Dirty Money, Dirty Politics & Bishop Estate

Dirty Money, Dirty Politics and
Bishop Estate

PART VI - The Never-Ending Story ...

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December 8, 2006

Black Group Decries Discriminatory
Hawaiian Admission Policy

Court Ruling Allowing Preferential Treatment of Native Hawaiians Greases the Skids for Race-Based Island Government

Members of the black leadership network Project 21 decry a Ninth Circuit federal court ruling that allows a Hawaiian school to discriminate against non-native Hawaiians, and note that the ruling could jump-start legislation stalled in Congress to create a race-based island government that directly contradicts our nation's "melting pot" tradition of inclusion.

"Responsible lawmakers, jurists and the residents of Hawaii oppose race-based preferences," noted Project 21 chairman Mychal Massie. "This ruling once again shows how a handful of unelected judges can override the will of the people, and how important it is to have judges who strictly interpret our Constitution."

Established in 1887 by the will of the last royal descendent of King Kamehameha, the nonprofit Kamehameha Schools currently give "first right" of admission to those with native Hawaiian ancestry. In a razor-thin 8-7 decision, the federal 9th Circuit Court of Appeals ruled that this preferential policy could continue. In her majority opinion, Judge Susan Graber said the policy helps "counteract the significant, current educational deficits of native Hawaiian children in Hawaii."

In his dissent, Judge Jay Bybee noted: "I believe the majority's novel approach to statutory interpretation is readily manipulable and would enable courts to rewrite statutes whenever they want to save a particular program, contract or enactment."

The Doe v. Kamehameha Schools ruling is also being seen as a boost for "The Native Hawaiian Government Restoration Act," a bill proposed by Senator Daniel Akaka (D-HI) to create a native Hawaiian government with sovereign immunity akin to that enjoyed by Indian tribes. Critics of the legislation say it could create a race-based government that would institute a virtual caste system and overturn federal laws and safety regulations as well as endanger the operations of military bases such as Pearl Harbor.

A May 2006 poll commissioned by the Grassroots Institute of Hawaii found that 67 percent of Hawaiian residents oppose the proposed Akaka bill and 80 percent generally oppose race-based preferences. Despite this overwhelming public rejection, Professor Jon Van Dyke of the University of Hawaii's Richardson School of Law told the Honolulu Star-Bulletin of the ruling, "This gives the green light, I would think, for Congress to pass the Akaka bill."

"All of this is a transparent attempt to create race-based preferences for a select group of people," said Project 21's Massie. "This ruling must be viewed as an incremental attempt to establish a type of sovereignty which would ultimately relieve native Hawaiians of all federal responsibility. Nothing in said formula, however, convinces reasonably-minded persons that the so-called plight of these people would improve."

In 2000, a decisive 7-2 ruling by the U.S. Supreme Court overturned a "Hawaiians only" voting provision for the state's Office of Hawaiian Affairs.

Regarding the record of the 9th Circuit Court of Appeals, the Center for Individual Freedom noted in 2004 that it is "the most reversed court in the country" with 250 percent more unanimous reversals of its decisions appealed to the U.S. Supreme Court than any other circuit at that time.

“The 9th Circuit continues to show its proclivity for ruling from the bench in favor of that which is antithetical to a civil and unified American fabric. This is exactly why it is not only the most reversed court in the history of judicial circuits, but also the most frequently chastised court by the U.S. Supreme Court," said Massie.

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Project 21, a nonprofit and nonpartisan organization, has been a leading voice of the African-American community since 1992. For more information, contact David Almasi at (202) 543-4110 x11 or Project21@nationalcenter.org, or visit Project 21's website at http://www.project21.org/P21Index.html

For more, GO TO > > > OUST vs. Harmon: Witness Barack Obama

November 29, 2006

Kamehameha trustee hopefuls
vow fight on native-only issue

The finalists attended a forum last night sponsored
by Na Pua A Ke Ali'i Pauahi

By Craig Gima, Honolulu Star-Bulletin

The three finalists to become a trustee of the Kamehameha Schools would continue to appeal if a federal court strikes down the school's native Hawaiian admissions policy.

