justice in my RICO case as well as in EQ 2048 and the IRS audit of KSBE and P&C.

Page 13: “20. After the Arbitration was initiated, Respondent wrote and sent letters to many people, entities, and government agencies about the Arbitration, and a the process by which the Arbitrator had been selected. Respondent also demanded, and continued to demand after disagreeing with any responses - or non-responses - he had received, that KS, and its insurance carriers, defend and indemnify him in this Arbitration....”

Answer: I have personal knowledge of an agreement with P&C Insurance Company that, as an officer, they would indemnify and hold me harmless for certain actions. I also have knowledge of the terms of professional liability insurance contracts and claims reporting requirements and procedures of insurance companies, in general, and for KSBE’s captive insurance company, in particular. The Claimant, and her attorney, do not have knowledge of the specific indemnification agreement to which I refer, and do not have the degree of experience or expertise that I possess in the insurance field, or the specific, personal knowledge I have regarding the operations of P&C Insurance Company. Yet, Mr. Guttman continues to give his unsolicited, unprofessional, unauthorized, and unsubstantiated opinions regarding the unseen (by him) indemnity contract between P&C Insurance Company and myself, and about whether or not I have the right to submit my claims to the insurance carrier. In fact, Louanne Kam, in response to one of my questions, stated during the Arbitration Hearing, that she was the person responsible for reviewing my claims letters, and for the decision NOT to report my claims to the insurance company. Since my indemnity agreement was with P&C Insurance Co., and not with KSBE, the fact that Kam, a KSBE employee, is acting in this matter as P&C’s claims adjuster, is, in itself, a violation of the IRS rule regarding the maintaining of “arms-length” between a charitable trust and its for-profit subsidiaries. This was a major issue in the IRS audit, with which I was involved, and one which could result in the loss of KSBE’s tax-exempt status. The awarding of non-bid insurance contracts and legal assignments to favored “outside firms” can also be construed as violating certain other IRS rules.

Page 14: “22. The parties to the Settlement Agreement did not agree that money paid to Respondent thereunder would be deemed wages.”

Answer: This is a false statement, for the reasons stated above, and is subject to the parole evidence rule.

Page 14: “23. No evidence has been presented in this Arbitration of any conflict of interest between any party and any attorney for which Respondent may justifiably complain.”

Answer: As described above, Respondent presented evidence of an undisclosed business relationship between Trustee Woo and KSBE’s attorney, Susan Tius, which could have adversely tilted the settlement in favor of KSBE and P&C, and against Respondent and the creditors of the Estate.

Page 14: “24. By the Settlement Agreement, Respondent released any and all known or unknown claims related to the Underlying Litigation and any and all claims based upon his employment with KS and his relationship with P&C, including claims for indemnification.”

Answer: My claims for indemnification and my tender of defense in this Arbitration case were not at issue in this Arbitration, as stated by the Arbitrator. Mr. Guttman does not represent P&C or their insurance company, and is not authorized or qualified to decide whether or not my claims have any merit.

Page 15: “25. By writing and sending letters demanding indemnification and asserting claims, Respondent violated the terms of the Settlement Agreement.”

Answer: My request for indemnification under my contract with P&C, and my assertions of claims against various parties in this case, including Trustee Woo and Mr. Guttman, is my legal right and in no way violates the terms of the Settlement Agreement. In fact, the Settlement Agreement states: “They shall not violate this AGREEMENT if they disclose information regarding this AGREEMENT in order to institute any claims to enforce this AGREEMENT ...”

Page 15: “26. By the Settlement Agreement, Respondent agreed that all information related to the settlement would be confidential, including the existence of the Settlement Agreement itself.”

Answer: Here Mr. Guttman is adding words, and his own interpretation, to the actual Agreement. The Agreement does not state, and it was not explained to me by my attorneys, that the EXISTENCE of the Settlement Agreement itself was not to be disclosed. In all my years of working with insurance claims settlements, I recall that generally only the amounts and terms of the settlement were deemed to be confidential. I do not recall ever seeing an Agreement where the fact there was an agreement was to be kept confidential. In my experience, when an insurance case is closed, it is automatically assumed that there was a Settlement Agreement signed. In fact, the insurance adjuster, as a rule, provides all parties, up-front, the name of the insurance carrier, their Policy Number, date of claim, Claims I.D. Number, effective dates of coverage, etc. It appears that Claimant was provided none of this by Torkildson Katz, and neglected to require them to provide this information – another clear indication that this claim was being handled solely by KSBE’s attorneys, without the approval or assistance of the insurance company or its independent adjuster.

