Dirty Money, Dirty Politics and Bishop Estate

Stealing the Legacy of an Hawaiian Princess


 

Sightings from The Catbird Seat

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PART I - The Stealing Begins....

PRINCESS BERNICE PAUAHI was born on December 19, 1831, the last in the royal lineage of Kamehameha the Great, conqueror and first king of the Hawaiian Islands.

As was the custom for Hawaiian royalty, it had been planned from childhood that Pauahi would marry her hanai brother, Lot Kamehameha. She doted upon her brother but declined to take him as a husband. Instead, the attractive young Pauahi met and fell in love with a commoner, a foreigner from Sandy Hill, New York -- Charles Reed Bishop.

The love between Princess Pauahi and the foreigner faced great opposition from her family, other ali'i and members of the community. But the young princess was intelligent and independent, and in June 1850, at age 18, she married the young "haole" businessman.

The Princess and her husband eventually won over many of their critics and their relationship came to be admired by Hawaiians and westerners alike, and she eventually reconciled with her family and the other ali'i.

Pauahi grew and developed as a young matron and counselor to her people. At the age of 25, she inherited over 16,000 acres of land from her parents. Other inheritances followed as other members of the royal family passed away. The greatest of the inheritances came from Princess Ruth, her first cousin. Ruth had declared Pauahi sole heir to her entire estate. The amount of land was mind-boggling: about 353,000 acres.

Ruth's gift to Pauahi made her the largest landowner and the richest woman in the Kingdom. At the same time, she presented Pauahi with the greatest challenge and responsibility of her life. Pauahi now owned a giant estate, and she would have to decide how it would be used.

The Bishops had a multitude of blessings, except one. They never had children of their own. Possibly from this came Pauahi's inspiration to use her legacy to establish the Kamehameha Schools for all the children of Hawaii.

On Thursday, October 16, 1884, the princess passed away. Charles was by her side.

The newspapers reported that a heavy downpour of rains reached a crescendo just about the time Pauahi died. In ancient days, the Hawaiians said when rain fell at a the time of a person's death or funeral, "Kulu ka waimaka, uwe `opua." (The tears fall; the clouds weep.), for the gods mingle their tears of affection with those who weep in sympathy and aloha.

Of all the eulogies that were held upon her death, perhaps that of Reverend J.A. Cruzan was the most moving and prophetic:

"The great loss which Hawaii sustained last Thursday was not that the last of this great line of High Chiefs died, nor that the possessor of great wealth died, but that a true woman died...True in all times and among all races...

That Bernice Pauahi Bishop was such a true woman her life bears witness....Refusing a crown, she so lived that she was crowned. Refusing to rule her people, she did what was better, she served them, and in no way so grandly as by her example....

'The world can do without its masters better than it can without its servants.'...For fifty-three years her royal life here has borne unswerving witness in favor of virtue and purity...

She hated that which was impure with an intense hatred. She had only loathing and contempt for that which was coarse and low. Place, power, wealth, nor influence could win her favor or regard if it was joined with degraded character. And her womanly example was all the more potent for good because it was so quiet...

The things that are most noisy are not the most powerful. Nay, things that make no noise, and make no pretension, may be really the most powerful. This quiet, modest, true womanly life has been for years, and still is, and will be for years to come, a mighty power for good here in Hawaii.

Only the God who loveth purity and righteousness can measure this one true woman's influence for good upon her people..."

- Source: PAUAHI: THE KAMEHAMEHA LEGACY,
by George Hu`eu Sanford Kanahele

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It was from Pauahi's legacy that vast amounts of wealth eventually flowed, until the Bishop Estate became the wealthiest charitable organization in the United States. It is her estate that has been systematically looted over the last decades by persons "with degraded character" that the princess undoubtably would have viewed with only "loathing and contempt."

In 1997, responding to a surging tsunami of criticism from the faculty, students and alumni of the Kamehameha Schools, and from concerned citizens of all ethnic backgrounds in Hawaii, Governor Ben Cayetano took an unprecedented action and directed the state's attorney general, Margery Bronster, to investigate the practices of the Estate's five highly paid trustees.

But the attorney general was not the only one investigating the estate. The IRS had already been auditing the records of the estate for several months -- empowered by the "interim sanctions" regulations which had been passed by Congress in early 1996. At the same time, the court-appointed "master" who is charged by the probate court with oversight of the operations of the estate, was digging deeper into the activities of the trustees than a long line of previous masters.

Suddenly the trustee's were, for the first time in the schools' 115-year history, under siege from all sides.

The full and sordid story of the looting of the estate is too long to relate here. To give you an idea of the magnitude of the financial losses, however, the Master's Report on the 109th Annual Account of the Trustees revealed that the Estate's investment portfolio suffered substantial losses in 1994, the year under review. The records relating to the various investments showed that combined losses and loss reserves of $264,090,257 were recognized in fiscal year 1994 alone.

The short story is that, after long and hard-fought court battles, the five former trustees were forced to resign, and five interim trustees were selected to take their places until a new trustee selection process was created and implemented. The removal of the five former trustees was one of the non-negotiable conditions of the IRS to prevent the loss of the estate's tax-exempt status.

The long story can be found herein and in the volumes of news articles and court proceedings in the on-line archives of the Honolulu Star-Bulletin.

The removal of the incumbent trustees was good news, hailed by many as the beginning of the healing process....

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March 12, 2000

Bishop Estate’s first trustees
played key role in overthrow

By Bob Dye, Honolulu Advertiser

They were American annexationists, these first five trustees of the estate of Bernice Pauahi Bishop.

Within three years of their appointment, they helped strip King Kalakaua of his power. When, upon his death in 1891, Pauahi’s hanai sister Lili‘uokalani succeeded to the throne, they joined with others to depose her, establish a provisional government and a so-called republic.

The annexationists realized their ultimate political goal four years later when the Hawaiian Islands became a U.S. territory. Their political agenda had a profound effect on Bishop Estate and the Kamehameha Schools.

Princess Bernice Pauahi Bishop was the last of the Kamehameha dynastic line. Upon Pauahi’s death, in the 11th year of Kalakaua’s reign, the royal lands of the Kamehamehas — one-ninth of all land in Hawaii — passed to the control of five esteemed haoles — the trustees.

None had a drop of Hawaiian blood.

Those lands became a base of wealth for two great estates — those of Bishop and Damon.

The trustees were:

Charles Reed Bishop, president, founder of Bishop Bank (now First Hawaiian Bank) and Pauahi’s husband. Born in Glenn Falls, N.Y., in 1822, he came to Hawaii in 1846 and accepted a clerkship in the U.S. Consulate. He became the Collector General of Customs in 1849, and a year later, he married the princess. She was 16 and he was 26. Her missionary teachers at the Royal School — Amos Starr and Juliette Montague Cooke — encouraged the courtship.

“I’m decidedly in favor of annexation, not only because I’m an American, proud of the ‘stars and stripes’ and expect to gain something by such a move, but because I’m an Hawaiian too, and believe that while such a change might bring its evils, it would be the best thing for the great majority of the population both native and foreign,” he wrote in 1853.

In 1873, as Lunalilo’s minister of foreign affairs, he urged the cession of Pearl Harbor to the United States for a naval base. In addition to being a trustee of the Punahou School, he headed the public board of education. He served as president of the Legislative Assembly, and was a member of the House of Nobles.

The Rev. Charles McEwen Hyde, vice-president. Hyde was born in New York City on June 8, 1832. His father, an attorney, was treasurer and general agent of the American Bible Society, and his uncle William was a board member of American Board of Commissioners of Foreign Missions.

A graduate of Princeton Theological Seminary and the holder of a doctor of divinity degree from Williams College, Hyde came to Hawaii in 1877 to be secretary of the Hawaiian Evangelical Association. He reorganized a Honolulu theological school as the North Pacific Missionary Institute, and served as principal. He was named a trustee of Punahou School in 1877.

Supporters called Hyde a “typical American, combining all the energy and persistency of the New Englander with the refinement and culture of the Christian Gentleman.”

Charles Montague Cooke, secretary. A son of missionary parents and teachers of Princess Pauahi, Amos Starr and Juliette Montague Cooke, he was born in Honolulu on May 16,1849.

He began his business career with Castle & Cooke, a firm founded by his father.

At the time of his appointment, he was a partner in Lewers & Cooke. He married missionary daughter Anna Charlotte Rice in 1874. They had six children. He became a trustee of Punahou School in 1880. He was a charter member of the Hawaii Society of the Sons of the American Revolution.

Samuel Mills Damon, treasurer of the board. A son of missionary parents, the Rev. Samuel Chenery Damon and Julia Mills Damon, he was born in Honolulu on March 3, 1845. A partner of Charles Reed Bishop in the Bishop Bank after Sept. 1, 1881, he inherited from Bernice Pauahi Bishop the ahupua‘a of Moanalua. That bequest contained about 7,000 acres, and stretched from the Koolau Range to Keehi Lagoon. He coordinated her funeral.

Earlier he had coordinated the funeral of Princess Ruth. He married missionary daughter Harriet Melinda Baldwin. Her brother, Henry P. Baldwin, was a founder of Alexander & Baldwin. At the time of appointment Damon was a member of Kalakaua’s privy council. With Charles R. Bishop, he was an executor of Princess Pauahi’s will.

William Owen Smith, trustee. A son of missionary parents, Dr. James William and Melicent Knapp Smith, he was born at Koloa, Kauai, in 1848. He became the sheriff of Kauai in 1870, and of Maui in 1872. In 1875, he was admitted to the practice of law. The following year he married Irish-born Abbey Hobron, the daughter of Capt. T.H. Hobron, founder of the 3,000 acre Grove Ranch on Maui. They had five children. He was named a trustee of Punahou School and an editor of Planters’ Monthly in 1882.

When appointed to the Bishop Estate board, he was a trustee of Lunalilo Estate. A member of the Hawaiian legislature, he was politically allied with Sanford Ballard Dole, a childhood friend. Smith, who had extensive trust experience, resigned as trustee on Oct. 20, 1886, and was replaced a day later by Joseph Oliver Carter, another trust expert.

Schooling Hawaiians

The trustees met at least once a month in the board room of Bishop & Co., but usually more often than that. Hyde’s biographer reported that trustee commissions “hovered”‘ about $1,000 a year during the first years.

But apparently individual commissions varied. Cooke returned every penny he received from his trusteeship in the first five years — a total of $989.79 — and pledged all future commissions to establish a library at the school.

The Rev. Hyde recommended a site for the Boys’ School, and enunciated “the objective, aims, method, time, and extent of the school.” Called The Prospectus of the Kamehameha Schools, the report was unanimously adopted. After Princess Pauahi’s will called for the establishment of a school to educate Hawaiian children, the document became the principal guideline for the development and management of the schools.

Hyde became the “lead trustee” for the schools and advocated appointing the Rev. William Brewster Oleson as principal. Oleson began his duties on July 1, 1886, and soon traveled to the United States to visit similar schools and recruit faculty.

Planning an overthrow

Calling King Kalakaua “a bully and a coward,” Hyde advocated his overthrow.

He wrote to the Rev. Judson Smith, head of the American Board of Commissioners of Foreign Missions, on Nov. 20, 1886: “I have learned facts about the King’s measures and objects, which convince me that with the cunning of the savage and the tirelessness of revengeful animosity, he is seeking the overthrow of Christian institutions and the utter demoralization of society. His aim is to restore heathenism with its absolute power of the chief and licentious orgies of wasteful indulgence ... we should have a revolution.

A Jan. 13, 1887, correspondence from Hyde to Smith states: “By the Constitution, he is not responsible to anybody for anything he chooses to do. He can steal, murder, defraud. He cannot be called to account. But if twelve of the leading men of this community should agree upon a line of policy that they believe the King ought to pursue, and publicly demands, he would have to succumb. That is my idea in reply to your question what means there are of checking this irresistible rush to disgrace and ruin.

“But there are no such twelve men to be found in this community … But if circumstances should put me in a position in which I should have to defend the interests of Christ’s Kingdom, as against the King, I should have neither fear nor hesitancy in doing so.”

Months earlier, the king had confided to an aide that he feared he might be overthrown. Members of his staff spent the night guarding him for several weeks after as he slept in the palace.

It was confirmed later that a secret organization, called the Hawaiian League, had been formed about the first of the year, consisting of some of the most powerful businessmen and their pastors. All were white, male and mostly Protestant.

Hyde refused to join the Hawaiian League, “objecting to the secret, underhand plottings involved in such a style of procedure.” But his co-trustee Cooke was among the first to sign up. Kamehameha School principal Oleson was on its executive committee and vice principal Henry S. Townsend, was a member.

Members pledged to keep the League secret and to “protect the white community” of the kingdom “against any arbitrary or oppressive action of the government.”

The League held its first meeting at the home of Sanford B. Dole. By June 30, 1887, it had 405 members. Meetings usually took place in the evening, and in different parts of the city, to frustrate police efforts to gather information on them.

Seizing control

The revolution was bloodless.

Kalakaua was stripped of power and the government fell into the hands of the Hawaiian League. On July 5, 1887, the Honolulu Rifles were ordered out in full uniform. Their cartridge belts were full. Charles Bishop’s nephew, Eben Faxon Bishop, was one of the officers as a first lieutenant of Company B. In addition, League members armed themselves.

At the palace a New York Herald correspondent asked King Kalakaua:

“What means have you of self-defense?”

“I have my bodyguard of sixty men, who are passably well armed and drilled,” he replied, “an Austrian battery of six field pieces, two brass cannon with sweeping fire, good bolts to outside doors and good hearts within. Then, too, there are two companies of native volunteers called the Queen’s and King’s Own, composed mainly of old retainers.”

“But outside, as I understand it, there are three hundred men, over a thousand rifles and ammunition enough for a siege.”

“Yes,” replied the king, nervously wetting his lips, “but they have not got in yet.”

Hyde told a different story. He wrote that Kalakaua had “ordered his military to assemble at the palace Friday night, but only 20 assembled out of 200. When he asked them how many would fight for him, only 2 said they would.”

Hyde also wrote: “The backbone of the whole movement is the money furnished by some of our capitalists, while the brains came largely from the ‘missionary ring’ and the muscle from the sturdy mechanics, carpenters, and masons and machinists who have no great regard for royalty but do believe in right and justice.”

A man credited with financing the revolution was Trustee Damon, the banker. In July 1889, the “reform” cabinet named him minister of finance. Kalakaua died in 1893 and was succeeded by Queen Lili‘uokalani.

-Bob Dye is a Kailua historian and writer.

http://the.honoluluadvertiser.com/2000/Mar/12/opinion6.html

 

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IMAGES OF THE BEAUTIFUL LEGACY OF
PRINCESS PAUAHI BISHOP

 

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The Catbird Chronicles: Bishop Estate

1986 - Bishop Estate joins golf course designer Robert Trent Jones and North Carolina developer Clay Hamner in the purchase of 1,100 acres at Lake Manassas, Virginia.

1989 - Bishop Estate trustees approve the McKenzie Methane acquisition, with trustees, principle executives, managers, family members, business cohorts and other insiders co-investing millions of their personal money. Among the investors are the estate's tax-adviser, Mark McConaghy of Price Waterhouse.

1989 - HFH, a holding company originally comprised of four major investors, William E. Simon, Sr., Gerald L. Parsky, Larry B. Thrall, and Roy Doumani, to purchase HonFed Savings & Loan Association, sells approximately 23 percent of its ownership stake in the thrift.

1991 - Bishop Estate and partners set up RTJ Acquisition LP to develop the Lake Manassas property, which is to become the Robert Trent Jones Golf Club -- the object of controversy and a lawsuit in which the later owners of the club claimed fraud was involved in the sale. The purchasers allege Bishop Estate was both the buyer and the seller (BE trustee Henry Peters also served on the golf club's board of trustees), and also had failed to inform them of a $33 million development debt they would have to pay off -- to Bishop Estate.

1992 - Bishop Estate trustees invest $250 million of the trust's money in Goldman Sachs.

1992 - Bishop Estate invests $31 million in Mid Ocean Reinsurance Co. with partners J.P. Morgan & Co, Marsh & McLennan Co. and Texas deal-maker Richard Rainwater. While a director of Mid Ocean, estate trustee Henry Peters received substantial director's fees and received options to acquire 6,000 shares of Mid Ocean Stock.

1993 - Bishop Estate, The MacArthur Foundation, and Duke University Endowment Fund back the formation of a Boston merchant bank called Orion Capital Partners LP.

1993 - Robert Rubin, worth an estimated $100 million at the time, resigns Goldman Sachs to join the Clinton administration. Rubin makes a phone call to Bishop Estate and the estate "insures" Rubin's stake in Goldman Sachs for $100,000 a year -- a real "sweetheart deal" for poor Rubin?

1994 - Bishop Estate invests another $250 million in Goldman Sachs.

1994 - The records relating to the various investments held by the Trust Estate and its Pauahi Holdings, Inc. subsidiary, showed that combined losses and loss reserves of $264 million were recognized in fiscal year 1994.

1995 - The Wall Street Journal exposes the estate nationally with their in-depth, front-page article, Bishop's Gambit - Hawaiians Who Own Goldman Sachs Stake Play Clever Tax Game.

1995 - According to The Cheating of America: “Tax attorneys for Verner, Liipfert, Bernhard, McPherson and Hand the Washington, D.C.-based law and lobbying powerhouse whose members include the likes of Bob Dole and former treasury secretary Lloyd Bentsen – prepared a thirty-page confidential report for a client (Kamehameha Schools/Bishop Estate) in search of a new home. The attorneys surveyed the tax and legal consequences of relocating in 49 states (only Hawaii was excluded), then recommended a single location to their client: the Cheyenne River Sioux Reservation in South Dakota.”

1996 - Bishop Estate lends $1 million to Charles M. Harmon, Jr., an investment banker and former general partner at Goldman Sachs, and together with Larry L. Landry, chief investment officer of the MacArthur Foundation; and Brad Heppner, a consultant at Bain & Co. and former director of private investments at the MacArthur Foundation, they form Crossroads Group to purchase Bigler Investment Management, a Conn. firm that manages fund-of-fund accounts. Bigler's clients include: Connecticut State Treasury; Massachusetts' Pension Reserves Investment Management Board; Rhode Island Employees' Retirement System; City & Co. of San Francisco Retirement System; and pension funds of E.I. duPont de Nemours & Co.

1996 - The estate spends more than $330,000 on federal lobbying - most of it going to three firms to fight, unsuccessfully, the "interim sanctions" law that created penalties for employees or officers of charitable institutions who gain undue "excess benefits" from their positions. The three lobbying firms were Verner, Liipfert, Bernard, McPherson & Hand, a prominent Washington, D.C. firm that employs former Hawaii governor (and friend of Bill Clinton), John Waihee; Hecht Spencer & Associates; and Price Waterhouse. Other Verner firm members enlisted in the effort included former Treasury Secretary Lloyd Bentsen of Texas, former Senate Majority Leader George Mitchell of Maine and former Texas Governor Ann Richards. Also, enlisted to fight the "interim sanctions" regulations was the Rev. Jesse Jackson.

1996 - In October, Bobby Harmon, the estate's Risk Manager and president of P&C Insurance, reports suspected fraud and collusion between Trustee Henry Peters; Nathan Aipa, the estate's general counsel, and Marsh & McLennan, Inc. to the organizations' auditors, Coopers & Lybrand. In November, Harmon is terminated from both positions.

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The Chronicles Continue in Part II.

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IF YOU WANT TO TAKE A CLOSER LOOK AT SOME OF THE CAREFULLY HIDDEN NESTS INHABITED BY THESE BIRDS OF A FEATHER, JUST TRAIN YOUR FIELD GLASSES BELOW!

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Bedford Property Investors, Inc. - From a Bedford Properties press release: Bedford Property Investors, Inc. announced the appointment of Scott R. Whitney as Sr. V.P. and CFO. Whitney, 45, has been serving as Sr. VP/CFO of WCI Communities (a Bishop Estate investment) of Naples, Florida since 1995.

Before joining WCI Communities, Whitney was with Equity Group Investments, Inc. Prior to joining Equity Group Investments, Whitney worked with Balcor/American Express, Inc. as V.P. Banking and Sr. Controller.

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From Midweek, 3/7/01, by Robert M. Rees: Years of pursuing the Bishop Estate trustees revealed more than the self-seeking greed and hubris of its five now-deposed incumbents....

Bina Chun, widely referred to as “the queen of the school,” (and wife of Kamehameha Schools’ president, Michael Chun) had her own rewards. In 1992, for example, Bedford Properties paid her a cool million just for negotiating the purchase price of the Kalele Kai condo project with the trustees....

For more, GO TO > > > Paradise Paved; The Grand (and dirty) Ko `Olina


 

Benson Forests - Kamehameha Schools’ 390,000-acre timberland investment in Michigan.

For more, GO TO > > > Part II


 

Blackstone Group - A New York-based private investment bank.

From The Conspirators: Secrets of an Iran-Contra Insider, by Al Martin:

GOVERNMENT FRAUD, CORPORATE FRAUD,
AND MORE FRAUD

People in the media often ask me to give them examples of frauds that began in Iran-Contra and continue to this day, albeit under different names.

It’s essentially the same fraud and the same cast of characters.

The examples I always give (about which I have substantive information, since I was involved in all three of the original frauds and also involved in marketing some of the partnerships for the secondary fraud) are the Ocean Reef Development Group, Ltd., the Omni Development Group, Ltd., and the Tri-Lateral Investment Group, Ltd.

Who are the common players who are links between all three deals during Iran-Contra?

They are Frank Carlucci and Richard Armitage.

When Frank Carlucci and Richard Armitage left government service immediately after Iran-Contra (they literally had to leave in order to avoid being subpoenaed as part of the overall coverup), they became principals with Pete Peterson, the infamous Republican player and GOPAC money launderer, in the Blackstone Investment Group, which is a big organization.

Then they simply continued the same real estate development frauds which were begun under Iran-Contra.

This time all the original deals went bankrupt. A certain set of banks got burned. The property reverted to them, and then they refinanced the property again through Blackstone.

Subsequently they entered into an arrangement with another similar sounding company (there’s always been some confusion) the Capstone Development Group, which was also a post-Iran-Contra creature.

They are two separate organizations.

Some people will try to claim that Capstone was simply a subsidiary of Blackstone.

It is not. It is a separate company. Look at the directors. They are none other than Larry Eagleburger and Bernie Aronson, former co-workers of Frank Carlucci and Assistant Secretary of State, Richard Armitage.

However, the real estate frauds continued essentially until the early 1990s. It’s interesting to note how former government officials who were in the Reagan-Bush Administration during Iran-Contra profit by subsequent frauds – post-Iran-Contra frauds, if you will.

For instance, in 1994-95, there was the great Mexican Diversion Fraud, when Blackstone immediately opened an office in Mexico City to take advantage of American taxpayers’ money being lent to Mexico vis-a-vis the OCED and OPEC and other United States lending and/or guaranteeing agencies.

The opportunity to commit fraud against the United States Treasury during that Mexican bailout was just like a walk in the park.

You buy a busted out Mexican company for pennies on the dollar, pump it up, make it look nice, make sure you’ve got your hands out for a twenty or thirty million dollar loan from somebody else, like the IMF, or a direct United States lending agency, and you would be given Brady Bonds which could then be rehypothecated.

And it was such a scam.

Dinnerstein alone documented $130 million of fraud committed by former officials of the Reagan-Bush Administration during the “Great Mexican Turkey Shoot” as it became known.

And then what happened?

The Russian bailout.

Blackstone suddenly opened an office in Moscow and promptly proceeded to do the same thing again. This time they were raping and pillaging the American taxpayer with the same corporate schemes to get money out of U.S. agencies and/or collateral guaranty or fidelity instruments that could be rehypothecated.

It’s exactly the same scheme.

It was another $38 million of fraud according to our estimates at the time.

To follow fraud from the Iran-Contra period and to continue to do it to this day – just look at where the Blackstone Investment Group is opening up offices in the world. . . .

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For more, GO TO > > > Birds that Drink from Cesspools; The Blackstone Group; Predators in Paradise


 

Bruce Nakaoka - Former investment manager at Kamehameha Schools/Bishop Estate.

Ex-estate workers to talk to Bronster

They were granted immunity from suits that could come up

By Honolulu Star-Bulletin Staff

Two former investment managers at Kamehameha Schools/Bishop Estate have agreed to comply with subpoenas issued by Attorney General Margery Bronster in the state's investigation of the $10 billion charitable trust.

Bruce Nakaoka and Eric Martinson agreed to meet with the attorney general before Nov. 26, after they were granted immunity from civil suits that may arise from their cooperation, said Deputy Attorney General Hugh Jones.

The agreement was approved today by Circuit Court Judge Kevin Chang.

In another Bishop Estate investigation, retired Circuit Judge Patrick K.S. Yim today said he met with the five estate trustees Monday to update them on the progress of his fact-finding report into management of the schools.

Yim did not disclose the nature of the discussion. He is required by court order to complete his report on or by Dec. 5.

None of the trustees commented on the meeting.

Critics of the trustees' management said Yim was wrong to privately meet with the group before he releases his report....

See also: Eric Martinson


 

Cades, Shutte, Fleming & Wright - GO TO > > > The Morgan, Lewis & Bockius Report


 

Carlyle Group - a Washington-based merchant bank that is chaired by Frank Carlucci, the former Secretary of Defense in the Reagan Administration.

For more, GO TO > > > A Connecticut Yankee in King Kamehameha’s Court; Birds That Drink From Cesspools


 

Central Pacific Bank - one of Hawaii’s largest commercial banks, formerly majority-owned by Japan’s giant Sumitomo Bank. The major financial asset of Senator Daniel K. Inouye (D-HI).

See also: Dan Inouye; Sumitomo Bank; Yakuza

For more, GO TO > > > Behind the Blinds at Central Pacific Bank


 

Chubb Corporation - Chubb is a holding company whose subsidiaries are engaged in two industries: property & casualty insurance and real estate.

The second largest institutional investor in Chubb is Putnam Investment Management, a subsidiary of the world's largest insurance broker, Marsh & McLennan. The third largest institutional investor in Chubb is Citigroup, which was formed through the mega-merger of Citicorp and Travelers Insurance Company.

Citigroup is co-headed by Robert Rubin, the former U.S. Treasury Secretary and former co-chairman of Goldman Sachs. A leading institutional owner of Goldman Sachs is Hawaii's wealthy Bishop Estate.

The broker for Bishop Estate is Marsh & McLennan. Marsh & McLennan placed the estate's Directors & Officers Liability insurance policy in Federal Insurance Company, a Chubb subsidiary.

Federal Insurance Company provided the excess liability insurance policy for Bill Clinton that defended him in the Paula Jones lawsuit.

Just one big happy flock.

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From the RICO lawsuit: Harmon v. Federal Insurance Co, et al.:

Defendant Federal Insurance Company, Inc. (Federal), a member of The Chubb Group, conducts business in the United States and was, at all times, registered with the Insurance Commissioner, State of Hawaii, as an admitted foreign insurance company. Federal conducts business through insurance brokers as well as through licensed general agents of the company. In Hawaii, one of Federal's licensed general agents is Marsh & McLennan, Inc. (M&M).

On or about October 27, 1995, Plaintiff, in his capacity as Risk/Insurance & Safety Manager for Kamehameha Schools Bishop Estate (KSBE), caused Federal, through its agent M&M, to bind coverages under an Association Liability Insurance policy. . . .

Plaintiff alleges that the failure of Federal, and its agent, M&M, to provide defense coverage to Harmon in Civil No. 97-0512-02 constitutes mail fraud, wire fraud, misrepresentation and fraudulent inducement to purchase this insurance....

As detailed in Plaintiff's complaint, there was collusion among the Defendants, the primary purpose of which was to increase their profits through the awarding of non-bid insurance contracts to Federal and its agent, M&M.

Profits were further enhanced by Federal through reduction in their claims payments by means of fraudulently "back-dating" an exclusion endorsement in their Association Liability Policy in order to wrongfully deny defense coverages to Plaintiff....

For more, GO TO > > > The Chubb Group; Claims By Harmon; Woo vs. Harmon


 

Coconut Island - Better known to millions of TV viewers as “Gilligan’s Island”.

From sheep to science - Coconut Island

by Nathalie Parkvall, editor, HPU Student Newspaper

Before 1930, Bishop Estate-owned Coconut Island, or Moku O Lo ‘e, was a 12-acre island used as a base for local shepherds and fishermen. Little did anyone know that the island would gain national notoriety by being featured in the opening credits of the popular ‘60s TV show Gilligan’s Island, and few could foresee the many changes that would make the island a rather special place today.     

Over the decades, the Kaneohe Bay-located island was transformed many times. It was as a location for a tuna-packing factory, it became a rich man’s private paradise with a bowling alley and a small zoo, and today it is the Hawai’i Institute of Marine Biology’s research center (HIMB) owned by University of Hawai‘i. . . .

Coconut Island, named after its many coconut palm trees, has a long history of many different owners. In the 1930s, Christian Holmes, owner of Hawaiian Tuna Packers (now Coral Tuna) bought the island from Bishop Estate to use as a tuna-packing factory. As he wasn’t satisfied with the size of the island, he decided to enlarge it to 28 acres, more than double its original size, using material taken from a sandbar in Kaneohe Bay.  

Holmes had a vision of creating a private paradise, so while working on increasing the size of the island he also enhanced it by building a saltwater swimming pool and fishponds (which later became useful for HIMB) and adding numerous exotic plants and trees. He also built a bowling alley, brought a shooting gallery from an amusement park in San Francisco, and built bars at several spots on the island. He also made a bar with a movie theater out of a 4-masted schooner, Seth Parker, which he couldn’t sail anymore since it leaked. This boat was later featured in the movie Wake of the Red Witch starring John Wayne.

Holmes wasn’t satisfied with his paradise until it also housed a small zoo, including such animals as donkeys, monkeys, a giraffe, and a baby elephant, which were later donated to the Honolulu Zoo when Holmes died in 1944. After his death, the Kaneohe Marine Corps Air Station (now Kaneohe Marine Corps Base Hawai‘i) used the island as a rest and recuperation post for its officers until five wealthy oil men purchased the island in 1947.

Eventually one of the men, Edwin Pauley, became the sole owner and utilized the island as a summer residence for his family, entertaining many famous people, including Harry Truman, Lyndon B. Johnson, Red Skelton, Richard Nixon, and Ronald Reagan.

In 1951, Pauley invited scientists from UH-Manoa to establish a marine lab on a part of the island. He leased the land “rent-free” to help establish the Hawai‘i Marine Lab, which moved into the barracks previously built by the Marine Corps. In 1961, a fire destroyed the marine lab, but with help of a $300,000 donation from Pauley, a new lab was built, which became the Hawaii Institute of Marine Biology in 1965.

After Pauley’s death in 1981, the estate was put up for sale. After 17 months with no buyer, a proposal was made for the state to buy the island. However, the negotiations took several years and before the state made up its mind, Katsuhiro Kawaguchi, a Japanese real estate developer, made an offer of $ 8.5 million for the private part of the island and bought it in 1987.

In 1992, Kawaguchi was deported due to criminal activities and forced to sell the property....

© 2001, Kalamalama, the HPU Student Newspaper. All rights reserved.

See also: Katsuhiro Kawaguchi

For more, GO TO >>> Vampires on Gilligan’s Island


 

Crossroads Group - In 1996, Hawaii’s Bishop Estate loaned approximately $1 million of the trust’s funds to Charles Harmon, Jr., an investment banker and former general partner of Goldman Sachs, to buy into a joint investment of the estate.

For more, GO TO > > > A Connecticut Yankee in King Kamehameha’s Court


 

Dan Inouye - U.S. Senator (D) from Hawaii, called by some Hawaii’s “Political Godfather”.

From AllPolitics:

FISCAL 1997 PORK TOTALS: Per Capita, Per State, June 9, 1997

Rank: #1 - Hawaii

Population: 1,183,723

Pork/per Capita: $131.01

Pork Dollars: $155,078,000

(For comparison: Michigan ranked at the bottom of the pork barrel with a Population of 9,594,350, with Pork/per Capita of $0.96, for total Pork Dollars of $9,594,350.)

* * *

ABC News, 2/2/97, by James Walker:

The King of Pork

 Dan Inouye is the second largest industry in the state of Hawaii,” says Richard Borreca of the Honolulu Star-Bulletin.

That’s because in just the last five years, Inouye has brought home almost half a billion in federal tax dollars. The senator has mastered the recipe for pork: one part seniority, mixed with a choice assignment on a powerful spending committee. . . .

Pork Barrels at Sea

When local historians wanted to build a replica of a Polynesian canoe, they went to Sen. Inouye and he delivered.

Two million dollars in federal funds and the Hawaii`iloa was built– all 57 feet, 17 thousand pounds of it. The goal was to show how the first Hawaiians sailed to their new home.