However, each said they would also pursue alternatives to the policy to continue serving native Hawaiian children.

The finalists -- Honolulu lawyer Allen K. Hoe, First Hawaiian Bank Senior Vice President Corbett A.K. Kalama and former city Budget Director Ivan M. Lui-Kwan -- attended a forum last night sponsored by Na Pua A Ke Ali'i Pauahi Inc., a nonprofit group whose members include alumni, parents, students and faculty of Kamehameha Schools.

Kalama said the school could still continue and expand already-successful partnerships with the Department of Education and other entities to provide early childhood education and better prepare native Hawaiian children for school.

Lui-Kwan said there are other criteria to target native Hawaiians that could be used for admissions besides race. But giving up Kamehameha Schools' tax-exempt status to preserve the admissions policy would be "too expensive" because it would cost the trust hundreds of millions of dollars.

Hoe said the trustees should take a fresh look at the policy and "go outside the box to see what can be done to expand educational opportunities for Hawaiian children."

Each nominee gave opening remarks and then spoke separately in a question-and-answer session with about 40 people gathered at the Center for Hawaiian Studies at the University of Hawaii at Manoa.

The three nominees were chosen by a selection committee that reviewed applications for the position on the five-member board, which oversees a $6.8 billion endowment.

A Probate Court judge will make the final selection.

The trust was formed by the will of Princess Bernice Pauahi Bishop, the last direct descendent of Kamehameha I, to educate native Hawaiian children.

The new trustee will fill the remaining term of Constance Lau, who announced she would resign after she was promoted to president and chief executive officer of Hawaiian Electric Industries.

Jan Dill, a board member of Na Pua A Ke Ali'i Pauahi, said the group will not make a formal recommendation to the Probate Court on who it thinks should be the next trustee.

But he said he expected some in the audience would submit comments.

The court is taking comments from the community until Friday.

"Certainly the beneficiaries should have an opportunity to provide input significantly in the process," Dill said.

Adrian Kamalii, the organization's president, said the group made a point of asking each nominee whether they would be open to continue talking with beneficiaries and each nominee indicated they thought it would be a good idea.

Lau's term expires June 30, 2008.

The other current trustees of Kamehameha Schools are Chairman Robert Kihune, Douglas Ing, Nainoa Thompson and Diane Plotts.

http://starbulletin.com/2006/11/29/news/story02.html

November 27, 2006

Kamehameha hopefuls face grilling

By Dave Shapiro

The three final candidates for Kamehameha Schools trustee will be questioned by Kamehameha beneficiaries tomorrow at a public forum from 6 to 8 p.m. at the Center for Hawaiian Studies at the University of Hawaii-Manoa.

The sponsor, Na Pua A Ke Ali'i Pauahi, has opened the event to public participation as an opportunity for beneficiaries and others to learn more about candidates for the $100,000-a-year position.

Banker Corbett Kalama and attorneys Allen Hoe and Ivan Lui-Kwan are the finalists named by a court-appointed selection committee to compete for the Kamehameha Schools trustee vacancy created by the resignation of Constance Lau.

State Probate Judge Colleen Hirai is accepting public comment until Dec. 1, after which she'll make her appointment.

The candidates have actively courted support from the Kamehameha 'ohana, but it's uncertain if the beneficiaries will make an endorsement — or how much weight Hirai would give their backing.

I received mixed reaction to my Advertiser column last week exploring the selection process. Some have enthusiastically supported one candidate or another, while others have expressed skepticism about selection procedures.

The skeptics believe the court needs to cast a wider net than the half mile between Bishop Street and the State Capitol if Kamehameha trustees are to represent the diversity of Hawaiian thought and experience as they fulfill the school's educational mission and help advance Hawaiian interests.

There's also a fear that politics is again becoming paramount in trustee selection just eight years after the politically connected former board of trustees was ousted for breaches of trust.

Hoe has been an associate of former Gov. John Waihee and Lui-Kwan has worked in the campaigns of U.S. Sen. Daniel Akaka. Both Waihee and Akaka supported the old trustees in the turmoil that led to their removal.