Page 15: “By writing and sending letters discussing the Underlying Litigation, new claims, and his employment with KS and his relationship with P&C, Respondent disclosed information which Respondent agreed to not disclose when he agreed to keep the existence, and the terms, of the Settlement Agreement confidential, in violation of the terms of the Settlement Agreement.”

Answer: Here again, Guttman slips in his own words and interpretation that I agreed not to disclose the “existence” of the Settlement Agreement. There is nothing in the Settlement Agreement which would prevent me from submitting NEW claims, or from discussing my employment with KS and my relationship with P&C - especially if this information was provided to law enforcement or regulatory agencies as it related to my reporting of illegal activities. Likewise, the Agreement does not prohibit me from disclosing this information to an insurance company if it is information reasonably necessary to process a claim, or to an agency such as the IRS.

Page 15: “28. By posting letters and other documents on his website discussing the Underlying Litigation, new claims, and his employment with KS and his relationship with P&C, Respondent disclosed information which Respondent agreed to not disclose when he agreed to keep the existence, and the terms, of the Settlement Agreement confidential, in violation of the terms of the Settlement Agreement.”

Answer: Again Mr. Guttman is inserting words and his interpretation into the Agreement. There is nothing in the Agreement which states that I cannot submit NEW claims, or that these NEW claims are subject to the confidentiality provisions of the Settlement Agreement, which applies only to the SETTLED claims. I know of no laws which require that NEW claims be kept confidential and hidden from the public. Also, practically all of the information published on my website consists of quotes from newspapers and other public information. The confidentiality terms of the Agreement do not prevent me from posting information that is already public.

Page 16: Paragraphs 29, 30, and 31 merely repeat Mr. Guttman’s unreasonable contentions that I do not have the rights to free speech, or to file claims, or to request information pertinent to these claims, such the name of the insurance carrier, claim number, policy number, policy period, etc., and that I be contacted by the licensed claims adjuster in order that I can present further information directly, and confidentially, to the authorized, and licensed claims representative for the insurance company. Just because Mr. Guttman evidently is not familiar with the insurance claims process, does not mean that I have to make the same mistakes in the pursuit of these NEW claims that he made in the Settlement of my RICO lawsuit. Just because certain individuals may wish not to receive complaints or claims, does not mean that I am conducting an illegal or abusive “letter-writing” campaign, or that the terms of the Settlement Agreement apply to these NEW claims. And just because Louanne Kam or Matt Tsukuzaki choose not to report my claims to the insurance carrier, does not mean that I am obliged to stop sending follow-up letters asking for a response. It does mean, however, that Ms. Kam is violating “arms-length” regulations of the IRS, as well as exposing KSBE and P&C to uninsured losses due to the fact that she is not reporting these claims to their insurance carrier. Furthermore, her actions amount to the unauthorized adjustment of an insurance claim by an unlicensed claims adjuster. Also, as specifically stated by the Arbitrator during our conferences and at the Hearing, the matter of these insurance claims was NOT AT ISSUE in these proceedings.

Page 16: “32. Respondent’s violations of the Settlement Agreement have injured Claimant and the bankruptcy estate. Respondent’s actions have prevented Claimant from closing the bankruptcy estate. The bankruptcy estate has been forced to expend substantial resources to address issues arising from Respondent’s failure to stop writing letters in violation of the Settlement Agreement, to the detriment of the estate’s creditors.”