Donald Duckworth of Bishop Museum is an admirer of Inouye’s ways. “Certainly out here, we admire and respect Senator Inouye’s translation of our needs.”

But what some call need, others call waste.

How does a boondoggle like this get funded anyway?

Read Between the Lines

Sen. John McCain, R-Ariz, says it’s because some lawmakers slip requests for special projects into huge appropriations bills that no one is likely to scrutinize.

McCain claimed he knew nothing of the Polynesian canoe. “Many times we don’t know what’s in these bills until after they’re signed into law.”

Inouye also used a 203-page military-appropriations bill to get a company a 30-year monopoly on the cruise business in Hawaii.

“You give one company a monopoly to cruise the very beautiful islands of Hawaii, the consumers are going to pay, and clearly, far in excess of what they otherwise would if there was competition,” said Sen. McCain.

Senator Inouye declined ABC News’ request for an interview.

Meanwhile, the pork projects keep flowing into Hawaii. And Senator Inouye keeps spending your money. . . .

~ ~ ~

What the preceding article doesn’t tell you: Bishop Museum was endowed by Charles Reed Bishop, the husband of Princess Bernice Pauahi Bishop ... AND THE TRUSTEES FOR THE C.R. BISHOP ESTATE ARE THE SAME POLITICALLY-CONNECTED TRUSTEES AS FOR THE KAMEHAMEHA SCHOOLS / BISHOP ESTATE !

AND WHO WAS THE PROJECT DIRECTOR FOR THE $2 MILLION CANOE? Try guessing NAINOA THOMPSON - one of the five NEW TRUSTEES (and son of retired trustee, Myron Thompson, one of the co-investors in the infamous McKenzie Methane deal!) Another coincidence?

* * *

Honolulu Star-Bulletin, 10/28/96, by Ian Y. Lind: Isle Woman Part of Campaign Probe - Former resident Nora Lum figures in congressional investigation into ‘92 finances. Congressional investigators have renewed a probe of former Hawaii resident Nora T. Lum, and a 1992 campaign project which she headed, because of their links to Democratic National Committee fund-raiser John Huang and former DNC official Melinda Yee.

David Bossie, staff investigator for Rep. Dan Burton, said last week that investigators are “extremely interested” in Lum’s association with Huang and Yee in the Asian Pacific Advisory Council (APAC-Vote), a DNC project that operated out of offices in Torrance, Calif, during the fall of 1992.

Bossie said APAC-Vote is drawing new scrutiny because its “cast of characters” included Huang, then an officer of the Indonesian-owned Lippo Bank in Los Angeles; the late Secretary of Commerce, Ron Brown, then chairman of the DNC; and Melinda Yee, an assistant to Brown at the DNC and national director of Asian Pacific American affairs for the 1992 Clinton-Gore campaign.

Following the 1992 elections, Brown was appointed secretary of commerce and named Huang and Yee to key positions in the department. . . .

Huang and Yee have been ordered to testify in a lawsuit by the conservative organization, Judicial Watch, which wants to know whether Commerce Dept trade missions were used to raise funds for the Democratic Party. . . .

APAC-Vote officially opened its office on Sept 9, 1992, the same day then-candidate Bill Clinton announced the formation of the Asian Pacific American Committee for Clinton-Gore, whose roster included Sen. DAN INOUYE, Sen. DAN AKAKA, Rep. PATSY MINK, and then-Gov. JOHN WAIHEE. . . .

* * *

Portland Free Press, Jan 1997, by Ace R. Hayes: New York Mob at Mena . . . Yet another CIA-Mafia drug connection: Richard Brenneke puts mob boss John Gotti and CIA boss Donald Gregg in the middle of contra drug operations at Mena Airport.

In Dec 1996, the Portland Free Press secured a copy of Richard Brenneke’s 21 June 1991 sworn-deposition before Congressman William Alexander, Jr, and Chad Farris, chief deputy attorney general of Arkansas. . . .

We secured former congressman William Alexander’s fax number and sent him a request for confirmation. We got more than we hope for – Jan 1997: “... the Brenneke transcript, along with other evidence of money laundering by Barry Seal at Mena, Arkansas, was delivered to Judge Walsh for action. Nothing followed. I agree that the American people deserve to know the truth about our government. Thank you for providing it. Good luck.” (signed Bill Alexander)

~ ~ ~

The American people, since World War II, or World War I, or the Spanish American War– take your choice– have witnessed the tip of many criminal icebergs. The official investigations of the criminal icebergs almost always stopped at the waterline. The other 90 percent of the criminal icebergs were never hauled onto the beach for complete examination, prosecution and correction.

The criminal cases of 1980 to the present are in perfect harmony with this honored tradition. This is, of course, why Americans are the most profoundly ignorant people on planet earth. The illusion of knowledge is far worse than knowing you don’t know.

The Iran-Contra-cocaine criminal iceberg was subjected to a series of bogus investigations and damage control “exposes.” The Tower Commission and Select Committee of the House and Senate on Secret Military Assistance to Iran and the Nicaraguan Opposition in 1987, began the damage control operation for the Imperial state.

But the Hall of Shame did not stop with John Tower, Ed Muskie and Brent Scowcroft or Dan Inouye and Lee Hamilton. It included Senator John Kerry and his Special Counsel Jack Blum and Staff Aid Dick McCall. It reached to the Special Counsel, Judge Lawrence E. Walsh ...

* * *

From Shadow, by Bob Woodward: . . . THE REAL THREAT to the Reagan presidency, (Harold) Baker and (Arthur) Culvahouse knew, lived across town in the Watergate Hotel . . . In room 609 of the hotel, Lawrence E. Walsh, 75, had set up living quarters after being named by the three-judge panel as the independent counsel for Iran-contra. . . .

One of Walsh’s first stops was the CIA, which gave his team space and filing cabinets in the basement of agency headquarters in Virginia so they could look at top-secret codeword documents. Early in the investigation, the IRS gave Walsh 11 agents who were experts in tracing hidden money so Walsh could attempt to understand the “Enterprise” that North had set up using Swiss bank accounts for the Iran arms sales, the secret contras resupply and other covert operations.

Iran-contra had dozens of tentacles, and Walsh chose to pursue nearly all of them. He was not sure if he was chasing rabbits or where they might take him. His authority from the three-judge panel called on him to prosecute any related crimes he uncovered, even by underlings.

His preoccupation became (Oliver) North and (John) Poindexter, the operational officers....

Iran-contra would not go away for Bush. Although on September 29 the judge in the (Caspar) Weinberger case dismissed a key obstruction charge, ruling the independent counsel had not shown that Weinberger corruptly worked with others, he demanded a proper reindictment within the next month. . . .

On Wednesday, October 28, six days before the election, Barrett faxed a copy of the new indictment to Walsh in Oklahoma....

Walsh was determined to proceed with the Weinberger trial. He approved an expenditure of $32,600 for Brosnahan to conduct a mock trial before 36 citizens who were paid to act as jurors. After the presentation of the prosecution and defense cases, the 36 people were divided into three separate juries. Two of the mock juries found Weinberger guilty on all four counts, the other found him guilty on three of the counts. The story leaked, unleashing a fresh attack on Walsh. Many Republicans were now publicly urging President Bush, who would be leaving office in January, to exercise his constitutional power to pardon Weinberger.

Bob Bennett, Weinberger’s attorney, told Gray his client’s trial could be embarrassing for Bush, who might be called as a witness.

Gray said he was exploring the pardon option.

“What can I do?” Bennett asked.

“Get some Democratic cover,” Gray said, “and I’ve got to be convinced it’s a one- or two-day story.”

Among others, Bennett recruited House Speaker Tom Foley, the Washington State Democrat, to phone Gray pledging his support for a Weinberger pardon.

Bennett also enlisted Senators Daniel Inouye, a Democrat from Hawaii, and Warren Rudman, who headed the Senate Iran-contra probe, to write a letter of support. . . .

Bush had some reservations. On Tues, Dec 22, he dictated into his diary, “The pardon of Weinberger will put a tarnish, kind of a downer, on our legacy.”

Before going to Camp David that Christmas weekend, where he planned to make the final decision on pardons, Bush was in the Oval Office . . . “Okay, Marlin,” Bush asked Fitzwater. “What’s your final recommendation?”

“Pardon all of them.” . . .

Gray was strongly in favor of pardons. It would end the Walsh investigation. He had his deputies call around to the lawyers for other convicted Iran-contra figures to see if they would accept pardons. Four did: two CIA officers, Elliott Abrams, and former national security adviser Bud McFarlane.

Gray helped draft a three-page executive order explaining the reasoning. Bush signed it on Christmas Eve, December 24, 1992. . . .

* * *

Compiled by Associated Press from financial disclosure forms filed June 12, 1998:

1998 Financial Profile: Sen. Daniel K. Inouye, Indian Affairs Committee ranking Democrat

Earned Income: $135,340

Major Assets: Stock in CPB Inc. worth $100,001-$250,000. Over $100,000 in bank accounts. . . .

Major Sources of Unearned Income: Dividends of $5,001-$50,000 from CPB stock, and bank interest in the same range.

Inouye’s major investment is in CPB, a holding company for Central Pacific Bank, one of Hawaii’s largest commercial banks.

* * *

The Honolulu Advertiser, 2/16/01: Bush May Stop VIP Cruises - The search for survivors and the quest for answers continued yesterday from Oahu to the Pentagon.

It prompted President Bush to suggest that the military review its practice of allowing civilians to ride aboard sophisticated warships like the submarine that sank a Japanese fishing vessel seven days ago. . . .

At the Pentagon, Pietropaoli confirmed earlier reports that retired Adm. Richard Macke of Honolulu had helped arrange for “individuals for the Missouri Battleship Memorial Association” to tour the sub while on its training maneuvers. He said 14 of the 16 guests were involved with the Missouri association.

Yesterday, retired Adm. Robert Kihune, vice chairman and president of the USS Missouri Memorial Association, said he had not seen the guest list and therefore did not know whether any of the association’s more than 3,000 members were involved. . . .

* * *

See also: Central Pacific Bank; Dean R. O’Hare; Gene & Nora Lum; James Riady; John Waihee; Leon Panetta; Lucent Technologies; Robert Kihune; Richard Macke; Sukamto Sia; Sumitomo Bank; USS Missouri Memorial Association; Yakuza


 

David Ige - From Honolulu Star-Bulletin, April 30, 1998

He entertained them at Bishop Estate expense, IRS records show;
several of them deny it

By Rick Daysog

Former state Sen. Milton Holt reported that he entertained state legislators at Bishop Estate's expense at local restaurants and hostess bars, according to records the estate submitted to the Internal Revenue Service.

But several lawmakers denied that the meetings took place. . . .

Sources familiar with the records sent to the IRS told the Star-Bulletin that Holt charged more than $2,500 on the estate's Visa cards at local restaurants, drinking establishments and nightclubs between 1992 and 1997, listing lawmakers as his guests.

Some $1,500 of the total was spent at two local hostess bars in 1992 and 1993.

These expenses are in addition to some $21,000 that Holt ran up in credit card charges and cash advances on estate Visa cards at Las Vegas casinos and local hostess bars and restaurants since 1992.

One critic of the Bishop Estate called the expenditures unsuitable for a tax-exempt trust that has a mission to educate native Hawaiian students.

"To me these are totally inappropriate expenses for the estate to be paying out," said longtime Bishop Estate watcher Desmond Byrne.

"You wonder if this is just the tip of the iceberg. You wonder what else is out there."

During a Feb. 10, 1993, outing, Holt ran up a $540.50 tab at the Crystal Palace hostess bar, naming as his guests Senate President Norman Mizuguchi and Sen. Robert Bunda then a state representative, sources said.

That came after Holt ran up a $751 bill on the estate's charge cards at the former Monte Carlo hostess bar in August 1992, listing Mizuguchi, Bunda and Sen. Joe Tanaka as his guests.

Holt charged $260 on an estate credit card at the Monte Carlo club in April 1993, listing Bunda, House Finance Chairman Calvin Say and House Judiciary Chairman Terrance Tom as guests. . . .

Holt declined comment on credit card charges involving lawmakers other than Mizuguchi, saying the information was supposed to be confidential. An estate spokesman had no immediate comment.

Bishop Estate, the state's largest private landowner, has long enjoyed a close relationship with the state Legislature. The multibillion-dollar estate's five trustees include former Senate President Richard Wong, and former House Speaker Henry Peters.

In the past, the estate has said that it did not incur any lobbying expenses at the local level, according to Byrne. But Holt's expenditures raised significant questions as to whether it was trying to influence legislation, he said. "Unless they have hope to obtain some benefit, why should the estate being paying this kind of money for entertainment?" Byrne asked.

The restaurant and bar tabs were included in the estate's response to inquiries from the IRS in its audit of the trust. The IRS is looking at various estate expenditures and wants to know whether employees and trustees received benefits or perks at the expense of the trust.

The attorney general's office subpoenaed the estate for Holt's records along with volumes of other confidential IRS records, also known as information document requests, in its investigation into potential wrongdoing by trustees.

The Star-Bulletin obtained details of several other credit card transactions at traditional isle restaurants listing lawmakers as Holt's guests.

Here are some examples . . .

An October 30, 1995, charge for $115.32 at the Gordon Biersch Brewery Restaurant, naming Sen. Les Ihara and Sen. David Ige as Holt's guests. . . .

Under state law, legislators aren't required to list gifts less than $200 in their annual disclosure statements. But they are prohibited from accepting gifts intended to influence or reward lawmakers. . . .

* * *

From Honolulu Star-Bulletin, Feb 11, 1998:

Editorials

Legislator shouldn’t be utility lobbyist

CONFLICTS of interest are natural and expected in Hawaii's Legislature, where part-time lawmakers are obligated to make decisions that affect the companies they work for during the remainder of the year. Conflicts become more serious when legislators accept company positions devoted to influencing government decisions.

State Sen. David Ige, a Democrat who represents Pearl City, has accepted such a position.

Ige is an electrical engineer by training and, until recently, by profession. He held such a position at GTE Hawaiian Tel (now Verizon), when he was appointed in 1985 by then-Gov. John Waihee to fill a vacant seat in the state House of Representatives.

Eventually, Ige was promoted to the job of Hawaiian Tel's network design senior administrator. When the position of government affairs director became open, Ige applied. He was appointed to the post at the beginning of this year. In plain English, that means Ige's new job is chief lobbyist for the phone company, one of the most regulated companies in Hawaii.

Recognizing the anachronism of a legislator who is also a lobbyist, Ige has gone to great pains to gain acceptance of his dual role. He said that he will lobby only federal and county officials, not state officials or legislators, leaving that responsibility to Hawaiian Tel's vice president for external affairs.

Ige has registered with the city as a lobbyist but not with the state Ethics Commission. And, as co-chairman of the Senate Consumer Protection Committee, Ige has promised to allow co-chairman Wayne Metcalf to assume responsibility for matters relating to the Public Utilities Commission, which regulates Hawaiian Tel. Ige pledges not to vote on matters that present a conflict.

However, all the maneuvering in the world by Ige to avoid the appearance of impropriety will not erase the impression that he was assigned to his present job at the phone company because of his position as a state senator. The interweaving of city, state and federal functions makes the confined activities that Ige prescribes for himself impossible to perform.

Senator Ige's conflict is inescapable and unacceptable. His district would be better served by an engineer rather than a lobbyist.

* * *

Business Briefs - Reported by Star-Bulletin staff & wire:

Sunday, April 29, 2001

NEW JOBS

>> Michael Loo has been named controller for the Kamehameha Schools. He will oversee accounting, purchasing, financial and investment reporting and systems functions. Loo was previously controller and treasurer of Hawaiian Airlines.

>> David Ige has been named vice president of engineering for NetEnterprise. Ige comes to NetEnterprise from Pihana Pacific, where he was a project manager. Ige is a state Senator.

>> Alison Mortlock has been named branch manager for the captive insurance division of Marsh Hawaii. Mortlock, who also serves as vice president, will be responsible for tracking the captive insurance industry and for creating new programs for clients. Mortlock joins Marsh Hawaii from the company's Bermuda office.

>> Gordon S. Wood has been named project manager at AM Partners' Honolulu office. He joins the company from the city and county Department of Planning and Permitting, where he was a project manager. Wood will be responsible for community planning projects.

* * *

See also: Broken Trust


 

Dean R. O'Hare - CEO of Chubb Corp.

See also: Chubb Corporation; Dan Inouye


 

Dennis Fern - From the Kukui, Inc. website:

MANAGEMENT OF KUKUI OPERATING COMPANY

Dennis E. Fern - President

Mr. Fern is a graduate of Willamette University in Oregon with a Bachelor's degree in Mathematics. A Certified Public Accountant, Mr. Fern worked for PricewaterhouseCoopers (formerly Coopers & Lybrand) in their auditing division.

In 1983, Mr. Fern joined Kamehameha Schools Bishop Estate (KS), the largest private landowner in the state of Hawaii and an education trust, as their Internal Auditor.

In 1991, in his role as Internal Auditor, he became involved in KS' investment in coalbed methane projects in Alabama, Colorado, and New Mexico. In 1996, he took over responsibility for KUKUI, INC., a wholly owned taxable subsidiary of KS, which had been assigned KS' interest in the coalbed methane project (aka the McKenzie Methane deal).

* * *

Testimonial letter to The Woodlands Resort:

"It's taken me quite a while to calm down after our stay at The Woodlands Resort & Conference Center. I thought it best to take some time to gather my thoughts and I now feel able to put in writing my views on your staff and facility. After Liz Edwards, of our Houston office, and I toured your property and met with you and Dana Denton, I believed The Woodlands would meet our every need. I was wrong! I apologize for the use of some very strong "f" words to describe the experience of our group…………..fun, fantastic, fabulous, or some "e" words…….exceptional, extraordinary, excellent, or a plain old "g" word……great!

The Woodlands exceeded our every expectation. Bob……Mahalo (Thank you) for making this years annual gathering (our fourth annual holiday gathering) truly a memorable one. We speak of the aloha spirit here in the islands. We found an example of it at The Woodlands."

Dennis E Fern
President
KUKUI, INC.

* * *

See also: Claims By Harmon; McKenzie Methane; The Woodlands

For more, GO TO > > > The Sinking of the Ehime Maru


 

Eric Martinson - A Kamehameha Schools manager from 1984 to 1996, at one point managed the estate’s substantial financial holdings, which included a multibillion interest in Goldman Sachs.

From the RICO lawsuit - Harmon v. Federal Insurance Co, Marsh & McLennan, Trustees of Bishop Estate, et al.:

o) Unison Pacific - As a subsidiary of KSBE, General Liability, Directors & Officers Liability and other insurance coverages for this entity were combined under KSBE’s master policies, and premium charges were allocated according to the entity’s risk exposures. After this arrangement had been in effect for several years, Eric Martinson, KSBE Assets Manager and officer of Unison Pacific, directed KSBE’s accounting department to reallocate Unison’s premiums. This had the effect of KSBE paying the premiums for this subsidiary.

~ ~ ~

From Harmon’s letters to the Hawaii Insurance Commissioner: Deceptive Business Practices; Conflicts of Interest; Mail Fraud.

At the direction of Henry Peters and other managers for KSBE, premiums that should have been charged to subsidiaries were actually paid by KSBE. One example is Eric Martinson's memorandum of September 24, 1996 to Ramona Hinck regarding the reallocation of premiums for the SoCal, AFCO, Unison and SINO subsidiaries. As a result of this directive, premium charges that had been previously allocated by me to these subsidiaries were transferred to KSBE. Eric Martinson was the Financial Assets Manager for KSBE, and was also the Secretary/Treasurer, Sino Finance Group LLC, and Vice President, Unison Pacific Investment (US) Limited.

Under the lease agreements for various commercial properties that are owned and managed by the estate, insurance costs are directly passed on to the lessees and tenants through monthly maintenance fees. As a result of the overcharges by M&M, and the improper allocations of premiums and claims costs to the various subsidiaries, these lessees and tenants were wrongfully and deceptively billed a share of these higher costs. The various commercial properties would include Royal Hawaiian Shopping Center, Windward Mall, Bishop Commerce Center (Georgia), Desert Springs Marketplace (California), and Velvet Cloak Inn (North Carolina), among others.

These monthly maintenance billings and payments are normally done by mail and involve interstate commerce since many of KSBE’s properties, and the home offices of various lessees, are located on the mainland. As a result, these acts may be subject to the 1994 Federal Insurance Crimes Act, which covers crimes by persons engaged in the business of insurance whose activities affect interstate commerce. ...


 

Gene and Nora Lum - From freerepublic: Lum Pleads Guilty to Tax Fraud -

Tulsa, Okla (AP) 8/13/98 - Democratic fund-raiser Gene K.H. Lum changed his plea in a tax fraud case to guilty Thursday as part of an agreement that seeks his cooperation in other investigations.

Lum, who pleaded guilty in 1997 to making illegal donations to Democratic campaigns, admitted he filed tax returns that claimed more than $7.1 million in false deductions for him and his wife.

Lum, 59, faces up to six years in prison and $500,000 in fines at a Nov 23 sentencing. . . .

Under the pleas agreement, the government agreed not to seek indictments against his wife, Nora, or their corporations. . . .

The Lums, who operated a Tulsa-based gas pipeline company at the time of the violations, pleaded guilty last year to a charge of felony conspiracy for laundering $50,000 in illegal donations to 1994 congressional campaigns.

Their daughter, Trisha C. Lum, pleaded guilty to a misdemeanor violation in a separate campaign finance incident.

Gene and Norn Lum each received 10 months in prison and $30,000 fines in that case.

The tax charges stemmed from information uncovered by independent counsel Daniel S. Pearson during his investigation of Commerce Secretary Ronald H. Brown. Pearson closed his inquiry when Brown was killed in an airplane crash. He transferred his findings about other people to the Justice Dept for continued investigation and prosecution.

* * *

Comments in the freerepublic forum: . . . Of some interest to me was the fact that the golf course Michael Brown (son of Ron Brown) was given a membership to (and which Bill Clinton often uses ...) in suburban Virginia was owned by the Bishop Estate of Hawaii. . . . Bishop put close to 100 million into a company called McKenzie Methane Gas a few years before Dynamic. Bishop also bought into a Red Chip bank with Mochtar Riady's brother in law. Bishop hired as its Washington law firm Verner Liipert whose lobbyist is ex Gov. John Waihee. Waihee appointed 4 of the 5 Bishop Trustees. Waihee attends Clinton coffees. Waihee appointed Sen. Akaka. Verneer Liipert has another big name partner ex Sen. George Mitchell. Mitchell's son in law was president of Lum's company Dynamic Energy. Bishop owns 11% of Goldman Sachs. Sec of Treasury Robert Rubin's blind trust managed by Bishop, etc, etc. (abwehr, 8/13/98)

* * *

See also: John Waihee; Mochtar Riady; Sports Shinko; Yakuza


 

George Mitchell - Former Senate Majority Leader; lobbyist for the tobacco industry.

From The Courier-Journal, Dec 28, 2001:

Mitchell to Oversee Fund for Red Cross

NEW YORK – Former Sen. George Mitchell was named yesterday to oversee the $667 million American Red Cross fund created to help victims of the terrorists attacks.

The charity also announced that it will exceed its goal of distributing $275 million in aid from the Liberty Fund by Dec. 31. It said it expects to hand out $317.5 million by year’s end.

Mitchell, who is from Maine, has spent his post-Senate life trying to negotiate peace in the Middle East and Northern Ireland.

As independent overseer of the Liberty Fund, Mitchell will supervise the development and carrying out of a plan to distribute the fund’s balance, said Harold Decker, chief executive of the Red Cross. The plan is scheduled for release by the end of January....

* * *

Comments in the freerepublic forum: . . . Of some interest to me was the fact that the golf course Michael Brown (son of Ron Brown) was given a membership to (and which Bill Clinton often uses ...) in suburban Virginia was owned by the Bishop Estate of Hawaii. . . . Bishop put close to 100 million into a company called McKenzie Methane Gas a few years before Dynamic. Bishop also bought into a Red Chip bank with Mochtar Riady's brother in law.

Bishop hired as its Washington law firm Verner Liipfert whose lobbyist is ex Gov. John Waihee. Waihee appointed 4 of the 5 Bishop Trustees. Waihee attends Clinton coffees. Waihee appointed Sen. Akaka. Verner Liipfert has another big name partner ex -Sen. George Mitchell. Mitchell's son in law was president of Lum's company Dynamic Energy. Bishop owns 11% of Goldman Sachs. Sec of Treasury Robert Rubin's blind trust managed by Bishop, etc, etc. (abwehr, 8/13/98)

* * *

In the 02/18/00 edition of The Honolulu Advertiser, reporter Sally Apgar revealed that the ousted Bishop Estate trustees used the trust money to "enlist" the aid of U. S. Sens. Dan Inouye and Daniel Akaka in 1995 to influence fellow members of Congress to vote against "interim sanctions" regulations that threatened the trustee's $1 million-a-year paychecks. According to Apgar:

Thirteen confidential memos during the fall of 1995 through April 1996 detail the trustees' strategy against the bill . . .

The memos express the trustees' intent "to kill the measure" and their recruitment of influential contacts such as Inouye, Akaka and the Rev. Jesse Jackson. They also targeted others, including Sen. Daniel Patrick Moynahan of New York and even White House insiders such as Leon Panetta, then President Clinton's chief of staff, to win support. . . .

The memos give a glimpse of the behind-the-scenes political power and influence the former trustees once wielded and describe a costly, intensive effort to protect their interests.

As previously reported, the ousted trustees hired former Gov. John Waihee and his Washington, D.C.-based law firm Verner Liipfert Bernhard McPhearson Hand to lobby against the federal legislation...

Other Verner firm members enlisted in the effort included former Treasury Secretary Lloyd Bentsen of Texas, former Senate Majority Leader George Mitchell of Maine and former Texas Gov. Ann Richards. . . .

The state Attorney General's Office has said previously that the trust paid the firm more than $900,000 for its lobbying efforts on intermediate sanctions legislation between 1995 and 1998.

Waihee alone was in charge of swaying Erskine Bowles, then assistant to the president and deputy chief of staff, and Doug Sosnick, then assistant to the president and director of political affairs. . . .

Mark McConaghy of PriceWaterhouseCoopers LLP, a longtime tax adviser to the trust, was charged with contacting Leslie Samuels, then assistant secretary for tax policy. . . .

Congressman Neil Abercrombie (D-HI) is also mentioned in the memos. For example, the Oct. 12 memo said, "Congressman Abercrombie is prepared to speak to Rep. Gibbons, the ranking minority member, Charles B. Rangel (D-NY) and Andrew Jacobs, Jr. (D-Ind) as well as GOP Rep. Nancy Johnson. . . .


 

Gilbert Tam - From RICO lawsuit Harmon v. Federal Insurance Company; P&C Insurance Company; Marsh & McLennan, Inc. et al.:

Gilbert Tam is a Director, P&C Insurance Company, Inc. and the former Administrative Group Director for Kamehameha Schools Bishop Estate. Tam is currently an officer with Bank of Hawaii, which has substantial financial connections with KSBE.

Tam was also a co-investor in the McKenzie Methane deal at the time he was a KSBE manager. Plaintiff alleges that Tam's actions, through his complicity, deceptions, and breach of fiduciary duties, in collusion with some or all of trustees of KSBE, with other managers and employees of KSBE, with other officers and directors of P&C, and with outside contractors, attorneys, politicians and others, constituted a conspiracy to defraud P&C and the beneficiaries of the Estate of Bernice Pauahi Bishop; racketeering; mail fraud; wire fraud; extortion; and violation of IRS interim sanctions regulations. . . .

For more, GO TO > > > Predators in Paradise


 

Goldman Sachs - The Goldman Sachs Group is a leading global investment banking and securities firm with three principal business lines: Investment banking; Trading and Principal Investments; and Asset Management and Securities Services.

From Goldman Sachs, by Lisa Endlich:

GOLDMAN SACHS had been expanding the size of its partnership steadily for decades. There had been fifty partners in 1973; there were seventy-five in 1983 and one hundred fifty by 1993. But as the size of the partnership increased, the profits of the firm had to grow at breakneck speed if existing partners' income levels were to be maintained. . . .

With his ascendency in 1990, Robert Rubin openly discussed with the partnership the need for an expanding pie . . .

In addition to the firm's limited partners (retired partners who choose to leave capital in the firm), Goldman Sachs has taken on three groups of financial partners. Sumitomo's investments in 1986 entitled the Japanese bank to 12.5% of the firm's annual profits. Kamehameha Schools/Bishop Estate, the giant Hawaiian education trust, which also made two major cash infusions into the firm, first in 1992 and again in 1994, receives about 11% of what the firm makes every year. Finally, a group of insurers has injected $225 million into the capital structure.

Goldman Sachs will go down in history as the last major partnership on Wall Street. . . .

Quoting one former partner:

"Greed changed the firm, and the view was to take as much
risk as we can, and make it as fast as we can
."

~ ~ ~

"1986," Institutional Investor magazine proclaimed, "was the year they sold Wall Street." During the five preceding years John Weinberg had watched his major competitors incorporate, merge, or simply cease to exist....

* * *

From USA Today, May 3, 1999: Trust Scandal Haunts Goldman -- Sullied Bishop Estate Owns 10% of Bank: . . . Daytime television has nothing on the Bishop Estate, a charitable trust that will make a huge windfall in Goldman Sachs' initial public offering expected Tuesday... The trustees of the estate are mired in an explosive scandal with subplots of greed, cronyism, sex and suicide that are worthy of the tawdriest soap opera. . . .

Kamehameha Schools/Bishop Estate was set up 115 years ago to educate Hawaiian children as stipulated in the will of Princess Bernice Pauahi Bishop, the last direct descendant of the king who united the islands. With assets of about $10 billion, it is one of the richest trusts in the USA and the largest private landowner in Hawaii. . .

Among its assets: a 10% stake in Goldman Sachs, the leading investment bank that is ending its long reign as a private partnership. When Goldman goes public, the estate stands to at least triple the value of its $500 million investment. . .

* * *

From The Wall Street Journal Interactive Edition, May 4, 1999: Goldman Sachs Leaves Little To Chance With Red-Hot IPO.

The IPO which raised $3.66 billion, ranks as the largest financial-services IPO ever ...

Top executives at Goldman, such as Mr. Paulson, received shares in the company valued at as much as $200 million. . .

Goldman itself sold 51 million shares. Two Goldman shareholders, Kamehameha Activities Association and Sumitomo Bank Capital Markets, a unit of Sumitomo Bank, also sold nine million shares each, leaving them with Goldman stakes of 4% and 5%, respectively....

See also: Dan Inouye; Lucent Technologies; Sumitomo Bank; Xiamen International Bank; Yakuza

For more GO TO > > > Dirty Gold in Goldman Sachs?


 

Hanford's Creations, Inc. - A company that makes Christmas decorations. Owned by Elizabeth Hanford Dole, a friend of Mark McConaghy of PricewaterhouseCoopers, before she sold it to a group headed by Bishop Estate. The estate promptly lost money on the deal.

See also: Bob & Elizabeth Dole; Mark McConaghy; PricewaterhouseCoopers


 

Henry Peters - Ex-trustee of Kamehameha Schools/Bishop Estate.

From the RICO lawsuit : Civil No. CV 99 00304-DAE - Harmon v. Federal Insurance Co., P&C Insurance Co. Inc.; Marsh & McLennan, Inc., PricewaterhouseCoopers, et al: . . .

Defendant Trustee Henry H. Peters, was appointed in 1984 by the Justices of the Supreme Court of the State of Hawaii, acting as individuals, and was entrusted with the fiduciary duty to administer the Estate of Bernice Pauahi Bishop for the education of the children of Hawaii...

Defendant Peters is also Chairman of the Board of Directors of P&C. Peters has also served on the Board of Directors of Mid-Ocean Reinsurance Co. (a Bermuda company); Underwriters Capital (Merritt) Insurance Co. (a Bermuda company); SoCal Holdings, Inc.; and numerous other companies owned by, or related to, KSBE....

Beginning around March 1996, Harmon began questioning what appeared to be excessive premium charges being made by Marsh & McLennan ... and for fees M&M was billing to P&C.

For the next several months, Plaintiff was subjected to threats, intimidation and various abuses from Aipa and Kam for questioning the excessive fees of M&M . . . Harmon asked Aipa about the status of his transfer (to P&C). Aipa's response was that it wasn't going to happen because "arms-length was no longer an issue," (referring to previous legal opinions from Price Waterhouse that the IRS might revoke the Trust's tax-exempt status if it did not maintain arms-length from its taxable subsidiaries)....

* * *

From Equity No. 2048, Petition of the Attorney General on Behalf of the Trust Beneficiaries to Remove and Surcharge Trustees:

"The Trustees have been unfaithful to the Will and the purpose of the Trust. They have failed to comply with clear directives of the Will. They have subordinated the sole purpose of the Trust to their personal gain. They have squandered Trust assets intended for education by their excessive compensation, and by imprudent and improper Trust management and investments.

