July 26, 2000
[Hand Delivered]
Dr. Hamilton McCubbin, CEO
Kamehameha Schools
567 South King Street, Suite 200
Honolulu, Hawaii 96813
RE: Kamehameha Schools and P&C Insurance Company, Inc. - Equity 2048
Dear Dr. McCubbin:
Thank you for the opportunity to meet with representatives of Morgan, Lewis & Bockius, LLP on this date. As I understand the major focus of your investigation to be the improper use of outside legal counsel, accounting firms and other third-parties, the following is a list of individuals and companies that, in my opinion, colluded to improperly transfer trust assets from the Kamehameha Schools and related companies:
Attorneys and Law Firms
Cades Schutte Fleming & Wright (Michael Hare)
Chee & Markham (Kevin Chee)
Devens Lo Nakano & Youth
Watanabe Ing & Kawashima (Douglas Ing and James Kawashima)
Goodsill Anderson Quinn & Stifel
Law Offices of Stanford Manuia (Stanford Manuia)
Torkildson Katz Jossem Fonseca Jaffe Moore & Heatherington
Carlsmith Ball Wichman Murray Case & Ichiki
Nathan Aipa, Louanne Kam, Lyn Anzai and Colleen Wong often directly engaged these firms to handle insurance claims without the required authorization of the insurance companies, including P&C.
Once the firms were engaged, these KSBE employees "controlled" and "managed" the claim directly with outside counsel, deliberately disregarding insurance company guidelines regarding the use and payment of these firms. Nathan Aipa, as principal executive of the Legal Group, had ultimate approval of all legal bills including P&C's.
Aipa would frequently pay these legal fees and costs from his General Counsel Account, without approval from the insurance companies. Often the amounts billed by the law firms exceeded allowable fees and costs provided in the insurance company guidelines. When, if ever, KSBE submitted the legal bills to the insurance company, many of the charges were disallowed. This practice led to the loss of millions of dollars that were never recovered from the insurance companies.
In the case of claims under P&C Insurance Company policies, Nathan Aipa, Louanne Kam or other KSBE attorneys directed that P&C pay the bills even though the outside firms flagrantly disregarded P&C's written guidelines.
These outside legal firms reported directly to in-house counsel, rather than to the insurance companies. In-house attorneys, including Aipa, often would not disclose critical information to the insurance carriers in these "sensitive" claims, resulting in further millions lost to the estate due to "non-cooperation".
This situation became particularly suspect and troublesome when these same KSBE employees handled claims in which they also had participated in the original financial transactions. They may have been potential witnesses-- even defendants-- in resultant lawsuits. These were extremely serious "conflict of interest" situations.
With P&C this became even more critical due to the obvious violation of "arms-length" principles, which potentially exposed the estate to unlimited losses beyond the actual insurance policy coverages and limits of liability.
During my years at KSBE, the following are just some cases in which KSBE and P&C funds were misused in the handling of insurance claims:
Kona Enterprises
Ted Fields
Robert Trent Jones Golf Club
McConnell vs. KSBE
William Rosehill
From all public accounts and from my personal experience, these imprudent practices have continued-- unhindered and unabated-- from the time of my departure until the present, under both the ex-trustees and the interim trustees.
Accounting Firms/Representatives
Coopers & Lybrand LLP (Dennis Tsuhako)
Price Waterhouse (Mark McConoghy)
The roles that these two firms played in questionable activities are documented in my own RICO lawsuit, Chronology, and Documents
Insurance Companies and Agent/Brokers
Marsh & McLennan (Hawaii) (Rocco Sansone, Christine Lee)
M&M Insurance Management Services (Peter Lowe)
Federal Insurance Company
The roles of these firms are also detailed in my RICO lawsuit, Chronology, and Documents.
Outside Contractors (Other)
Stay and Sons
The role of this "hazardous waste contractor" is detailed in the enclosed documents.
Kamehameha Schools' Executives and Employees
Nathan Aipa
Colleen Wong
Louanne Kam
Allen Yee
Rodney Park
Wally Chin
Yukio Takemoto
Milton Holt
Mitch Gilbert
Gilbert Ishikawa
Dennis Fern
Bruce Nakaoka
Eric Martinson
Christine Lee
It is clear that the ex-trustees did not operate alone in the alleged theft of hundreds of millions of dollars from the estate. It takes the consent and cooperation of key executives and managers to facilitate such a broad misuse-- even embezzlement-- of trust funds. The enclosed documents provide details.
P&C Insurance Company, Inc.
Henry H. Peters, Chairman, Board of Directors
Gilbert Tam, Director
William Richardson, Director, Secretary/Treasurer
Peter Lowe, Vice-President
Nathan Aipa, Asst. Secretary/Asst. Treasurer
Rodney Park, President
Louanne Kam, Officer
Marsh & McLennan, Inc.
Bank of Hawaii
Again, details are provided in the enclosed documents.
I hope this information will be helpful in your investigation. If I can be of any further assistance, please feel free to contact me.
Very truly yours,
Bobby N. Harmon, CPCU, ARM
enclosures:
Harmon vs. Trustees, et al. - RICO Case Statement
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