Answer: Respondent continues to maintain that he did not breach the Settlement Agreement, for the reasons explained above. Furthermore, it is due to Claimant’s own errors and omissions, and her relentless efforts to cover-up the misdeeds and wrongdoing that Respondent was legitimately testifying about in Equity 2048, to IRS auditors, and other law enforcement and regulatory authorities, that is the true cause of the long, and costly, delays in the final settlement of the estate. When Claimant, and her attorney, were unable to provide clear and reasonable answers to my plain and simple requests for information, due to the fact that this information would be incriminating to Claimant and other parties, or simply did not exist, they either refused to provide the information, gave vague or incomplete answers, or simply quit responding to my inquiries altogether. The result of this evasiveness and non-response was, naturally, the need for me to write yet another follow-up in a desperate attempt to get the needed information. The arbitration itself was unnecessary from the beginning and could have been avoided altogether by the Trustee providing such simple documents as Attorney of Record letters; complete copies of the signed settlement agreement (including Exhibit 5); the identities of the KS Trustees who signed the Agreement, and verification that these signatures were authentic signatures of these individuals. Even after the Arbitration was demanded by the Claimant, the process in selecting a neutral arbitrator was unnecessarily complicated and drawn-out due to the Claimant’s unreasonable insistence that Judith Neustadter had no undisclosed conflicts-of-interests, which I have given factual evidence to dispute in countless letters. (And there is more evidence to come.) Had we simply been able to agree upon a neutral arbitrator from the beginning, we would have saved over a year in time, and countless dollars in expenses. Time and time again, I have stated that I would approve Daniel Bent as a neutral arbitrator. Time and time again, Claimant and her attorney rejected this offer, insisting that, in their opinion, Ms. Neustadter had no conflicts. To make matters worse, and more expensive, Claimant insisted on having the hearings held in Hawaii, thousands of miles from my home. When I later suggested that these hearing be conducted by a simple telephone conference, Claimant first insisted that it was necessary for me to travel to Honolulu, then later consented to a video conference which was even more expensive to arrange. I consider these delays, and the unnecessary expenses incurred to conduct the video hearings, to be further evidence of harassment and intimidation in a continuing effort to silence my testimony, and obstruct justice, in the previously described court actions as well as to discourage my pursuing NEW claims against Trustee Woo, Guttman, Tsukazaki, Hipp, Kam, Sia, Wong, and others. I also consider these delaying tactics to be self-serving on the part of Trustee Woo and Mr. Guttman, and largely motivated by the greed of these individuals and their desire to run up their huge and outrageous fees that I cannot possibly afford to pay in my lifetime.

CONCLUSIONS OF LAW

As I have been wrongly denied the services of an attorney by Louanne Kam and others, I do not have the technical knowledge or resources to comment to any extent on these Conclusions of Law. I do strongly disagree, however, with the following statements for the various reasons previously stated:

Page 20: “12. Based on the express provision of the Settlement Agreement, the payment of the settlement proceeds under the Settlement Agreement did not constitute the payment of wages.”

Page 21: “14. No conflict of interest existed or presently exists between any of the parties to the Settlement Agreement and their counsel.”

Page 21: “19. Respondent’s letters assert demands and raise claims released by the terms of the Settlement Agreement.

Page 21: “20. Respondent’s letters and website postings disclose information to third parties which information is protected by the confidentiality agreement in the Settlement Agreement.”

Answer: This statement is non-specific and should not be allowed. Also, it is inaccurate for the reasons stated above.

Page 22: Paragraphs 21, 22 and 23.

Answer: Respondent disputes the statements in these paragraphs as being non-specific opinions, and for the reasons stated above.

Pages 22, 23, & 24: Paragraph 24, which begins, “Respondent is forever barred and prohibited from disclosing, discussing, disseminating, or communicating, the following “Protected Subject Matters,” and all of the sub-paragraphs.

Answer: Respondent disputes the statements in these paragraphs as being an overly-broad interpretation of the issues and the terms of the Settlement Agreement; for going far beyond the scope and limits of the Agreement and this Arbitration; and for the reasons stated above. I especially disagree with sub-paragraph h, which states, “Any of the claims, issues, and allegations and/or the basis for the claims, issues, and allegations which relate in any way to Respondent’s claims, or notices of claim, for a right to defense and indemnification from KS or its insurance carrier for any cost, expense, or damages incurred or awarded against Respondent in this arbitration.” As I have said previously, these NEW claims were not at issue in this arbitration – as stated by the Arbitrator herself. Neither Trustee Woo nor her attorney, are licensed claims adjusters with the authority from their respective insurance companies to adjust any manner of claims – especially claims against themselves. Certainly, they do not legally represent the other parties to the Settlement Agreement, or their insurance carriers. This is yet another excellent example of Claimant going far out-of-bounds in her attempts to protect herself and other third parties involved in this case – including Susan Tius and KSBE, for the reasons stated previously.