They have violated Hawaii statutes and court orders. They have engendered hostility between themselves and the Beneficiaries whose interests the Trustees were appointed to serve...

Peters became lead trustee for asset management in 1993 and assumed responsibility for Trust investments and for due diligence on prospective investments....

Peters as lead trustee purposely withheld information on existing and potential investments from his co-Trustees, dismantled the Trust's internal audit function, instructed staff employees to withhold information from the co-Trustees, and used his position to approve Trust payment of improper non-Trust expenditures....

As to Peters, the effect of these violations has been that Trust assets have been mismanaged and misspent to the detriment of the Trust purpose. . . .

Trustees Peters, Wong, and Lindsey have violated their duty of loyalty to the Beneficiaries by using their positions as Trustees and by using Trust assets and opportunities to benefit themselves and their relatives and friends....

In 1992, the Trust invested approximately $31 million in Mid Ocean, Ltd. (Mid Ocean), a Bermuda-based insurance company, and acquired 310,000 Mid Ocean Class A shares. . . . In 1993, when Matsuo Takabuki retired as a Trustee of the Trust, Peters succeeded to Takabuki's seat as a director of Mid Ocean. . . . Peters served as a Mid Ocean director until early 1998. . . . Peters' service as a Mid Ocean director fell within his duties as Trustee and was a Trust opportunity. . . . While a director of Mid Ocean, Peters received substantial director's fees and received options to acquire 6,000 shares of Mid Ocean stock. . . . The Mid Ocean fees and stock options are assets that belong to the Trust and not to Peters individually. . . . Peters has enriched himself at the expense of the Beneficiaries by retaining the fees and stock options for his personal benefit. (Note: Marsh & McLennan, and its subsidiary, Guy Carpenter, were major players in the creation and management of Mid-Ocean.)...

* * *

From Honolulu Star-Bulletin, 4/14/99, by Rick Daysog:

EMBATTLED EMPIRE . . . Larry Landry, former chief financial officer for the $4 billion John D. and Catherine T. MacArthur Foundation, which is a co-investor with the estate in a Boston-based investment fund and a Florida apartment complex, describes Peters as a savvy and thorough investment manager. . . . Deal promoters often approach large foundations and charitable trusts thinking they have deep pockets. But Peters brings a healthy skepticism to anyone who brings an investment to the estate, according to Landry....

"Henry is extremely bright and has the right kind of conservative (investment) philosophy," said Landry, who now serves as CEO of Florida-based Westport Realty Advisers....

In his review of the estate's 1994-1996 accounts, court-appointed master Colbert Matsumoto and the accounting firm of Arthur Andersen said the estate -- during Peters' tenure as acting asset manager -- generated an embarrassing return on investment of minus 1%. During that period, the trust set aside more than $240 million in reserve for future losses....

That woeful performance came as Wall Street was in the midst of a record bull run in which investors could have made double-digit returns just by putting their money in an index fund...

Peters, charges stand out in lengthy Bishop Estate investigation. The state's exhaustive investigation into the Bishop Estate appears to focus on trustee Henry Peters as a central figure in the two-year controversy that's rocked the multibillion-dollar charitable trust....

In a September Probate Court petition to permanently remove several trustees, Attorney General Margery Bronster alleged that Peters took part in repeated acts of self-dealing and mismanagement. The state's charges include: ... Between 1993 and 1998, Peters received options to acquire 6,000 shares of stock as well as substantial director's fees from a Bermuda-based insurance company, Mid Ocean Ltd. The estate was a big investor in Mid Ocean. Peters has since declined to exercise the stock options, which would have been worth more that $400,000 under Mid Oceans's 1993 merger with competitor Exel Ltd. [another Marsh & McLennan financial venture]....

Peters directed trust managers and the estate's former Royal Hawaiian Shopping Center subsidiary to hire his friends and relatives for unbudgeted positions and outside consulting work, according to the state. The employees included former state Rep. Terrance Tom, local attorney Albert Jeremiah and Office of Hawaiian Affairs trustee and former state Sen. Clayton Hee...

Starting in 1995, a company headed by Peters' nephew received more than $1.3 million in nonbid and subcontracting work from the estate. . . . The company, Rhino Roofing, conducted renovation work on Peters' Maili home....

Since 1995, Peters' former employer, Dura Constructors Inc., received more that $2.7 million in nonbid work from the estate. . . . In one case, Dura billed the estate $465,000 to build an athletic locker room at Kamehameha Schools that was later deemed unsafe for student use. The trust would up correcting the building deficiencies itself and did not pursue Dura for the faulty work. Dura also conducted work on Peters' Maili home....

Along with his fellow trustees, Peters received compensation well above that of comparable organizations. In 1997, each trustee earned about $840,000 in commissions.

Peters and fellow trustees also spent more than $900,000 of trust money to lobby Congress against the passage of federal legislation limiting salaries for board members of charitable trusts....

* * *

Reporter Sally Apgar, in the 02/18/00 edition of The Honolulu Advertiser, revealed that the ousted Bishop Estate trustees used the trust money to "enlist" the aid of U. S. Sens. Dan Inouye and Daniel Akaka in 1995 to influence fellow members of Congress to vote against "interim sanctions" regulations that threatened the trustee's $1 million-a-year paychecks.

According to Apgar:

Thirteen confidential memos during the fall of 1995 through April 1996 detail the trustees' strategy against the bill . . .

The memos express the trustees' intent "to kill the measure" and their recruitment of influential contacts such as Inouye, Akaka and the Rev. Jesse Jackson. They also targeted others, including Sen. Daniel Patrick Moynahan of New York and even White House insiders such as Leon Panetta, then President Clinton's chief of staff, to win support. . . .

The memos give a glimpse of the behind-the-scenes political power and influence the former trustees once wielded and describe a costly, intensive effort to protect their interests.

As previously reported, the ousted trustees hired former Gov. John Waihee and his Washington, D.C.-based law firm Verner Liipfert Bernhard McPhearson Hand to lobby against the federal legislation... Other Verner firm members enlisted in the effort included former Treasury Secretary Lloyd Bentsen of Texas, former Senate Majority Leader George Mitchell of Maine and former Texas Gov. Ann Richards....

The state Attorney General's Office has said previously that the trust paid the firm more than $900,000 for its lobbying efforts on intermediate sanctions legislation between 1995 and 1998.

Waihee alone was in charge of swaying Erskine Bowles, then assistant to the president and deputy chief of staff, and Doug Sosnick, then assistant to the president and director of political affairs....

Mark McConaghy of PriceWaterhouseCoopers LLP, a longtime tax adviser to the trust, was charged with contacting Leslie Samuels, then assistant secretary for tax policy....

Congressman Neil Abercrombie (D-HI) is also mentioned in the memos. For example, the Oct. 12 memo said, "Congressman Abercrombie is prepared to speak to Rep. Gibbons, the ranking minority member, Charles B. Rangel (D-NY) and Andrew Jacobs, Jr. (D-Ind) as well as GOP Rep. Nancy Johnson....

* * *

Honolulu Star-Bulletin, 5/21/99, by Rick Daysog:

It is alleged that trustees Peters and Wong
helped conceal $350 million

Two weeks after a state judge temporarily removed four of the five trustees of the Bishop Estate, the state attorney general's office today filed court papers in a separate proceeding spelling out why trustees Henry Peters and Richard "Dickie" Wong should be temporarily ousted from their $1 million-a-year jobs. . . . In an 89-page proposed findings of fact, Deputy Attorney General Hugh Jones argued that Peters and Wong helped conceal $350 million in trust income that should have been spent on the estate-run Kamehameha Schools, paid themselves $131,000 more than they were entitled to and failed to adopt strict conflict-of-interest policies at the trust....

The result of these actions deprived scores of native Hawaiian children of an education at the Kamehameha Schools, Jones said. . . .

See also: Dan Inouye; George Mitchell; Marsh & McLennan; Mid-Ocean Reinsurance; Milton Holt; National Housing Corp; P&C Insurance Co; Sun International Hotels; Xiamen International Bank


 

HonFed Savings & Loan - Another major investment for Bishop Estate, later sold to Bank of America.

March 21, 2003:

In the United States Court of Federal Claims

Nos. 95-660C and 95-797C

Filed March 21, 2003

BANK OF AMERICA, FSB, et al.,

Plaintiffs

v.

THE UNITED STATES,

Defendant

~ ~ ~

FACTS

A.

In 1986, a group of investors, led by the former Secretary of the Treasury, the late William E. Simon, Sr., approached the Bank Board about the possibility of acquiring HonFed, a then-failing thrift based in Honolulu, Hawaii. Recognizing the need to recapitalize HonFed, the investors proposed a plan by which the thrift would be converted from a mutual association to a stock association, with its stock to be sold to raise capital for the resulting institution. The proposal additionally envisioned the creation of HFH, a holding company that was to be wholly owned by the investors and created for the sole purpose of acquiring the thrift. Finally, the proposal anticipated the issuance of approximately $35 million in subordinated debentures to further bolster the thrift’s flagging capital levels....

On June 17, 1986, HFH, together with HonFed, submitted a formal application to the Bank Board seeking approval of the proposed restructuring and recapitalization of HonFed....

On August 29, 1986, the Bank Board adopted Resolution No. 86-910 approving HFH’s application to acquire HonFed....

B.

On August 6, 1989, Congress enacted FIRREA, directing, inter alia, the promulgation of regulations setting forth new minimum capital standards. The resulting regulations, issued by the Office of Thrift Supervision (“OTS”) on November 6, 1989, provided that unidentifiable intangible assets, such as the goodwill arising from HFH’s acquisition of HonFed, would have to be excluded when determining compliance with the statute’s core capital requirements. The regulations additionally restricted HonFed’s ability to include subordinated debt in regulatory capital.

Shortly after the promulgation of these regulations, OTS informed HonFed that, based on its quarterly financial report, HonFed was in danger of failing one or more of the new capital requirements. Although HonFed objected to the conclusion that it was required to meet the more stringent FIRREA capital requirements rather than the capital requirements set forth in Resolution No. 86-910, HonFed nonetheless took steps to bring itself into compliance with the new capital standards. Toward that end, HonFed conducted a private equity placement involving the sale of preferred stock to a Hawaiian charitable trust, the Kamehameha Schools, Bernice Pauahi Bishop Estate. As a result of that placement, HFH relinquished approximately 23 percent of its ownership stake in the thrift but raised an additional $45 million to be counted toward the thrift’s regulatory capital.

HonFed continued operating under this shared ownership for an additional two years, but on October 10, 1991, BankAmerica Corporation and its wholly owned subsidiary, the Bank, acquired ownership and control of HFH and HonFed through the purchase of the outstanding shares of HonFed and HFH. Following this acquisition, both HonFed and HFH became wholly owned subsidiaries of the Bank. Within the next year, each entity was abolished, HonFed through a conversion of its shares into shares of the Bank and HFH through a liquidation and dissolution. It is on the basis of these transactions that the Bank now claims to stand as the successor in interest to the rights and interests of HonFed and HFH....

OPINION

WIESE, Judge

Plaintiff Bank of America, Federal Savings Bank (“the Bank”) is the successor in interest to H.F. Holdings, Inc. (“HFH”), a bank holding company, and Honolulu Federal Savings & Loan Association (“HonFed”), a thrift institution. The Bank is joined in this suit by Beverly W. Thrall (successor by operation of law to the claims of Larry B. Thrall) and Roy Doumani, members of the original investor group that formed HFH and acquired, through their investment in HFH, a majority ownership interest in HonFed. (1) ...

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

(1) The original investor group consisted of four individuals: William E. Simon, Sr., Gerald L. Parsky, Larry B. Thrall, and Roy Doumani, each of whom filed suit here in his individual capacity. William Simon and Gerald Parsky subsequently withdrew their actions, while Larry Thrall (now represented by his successor in interest, Beverly Thrall) and Roy Doumani have been permitted to join in the Bank’s claim as intervenors pursuant to RCFC 17...

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

For more on William Simon and Gerald Parsky, GO TO > > > The Opal File: A Secret History of Australia and New Zealand; William Simon Says


 

Industrial and Commercial Bank of China - From The Straits Times-Asia, 10/31/00:

ANTI-GRAFT AUDITS TO INCLUDE TOP LEADERS

China's chief auditor plans to take his fight against corruption to almost the top of the country's political system, according to state media.

This follows the discovery of US$11 billion in mismanaged funds at Chinese government offices and businesses.

The astounding sum, reported by Mr. Li Jinhua, Auditor-General of China's National Audit Office, is one of the strongest indications of how mismanagement is in China. . . .

"Corruption thrives under a lack of efficient supervision," the paper said . . .

According to earlier official reports, the auditing led to the discovery of misuse of funds at the Industrial and Commercial Bank of China, and the Construction Bank of China, causing losses worth more than 10 billion yuan (S$2 billion). . . .

Mr. Li's auditors found that individual officials and managers had misappropriated 590 million yuan. But this marked only a fraction of the 96.17 billion yuan mismanaged, if not embezzled, by offices and firms, the China Daily said.

The reports did not give details of how the funds were misused . . . But in previous reports over the past 18 months, Mr. Li has criticised officials for diverting government subsidies and spending lavishly on offices. There has also been talk of speculation in stocks. . . .

* * *

Asia 2000, 11/8/00, by Jeremy Page:

CHINA SENTENCES 14 TO DEATH IN SMUGGLING CASE

China sentenced 14 people to death on Wednesday, including senior police and customs officials, in the first verdicts of a multi-billion dollar smuggling scandal, the biggest corruption case of the Communist era.

Those sentenced to death included the former customs chief and deputy mayor of the southern port of Xiamen, and the former deputy police chief of southern Fujian province . . .

But state media said the mastermind of the smuggling scam, businessman Lai Changxing had fled overseas after being tipped off by police. ...

Lai's Yuanhua Group smuggled more that $6 billion worth of cars, luxury goods, oil and raw materials in the early 1990s, paying off city and provincial officials to facilitate and cover up duty evasion, Xinhua said.

"The group also used money and women to seduce a number of government officials for the convenience of their smuggling activities," Xinhua said.

The smuggling "caused serious damage to the normal economic order, brought huge financial losses to the state, led to rampant corruption, and impaired the social, political and economic life in China," it said. . . .

The death sentences included Xiamen's former customs chief Yang Qianxian and former vice mayor Lan Pu, and former Fujian deputy police chief Zhuang Rushun, Xinhua said.

Ye Jichen, head of the Industrial and Commercial Bank of China in Xiamen, was also given a death sentence . . .

See also: Henry Peters; William Simon; Xiamen International Bank


 

Investcorp - Investcorp is a leading global investment group with offices in London, New York and Bahrain. Since 1982, it has completed transactions in North America and Western Europe, with a total acquisition value of approximately $19 billion.

* * *

May 24, 1996

Stock offering by Saks a boon
to Bishop Estate

Its holdings gain more than $24 million in value on
the first day of trading

By Rick Daysog, Honolulu Star-Bulletin

Bishop Estate's investment in Saks Fifth Avenue increased by more than $24 million in a single day.

The charitable trust owns 4.1 percent of the upscale department store chain's parent, Saks Holdings Inc., whose shares soared with the successful launch of its initial public offering Wednesday.

The stock, priced late Tuesday at $25 per share, closed Wednesday at $34.621/2 on the New York Stock Exchange, a 38.5 percent increase.

That gave Bishop Estate a paper profit of $24.1 million for the 2.5 million Saks shares it owns. Saks' stock closed on Thursday at $32.50 a share but regained 50 cents on Friday to close at $33.

The estate stressed that it has not realized any gains because it has not sold any of its stock.

"We're very pleased with the results there," said Kekoa Paulsen, spokesman for the estate. "(But) bottom line, it's a paper gain."

Paulsen said the estate is positive about Saks' future and its current management, noting that the investment in Saks is for the long-term. Bishop Estate purchased its stake in Saks Holdings back in March 1993 from Bahrain-based Investcorp S.A. for about $50 million.

Bishop Estate, the state's largest private landowner, lists about $1 billion in assets but critics have said that figure may be as high as $10 billion.

Founded in 1867, Saks Fifth Avenue was privately held and operated as a division of Gimbel Bros. Inc. until it was purchased by British giant BAT Industries Plc in 1973. In 1990, BAT sold Saks to Investcorp for $1.6 billion.

The retailer currently owns 45 Saks Fifth Avenue department stores, 19 Off 5th outlet stores and the Folio catalog.

In Hawaii, Saks operates an off-price outlet at the Waikele Center and has expressed an interest in opening a department store in central Honolulu.

In Wednesday's public offering, Investcorp sold 16 million shares in Saks, or about a quarter of the retailer's equity. Saks said it would use the proceeds to pay down debt, which it listed as nearly $976 million.

An offering prospectus said that Bishop Estate's 4.1 percent stake represents the fifth largest block of the company's stock. Investcorp is the largest with 17.3 percent of the Saks' equity, followed by SIPCO Ltd., a Cayman Island-based investor, with 17.28 percent.

Honolulu Star-Bulletin Business

( http://starbulletin.com/96/05/24/business/story1.html )

~ ~ ~

For much more, GO TO > > > Investigating Investcorp


 

JMB Realty Corp. - A major US commercial real estate investment firm which owns, develops and manages real estate projects throughout North America, including regional malls, hotels, planned communities, and office complexes.

* * *

Honolulu Star-Bulletin, 6/16/00 - Kamehameha Losses Top $335 Million - Despite unprecedented financial growth, the Kamehameha Schools recorded more than $335 million in losses and writeoffs during the past decade. . . . The troubled investments underscore criticisms that the estate’s embattled former trustees mismanaged assets and took ill-advised bets on speculative ventures. . . .

The estate’s largest write-off was for $50 million. It involved a 1987 investment in Cadillac Fairview Corp, a Toronto-based office and retail property developer.

The estate, following the advice of Chicago-based JMB Realty Corp, joined 38 institutional investors in the $2.6 billion leveraged buyout of Cadillac Fairview, but the investment went south after the mainland recession of the early 1990s forced the developer into bankruptcy protection. . . .

* * *

Honolulu Star-Bulletin editorial, 1/30/98: Waiahole Ditch - The Waiahole Ditch was built in 1916 by the sugar companies and was operated by them to transport water from Windward to Leeward and Central Oahu to irrigate sugar cane. But with sugar dead the ditch’s current owner, Amfac/JMB, has considered shutting down the facility or reducing service. For this reason, Governor Cayetano wants to buy the ditch for $8.5 million, with an additional $1.7 million to be spent on improvements and operation costs. . . .

* * *

Honolulu Star-Bulletin, 2/18/98: Liberty House to Eliminate 500 Jobs . . . Liberty House Stores is eliminating 500 jobs, or more than 10% of its work force, in the wake of the weak local economy and the growing Asian economic crisis. . . . The downsizing is the worst in Liberty House’s 149-year history.... Liberty House, a unit of Illinois-based JMB Realty Corp, operates 11 department stores and 30 resort and specialty shops in Hawaii and Guam.... Its annual sales are in the $400 million range....

* * *

Honolulu Star-Bulletin, 3/19/98: Liberty House Bankrupt . . . Liberty House Stores, Hawaii’s largest and oldest department stores chain, filed for bankruptcy protection this morning. . . . The company filed for Chapter 11 ... listing assets of $284.2 million and liabilities of $248.4 million. . . . Liberty House becomes the largest Hawaii company to file for bankruptcy reorganization . . . Founded in 1849, Liberty House is a unit of ... JMB Realty Corp, which acquired the department store chain when it bought out then-parent Amfac Inc. in 1988....

* * *

Honolulu Star-Bulletin, 10/9/98: Judge: Law Firm Can’t Work for Liberty House . . . A federal judge today ruled that a New York law firm could not work for Liberty House because it also represents some of the retailer’s major creditors....

U.S. Bankruptcy Judge Lloyd King ruled that the firm, Cleary, Gottlieb, Steen & Hamilton, has conflicts of interest because it represents major banks and other creditors in the bankruptcy....

JMB argued Cleary, Gottlieb has a conflict because it represents creditors claiming more that $140 million in the Liberty House bankruptcy.

Those clients include Bank of America NT&SA; Merrill Lynch, Pierce, Fenner & Smith; Oaktree Capital Management LLC; Sanwa Bank; Capital Management LLC; and Canyon Partners...

* * *

Honolulu Star-Bulletin, 5/6/99: Liberty House is Hit with $138 Mil Claim . . . The Liberty House retail chain has been hit with a claim for $138 million in allegedly unpaid taxes and interest, adding a new difficulty to it already complex bankruptcy reorganization effort....

* * *

Honolulu Star-Bulletin, 5/9/00: Liberty House Parent Settles Part of IRS Tax Claim . . . Liberty House parent JMB Realty Corp will pay a reduced $4.2 million tax claim to the IRS, answering a major tax question that has stalled the Liberty House bankruptcy since last year.

The IRS last week filed an amended claim in U.S. Bankruptcy Court, cutting its original bill from about $103 million to $4.2 million for 1992 through 1994.

The actual liability to Liberty House, then a member of a consolidated group whose taxes were paid by JMB affiliate Nortbbrook Corp, is expected to be about $500,000 . . . but even though the tax logjam has been unclogged, another IRS claim totaling about $35 million for the years 1995 through 1996 still remains.

JMB believes its tax payments for those years are in order. The IRS recently began an audit of Northbrook’s taxes, a process that could take several years...

* * *

Pacific Business News, 9/1/00: ERS Forecloses in Kaanapali - The state Employees’ Retirement System is foreclosing on two Kaanapali Beach golf courses, claiming in a lawsuit that golf course owner Amfac/JMB Hawaii LLC defaulted on $77.4 million in loans and interest earlier this year.

ERS, which invests retirement funds for state and county employees, is pulling the plug on a $66 million mortgage loan it provided to Amfac/JMB for the 18-hole, championship North and South golf courses that serve the sprawling West Maui resort destination. The 1st Circuit Court lawsuit ERS filed on Aug 24 is five inches thick....

* * *

Honolulu Star-Bulletin, 11/16/00: Final Harvest for Sugar Fields - “See my eyes?” asks Joe Maneja. “Not angry. Just sad. No one can help the company. No one can fix it.” Maneja is one of a crew of about a dozen Lihue Plantation heavy-equipment operators and haul-cane truck drivers eating lunch at a field station near Wailua Falls...

It is the last field to be harvested this year. It is the last Amfac field to be harvested ever.

Maneja, a 28-year old Amfac employee, is one of about 400 at Lihue Plantation and Kekaha Sugar Co who will be unemployed at the close of business tomorrow, when Amfac shuts down its two sugar operations....

It is the largest layoff of agricultural workers in Kauai’s history and will cut the island’s farm labor force of 850 almost in half. But for each of the employees, it is a loss of a way of life....

Sugar was king for more than 100 years. . . . The two Amfac/JMB sugar mills that will shut down tomorrow represent half of the surviving four sugar mills in Hawaii.

Sugar was first grown commercially in Hawaii at Koloa Plantation on Kauai in 1835. At one time there were 32 plantations in Hawaii. Collectively, they imported the 385,000 workers from Asia, Europe and North America who created Hawaii’s unique multi-cultural society.

Lihue Plantation, which will officially close its doors tomorrow, has been producing sugar for 151 years. Kekaha Sugar Co, which also shuts down tomorrow, dates back to 1878.

Both are owned by Amfac/JMB, which traces its roots to a ship chandlery, Hackfeld & Co, started on Kauai by Hendrich Hackfeld, a German sea captain.

The firm, which remained in German ownership, was seized by the U.S. government during World War I and auctioned off to a group of Hawaii businessmen who changed its name to American Factors. In 1966 the name was shortened to Amfac and in 1988 the company was purchased by JMB Realty of Chicago and its name became Amfac/JMB....

Two years ago, the property that was the site of the Makee Plantation was sold by Amfac/JMB to Kealia Plantation Inc.

It is being developed into lots for multi-million-dollar homes....

See also: John Waihee


 

James Ahloy - President, Ali’i Petroleum; Trustee for Lunalilo Trust; President, Aloha Petroleum (the company in the political spotlight because of its spinoff from Harken Energy CorporationGeorge W. Bush’s tenacious albatross).

January 9, 1991

Excerpted from a Letter from Bruce N. Huff, Sr. V.P., and CFO, Harken Energy Corp. to Edmund Coulson, Chief Accountant, Securities and Exchange Commission:

. . . June, 1989, the Company decided to sell Aloha (Petroleum) due to the lack of strategic fit and the need to redeploy assets and management effort . . . determined that Intercontinental Mining & Resources, a major shareholder of the company, was the most logical buyer.

. . . At the end of March, 1990, IMP completed the sale of its interest in Aloha to Advance Petroleum Marketing Co.

. . . Advance at this time raised the possibility of a long and costly dispute over environmental liabilities. . . .

. . . Prior to entering into the Letter of Intent dated February 22, 1990 with Advance concerning this sale, IMR through its affiliate Quadrant Management Co. had contacted a number of potential third parties towards locating a prospective purchaser of IMP’s interest in Aloha including potential purchasers in Japan, New York and in Hawaii, after which it determined that Advance constituted the most acceptable purchaser for its interest....

. . . Concessions:

       – Assumed Jimmy Ahloy’s Employment Contract obligation.

* * *

August 9, 1997

BROKEN TRUST

By Samuel King, Msgr. Charles Kekumano,
Walter Heen, Gladys Brandt and Randall Roth

The time has come to say “no more.” The web of relationships between the Judiciary and our beloved Kamehameha Schools/Bishop Estate has pushed two great institutions to an absolute critical point. Immediate action must be taken. To understand the underlying causes, readers must piece together the following stories. Think of them as puzzle parts....

How trustees get selected

In the words of a former Supreme Court justice, here's how the process worked: "The way we went about picking trustees was different each time. The time we named Chief Justice Richardson, for example, Justice Lum suggested that we select him, and we all agreed. It was just that simple. Another time, we must have gotten over 100 applications. It was pretty informal then too, but we did read through everything. It's really hard to generalize about how we did things because it just depended on the circumstances."

In the words of a different former justice, "When Os Stender was picked, we got lucky. Two of the justices wanted Larry Mehau very badly, another two were just as adamant about Anthony Ramos. The fifth justice, who was for Jimmy Ahloy, refused to switch to either of the other two candidates. Once it became crystal clear that we had a stalemate, someone -- and I wish I could remember who -- brought up Os' name. We all knew he was Hawaiian and that he was the CEO at Campbell Estate, and it didn't take long to agree on him. Chief Justice Lum immediately called and asked him to come over right away. When Os arrived 10 minutes later, we told him he had just been chosen to be a Bishop Estate trustee. He just sat there for a good minute. You know, a minute is a pretty long time to just sit there in a situation like that. Anyway, after that long pause, he just said thank you,' and that was that. Just about everyone agrees that Os has been a great trustee. Like I said, we got lucky."

Here's the same scene as seen through the eyes of Os Stender: "You know, when they picked me, they practically picked my name out of a hat. Can you believe it? There was no process, not even an interview. I was speechless."

We can't knock good luck, but would rather rely upon clearly articulated criteria and a coherent selection process. Otherwise, the selectors cannot effectively be held accountable. . . .

* * *

February 2, 1999

Bill would limit amount of money paid to
board members of charitable trusts

By Craig Gima, Star-Bulletin

Trustees of the Bishop Estate and other charitable trusts would be limited to compensation of not more than the salary of the chief justice of the Hawaii Supreme Court under a bill heard today in the Senate Judiciary Committee.

The chief justice makes $94,780 a year. In the last few years, Bishop Estate trustees received more than $800,000 annually in compensation.

Critics of the Bishop Estate told senators that excessive compensation is the genesis of many of the estate's problems. . . .

In written testimony, Beadie Kanahele Dawson, of Na Pua a Ke Ali'i Pauahi, told the committee, "Eliminate the fat commissions and you eliminate much of the court battles, greed, self-interest, and future politically connected, unqualified trustees."

Another bill before the committee would impose a five-year renewable term limit on trustees, allow a designated group of beneficiaries to sue trustees and receive attorneys' fees if they win, and prohibit public officers and employees except probate judges from appointing trustees of a charitable trust.

James Ahloy, a trustee for the Lunalilo Trust, opposed the measure because it would also affect the selection process for the estate that supports the Lunalilo Home.

"The precedent set by changing King Lunalilo's will may lead to other changes of negative results for Lunalilo Home," he told the committee....

See also: Paradise Petroleum


 

James Duffy - Honolulu attorney; past Master for Kamehameha Schools/Bishop Estate; arbitrator for the insurance settlement with Federal Insurance Company for the state’s claims against the Kamehameha Schools’ trustees.

The Honolulu Advertiser, 01/04/01: Clinton again nominates Duffy to U.S. appeals court. In his waning days as president, Bill Clinton yesterday renominated Honolulu attorney, James Duffy for a seat on the 9th U.S. Circuit Court of Appeals. . . .

Duffy, 58, was first nominated in June to the 9th Circuit seat . . .

Sen. Daniel Inouye, D-Hawaii, submitted Duffy’s name to Clinton for consideration.

“I am very grateful to Sen. Inouye for his continued support,” Duffy said yesterday. . . .

The former president of the Hawaii Bar Association closed his former law firm, Fujiyama, Duffy and Fujiyama, when he was first nominated and now runs his own firm. . . .

See also: Dan Inouye

For more, GO TO > > > Buzzards of Paradise


 

James J. Kayoda - From the JAIMS website: JAMES J. KAYODA is an accounting professional who provides general business services to small businesses. He is also an accounting instructor at the Japan-America Institute of Management Science.

Previously, Mr. Kayoda was a Certified Public Accountant at the international accounting and consulting firms, Price Waterhouse and KPMG Peat Marwick, and Controller/General Manager at Hawaiian Tuna Packers, a real estate development and ice-manufacturing firm. Before becoming a CPA, Mr. Kayoda was a Japanese language instructor at the University of Hawaii at Manoa. He also served in the United States Air Force Security Service as a Chinese Mandarin linguist.

Mr. Kayoda received his B.A. (Asian History) and M.A. (Japanese Language) degrees from the University of Hawaii at Manoa.

Professional Experience

2000 to present: Counselor, Genki Sushi Hawaii, Inc. Advises the board of directors on all administrative, financial, and business planning matters.

1995 to present: Business consultant, accounting and general business services. Throughout 1997, as an outside accountant, worked with Shigemura and Sakamaki, CPAs, Inc., in the firm’s engagement to assist the Court Master in his examination of the 1994 and 1995 annual reports of the Trustees for Kamehameha Schools/Bishop Estate. The Master’s examination for these years began the process that resulted in the total reform of the trustee system of the Estate in 1999.

1996 to present: Instructor, Intercultural Management Program, Japan America Institute of Management Science. Teaches topics in financial and management accounting.

1995 to 1998: Controller, Hawaiian Tuna Packers. Returned to oversee the company’s finances until the firm’s dissolution in 1998.

1993 to 1995: Manager, KPMG Peat Marwick. Recruited to establish the Honolulu office’s International Business Section to assist Asian start-ups in Hawaii.

1990 to 1993: Controller and General Manager, Hawaiian Tuna Packers. Oversaw the administration, commercial rent, and production divisions; prepared budgets and managed cash flow; provided the real estate development division with financial modeling assistance.

1988 to 1990: Japanese Business Coordinator, Price Waterhouse. Recruited to establish the Honolulu office’s Japanese business division to assist Japanese start-ups in Hawaii.

1987 to 1988: Staff auditor, KPMG Peat Marwick, Guam. Worked on audits in Guam, Saipan, and the Marshall Islands.

1976 to 1987: Instructor in Japanese, University of Hawaii at Manoa. Taught first through third level Japanese language courses.

© 2000 JAIMS. All rights reserved.

See also: KPMG, LLP

For more on the Hawaiian Tuna Packers connection see: Coconut Island


 

John Waihee - former Governor of Hawaii and big FOB (Friend of Bill).

Honolulu Star Bulletin, 10/2/85:

WAIHEE: $10,000 REWALD DOWN PAYMENT RETURNED

The administrator of Ronald Rewald's bankrupt company testified yesterday that Rewald loaned Lt. Gov. John Waihee's law firm $10,000 in January 1983. Waihee, however, said ... that the money was a down payment on a land deal and was later returned.

Thomas Hayes said the check was made out to Waihee but deposited in the law firm of Waihee, Manuia, Yap, Pablo and Hoe. Hayes said Waihee was "embarrassed" about the transaction after Rewald's company collapsed and paid the money back in Nov 1983.

Waihee said the $10,000 wasn't a loan, but a deposit on some Big Island land Waihee owned that Rewald wanted to buy. He said he does not know why the check was marked as a loan. ...

WAIHEE DID receive $4,500 during the 1982 lieutenant governor campaign from Rewald and his companies.

Waihee said he was unaware of the large amount of political donations from Rewald until the collapse of Bishop, Baldwin, Rewald, Dillingham and Wong.