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November 22, 2006

The History Lesson of
Kamehameha Schools

By David Shapiro

The selection of a new Kamehameha Schools trustee to succeed Constance Lau is focusing attention on whether the $6 billion institution to educate native Hawaiian children has Fully reformed since the scandal that led to removal of the previous board of trustees in 1999.

Three trustee finalists chosen by a panel assigned by Probate Judge Colleen Hirai — banker Corbett Kalama and attorneys Allen Hoe and Ivan Lui-Kwan — are courting support among alumni and others in the Kamehameha 'ohana.

The public has until Dec. 1 to submit written comment, after which Hirai will make her appointment.

Since the turmoil of the 1990s, there have been obvious changes for the better at the schools funded by the will of Princess Bernice Pauahi Bishop.

The compensation of more than $1 million a year paid to each former trustee has been greatly reduced, and current trustees have abandoned the speculative deal-making of their ousted predecessors for a more prudent investment strategy to keep the trust financially sound.

Trustees have devoted far more of the estate's assets to the primary mission of education, opening new campuses on Maui and the Big Island, restoring outreach programs axed by the former trustees and sponsoring public charter schools in predominantly Hawaiian areas.

But critics worry that some of the conditions remain that got the estate into trouble before.

Trustees are as secretive as ever in their dealings, and the agencies most responsible for finally holding the old trustees to account — the state attorney general, the Probate Court and the IRS — have pulled back their oversight.

The job doesn't pay $1 million anymore, but the remuneration of about $100,000 a year is still high for a part-time commitment; the average received by trustees of U.S. charitable institutions is about $6,500.

With pay possibly heading higher yet, a trusteeship remains a political plum, and critics such as senior U.S. District Judge Samuel King, co-author of "Broken Trust," believe the reforms won't be complete until Kamehameha Schools is converted into a nonprofit corporation with directors serving for little or no compensation, like schools such as Harvard and Yale.

The political overtones of the current trustee selection are nothing like the scandalous years, when the Bishop Estate board had a former president of the state Senate, a former speaker of the House of Representatives and a confidant to former Gov. John Waihee.

But all finalists to replace Lau have deep ties to Hawai'i's political and business establishments.

"They are perfect if you want to continue keeping Kamehameha under the thumb of the powers at be," said Jan E. Dill of Na Pua a Ke Ali'i Pauahi.

Kalama, an executive vice president at First Hawaiian Bank, worked for Democratic Party stalwart Walter Dods and was involved in providing input for the Akaka bill for Native Hawaiian political recognition.

Hoe was appointed by Waihee to the state Land Use Commission and served on a panel appointed by Hirai which recommended in 2004 that pay for Kamehameha trustees be nearly doubled to $180,000 for each trustee and $207,000 for the chairman. Trustees declined the increases at the time after community opposition.

Lui-Kwan was a law clerk for former Supreme Court justice and Kamehameha trustee William Richardson, served as Honolulu budget director under former Mayor Jeremy Harris and helped manage U.S. Sen. Daniel Akaka's political campaigns. Akaka supported the deposed trustees and suggested at one point that their $1 million compensation might be too little.

The three finalists will be interviewed next week by alumni and other members of the Kamehameha 'ohana, and can expect some tough questions about their ties to the status quo and commitment to moving the Hawaiian community forward.

August 16, 2006

FBI probes bank over
alleged fraud cover-up

By Rick Daysog, Honolulu Advertiser

The FBI is investigating claims that American Savings Bank officials tried to cover up theft, including one case in which a bank employee allegedly took several hundred thousand dollars from a 91-year-old customer.

FBI agents interviewed the bank's former security director Bert Corniel yesterday after he charged in a lawsuit that the bank asked him to stop reporting fraud cases to federal and state officials, said John Perkin, Corniel's attorney....

The bank said the charges are false and it is cooperating with the FBI investigation.

