Bobby N. Harmon, CPCU, ARM
May 29, 2001
Mr. Steve Guttman, Esq.
Attorney at Law
1132 Bishop St., Ste 1404
Honolulu, HI 96813
RE: Harmon Ch. 7 Bankruptcy Case No. 99-04339 - Conflicts / Misrepresentations
Dear Mr. Guttman:
This is in further reply to your letter dated May 14, 2001. As I indicated in my letter dated May 22, 2001, I will address various unanswered issues in separate letters. This letter will address what appears to be possible attorney conflicts of interest and/or misrepresentations.
As you know, in my RICO lawsuit (CV 99 00304) in US District Court, I named the following defendants:
Federal Insurance Co., Inc.; P&C Insurance Company, Inc.; Marsh & McLennan Companies, Inc.; Pricewaterhouse, Coopers & Lybrand, LLP; Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington, A Law Corporation; Henry H. Peters, Richard S. H. Wong, Lokelani Lindsey, Gerard Jervis and Oswald Stender, Trustees of the Estate of Bernice Pauahi Bishop; John Mullen & Co., Inc.; Nathan Aipa; Louanne Kam; Rodney Park; William S. Richardson; Gilbert Tam; Peter Lowe; John & Jane Does 1 - 1000, et al.
It is important to note that I did not name Kamehameha Schools Bishop Estate in this lawsuit – only the individual Trustees.
In the Civil Docket as of July 29, 1999 for this case, I note the following attorneys are listed:
P&C Insurance Company – Jeffrey H. K. Sia
Torkildson Katz – Robert Katz; Matt A. Tsukazaki
Henry H. Peters – No representation indicated.
Richard S. H. Wong – No representation indicated.
Lokelani Lindsey – No representation indicated.
Gerard Jervis – No representation indicated.
Oswald Stender – No representation indicated.
Nathan Aipa – No representation indicated.
Louanne Kam – No representation indicated.
Rodney Park – No representation indicated.
William S. Richardson – No representation indicated.
Gilbert Tam – No representation indicated.
Peter Lowe – No representation indicated.
I next call your attention to the “Settlement, Release and Indemnity Agreement” which I signed on January 27, 2000. Others signing this Agreement included:
Kamehameha Schools, by three interim trustees (signed April 11, 2000)
P&C Insurance Company. by Rodney Park, President (signed April 13, 2000)
Nathan Aipa (signed March 21, 2000)
Louanne Kam (signed March 21, 2000)
Rodney Park (signed March 21, 2000)
William S. Richardson (signed March 29, 2000)
Gilbert Tam (signed April 14, 2000)
Peter Lowe (signed February 11, 2000)
Mary Lou Woo (signed February 1, 2000)
It is important to note that the following persons and entity named in my RICO lawsuit did NOT sign this Settlement Agreement:
Henry H. Peters
Richard S. H. Wong
Lokelani Lindsey
Gerard Jervis
Oswald Stender
Torkildson, Katz, et al.
For this Settlement Agreement, attorneys signing “Approved as to Form” included:
Arnold T. Phillips, Atty for Bobby N. Harmon in Supreme Court No. 22624 (the Agency Appeal)
Roy F. Hughes, Atty for Bobby N. Harmon and Island Insurance Co. in Civil No. 97-0512-02 (the State Lawsuit)
Bradley R. Tamm, Atty for Bobby N. Harmon in Bankruptcy Case No 99-04339 (the Harmon Bankruptcy case)
Robert Katz, Attorneys for P&C Insurance Company, in Case No. 97-0512-02 (the State Lawsuit) and Bernice P. Bishop Estate in Supreme Court No. 22624 (the Agency Appeal)
Jeffrey Sia, Attorney for P&C Insurance Co in Civil No 94-00304 (the RICO Lawsuit)
Kenneth B. Hipp, Attorney for the Kamehameha Schools Bishop Estate in Civil No. 94-00304 (the RICO Lawsuit)
Susan Tius, Esq., Attorney for the Kamehameha Schools Bishop Estate in Civil No. 99-04339 (the Harmon Bankruptcy)
It is important to note that no attorney signed this Settlement Agreement for the five ex-trustees or for Torkildson, Katz – all named defendants in my RICO lawsuit.