Waihee met with Rewald on three occasions before and after the 1982 election because of his interest in international trade. Rewald at the time was preparing a report on flight capital from Hong Kong. . . .

* * *

A Fiscal Policy Report Card on America's Governors - 1994, by The Cato Institute:

Hawaii: John Waihee, Democrat - Took Office 12/86 - Grade F.

Waihee has helped to create and prolong the recession in Hawaii by his spendthrift budget policies. In his first five years, he allowed the state budget to mushroom from $3.2 billion to $5.3 billion- an average annual increase of 10 percent. That amounts to about $1,200 per family every year. . . .

Despite ... "pro-growth" spending initiatives, the unemployment rate in Hawaii has increased by 2 percentage points since 1989, and property values are in a depression. The spending path charted under Waihee is clearly unsustainable- both fiscally and economically.

* * *

GreaterThings by Greg Wongham: FBI Investigates Hawaii Democratic Party. According to news reports, Nora and Eugene Lum were dispatched by the Hawaii Democratic Party to meet with Bill Clinton. The purpose of the visit was to seek the Presidential candidate’s help in pulling the plug on an FBI investigation of Hawaii’s (D) Governor John Waihee. The Lums admitted to FBI investigators looking into allegations that arose during the “Chinagate” investigation that after Clinton was elected, Webster Hubbell (3rd man in the Justice Dept during the early days of the Clinton administration) pulled the plug.

* * *

Honolulu Star-Bulletin, 10/28/96, by Ian Y. Lind: Isle Woman Part of Campaign Probe - Former resident Nora Lum figures in congressional investigation into ‘92 finances. Congressional investigators have renewed a probe of former Hawaii resident Nora T. Lum, and a 1992 campaign project which she headed, because of their links to Democratic National Committee fund-raiser John Huang and former DNC official Melinda Yee.

David Bossie, staff investigator for Rep. Dan Burton, said last week that investigators are “extremely interested” in Lum’s association with Huang and Yee in the Asian Pacific Advisory Council (APAC-Vote), a DNC project that operated out of offices in Torrance, Calif, during the fall of 1992.

Bossie said APAC-Vote is drawing new scrutiny because its “cast of characters” included Huang, then an officer of the Indonesian-owned Lippo Bank in Los Angeles; the late Secretary of Commerce, Ron Brown, then chairman of the DNC; and Melinda Yee, an assistant to Brown at the DNC and national director of Asian Pacific American affairs for the 1992 Clinton-Gore campaign.

Following the 1992 elections, Brown was appointed secretary of commerce and named Huang and Yee to key positions in the department. . . .

Huang and Yee have been ordered to testify in a lawsuit by the conservative organization, Judicial Watch, which wants to know whether Commerce Dept trade missions were used to raise funds for the Democratic Party. . . .

APAC-Vote officially opened its office on Sept 9, 1992, the same day then-candidate Bill Clinton announced the formation of the Asian Pacific American Committee for Clinton-Gore, whose roster included Sen. Dan Inouye, Sen. Dan Akaka, Rep. Patsy Mink, and then-Gov. John Waihee. . . .

* * *

The Price of Paradise - Vol II - Randall W. Roth, Editor: Is the State Employees’ Retirement Being Abused?, by Bill Wood: . . . I’ll tell you a few things about the Hawaii State Employees’ Retirement System and let you draw your own conclusions. . . .

The ERS now has total assets of about $5 billion, with two-thirds invested in U.S. Stocks and bonds and the remaining third divided among five other categories, the biggest of which is real estate. . . .

Direct investment in real estate offers the possibility of a comparatively high return, but as a relatively high risk. . . .

The fund had not directly invested in real estate prior to 1989. Governor John Waihee says he suggested the move then as a means of broadening the fund’s investment base. His administration paved the way by convincing the legislature to double the statutory ceiling on real estate investments to 10 percent.

Run by trustees. The ERS is administered by seven unpaid trustees and a paid staff. Three of the trustees are elected by the members of the system, three are appointed by the governor, and one, an ex-officio by voting trustee, is a member of the governor’s cabinet, the director of the state’s Dept of Budget and Finance. So the governor appoints four of the seven trustees.

The trustees have a great deal of discretion in the day-to-day operations ... They do, however, get lots of help with their investment decisions. Currently, about 30 investment advisory firms– some local, some not– monitor and make buy-sell recommendations. And there is other help. ERS’s data processing, legal and actuarial work, and financial audits are done by outside firms.

Okamoto, Himeno & Lum. In 1989, when the trustees made their first direct real estate investment, the purchase for $68 million of the newly built City Financial Tower in downtown Honolulu, they decided the legal advice they had been getting in-house– mostly through the state attorney general’s office– was inadequate. The needed specialists. So they hired an outside law firm, known then as Okamoto, Himeno & Lum.

The firm’s partners were Kenneth Okamoto (whose wife, Sandra, was an assistant to then-State Attorney General Warren Price), Sharon Himeno (Sandra’s sister and by November of that year Warren Price’s wife), and Bettina Lum (the law firm’s real estate expert).

Bettina Lum assisted the ERS in its purchase of City Financial Tower. She also helped the trustees evaluate the many mortgage loan applications that were coming in to the ERS as a result of a decision to step up that activity. Much of the $628,000 in fees earned by the law firm from the ERS account between 1989 and 1992 came from evaluating these applications.

Not all the fees came directly from the ERS. Some loan applicants paid Okamoto, Himeno & Lum directly for help in preparing and evaluating their applications. One of these applicants was Waikele Commercial Associates, a partnership seeking a $154 million loan from the ERS to develop a shopping center on land purchased from Amfac/JMB in central O`ahu. Governor Waihee now says he had urged the ERS trustees to increase their loans to Hawai`i businesses such as Amfac/JMB and Waikele Commercial Associates “because it makes good economic sense.”

Political tool. Some people complain that the governor has openly used the ERS as a political tool and improperly interfered in its decision-making. They contend that this amounts to abuse. . . .

The ERS trustees used more than Lum’s services in buying the City Financial Tower. They also hired the local real estate firm Marcus & Associates. That firm had been recommended by the trustee and budget director, Yukio Takemoto, who was a golfing buddy of its chairman, Marcus Nishikawa. Marcus & Associates was named exclusive leasing agent for the 24-story City Financial Tower and given the contract to review the leasing program for the building.

Marcus & Associates also participated in other real estate purchases. Later in 1989, it was a player in the ERS’s $26 million purchase of the CentrePointe office-warehouse complex in Carson, Calif, and in the 1991 purchase, for $17.5 million, of Huntington Plaza, another commercial center in Southern Calif. In each case, the real estate firm was paid a six-figure commission, not by the ERS, but by the sellers.

A quick $3 million. The CentrePointe purchase came back to haunt some of its participants. That deal began when Honolulu businessman Stanley Himeno (father of Sharon Himeno) approached the ERS trustees wanting to borrow money to buy the California property. Marcus & Associates got involved and soon it was decided the ERS would itself buy the property.

CPA’s Ernst & Young, who had started to work for Himeno, appraised the property for the ERS trustees at $26.2 million, and the ERS then offered Himeno’s company $26 million. The offer was quickly accepted and the sale closed. The trustees later said they had no idea Himeno had bought the property for only $23 million and arranged back-to-back closings, thus making an apparent $3 million gain in a matter of minutes.

Okamoto, Himeno & Lum declined to participate in that particular purchase because of the obvious conflict of interest. Besides the family relations, Sharon Himeno and Sandra Okamoto were officers and directors of the Himeno company that bought and sold the CentrePointe property. Another law firm was hired to help out: Hoe, Yap and Sugimoto, Governor Waihee’s former law firm. . . .

Jurist resigns. Late in 1991, the trustees voted to pay $31 million for Wood Ranch, a California golf course. That deal had been brought to them by Honolulu developer Rodney Inaba, a friend of ERS trustee Gordon Uyeda. But retired Hawai`i Supreme Court justice Edward Nakamura, who had been appointed an ERS trustee only months before, strenuously opposed the purchase. He also had grown upset over the pending $154 million loan to Waikele Center Associates. Saying he couldn’t stomach such treatment of public funds, the respected jurist resigned his trusteeship when the Wood Ranch acquisition was approved by a majority of the board.

The governor then told “Yuki” Takemoto to kill the deal and the trustees reversed their decision. Another trustee later said Takemoto told the board the governor “didn’t want the hassle.”

By mid-1993 the ERS had made one other real estate investment, a 400-unit apartment complex in Arlington, Virginia, that cost $38 million, and it was considering two others . . .

But in the summer of 1993 the ERS faced a State Senate special committee probe into its investment decisions and contract practices. Gov. Waihee labeled the investigation “McCarthyism.” The ERS met the challenge by hiring another consultant: Hill and Knowlton, a high-powered international public relations firm that specializes in crisis management.

The first this the big PR firm did was launch a newsletter for ERS members called “Safe & Sound.” The first issue contained blanket denials of any wrongdoing.

See also: Dan Inouye; Gene and Nora Lum; JMB Realty; James Riady; Mochtar Riady; Ron Rewald; Yukio Takemoto


 

Katsuhiro Kawaguchi - The Japanese purchaser of “Gilligan’s Island” (otherwise know as Coconut Island), later to be deported for “criminal activity.”

From: www.zorro-me.com/MIYAZAKI_ENG/

MY FAMILY

The year I was born was a very disgraceful one to be recorded in golden letters in our long national history.

In the midst of confusion following the nation's defeat in World War II, I was born as the fourth and last child to my family in Fukakusa Fukuine Takamatsu-cho, Fushimi Ward, Kyoto Prefecture, on October 25, 1945. My father, Kiyochika Miyazaki, then 43 years old, was the founder-leader of Teramura Gumi, a Yakuza1 organization based in the Fushimi area. . . .

Rascals and Bubble

The year 1987 saw Japan right in the middle of the bubble economy with the Tokyo land price shot up 85% in just one year, as newspapers and journals frequently using such headlines as "runaway land price" which was reminiscent of the "runaway price" of the decade before.

When NTT went public, its share fetches the price of 1.6 million yen with so many eager to buy them, pushing the Nikkei index share price over 25,000 yen.

The Resort Law went into effect in that year as if to encourage the entire nation to build practically as many hotels and golf courses as you wished. The bubble economy was in full swing....

As there remained less and less land, the reward for finding a plot of land for speculation was skyrocketing, about 20,000 yen for the 100 yen million piece of land he found.

"Find bare ground" became a buzzword for land speculators and lots of those shady people, plotters and agents as I mentioned before, were seen traveling across the country looking for land.

People like Kawaguchi Katsuhiro known as the "First land price raiser" of Yadai Sangyo set an eye to the Kansai region, and paid the local yakuza men to find him as much land as possible....

See also: Coconut Island; Yakuza

For more, GO TO > > > Vultures on Gilligan’s Island


 

KPMG LLP - One of the Big Five accounting firms. Current auditors for Kamehameha Schools, replacing PricewaterhouseCoopers.

* * *

November 6, 2000, Honolulu Advertiser:

SUSAN W.F. TODANI has resigned from the Real Estate and Hospitality Consulting Group of KPMG LLP, to accept the position of senior asset manager for investments at THE KAMEHAMEHA SCHOOLS. Todani will oversee strategic management for about 50 Mainland real estate investments, and for-profit subsidiaries in Hawai‘i.

* * *

August 19, 2001, Honolulu Star-Bulletin:

CLAIRE R. ANIYA has been named tax director at Kamehameha Schools. She will be responsible for reviewing and advising KS management on tax matters, as well as overseeing general operations of the tax division. Aniya, a certified public accountant, joins Kamehameha Schools after serving as senior tax manager at KPMG LLP.

* * *

For more, GO TO > > > P-s-s-t, wanna buy a good audit?


 

Kukui, Inc. - A for-profit oil and gas subsidiary formed by the Kamehameha Schools Bishop Estate to take over the operations of the bankrupt business venture McKenzie Methane.

For more, GO TO > > > Part II


 

Larry Mehau - From Philippine Daily Inquirer, 10/31/99: . . . A surprise witness is expected to corroborate industrialist Enrique Zobel's claim that the late strongman Ferdinand Marcos gave gold bars worth $1 million to each of his favored men....

Amid a flurry of denials and verbal attacks sparked by his controversial deposition to Senate investigators, Zobel yesterday stuck to his story as he ended his third day of testimony.

He also said he learned that Marcos allegedly gave the gold bars to former President Fidel Ramos, Sen. Juan Ponce Enrile, the late Gen. Fabian Ver and the late Rep. Floro Crisologo between 1960 and 1970. . . .

Before he died in 1989, Marcos also allegedly told Zobel that he had given "a small share of the gold bullion" and gold Rolex watches to 12 people. The so-called "Rolex 12" were allegedly the key strategists of martial rule. . . .

Zobel, who was paralyzed from the neck down after an accident in 1991, yesterday put his thumb mark on his 69-page deposition at the Philippine consulate.

The last three days were an ordeal for the 72-year-old businessman who answered senators' questions for several hours while strapped to a wheelchair. . . .

For more, GO TO > > > Predators in Paradise


 

Lawrence Landry - From Journal Inquirer, 11/22/00, by Don Michak: . . . A former top official with one of the nation’s wealthiest foundations denied Tues that he was able to start his own investment partnership with $100 million in Connecticut pension money because he agreed to go along with an extortionate demand by former state Treasurer Paul J. Silvester.

But Lawrence L. Landry, who until two years ago was chief financial officer at the Chicago-based MacArthur Foundation, confirmed that he paid at least $1.09 million in “finder’s fees” to a mysterious New York investment banker, Andrew Ferdinand Moses, only after Silvester suggested that Moses was the man to help him get the state’s backing.

Landry said the corrupt former treasurer also had arranged for Moses to meet him and his associates in the Palm Beach, Fla-based Westport Senior Living Investment Fund, which buys and develops retirement communities....

A protégé and longtime business partner of Landry’s, Brad K. Heppner, heads another partnership that has received several state pension fund investments since 1987: The Crossroads Group of Dallas, Texas.

Landry was one of the owners of Crossroads until he left to start Westport, which he said was originally intended to be operated as a unit of Crossroads.

Heppner said that while he wanted Silvester to invest another $100 million with Crossroads, Landry told him Silvester wouldn’t do a deal unless the Texas company paid a further finder’s fee to someone whom Silvester would designate.

Heppner said he ... refused to accept Silvester’s condition. That, he added, led Landry to sell his interest in Crossroads and start Westport, which ended up with the money from Silvester.

Landry, after a presentation before the state’s Investment Advisory Council, a state panel that oversees pension plan deals ... denied Heppner’s allegation....

Silvester was convicted last year on federal racketeering and money-laundering charges, and investigators are continuing to examine how he funneled bribes, and kick-backs through his or others’ political campaigns.

Landry and an investment banker associated with Westport, John Magee, meanwhile said they had no reason to suspect that Moses may have kicked back part or all of his finder’s fee to Silvester...

State treasury records show Moses received a $437,500 fee in connection with one other investment authorized by Silvester.

Landry and Magee said Westport signed a contract with Moses’ company, New York Capital Partners, which also was supposed to find investors in other states for the partnership....

During his half hour presentation to the IAC, Landry revealed that the biggest backer of Westport Advisors, Ltd., the general partner in Westport Senior Living Investment Fund, is Kamehameha Schools/Bishop Estate, a $10 billion Hawaiian education trust that owns 69.2% of Westport.

Similarly, Landry disclosed that Bishop Estate is also the second-biggest investor in the Westport Senior Living Fund itself, having put up $25 million.

Bishop Estate, said to be the nation’s wealthiest charitable trust, has been wracked by a scandal involving the former trustees, whom the Internal Revenue Service ordered removed after accusations that they mismanaged estate finances, took kickbacks, and paid themselves annual fees averaging around $900,000 each.

Its critics, like University of Hawaii professor Randall W. Roth, also say the trust was for years operated “as a multibillion-dollar candy store for the state’s political establishment.”

Landry, who has been quoted in the Hawaiian press as defending the estate’s treasurer, protested Tuesday that the controversy surrounding Bishop Estate has nothing to do with him or Westport.

The fact that he, Westport, and Bishop Estate now also have a connection to the Silvester scandal, he added, is purely coincidental....

See also: Adele Smith Simmons; Apollo Advisers; Crossroads Group; Marsh & McLennan; Paul Silvester; Wayne Berman

For more, GO TO > > > A Connecticut Yankee in King Kamehameha’s Court


 

Lee H. Henkel - A Republican, was Treasury Dept. & IRS Counsel in the Nixon Administration; later a tax attorney and real estate developer in Atlanta.

From CENTURY CAPITAL GROUP website:

Lee H. Henkel, Jr., Managing Director, has over 40 years experience in the tax, merger and acquisition fields both as a lawyer and broker representing primarily the owners of closely held businesses. He is widely known as a dealmaker and is comfortable discussing the various elements of selling a business....

In 1971 he was appointed by President Nixon as the ranking Assistant General Counsel of the U.S. Treasury Department and Chief Counsel for the Internal Revenue Service, Washington, D.C. In this position, he served under Secretaries of the Treasury John B. Connally, George P. Schultz, and William E. Simon...

* * *

From www.jailhurwitz.com/beebe.html :

In 1980, Lee Henkel and the infamous Charles Keating were the East & West Coast financial chairs for ‘John Connally for President’.

Henkel was Keating’s attorney.

In October 1983, ACC buys the infamous Lincoln Savings with DBL issued junk bonds.

In 1984, Lincoln makes $70,000 loan to Connally on a land deal near Austin, TX and $134,000 loan to Henkel; Connally defaulted leaving Lincoln (and not the taxpayers) holding a $70,000 loss (Nation 11/19/90).

In February 1987, WSJ reports Lincoln S&L made at least $619,000 in loans to corporations & partnerships in which Lee Henkel had an interest. In mid-August 1987 the records of the records of Southmark, San Jacinto SA, Strauss, Barnes, Connally and about 200 others were seized according to the Dallas Times Herald. . . .

In 1988, SEC v. MDC Holdings; MDC (has close ties with Silverado), is caught in shady deal with Lincoln S&L. Neal Bush is loaned $550,000 for a house. Connally was elected to Maxxam BOD.

* * *

From The Daisy Chain: How Borrowed Billions Sank a Texas S&L, by James O’Shea:

A lot of money went into Tony Coelho’s DCCC.

More than $200,000 flowed in between early 1985 and mid-1986 from Vernon, other high-flying thrifts, and their supporters. The contributions to senators and House members came in as the donors were having trouble with regulators and felt threatened by pending legislation. The political body also added to the S&L losses, meaning that half the American taxpayers eventually picked up the tab by funding a massive government bailout designed to restore solvency to thrifts such as Vernon.

Of course, Lowery, Kemp, Wright, Coelho, DeConcini, Riegle Cranston, Glenn, McCain, and many others say they did nothing wrong. If contributions were somehow illegal, they say they didn’t know it. Some, such as DeConcini and Riegle, have given the money back. . . .

But none of these public-spirited refunds came until the lawmakers got caught...

Indeed, when he was asked whether he thought the campaign money influenced any of the lawmakers, Keating replied, “I certainly hope so.”

Keating was right. The S&L executives did get something for their money. Barnard held hearings and gave Keating a forum from which he could criticize the bank board. The Treasury legislation that the industry and high-fliers opposed went nowhere, either. When powerful congressmen such as Majority Leader Wright and senators such as Cranston want a bill passed they can get the job done. Obstacles don’t stop the Congress when powerful leaders want legislation.

The administration’s bill started working its way through the bureaucracy in mid-1985. It was introduced into the Congress in early 1986, just before the start of the primary season for mid-session elections....

Although both the Senate and House played a role in blocking the legislation, the House Democratic leadership played a crucial role in the developments that led to the abandonment of the legislation. During the same time frame in which the Democratic leaders stalled the bill, Dixon, Vernon employees, and the thrift’s major borrowers gave Coelho’ DCCC $48,000. Another $62,500 flowed in from other high-flying S&L’s and developers in Texas. An additional $56,500 landed at the DCCC courtesy of Michael Milken and his company, Drexel Burnham, and $29,100 flowed in from Columbia Savings and Loan, the California thrift and big advocate of Milken’s junk bonds. Keating and his employees chipped in another $8,000, and people associated with Silverado gave $4,000....

To ordinary working folks, the contributions may seem like a lot of money. But to the Dixons and Keatings of the world, it was peanuts. What were a few hundred thousand dollars in political contributions if the money bought access to politicians who helped protect S&Ls with billions of dollars in federally insured savings deposits? Vernon had assets of close to $2 billion; Lincoln more than $3.5 billion....

As the S&Ls tossed money around Washington, the impact of their influence peddling fell unevenly on their customers....

But the parties that really paid the price were the American taxpayer and the honest S&L operator. By delaying the legislation, the Congress and the Reagan-Bush administrations simply increased the cost of eventually resolving the industry’s problems. Deposit-insurance premiums remained high for the honest and dishonest segments of the industry alike. Good thrift operators, who were the majority of the industry, paid for the insolvencies generated by the bad....

The losses of the thrifts such as Vernon widened every day as they took in more federally insured deposits to compensate for the plunging value of their assets....

Reagan’s White House displayed an astonishing tons of indifference to the problems. Donald Hovde’s October 1986 resignation from his $72,500-a-year-job as a board member left Gray without any authority to take any kind of official action. Mary Grigsby had resigned from the three-member board two months earlier, and Gray couldn’t act unless he had at least one other board member. Yet the White House left him alone and without power for nearly a month as more and more S&Ls hit trouble.

In November, at the request of Sen. Mack Mattingly, a Georgia Republican who had received more that $10,000 in campaign funds from Keating and his associates, Reagan filled one of the bank board vacancies with Lee Henkel, an Atlanta attorney and real estate developer who had done more than $60 million worth of business with Keating’s S&L....

Henkel wasted no time showing the flag. Reagan made Henkel a recess appointment after Congress had adjourned, meaning he could take his seat immediately. Once the Senate reconvened, Henkel would have to be confirmed. In one of his first actions in December, though, he proposed a rule that would have immunized Lincoln Savings from any enforcement actions in a dispute with the bank board over $615 million worth of direct investments that Lincoln had made in real estate and other risky deals.

By January, incoming Senate Banking Committee chairman William Proxmire of Wisconsin announced that he would oppose the Henkel nomination, when it came before the Senate. Proxmire also asked for a Justice Department investigation of Henkel’s actions.

Henkel asked Reagan to withdraw his nomination a few months later....

For more, GO TO > > > The Myth & The Methane; Vultures in The Meadows

* * *

From www.dcia.com/settlement.html

BILLIONS WON BY INVESTORS

The Arizona Republic

Damages and out of court settlements won by investors in Charles H. Keating Jr.'s American Continental Corp. who filed a $1.2 billion fraud and racketeering lawsuit in U.S. District Court in Tucson:

DAMAGES AWARDED BY JURY:

Defendants will share in a judgement of $1.8 billion in compensatory damages returned by a jury Friday against:

Charles Keating, former chairman of American Continental, who also owes $1.5 billion in punitive damages.

Editor's note: Now that really sounds wonderful but what does it mean? Since Keating says he is broke that $1.5 billion just disappears form the equation. Now there is just chicken feed left for the investors. This headline is a lie. Notice (burried at the very end of the article!) the amount Michael Milken had to pay and remember he was making $550 million per year when he was stopped. That is what it means to have attorneys like the Dershewitz brothers, Melvin McDonnald, and John Dowd. I can think of about 200 million people who would think serving a few years in the pen and keeping all that loot was a pretty good deal!!

Saudi European Investment Corp. of Paris, was a financial partner.

Conley Wolfswinkel of Tempe, was a borrower from Lincoln Savings and Loan Association, an American Continental subsidiary.

Continental Southern Inc., Atlanta, was a Lincoln borrower.

SETTLEMENTS REACHED

Former executives of American Continental and Lincoln Savings, $4.75 million.

Law firms and individual lawyers

Jones, Day, Revis & Pogue, Cleveland: helped Lincoln prepare for a 1986 federal examination, $24 million.

Kaye, Scholer, Fierman, Hays & Handler, New York: represented Lincoln in its disputes with federal regulators, $20 million.

Parker, Miliken, Clark, O'Hara & Samuelian, Los Angeles: worked with American Continental's Lincoln subsidiary in connection with investigations by California regulators, $5.65 million

Sidley & Austin, Chicago: represented Lincoln in dealings with federal regulators, $4 million.

Mariscal, Weeks McIntyre & Freidlander, Phoenix: represented Lincoln in dealings with federal regulators, particularly in disputes over appraisals of properties, including the Phoenician Resort, $2 million.

Barbara Thomas, New York, $90,000.

Accountants

Arthur Young & Co. (succeeded by Ernst& Young); audited Lincoln and Continental's financial statements for 1986 and 1987, $63 million.

Arthur Anderson & Co.: audited Lincoln and American Continental's financial statements for 1984 and 1985, $22.8 million.

Touche, Ross & Co.: audited Lincoln and American Continental from November 1988 until April 1989, $7.5 million, plus $1 million in services for accounting and distribution of payments to investors.

Lincoln borrowers

MDC Holdings, Denver, $1 Million

Isaac Heimbinder, US Homes president, Houston, $1 million.

C.V. Nalley, Atlanta, $750,000

Lee H. Henkel Jr., Atlanta, $100,000

E.C. Garcia & Co., Phoenix $90,000

Others

Offerman & Co., Minneapolis, investment bankers, $1.5 million.

Lexecon Inc., Chicago Financial Consultant, $1 million in services for investors.

Jeffery C. Patch, PHX, appraiser, $500, 000

Richard Fenn, former vice chairman of Saudi European Investment Corp. a financial partner, $16,000

ANTICIPATED SETTLEMENTS

Drexel Burnham Lambert Inc. Investment bankers, $40 to $50 million

Michael Milken, former head of junk bond sales for Drexel, $35 million to $50 million.

Emerald Homes, PHX, Lincoln borrower, $200,000

* * *

See also McKenzie Methane; William Simon

For more, GO TO > > > Aloha, Harken Energy! ; Vultures in the Meadows


 

Leon Panetta - Leon Panetta served as White House Chief of Staff under President Clinton from 1994 to 1997.

PBS Online, 11/8/96: Presidential Press Conference . . . President Clinton held a news conference, the first since his re-election victory Tuesday. The major announcement was that of Erskine Bowles to replace Leon Panetta as White House Chief of Staff...

PRESIDENT CLINTON: . . . I must begin by announcing that Leon Panetta, who has been my chief of staff since 1994, will be resigning...

REPORTER: The election is over. . . . but some questions remain. One of them is: How do you explain the obsession with fund-raising, especially from dubious Asian sources, and how do you overcome the image created by your opponent that you are a President who cannot be trusted?

PRESIDENT CLINTON: Let me answer the second question first. I think the American people, since they’ve been hearing this for five years, took a long, hard look at it, and they measured that against what they saw in terms of the work of this administration, in terms of the people who were laboring hard to make their lives better, and in terms of the President. And I think they made their judgment that I have worked hard for them, I will keep working hard for them ... and I think that they gave me their trust, and I’m going to do my best to be worthy of it.

Now, with regard to the contribution issue, the Democratic Party and the Republican Party raised a lot of money under the rules which now exist. The Democratic Party received over a million different contributions in two years. They determined two things: One is that a relatively small number of them – I think – I don’t know exactly what the number is but quite a small number out of a million, they should not have taken, and they have returned them.. They also– the Democratic Party said that they should have a tighter screen on contributions when they come in, and they’ve implemented an improvement so that they won’t receive contributions they shouldn’t give they can determine it at all. (Huh?) I think that’s a good thing. . . . Terry.

REPORTER: Mr. President. Attorney General Reno is considering whether to appoint an independent counsel to investigate these allegations of improper fund-raising by your campaign. She says that she’s got–

PRESIDENT CLINTON: Wait, wait, wait. There have been no allegations about improper–

REPORTER: Well, by–

PRESIDENT CLINTON: That’s correct– by the Democratic Party– let’s–

REPORTER: She says that she’s–

PRESIDENT CLINTON: That was the other campaign that had problems with that– not mine.

REPORTER: General Reno says she’s caught between a rock and a hard place and that she’ll be criticized no matter what she does. I know that it’s her decision, but what do you think? Do you think that these– these allegations should be investigated by an independent counsel, and secondly, do you think that General– would you like to see General Reno stay on for a second term?

PRESIDENT CLINTON: I think on the first question I should have no comment on that. On the second question, I should have no comment on any personnel decision until I have had a chance to meet with the cabinet members . . .

* * *

From PBS Online, 1/17/97: Panetta Heads West . . . On his last day in office he talks to Margaret Warner about ethics, money in politics, and Clinton’s Presidency. . . .

MARGARET WARNER: . . . Now one of this group of problems did happen on your watch, and that is the Democratic National Committee fund-raising, and let me just ask you whether you think, in retrospect, you all put too much pressure on the DNC to raise these millions and millions for the presidential year and that there was also maybe something a little unseemly about the way you involved the President in all these special things for the donors or the nights in the Lincoln Bedroom or the coffees here at the White House. . . .

LEON PANETTA: Well, obviously, I think the President and all of us were disappointed at what happened with regards to how the DNC checked the contributions and the fact that they had a check system in place and then ignored it or put it aside . . .

* * *

The Detroit News, 1/29/98: . . . Negotiations to get Monica Lewinsky’s cooperation in the sexual scandal surrounding President Clinton inched forward Wednesday while investigators cast a wide net to gain corroborating evidence.

Independent counsel Kenneth Starr’s team called the biggest figure yet to testify before a federal grand jury sifting through charges that Clinton had sex with Lewinsky while she was a White House intern and then encouraged her to deny it under subpoena....

“I am personally not aware of any improper relationship, sexual or otherwise, by this president and any of the White House interns or anyone else for that matter,” Panetta said later.

Panetta’s testimony is seen largely as a building block for the investigation because of his access to Clinton and because Lewinsky worked for him when the alleged sexual encounters occurred.

Panetta, though, recently said he didn’t recall Lewinsky . . .

* * *

The Starr Report Evidence, edited by Paul Kuntz: Monica Lewinsky’s First Interview with Investigators:

Office of the Independent Counsel - 07/27/98 ...

LEWINSKY first met the President of the United States, WILLIAM J. CLINTON, in July 1995, soon after beginning her job as an intern in LEON PANETTA’s Office in the White House. The occasion was the departure of the President from the South Lawn of the White House....

LEWINSKY began her personal relationship with the President on Nov 15, 1995. ...

LEWINSKY, who was still an intern working for LEON PANETTA in the West Wing of the White House, saw the President when he came to the West Wing to see PANETTA and HAROLD ICKES....

* * *

The Honolulu Advertiser, 02/05/00:

Trustees helped by Inouye, Akaka
in fighting pay limit

By Sally Apgar

The ousted trustees of Kamehameha Schools enlisted the aid of Sens. Dan Inouye and Daniel Akaka in 1995 to influence fellow members of Congress to vote against a bill that threatened the trustees’ $1 million-a-year paychecks, according to internal trust documents obtained by The Advertiser. . . .

Thirteen confidential memos during the fall of 1995 through April 1996 detail the trustee’s strategy against the bill, which called for intermediate sanctions that penalize high-ranking insiders of charitable organizations for taking excessive personal benefits. . . .

The memos express the trustees’ intent to “kill the measure” and their recruitment of influential contacts, such as Inouye, Akaka and the Rev. Jesse Jackson. They also targeted others, including Senator Patrick Moynihan of New York and even White House insiders such as Leon Panetta, then President Clinton’s chief of staff, to win support....

The memos give a glimpse of the behind-the-scenes political power and influence the former trustees once wielded and describe a costly, intensive effort to protect their interests....

Mark McConaghy of PricewaterhouseCoopers, a longtime tax adviser to the trust, was charged with contacting Leslie Samuels, then assistant secretary for tax policy....

* * *

Zenith National Insurance Corp. Press Release, 5/18/00: LEON PANETTA JOINS ZENITH’S BOARD OF DIRECTORS. Zenith National Insurance Corp announced today that Leon E. Panetta has been elected a Director of Zenith and its wholly-owned subsidiary, Zenith Insurance Company...

See also: Dan Inouye

See in Part II: Zenith National Insurance


 

Lloyd Bentsen - Former U.S. Secretary of Treasury.

Bentsen sat on the Board of Directors of American International Group at the time Governor Clinton's Arkansas Finance & Development Authority (with help from Goldman Sachs and Robert Rubin) invested in AIG's Coral Reinsurance in Barbados.

Bentsen, along with Hawaii's ex-governor (and FOB) John Waihee, are also lobbyists with the Washington, D.C.-based law firm Verner Liipfert Bernhard McPhearson Hand which was hired by Bishop Estate to lobby against the federal "interim sanctions" legislation. The state Attorney General's Office disclosed that the trust paid the firm more than $900,000 for its unsuccessful lobbying efforts on intermediate sanctions legislation between 1995 and 1998.

