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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ROBERT BRUCE GRAHAM
Ashford & Wriston
Alii Place, Suite 1400,
1099 Alakea Street, Honolulu, HI 96813
Fax: (808) 533-4945
Robert Bruce Graham, Jr., a partner at Ashford & Wriston, attorney for Kamehameha Schools/Bishop Estate, and former associate of Trustee David C. Farmer from 1998 through 2001, began practicing law in 1973 and joined the firm in 1989.
He is a member of the firm's management and compensation committees. Mr. Graham's practice focuses on commercial leasing, land title, real estate transactions, trust administration and nonprofit organizations. His experience includes:
Counsel to the Roman Catholic Church In The State Of Hawaii.
Representation of the Kamehameha Schools Bernice Pauahi Bishop Estate concerning trust law issues, property title and Hawaiian land rights.
Representation of title companies and numerous Hawai`i landowners in matters concerning the determination of title, boundaries and appurtenant rights.
Mr. Graham is the author of "Title Matters" in Hawai`i Commercial Real Estate Manual (1988), "Legal Description and Title Search" in Hawai`i Conveyance Manual III (1992) and Hawai`i Conveyance Manual IV (2002) and "Traditional Hawaiian Land Law" in Hawai`i Real Estate Law Manual (1997). He is also co-author of Boundary Law in Hawai`i (1990) and an Adjunct Professor of Real Property Law at the University of Hawai`i School of Law. He is a frequent speaker concerning Hawaiian land law, water rights, and related matters. He has spoken at seminars sponsored by the Hawai`i Association of Land Surveyors, Hawai`i Association of Realtors, Hawai`i Developers' Council, Hawai`i Institute For Continuing Legal Education (HICLE), Hawai`i Real Estate Research and Education Center, Hawai`i Section of the International Right of Way Association (IRWA), Honolulu Board of Realtors, Institute of Real Estate Management (IREM), National Association of Industrial and Office Parks (NAIOP), Legislative Reference Bureau, Office of State Planning, University of Hawai`i College of Business Administration, and the Richardson School of Law. Mr. Graham has served as a director of the Real Property and Financial Services Section of the Hawai`i State Bar and as a Hawai`i bar examiner.
Mr. Graham was selected as one of the best real estate lawyers in Hawai`i in The Best Lawyers in America, 1995 to present editions, and as one of the leading Hawai`i real property lawyers in America's Leading Lawyers for Business (Chambers USA), 2003 to present. He was inducted as a member of Lambda Alpha International Honorary Land Economics Society (Hawai`i Chapter) in 1998. Mr. Graham has received the Martindale-Hubbell "AV" rating.
Mr. Graham is a member of the Development and Finance Committees of the Roman Catholic Diocese and is the Hawai`i member of the Diocesan Attorneys Association of the United States Catholic Conference. He is a charter member of the Native Hawaiian Tourism and Hospitality Association and has served as director of the Hawai`i Visitors Bureau and Damien Memorial High School. He served as president of the Association of Apartment Owners of Harbor Square for more than eighteen years.
J.D., University of Virginia, 1973
B.A., cum laude, Santa Clara University, 1970
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GOOGLING FOR JOHN WAIHEE + ROBERT BRUCE GRAHAM + DAVID FARMER
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NEW DISCOVERY (06-02-08):
April 14, 2002
By Rob Perez, Star-Bulletin
Isle diocese shows
If Lynne Jensen had accused a Catholic priest on the mainland of sexually molesting her when she was a child, church officials likely would have investigated the charge no matter how far back the alleged incidents occurred.
At many dioceses, they would have immediately offered her counseling, even before launching an investigation.
But not in Hawaii.
Unfortunately for Jensen, who says a now-retired Hawaii priest sexually abused her about 25 years ago when she was 6 or 7 and living in Kahaluu, the Roman Catholic Church here seems more guided by legal interests than moral or pastoral ones, showing little compassion for people who may have been violated long ago by men of the cloth.
The church essentially dismissed Jensen's complaint -- first reported to the Honolulu diocese in October and detailed in a Raising Cane column last month -- and explained that the allegations were too old for the church to investigate, happened during a previous bishop's administration and that the credibility of any findings would be questioned given "the present climate surrounding this issue."
The church also told Jensen the conduct she alleged never was approved by the church, it was not liable for her alleged injuries and that the statute of limitations barred any claims in connection with such injuries.
Since then, a separate case involving alleged abuses of a minor in the 1960s by another Hawaii priest has come to light, and the church once again has raised the specter of the statute of limitations, among other possible defenses.