I then call your attention to the following signatories for the “Stipulation for Dismissal of Complaint as to All Claims and All Parties with Prejudice” filed on September 15, 2000, for Civil No. 99-00304 (the RICO lawsuit):
Arnold T. Phillips, Atty for Plaintiff Bobby N. Harmon
Jeffrey Sia, Atty for Defendant P&C Insurance Co.
Kenneth Hipp, Atty for the five individual ex-Trustees of Bishop Estate
Robert Katz, Attorney for Defendant Torkildson, Katz, Fonseca, etc.
On October 16, 2000, Roy Hughes sent me signed copies of these two documents. On October 26, 2000, I wrote to Mr. Hughes and Mr. Phillips stating, in part:
“In reviewing the ‘Settlement, Release and Indemnification Agreement’ and the ‘Stipulation for Dismissal...’ documents ... I noticed what might be a material misrepresentation in this case on the part of Robert Katz, Matt Tsukazaki, Kenneth Hipp and Christopher S. Yeh.
“... my RICO lawsuit named the ex-trustees as individuals – it did not name Kamehameha Schools. I had questioned, many times, who was representing the ex-trustees ... in the various lawsuits, and had even asked Katz and Tsukazaki for a copy of their appointment letter to verify who they were representing (which they would not provide.) In the state lawsuits, Katz and Tsukazaki indicated that they were representing the trustees and P&C Insurance Company. Later on, in the federal RICO lawsuit, Mr. Hipp and Mr. Yeh stated that they represented KSBE and the interim trustees, but not the ex-trustees. (Emphasis added.)
“... The apparent misrepresentation appears in the document, Civil No. 99-00304 (the RICO lawsuit), ‘Stipulation for Dismissal ....’ In this document, Kenneth Hipp has signed as the ‘Attorney for Defendant, HENRY H. PETERS, RICHARD S. H. WONG, LOKELANI LINDSEY, GERARD JERVIS AND OSWALD STENDER, TRUSTEES OF THE ESTATE OF BERNICE PAUAHI BISHOP.’ Robert Katz has signed this document as “Attorneys for Defendant TORKILDSON, KATZ, ...’
“If indeed these attorneys misrepresented on whose behalf they were negotiating a settlement, it would appear that these misrepresentations would be a material factor in the ultimate settlement of this case . . .”
On November 4, 2000 I sent another letter to Mr. Hughes and Mr. Phillips commenting on the “SCOPE OF RELEASE AGREEMENT” in which I stated, in part:
“The individual signing this document as the attorney for KAMEHAMEHA SCHOOLS and P&C INSURANCE COMPANY, is Jeffrey Sia. The date of signing is shown as June 7, 2000.
“My records indicate that Jeffrey Sia represented only P&C Insurance Company in this matter. If this is correct, then Mr. Sia has apparently misrepresented to the Court that he was also acting as the attorney for Kamehameha Schools. Furthermore, if Mr. Sia was not the attorney for Kamehameha Schools, then no legal representative for the estate has signed this document. . . .”
On November 4, 2000, I sent a copy of these two letters to Bradley R. Tamm.
On December 17, 2000, Mr. Tamm sent me a copy of your letter dated December 14, 2000 in response to my letter of November 4th.
On December 26, 2000, I responded to Mr. Tamm, stating in part:
“Mr. Guttman states that ‘neither the Trustee or I believe there were any misrepresentations in connection with the settlement.’ As this is a legal case, shouldn’t we all be held to a higher standard than ‘we believe’? As I said in my previous letter, there should be existing written documents that clearly state the names of the clients that each attorney is representing.
“Mr. Guttman goes on to state: ‘As you know, attorneys can represent more than one party in a lawsuit and represent other parties in different lawsuits provided they have permission of the clients and have made a disclosure of who they represent in the specific litigation.’ This is precisely my point. From the documents that I have been provided, there is a strong indication that certain attorneys in this case may NOT have had permission of the clients and may NOT have disclosed who they were representing in the specific litigation. In fact, I ‘believe’ they may have deliberately MISREPRESENTED on whose behalf they were negotiating the settlement.
“I base this belief on the signatures in the court documents of which I do have copies. To me, these documents definitely appear to be inconsistent and conflicting. Again, it should be rather simple for Mr. Guttman to provide written ‘proof’ in the form of the original engagement letters. Then, as I said in my previous letter, ‘it would indicate that my suspicions were incorrect and further action probably would not be necessary.’
