THE UNITED STATES DEPARTMENT OF JUSTICE
OFFICE OF THE U.S. TRUSTEE
David C. Farmer, Successor Trustee
Bobby N. Harmon
(Formerly Mary Lou Woo vs. Harmon and James Nicholson vs. Harmon)
United States District Court, District of Hawaii
Judges: David A. Ezra; Kevin S. Chang
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Bankruptcy Trustee in the Defendant’s case, Aloha Airlines, and Hawaiian Airlines.
Curtis Ching, Esq.
Office of the U.S. Trustee
1132 Bishop St., Ste 602
Honolulu, HI 96813
Fax: (808) 522-8136
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NEW DISCOVERY (03/30/09): Undisclosed conflicts of interest between Attorney General Alberto Gonzales, the United States Department of Justice, Office of the U.S. Trustee, Curtis Ching, Carol Muranaka, Guido Giacometti, Susan Tius, Sukamto Sia, Bank of Honolulu, Diane Plotts, Bob Awana, Linda Lingle, Citigroup, Robert Rubin, Bill Clinton, John Waihee, Ben Cayetano, Goldman Sachs, Colbert Matsumoto, Henry Peters, Matsuo Takabuki, Richard Wong, Jeff Stone, Oswald Stender, Gerard Jervis, Lokelani Lindsey, Nathan Aipa, Colleen Wong, Louanne Kam, John Candon, Clifford Laughton, Timothy Johns, Bishop Museum, Nainoa Thompson, Mark Polivka, Judge Eden Elizabeth Hifo (fka Bambi Weil), Judge Lloyd King, Judge Robert Faris, Judge David A. Ezra, Judge Barry Kurren, Mary Lou Woo, James B. Nicholson, David C. Farmer, Steven Guttman, etc.:
August 24, 2000
for $4 mil
Ownership of the properties
could change during
another round of bids
By Peter Wagner, Star-Bulletin
A Nevada investor has outbid Citibank on 32 residential and two commercial units at Executive Centre, the downtown high rise that once belonged to Indonesian investor Sukamto Sia.
But with court confirmation and another round of bids possibly ahead, ownership of the property is yet to be determined.
Clifford Laughton, president of the Reno-based Nevada Holdings Ltd. and chief executive at Honolulu-based satellite company Columbia Communications Corp., yesterday made the winning bid of $4,000,100.
Laughton's bid topped a $4 million offer by Citibank N.A., the only other bidder at a foreclosure auction at the state courthouse yesterday.
The leasehold properties include 31 residential units, a penthouse, two commercial spaces occupied by Sprint Hawaii and Fujikami Florist and 65 parking stalls.
The heavily mortgaged 41-story building, at 1088 Bishop Street also includes a 120-room Aston hotel, retail outlets including Long's Drugs and Ross Dress For Less and nearly 300 residential units.
The entire property was appraised last year at $39.5 million.
Citibank, the major creditor in a foreclosure action against one of Sia's company's, MKS Executive Partners, took possession last month of most of the 41-story building in a complex bankruptcy deal in which Sia's estate will receive about $500,000.
Citibank affiliate EXCT L.P. took ownership of about 400 units on July 28.
Sia, currently in Chapter 7 bankruptcy liquidation, originally filed for Chapter 11 bankruptcy reorganization in November 1998.
While Citibank yesterday allowed itself to be outbid by $100, the sale is far from over. Under rules of the foreclosure, new bids may be entertained at confirmation but must be at least 5 percent above the auction price.
Foreclosure commissioner John Candon said at least three parties who were silent during yesterday's auction have asked when the confirmation hearing would be. No date has been set.
Laughton yesterday said he would likely honor existing leases at Executive Centre if he remains the high bidder. He said the units are a good investment because of depressed property values and a strong rental market in the downtown area.
While Executive Centre was once a key holding of Sia in Honolulu, the bankruptcy trustee was unable to liquidate the property for creditors because Sia held no equity in it.
His ownership in the building was through MKS Executive Partners, one of his numerous companies.
The 40-year-old businessman owes nearly $300 million to casinos, banks and creditors around the world.