* * *

New Holland N.V. Press Release, 10/29/96: Former U.S. Treasury Secretary Bentsen appointed Chairman of New Holland N.V. New Holland N.V. announced today that Lloyd Bentsen, the 69th U.S. Treasury Secretary, who played a pivotal role in the Clinton Administration during 1993 and 1994, and former U.S. Senator from Texas, has been appointed Chairman of the Board of Directors of New Holland.

Senator Bentsen was appointed Treasury Secretary by U.S. President Clinton in Jan, 1993, and served in the Clinton Administration until December, 1994. As Secretary he was a major policy adviser to the President and was credited with playing a key role in the Administration’s successful efforts to reduce the federal deficit and to increase trade and economic opportunity through NAFTA (North American Free Trade Agreement) and GATT (the General Agreement on Trade and Tariffs.)

Mr. Bentsen said: “As one who has for may years owned farms, I can attest to the high quality of New Holland’ agricultural equipment. I am pleased to become a board member of this leading international manufacturer.” . . .

Before joining President Clinton’s Cabinet, Lloyd Bentsen, born in Texas, was one of the most powerful members of the U.S. Senate where he served from 1971 until his appointment as Secretary of the Treasury. He was Chairman of the Senate Finance Committee, which has the responsibility for tax and trade issues. He also served as Chairman of the Joint Committee on Taxation and the Joint Economic Committee. In 1988, he was the Democratic Party’s nominee for Vice President of the United States.

Mr. Bentsen began his public service as a Texas County Judge, then served three terms in the U.S. House from 1948 to 1954. After that he pursued a successful business career. . . .

NEW HOLLAND - THE INITIAL PUBLIC OFFERING: As previously announced, New Holland has filed with the U.S. Securities and Exchange Commission a registration statement for a global initial public offering for 46,500,000 Common Shares . . . A registration statement relating to the Common Shares has been filed with the U.S. Securities and Exchange Commission but has not yet become effective . . .

* * *

J.P. Morgan Press Release, 11/12/99: J. P. Morgan, as New York transfer agent and registrar, is pleased to announce the name change for New Holland N.V.’s NYSE listed shares of New York registry to CNH Global N.V. The name change coincides with the closing of the company’s merger with Case Corporation....

The world’s largest ADR depository and a global financial services firm, J.P. Morgan serves clients through an integrated range of advisory, financing, trading, investment management, and research capabilities....

See also: Dan Inouye


 

Lucent Technologies - GO TO > > > Part II


 

Lyn Anzai - Former in-house attorney for Kamehameha Schools who handled many of the major “questionable” investments of the former, legally-ousted trustees, and responsible for the “work-outs” when the investments turned sour; wife of Earl Anzai – the politically-picked replacement of politically-ousted Hawaii Attorney General Margery Bronster.

For more, GO TO > > > Part II


 

Mark McConaghy - PricewaterhouseCoopers tax expert for Bishop Estate and its subsidiaries.

For more, GO TO > > > Part II


 

Marsh & McLennan Companies, Inc. - From the RICO lawsuit: Harmon v. Federal Insurance Co, Marsh & McLennan, Inc., Trustees of Bishop Estate, Pricewaterhouse Coopers, et al: . . .

Defendant Marsh & McLennan Companies, Inc. (M&M) is the world's largest insurance brokerage firm that conducts business throughout the United States and in many foreign countries, and is a licensed General Agent for Federal in the State of Hawaii.

On or about May 25, 1994, Plaintiff, in his capacity as Risk/Insurance & Safety Manager for KSBE, obtained a Captive Management Fee Proposal from Peter Lowe, VP, M&M Insurance Management Services, Inc. (M&MIMS), which detailed their proposed services and fees for managing P&C. Their services were to be on a time and expense basis, with an estimated annual cost of around $70,000. There was no mention in this proposal that their related subsidiary, M&M, would charge an additional flat annual fee of $200,000 for providing "brokerage", "risk management" or other purported services to the captive.

This proposal, the subsequent contract, and periodic invoices from M&MIMS and M&M were transmitted by mail and/or wire. Plaintiff relied upon this proposal, its costs and representations, as an inducement to contract for these captive management services. Plaintiff alleges that M&M's failure to disclose in their proposal an additional flat annual fee of $200,000 constitutes wire fraud, mail fraud, fraudulent inducement and misrepresentation.

Defendants M&M and M&MIMS, their employees, Rocco Sansone and Peter Lowe, and others in their organizations benefitted financially from these excessive fees in the form of salaries, commissions, bonuses, or other manner of compensation. Plaintiff alleges that M&M's acts in collusion with some or all of trustees of KSBE, with officers and directors of P&C, and with Federal constitutes a conspiracy to defraud P&C and the beneficiaries of the Estate of Bernice Pauahi Bishop; racketeering; mail fraud; wire fraud; extortion; and violations of the "interim sanctions" regulations of the IRS...

* * *

For more, GO TO > > > The Marsh Birds

For Harmon's letters to California and Hawaii Insurance Departments, GO TO > > > Insurance Commissioners


 

Marshall Ige - From Honolulu Star Bulletin, 1/19/01, by Rick Daysog: Ex-legislator Ige Could Face Prison Terms - Investigators got onto the case during the probe of Bishop Estate trustees and their political cronies.

In the latest twist to the state’s criminal investigation into the Kamehameha Schools former trustees and their political cronies, the attorney general’s office has filed new charges against former state Sen. Marshall Ige. Ige, who was arrested and released on bail yesterday, appeared in court this morning for his arraignment and plea...

Ige, who lost his Windward Oahu Senate seat last year, said he plans to plead not guilty to all of the counts...

In its criminal complaint, the state alleged that Ige improperly took $30,000 from an elderly Beverly Hills couple and laundered the proceeds through a businessman.

The state also alleged he improperly took $7,000 from a Windward Oahu farmer in June 1999 after threatening to evict him.

If convicted, Ige faces up to 10 years in prison for the first-degree theft and money laundering charges and up to five years in prison for the tax evasion, extortion and second-degree theft charges.

The new complaint is in addition to campaign finance-related charges faced by Ige. The attorney general’s office alleged in July 1999 that Ige failed to report $22,500 in campaign contributions laundered by the trust’s outside contractors.

Ige, a longtime associate of former Bishop Estate trustee Henry Peters, has pleaded not guilty to the campaign-related charges, which are misdemeanors. That case was scheduled to go to trial next month but may be delayed.

Senate President Robert Bunda, a former colleague of Ige’s, said he was shocked by the new criminal charges. Bunda (D) called Ige a “tenacious” individual who is a good person at heart.

Ige played an instrumental role in the controversial 1999 confirmation defeat of then-Attorney General Margery Bronster in the Senate....

* * *

May 29, 2002

Former Windward senator gets
6 months in prison

A judge comes down hard on Marshall Ige in a theft and tax case

By Rick Daysog, Honolulu Star-Bulletin

Saying the former lawmaker's actions were "glaringly wrong," a state judge has sentenced former state Sen. Marshall Ige to six months in prison.

Circuit Judge Sandra Simms yesterday also gave Ige five years of probation after the former Windward Oahu senator pleaded guilty in January to second-degree theft, attempting to evade taxes and failure to file tax returns.

Simms said Ige's case is troubling given that he took advantage of an elderly California couple and a farmer who didn't speak much English.

"It's like you knew who to pick on," Simms said. "That's just glaringly, glaringly, glaringly wrong."

Ige, who lost his Senate seat in 2000, appeared in court yesterday and pleaded for no jail time. His attorney Richard Sing said Ige was in dire financial straits.

"I'm not trying to make excuses," Ige said. "I regret going down this path. I should have never done it."

Ige, 48, served in the Legislature from 1982 to 2000 and is a former state Democratic Party vice chairman and a former chairman of the Senate Human Services Committee.

He is the latest local politician to be facing prison for crimes committed while in office. In December, a federal judge sentenced former city Councilman Andy Mirikitani to four years and three months in prison for a kickback and extortion scheme. That came after state Sen. Milton Holt served a one-year federal prison term for mail fraud.

"I think it's clear that the courts have recognized that we have an epidemic of public corruption," said Deputy Attorney General Kurt Spohn. "It's clear that people are fed up with this type of behavior."

According to the state, Ige improperly took $7,000 from Windward Oahu farmer Hahn Lam in June 1999 after threatening to evict Lam from leased land. Spohn, who asked for a one-year jail sentence, said Ige used his position in the state Legislature to bully Lam.

Ige's tax convictions arose from an "elaborate scheme" to defraud $30,000 from Morris and Rita Wolfred of Beverly Hills, according to Spohn.

The Wolfreds said Ige promised to expunge a Hawaii criminal conviction against their daughter, Joan Wolfred, in exchange for the money. But Ige was unable to expunge her criminal record and did not return the money to the couple voluntarily.

Ige then hid the money from the state tax collector by giving it to a businessman who parceled it back to him in small amounts.

The state initially obtained indictments for first-degree theft against Ige in the Wolfreds' case. But those charges were dropped with the couple's consent. Ige has repaid the $30,000 to the Wolfreds, but still owes $4,400 in restitution to Lam.

Spohn said Ige failed pay the balance due to Lam, even after the former lawmaker gave more than $16,000 to his son and daughter and paid for more than five trips to Hong Kong, Taiwan and the U.S. mainland.

"It was the classic case of robbing Peter to pay Paul," Spohn said.


 

McKenzie Methane - A Texas methane gas company in which Bishop Estate was the majority investor-- AND IN WHICH THE ESTATE’S TRUSTEES, MANAGERS, FRIENDS AND OTHER INSIDERS CO-INVESTED THEIR PERSONAL FUNDS, THEN LET THE ESTATE BAIL THEM OUT WHEN THE DEAL FIZZLED.

* * *

From the RICO lawsuit, Harmon v. Trustees of Bishop Estate, et al.:

. . . Plaintiff alleges that Aipa's wrongful acts are multitudinous. These acts include, but are not limited to: . . . Facilitating and concealing co-investments in KSBE deals by the Trustees, employees, family members and business associates.

In 1989 the four KSBE Trustees, Peters, Takabuki, Richardson and Thompson approved of the investment of approximately $85 million in a Houston-based energy venture with McKenzie Methane. (Trustee Lyman had recently passed away and a fifth trustee had not been appointed.)

This same venture also received more than $3 million in personal funds from all four trustees and employees and business associates of the estate. The Honolulu Advertiser reported in their February 26, 1995 issue that: "The troubled deal may cost the estate as much as $65 million in lost capital and at least twice that much in lost earnings and tax benefits."...

Honolulu businessman Desmond Byrne ... called the personal investments by estate trustees and staffers 'an absolutely improper conflict of interest. It raises the appearance that their official decisions are affected by their own personal financial interests'...

The current board is almost completely different from that of 1989. Only one trustee, Henry Peters, remains. But the current board still holds that the old one did nothing wrong, according to [Nathan] Aipa....

"There was no conflict of interest," Aipa said. The Texas court files clearly show, however, that the trustees, their employees and associates relied on estate reports and financial data when they decided to put their own money in the deal. Estate personnel have immediate access to the high-priced and sophisticated financial expertise of such firms as First Boston Bank and Goldman, Sachs & Co.

The estate, a non-profit, tax-exempt institution ... must be very careful in structuring its investment activities so it won't imperil its tax-exempt status. The Houston investment was particularly tricky because one of the principal benefits was that the estate would receive federal energy tax credits, which the tax-exempt estate intended to sell."

This same news article went on to describe other personal investments in estate-related business deals: "According to court records, the estate board of trustees was told in April, 1989 by Aipa, that 'no conflict (of interest) exists in the personal investments.'

The personal investments were made 'only after careful review of the issues and advice from the law firm of Rush Moore Craven & Stricklin,' Aipa said. But current trustee Oswald Stender ... said under oath in a 1993 deposition that he would not have made such a personal investment ... that he would not invest in activities ... that I had self-dealing in.

Takabuki, his wife, three children and family company, Magba Corp., invested $1.5 million...

The investments were made through a series of five partnerships, called the 'HAK Partnerships', that were organized and administered by Mitchell Gilbert, Bishop Estate financial assets manager from 1988 to September 1994...

Gilbert and members of his family invested nearly $72,000 in the five partnerships, the court records show. And he invited various influential 'investment affiliates' of the estate to invest in the HAK Partnerships. . . In 'marketing' the deal to potential investors, he was acting individually and not as a representative of the Bishop Estate, Gilbert said in his deposition... But the letters he wrote were on estate stationery and he signed them as Bishop Estate's financial assets manager....

A Texas lawyer for Bishop Estate said in Houston bankruptcy court last month that the estate can only hope to recover $20 million at most of its $85 million investment...

According to the Honolulu Advertiser, other co-investors included:

Henry Peters (trustee)

William Richardson (former trustee and subsequent consultant; Sec./Treasurer of P&C)

Myron Thompson (former trustee)

Matsuo Takabuki (former trustee and subsequent consultant)

Dave Thomas (owner of Wendy's restaurants and co-investor with KSBE on several other projects)

William E. Simon (former U.S. Treasury Secretary, and co-investor with KSBE on several other projects, including HonFed Savings & Loan, Sino Finance, Xiamen Bank (China), and SoCal Holdings)

Wayne Rogers (the Mash actor, who later brought many suits against KSBE for the Kona Enterprises deal)

Bruce Nelson (treasurer of the Rockefeller Group)

Raymond Pettit (CFO of the Rockefeller Group)

Frederick "Ted" Field (Big-time movie producer. Three Field employees also invested. Field was the estate's partner in the corporate takeover of European conglomerate DRG, Inc. He later brought suit against the estate in a co-investment deal involving The Pantry)

Mark McConaghy (Bishop Estate's principal tax lawyer and lobbyist. McConaghy, who works for the Price Waterhouse accounting firm's national headquarters in Washington, D.C., was a finalist on the state Supreme Court list of nominees to fill the latest vacancy on the estate board of trustees, losing out to Gerard Jervis.)

Michael Chun (President of Kamehameha Schools)

Gilbert Tam (then-Director of Administration, KSBE; currently, an officer of Bank of Hawaii and director, P&C)

Guido Giacommetti (then Director of Asset Management, KSBE; now court-appointed trustee for the Sukamto Sia mega-bucks bankruptcy)

Anthony Sereno (deceased, then Board of Directors, Royal Hawaiian Shopping Center, Inc.)

Neil Hannahs (head of the estate's Kakaako development project)

Charles Maeda (head of Information Services Division, KSBE)

Richard Wong (president of RHSC and Pauahi Holdings Corp.)

Wallace Tirrell (then president of Kamehameha Investment Corp.)

Gilbert Ishikawa (KSBE tax manager)

Ed Hendrickson (KSBE Financial Assets Division)

Rodney Park (then KSBE Controller; currently Dir, Administration Group, and President, P&C)

Wally Chin (then Deputy Controller; currently Controller, KSBE)

Donald K. H. Pang (father of KSBE employee, Leeanne Crabbe)

AIPA and others did such a good job of concealing this information, that Plaintiff was unaware of these co-investments until he read about them in the newspaper -- even though his job at the estate required him to be informed of the details of mergers and acquisitions for insurance and risk management purposes....

For example, in March 1993, B. M. McKenzie and McKenzie Methane Corporation filed a lawsuit for $2.3 billion against the trustees and KSBE. Additional defendants were the HAK Partnerships I, II, III, IV and V; Smith-Gordy Methane Co.; SG Methane Co., Inc.; Gordy Oil Co.; L. H. Smith; R. D. Gordy; D. A. Barras; Lee H. Henkel, III; Mitch Gilbert; Royal Hawaiian Shopping Center, Inc.; Maralex, Inc.; M. O'Hare; Kukui, Inc.; JGI Resources, Inc; and Northwestern Mutual Life Insurance Co.

AIPA initially did not report this lawsuit to the insurance company, United Educators. Plaintiff learned of this lawsuit several months after it was filed, and only as a result of his inquiring about unreported claims in preparation for the renewal of this policy. When Harmon did report this claim to the insurance carrier, Aipa immediately took control and directed that all correspondence to or from the carrier would be made by him.

AIPA repeatedly refused to furnish information to the insurance company regarding the claim, despite frequent and urgent requests. Eventually, the insurance company closed its files on the case due to Aipa's failure to respond to the carrier's request for information. The actual cost to the estate is unknown, but Plaintiff estimates that the loss of legal defense costs alone could easily have been in excess of a million dollars....

* * *

See also: Kukui, Inc.; Lee H. Henkel; William Simon

For more, GO TO > > > Claims By Harmon; RICO Lawsuit - Harmon v. Federal Insurance Company et al.


 

Michael Chun - President of Kamehameha Schools.

February 20, 1999

Bumbler or martyr?
Chun portrayal a key dispute in trial to oust Lindsey

The Kamehameha Schools' president
defends his record under questioning by Lindsey's lawyers

By Rick Daysog, Star-Bulletin

Is he a tortured martyr who selflessly placed the educational needs of the children and teachers at the Kamehameha Schools over his own interests?

Or is he an inept manager who lacks the basic educational background to properly run the Kapalama Heights campus?

The diverging portrayals of Kamehameha Schools President Michael Chun represents a central dispute in the trial to remove Bishop Estate trustee Lokelani Lindsey from the estate's board.

Trustees Oswald Stender and Gerard Jervis are seeking Lindsey's ouster on the grounds that she breached her fiduciary duties, mismanaged the estate-run Kamehameha Schools and usurped the popular Chun's authority.

Lindsey has argued that the school's academic program declined during Chun's tenure, prompting her to intervene.

Chun yesterday took the witness stand for the third day in the three-month-old removal trial, to answer questions from Lindsey's lawyers about his management record.

Chun told Circuit Judge Bambi Weil that while he does not have an advanced degree in education, he considers himself a strong educational leader.

Previously, Chun had testified that student admissions to four-year colleges have increased and test scores have risen during his tenure.

"I think I have a commendable reputation in education," said Chun, a former University of Hawaii engineering professor.

But Lindsey's attorney, David Gierlach, spent most of his cross-examination attempting to show that Chun helped fuel the campus controversy.

Chun conceded that he, and not the trustees, was responsible for shortening the length of teachers' contracts from the previous five-year term to the current one-year period.

The move contributed to a mood of uncertainty among Kamehameha faculty members and other staffers.

Chun also played a role in the demise of the Kamehameha Schools Association, which had served as a sounding board for teacher concerns and grievances to management.

The association's shutdown left teachers without a formal organization to voice their concerns and promoted an environment in which rumors flourished, Gierlach said.

Chun said he did not "cancel" the association, but he may have contributed to its end after expressing concerns that members wanted to form a faculty union.

The organization later dissolved after several poorly attended elections for association officers were held, Chun said.

Gierlach also grilled Chun about his financial status.

In addition to the $210,459 that Kamehameha Schools paid him for the year ending June 30, 1997, Chun said he earned an additional $62,000 last year for serving on the boards of Alexander & Baldwin Inc. and Bank of Hawaii, a subsidiary of Pacific Century Financial Corp.

In the past, Lindsey and trustees Richard "Dickie" Wong have raised concerns that Chun's outside work may distract him from his duties at Kamehameha Schools, Chun added.

Gierlach also questioned Chun about nonbid contracts that he awarded to his former employer, Park Engineering, and a former classmate, local architect Lloyd Sueda.

Chun said he awarded the two firms and their subcontractors between $1.5 million and $2 million in design and engineering work between 1988 and 1995.

But he said the work, which covered dormitory renovations and drainage projects, was awarded to the firms because they were qualified to do the work and not because their principals were friends....

See also: Park Engineering


 

Mid Ocean Reinsurance Co. - In 1993, Bishop Estate invested $30 million in Mid Ocean Reinsurance, a Bermuda company, with partners J. P. Morgan, Marsh & McLennan, and Texas deal maker, Richard Rainwater. Bishop Estate's trustee, Henry Peters, was appointed a director of Mid Ocean. In 1998, Exel Ltd, a Bermuda insurer, acquired the 75% of Mid Ocean Ltd. it didn't already own in a stock swap valued at $2.2 billion. The transaction was negotiated for Mid Ocean by J.P. Morgan & Co. while Excel was advised by Goldman Sachs.

* * *

From Equity No. 2045 - 2nd Amended Petition of the Atty Gen to Remove and Surcharge Trustees: . . .

In 1992, the Trust invested approximately $31 million in Mid Ocean, Ltd., a Bermuda-based insurance company, and acquired 310,000 Mid Ocean Class A shares....

In 1993, when Matsuo Takabuki retired as a Trustee of the Trust, (Henry) Peters succeeded to Takabuki's seat as a director of Mid Ocean. . . . Peters' service as a Mid Ocean director fell within his duties as Trustee and was a Trust opportunity. . . . Peters used Trust personnel to prepare him for Mid Ocean directors' meetings....

While a director of Mid Ocean, Peters received substantial director's retainers and attendance fees and acquired shares of Mid Ocean stock through a stock and deferred compensation plan for non-employee directors....

The Mid Ocean fees and stock options are assets that belong to the Trust and not to Peters individually... Peters has enriched himself at the expense of the Beneficiaries by retaining the fees and stock options for his personal benefit....

See also: Richard Rainwater


 

Miller & Chevalier - A Washington, DC-based nest of Lawyers and Lobbyists.

For more, GO TO > > > Part II


 

Milton Holt - Holt was a Kamehameha Schools employee and former Hawaii state senator.

Equity No. 2048, Petition of the Attorney General on Behalf of the Trust Beneficiaries to Remove and Surcharge Trustees: "Milton Holt is a friend of Peters and served with him in the Hawaii Legislature. Holt has been an employee of the Trust since 1987, first as assistant athletic director and more recently as a special projects officer. . . . Holt has been paid as a full time employee. He has not worked full time for the Trust....

From 1992 until early 1998, Holt repeatedly used a credit card issued to the Trust for charges at Honolulu adult entertainment nightclubs and to obtain cash advances at Nevada casinos. . . . Peters and Wong were informed by senior Trust executives of the improper nature of the charges and of the difficulties in obtaining repayment from Holt....

Peters and Wong concealed from the other Trustees Holt's personal charges on the Trust credit card and rejected suggestions to confiscate the card. In 1994, the Trust gave Holt a retroactive pay raise of $12,325. The retroactive pay raise was not related to the value of Holt's services for the Trust but, rather, was calculated to pay off the improper expenses charged by Holt. ... The Trust did not timely pay employment taxes on the retroactive salary increase to Holt."

* * *

Honolulu Star Bulletin, 4/4/00, by Rick Daysog:

Estate Paid Law Firm Bill for Holt -- Nearly $15,000 Went to S.F. Lawyers for a Case that Did Not Involve Kamehameha Schools.

The Kamehameha Schools paid a San Francisco law firm nearly $15,000 to defend former state Sen. Milton Holt during a 1993 federal political corruption investigation, in the latest questionable expenditure involving the convicted former lawmaker.

The $6 billion charitable trust picked up Holt's legal tab with Farella Braun & Martel LLP in 1994, even though the federal investigation did not involve the estate and apparently was not related to Holt's duties at the trust. . . . sources say it involved the alleged bribery attempt of then Senate President James Aki.

In 1993, the FBI conducted a preliminary inquiry into charges that Indonesian developer Sukamto Sia ... offered to develop Aki's Nanakuli property if Aki would relinquish the senate presidency in favor of Holt. Holt was then vice president of the Senate....

Holt, Aki and Sukamto were never charged ...

Sources said that Holt's legal payments were authorized by the estate's then-general counsel Nathan Aipa on the recommendation of C. Michael Heihre, formerly know as C. Michael Hare, one of the estate's outside attorneys....

Heihre is a former chairman of the nine-member state Judicial Selection Commission, which nominated the state Supreme Court justices. Until recently, the state Supreme Court selected Kamehameha Schools trustees.

Heihre, whose firm has conducted millions of dollars in legal work for the estate throughout the years, declined comment . . .

Holt is serving time in a federal prison after he pleaded guilty to a mail fraud charge relating to campaign finance abuses. A federal grand jury indicted Holt for theft of thousands of dollars of campaign funds in 1998 . . . While awaiting trial, Holt tested positive for illegal drugs, violating the conditions of his bail. The state attorney general has alleged that Holt spent thousands of dollars on the estate's credit cards at isle hostess clubs and Las Vegas casinos.


 

Mitsui Trust and Banking Company - From Pacific Business News, 06/24/96: Landmark back on market. . . . The architecturally distinctive 35-story Waikiki Landmark has languished since its completion in 1993, a victim of the evaporation of interest in expensive Hawaii real estate...

In June 1995, Los Angeles-based Oaktree Capital Management bought the $155 million mortgage on the 196-unit building for an estimated $50 million from Mitsui Trust & Banking Co. Ltd. And in January, Oaktree filed a foreclosure suit against owner Waikiki Landmark Partners, headed by controversial Indonesian developer Sukamto Sia, also known as Sukarman Sukamto....

* * *

According to the condominium documents, total construction costs of the Waikiki Landmark exceeded $200 million, or over $1 million per apartment. The general contractor was Charles Pankow & Associates, a tenant in Bishop Estate's head office building, Kawaiahao Plaza. The developer's and the contractor's insurance broker was Marsh & McLennan, who was also Bishop Estate's broker. The project was built on land leased from the family of Hung Wo Ching, a former trustee of Bishop Estate.

* * *

U.S. News & World Report, 04/13/98, by David Kaplan: Yakuza, Inc. - . . . U.S. News obtained a ... portfolio of 108 properties offered to Western investors by Mitsui Trust & Banking Co., one of Japan's largest banks. . . . Thirteen of the properties ... are held by Azabu Building, a company that might not mean much to Americans but is quite familiar to Japanese police. . .

* * *

Honolulu Star-Bulletin, 12/23/97: Mitsui Trust Foreclosing on Maui Marriott - A Japanese-based lender has filed a foreclosure suit against the owner of the 720-room Maui Marriott Resort . . . Mitsui Trust and Banking Co. filed the complaint last week against Azabu Building Co. ... saying the developer owned $245 million in principal and interest ...

Azabu acquired the Maui Marriott, which opened in 1982, from Metropolitan Life Insurance Co., Marriott Corp. and KBP Limited Partnership in 1986.

The suit is the latest legal action faced by Azabu, headed by Japanese deal maker Kitaro Watanabe, who invested about $600 million in isle properties during the late 1980s and early 1990s. . . . In 1993, Mitsui filed a foreclosure suit against Azabu for its purchase of the 1,200-room Hyatt Regency Waikiki....

Some believe that the foreclosure is largely a result of Azabu's problems in Japan. In 1994, Mitsui wrote off about $1 billion in bad debts largely from Azabu's loans in Japan.

See also: Sukamto Sia; Yakuza


 

Mochtar Riady - A senior executive for the Riady family's Indonesian enterprise, Lippo Group.

A billionaire, Mochtar Riady was an invited guest at Clinton's inauguration and his son, James was on the "economic summit" convened after Clinton's election. Riady has close ties with the military junta that has killed hundreds of thousands in East Timor.

When Clinton visited Indonesia in November 1994, he met with Mochtar Riady and John Huang. A point at issue here is not only the illegal foreign contributions to a presidential election, but also the close economic and social ties to an enterprise vying to market East Timor goods in America by a group that uses genocide and slave labor to compete in the global market.

The Bishop Estate reportedly has tenuous connections to the Riadys through the Panin Group, Sino Finance, and Xiamen International Bank.

* * *

greaterthings.com, by Greg Wongham: HAWAIIAN BANKS LINK: China-US Campaign Scandal and Illicit Capital Flow - The Link Between Mochtar Riady and the Clinton Administration. The problems with the FDIC/Donna Tanoue and the two big Hawaii banks will undoubtedly effect people throughout the country. I believe that the Hawaii links to Mochtar Riady are attempting to gain access to the American capital market through Riady’s brother-in-law, Mumin Ala Gundawun. Riady was too hot (BCCI, Chinagate), so they wisely chose to approach their plan via the Hawaii connection.

Sec. Treas., Robert Rubin played a major role in setting up this new bank scandal by lobbying for repeal of the Bank Holding Company Act. The purpose for this action is to allow Bank Holding companies (Hawaii’s Pacific Century Financial Corp and BancWest) to expand their financial services, thus allowing them to become full service securities brokerages. This seems like an ideal front to legitimize their deals to the American capital markets....

Overview. I am the producer/host of a public access TV show called “Corruption in Hawaii.” I have spent 6 years exposing different aspects of the Hawaii machine....

During the month of August ... a segment of my show (was) titled, “What does Hawaii’s Bank Losses Mean to You?” The show featured a guest who described the losses he experienced in his family trust which was handled by Pacific Century Financial Corp (formerly Bank of Hawaii). He lost $1 million, plus $300 thousand in legal fees.

Numerous people called and said that they too, had experienced significant losses. Last week the public access station pulled the segment of the show. The next day the CEO of Pacific Century resigned. Two of the board of directors for the public access station are with the two big banks....

The important points in this story revolve around the fact that Hawaii’s Democratic machine played a major role in the Chinagate scenario that grew out of the investigation into illegal foreign campaign fundraising.

The machine headed by Hawaii’s political godfather, Senator Dan Inouye was being investigated by the FBI during former (R) President George Bush’s tenure. The basis of the investigation stemmed from allegations of extortion and bribery aimed at the administration of former (D) Gov. John Waihee. The investigation was killed by Clinton’s friend Webster Hubbell, the number three man in the Justice Dept under Janet Reno. (AP story by J. Solomon: FBI failed to act of fund-raising of ex-Hawaii couple.)...

Eventually the investigation focused on Indonesian banking tycoon, Mochtar Riady and his Lippo Group. The basis of the story I am trying to relay to you is that Hawaii’s Democratic Machine used the billions of dollars of the Kamehameha Schools / Bishop Estate assets to undertake the task of underwriting and orchestrating the initial public offering of the Xiamen International Bank on the Hang Seng and the NY Stock Exchange.

This would have the effect of legitimizing a Communist Chinese banking entity on the biggest stock exchange in the U.S. and opening the doors allowing American money to capitalize a communist regime. . . .

See also: Dan Inouye; Henry Peters; James Riady; Panin Group; Sukamto Sia; Xiamen International Bank


 

Morgan Lewis & Bockius - “Reputable” Philadelphia and Washington D.C. lawyers hired by Bishop Estate to discredit a court-appointed special master’s report that raised boku-serious questions about the work of the estate’s outside law firms.

For more, GO TO > > > Part II


 

Nathan Aipa - From RICO lawsuit: Harmon v. Federal Insurance Co, et al :

Nathan Aipa, is General Counsel and Principal Executive in charge of the Legal Group, KSBE, and Assistant Secretary/Assistant Treasurer, P&C. Plaintiff was an employee in the Legal Group under Aipa's supervision. Gilbert Ishikawa, Tax Manager, also reported directly to Aipa.

Plaintiff alleges that Aipa's wrongful acts ... include:

>> Facilitating the Trustees' intentional disregard of federal and state laws and regulations, such as the Americans with Disabilities Act, the Environmental Protection Act, the Occupational Safety and Health Act, the Equal Employment Opportunity Act, the Family Emergency Leave Act, and the "Interim Sanctions" regulations of the IRS....

>> Facilitating and concealing the Trustees' use of Estate assets in mergers and acquisitions of businesses and properties without performing proper due diligence.

>> Facilitating and concealing co-investments in KSBE deals by the Trustees, employees, family members and business associates. According to newspaper reports, in 1989 the four KSBE Trustees, Peters, Takabuki, Richardson and Thompson approved of the investment of approximately $85 million in a Houston-based energy venture with McKenzie Methane....

This same venture also received more than $3 million in personal funds from all four trustees and employees and business associates of the estate....

The Honolulu Advertiser reported in their February 26, 1995 issue that: "The troubled deal may cost the estate as much as $65 million in lost capital and at least twice that much in lost earnings and tax benefits...”

Honolulu businessman Desmond Byrne. . . called the personal investments by estate trustees and staffers 'an absolutely improper conflict of interest. It raises the appearance that their official decisions are affected by their own personal financial interests'...

The current board is almost completely different from that of 1989. Only one trustee, Henry Peters, remains. But the current board still holds that the old one did nothing wrong, according to Aipa. 'There was no conflict of interest,' (Nathan) Aipa said....

The Texas court files clearly show, however, that the trustees, their employees and associates relied on estate reports and financial data when they decided to put their own money in the deal. Estate personnel have immediate access to the high-priced and sophisticated financial expertise of such firms as First Boston Bank and Goldman, Sachs & Co.

The estate, a non-profit, tax-exempt institution . . . must be very careful in structuring its investment activities so it won't imperil its tax-exempt status. The Houston investment was particularly tricky because one of the principal benefits was that the estate would receive federal energy tax credits, which the tax-exempt estate intended to sell."...

In May 1999, Nathan Aipa was promoted to the position of Chief Operations Officer of KSBE by the estate's interim trustees.