"Although we cannot comment on the investigation, we can say that we have and will continue to cooperate and provide investigators with all the relevant information as it is requested," said American Savings Bank in a written statement. "Mr. Corniel's concerns ... were thoroughly investigated and found to be without merit."

Corniel and bank customer Ada Lim, 91, alleged in separate lawsuits filed on Aug. 2 that a manager at a bank branch took hundreds of thousands of dollars from Lim.

Lim deposited more than $600,000 into her American Savings account in 2004, only to have most of the money siphoned out of her account by the bank employee, who was helping to manage Lim's finances, the lawsuits allege. The bank employee opened an account with Bank of Hawaii and deposited various sums from Lim totalling $304,000, according to Lim's lawsuit. The bank employee bought a condominium using $110,000 of Lim's money, the suit claims.

Corniel said in January 2005, when he was investigating the Lim case, the bank employee confessed to him that she took the money. American Savings officials said the transfer was a loan from Lim to the employee, Corniel said.

Corniel said American Savings officials told him not to report the fraud as required by law to federal regulators and law enforcement agencies such as the FBI, Office of Thrift Supervision and the Federal Deposit Insurance Corp.

Several American Savings employees went to Lim's house in February 2005 with gifts and to get her to sign a document exonerating the bank, according to the lawsuits....

PRESIDENT IMPLICATED

Corniel's lawsuit also charges that Constance Lau, the president of the bank, asked him to "recharacterize" the bank's fraud losses as "potential losses" in his reports to federal regulators.

Lau became chief executive of American Savings' parent company, Hawaiian Electric Industries Inc, in May.

Togami said Lau was traveling and could not be reached for comment....

August 15, 2006

Kamehameha trustee is sought to
complete term of new HEI chief

By Sally Apgar, Honolulu Star-Bulletin

The search has begun for Kamehameha Schools' latest trustee to fill the remaining term of Constance Lau, chief executive of Hawaiian Electric Industries Inc.

A trustee screening committee of seven volunteers will present a list of three candidates to the Probate Court, which will then select a trustee to serve the remainder of Lau's five-year term, through June 30, 2008, according to an announcement yesterday....

In February it was announced that Lau, who has served as a Kamehameha trustee since 1999, would take over as Hawaiian Electric's chief executive, director and president as of May 2....

The screening committee "is looking for active leaders within the community with a deep sense of commitment" to the vision of Kamehameha's founder, Princess Bernice Pauahi Bishop, according to its statement.

It said the "ideal candidate" must have an understanding of Hawaiian values in addition to "demonstrated expertise in business administration, finance and investment, strategic planning and policy setting."

The selection committee includes Robert Alm, Dr. Claire Asam, George Freeland, Francis Keala, Melody MacKenzie, Benjamin Matsubara and Michael Rawlins.

Candidates should submit a resume and statement by Sept. 30 explaining "their vision, goals and objectives" for the estate and how the candidate, as a trustee, "would attain those goals."

APPLICANTS SOUGHT

Nominations should be submitted to Trustee Screening Committee, c/o Inkinen & Associates, 1001 Bishop St., Pauahi Tower, Suite 477, Honolulu, HI 96813. Applications may also be faxed to 521-2380 or e-mailed to jobs@inkinen.com.

Read the complete article, with photos, at...

http://starbulletin.com/2006/08/15/news/story12.html

August 3, 2006

SMALL BUSINESS NEWS

Online Edition @ www.smallbusinesshawaii.com

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'Broken Trust' Forum Calls for
Release of Corruption Documents

By Malia Zimmerman, HawaiiReporter.com

The full story of the corruption that permeated Hawaii's $10 billion charitable trust, the Kamehameha Schools/Bishop Estate, to the highest levels of government in Hawaii, has never been told.

But the information that has become public is categorized by 60 Minutes as "The biggest story in Hawaii since Pearl Harbor;" by The New York Times as "A feudal empire so vast that it could never be assembled in the modern world;" and by Howard M. McCue III, the Chairman of the Charitable Planning Committee for the American College of Trust and Estate Counsel, as "The most significant legal dispute of our time ... a tale of unbridled ambition, infectious greed, and high drama ... ."