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NEW DISCOVERY (05-22-08):
May 22, 2008
House subpoenas Karl Rove
By LARA JAKES JORDAN, Associated Press
WASHINGTON - The House Judiciary Committee on Thursday subpoenaed former White House top political adviser Karl Rove to testify about whether the White House improperly meddled with the Justice Department.
Accusations of politics influencing decisions at the department led to last year's resignation of former Attorney General Alberto Gonzales.
The subpoena issued Thursday orders Rove to testify before the House panel on July 10. He is expected to face questions about the White House's role in firing nine U.S. attorneys in 2006 and the prosecution of former Gov. Don Siegelman of Alabama, a Democrat.
House Judiciary Chairman John Conyers had negotiated with Rove's attorneys for more than a year over whether the former top aide to President Bush would testify voluntarily.
"It is unfortunate that Mr. Rove has failed to cooperate with our requests," Conyers, D-Mich., said in a statement. "Although he does not seem the least bit hesitant to discuss these very issues weekly on cable television and in the print news media, Mr. Rove and his attorney have apparently concluded that a public hearing room would not be appropriate."
"Unfortunately, I have no choice today but to compel his testimony on these very important matters," Conyers said.
Neither Rove nor his attorney, Robert Luskin, could be immediately reached for comment.
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NEW DISCOVERY (04-11-08): Trustee James B. Nicholson failed to disclose that he was the court-appointed bankruptcy trustee for Defendant’s witness, Peter Savio, even though he was asked specifically if he had any business, professional, personal or political relationships with Mr. Savio:
Hawaii’s Top 250 Companies:
New To The List: Whoa, Savio!
Hawaiian Island Homes' debut is marked by acrimony
By Kelli Abe Trifonovitch, Hawaii Business Magazine
Any interview that focuses on Peter Savio's new company, Hawaiian Island Homes Ltd., will soon focus on another Top 250 company, Central Pacific Bank. Says Savio: "They're malicious. They're vicious. I am going to become a stockholder in Central Pacific Bank. I am going to reform that institution. Their mistake was they stomped me. They didn't kill me. I'm coming back. I'm going to have fun with them."
Go back to the year 2001. Savio Inc., a holding company for eight real estate sales and development companies, was No. 56 on the Top 250, with $134.6 million in 2000 gross sales. But in 2001, Savio Inc. filed for Chapter 7 liquidation, and Peter Savio and his wife filed for personal bankruptcy protection. Savio says he was forced into the bankruptcies because CPB gave him just five days to move from his second-floor offices at 931 University Ave. Savio says he had been in a workout plan with a number of lenders after he started experiencing cash-flow problems in the mid-1990s. But CPB forced his hand.
"The only way to stop them was, I had to file for personal bankruptcy. So to save my employees and everything else, I filed for personal bankruptcy - one of the most difficult decisions I've ever had to make. But I was really pissed at Central Pacific Bank for doing that," he says.
"It was tough," he adds. "Basically I lost everything. Lost my house. Lost everything. Had to basically come back from nothing."
Today, Savio is more than back. His real estate company, Hawaiian Island Homes Ltd., lists 2002 gross sales of $177 million. Its office is downstairs in the same building that Savio Inc.'s once was. And the company is No. 27, ahead of CPB Inc. (No. 49), something Savio will rejoice to read. Savio says, "I've decided that my goal is to beat them in the Top 250. … just so we can say, 'Nannynannybooboo!'"
That's not all. "My short-term and my long-term goal is to reform Central Pacific Bank," Savio says. "I think I'm going to buy the bank."
Ann Takiguchi, Central Pacific Financial's communications officer, says, "We made every effort to work with Mr. Savio, and it is unfortunate that he is blaming us for his situation. Out of respect for our customers' privacy, we have no further comment. As a matter of bank policy, we don't comment on the affairs of our customers."
Bankruptcy court filings show that Central Pacific Bank claimed that Savio Inc. owed it about $1.5 million when Savio filed for bankruptcy in 2001. The Internal Revenue Service and Pitney Bowes Credit Corp. also listed claims of about $2,000 each.
The court-appointed trustee for Savio Inc.'s bankruptcy case, attorney Jim Nicholson, says the only unencumbered asset of the estate, a unit in the Diamond Head Beach apartment building, was sold for $375,000 in June 2003.