“As I also stated in my previous letter:
“On the other hand, if such documents do not exist, then I believe this would be a clear indication that fraud was involved and that some action should be taken. If legal action is needed, then the question becomes who should be the party to initiate such action. Being a layman I am not sure, but I would think that it would be the Bankruptcy Trustee’s responsibility as she, presumably, is charged with making certain that ALL parties are acting in good faith and that no fraud is committed.
“If fraud has indeed been committed, then the creditors in this bankruptcy are also being defrauded and suffering monetary losses. If the Bankruptcy Trustee does not take action in a fraud situation, then it would appear that the creditors (especially Bank of America in this case) would also have cause for action. If this is correct, then it would seem that it would be more practical for all the creditors and debtors to file some sort of joint action, rather than our taking independent action. If this is true, then should we contact the creditors’ attorneys in this case, or would this be the responsibility of the Bankruptcy Trustee?
“Mr. Guttman went on to say: ‘Independent of the attorney disclosures to the Trustee, I do not understand why your client is concerned about the overlapping representation. It had no negative impact.’ To respond to this, I am not concerned about ‘overlapping’ representation. What I am concerned about is ‘conflicting’ representation – that is, where there may be strong conflicts of interests between the parties – and about deliberate misrepresentation and fraud.
“If overlapping representation was the only issue, then Mr. Guttman is probably correct that it had no negative impact. But if, indeed, there were ‘conflicting’ representation, misrepresentation, or fraud involved, would Mr. Guttman and Mary Lou Woo, the Trustee, not agree that this would have had a definite negative impact on the settlement? And, if conflicts, misrepresentation and fraud were committed, would the Trustee still oppose any action, or would she be required under trust law to take action? As I am not an attorney, these are the questions I need to ask. . . .”
On January 3, 2001, Mr. Tamm replied to my letter, to which I responded on January 10th, in part:
“In my previous letters, I simply requested some information regarding the settlement negotiations (which took place behind closed doors), in an attempt to determine if any fraudulent misrepresentations were made to the court, to the bankruptcy trustee or her attorney, to our creditors, and to us or our attorneys. As I have stated before, it certainly appears that fraud is involved here, but I need more evidence before I can make any determination of what action I need to take, if any. If it eventually turns out that I do need to seek the help of another attorney, I will need some material evidence to present my case to him.
“To make certain that you understand my current position, I am not talking about taking on Bishop Estate or the other giants involved in my complex RICO lawsuit. That case is settled. If any fraud or material errors were committed, it was by one or more of the attorneys who participated in the settlement negotiations.
“At this stage, my only request is that I be provided the following information:
1. The payment amount that each involved party contributed, or agreed to contribute, to the settlement of my RICO lawsuit;
2. A breakdown of these payment amounts between the principals and their insurance companies, if any. This breakdown should indicate the name of the insurance company, type of policy, policy number, and policy period.
3. Copies of engagement letters or similar documents from certain principals appointing their respective attorneys to defend against my RICO lawsuit. In particular, I need to see who legally represented the former Bishop Estate trustees; the interim trustees; P&C Insurance Company, their officers and directors (Henry Peters, Nathan Aipa, Louanne Kam, Rodney Park, William Richardson, Gil Tam, and Peter Lowe); and Torkildson Katz.
4. Answers to my questions about whether or not it would be the Bankruptcy Trustee’s legal responsibility to pursue any fraudulent or illegal acts that are committed during the course of bankruptcy actions; or, are the debtors and creditors required to take independent action? . . .”
On January 11, 2001, Mr. Tamm responded, in part:
1. The only information I have regarding the payors is the Trustee’s interim report, a copy of which is enclosed herewith.
2. I believe this to be information that is most probably privileged attorney work product, or attorney-client.
3. This information is most likely attorney-client privileged, and therefore not obtainable.
4. If the bankruptcy trustee believed that actionable fraud was committed, I am sure she would follow up. However, I believe the trustee has expressed her opinion that no actionable fraud has been committed.
Mr. Tamm then stated, “Given your insistence in pursuing this matter, we are left with no alternative but to file a motion to withdraw as your attorneys. You can expect to be served with such a motion in the near future.”