This saga, involving Bishop Estate trustees, state Supreme Court justices, a former governor and leaders in the Hawaii State Legislature, peaked in 1997.

However, nearly one decade later, critics say there has been no accountability for the many influential people who wrongfully took advantage of Princess Pauahi Bishop's charitable trust - a trust she established in 1884 to fund the education of Hawaiian children, not to fatten the pockets of politicians and trustees.

University of Hawaii Law Professor Randall Roth and U.S. Federal Judge Samuel King co-authors of a newly published book, Broken Trust: Greed, Mismanagement and Political Manipulation at America's Largest Charitable Trust, documented the story of the trust from its inception 100 years ago through current times.

At a July 5 forum hosted by Small Business Hawaii, and moderated by Hawaii Reporter, Roth and King shared their thoughts on what led to the extensive problems at the Bishop Estate and what still needs to be done to ensure there is justice and accountability for past wrongdoings.

Joining them were four other prominent Hawaii citizens who played a major role in pushing for reforms including Hawaiian attorney Beadie Dawson, former Honolulu Star-Bulletin Managing Editor Dave Shapiro, former Campaign Spending Director Robert Watada and Congressman Ed Case....

A great deal of the information Roth and co-author Judge King used to write the Broken Trust was given to them by Watada, the director at the time of the state Campaign Spending Commission.

But Roth says there are still between 1 million and 2 million more documents sealed by the courts that he wants to review and catalogue and believes should be made public.

He hopes trustees will some day be held accountable for their mismanagement. But that is unlikely: they did not pay legal fees for the most part, they took millions of dollars for themselves, they paid off political cronies with trust funds, and held what Roth calls a "world record for breaches of trust."

Roth and King maintain the Broken Trust saga is not over, and neither are the problems for Kamehameha Schools if further safeguards and reforms are not implemented....

Read the complete story (with photos) at:

www.smallbusinesshawaii.com/2006/Aug2006-3.html

July 10, 2006

Corruption within Bishop Estate Reached
the Highest Levels of Government, But
Major Records Still Under Seal

Six Prominent Community Leaders Share Their Part in the 'Broken Trust'
Controversy, Call for Release of More Than 1 Million Pages
of Documents Kept Secret by the Court

By Malia Zimmerman, The Hawaii Reporter

The full story of the corruption that permeated Hawaii’s $10 billion charitable trust, the Kamehameha Schools/Bishop Estate, to the highest levels of government in Hawaii, has never been told.

There are still between 1 million to 2 million pages of documents under seal by the court and with the attorney general and still many questions unanswered.

But the information that has become public is categorized by 60 Minutes as "The biggest story in Hawaii since Pearl Harbor;” by The New York Times as "A feudal empire so vast that it could never be assembled in the modern world;” and by Howard M. McCue III, the Chairman of the Charitable Planning Committee for the American College of Trust and Estate Counsel, as “The most significant legal dispute of our time ... a tale of unbridled ambition, infectious greed, and high drama ... .”

This saga, involving Bishop Estate trustees, state Supreme Court justices, a former governor and leaders in the Hawaii State Legislature, peaked in 1997.

However, nearly one decade later, critics say there has been no accountability for the many influential people who wrongfully took advantage of Princess Pauahi Bishop’s charitable trust -- a trust she established in 1884 to fund the education of Hawaiian children, not to fatten the pockets of politicians and trustees.

University of Hawaii Law Professor Randall Roth and U.S. Federal Judge Samuel King, co-authors of a newly published book, Broken Trust: Greed, Mismanagement and Political Manipulation at America’s Largest Charitable Trust, documented the story of the trust from its inception 100 years ago through current times.

Last week at a forum hosted by Small Business Hawaii, and moderated by Hawaii Reporter, Roth and King shared their thoughts on what led to the extensive problems at the Bishop Estate and what still needs to be done to ensure there is justice and accountability for past wrongdoings.

More than 150 members of the public attended the forum held at the Hale Koa Hotel and several asked questions including ousted Bishop Estate trustee Henry Peters, who showed up at the forum with a second ousted trustee, Dickie Wong.