Gross sales for Savio's other new company, Hawaiian Island Development, were not reported for this year's Top 250, so one thing is for sure: Next year, he'll be back. Says Savio: "We're going to set up a new holding company called, 'I Hate CPB.' No, my attorney said I couldn't do that. I have a warped sense of humor, OK? But anyway, the new holding company is going to be Ohia Holdings."
Knowing Savio, there is marked symbolism in that choice. After all, the Ohia tree can be found growing in the middle of old lava flows.
Hawaii Business, August, 2003
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NEW DISCOVERY (02-09-08): Kamehameha Schools made a “confidential” settlement agreement with the plaintiff in the John Doe vs. Kamehameha Schools case, which my former attorney, John Goemans, Esq., says, according to what he has learned from the IRS, violates the rules for a non-profit charitable trust:
February 9, 2008
An attorney involved in a challenge to Kamehameha Schools' Hawaiians-only policy reveals the amount of a settlement
By Ken Kobayashi, Honolulu Star-Bulletin
Kamehameha Schools made the first move to settle a legal challenge to their admissions policy giving preference to native Hawaiians and later agreed to pay $7 million, a lawyer involved in the case said yesterday.
John Goemans, an attorney for an unnamed non-native Hawaiian student who filed a lawsuit contesting the policy, said the charitable trust offered for the first time to talk about an out-of-court settlement last May, just days before the U.S. Supreme Court was to decide whether to hear the case.
Goemans, a former Big Island attorney recuperating in Florida from heart surgery, and Sacramento, Calif., lawyer Eric Grant, the lead attorney, represented the unnamed student and his mother.
"They (the schools) approached Eric and said we wanted to settle and we have to settle by Friday morning," when it was believed the high court was to make a decision about accepting the case, Goemans said.
He said it appeared the high court would accept their appeal of an 8-7 decision by the 9th U.S. Circuit Court of Appeals that upheld the policy.
"They (the schools) were worried about losing in the Supreme Court," Goemans said.
Goemans said he did not know how Grant and the Kamehameha Schools arrived at the $7 million figure.
The hotly disputed federal civil rights lawsuit caused a firestorm of controversy among Kamehameha Schools supporters who believed the challenge struck at the more than century-old admissions policy and the heart of the charitable trust's mission to educate children of Hawaiian ancestry.
The confidential settlement was announced on May 14. Those connected with the case repeatedly refused to disclose the terms.
Goemans said he was disclosing the amount because he said he recently learned from Internal Revenue Service officials that Kamehameha Schools, a tax-exempt charitable trust, cannot keep the figure confidential.
"Because exempt organizations operate in the public good, you got to report all your expenses with particularity, and you cannot keep information relative to those expenses confidential," he said. "It's in the public interest to have full disclosure."
Ann Botticelli, Kamehameha Schools spokeswoman, said yesterday the settlement contained a confidentiality clause.
"We intend to honor the terms, and we will not be discussing the settlement or John Goemans' assertions," she said.
Grant said yesterday he had no comment.
Kamehameha Schools, a multibillion-dollar charitable trust and the state's largest private landowner, was established under the 1883 will of Princess Bernice Pauahi Bishop. It educates more than 6,700 students at its flagship campus at Kapalama Heights, two other campuses on Maui and the Big Island, and 31 preschools throughout the state.
Senior U.S. District Judge Alan Kay upheld the school's Hawaiians-first policy, but a panel of the appeals court in San Francisco ruled 2-1 that the practice violated federal civil rights laws. That decision triggered statewide protests and marches by school supporters.
Later, a larger appeals court panel voted 8-7 to uphold the policy.
It was an appeal by Grant of that 8-7 ruling that was on the doorsteps of the U.S. Supreme Court when the settlement was announced.
At the time, school officials indicated that the settlement calling for the dismissal of the lawsuit leaves intact the appeals court's 8-7 decision upholding the admissions policy.
But the dismissal does not guarantee that another lawsuit might surface and make its way to the high court, although it would first have to go through the federal trial and appeals courts, where the 8-7 ruling would be considered to be binding on the issue. But even if those who file the new lawsuit lose on those two levels, they could still ask the high court to review the case.