The church in Hawaii "will not waive the statute of limitations with respect to any matters discussed by you in your various letters," attorney Robert Bruce Graham Jr. wrote to the California man and former Hawaii resident in an October letter.
"Your request for compensation is denied," Graham wrote. "The church is not liable to you for any of the injuries you allege."
The 51-year-old man, who has written letters to the Honolulu diocese over the past year detailing the alleged abuses but without naming the priest, said he was stunned by the diocese's lack of compassion.
"l feel abused again," the man said, asking that his name not be used. "Basically, they're ignoring me, using the statute of limitations."
Patrick Downes, a spokesman for the Honolulu diocese, said the diocese considers the circumstances of each case and responds accordingly.
"The diocese right now is comfortable with the decisions it has made in all these cases," Downes said.
Partly contradicting what he said last month, Downes said the diocese conducted an internal review of Jensen's allegations. The review concluded that her charges weren't credible, Downes said, but he refused to provide any details or say how the church reached its conclusion.
"We have absolutely no evidence that the allegations are true," he said, adding that the diocese has information indicating the charges may be false.
Yet the church didn't speak to Jensen, her therapist, her mother or a childhood friend she confided in nearly 20 years ago about the allegations -- all people whom the Star-Bulletin interviewed and whom verified aspects of Jensen's story.
The church didn't even refer Jensen's allegations to an internal committee of priests and lay professionals established specifically to investigate what the church calls "credible" sexual abuse accusations.
The church's internal review determined that Jensen's case didn't warrant going before the committee, Downes said.
When the Star-Bulletin questioned Downes about the Jensen case last month, he never mentioned the review -- an odd omission given that Downes was told the newspaper's research showed Jensen to be credible. Downes last week said he didn't mention the review because he wasn't aware of it at the time.
Regarding the case of the California man, Downes said the diocese would look into his accusations if the man identified the priest.
"The diocese wants him to stand behind the allegations by naming the perpetrator rather than have the diocese guess," Downes said.
But the former altar boy who attended school at St. Theresa's in downtown Honolulu in the 1960s said he provided enough information for the diocese to identify the priest and would've named him had the church indicated it would seriously investigate the matter.
"I have no reason to believe they were going to help me, whether I released the name or not," he said.
In his correspondence to the diocese, the man provided graphic details of the alleged abuses when he was 12 and 13 and said the priest still is assigned to a Hawaii parish. He provided the priest's name to the Star-Bulletin, but the newspaper isn't naming him because, like with the Jensen case, he wasn't charged.
Unlike the Honolulu diocese, many mainland ones launch formal investigations without first considering the age of the alleged incidents.
"It doesn't matter if it happens 25, 30, 40 years ago," said Jim Dwyer, a spokesman for the Chicago archdiocese.
Unlike the Honolulu diocese, many mainland ones also provide therapy services for alleged victims before investigating their charges.
"First thing we do is offer counseling," said Bud Bunce, spokesman for the archdiocese of Portland, Ore.
The Chicago archdiocese will offer counseling immediately, and if the alleged victim no longer lives in the area, the archdiocese will arrange to pay for therapy where the person lives, Dwyer said.
The idea is that these kind of charges are so serious that, if true, the person was violated in a terrible way and is in need of professional help and, if false, the person is suffering from something else but still needs help, Dwyer said.
"In either case, it's someone who really feels wronged, and we want to help in a nonjudgmental way," he said.
In neither of the Honolulu cases has the diocese offered counseling of any kind.
Jensen, who started seeing a therapist in October because of the abuse she allegedly suffered, asked the diocese to cover her therapy bills. The amount: $440 a month.
"I'm not some charlatan looking to make a quick buck," Jensen said.
Her request was rejected in a terse three-paragraph letter she received in November from Graham.
In the mid-1990s, however, the diocese paid roughly $9,000 to cover medical insurance and counseling for an alleged victim of sex abuse by a priest. Downes wouldn't say how that case was different from Jensen's.
The diocese told the Star-Bulletin last month that any investigation of Jensen's allegations should be done independently by proper legal and judicial authorities and that she was free to initiate such a process.
But when Jensen consulted prosecutors here she was told Hawaii's criminal statute of limitations in such sex abuse cases has long since lapsed. And more recently, she was told by a Honolulu attorney that the civil statue of limitations likewise has lapsed, leaving her no legal recourse against the church.
Jensen, now 33, didn't contact the church about the allegations until last year because she believed she had been able to successfully cope with what had happened. Now she's seeing a therapist once a week.
Advocates for sexual abuse victims of the clergy say they are appalled at how the Hawaii church is handling allegations of long-ago abuses.