Mr. Tamm’s withdrawal was approved by Judge Lloyd King on February 21, 2001.
On April 2, 2001, I sent you a letter stating, in part:
“As you will recall, my basic contention is that certain attorneys which participated in the settlement discussions may have misrepresented on whose behalf they were authorized to negotiate. In particular, these attorneys included Robert Katz, Matt Tsukazaki, Kenneth Hipp, Christopher S. Yeh, and Jeffrey Sia, as detailed in my letters dated October 26. 2000, and November 4, 2000 addressed to my attorneys, Roy Hughes and Arnold T. Phillips. . . .
“The fact that I did NOT name KAMEHAMEHA SCHOOLS/BISHOP ESTATE as a defendant in the RICO lawsuit was intentional. It was not the TRUST that was responsible for the alleged racketeering and corruption. The beneficiaries of the Trust were already the victims. It would be a double injustice for the Trust to pay additional monies to ‘bail out’ the real perpetrators. . . .
“In my letter dated January 10, 2001, addressed to Bradley R. Tamm, I had asked four questions. I am not pursuing the first two questions at this time; however, I still need the following:
1. Copies of engagement letters or other legal documents from certain principals showing the appointment of their respective attorneys to defend against my RICO lawsuit. In particular, I need to see who legally represented the former Bishop Estate trustees, the interim trustees, the current trustees, P&C Insurance Company, Inc., its officers and directors, and Torkildson Katz.
2. Answers to my questions about whether or not it would be the Bankruptcy Trustee’s legal responsibility to pursue any fraudulent or illegal acts that are committed during the course of the bankruptcy case; or, are the debtors and/or creditors required to take independent action?
“If the answer to the second question is that the debtors and/or creditors are required to initiate legal action, then another question I need to ask is, “Can the attorney fees and legal costs needed to bring this action be paid from our bankruptcy estate?”
On April 5, 2001, I sent you a letter stating, in part:
“You state that independent of the settlement agreement, the Trustee is not aware of any act during the course of my bankruptcy case that constitutes fraudulent or illegal acts. Again, I do not understand this statement. Are you saying that the agreement may have been fraudulent or illegal, but that the Trustee is not aware of any OTHER fraudulent or illegal acts? My contention is that certain attorneys may have made material misrepresentations during the negotiations which I have made the Trustee aware of through these letters.
“You state that the concern I express regarding the attorney-client relationship is not an issue for my creditors, the Trustee or myself. I respectfully disagree. If an attorney makes any fraudulent statements of material importance in legal proceedings, I believe this is an issue of concern to all parties in the case.
“You state, ‘While I assume Mr. Katz, Mr. Tsukazaki, Mr. Hipp, Mr. Yeh and Mr. Sia fully advised their clients of their actions, quite frankly, only their clients have standing (the legal right to pursue) the issue. Neither you or my client have legal cause to raise any of the matters you present in your letter.’ Again, I must disagree. I have not said that these attorneys have not advised their clients of their actions. What I have stated is that I believe they may have been untruthful to me, you, the Trustee and the court. If this is correct, then wouldn’t we all have ‘standing’ to pursue the matter?
“You then state, ‘You request copies of the engagement letters between the above-named attorneys and their clients. As you probably know, certain communications between an attorney and his or her attorney are privileged, which means that third parties, such as you and me, have no right to the communication. I have to assume the written communications between the various parties to the settlement and their attorneys will be treated as subject to the privilege, including engagement letters.’
“I have to take issue with your statement that you ‘assume’ the engagement letter will be treated as privileged. This indicates to me that both you and my attorneys originally neglected to request copies of representation letters even though this was a key issue in my RICO lawsuit as well as in the settlement negotiations. Secondly, it would appear that because you ‘assume’ the other parties will treat the engagement letters as privileged, you have not made any effort to obtain copies.
“You state that in this specific case, the Trustee will not ask any of the individuals involved in the settlement to waive the privilege or take any action that will cause them to incur any further fees and costs relating to the matters set forth in my April 2 letter. As I indicated above, I believe that it is improper to ‘assume’ that the engagement letters would be treated as privileged. As for the additional costs to produce copies of these letters, I would be willing to pay the copying costs (subject to maximums of 50 pages @ $.50 per page, without my prior approval.)