While Wong, the former president of the Senate, remained silent, Peters, the former speaker of the House, spoke up during the question and answer period, professing his innocence and saying he continues to be persecuted by the Broken Trust book and panelists. He claimed he is a victim, but critics maintain he is not, citing a passage in the Broken Trust book that says Peters became "entitled to approximately $600,000 a year under a deferred-compensation contractual arrangement that he had arranged while a trustee. Deputy attorneys general believed these payments would continue for the rest of Peters' life."

Before the 90-minute panel wrapped up, the panelists shared some of the following insights from their experiences:

Congressman Ed Case was a freshman state legislator in 1995 when he first faced the powerful the Bishop Estate and its felt its wrath through his peers in the state House of Representatives. He tried to make two major reforms related to the Bishop Estate -- take the Supreme Court justices out of the trustee selection process and limit trustee compensation to what was “reasonable” -- both of which made him forceful enemies within the legislative leadership, the court and the Bishop Estate.

“I got nailed pretty bad,” Case says of his first attempt in 1995.

But Case did get the attention of the Hawaii Supreme Court justices, saying that in a meeting with the justices, he could see that they were split on whether they should be appointing trustees because of perception of cronyism and favoritism.

Two years later in 1997, Roth, King and three other well-respected Hawaiians signed their name to a compelling essay entitled “Broken Trust” that documented the power, influence and wrongdoing in the highest levels of the Bishop Estate and the Hawaii government.

David Shapiro, then the managing editor of the Honolulu Star-Bulletin, published the oped, which rocked the very core of the Hawaiian, political and legal communities.

That was the final catalyst for all but one justice -- Robert Klein (now an attorney/lobbyist for the Office of Hawaiian Affairs) -- to voluntarily step aside from the duty.

Case’s bill to limit trustee compensation also passed, despite major obstacles. At the time, trustees were making more than $1 million a year, while their peers at prestigious colleges and institutions were strictly volunteers with little or no compensation.

The House, which had Bishop Estate-backed leadership, including House Speaker Joe Souki, and Reps. Terrance Tom and Calvin Say, agreed to a bill that would study the issue. But the Senate sided with Case in establishing compensation limits. In a highly unusual move, Case moved to suspend the rules and adopt the Senate version. Because of extensive pressure from the Hawaiian community, the media and the public, the House agreed to the bill by a vote of 50 to 1 with Rep. Say (who is presently the House Speaker) as the one dissenting vote.

Now, as a Congressman for the second district who is running for U.S. Senate against Sen. Daniel Akaka, Case has distinguished himself from his opponent on this issue. Akaka was sympathetic with the ousted trustees, while Case pushed for more accountability and less compensation. Today, Case says there are still “broken trusts” in Hawaii, which need to be addressed.

Hawaiian attorney and advocate Beadie Dawson says the Bishop Estate controversy was significant for the Hawaiian people because it is the first time they began to use their voices and their numbers to take a stand politically.

The tremendous power was evident when Kamehameha Schools alumni, students, faculty and supporters marched in 1997 from the Capitol to the Bishop Estate headquarters, demanding reforms, including the removal of the most outspoken trustee, Lokelani Lindsey, who was micromanaging the school in a highly destructive manner.

“This was one of the great turning points for the Hawaiian people,” Dawson says, noting the scandal woke up apathetic people, made union members begin to question their leadership and local businesses to adopt Hawaiian principles. “We are happy we stayed the course.”

She says she looked for a law firm in Hawaii to give legal advice to her Hawaiian group, Na Pua, but no lawyers in the state would work with her. Instead, she trained people from Kamehameha Schools as paralegals. “They made wonderful staff,” Dawson says.

Dawson survived death threats, which she maintains “amazingly enough did not bother me at all.” She adds, “When you know what you are doing is right, that dispels any fear.”

University of Hawaii Law Professor Randall Roth did not recount the many examples of breaches of trust and political corruption detailed in his book, instead encouraged the audience to read the Broken Trust.