* * *

For much more, GO TO > > > Part II


 

National Housing Corporation - From Equity No. 2048 - Petition of the Attorney General ... to Remove and Surcharge Trustees: . . .

Kickbacks to Peters and Wong – Wong has a brother-in-law, Jeffrey Stone ... In 1990, the Trust owned land in Hawaii Kai that it leased to Kapalele Associates ... to develop and construct Kalele Kai, a leasehold condominium project.

The Kalele Kai project was completed in 1993. ... In 1995, Kapalele sold the improvements to One Keahole Partners (OKP) for $36.5 million. OKP is a partnership between National Housing Corporation (50%) and Pacific Northwest, Ltd., (50%) an entity owned and controlled by Jeffrey Stone....

OKP financed its purchase of Kalele Kai in part with a loan from the Bank of Hawaii and in part by negotiating with the Trust a restructuring of the original note. ... Under the restructuring, the Trust reduced the principal amount due, waived an annual 5.0% increase in principal, extended the balloon due date, reduced the amount of collateral required for security, and set the interest rate at 2.75%. . . . The restructuring artificially inflated the value of the land in order to affect anticipated future mandatory sales by the Trust of its leased fee interest in other leasehold condominiums....

The restructured note was worth millions of dollars less to the Trust than the original note and conferred millions of dollars profit on OKP and Jeffrey Stone ...

Wong claimed to have recused himself from any participation in the Kalele Kai transaction ... Contrary to Wong's assertions, he did participate in the negotiations. ...

Peters and Wong each immediately thereafter received a substantial personal benefit through Jeffrey Stone. . .

The petition then goes on to disclose a series of transactions involving sales of apartments and homes by Peters and Wong and Pacific Northwest, OKP and other companies connected with Stone.

Henry Peters, Richard Wong and his wife, and Jeff Stone were indicted, but the case was dismissed; indicted again but dismissed again (both cases were dismissed on the grounds that one of the witnesses was an attorney, and the testimony violated attorney-client privilege).

National Housing Corporation has never been indicted for their participation in the alleged kick-back scheme.

National Housing and Jeff Stone have since formed new partnerships which have purchased the multi-million dollar development, Ko `Olina on Oahu.

* * *

The Wong's have since divorced.

* * *

See also: Bank of Hawaii; Gil Tam; Marsh & McLennan; Sun International Hotels

For more, GO TO > > > Predators in Paradise


 

Oaktree Capital Management - A funds management firm for institutional investors.

See also: JMB Realty Corp.; Mitsui Trust; Sun International Hotels


 

Orion Capital Partners - A joint investment of Bishop Estate, MacArthur Foundation, and others. This partnership was later involved in the Connecticut Treasury scandals.

See also: Paul J. Silvester


 

P&C Insurance Company, Inc. - Bishop Estate's captive insurance company, domiciled in Hawaii, managed by Marsh & McLennan.

From: RICO LAWSUIT: Harmon v. Federal Insurance Company, P&C Insurance Co, Marsh & McLennan, PricewaterhouseCoopers, Henry Peters, Nathan Aipa, Rodney Park, et al: . . .

Defendant P&C Insurance Company, Inc. (P&C), is a single parent captive insurance company formed in September, 1994, and was a wholly-owned subsidiary of Pauahi Holdings Corporation which, in turn, was a wholly-owned, for-profit subsidiary of KSBE. . . .

Although Harmon was the president of P&C, he alleges that he was actually set up as a "straw man" to be controlled by Henry H. Peters, Trustee of KSBE and Chairman of the Board of P&C; Nathan Aipa, KSBE General Counsel and Assistant Secretary/ Assistant Treasurer of P&C; Louanne Kam, Esq., Litigation Manager for KSBE, and others . . .

* * *

From Equity No. 2088 - Report of Attorney General Concerning May 7, 1999 Order - 5/5/00:

The May 7, 1999 order regarding orders to show cause requires the former trustees immediately to resign offices and directorships in the trust's subsidiary and affiliated organizations . . . P&C Insurance Company, Inc., is a captive insurance company, the sole stock holder which is Pauahi Holdings Inc.

The Attorney General respectfully invites the court's attention to the annual report publicly filed on March 28, 2000 by P&C (Ex. 1). The annual report lists Henry H. Peters as a director. The Attorney General is unable to determine whether the listing is incorrect (and hence the signed certification of the annual report is incorrect) or whether Peters remains a director in violation of court order.

The Attorney General's several inquiries of the trust concerning this matter remain unanswered despite the passage of three months. (Ex.2).

For more, GO TO > > > Part II

For more, GO TO > > > Claims By Harmon; RICO Lawsuit, Harmon v. Federal, P&C et al.; Harmon’s Letters to Insurance Commissioners


 

Panin Group - From The Honolulu Star-Bulletin, 10/29/97, by Rick Daysog: Bishop, partners alter Chinese bank plan. . . . The turmoil in Hong Kong's stock market may hamper plans by Bishop Estate and its partners to take a mainland Chinese bank public. . . . With the benchmark Hang Seng index losing more than a fifth of its value during the past weeks, analysts said that a proposal to list shares of Xiamen International Bank on the Hong Kong Stock Exchange could be put on hold.

The development underscores Bishop Estate's growing exposure to global economic trends. It also calls attention to the $10 billion trust's high-risk, high-reward investment strategy. . . . Bishop Estate, the state's largest private landholder, owns nearly 5 percent of Xiamen, which last year applied with the People's Bank of China to list its shares on the Hong Kong Stock Exchange.

Henry Peters, a Bishop Estate trustee and a member of Xiamen's board of directors, conceded that the volatile Hong Kong market may delay Xiamen's initial public offering. But he said the bank's partners are committed to taking it public, which would greatly enhance the estate's investment....

Critics say the trust should not be investing in exotic companies such as Xiamen. They argue that the nonprofit foundation -- which finances Kamehameha Schools -- should avoid high-risk ventures in emerging markets such as China....

The list of Xiamen International Bank's investors reads like a who's who of Wall Street and Pacific Rim finance. They include former U.S. Treasury Secretary William Simon, Manila-based Asian Development Bank and Long-Term Credit Bank of Japan Ltd....

The largest shareholder is Min Xin Holdings Ltd., formerly the Panin Group, which owns 36.75 percent of the bank. An affiliated company, Panin Bank, formed Xiamen in 1985.

Panin was founded by Indonesian businessman Mu'min Ali Gunawan, a brother-in-law of Indonesian banking tycoon Moshtar Riady....

Riady, who heads the Lippo Group, is at the center of the campaign finance scandal plaguing the Clinton administration....

Peters said he was unaware of the relationship between Panin Bank and the Riady family. ...but investments of Simon, Panin and the estate have been linked for years. The estate was a big shareholder in First Interstate Bank of Hawaii Inc. when Simon sold the local bank to First Hawaiian Inc. in 1991.

Simon, in turn acquired much of his stake in First Interstate in the mid-1980s from Panin Bank executives....

Peters was a director of the local affiliate Panin North America Inc. in 1983 when he was a legislator, according to filings with the state Ethics Commission....


 

Paradise Petroleum - A subsidiary of Autofuel Company (AFCO) which was a subsidiary of Kukui, Inc., which was a subsidiary of Pauahi Holdings Corp.

April 27, 1999

From the RICO lawsuit, Harmon v. Trustees of Bishop Estate, P&C Insurance Company, et al.:

. . . During his employment with KSBE and P&C, Plaintiff became aware of various activities of certain individual trustees, directors, officers, and employees of these entities that appeared to be illegal and/or breaches of their fiduciary duties. The following is only a small sample of some of these wrongful activities witnessed by Harmon:

a. There was a failure to disclose conflicts of interest and other financial information in annual financial statements and in federal tax returns for KSBE regarding personal investments by certain trustees, executives, managers and employees in related for-profit companies controlled by KSBE.

b. IRS rules regarding the maintaining of “arms-length” relationships between a tax-exempt charitable organization and its for-profit subsidiaries were being breached.

For example, at the direction of Henry Peters, Nathan Aipa, Louanne Kam, Eric Martinson, and others, KSBE paid salaries, premium charges, legal fees and claims costs that should have been paid by for-profit subsidiaries (e.g. Kukui, Inc., Sino Finance, Unison Pacific, SoCal, AFCO, Paradise Petroleum, etc.), or by individual trustees, officers, directors or employees, or by persons outside of these organizations.

Despite recommendations from its tax advisors, Price Waterhouse, the official written policy of Trustees, and the policies and procedures of P&C, services were being provided by KSBE’s employees to P&C and other for-profit entities at no cost to the subsidiaries.

In effect, KSBE was subsidizing these for-profit entities, which resulted in larger profits for the subsidiaries; larger commissions for the Trustees; larger compensation to “insider” officers, directors and employees of these entities; and larger payments to independ contractors such as attorneys, auditors and claims adjusters....

For more, GO TO > > > Aloha, Harken Energy; Claims By Harmon


 

Park Engineering - Politically-connected engineering firm which may soon be disconnected; former employer of Dr. Michael Chun, President of politically-connected Kamehameha Schools.

Continued in Part II


 

Paul J. Silvester - Former Connecticut State Treasurer, now a confessed racketeer and money launderer.

The Hartford Courier by Jon Lender and Mark Pazniokas, 09/24/99:

Three Plead Guilty in Corruption Case. Former state Treasurer Paul J. Silvester pleaded guilty in federal court Thursday to charges of racketeering and conspiring to launder money -- and, in a deal to cut his jail time, agreed to cooperate as the investigation targets well-connected political figures from Connecticut to Washington, D.C....

His brother, New York real estate investor Mark Silvester, 50, pleaded guilty to conspiracy to solicit and accept corrupt payments. Brother-in-law Peter D. Hirschi, 43, of West Hartford, a lawyer, pleaded guilty to conspiracy to launder money....

They ... have been talking to federal prosecutors for a month and have promised to continue cooperating -- including possible testimony against others. . . . Documents released Thursday detailed kickbacks from so-called finder's fees totaling more than $330,000, but there may be significantly more money involved in activities still under investigation....

"We are looking at both other individuals and organizations," U.S. Attorney Stephen C. Robinson said Thursday after the pleas were entered. His office worked with the FBI and IRS in the probe of the West Hartford Republican's 17-month tenure as state treasurer....

Although Robinson declined to give specifics about where the probe will go, court documents indicated that prosecutors are looking closely at Wayne Berman, a prominent Washington, D.C. business consultant who is a major fund-raiser for Republican presidential front-runner George W. Bush.

Sources in recent days have said Berman received more than $900,000 from a fee or fees by virtue of Silvester's placement of tens of millions of dollars with an investment fund of the internationally known Carlyle Group....

See also: Carlyle Group; Lawrence Landry; Wayne Berman

For more, GO TO > > > A Connecticut Yankee in King Kamehameha’s Court


 

PricewaterhouseCoopers - The biggest of the Big Five accounting firms.

From the RICO lawsuit: Harmon v. Federal Insurance Company, P&C Insurance Co., Inc., Marsh & McLennan, Inc., Trustees of Kamehameha Schools/Bishop Estate, PricewaterhouseCoopers, et al.:

. . . Defendant PricewaterhouseCoopers is one of the nation's largest accounting firms, and conducts business in Hawaii and throughout the United States.

Despite written opinions from Pricewaterhouse that P&C should operate at "arms-length" from KSBE, all or some of the Trustees of KSBE, and all or some of the directors and officers of P&C, conspired to disregard these opinions and to conceal violations of I.R.S. "interim sanctions" regulations.

Plaintiff Harmon personally reported his concerns regarding the apparent "sweetheart deals" with M&M at the direction of Peters, Aipa and Kam, to representatives of Coopers & Lybrand in October, 1996, and followed this up in writing on November 20, 1996. At this meeting and in his letter, Plaintiff explained that he would not sign P&C's annual financial statements due to the apparent conspiracy between certain trustees, managers, directors and officers at KSBE, P&C and M&M, to defraud KSBE, P&C, and the I.R.S.

Plaintiff also sent a copy of this letter to the Insurance Commissioner, State of Hawaii, along with all enclosures which provided documentary evidence of these wrongful activities. Neither entity responded to this report. Plaintiff later learned that Nathan Aipa had approved P&C's annual financial statements, and that Coopers & Lybrand had not disclosed in their review the information that M&M was charging excessive fees, and that certain claims were intentionally inadequately reserved.

Plaintiff alleges that Pricewaterhouse had knowledge of these improper activities and financial statements, had a professional duty to report improper and illegal conduct regarding the preparation of these financial statements, and knowingly and wrongfully colluded with some or all of trustees of KSBE, with officers and directors of P&C, in a conspiracy to defraud the beneficiaries of the Estate of Bernice Pauahi Bishop and P&C; racketeering; mail fraud; wire fraud; and violations of the "interim sanctions" regulations of the I.R.S., as detailed in Plaintiff's complaint....

Continued in > > > Part II

For More, GO TO > > > Claims By Harmon; What Price Waterhouse?


 

Prudential Insurance Company - From Reputation Management, 1996: The Rock's Tarnished Image. . . . If people at the Prudential Insurance Co. of America could turn the clock back 15 years, to the moment in time when the venerable insurance company acquired the floundering brokerage Bache & Co., probably none of them would do it over again. The Bache acquisition, presented at the time as a step toward the ideal of offering consumers "one-stop shopping for financial services," would over the next decade prove to be a disaster for Prudential....

Unfortunately, by the time the Prudential was ready to acknowledge its mistake, the marriage had cost the company billions of dollars in legal settlements, fees and fines and undermined a reputation for integrity that had been a hundred years in the making....

The scandal had its origins in 1981, when the first Reagan tax reform bill and changes in SEC regulations triggered explosive growth in the number of tax shelters available to American investors and opened the door to speculators who saw real estate, energy and airplane-leasing partnerships as a way to limit tax liability....

For more than a decade, the Direct Investment Group traded on the Prudential's Rock-of-Gibraltar image to package and sell billions of dollars worth of dubious investments.

Employees who questioned the ethical or economic premise upon which these deals were based were intimidated into silence or fired. Brokers who refused to push the product were punished. . . .

~ ~ ~

In October 1994, Prudential Securities admitted charges of fraud - an admission that enable the firm to avoid criminal indictment - and began settling more than $1 billion in claims against it.

The settlement marked the scandal as the costliest in the history of Wall Street.

* * *

Honolulu Star-Bulletin, 7/3/96, by Ian Y. Lind: The Chee Papers:

WEB OF ASSOCIATION STARTED WITH
AIEA REAL ESTATE DEAL

How did a local crime figure and the head of a major real estate firm wind up linked to a proposed residential development?

The way was paved when former Waikiki owner Steve Crouch turned to unconventional sources to finance initial stages of the project, his first venture. Details of the resulting deal emerged in court files after Crouch defaulted on a series of loans and was hit with a foreclosure lawsuit.

Crouch, who ran the Masquerade nightclub until it closed in 1990, had bought, bartered and talked his way into majority ownership of four acres of land on Aiea Heights.

When he couldn't get a bank loan to develop the property, Crouch sought help from Gabriel "Gabe" Aio, a longtime friend. Aio, a security coordinator for Matson Navigation Co., also claims a lengthy relationship with Hawaii Protective Association, a private security firm headed by politically influential Big Island rancher Larry Mehau.

The contact got results: Aio took Crouch to meet with crime figure Jesse James Bates, who agreed to help arrange a $300,000 loan in exchange for an exclusive construction trucking contract for the development and a discount on the purchase of two homes, Aio and Crouch said. Bates, in turn, set up a meeting with Bill Chee, president of Prudential Locations Inc., where Bates' wife, Kathleen "Bunny" Bates, worked as a broker.

Aio told the Star-Bulletin he has known Jesse Bates since the two spent time together as teen-agers at the state Youth Correctional Facility in the 1960s.

Bates was convicted of manslaughter and bank robbery in the early 1970s, and later served prison sentences for counterfeiting and armed robbery. He was paroled in 1989 and, at the time of the meeting with Crouch and Aio, was starting a trucking company.
Federal court records in a later drug case say he had also been involved in cocaine distribution since 1990.

Aio and Crouch both say Bates agreed to help, then told them he was in business with Chee....

During the first week in Jan 1993, when the men met for a second time, Chee agreed to loan the $300,000 Crouch requested, plus another $127,000 to pay off other mortgages on the property. Loan documents show that prepaid interest of $143,000 (or 33.3 percent) was added, bringing the amount to be repaid to $570,000....

The loan had several other unusual aspects, court records show:

1.       Chee used $427,000 of his own funds to make the loan, but took deliberate steps to conceal his involvement. According to internal company documents later disclosed in court proceedings, Chee instructed loan administrators that "Crouch is not to know the source of the proceeds."

2.       Chee approved the loan without a current appraisal, without a credit check, and without knowing whether Crouch or his wife was employed or had any current income...

Allegations of EXTORTION

Thieves last year stole thousands of pages of documents from the Honolulu law firm of Alston Hunt Floyd & Ing, says senior partner Paul Alston....

He says the theft was part of an extortion scheme aimed at him and real estate executive William S. Chee. The two say they have been publicly accused of "outrageous criminal acts" to "strong- arm" them into not collecting on a bad debt. Copies of stolen documents have been circulated with some of those accusations.

Alston and Chee have filed suits in state and federal courts blaming former Waikiki nightclub operator Steve Crouch and two supporters for the 1995 theft and extortion attempt, which allegedly occurred after Crouch defaulted on three real estate loans....

Chee's attorney, John Komeiji, said former Gov. George Ariyoshi, a member of Komeiji's law firm, sought the help of Big Island rancher Larry Mehau during behind-the-scene negotiations aimed at settling the dispute with Crouch. Mehau was contacted because of Crouch's association with Gabriel "Gabe" Aio, a longtime associate of Mehau's....

Chee is president of Prudential Locations Inc., until recently the state's largest real estate firm, and is president and chairman of Resco Inc., its parent company. Alton is a director of Resco and some subsidiaries, and his law firm represents the companies.

Alston and Chee are related by marriage.

Beginning in early 1993, Alston and Chee purchased $1 million in mortgage loans that Crouch and his company, MLC Inc., obtained to fund initial stages of a proposed 19-home development in Aiea Heights....

According to court records, dozens of the stolen documents spilled into view this year when they were included in fliers accusing Chee and Alston of numerous crimes related to the Crouch loans, including fraud, conspiracy and taking part in a money-laundering scheme linked to well-known Hawaii crime figure Jesse James Bates.

Thousands of copies of the fliers, including what purported to be a letter from Bates describing the conspiracy, were passed out on downtown street corners and at a national Prudential convention hosted by Chee at Blaisdell Center. The fliers were distributed by Nolan Crabbe, a contractor who says he is running for the 2nd Congressional District seat. . . .

Crouch, who has filed for personal and corporate bankruptcy, says he obtained copies of the stolen documents late last year when four boxes were left anonymously at his home.

Crouch says the documents show Alston and Chee conspired to put him out of business by secretly buying his mortgages at the same time their company, Prudential Locations, was the project's exclusive sales agent. . . .

Alston rejects Crouch's allegations....

For more, GO TO > > > Prudential: A Nest on Shaky Ground


 

Renton Nip - Attorney with Verner, Liipfert, Bernard, McPherson, Hand, and the lawyer for Sukamto Sia.

See also: John Waihee; Sukamto Sia; Yukio Takemoto

For more, GO TO > > > Buzzards of Paradise


 

Rey Graulty - Former Hawaii State Senator; former Hawaii Insurance Commissioner; and now a state Circuit Court Judge appointed by Gov. Ben Cayetano.

Honolulu Star-Bulletin 10/31/00 by Rick Daysog:

Former Trustees Funneled
Donations to Lawmakers

Former trustees of the Kamehameha Schools operated an underground political network that funneled money to the campaigns of dozens of key Hawaii lawmakers, according to trust documents obtained by the Honolulu Star-Bulletin.

Between 1992 and 1997, the $6-billion estate's now-defunct government relations department orchestrated contributions to incumbent Democrats friendly to the trust's interests or to high-ranking politicians with regulatory control over the trust's massive land and business holdings.

Those on the receiving end of estate contributions included U.S. Rep. Neil Abercrombie, Honolulu Mayor Jeremy Harris and former Mayor Frank Fasi's Best Party. . . .

The state Campaign Spending Commission is looking into whether the trust illegally laundered contributions through former trustees, employees, relatives and outside contractors. . . .

The list of recipients for that election year reads like a Who's Who of island politics. They include: . . .

Former state Sen. Rey Graulty: On March 22, 1994, Wong bought $250 worth of tickets for a Graulty fund-raiser ... The check was delivered by a staffer. Graulty, now a state Circuit judge, could not be reached for response. . . .

The ex-trustees deny that they took part in an organized effort to finance the campaigns of isle politicians. They say their political contributions and those of staffers and outside vendors were personal in nature and have nothing to do with trust business. . . .

However, in sworn testimony, some staffers say they not only helped organize the campaign contributions but also used trust facilities to direct the money to local politicians. . . .

* * *

Honolulu Weekly, 1/27/99: . . . Mike Gabbard and his supporters were instrumental in targeting key legislators seen as gay-friendly. To that end, Senate Judiciary Chair Rey Graulty lost his seat in November 1996 . . .

* * *

Pacific Business News, 2/4/97: . . . Gov. Cayetano named former state Sen. Rey Graulty insurance commissioner for Hawaii. He replaced Wayne Metcalf, who was appointed state senator to replace retiring Sen. Richard Matsuura.

* * *

Honolulu Star-Bulletin, 11/30/98, by Ian Lind: . . . PGMA’s Wong accused of siphoning millions. . . . An investigator says an investment network stretched to the Caymans. . . .

Pacific Group Medical Association founder Peter P. Wong allegedly constructed an intricate network that enable insiders to siphon off millions of dollars from the failed health insurer, according to financial investigator Thomas E. Hayes.

The network had more than 60 separate bank, brokerage, and investment accounts stretching from Kakaako to the Cayman Islands, said Hayes, a special assistant to state Insurance Commissioner Rey Graulty. . . .

Despite the fraud allegations repeatedly raised by Graulty and Hayes in court proceedings, the state has not taken action directly against Wong or any other individuals who may have been responsible for the insurer’s collapse.

PGMA was declared insolvent and seized by the state regulators in March 1997, leaving its members and medical providers with more than $18 million in unpaid bills.

The company provided health insurance coverage for 28,000 people before its collapse, with nearly half drawn from the memberships of the United Public Workers and Hawaii Government Employees Association, the state’s two largest public employee unions.

Hayes said he provided documents to the attorney general’s office “on areas of wrongdoing,” but a criminal probe launched last year was slowed by the heavy workload involving the Bishop Estate investigation.

Cynthia Quinn, special assistant to Attorney General Margery Bronster, said she could not comment except to confirm that PGMA “is an active case within this department.”

But several former PGMA employees who were interviewed by the attorney general’s office last year say there has been no follow-up by investigators.

Graulty, appointed in court proceedings to oversee the liquidation of PGMA’s assets, views Wong as “an empty basket” because he already faces millions of dollars in federal tax liens. . . .

“Many times, in these cases, by the time you chase after the individual, the trail is cold. You have to concentrate on the assets you see in front of you where the chances for recovery are greater,” Graulty said.

“It’s much easier to pursue an insurance payout than chase the Cayman Islands and Peter Wong and what he’s done with the money.”...

Graulty has said he has at least temporarily dropped his probe of payments made to Four Winds RSK, a Kauai company headed by Robin Rodrigues, daughter of UPW State Director Gary Rodrigues. The firm provided unspecified services related to PGMA’s coverage of UPW members....

“We have not determined whether the payments were appropriate or not,” Graulty said. “We have our suspicions, but suspicions are not something you can take to a judge.”

Graulty said his efforts are focused on areas that promise a significant return, and that the payments to Four Winds are not a priority.

“It might be major to you, but to us, in the scheme of things, it is not as significant. We’re after the $2 million, not the amount his daughter was paid for a management contract,” Graulty said.

* * *

From RICO Case Statement, Harmon v. Federal Insurance Co; P&C Insurance Co; Marsh & McLennan, Inc; PricewaterhouseCoopers; Trustees of Bishop Estate, et al.:

Plaintiff alleges that the following persons and agencies have a duty in law to act upon complaints of citizens, yet failed to act, pretended to act but did not act, or misled or deceived Plaintiff in other ways when, in good faith, he brought to their attention evidence and suspicions of serious ongoing criminal activity endangering the citizens of the United States. By their acts and omissions they either sanctioned or perpetuated the crimes. It was clearly within the duties and functions of these people and agencies to act and take seriously the allegations plaintiff had set forth:

a) Insurance Commissioner’s Office, State of Hawaii.

b) Wayne Metcalf, Insurance Commissioner, State of Hawaii

c) Rey Graulty, former Insurance Commissioner, State of Hawaii

d) California Department of Insurance

e) Chuck Quackenbush, Insurance Commissioner, State of California . . .

* * *

Small Business Views, Aug, 2000, by Sam Slom: . . . Inquiring minds want to know: how did the newly-appointed judge (former Democrat Senator) Rey Graulty get assigned to the high profile City Ewa Estates fraud trial and then excuse Mayor Jeremy Harris - the Governor’s and Dan Inouye’s choice for his successor - from being put under oath?...

* * *

See also: Investors Equity Life Insurance Co; P&C Insurance Co.; Woo vs. Harmon


 

Richard Macke - Retired Admiral Richard Macke was the former Commander in Chief, U.S. Pacific Command. He is currently the Senior Vice President of Wheat International.

Lucent Technologies Press Release, 3/12/97:

Lucent Technologies provides equipment for military communications upgrade in Hawaii . . . Lucent Technologies announced today it has sold $16 million in network switching equipment to Wheat International for an upgrade of military communications systems in Hawaii. . . .

Lucent Technologies was formed as a result of AT&T’s restructuring and became a fully independent company, separate from AT&T, on Sept 10, 1996....

* * *

Honolulu Star Bulletin, (AP) 2/15/01 . . . Civilian Manned Controls on Ascending Sub - A civilian who was on the Navy submarine that struck a Japanese fishing vessel said today that he pulled levers for the ascent drill but had a crew member right beside him. He also described how the ship “shuddered” at the impact....

As the submarine surged upward, Hall said, “there was a very loud noise, and the entire submarine shuddered.”

According to him, Cmdr. Scott Waddle said, “Jesus, what the hell was that?”...

* * *

Honolulu Star Bulletin, 2/16/01 . . . Japan Defense Chief: ‘It is outrageous’ - He says the U.S. Navy ‘is slack’ to let civilians sit at sub controls - Amid rising anger and distrust, Japan’s defense minister today called it “outrageous” that civilians were at the controls of a U.S. Navy submarine when it smashed into a Japanese fishing vessel off Hawaii....

The Japanese public shared his anger. . . . Ietaka Horita, principal of the high school that owned the boat, said he was “enraged” to hear that civilians were at the sub’s controls and that he found out about it from media reports, not government investigators....

* * *

The Honolulu Advertiser, 2/16/01: Bush May Stop VIP Cruises - The search for survivors and the quest for answers continued yesterday from Oahu to the Pentagon.

It prompted President Bush to suggest that the military review its practice of allowing civilians to ride aboard sophisticated warships like the submarine that sank a Japanese fishing vessel seven days ago. . . .

At the Pentagon, Pietropaoli confirmed earlier reports that retired Adm. Richard Macke of Honolulu had helped arrange for “individuals for the Missouri Battleship Memorial Association” to tour the sub while on its training maneuvers. He said 14 of the 16 guests were involved with the Missouri association.

Yesterday, retired Adm. Robert Kihune, vice chairman and president of the USS Missouri Memorial Association, said he had not seen the guest list and therefore did not know whether any of the association’s more than 3,000 members were involved. . . .

See also: Robert Kihune

For more, GO TO > > > Sinking the Ehime Maru


 

Richard Rainwater - Billionaire investor; power-broker. Co-investor with Bishop Estate in Columbia/HCA and Mid-Ocean Reinsurance.

For more, GO TO > > > The Sick Birds


 

Robert Kihune - Chairman of the new Board of Trustees, Kamehameha Schools; Vice Chairman and President of the USS Missouri Memorial Association.

For more, GO TO > > > Part II


 

Robert Rubin - Former co-chairman of Goldman Sachs, former U.S. Treasury Secretary; current co-chairman of Citigroup.

August 8, 2002

Lawmaker Seeks Inquiry of Rubin Intervention for Enron

Fox News

WASHINGTON —— A House Republican lawmaker is seeking an investigation into phone calls made on behalf of Enron Corp. to the Bush administration by former Treasury Secretary Robert Rubin.

Rep. Mark Foley, R-Fla., wants the Securities and Exchange Commission to look into the phone call, alleging that Rubin was attempting to tamper with Enron's credit rating.

"A former Treasury Secretary should not be soliciting financially-beneficial favors from colleagues at an agency that he once led," Foley wrote in a letter to SEC Chairman Harvey Pitt.

"I would ask that you would investigate all equity trades submitted by Citigroup or its subsidiaries and their clients in the two weeks preceding Mr. Rubin's call to Mr. Fisher as well as the two weeks following the call," the letter reads.

In his capacity as head of Citigroup, Rubin allegedly called Treasury Undersecretary of Domestic Finance Peter Fisher last November to see whether Fisher thought it would be a good idea for the Treasury Department to call bond rating agencies to halt an expected reduction in Enron's credit rating.

Former energy giant Enron declared bankruptcy last December after it revealed that it had been using capital accounts to cover for losses in its operating accounts. Its collapse was the first in a string of corporate scandals that has claimed Tyco International, Global Crossing, WorldCom and others.

Enron's credit rating and condition was very much on the minds of Citigroup because Enron is a huge client of the bank.

Citigroup has millions of dollars of loans with Enron, and such an intervention on behalf of the Treasury to bolster Enron would have benefited both the bank and the energy firm....

Democrats ask if Rubin is so important, why have Republicans who lead the House not bothered to call him to testify. Republicans say they will leave that open as an option.

Fox News' Major Garrett contributed to this report.

* * *

From The Buying of the President : . . . With the pressing need to maintain the trust and confidence of Wall Street, a significant force in the new education of Bill Clinton in late 1992 and early 1993 was Robert Rubin, a man worth an estimated $100 million who resigned as co-chairman of Goldman Sachs to join the Clinton administration. Rubin and his wife made a $275,000 contribution from their personal foundation to the New York Host Committee to the Democratic National Convention. Goldman Sachs helped to fund the Clinton campaign for the presidency, with its officers contributing more than $100,000 in so-called "bundled" money. "Bundled" is the term applied to the aggregate contributions of multiple employees of a single company....

Rubin, Goldman Sachs, and the Clinton crowd go way back. Rubin has known longtime friend and White House counselor Mack McLarty for a decade, and in the late 1980s, Goldman Sachs helped to underwrite $400 million in bonds for the Arkansas Development Finance Authority.

* * *

Buh-bye, Rubin ! . . . The forced resignation of disgraced Clinton Treasury secretary Robert Rubin may have been a result of imminent further exposure of a vast array of corrupt activities, from Treasury's attempted coercion of U.S. Secret Service agents to lie during their Filegate testimony in 1996, and the agents' criminal prosecution as a result of that testimony, to today's New York Times story "CHINA SENT CASH TO U.S. BANK, WITH SUSPICIONS SLOW TO RISE." ...

Treasury was looking the other way and suppressing reports by its Comptroller of the Currency (which regulates national banks) unit as the Central Bank of Communist China illegally moved tens of millions of dollars into a California bank for illegal political and intelligence purposes.

However, the final straw that broke Rubin's back could well have been a brilliant investigative journalism article by the USA TODAY's Tom Lowry on May 3, 1999, "Trust Scandal Haunts Goldman/Sullied Bishop Estate owns 10% of Bank / Highly Paid Trustees Facing Accusations, Charges."

Mr. Lowry exhaustively details the utterly corrupt activities of Hawaii's giant Bishop Estate in general, and a highly suspect transaction between the Bishop Estate and the personal financial account of Robert Rubin in particular. Rubin is also a former chairman of Goldman Sachs and whose Treasury department regulates both the Bishop Estate and Goldman Sachs, with full awareness of his massive conflicts involving his personal investments, the Treasury department, the Internal Revenue Service, Goldman Sachs, and the Bishop Estate....

Mr. Lowry wrote: . . . Treasury Secretary Robert Rubin, who was Goldman Sach's chairman when the firm first approached the estate about an investment, disclosed several years ago that he entered into a business agreement with the estate. He pays the trust more that $100,000 a year, and in return, the estate guarantees that when Rubin leaves government office, the value of his partnership stake in Goldman will not be any less than when he joined the Clinton administration in 1993....

Randall Roth, a University of Hawaii law professor who sparked the state's review of the estate with a 1997 essay in the Honolulu Star-Bulletin, says the investment just "looks terrible for Goldman Sachs with this monstrosity of a charity with these huge problems." ...