Honolulu attorney David Rosen said he has plaintiffs for a lawsuit to challenge the admissions policy. He said the settlement does not affect his case. Rosen said he expects the suit will be filed this year.
Goemans said Grant received 40 percent, or $2.8 million of the $7 million. Goemans said he is preparing to file his own lawsuit seeking to recover a "reasonable percentage" of the $7 million for his work in the case.
Goemans said he found the unnamed student and arranged for Grant to be the attorney for the student and his mother.
"I put the whole thing together," Goemans said. "But for me there would not have been a $7 million payment."
The student never was admitted to Kamehameha Schools because his case was pending. He has since graduated from high school and had been attending college, Grant said last year.
~ ~ ~
February 9, 2008
Amount of settlement
raises critical concern
By Robert Shikina, firstname.lastname@example.org
Supporters and critics expressed surprise yesterday at the $7 million Kamehameha Schools paid a student to settle a lawsuit disputing its Hawaiians-first admission policy.
One Kamehameha Schools alumnus says disclosure of the settlement with the anonymous, non-Hawaiian student will prompt questions among Hawaiians.
"I'm not happy with $7 million," said Kamehameha Schools alumnus Jan E. Hanohano Dill. "Unfortunately, that's a lot of money, and it's going to create a lot of questions in the Hawaiian community whether it was right or wrong and to continue."
Dill, also a board member of Na Pua a Ke Ali'i Pauahi, a nonprofit group whose members include students, parents, and alumni of Kamehameha Schools, said he continues to support the school's decision.
"I don't know the details, and I think that's something that has to be cleared," he said. "You settle because you want to avoid costs that would be incurred as you go forward."
He added, "I have to believe that they understood that this was something good for the Hawaiian people. ... It will be clear as things unfold whether that was true."
Dill, who is also president of the nonprofit Partners in Development Foundation, said the admissions policy must eventually be addressed and that the settlement avoids this case but does not stop other cases.
Marion Joy, former vice president of Na Pua, called the settlement a "misuse of trust funds."
"The trust is continually going to be challenged," she said. "This is not going to be the last. ... As far as settling for the particular lawsuit, it's not in the best interests of the beneficiaries (of the 1883 will of Princess Bernice Pauahi Bishop)."
Kamehameha Schools declined comment.
Honolulu attorney David Rosen, who has sought potential clients to sue Kamehameha over its admissions policy after the settlement, sent out a statement yesterday that said the $7 million settlement was used to "buy off this case."
He added that the trustees should open a campus on the Leeward Coast of Oahu and possibly Molokai where increased educational opportunities are needed.
H. William Burgess, a retired attorney and founder of Aloha for All, a group opposed to Hawaiian sovereignty, said the settlement raises questions about the proper use of the trust funds.
"Normally, trustees, if they're doubtful about doing something, they ask the court to give them instructions," he said. "Yet in this case, the biggest charitable trust, probably in the nation, instead of welcoming the opportunity to get the highest court in the land to settle it, they pay $7 million to leave it open. And it is very much open."
* * *
From The Catbird Seat website:
The Wise Old Owl asks: How much of the settlement amount came from Kamehameha’s insurance companies, and how much came from the trust funds? How much did Kamehameha Schools (and/or their insurance company) spend for defense costs in this case before they decided to settle? Who is their insurance company? Their insurance broker? Who actually signed the Settlement Agreement?
~ ~ ~
U.S. Department of Justice
Executive Office for United States Trustees
Office of Research and Planning
For Immediate Release
October 30, 2001
U.S. TRUSTEE PROGRAM LAUNCHES
BANKRUPTCY CIVIL ENFORCEMENT INITIATIVE
WASHINGTON, D.C.--The United States Trustee Program has launched an initiative to more aggressively use existing civil enforcement methods to curb abuse of the bankruptcy system, Martha Davis, Acting Director of the Executive Office for United States Trustees, announced today.
"Effective case administration is vital to ensure the American public that the bankruptcy system provides relief for honest but unfortunate debtors overcome by serious financial difficulties," Davis stated. "The Civil Enforcement Initiative emanates from the U.S. Trustee Program's long-standing commitment to enforce the Nation's bankruptcy laws and explore other meaningful strategies to bolster public confidence in the integrity and effectiveness of the bankruptcy system."