A great deal of the information that he and co-author Judge Samuel King used to write the Broken Trust was given to them by Bob Watada, the director at the time of the state Campaign Spending Commission.

But Roth says there are still between 1 million and 2 million more pages of documents sealed by the courts that he wants to review and catalogue and believes should be made public.

Roth and King maintain the Broken Trust saga is not over, and neither are the problems for Kamehameha Schools if further safeguards and reforms are not implemented.

King points out that the estate is set up like an “ancient horse drawn buggy cart” and says 5 trustees are no longer necessary.

Although some would argue there are 5 trustees because Princess Pauahi Bishop set the trust up that way in her will, King says every provision of that sacred document has been violated except the provision that says there are 5 trustees.

For example, Princess Pauahi Bishop requested there be two Kamehameha Schools, one for boys and one for girls, and today it is one school. The princess asked that the teachers and trustees be Protestant, but that violates federal law. King maintains it makes sense to convert the trust into a not-for-profit corporation with an unpaid board of trustees who would limit themselves to setting policy and overseeing a CEO-led management team.

David Shapiro, former managing editor of the Honolulu Star-Bulletin who agreed to publish the Broken Trust essay in 1997, says the insightful report “changed the rules of engagement” in terms of the way the Bishop Estate story was covered by the media.

He admitted the Honolulu Star-Bulletin was falling sorely behind The Honolulu Advertiser in terms of coverage. “The Advertiser was kicking our ass,” he told the audience, getting a surprised chuckle from many observers.

But that all changed when The Honolulu Advertiser editors refused to say when or if the essay would be published. The five authors then turned to the Honolulu Star-Bulletin, whose editors immediately seized the opportunity. “I said ‘thank you Jesus,’” Shapiro says.

The day after Broken Trust essay was published, Honolulu Star-Bulletin Columnist Adam A. "Bud" Smyser told Shapiro that it was the best story the Honolulu Star-Bulletin has ever published. “That was a little embarrassing, because the Broken Trust was not generated by our own staff,” Shapiro says.

The Broken Trust essay escalated the discussion from simply removing one trustee, Lokelani Lindsey, to the incestuous relationships, alleged self dealing, and mismanagement of resources, and it put the issue of removing trustees in the forefront, Shapiro says. He maintains without the essay, the state might not have launched its investigation and the Supreme Court justices may not have stepped aside.

Shapiro admits the Broken Trust essay was necessary because the media shied away from covering the Bishop Estate controversy. The reasons? The Bishop Estate was powerful and had tremendous wealth and influential friends; it was a secretive organization and employees were too scared to talk; it was a complicated story to cover; and there was an unspoken rule that if the Hawaiian community did not complain, the media shouldn’t either. “But that is no excuse,” he says.

Noting the sore lack of media coverage on the Bishop Estate since the 1990s when the trustees were removed, he says he is concerned how coverage has fallen in the local media.

Bob Watada, the executive director of the State Campaign Spending Commission, was charged with investigating any political corruption tied to campaign finances, and with the Bishop Estate, he had his hands full.

The Bishop Estate management was engaging in major lobbying efforts -- a big “no-no” for non-profits with a 501-(c)(3) status. The money that was supposed to be used to educate Hawaiian children was instead being used to buy political fundraising tickets and distribute additional tickets by the thousands to Bishop Estate vendors; pay for political polling that would normally cost candidates more than $100,000; and subsidize the seedy lifestyle of some prevailing politicians including Senate Ways and Means Chair Milton Holt, who was granted a $20,000 credit card from the Bishop Estate to spend how he pleased. Holt, who had a drug addiction and landed in federal prison for a year soon after, spent his money on entertainment in strip clubs and gambling.

Sen. Marshall Ige, who called trustee Henry Peters his “role model,” also landed in jail for a year. Watada’s office forwarded an investigation into Ige’s finances, discovering that a Bishop Estate vendor had participated in a money laundering scheme, paying Ige’s campaign debts as a favor to the Bishop Estate elite.