AWARD

Pages 25, 26, 27: All paragraphs.

Answer: Respondent objects to all awards due to all the reasons stated above. In particular, I make objection to the fact that the term “Protected Subject Matter” is vague, overly broad, goes beyond the scope of the terms of the Settlement Agreement and this Arbitration, and violates Respondent’s First Amendment Rights. For example, Claimant demands that “Respondent shall immediately remove all material relating in any way to a Protected Subject Matter from his website www.the-catbird-seat.net, and shall immediately terminate the website sub-directory identified as www.the-catbird-seat.net/HarmonArbitration.htm . I have previously advised Claimant that I would be willing to redact any portions of any documents on the website that were perceived to be in violation of the Settlement Agreement, but that she would need to more clearly define which sections of these documents would need to be so-redacted. This web-site consists of many thousands of pages. To the best of my knowledge and belief, I have already redacted, on my own volition, all the pages and sections which I believe may be perceived to be in violation of the Agreement. However, I believe that Claimant should also be required to be more specific and identify which sections SHE believes may violate the Agreement. Claimant has not responded to this offer. Due to the overly-broad definition of the term “Protected Subject Matter”, Respondent believes that this term needs to be redefined in more specific terms, and in terms that do not restrict his First Amendment Rights, or extend into unacceptable areas such as the reporting of new claims, as explained above. I also believe that the Awards are excessively high – $500 per day, for example, “for each calendar day, commencing on and after June 30, 2004, on which he has not: (a) removed all material from and terminated, the website sub-director identifies as www.the-catbird-seat.net/HarmonArbitration.htm; or (2) expunged any and all material presently accessible at the www.the-catbird-seat.net website or any other website, which references or mentions any claim, issue, or allegation of a Protected Subject Matter...” This per day amount may be affordable to a lawyer who makes $250 per HOUR, but is certainly not affordable to a person who is receiving close to this amount per MONTH from his retirement plan with Kamehameha Schools. And I question whether or not the punishment fits the crime (of publishing public information) in this case. As previously stated, I have already made a good faith effort to redact all the portions of documents that I believe may be perceived as violating the Confidentiality provisions of the Settlement Agreement. As a further demonstration of good faith, I will completely and unconditionally remove the web page designated as www.the-catbird-seat.net/HarmonArbitration.htm, even though I believe this requirement violates my First Amendment Rights, and although I still believe that the entire definition of “Protected Subject Matter” is overly-broad and needs to be redefined as stated above.

REGARDING THE DECLARATION OF STEVEN GUTTMAN IN SUPPORT OF CLAIMANT’S REQUEST FOR ATTORNEYS’ FEES AND COSTS

Respondent believes the awards for Attorney’s Fees and Costs are excessive and totally unjustified and were generated for the illegal purposes of extortion and obstruction of justice, through intimidation and threats of financial ruin. Respondent has repeatedly offered to settle these disputes through mediation, or preferably though simple negotiation, but Claimant has declined these simpler, less costly means of dispute resolution. She and Guttman have both apparently not reported these claims to their insurance companies, which could have expedited settlement and relieved them of having to incur the expenses of this arbitration. Many of the charges shown in Guttman’s Declaration were generated simply because I was questioning the neutrality of the AAA-chosen Arbitrator. If this is the way arbitration is designed to work, there is not a person of average means in America that could afford to defend himself in any case against persons of wealth and influence. Remember, the Trustee is the Complainant in this case, and my major “crime” was revealing to the authorities the activities occurring at the Estate. In theory, a citizen should be rewarded for being honest and doing the right thing. Instead, I was fired, denied unemployment benefits, driven into bankruptcy, lost my home and business, and have been continually harassed for the past eight years. Under the circumstances, it might be considered natural for me be a little distrustful of those attorneys in power and control at the mighty estate – especially when those individuals are the same persons whom I “blew the whistle” on that led to my termination. It is obvious to anyone who wishes to see, that these individuals would never be permitted by an insurance company to handle insurance claims against themselves and their co-workers. It violates every known Risk Management and Claims Adjustment principle. Yet Trustee Woo, despite her assurances early on that she would make diligent efforts to pursue my claims of fraud and racketeering against KSBE, breached her duties and failed to pursue my RICO lawsuit in a reasonable manner – largely due, I suspect, to her close personal relationship with Susan Tius.