* * *

See also: American International Group; Coral Reinsurance; Dan Inouye; John Waihee

For more on Citigroup, GO TO > > > Vampires in the City

For more on Enron, GO TO > > > The Story of Enron

For more on Goldman Sachs, GO TO > > > Dirty Gold in Goldman Sachs


 

Robert Trent Jones Golf Club - The Playground of Presidents - and a top nesting ground for politicians, lobbyists, and other predators of the highest order.

For more, GO TO > > > Part II


 

Robin Campiano - Former Hawaii Insurance Commissioner who became president of AIG Hawaii soon after leaving his commissioner’s post.

See also: American International Group; Coral Reinsurance; Investors Equity Life Insurance Co.


 

Rockne Freitas - Vice President of Kamehameha Schools; President of GRG Enterprise Inc.; friend of Larry Mehau.

For more, GO TO > > > Part II


 

Rodney Park - Executive formerly in charge of Bishop Estate's Administration Group. Park was the estate's controller at the time of their $85 million investment in McKenzie Methane. Park was also a co-investor in the deal. Park was also made president of the estate's captive insurance company, P&C Insurance Co, Inc., replacing the fired president, Bobby Harmon.

* * *

From: RICO LAWSUIT: Harmon v. Federal Insurance Company, P&C Insurance Co, Marsh & McLennan, PricewaterhouseCoopers, Henry Peters, Nathan Aipa, Rodney Park, et al: . . .

Rodney Park, is Director, Administration Group, KSBE, and President, P&C.

From Equity No. 2048, Petition of the Attorney General on Behalf of the Trust Beneficiaries to Remove and Surcharge Trustees:

". . . Since 1996, the Trustees' compensation has also been limited by federal law, specifically the Intermediate Sanctions provision of the Internal Revenue Code (IRC) 4958.

In 1996, based in part on an agreement between the Attorney General and the Trustees, the Trustees agreed that they would take no commissions based on monies spent on the construction of Kamehameha Schools facilities (classified as Final Disbursements of Capital or FDOC).

Between November 1993 and May 1994 the Trust incurred investment losses of over $45 million, which would have reduced each Trustee's compensation by more than $225,000.

Rather than reduce compensation, retroactive adjustment were made in June and July 1994 to generate commissions on FDOC amounting to more than $98,000 to each Trustee. The retroactive adjustments were made at the direction of Peters, general counsel Nathan Aipa, and the principal executive of the administration group, Rodney Park (emphasis added)."...

Park was also a co-investor with KSBE in the McKenzie Methane deal described above, at the time he was acting as the Controller for KSBE. In this position, Park had fiduciary responsibilities to expend trust funds in a prudent and legal manner, and to properly account for these expenditures to the beneficiaries, the trustees, the master, the IRS and others.

Plaintiff alleges that Park's actions, through his complicity, deceptions, and breach of fiduciary duties, in collusion with some or all of trustees of KSBE, with other managers and employees of KSBE, with other officers and directors of P&C, with officers and managers of Federal, M&M, Mullen and PricewaterhouseCoopers, and with outside contractors, attorneys, politicians and others, constituted a conspiracy to defraud P&C and the beneficiaries of the Estate of Bernice Pauahi Bishop; racketeering; mail fraud; wire fraud; extortion; and violation of IRS interim sanctions regulations.

* * *

Honolulu Star-Bulletin, 01/24/01by Rick Daysog: Estate’s Managers Shuffled in Shake-up: . . . Kamehameha Schools’ senior management team has undergone a major shake-up.

Rodney Park, former head of the $8 billion charitable trust’s Administration Group, left Dec. 31 after his $160,000-a-year position was eliminated....

For more, GO TO > > > Claims By Harmon


 

Sabrina Toma - You’ll see her over in > > > Part II


 

Sino Finance Group - Subsidiary of Bishop Estate, with William Simon and others as co-investors. Sino Finance owns nearly 5% of Xiamen International Bank in China.


 

Sports Shinko, Inc. - This Japan-based real estate development firm invested heavily in Hawaii in the bubbling 1980s (these were big bubbles, not tiny bubbles). The Queen Kapiolani Hotel in Waikiki is one of the better known properties purchased by the company.

* * *

Honolulu Star-Bulletin, 7/6/98, by Rick Daysog: . . . House Speaker Joseph Souki was questioned by the state attorney general's office over a Maui land deal involving the Bishop Estate that netted him a $132,000 commission. . . .

According to Souki, the state subpoenaed the Bishop Estate for information about its $5.3 million purchase of a 100-acre parcel in Pukalani, Maui, from developer Everett Dowling. Souki had served as a consultant to Dowling.... Bishop Estate plans to build its permanent Maui campus on the site....

Estate critics have cited Souki's involvement as a conflict of interest, saying he led opposition to a bill to limit the compensation of trustees of the Bishop Estate and other charitable trusts. After it failed on an initial vote, public pressure prompted the House to pass the measure....

Souki has denied any wrongdoing, saying it was a private real estate transaction...

As part of its inquiry into the Maui land deal, the state also has subpoenaed Dowling and state Sen. Joe Tanaka. . . . Tanaka earned $42,000 commission from Dowling last year but said his consulting work did not involve the Bishop Estate.

Tanaka, who has not yet met with state attorneys, said he helped introduce Dowling to Sports Shinko, Inc., which originally owned the Maui property....

State records show that Dowling acquired 273 acres from Sports Shinko in Dec. 1996, before selling 100 acres of it to the estate....

* * *

The Honolulu Advertiser, 5/8/86: Mililani Golf Course sold to Japanese firm . . . Oceanic Properties, Inc. yesterday announced sale of the Mililani Golf Course to a Japanese company ...

The new owner, Sports Shinko Co. Ltd, plans "to beautify and improve the course ..."

The seller, Oceanic Properties is the real estate subsidiary of Castle & Cooke, Inc....

Sports Shinko Co was organized in 1959 by its president, Toshio Kinoshita, and opened its first golf course in 1962. It currently manages 26 golf courses in Japan...

See also: Gene & Nora Lum ; Peter Savio ; Yakuza

For more, GO TO > > > Broken Trust; Paradise Paved


 

Stephen Friedman - a senior principal of Marsh & McLennan Capital, Inc..

In 1994, Mr. Friedman retired as chairman of Goldman, Sachs & Co. He was co-chairman or sole chairman from 1990-1994, and from 1987-1990 he served as co-chief operating officer. He joined Goldman, Sachs in 1966 having previously held a position as a law clerk to a federal district court judge and as an attorney in New York City (1963-1966).

Mr. Friedman holds a B.A. from Cornell University (1959) and an LL.B. (Law Review) from Columbia Law School (1962). He is a Trustee of Columbia University (Chairman, Board of Trustees); Chairman of the Executive Committee of The Brookings Institution; Trustee of Memorial Sloan-Kettering Cancer Center and member of the Executive Committee.

He serves as a director of: Fannie Mae, Wal-Mart Stores, Inc., the National Bureau of Economic Research and the Concord Coalition.

Mr. Friedman is also a member of the President’s Foreign Intelligence Advisory Board and a director of In-Q-Tel, Inc. He is a former member of the Aspin/Brown Commission on the Roles and Capabilities of the U.S. Intelligence Community and the Jeremiah Panel on the National Reconnaissance Office.

For more, GO TO > > > Dirty Gold in Goldman Sachs?; The Marsh Birds


 

Sukamto Sia - Indonesian multi-millionaire businessman (before declaring bankruptcy). Sia, formerly known as Sukarman Sukamto, also owned a majority share of Bank of Honolulu, The Executive Center building, and the land purchased by the State of Hawaii for the Hawaii Convention Center.

Connections: The land under The Executive Center is owned by Bishop Estate. The insurance broker for Sia is Marsh & McLennan. A prime lender on The Executive Centre was Citibank.

* * *

Honolulu Star-Bulletin, 10/15/93: . . . Key Senator Remains Silent in Bribe Probe. . . . The federal and state investigation into whether developer Sukarman Sukamto offered a bribe to Senate President James Aki hinges on what Sen. Bert Kobayashi said at a meeting Oct. 1 in Aki's office....

Of those who were present at the Oct. 1 meeting, only Senator Rey Graulty and Senator Russell Blair said they clearly recalled Kobayashi making what they described as an allegation involving bribery.

Graulty said that Kobayashi told the group that Sukamto asked Aki to relinquish the Senate presidency to Senate Vice President Milton Holt, "and if he did so, Sukamto would do some development project on Aki family land in Nanakuli to make it worth his while.

Aki and Sukamto, who owns the Waikiki-area site that the state wants to buy for a convention center, deny they were involved in a bribery scheme....

Graulty said Kobayashi told the group that Sukamto was backing Holt because the real estate tycoon saw Holt as a political force who would be around for another six or seven years and eventually be named a trustee of the Bishop Estate, Hawaii's largest private landowner....

* * *

See also: Rey Graulty

For much, much more, GO TO > > > The Indonesian Connection


 

Sumitomo Bank - This Japanese financial giant pumped around $500 million into Goldman Sachs in 1986. After Goldman's IPO in 1999, Sumitomo held about a 6% interest in Goldman. In Hawaii, Sumitomo formerly owned the majority interest in Central Pacific Bank.

* * *

MY FAMILY

 www.zorro-me.com/MIYAZAKI_ENG/

The year I was born was a very disgraceful one to be recorded in golden letters in our long national history.

In the midst of confusion following the nation's defeat in World War II, I was born as the fourth and last child to my family in Fukakusa Fukuine Takamatsu-cho, Fushimi Ward, Kyoto Prefecture, on October 25, 1945. My father, Kiyochika Miyazaki, then 43 years old, was the founder-leader of Teramura Gumi, a Yakuza1 organization based in the Fushimi area. . . .

Rascals and Bubble

The year 1987 saw Japan right in the middle of the bubble economy with the Tokyo land price shot up 85% in just one year, as newspapers and journals frequently using such headlines as "runaway land price" which was reminiscent of the "runaway price" of the decade before.

When NTT went public, its share fetches the price of 1.6 million yen with so many eager to buy them, pushing the Nikkei index share price over 25,000 yen.

The Resort Law went into effect in that year as if to encourage the entire nation to build practically as many hotels and golf courses as you wished. The bubble economy was in full swing. . . .

~ ~ ~

The bubble economy was at its terminal stage, snowballing as it picks up more and more unsubstantiated credits, thus gathering its downward momentum. At the end of this game was somebody left holding a worthless piece of "land". To not become the unlucky one holding a baby, they tended to roll the land over as soon as they got it.

The banks knew this all along. Or rather I should say, it was the banks that took the initiative in this dirty game, by continuing to offer loans.

And the dirtiest of all was no doubt Sumitomo Bank...

* * *

Organized Crime Registry: Who Got Yakuza Into Our Banking System?:

Business Week carried a feature story in its Jan 29, 1996 edition with the headline, "The Yakuza and the Banks"...

The main focus of the parliamentary debate begun recently is whether tax money should be used to bail out the special housing loan companies, "jusen," whose management collapsed under the weight of trillions of yen in bad loans....

The seven failed jusen companies have a combined total of claims amounting to 13.2 trillion yen, at least half of which was lent to the yakuza (organized crime)-related companies at the peak of the economic bubble...

* * *

futuresmag.com, - August 1996: The copper trader who fell from grace . . . Yasuo Hamanaka is a name that has grown in notoriety. . . . Hamanaka, king of the copper market for the past 10 years, now makes losses from Codelco's alleged rogue trader Juan Pablo Davila look like a petty miscalculation. Davila is in a Santiago prison facing charges that as Codelco's chief trader he lost $200 million in an alleged scheme whereby he diverted business to various dealers for kickbacks. Davila says he lost the money on a computer error.

But that was only $200 million.

This is $1.8 billion, and some market watchers have forecast losses for Sumitomo to reach as much as $4 billion....

* * *

From www.aci.net/kalliste: How to Launder Money in the Copper Market: . . . Yasuo Hamamada would often enter the copper market with large-size trades, and slam the copper price in this direction or that. The logic of the pattern of trading would often appear mystifying, creating paranoid uncertainty as to Sumitomo's intentions in the minds of its competitors and counterparties. But it all makes a little more sense when you realize Hamanaka was not only meeting the considerable copper-trading needs of the Sumitomo empire, but also conducting a major money-laundering operation for funds arising from the Southeast Asian heroin trade.

The press has lumped this affair into the convenient category of that of one more rogue trader operating without proper management supervision. This in itself is nonsense.

First of all, the operating assumption of both the press and the investigating authorities should be that upper management knew very well what was going on, as is usually the case.

Second of all, the "trading losses" are related to missing heroin money. Sumitomo is not about to announce that "a large sum of heroin money entrusted to our care is missing." ...

So the loyal Hamanaka takes the fall for "copper-trading losses."

 * * *

Rueter's News Service, 02/16/98: Sumitomo Bank and Bank of Toyko-Mitsubishi (BTM) Linked to Bribery Scandal:

Two of Japan's leading banks, Sumitomo and Bank of Tokyo-Mitsubishi, were implicated on Monday in a widening bribery scandal involving officials at Japan's powerful Ministry of Finance (MoF)...

Tokyo prosecutors on Monday issued a fresh arrest warrant against two MoF inspectors . . . on suspicion of receiving bribes from Sumitomo Bank and Bank of Tokyo-Mitsubishi, as well as Sanwa Bank, in exchange for confidential information. . . . Many of them were encroached by Kanto-based yakuza, incurring massive losses in failed stock and land speculation...

The article by Insider said: "MOF at the end of 1984, through the underground connections of former officials, requested the then leader of Yamahuchi Gumi, the late Takenaka Masahisa, to come to Tokyo and help kick out Kanto-based yakuza from Sogo banks."...

At the time, Yamaguchi Gumi was in the midst of an internal breakup, and Takenaka needed money. He immediately complied with the request and went to Tokyo to start talks with the Kanto-based yakuza. But immediately after, he was killed by an unknown assassin.

However, taking advantage of this situation, Yamaguchi Gumi not only expanded its business territory but also started interacting openly with the bank's top management with the consent of the Ministry.

For instance, Sumitomo Bank, originally headquartered in Osaka and weak in Tokyo, acquired Tokyo-based Sogo bank, Heiwa Sogo Bank, from 1985 to 86. Through the acquisition, the Sumitomo offices in Tokyo increased, leading to their ascent to the number one position in the nation's banking industry.

That was made possible by the Ministry and then-Finance Minister Takeshita Noboru at the front, and Yamaguchi Gumi in the back....

* * *

March 14, 2001

19 Japanese Banks Placed on Credit Watch

Honolulu Star-Bulletin

Fitch IBCA’s Negative Rating Outlook Sends Worldwide Stock Markets Reeling and Pushes the Yen to a 20-Month Low Against the Dollar...

After the close of today’s trading in Asia, Fitch IBCA placed 19 Japanese banks of “Rating Watch Negative” because of concern about their asset quality....

Among the banks are Japan’s largest, including Bank of Tokyo Mitsubishi, Fuji Bank, Sumitomo Bank and Sanwa Bank....

Much of Japan’s bad loan problem is related to the decreased value of land offered as collateral during the bubble economy of the 1980s. Although billions of dollars of taxpayer money have been funneled to help resolve the bad loans racked up by banks, problem loans still total a staggering 64 trillion yen ($331 billion) ...

The newest big fear on Wall Street is that Japan’s economic problems will cut into demand in that country for U.S. goods and services – leading to a further drop in American stock prices....

See also: Dan Inouye

For more, GO TO > > > Dirty Gold in Goldman Sachs; Yakuza Doodle Dandies


 

Sun International Hotels Ltd. - GO TO > > > Part II


 

Thayer Capital Partners - A private equity investment fund where some very big birds privately nest.

For more, GO TO > > > A Connecticut Yankee in King Kamehameha’s Court


 

Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington - From RICO lawsuit, Harmon v. Federal Insurance Co; Torkildson, Katz, et al.:

Defendant Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington (Torkildson, Katz) is a law corporation conducting business in the State of Hawaii.

Plaintiff alleges that Torkildson, Katz, through its complicity; deceptions; threats; failure to disclose settlement proposals to all interested parties and insurance carriers; and failure to respond to Plaintiff's good faith settlement proposals, acted in bad faith and in collusion with some or all of trustees of KSBE, with managers and employees of KSBE, and with officers and directors of P&C, constituted a conspiracy to defraud the beneficiaries of the Estate of Bernice Pauahi Bishop and P&C; racketeering; mail fraud; wire fraud; extortion; and violation of I.R.S. interim sanctions regulations as detailed in Plaintiff's complaint....

For more, GO TO > > > Buzzards of Paradise; Claims By Harmon


 

Trinity Investment Trust - From: Honolulu Star-Bulletin, 7/31/97: . . . A Chicago-based partnership is buying the 318-room Keauhou Beach Hotel on the Kona Coast . . .

Trinity Investment Trust LLC, which is also purchasing the mortgage to the Aloha Tower Marketplace, has signed a letter of agreement to acquire the beachfront hotel from Azabu USA.

The hotel, built in 1970, sits on land leased from the Bishop Estate....

Azabu, headed by maverick deal maker Kitaro Watanabe, acquired the Keauhou Beach Hotel in 1987 for $13 million. During the 1980s, Azabu invested about $600 million in Hawaii, acquiring the Hyatt Regency Waikiki, the Ala Moana Hotel, the Maui Marriott and the Kona Lagoon [also on land leased from Bishop Estate].

Since then, Azabu has run into a string of financial difficulties. In 1993, lender Mitsui Trust & Banking filed a foreclosure suit on the 1,200-room Hyatt Regency.

In 1994, Mitsui wrote off $1 billion in bad debts from loans to Azabu.

Last month, Tokyo officials arrested Watanabe and two other Azabu officials alleging that they illegally concealed company assets from creditors. Azabu's Hawaii subsidiary said then that the arrests had no effect on the company's local operations.

Trinity, meanwhile, is part of a new wave of American buyers who are purchasing properties from financially troubled Japanese investors. . . .

The company -- whose investors include former VMS Realty executives George Ruff, local attorney Jon Miho [of McCorriston Miho Miller & Mukai, defense attorneys for the Bishop Estate trustees] and hotel developer Charles Sweeney -- is trying to acquire the $60 million mortgage to the Aloha Tower Marketplace from Mitsui and take over the waterfront complex.

Last year, Trinity and Apollo Advisors L.P. bought the $130 million mortgage to the nearby Harbor Court luxury office and condominium complex for an undisclosed price from Mitsui.

Trinity has also joined up with Apollo, time-share operator Signature Resorts Inc. and Goldman Sachs' Whitehall Fund [another Bishop Estate investment] to buy the 413-room Embassy Suites Resort on Maui for $78 million....

[A Catbird Comment: Note that nowhere in this news article is there a tweet about Azabu's connection with the Yakuza.]

* * *

Honolulu Star-Bulletin, 3/11/99, by Gordon Pang: Yoshimura Accused of Condo Conflict of Interest . . . Colleagues of Councilman Jon Yoshimura say he has a conflict of interest in the Harbor Court condominium project.

Council Chairman Mufi Hannemann and members Steve Holmes and Donna Mercado Kim say Yoshimura should not be voting on matters involving the Harbor Court project because he is working for the project's chief lender.

Harbor Court Developers owes the city about $12 million for the fee interest of the property.

Yoshimura, an attorney, disclosed yesterday that he is being paid by the law firm of Verner Liipfert Bernhard McPherson Hand to do lobbying work at the state Legislature on behalf of Trinity Investment Trust LLC.

Yoshimura said that under the direction of former Gov. John Waihee, a Verner Liipfert attorney, he is lobbying to help Trinity gain the right to put up an underground parking lot at the Aloha Tower Marketplace's Irwin Park.

In early February, after he began working for Trinity, he participated in a closed-door vote of the Policy Committee that rejected a $6 million offer from Trinity and the developer as settlement for the money owed. Yoshimura later met with several Council members to discuss whether the city should present a counteroffer to settle at $10 million.

"I would have recused myself," Hanneman said....

Yoshimura said he does not believe there is a conflict because his work for Trinity has nothing to do with its situation with the city....

See also: John Waihee; Verner Liipfert; Yakuza


 

USS Missouri Memorial Association - From The USS Missouri Memorial Association Website: . . . The USS Missouri Memorial Association, Inc. is a private Hawaii-based (501-C3) non-profit organization selected by former Secretary of the Navy, John Dalton, as the caretaker of the historic Battleship Ex-USS Missouri. The Association was formed in 1994 and includes a cross-section of leaders from Hawaii’s business, civic, political, and retired Navy and Marine Corps communities....

See also: The Sinking of the Ehime Maru


 

Verner, Liipfert , Bernhard, McPherson and Hand - From The Moneymen : The number one lobbying firm-- Verner, Liipfert, Bernhard, McPherson, and Hand-- acquired its marquee names over a relatively short stretch in the mid-1990s. They included two former Senate majority leaders, Bob Dole and George Mitchell, and a former treasury secretary, Lloyd Bentsen....

* * *

Honolulu Star-Bulletin, 4/10/96, by Rick Daysog: . . . Former Hawaii Republican Party Chairman Jared Jossem plans to join former Gov. John Waihee as a local partner in a Washington, DC, law firm.

According to a source close to the deal, Jossem will join Verner, Liipfert Bernhard McPherson Hand.

Besides Jossem and Waihee, the firm's big-name recruits include former Land Use Commissioner Renton Nip and Norma Wong, former Office of State Planning deputy director in the Waihee administration....

Jossem, a longtime partner in the firm of Torkildson Katz Jossem Fonseca Jaffe Moore & Hetherington, declined comment on the matter. He took over as GOP chairman in 1991 and stepped down in 1994.

Waihee did not return calls....

Besides Honolulu, Verner Liipfert has offices in Houston and Austin, Texas. Locally, the firm has represented Bishop Estate in its lobbying efforts in Washington. The firm lobbied under contract for the state Department of Transportation on aviation, highway and mass transit funding issues.

Last year, Gov. Ben Cayetano canceled that nonbid contract, saying the circumstances surrounding it created the appearance of impropriety.

Waihee and the law firm, which earned some $1 million in fees from the contract, insisted the contract was proper. . . .

* * *

From The Buying of the President 2000 : . . . Elizabeth Dole raised only $3.5 million through the first half of 1999. Her husband's prestigious Washington law firm, Verner, Liipfert, Bernhard, McPherson, and Hand, is the top patron of her current campaign...

* * *

From Equity No. 2048 - In the Matter of the Estate of Bernice Pauahi Bishop, Report of Master Regarding Retention of Non-Staff Counsel, filed 5/18/00:

 . . . Prior to August 1998, Verner Liipert, a Washington D.C. based law firm which employed former governor John Waihee was retained to do certain legal work. From other pleadings filed in this matter we know that central to that retention was lobbying by the firm on the issues of intermediate sanctions and/or trustee compensation. It is also known from other pleadings that that firm was compensated for work done on investigating the feasibility of changing the domicile of the trust from Hawaii to a Souix River Indian Reservation....

Minutes of a Special Trustees' meeting of Sept 9, 1998 authorized instructing John Waihee to "transfer all files on the matter of Trustees lobbying efforts on Intermediate Sanctions legislation" to Hawaii for review by other lawyers, including "point person" William McCorriston. In addition, Verner Liipfert lawyer Sue Temkin was to come to Hawaii "as soon as possible to explain and elaborate on the lobbying efforts". This was in response to Master Matsumoto's request for information on the subject and the right to review the files.

However, it is clear from a review of all of the 1998 invoices that even before August 1998 Verner Liipfert was aware that the Attorney General had subpoenaed its files and was involved in efforts to not produce its files. As time progressed this firm did everything possible to delay production and, then, to attempt to limit the scope of that production. This Master reviewed the following invoices: . . . $347,564.09 TOTAL.

This entire amount should be surcharged to the Trustees. . . . Further, the bills do not contain charges for John Waihee, even though he clearly spent time on the file matter. If he was compensated in some other way or at a different time, that sum should be included in the surcharge total....

It is not overstatement to say that there was nothing of legal substance in the work done in 1998 by this firm. Rather, it simply represents the formulation and implementation of a strategy to delay and obstruct, discussed ad nauseum among a large number of firm personnel, including the central involvement of N. Wong, S. Temkin and J. Waihee....

Simply stated, as one proceeds through the billing records one is left with the inescapable conclusion that legal work being done was of no benefit to the trust. Rather it was designed solely to address allegations of past misconduct or at least errors of judgment made by the individual trustees with regard to the earlier retention of this firm. The goal of the work was to attempt to formulate a strategy to prevent or limit disclosure.

In the event that this court adopts this Master's recommendation and orders surcharge, the possibility exists that one or more of the trustees will not be able to pay. The law permits, upon petition of an interested party and after notice to all interested persons, examination of the propriety of employment of any person, including attorney, by trustees. Refunds may be ordered from such persons. HRS 560:7-205. . . .

Absent a satisfactory explanation by Verner Liipfert and assuming an interested party files an appropriate action which gives the appropriate notice to Verner Liipfert, a refund is, in the opinion of this Master, in order. This master finds it inconceivable that a lawyer would hold that this type of work both benefitted the trust, did not encompass allegations of trustee misconduct and/or error and was, therefore, appropriate to be paid from trust assets. However, the statute does require that Verner Liipfert be given notice and that has not been done.

Finally, this Master also concludes that a surcharged trustee who satisfies the surcharge is an interested party who could petition for such a refund. . . .

See also: John Waihee; Lloyd Bentsen; Renton Nip; Torkildson Katz

For more, GO TO > > > Claims By Harmon; RICO in Paradise


 

Vernon Jordan - GO TO > > > Part II

See also: Robert Trent Jones Golf Club; Xerox


 

VMS Realty - Company specializing in limited partnerships - the majority sold by Prudential-Bache.

From In Good Faith, by Kathleen Sharp:

During the eighties, VMS raised about $2.6 billion from about 110,000 outside investors; about $1.3 billion was sold through Prudential-Bache Securities. The realty company become one of the two largest packagers of limited partnerships that were sold by Pru-Bache brokers (the other being Graham Energy).

VMS Realty was named after the initials of its three principals: Robert Van Kampen, Peter Morris, and Joel Stone. Initially, the Chicago-based firm had formed limited partnerships to purchase hotels, resorts, apartments, and other properties. Since its inception in 1979, the company had grown from an idea to $9 million in assets, becoming one of the nation’s largest real-estate syndicators....

Perception vs. Reality

During a Pru-Bache executive committee meeting one day in 1988, Loren Schechter announced that there were some “minor” problems with the limited partnerships packaged by VMS Realty, the firm’s second-largest LP sponsor. As he would say two years later, a “vocal minority” was complaining that the investments weren’t performing as promised....

Schechter detailed some of the claims and indicated that at worst, the troubles could cost Pru-Bache about $34 million.

Fowler quipped, “Sounds more like $1 billion to me.”

No one spoke, but Fowler’s figures would prove closer to the mark. Over the decade, Pru-Bache had sold about $1.2 billion of VMS investments to clients, who by 1994 had recouped only half of their funds....

A due diligence team from another brokerage house, as well as from Pru-Bache, were dispatched to review VMS’s books. The team’s consensus was that “insiders at VMS were doing funny things” that undermined the value of the funds....

Problems had festered for years at the Chicago-based realty company, and by March 1988 Pru-Bache knew of those problems. Senior managers at DIG knew that VMS Realty was short of cash and that some properties in the sponsor’s LP funds weren’t making enough money to pay loans. Indeed, years later, DIG executive James Kelso admitted as much to arbitrators, saying that “the mere appearance that the properties were not sufficient to serve loans does not, in and of itself, set off a fire alarm that the fund is going down.”

However, the fund would go down.

Many of the firm’s brokers and clients had complained about the VMS deals. In 1986, when the tax laws changed, VMS officers realized they had trouble pending. In February 1987, Xerox Corp. injected about $80 million on cash into the troubled company in return for a 25 percent equity stake. At the time, at least one market analyst warned Xerox and other big investors about the investment.

Years later, Scott Miller, an independent real-estate analyst in Houston, said, “VMS is not now and never has been worth anything.”

Here’s why. The firm in the early 1980s had played the tax shelter game, paying high prices for properties, such as resorts, hotels shopping complexes, and apartments. Some of these assets were inferior properties, which were then ladened with debt and high fees extracted by VMS.

What VMS had really sold in the early 1980s were tax write-offs. The general partner often didn’t invest its own money in the deals, although it did secure outside financing to complement investor funds. For example, in the Boca Raton Hotel and Club LP, limited partners would later claim that VMS had contributed only $100 to the LP – while taking as much as $50 million in assorted fees.

In addition, without consensus from its limited partners, VMS in 1988 acquired the Boca County Club golf course and an attractive piece of development property, known as the marina parcel. “There was no vote, they just did it,” said one broker. The two properties were encumbered by mortgages payable to Banyan, a VMS affiliate, and each mortgage was collateralized with the other property. By 1990, the mortgages had grown to about a $21 million debt and were in danger of foreclosure; the LP had defaulted on the payments and was in danger of losing the underlying assets.

At the same time, the Boca Raton LP was also straining under the third “wraparound” mortgage, which allowed the VMS entity to siphon off more money. Although it didn’t lend any money to the LP, the loan carried a 13 percent interest rate – or about 7 percent above the prime rate. The net effect of the above-market rate loan was that,k by 1990, the $8 million debt had ballooned to about $21 million – all shouldered by investors....

By 1989, VMS entities were making even more money by “lending” in similar fashion to its other limited partnerships. Why? When the tax laws changed in 1986, the real-estate market began to slip. To keep its earlier private, tax-shelter limited partnerships afloat, VMS turned to raising public “mortgage” funds, which were lent back to its private properties. (Public deals require more disclosure than do its private offerings.)

“Essentially, public investors in VMS were used to pay off private VMS deals, just like a Ponzi scheme,” said Zahn. According to many brokers and branch managers, this tactic allowed VMS to publish glossy brochures that pointed to great track records from earlier programs, which in turn enticed less sophisticated investors to fund later public programs.

By the late 1980s, some brokers began to privately blast these deals as self-dealing. The interest rates on the loans were inordinately high. To an increasing number of salespeople, the deals clearly benefitted VMS at the expense of Pru’s clients – the investors. Yet the outrageous self-dealing transactions were disclosed in prospectuses, which were rubber-stamped by regulators, who were not required to issue opinions on any stock offering.

All the while VMS helped itself to enormously high fees for “management” and other services it charged limited partners. Pru-Bache also earned millions of dollars in fees, commissions, and other charges. By 1993, many of VMS’s $1.2 billion LPs had dropped so steeply in value that Pru-Bache clients would lose about $600 million....

See also: Prudential Insurance Company; Xerox Corporation


 

Wally Chin - President of Kamehameha Activities Association.

March 13, 2002

Hawai'i trust sees WCI stock boom

Honolulu Advertiser Staff and News Services

Kamehameha Schools' investment in Florida development company WCI Communities Inc. paid big dividends this week when WCI raised more than $130 million in an initial public stock offering.

WCI Communities Inc.'s shares rose 19 percent after the stock sale for the builder of residential communities and luxury condominium towers in Florida. Shares of WCI rose $3.67 to $22.67 in New York trading.

The offering raised the value of the 7.1 million shares owned by Kamehameha Activities Association, a subsidiary of Kamehameha Schools, to $160 million. Kamehameha, the largest single shareholder, with more than 16 percent of WCI shares, invested in the Bonita Springs, Fla., company in 1995. Kamehameha Schools' initial investment in WCI was worth about $37 million, trust officials said.

The Kamehameha Schools trust and its subsidiaries have about $3 billion invested in stocks, bonds and other securities. The value of its WCI investment now makes up about 5 percent of that portfolio, which is the main asset base for the $4.4 billion non-profit network of private schools serving Hawaiians.

The trust has not decided what to do with its stock after the expiration of a six-month "lock-out" period, after which initial investors in WCI can sell shares, said Wally Chin, president of Kamehameha Activities Association. . . .

WCI originally filed with the Securities and Exchange Commission to go public Sept. 7, a plan that was delayed by the terrorist attacks four days later.

The shares sold represent a 16 percent stake. The IPO values WCI at $822 million.

The company, which traces its roots back to 1946, was once a unit of Westinghouse Electric Corp. The company is now headed by chief executive officer Alfred Hoffman, 67, who was the national co-chairman of finance for George W. Bush's presidential campaign.

Citigroup Inc.'s venture capital unit, the John D. and Catherine T. MacArthur Foundation and Kamehameha Activities Association own about 43 percent of the shares.

A Bloomberg News story was used in this report.

See also: McKenzie Methane

For more, GO TO > > > A Connecticut Yankee in King Kamehameha’s Court; Claims By Harmon; How to Pluck a Non-Profit


 

Watanabe Ing & Kawashima - Home of current Kamehameha Schools’ trustee James Douglas Keauhou Ing. According to his bio, James Ing was a former associate of Judge Kevin Chang, the judge who ultimately selected the new trustees. Ing also represented former trustee Oswald Stender in an effort to remove former trustee Lokelani Lindsey, and represented the interim trustees in efforts to remove old trustees....