Watada says the trustees had tremendous power. They controlled banks, politicians, lawyers, and almost every aspect of Hawaii. He says it was clear that if it had not been for the Broken Trust, “all of us would be beholden to the trustees.”

Although the Campaign Spending Commission could have spent hundreds of thousands of dollars pursuing the investigation into the Bishop Estate, Watada says the commission backed down because resources were limited and because the estate lawyers said any fines imposed would “take money from the children.”

Roth, who wrapped up the July 5 forum, is working to get his books into all the schools in Hawaii, so that the next generation can learn about the Broken Trust. Sponsors and proponents of his plan say this will help to ensure that history isn’t doomed to repeat itself.

To make sure their efforts benefit Hawaii's keiki, Roth and King are donating all proceeds from the Broken Trust book to children's charities.

Reach Malia Zimmerman, editor and president of Hawaii Reporter, via email at Malia@hawaiireporter.com

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Read the complete story (with photos) at:

http://www.hawaiireporter.com/story.aspx?1f8e88b2-75b4-482e-80cc-a8c20fd3a081

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From the Chun, Kerr, Dodd, Beaman & Wong website:

Estate buys Puck's Alley with eye on the future

June 30, 2006 - Chun, Kerr, Dodd, Beaman & Wong represented Peter Savio in the sale of Puck's Alley.

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June 30, 2006

Estate buys Puck's Alley
with eye on the future

by Kristen Consillio, Pacific Business News

Kamehameha Schools is set to close a deal today to buy Puck's Alley in Moiliili from its original developer, James W.Y. Wong, and at least four family-run entities.

Neither party would disclose a purchase price. The assessed value of the center's four buildings is $2.7 million but the sales price on the leasehold property was believed to be closer to $3 million.

The sale could be a significant first step in the redevelopment of a corner of Moiliili into the "college town" that has been discussed for years.

The Wong family, which has owned Puck's Alley for 35 years, developed the 50,000-square-foot center on land leased from Kamehameha Schools and The Malulani Group, formerly known as Magoon Brothers Ltd., the latter of which no longer has an interest in the land.

Darryl Wong, the center's property manager and son of James Wong, said the family thought the time was right to sell the busy but aging retail center at the corner of University Avenue and South King Street.

The Wong family has multiple leases with Kamehameha Schools on the property and they expire at various points within the next 20 years....

Developers, landlords and University of Hawaii administrators have long envisioned a "college town" centered at University and King with a village of shops, restaurants and student housing similar to those found near many urban campuses.

But with scores of landlords, deteriorating commercial and residential stock, competing business interests and no shared vision for the area, nothing has happened.

That may change with the Puck's Alley purchase.

Kamehameha Schools currently has no development plans for Puck's Alley, but is looking at creating a master plan for Moiliili, which is a priority now that the trust's other major developments at Royal Hawaiian Shopping Center and Kakaako are under way, said Kekoa Paulsen, Kamehameha Schools spokesman.

The trust, with assets of about $6 billion, owns roughly 10 acres in Moiliili.

Kamehameha Schools is responsive to the college town concept and will align development plans with the University of Hawaii's larger vision for the area, he said.

Kamehameha's priorities are to fill vacant store fronts and make necessary upgrades to the retail complex, which is a busy but tattered warren of 40 shops, restaurants and offices. Wong said there is only one vacant storefront, the one next to the Curry House....

Developer Peter Savio last August announced plans to renovate Puck's Alley, which opened in 1973, and potentially build several hundred student dorms above the two-story retail plaza.

Savio said he had an agreement to buy the center's lease from the Wong family for nearly $3 million, but in the process of negotiating a long-term lease with Kamehameha Schools, the trust decided to buy Puck's Alley.

However, Savio said he has a 10-year agreement with Kamehameha Schools for the right to build dorms on the property.

June 20, 2006

Kamehameha Schools Urge Court
to Affirm Admissions Plan

Contributed by: Thomas Yoshida

Policy giving preference to Hawaiians serves legitimate
purpose, U.S. appeals judges told

SAN FRANCISCO – Kamehameha Schools today urged federal appeals court judges to uphold its 119-year-old policy of gi