"The priorities of the initiative will require a concerted effort nationwide to use existing tools in a way that best accomplishes tangible results and improvements for case administration," Davis continued. "Many of our offices use such strategies today and we hope to build upon their experience. By focusing our resources on these priorities, we also seek to address some of the concerns that have been at the forefront of debate in recent years both before Congress and in other public venues. In the end, this is very much a community effort that will require communication and cooperation with private bankruptcy trustees and with the bankruptcy bench and bar."
These are the priorities of the Civil Enforcement Initiative:
Ensuring that Chapter 7 is not abused and that Chapter 7 debtors are held accountable.
Chapter 7 debtors who do not comply with the law will have their cases converted or dismissed, or their bankruptcy discharges denied or revoked. Enforcement measures include motions to dismiss Chapter 7 cases under 11 U.S.C. §§ 707(a) and 707(b), and complaints to bar or defer discharge under 11 U.S.C. § 727.
Protecting consumer debtors, creditors, and others who are victimized by those who mislead or misinform debtors, make false representations in connection with a bankruptcy case, or otherwise abuse the bankruptcy process.
Attorneys and bankruptcy petition preparers (non-attorneys who prepare bankruptcy documents for a fee) must engage in full disclosure, be free of conflicts of interest, and engage in ethical practices. Enforcement measures include motions for sanctions, contempt of court, and disgorgement under 11 U.S.C. § 329 for misconduct by attorneys, and complaints and motions under 11 U.S.C. § 110 for misconduct by bankruptcy petition preparers....
Fighting fraud and abuse by making criminal referrals and assisting United States Attorneys in criminal prosecutions.
The U.S. Trustee Program is a component of the Justice Department that oversees the administration of bankruptcy cases and intervenes in court to enforce the bankruptcy laws. There are 21 regions in the Program, each headed by a U.S. Trustee appointed by the Attorney General.
The Civil Enforcement Initiative took effect Oct. 1, 2001, with the start of the federal government's 2002 fiscal year. Previous U.S. Trustee Program initiatives have focused on issues such as enhancing the supervision of private trustees who administer Chapter 7 bankruptcy cases, increasing the efficiency and speed of Chapter 7 case administration....
Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees
~ ~ ~
January 14, 2005
Isle bankruptcy lawyers
enjoy boom in business
Local representation for
Aloha Airlines improves efficiency
By Dave Segal, Star-Bulletin
Is there an available Chapter 11 attorney in the courtroom?
The side-by-side reorganizations of Hawaiian and Aloha airlines might not be good for their employees and creditors, but the cases are providing a steady flow of income to the firms of the approximately 50 attorneys in town who specialize in business bankruptcies.
"Airline bankruptcy is a growth area. It's certainly not a bad time to be a bankruptcy lawyer," said Rich Turbin, the newly elected president of the Hawaii State Bar Association.
Gelber, Gelber, Ingersoll & Klevansky, one of the few firms in Hawaii with the resources to serve as the lead counsel in a commercial bankruptcy, was chosen to represent Aloha yesterday in a ruling that will make the bankruptcy less expensive and more efficient for the airline than if it had been forced to look for representation on the mainland.
But the selection of the Gelber firm did not come without a fight. The Office of the U.S. Trustee objected to the firm's hiring in federal Bankruptcy Court because the firm also represents the majority shareholders of Hawaiian Airlines' parent company and an investor group that is part of the leading reorganization plan for Hawaiian.
U.S. Trustee attorney Curtis Ching said the Gelber firm should remove itself from the Hawaiian Airlines case if it wants to represent Aloha, because not doing so would create conflicts since the two airlines are competitors in the interisland flight market. Ching said the Gelber firm would have access to confidential information of Aloha and that Hawaiian and Aloha have competing interests.
But Bankruptcy Judge Robert Faris sided with the Gelber firm while noting that the Hawaiian Airlines case appears to be coming to an end. Faris indicated it could be difficult for parent company Hawaiian Holdings Inc. and investor group RC Aviation LLC to find new local representation this late in the bankruptcy.