There are simply too many questions and appearances of fraud and collusion and excesses in Steven Guttman’s lengthy list of charges, for me to comment on in any detail. Therefore I will limit my comments to some of the more egregious and unconscionable charges:

04/09/03 - a “status conference” shown with the participants being Atty Tius, and Atty. Tsukazaki, re Mediation Status. The charge being billed to ME for this little conspiracy get-together is $92.00. I hope everyone enjoyed the coffee and donuts.

05/02/03 - Charge for faxing Steven Guttman’s letter to J. Schuck, AAA, with copies to me and Trustee Woo: $18.00. On the same date there is shown a charge for reviewing a fax from me to my previous attorney, Roy Hughes; reviewing and drafting AAA letter re a Conf Call: $138.00.

05/06/03 - Tel call to Schuck, AAA, and to Atty Hughes re arbitration; letter to me regarding my letter dated 3/3/3: $184.00. Note that Atty Hughes, and Island Insurance Co. denied my tender of defense in this case, so that Mr. Hughes was not even my attorney or a participant in this arbitration. Further evidence of conspiracy and unjustified charge?

06/13/03 - Rvw let from AAA & prep ltr to Atty Tsukazaki re same: $18.

06/13/03 - Rvw AAA letter, re Batchelder Appointment: $23.

06/19/03 - Tel call from MT (Matt Tsukazaki?) Rep Arbitration Appt: $23. (Question: Why should I be charged for Guttman’s consulting with Tsukazaki regarding the appointment of Batchelder as the arbitrator - especially when Tsukazaki was not a participant in the arbitration?)

06/19/03 - Draft ltr to Schermanhorn at AAA re: Arbitration Appt: $184.

06/20/03 - Draft ltr to Atty MT & Trustee re AAA ltr: $18.

06/20/03 - Review ltr from AAA, re Batchelder: $23.

06/20/03 - Review/revise ltr to Schermanhorn re Batchelder: $92.

07/18/03 - Rvw BH Ltr to IRS re alleged code violations: $18.

07/18/03 - Rvw BNH ltr to IRS; review AAA ltr re Arbitration Appt; E-mail the MT re BNH and AAA ltrs.

07/21/03 - E-mail w/ Atty MT re arbitration selection: $69.

07/24/03 - Ltrs to trustee and atty MT re AAA Van Etten Ltrs: $27.

07/25/03 - Rvw ltr from BH re Object to Van Etten: $9.

07/25/03 - Ltrs to Trustee & Atty MT re BH ltr: $27.

07/28/03 - Rvw ltr from B. Harmon to P&C Ins: $9.

07/28/03 - Ltrs to Trustee and Atty MT re BH letter: $27.

07/31/03 - E-mail to WKI re Arbitration selection; Tel call with Atty MT re Van Etten.

08/04/03 - Rvw Ltr from AAA re appt Neustadter: $9

08/04/03 - Ltrs to Trustee & Atty MT re Neustader appt: $18.

08/05/03 - Rvw Ltr from B Harmon re Neustadter: $9.

08/05/03 - Ltrs to Trustee & Atty MT re BH ltr re Neustadter: $18.

09/26/03 - E-mail to Atty Tamm re Witness List: $46.

10/14/03 - Review BNH ltr to Robert Tameler & Atty Liability Protection Society: $23.

10/15/03 - Review Ltr from BNH re Jerrold Chun: $23.

10/16/03 - Draft Ltr to AAA Re BNH Ltr to Arbitrator: $276.

1016/03 - TC from Atty Peter Olsen (Cades Schutte), re Tamm Representation: $69.

10/18/03 - Draft/revise ltr to JWS re BNH ltrs: $437.

10/22/03 - Review Ltr from BNH re Arbitrator; web page review coordination; TC from Atty Tius re: Arbitrator: $207.

10/28/03 - TC from Atty MAT re arbitration: $69.

11/15/03 - Review John Mullen Fax re BNH corresp: $115.

11/16/03 - Draft ltr to AAA re new arbitration date: $184.

11/19/03 - Memo to SG Re Mullen Request for BH to stop writing: $18.

11/20/03 - CW (Colleen Wong?) LK (Louanne Kam?) & Memo to RK (Robert Kuroda?) Re scenario and Mullen Ltr: $36.