September 22, 1998

Estate sues lawyers over confidentiality

Star-Bulletin

Bishop Estate has filed suit in Circuit Court, alleging its lawyers failed to keep a settlement confidential in a suit brought by a former employee.

William Rosehill, a Kamehameha Schools Bishop Estate land manager on the Big Island, was terminated July 10, 1992. Rosehill filed suit Feb. 22, 1993.

The lawsuit says an attorney with Watanabe Ing & Kawashima failed to guard the confidentiality of a settlement with Rosehill by attaching it to a court document not under seal.

In November 1996, a reporter with the Hilo Tribune Herald disclosed that Bishop Estate agreed to pay Rosehill $240,000 to settle the lawsuit.

For more, GO TO > > > Buzzards of Paradise


 

Wayne Berman - From The Money Men: . . . You’ve probably never heard of Wayne Berman, Peter Terpeluk, Beth Dozoretz, or Alan Solomont. But you should. Certainly anyone who wants to be president or a member of Congress has. They are among the key people to see in the powerful world of political solicitors. ... Whoever these people blessed were the candidates who had the best chances to become our next president. The ones they rejected didn’t have any chance at all. . . .

The wall of fund-raiser Wayne Berman’s office was papered with photos of himself glad-handing with virtually all of the big-name Republicans of the past two decades. As a longtime lobbyist, Berman knew— and was liked and trusted by— everyone from Ronald Reagan to Newt Gingrich and from George Bush to George W. Bush. They respected him both for his political savvy and for his ability to raise money— as much or more money, in fact, than almost anyone else in town.

It was no surprise, then, that a colleague of his, Scott Reed, interrupted my interview with Berman one day to ask for a favor. Reed was a Washington player in his own right; he had served as campaign manager for the 1996 Dole for President campaign. But Berman had the access that Reed lacked. Reed was pushing a “technical” amendment for a client that needed to be affixed to an appropriations bill that was on the verge of completion in the Senate.

So Berman picked up the telephone and called the chairman of the Senate Appropriations Committee, Ted Stevens of Alaska . . . A half hour or so later, Stevens called back. I didn’t hear everything that was said, but it was obvious that Berman’s reminder was all that was needed to insert the amendment into the bill. . . .

* * *

Journal Inquirer, 3/6/00, by Don Michak: Treasurer Scandal’s Tentacles Reach Texas SOME KEY PLAYERS in Connecticut’s Paul Silvester scandal also are embroiled in a controversy over conflicts of interest and political favoritism in Texas under the governorship of Republican presidential candidate George W. Bush.

At the center of the controversy are hundreds of millions of dollars of investments by the University of Texas Investment Management Co., or UTIMCO, a tax-exempt, quasi-public corporation said to be the brainchild of former University of Texas regent Thomas O. Hicks, the Dallas merchant banker who served as UTIMCO’S first chairman....

In Texas, Donald I. Evans, finance chairman of the Bush presidential campaign, is a Bush-appointed university regent, as is Tom Loeffler, a San Antonio lawyer and former congressman. Evans is now chairman of the regents, who approved the creation of UTIMCO in 1996.

Loeffler, one of Bush’s biggest financial backers in his 1988 gubernatorial race, also has been a registered lobbyist for Hicks, Muse, Tate & Furst, and he joined Hicks on the UTIMCO board in 1996.

Loeffler and several others involved in the UTIMCO controversy also are among the people Bush calls his “pioneers,” supporters who each helped him raise at least $100,000 in presidential campaign contributions.

The group includes R. Steven Hicks, the brother of Thomas Hicks; three people whose investment partnerships had received UTIMCO funds; two partners in the law firm that counsels UTIMCO; and Wayne L Berman, a Washington lobbyist...

Last fall ... Berman, who is finance chairman of the national Republican Governors Association, “voluntarily” suspended his activities on behalf of the Bush campaign, pending the results of the continuing federal investigation of Silvester’s crimes in Connecticut. . . .

Berman is a central figure in the Silvester scandal, having apparently “bundled” campaign cash to Silvester, including a contribution from another big Republican fundraiser and his co-chairman of the governors association’s Finance Committee, Washington lobbyist Peter Terpeluk.

Three of Berman’s colleagues, among Bush’s “pioneers” -- corporate chieftains Maurice R. Greenberg of American International Group, Herbert Collins of Boston Capital Partners, and Thomas Foley of ... NTC Group— also helped bankroll Silvester’s failed election bid.

And Berman hired both the former treasurer and his closest aide soon after Silvester’s narrow 1998 election defeat. A survey of the treasury’s business partners last fall also showed Berman to have collected $1.5 million in “finder’s fees” on two pension fund deals he helped broker with Silvester....

The bulk of Berman’s fees— $1 million ... came from The Carlyle Group, a Washington merchant bank run by several prominent Republicans in the Reagan and Bush administrations, including former Secretary of Defense and CIA Deputy Director Frank Calucci, Secretary of State James A. Baker, and Office of Management and Budget Director Richard G. Darmon.

Former President Bush also advises one of Carlyle’s investment partnerships, and the firm reportedly has paid him for speeches . . .

The UTIMCO controversy and the Silvester scandal also are both marked by the involvement of corporate and legal elites whose Republican pedigrees trace back to the Nixon administration.

The most obvious link is Thayer Capital Partners, an investment group headed by Frederic V. Matek, the former head of personnel in the Nixon White House, deputy director of Nixon’s Committee for the Re-election of the President, and president of Marriott Hotels, Northwest Airlines, and Coldwell Banker Commercial Group. . . .

Silvester invested $75 million with Thayer, and UTIMCO initially approved a $20 million commitment, but the Texans backed out of their deal....

In Connecticut the Carlyle payment to Berman amounted to 1 percent of Silvester’s $100 million investment in Carlyle European Partners. Thayer Equity Advisor IV LP, to which Connecticut committed $75 million, arranged to pay Merrill Lynch & Co. $2 million and North Cove Ventures, a company organized by former House Majority Leader William DiBella, a Democratic power broker and confidant of Silvester’s, $374,500....

Meanwhile, Silvester, who last September pleaded guilty to racketeering and money laundering as the key figure in the kickback scheme involving such fees, faces a federal prison term of as much as six years.

The U.S. Securities and Exchange Commission also has launched a broad investigation of the financial transactions that Silvester authorized during his 17-month tenure as treasurer. Two months ago it sought records concerning his private-equity investments as well as his hiring of investment managers and bond underwriters. . . .

For more, GO TO > > > A Connecticut Yankee in King Kamehameha’s Court; Birds that Drink from Cesspools


 

Wayne Metcalf - From RICO Case Statement, Harmon v. Federal Insurance Co; P&C Insurance Co; Marsh & McLennan, Inc; PricewaterhouseCoopers; Trustees of Bishop Estate, et al.:

Plaintiff alleges that the following persons and agencies have a duty in law to act upon complaints of citizens, yet failed to act, pretended to act but did not act, or misled or deceived Plaintiff in other ways when, in good faith, he brought to their attention evidence and suspicions of serious ongoing criminal activity endangering the citizens of the United States. By their acts and omissions they either sanctioned or perpetuated the crimes. It was clearly within the duties and functions of these people and agencies to act and take seriously the allegations plaintiff had set forth:

a) Insurance Commissioner’s Office, State of Hawaii.

b) Wayne Metcalf, Insurance Commissioner, State of Hawaii

c) Rey Graulty, former Insurance Commissioner, State of Hawaii

d) California Department of Insurance

e) Chuck Quackenbush, Insurance Commissioner, State of California . . .

See also: Investors Equity Life Insurance; Rey Graulty


 

William S. Richardson - Former Chief Justice of the Hawaii Supreme Court; retired Bishop Estate trustee; Sec/Treas of P&C Insurance Co.

From: RICO LAWSUIT: Harmon v. Federal Insurance Company, P&C Insurance Co, Marsh & McLennan, PricewaterhouseCoopers, Henry Peters, Nathan Aipa, William S. Richardson, Rodney Park, et al:...

William S. Richardson is a retired Trustee, a salaried consultant to KSBE, and serves as a Director and Sec./Treas., P&C. As Treasurer, Richardson had a fiduciary responsibility to P&C that expenditures and other financial records of the company be honest and accurate. Plaintiff refused to approve the 1995-96 fiscal year financial report, as prepared by Peter Lowe, as he was aware that these records were not honest and accurate. Plaintiff alleges that Richardson, as Treasurer, had the responsibility to review the financial records and raise questions about any entries that may have been fraudulent or misleading.

Richardson was also a co-investor in the McKenzie Methane deal during the time he was a Trustee. Plaintiff alleges that Richardson's actions, through his complicity, deceptions, and breach of fiduciary duties, in collusion with some or all of trustees of KSBE; with other managers and employees of KSBE; with other officers and directors of P&C; and with outside contractors, attorneys, politicians and others, constituted a conspiracy to defraud P&C and the beneficiaries of the Estate of Bernice Pauahi Bishop; racketeering; mail fraud; wire fraud; extortion; and violation of IRS interim sanctions regulations.

For more, GO TO > > > Claims By Harmon; RICO in Paradise; The Myth & The Methane


 

William E. Simon - Financier, businessman, and Secretary of the Treasury during the Nixon and Ford administrations. He was also a member of the Committee of 300.

A partial business career listing: Partner, Solomon Brothers (1964); Deputy Sec of the Treasury (1973); Secretary of the Treasury (1974-77); Sr Consultant, Booze Allen & Hamilton (1977-79); Consultant, Allstate Insurance Co.; Pres, John M. Olin Foundation; Director, Kissinger Associates; Founding Board Member, Robert Trent Jones International Golf Club; Senior Trustee, University of Rochester; Director, Xerox Corp.

William Simon died on June 3, 2000 of heart and lung ailments. He was 72.

* * *

William Simon was a co-investor with Bishop Estate in several business ventures, including HonFed Savings & Loan, Sino Finance Group, Xiamen International Bank (China), SoCal Holdings, and the now-infamous McKenzie Methane deal.

See also: Kukui, Inc.; Lee H. Henkel; McKenzie Methane; Robert Trent Jones Golf Club; Xerox Corp; Xiamen International Bank

For more, GO TO > > > William Simon Says...; The Xerox Conspiracy


 

The Woodlands - George P. Mitchell, Chairman and CEO of Mitchell Energy & Development Corp, founded “The Woodlands” a 25,000-acre planned community located 25 miles north of Houston.

Opened in 1974, The Woodlands was sold in 1997 to a partnership of Cresent Real Estate Equities Company and Morgan Stanley Real Estate Fund II.

Recommended Reading: Conspirators Hierarchy, by Dr. John Coleman.

See also: Dennis Fern; Lloyd Bentson; Kukui, Inc; McKenzie Methane


 

Xerox Corporation - From The Honolulu Advertiser, 10/7/93: Takemoto and his Budget Office: the list of items probed....

The Senate Special Committee on the Employees Retirement System and Government Procurement has repeatedly focused on state Budget Director Yukio Takemoto and the activities of his department.

The items the committee has investigated include . . .

The state had a competitively bid two-year contract with Xerox for fax equipment, with an option to extend for a year.

The Budget and Finance staff recommended that the contract be rebid to seek a better deal, while Xerox executive Ken Koike-- a friend and golf partner of Takemoto's-- asked Takemoto to extend the contract.

Takemoto said the contract was extended after Xerox agreed to provide new and better fax equipment under the contract.

At that hearing, Takemoto was also questioned about his trips to the annual Senior Skins Pro-Am, which was sponsored by Xerox. He said the golf excursions-- including at least one paid for by Xerox-- had nothing to do with his purchasing decisions....

* * *

From Equity No. 2048 - Findings of Fact and Conclusions of Law - Petition For Removal of Trustee Marion Mae Lokelani Lindsey: . . . In 1996, Xerox Corp paid for Trustee Lindsey and her husband's airfare, lodging, and food to attend the Olympics in Atlanta, Georgia....

At the time, Xerox was a Kamehameha Schools/Bishop Estate vendor....

* * *

June 6, 2003

SIX FORMER XEROX EXECS SETTLE
SEC ACCUSATIONS

The Courier-Journal

The Securities and Exchange Commission yesterday charged former Xerox chief Paul Allaire and five other ex-Xerox Corp. executives with civil securities fraud over accounting methods that the regulatory agency said overstated earnings for the huge copier maker.

The six men settled the civil suit with a $22 million payment that includes penalties and forfeiting profits, the SEC announced.

They did not admit to or deny the allegations.

Others charged were G. Richard Thoman, former president and chief operating officer; Barry D. Romeril, former chief financial officer; Philip D. Fishbach, former controller; Daniel S. Marchibroda, former assistant controller; and Gregory B. Tayler, former director of accounting policy.

Xerox shares closed down 2 cents at $11.25....

For more, GO TO > > > The Xerox Conspiracy


 

Xiamen International Bank - On Sept 28, 1974, Luso International Bank was incorporated in Macau. In 1975, it was acquired by Panin Group (renamed Min Xin Group in 1988), Hong Kong.

In Nov 1985, Panin Group, with three PRC-based institutions, Industrial and Commercial Bank of China; Fujian Investment and Enterprise Corp (renamed Fujian International Trust & Investment Corp); and Construction and Development Corp of Xiamen Special Economic Zone (renamed Xiamen Construction and Development Corp, Ltd.) jointly founded Xiamen International Bank, the first joint venture bank in the People's Republic of China.

Luso International Bank was injected as part of the capital to the bank, thus becoming a wholly-owned subsidiary of Xiamen International Bank.

In Nov 1991, XIB was joined by three more shareholders: Asian Development Bank; The Long-Term Credit Bank of Japan, Ltd.; and Sino Finance Group, Ltd. (owned by Bishop Estate and former U.S. Treasury Secretary, William Simon).

* * *

GreaterThings, by Greg Wongham: The Ripple Effect is one way we, the people of Hawaii, can attempt to tell the rest of the country about the way the Asian-influenced financial world of Hawaii could cost you and your children every penny in your bank. Hawaii’s political powerbrokers, led by Hawaii (D) Senator Dan Inouye, have been very busy manipulating the financial world from Wall Street to the White House. Inouye knew Wall Street could be had if he were able to get a big powerhouse brokerage firm like Goldman Sachs to make a market for one or two of his big Asian banker friends, like Mochtar Riady’s Lippo Group (who was the center of the “Chinagate” investigation) and his brother-in-law, Mumin Ala Gundawun, who controls Xiamen International Bank.

Other Chinese-Indonesians like Atang Latief and his former son-in-law Sukarman Sukamto (now named Sukamto Sia), played a big role in the “high finance” world that has dominated Hawaii and Hawaii politics for decades. Latief, for example, was credited with controlling 10 offshore banks in Hong Kong.

The $6 billion Kamehameha Schools Trust provided the financial “brick and mortar” used to build the bridge that would span the gap between Asia and U.S. capital markets. The Democratic Party-controlled Kamehameha Schools Trust spent $500 million to purchase 10% of Goldman Sachs stock. . . .

Kamehameha Schools’ lead investment trustee, Henry Peters, stated that they were going to put Xiamen International Bank on the N.Y. stock exchange. This was a plan to create a conduit allowing the American public’s capital to flow through to their business partners in Asia, in some cases subsidizing a communist regime. The Clinton appointment of Rubin as Secretary Treasurer was the other link to Hawaii’s financial and banking world....

* * *

March 8, 2002

China lets first foreign bank
take Chinese clients

SHANGHAI (Reuters) - China's central bank has given the green light to the first foreign financial institution, Xiamen International Bank, to do business with Chinese clients, a bank official and state newspapers said on Friday.

The Sino-foreign joint venture bank, based in booming Xiamen in the southeastern coastal province of Fujian, had been given approval to provide domestic clients with foreign currency services, they said.

"We are the first foreign financial institution and first joint venture bank to gain approval," an official at the Xiamen International Bank told Reuters by telephone. He declined to say how the new business would affect earnings.

Xiamen International Bank is 10-percent-owned by Japan's Shinsei Bank, 10 percent by the Asian Development Bank and five percent by U.S.-backed Sino-Finance Group Co Ltd.

It is majority-owned by Fujian provincial and municipal government firms.

As part of its commitments for World Trade Organisation entry, China allowed overseas banks to conduct foreign currency business with Chinese residents from February 1.

Foreign banks were formerly only allowed to take foreigners or overseas-invested firms as customers and many are now applying to the central bank to expand their business.

Xiamen International Bank gained its approval on March 4, state newspapers said on Friday.

The bank was set up in November 1985 and has a licence to do yuan business with foreign individuals and companies. Its market coverage spans Fujian, Macau and Hong Kong, according to its Web site.

Min Xin Holdings Ltd has a 36.75 percent stake in the bank, Fujian International Trust and Investment Corp has 12 percent, Xiamen Construction and Development Corp has 7.5 percent and Industrial and Commercial Bank of China has 18.75 percent.

China's central bank said on Thursday foreign banks have to follow the same interest rate guidelines as Chinese banks when taking foreign currency deposits from domestic clients.

Analysts said the guidelines would ensure foreign banking giants, with their more sophisticated products and international names, did not take clients away from Chinese banks by offering more attractive interest rates.

China has pledged to open the financial sector to overseas players gradually in the five years after its WTO entry. Foreign banks will be allowed to do yuan business with Chinese companies in two years and with Chinese individuals in five years.

See also: Zurich Financial Services Group

For more, GO TO > > > The World Trade Organization


 

Yakuza - From tripod.com: Yakuza Stretch Tentacles Overseas . . . Like most growth-oriented enterprises, the yakuza have not confined their illegal -- and legal -- business activities to Japan. In the late 1960's the Japanese mob took advantage of the sharp rise in Japanese tourism and began organizing "sex tours" to various countries in Southeast Asia.

The yakuza also began to recruit -- or, more probably, to coerce -- women from the Philippines, Taiwan, South Korea and other Southeast Asia countries to work as "hostesses" in mob-controlled brothels in Japan. The overseas push proved similarly lucrative for drug trading -- primarily of Korean, Taiwanese and other sources of methamphetamine (known as "speed" on U.S. streets).

Gunrunning also evolved into a profitable activity since the sale of guns is controlled so strictly in Japan that the black market price for handguns can be as much as $5,000 to $7,000.

Gangsters typically have bought the guns abroad, mostly from criminal elements in China, Taiwan, Hong Kong, the Philippines and the United States, and sold for exorbitant prices on the black market back home. . . .

American law enforcement officials maintain that until 1974 yakuza activities in the U.S. were relatively limited, both in nature and scope. Not surprisingly, given its geographic proximity and brisk tourist trade, Hawaii initially attracted Japanese gangsters. Their focus there was on fleecing their own countrymen on yakuza-organized tours that included patronizing yakuza-run bars, restaurants, brothels and other entertainment.

As the yakuza's economic power has grown, however, they have focused greater attention on picking other fruits from the U.S. market. In this regard, mobsters found that, partly due to its heavy tourist traffic, the fiftieth state was a prime market for selling Asian-made methamphetamine (usually at a cut-rate price compared to U.S.-made speed) and/or trading these drugs for handguns....

From its Hawaiian beachhead the Japanese mob has moved on to the mainland, stopping first in southern California but continuing its reach up the coast to such cities as San Francisco, Portland, and Seattle. As the yakuza have cultivated ties with other organized crime groups operating in the United States, American law enforcement officials have observed the Japanese mob in gambling centers, such as Las Vegas and Atlantic City, as well as in Newark, New Jersey, New York City and Boston....

While the primary focus of the yakuza's dealings with other organized crime groups still appears to be the trafficking in drugs and handguns, U.S. officials, aware of the Japanese mob's expanded activity in the "above-ground" business world in Japan, have become increasingly worried about the extent to which the yakuza have been able to commingle their illicit profits with legitimate Japanese investment in the United States....

U.S. News obtained a ... portfolio of 108 properties offered to Western investors by Mitsui Trust & Banking Co., one of Japan's largest banks. Thirteen of the properties ... are held by Azabu Building, a company that might not mean much to Americans but is quite familiar to Japanese police.

In early March, Azabu's president, Kitaro Watanabe, received two years in prison for hiding some $18 million in assets from creditors. Azabu properties, moreover, are protected by groups tied to Tokyo's largest crime syndicate, according to police....

The issue is sensitive enough that not one banker interviewed for this story -- American or Japanese -- would talk on the record. It's easy to understand why. "These guys are a nightmare to deal with," said a Tokyo banker responsible for collecting bad loans. . . .

In 1993, Tomosaburo Koyama, a vice president of now bankrupt Hanwa Bank ... was gunned down outside his home. Koyama headed a section of the bank that collected problem loans, and police believe the murder is tied to a dispute with a local yakuza gang.

A similar slaying occurred a year later, when the manager of a top branch of Sumitomo Bank was found shot through the head in his apartment building. Since 1991, assailants have committed dozens of violent acts against Japanese companies, including assaults, arson, and 21 shooting attacks on the homes of corporate executives....

It is not well understood in the West that key portions of Japan's financial industry-- debt collection, bankruptcy management, consumer finance -- are heavily influenced by the yakuza....

What pushed the gangs so deeply into the financial world was Japan's Bubble Economy, the huge speculative boom that sent real-estate and stock prices soaring in the late 1980s. In terms of sheer market capitalization, the Tokyo Stock Exchange became the world's largest; the Osaka stock market bumped London's Bourse to fourth place.

The value of real estate in Tokyo, on paper, was said to exceed that of the entire United States.

These overinflated assets became the collateral for a seemingly endless amount of credit extended to virtually any business in Japan --and the yakuza cashed in big....

To Japanese who watched the gangs, it soon became clear that all this money was transforming the underworld. This new breed of criminal was dubbed the keizai yakuza, the economic gangster, and became the stuff of legend from Ginza nightclubs to Manhattan art auctions...

Dirty Money.

The Bubble popped in 1990, plunging Japanese property and stock markets to lows from which they have yet to recover fully. Last January, the Ministry of Finance offered what analysts say is the first accurate accounting of the size of the bad loans left from the Bubble's collapse -- nearly $600 billion, an amount larger than America's S&L debacle, in an economy less that half the size.

Cleaning up the S&Ls, moreover, seems easy compared with what the Japanese face. The S&Ls were looted largely by white-collar crooks, not by violent crime syndicates. Much of the money lent to the gangs has simply disappeared, hidden away in mob investments, spent on fast living, or lost with deflating stock and property values....

Faced with gangsters, ultra-nationalists, and unresponsive police, U.S. investors may find it hard to resist making handsome payoffs to the mob.

"On the big discounted properties, you may have to cooperate with organizations like mine," advises godfather [Ryuma] Suzuki (who runs the Sumiyoshi-kai, a $1 billion crime syndicate with 7,000 employees). "Things can get a little rough out there."

“Privately, some U.S. investment bankers admit they may have to grease the wheels in order to clear their new properties."...

The profit potential is big enough, says one, that there's money to be made even after Suzuki's commission of 40 percent....

But such decisions will have repercussions on both sides of the Pacific, say yakuza watchers.

If the gangs are paid off, it means a large infusion of American cash into the Japanese underworld -- not a welcome thought for the United States, where yakuza practices have ranged from drug smuggling to extortion and money laundering....

"In the short term, you're getting an opportunity to make a profit," says former FBI man Godfrey. "But you're exposing yourself to paying off organized crime, and that could spill over to the rest of your business."

As the Japanese like to say . . .

"Dealing with the yakuza is like feeding a tiger. If you try to stop, the tiger will eat you."

* * *

See also: Central Pacific Bank; Dan Inouye; Gene and Nora Lum; John Waihee; Mitsui Trust; Sumitomo Bank; Trinity Investment Trust

For more, GO TO > > > Yakuza Doodle Dandies!


 

Yukio Takemoto - Takemoto is a former Hawaii State Budget Director who resigned under a thunderstorm of criticism in late 1993 to become Bishop Estate's chief executive for budget and review. The Trust paid him $163,010 in 1997.

From Equity No. 2048 - Petition of the Attorney General on Behalf of the Trust Beneficiaries to Remove and Surcharge Trustees:

Yukio Takemoto is the principal executive of the budget and review group of the Trust and reports directly to Peters. After the 1996 primary election, Milton Holt owed Starr Seigle McCombs (SSM), his media and advertising consultants, $18,690.72 that SSM had paid the Vendor on behalf of Holt. . . .

Takemoto asked another non-bid contractor of the Trust, Akinaka & Associate, Ltd., to help with Holt's unpaid campaign expenses. When Akinaka agreed to help, Takemoto said that Kajioka would be in touch. . . .

Shortly thereafter, a Trust employee instructed the Vendor to send four invoices (each for $4,672.68, or one-fourth of the campaign debt of $18,690.72) to each of: Kajioka; Ho; Akinaka; and Okita, Kunimitzu and Associates. . . .

The Vendor followed this instruction and sent false invoices to the four non-bid contractors for goods and services that were never provided to them.

Each of the four non-bid contractors paid the false invoice from the Vendor, and the Vendor then paid in full Holt's campaign debt to SSM. . . .

All the firms that participated in the instruction of the Trust in making illegal campaign contributions by sending or paying bogus invoices were receiving, have received, and continue to receive lucrative non-bid contracts from the Trust. . . .

* * *

Honolulu Star Bulletin, 09/15/98 by Ian Lind: It's Not The First Time for Takemoto - Bishop Estate budget chief was investigated for financial abuses in 1993

Bishop Estate budget chief Yukio Takemoto is no stranger to charges of political favoritism and cronyism. Last week, the state attorney general's office accused Takemoto of a scheme to improperly wipe out an $18,690 dept by then-Sen. Milton Holt, using payments from four nonbid contractors with the estate...

Takemoto, appointed state budget director by former Gov. John Waihee, spent months at the center of a 1993 legislative probe into state purchasing abuses and dealings of the state Employee Retirement System. The hearings, directed by the late Sen. Richard Matsuura, did not result in any formal charges against Takemoto. But they publicly aired details of several situations in which Takemoto appeared to direct nonbid contracts to friends, or improperly accepted gifts or favors from companies seeking business with the state....

Takemoto resigned under pressure at the end of 1993, and joined Bishop Estate months later...

According to information disclosed during the 1993 hearings, the Waihee administration awarded nearly $13 million in nonbid contracts to Data House even though he had no computer expertise, and either ignored or did not seek out the advice of computer experts on his staff.

Throughout the hearings, Takemoto denied his 25-year friendship with Arita played any major role in the contract decisions....

Soon after his appointment as budget chief, Takemoto stopped putting multimillion-dollar state bond sales out for competitive bid and substituted a nonbid process. The new negotiated deals gave him total control over who would sell state bonds and what fees they would collect....

With Takemoto in charge ... two attorneys with close ties to the Democratic Party and Waihee were named as local bond counsel on dozens of bond issues. The two captured all legal work not handled by large mainland firms specializing in bond deals during Takemoto's tenure. . . . Honolulu attorney Renton Nip advised the state or bond underwriters on more than 30 bond series issued by the state between 1990 and 1993.

In 1989, Nip assisted Takemoto in soliciting funds for Waihee's re-election campaign. Nip, then-Land Use Commission chairman, sent letters to a number of companies seeking to do business with the state....

"Mr. Yukio Takemoto of the Dept of Budget & Finance has asked our assistance in distributing tickets to you for the governor's fund raiser," the letter said. ... Computab, a computer services firm, was about to sign a $700,000 contract to provide computer equipment to Takemoto's department when it received the letter and 20 fund-raiser tickets, according to a complaint filed later by Desmond Byrne, a former Computab officer....

Another major beneficiary of Takemoto's new bond system was a small island firm, Hawaiian Capital Securities, whose investors included several key Democratic fund-raisers and contributors....

One of those investors, according to business records, was Richard M. Sato, president of Sato & Associates Inc., a Honolulu engineering firm....

Sato & Associates was one of the companies named by Bronster last week as taking part in the scheme to pay off a $12,344 campaign debt incurred by former Sen. and Bishop Estate employee Milton Holt. ... Sato & Associates paid one-third of Holt's unpaid campaign debt after receiving a false invoice "for goods and services that were never provided," according to the petition that Bronster filed in court....

All the companies have received lucrative nonbid contracts from Bishop Estate, Bronster charges....

* * *

From The Price of Paradise, edited by Dr. Randall Roth:

Investigative Reporting

by Jim Dooley

In Hawaii, more so perhaps than in other places, one story leads to another. Pull one out of the ground, follow its roots, and you've got a million more...

I did a series of stories back in the early 1980s about secret land partnerships here, commonly known as "huis," that included influential public officials as investors.

One of the partnerships I discovered had quietly bought and sold a piece of property at Nukoli`i on Kauai several years earlier, turning a $4 million profit. The land itself turned out to be the subject of an intense antidevelopment campaign raging on the Garden Isle just at the time I discovered the hui...

Investors in the Nukoli'i hui, I learned, included a state supreme court justice, the son and daughter of former governor John Burns, and John E. S. Kim, a convicted tax evader and former lobbyist for Amfac (the state's largest corporation at that time). Amfac had sold Nukoli`i to the hui. A key Amfac executive turned up as a hui investor.

Another investor was Edwin Honda, a state circuit judge who earlier had been director of the State Dept of Regulatory Affairs (DRA), the agency that is supposed to oversee public registration of business partnerships.

I asked Honda if he thought the hui should have been registered. He told me the question had never come up when he was the boss of the DRA (which was when the Nukoli`i hui was formed). So I addressed the question to DRA official Russel Nagata, who later became state comptroller. Nagata told me the hui probably should have been registered, but later he changed his position when interviewed by George Cooper, coauthor with Gavan Daws of Land and Power.

Years later, I accidently discovered that Nagata, while serving as state comptroller, had doctored a copy of a state record before giving it to me. He had carefully excised a portion of the memo which concerned state protocol spending, to make it look like I had received a complete document. The missing paragraph concerned Bank of Hawaii vice president Dolly Ching's role in providing credit cards to state officials for their use in charging protocol expenses. At the time, Ching was a member of the Judicial Selection Commission, which later selected Russel Nagata to be a state district judge.

All related.

Are you getting the picture here? The original Nukoli`i story, written in 1981, was connected to the doctored documents story written in 1992, which was connected to the Judicial Selection Commission story, which was connected to other Dolly Ching stories I then wrote.

Back to Nukoli`i now. Another investor was a little known state bureaucrat named Yukio Takemoto, later plucked from relative obscurity to become director of the Dept of Budget and Finance in the Waihee administration. Takemoto became a central figure in a later series of stories I wrote on non-bid and sole-source state purchasing. My starting place for that series was not Takemoto's department but the purchasing division in the Dept of Accounting and General Services, headed by . . . Russel Nagata. That department maintained a list of non-bid contracts awarded by most, but not all, departments of the executive branch. The list was a gold mine of stories.

One of the first nuggets concerned a non-bid contract awarded by Takemoto to GTE Hawaiian Tel [now Verizon Hawaii] to supply a new telephone system for the executive branch. The $1 million contract later grew into a $3 million job. It was awarded on a non-bid basis in part because of the phone company's monopoly position in Hawaii telecommunications, which in turn is regulated by the Public Utilities Commission (PUC).

In 1992, I wrote a story about how members of the PUC, along with Takemoto and assorted other officials, were the phone company's guests at a week-long social bash and professional golf tournament at the Royal Ka`anapali golf courses on Maui.

Those courses were built by Amfac (a familiar name) with the invaluable political assistance of Masaru "Pundy" Youchi, a Maui power broker and developer who had organised . . . the Nukoli`i hui.

The same Ka`anapali golf courses also served as collateral for a $60 million operating loan granted Amfac in 1991 by the State Employees' Retirement System, the $5 billion public pension fund operated out of Yukio Takemoto's budget department.

Now are you getting the picture?...

* * *

Honolulu Star-Bulletin, 1/24/01, by Rick Daysog: Estate’s Managers Shuffled in Shake-Up . . . Kamehameha Schools’ senior management team has undergone a major shake-up ...

Yukio Takemoto, former state budget director who previously headed the Kamehameha School’s office of Budget and Review, was reassigned several months ago to a new position...

Takemoto is now director of the Kamehameha Schools’ Facilities Development and Support Division . . .

See also: John Waihee; Renton Nip; Woo vs Harmon


 

Zurich Financial Services Group - Large, insurance-related investment group with connections to Bishop Estate, Marsh & McLennan, and many other birds of a feather.

For more, GO TO > > > Zeroing In On Zurich Financial Services

# # #

 


 

 

CONTINUED IN >>>

PART II - PART III - PART IV - PART V - PART VI - PART VII

 

 


 

Originally posted January 13, 2001

Last Updated on July 22, 2009 by The Catbird

 

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CHRONOLOGY

January 13, 2001: Originally posted in www.the-catbird-seat.net

March 13, 2007: Judge David Ezra signs Order to shut down website

July 22, 2009: Latest update on www.kycbs.net

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