“You further state, ‘You also imply that you are concerned as to who paid the settlement money. The Trustee’s bargain was for a gross amount, which was fully paid. We did not bargain for any particular party to the settlement to pay any specific amount.’ This statement itself raises very serious concerns. My belief at the time of the negotiations was that you and the Trustee were obligated to take into consideration all the allegations involving the numerous entities and complex issues in my RICO lawsuit, and to negotiate a fair settlement. Under these circumstances, I find it incomprehensible that you and the Trustee would not bargain for any particular party to pay any specific amount. Why was this not disclosed to us at the time of the settlement negotiations? Is this one of the reasons I was prohibited from sitting in on the meetings — so that this fact could be kept secret? Was the withholding of this information from my wife and myself, before we signed the Settlement Agreement, legal and proper?
“You state, ‘You have read the settlement agreement. I think it is clear that all issues relating to your involvement with your former employer are settled and you have no further right to litigate any issue that may have existed at the time of the settlement. The matters you are raising do not change the fact that you do not have a basis to reopen the litigation.’ As I have indicated in previous letters, I am not presently considering litigation against my former employer. If, however, any of the attorneys involved in the settlement discussions committed fraud and/or deliberately concealed material information, then I do believe that I may have a cause of action against those individual attorneys.
“Your letter concludes with the statement, ‘We would appreciate receiving your written acknowledgment that you understand the terms of the settlement and you won’t be further communicating in any form or forum regarding the issues relating to the settlement. For the Trustee to proceed with what is needed to fully close the estate, she needs to know that you are not going to take action that is inconsistent with the terms of the court approved settlement or in any way will involve her and/or the estate.’ Although I do not intend to take action that is inconsistent with the terms of the settlement, obviously there are still questions involving this case that remain unanswered. . . .”
Unfortunately, it appears that the majority of my questions still remain unanswered. Although you may characterize these questions as “spurious” and not deserving of an answer, to me they are very “serious”.
Perhaps it would be helpful if I rephrased some of the basic factual questions which I believe are pertinent and appropriate:
1. On what date was Marr Hipp Jones & Pepper engaged to represent Henry H. Peters, Richard S.H. Wong, Lokelani Lindsey, Gerard Jervis and Oswald Stender (the ex-trustees)? Would you please provide documentation.
2. On what date was Jeffrey Sia engaged to represent Kamehameha Schools? Would you please provide documentation.
3. In a bankruptcy case, is it the Bankruptcy Trustee’s responsibility to pursue any fraudulent acts that might have occurred during the settlement negotiations, or, are the debtors and creditors required to take independent action?
4. If I am required to take independent legal action, would the Trustee pay legal fees and costs from the estate?
While on the subject of conflicts of interest, I must add one new question. This is with regard to SUSAN TIUS, ESQ., who has signed as Attorney for the Kamehameha Schools Bishop Estate in Bankruptcy Case No. 99-04339 (the Harmon Bankruptcy). I have learned that Ms. Tius is the wife of Guido Giacometti, who was previously an executive with Kamehameha Schools Bishop Estate.
Mr. Giacometti is mentioned in my RICO lawsuit as one of the executives who co-invested with the Trust in the notorious “McKenzie Methane deal”. Consequently, this appears to be another substantial conflict of interest situation not previously disclosed.
I have also been informed that Ms. Tius has, or had, a business relationship with Trustee MARY LOU WOO. This may or may not be true, but because of Mr. Giacometti’s involvement with Bishop Estate, and his more recent involvement with the bankruptcy of Sukamto Sia, I must bring up this issue. My new question, then, is:
5. Have you or Ms. Woo ever had any business or personal relationships with Ms. Susan Tius, Mr. Guido Giacometti, Mr. Sukamto Sia, Mr. Ben Cayetano, Mr. Earl Anzai, any of the entities named in my RICO lawsuit, the interim or current trustees of Bishop Estate, or any current or former employees of Kamehameha Schools and, if so, would you please describe, in detail, the connection?
Thank you for your response.
Very truly yours,
Bobby N. Harmon
cc: Gayle Lau, Esq.
Curtis Ching, Esq.
Office of the U.S. Trustee
1132 Bishop St., Ste 602
Honolulu, HI 96813
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