11/20/03 - Draft ltr to Mullen re BH letters: $18.

11/20/03 - CW (Colleen Wong?), RK (Robt Kuroda?) Re Mullen Situation: $9.

11/20/03 - Review fax from John Mullen & outline response: $57.50

12/12/03 - Rvw ltr re alleged wrongdoing & memo to SG: $18.

12/15/03 - Rvw BNH 12 page ltr; TC and LTR to JWS re BNH corresp: $218.

12/17/03 - Review AAA fax re ltrs being sent to Arbitrator

12/17/03 - TC w/JWS AAA re BNH ltrs; review JWS ltrs re BNH ltrs: $92.

12/22/03 - Review various BNH ltrs; draft ltr to JWS re Atty-Client Privilege Names: $253.

01/12/04 - Review BNH ltr re Prudential arbitration: $23.

01/22/04 - Rvw ltr from BH to AG’s office: $9.

01/22/04 - Review BNH ltr to Atty Jones re Trustees; exhib for trial: $103.

01/26/04 - TC from BEN MATSUBARA re witness testimony: $9.

01/27/04 - Rvw BH ltr to Aon: $9.

01/30/04 - Ltr to Atty Tsukazaki re BH Ins Ltr: $18

05/03/04 - TC from Rene Stone at Zurich re John Mullen: $23.

05/25/04 - Conf Call w/ arbitrator, BNH and AAA; TC w/atty MT re conf call/ witnesses: $184.

05/26/04 - Rev/review MTN/Mem/ re personal appearance requirement; review BNH ltr to Atty Tsukazaki re P&C Ins: $115.

05/28/04 - Review and produce hard-copies of Documents from the “CATBIRD SEAT” Website: $149.50

05/28/04 - CW SG re signators & draft ltr to BH re same: $36.

05/28/04 - Memo to Atty MT re Arbitrator ruling: $18

05/28/04 - TC from Atty MT re testimony/ etc; revise/review ltr to BHN re Settlement Agreement signatures: $138.

06/11/04 - TC from AAA re BH ltr to Book Club; ltr to AAA re same: $9.

06/11/04 - Revise trustee testimony; e-mail and tc to Trustee; review Arbitrator’s decision; review BNH ltr re NA Kumu Book Advisory Group; TC to Farris re BNH ltr to Book Advisory Group: $253.

06/12/04 - Review BNH ltr to book advisory group; review Harmon’s Supple pre-hng stmt: prepare for Arbitration; Review ltr to AAA re Harmon Book Advisory ltr: $782.

06/14/04 - Trial prep; tc w/Peter Olson re Tamm Testimony; Mtg w/trustee; arbitration: $2,300.

06/15/04 - Review E-mails from trustee and atty Tsukazaki; prepare final agreement, etc: $18.

06/18/04 - Memos to Attys MT & ST (Susan Tius?)re order & BH ltr: $18.

06/19/04 - Rvw Atty MT memo & no contact list: $9.

06/22/04 - TC & e-mail from Atty MT re case status/BNH communications: $69.

07/22/04 - E-mail w/MT re Harmon website: $69.

07/29/04 - RES/RVW Analyze website violations & draft ltr to ARB: $234.

These represent only a small sampling of the pages and pages of legal bills totaling over $57,000.00, much of which appears to have been developed through letters, phone calls, e-mails and conferences with KSBE personnel and outside attorneys - including Colleen Wong, Louanne Kam, Matt Tsukazaki, and Susan Tius. It even includes one telephone call entry with the current KSBE Master, Benjamin Matsubara.

To any reasonable person, this large number of contacts with the party against whom Trustee Woo stated she would diligently pursue all claims, is clearly improper and excessive, and gives strong evidence of the conflicts of interests that I have suspected, and inquired about, for these many months.

This evidence, ALONE, should be more than sufficient for the Arbitrator to declare that the Trustee, and her attorney, have conducted these entire proceedings in an improper and fraudulent manner, and in extreme bad faith.

Therefore, Respondent hereby requests that the Arbitrator declare that ALL AWARDS in favor of the Claimant and against the Respondent be rescinded for just cause, and that Respondent be awarded his reasonable costs and expenses related to this Arbitration.

DATED: Louisville, Kentucky, September 10, 2004.

_________________________

BOBBY N. HARMON

pro se