"About a week ago, one party (involved with Hawaiian Airlines) said he was finding it impossible to find local counsel who wasn't already involved in the (Hawaiian) case," Faris said.
Hawaiian Airlines attorneys typically charge about half of what is demanded by their mainland counterparts. For example, Los Angeles attorney Bruce Bennett, who represents Hawaiian Airlines trustee Joshua Gotbaum, bills at $645 an hour, while the trustee's local attorney, Tom Roesser, bills at $285 an hour. Brett Miller, the New York-based attorney who heads the Hawaiian Airlines unsecured creditors' committee, bills at $575 an hour, while Jim Wagner, the unsecured creditors group's top-charging local attorney, bills at $350 an hour.
Even when mainland counsel is necessary or desired, Hawaii attorneys still get their share of the money. Hawaii state bar rules of the U.S. District Court require that attorneys who are not members of the Hawaii state bar must have local counsel sponsor them. Therefore, if a Hawaii company needs representation locally and from the mainland, bankruptcy expenses will quickly escalate. Although the state has about 130 members in the bankruptcy law section of the Hawaii State Bar Association, most of them handle consumer debtors in chapters 7 and 13 cases.
Still, attorney Don Gelber does not think the two simultaneous local airline bankruptcy cases are straining the availability of Hawaii attorneys, despite how it might appear on the surface.
"I don't think it has a significant difference," he said. "Each case alone requires so many professionals that those roles will be filled by both mainland and local counsel, consultants and other experts. I think the fact that both carriers are in Chapter 11 proceedings may have some effect on the ability of counsel to serve in each case, but it all depends on the facts and circumstances."
As it stands, most of the local attorneys who have Chapter 11 experience will end up representing both airlines. Unless an attorney is representing a bankrupt company, its creditors' committee or a trustee, the attorney is considered to be free of conflict and can get permission from other clients to participate in both cases.
Jerrold Guben, a bankruptcy attorney with Honolulu-based Reinwald O'Connor & Playdon, said mainland counsel who need a local sponsor do not have to rely on those who specialize in Chapter 11 cases.
"I'm sure all the Chapter 11 specialists have been spoken for in the Hawaiian case," Guben said. "But you could always use somebody else who's just a member of the bar."
~ ~ ~
Curtis Ching is expected to testify as to the reasons why he continued to allow Mary Loo Wou to serve as the interim Trustee in Defendant’s bankruptcy case after being advised by Defendant of her conflicts of interests, and the conflicts of interest of her attorney, Steven Guttman. Mr. Ching is also expected to testify regarding his business, professional and personal relationships with Carol Muranaka, Liberty House, Bruce Bennett, Gayle J. Lau; Judith Neustadter Fuqua; Mary Lou Woo, James Nicholson, Joshua Gotbaum, Steven Guttman, James Duca, Terrance Tom, Lyn Anzai, Hawaiian Airlines, Aloha Airlines, Summit Communications, Peter Savio, Guido Giacometti, Susan Tius, Sukamto Sia, Jeffrey Sia, Robert Katz, Matt Tsukazaki, Judge Kevin Chang, Judge Lloyd King, Judge Robert Faris, Wayne Minami; Clyde Matsui; Greg Dunn, Bradley Tamm, Kirk Caldwell, Donna Tanoue, Mitsui Trust & Banking, Resort Suites of Maui, Kenneth Kupchak, John Waihee III, John Waihee IV, Clayton Hee, Jason T. Ibarra, JTI International, JTI Foundation; Donald Ibara, Copiers Hawaii, Inc., Robin Taibbi, Island Spirit, MTM Resort Suites Ltd., West Maui Partners, Jon Miho, Trinity Investment Trust, Jerrold Guben, Mahalo Air, Hawaiian Palisade Homes, Westlink Group, and other entities to be determined upon discovery.
Pension and Bankruptcy Fraud-Related Links
Documents, News Articles and Related Links
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Equity 2048 -The Richards Report
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IRS Closing Agreement for Kamehameha Schools
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Lost Generations: A Boy, A School, A Princess
Originally posted: November 15, 2005, by The Catbird
Last updated: May 16, 2009