"Even some of the most antagonistic of dioceses at least offer counseling," said Terrie Light, an advocate in California. "What's happening in Hawaii is worse than horrible. It's sinful."
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NEW DISCOVERIES (02-04-08): Re: FURTHER EVIDENCE OF UNDISCLOSED, CONFLICTING PROFESSIONAL AND FINANCIAL RELATIONSHIPS BETWEEN TRUSTEE DAVID C. FARMER AND WITNESSES, FORMER GOVERNOR JOHN WAIHEE, GERARD JERVIS, NATHAN AIPA, AND BRUCE GRAHAM, ESQ, OF THE LAW FIRM OF ASHFORD & WRISTON:
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August 27, 2005
Reservation for a Broken Trust?
Special from Hawaii Free Press
By Andrew Walden
The Aug. 25, 2005, announcement of an agreement between Gov. Linda Lingle and the Bush administration’s Department of Justice on four amendments to the Akaka Bill (S147) increases the chances of the Bill’s passage in the U.S. Senate and the House. Since no court in the history of the United States has ever overturned Congressional approval of a tribal group, there is cause to look ahead at the possible forms a Hawaiian "tribal" government could take.
U.S. history has precedent for two types of native organizations: Indian reservations and Alaskan native corporations. Alaskan native corporations are for-profit corporations owned and operated by the members of native Alaskan tribes as stockholders. Each member is an equal shareholder. They are subject to most of U.S. corporate law, but are able to protect the tribal benefits from race-discrimination lawsuit claims by providing benefits on the basis of tribal membership rather than race -- even when the two are indistinguishable.
Alaskan natives have been able to enjoy the profits coming from their corporate assets, thus increasing their economic status. Indian Reservations, on the other hand, operate often as a power unto themselves without state oversight and with very limited federal oversight. For that reason, poverty and corruption are the norm on many U.S. Indian reservations.
Contrary to popular opinion, Indian reservations have a history in Hawaii. An Oct. 12, 1999, article in the Honolulu Star-Bulletin describes the efforts of Kamehameha Schools/Bishop Estate (KSBE) trustees in 1995 to evade oversight of their corrupt doings. The Trustees’ self-serving investments caused losses of $264,090,257 in 1994 alone. To avoid scrutiny, they considered moving KSBE corporate headquarters out of Hawaii to the windswept plains of the Cheyenne River Sioux Indian reservation in South Dakota (See http://www.kycbs.net/EQ2048-Adler-Aipa-3-15-95.pdf and http://www.kycbs.net/EQ2048-Adler-Cartwright-4-14-95.pdf )
In an apparent attempt to circumvent state and federal oversight, the Bishop Estate paid Washington D.C.-based (law firm) Verner Liipfert Bernhard McPherson and Hand more than $200,000 to look into moving the estate's legal domicile, or corporate address, to the mainland, sources said.
Verner Liipfert, whose local office is headed by former Gov. John Waihee, identified the Cheyenne River Sioux Reservation as the top relocation prospect after reviewing the legislative, tax and judicial environments of 48 mainland states and Alaska.
The study was part of a broader effort by the former board members to lobby against federal legislation limiting trustee compensation and to convert the tax-exempt Bishop Estate to a for-profit corporation.
The KSBE trustees’ efforts are also described in "The Cheating of America" by Charles Lewis and Bill Allison of The Center for Public Integrity. They quote former Hawaii Attorney General Margery Bronster explaining KSBE’s actions: "Their main motivation was to avoid oversight from the State Attorney General and the IRS."
The Honolulu Star-Bulletin further points out:
Gregg Bourland, chairman of the Cheyenne River Sioux tribal council … said there is good reason for an entity like the Bishop Estate to make inquiries about changing its domicile to the South Dakota reservation ...
Since the 1800s, the Cheyenne River Sioux have had a government-to-government relationship with the United States which allows them to operate their own police force, court system and legislative functions.
Such a system may shield the trust from Hawaii Probate Court jurisdiction, although Bourland was unsure if the IRS would continue to oversee the trust.
Such a move would have also shielded Bishop Estate from the investigations that state Attorney General Margery Bronster was forced to launch as "Broken Trust" revelations emerged in the press. According to Lewis and Allison the activities Bishop Estate trustees were attempting to shield included:
Giving themselves significant pay raises, even while programs at the school were being cut;
Moving profits from the estate’s taxable subsidiaries back into the (non-profit) estate to lessen the subsidiaries’ tax burdens;
Investing in questionable ventures recommended by a trustee’s personal acquaintances, including an Internet directory of would-be-adult-film actors and casting agents;
Frequenting adult entertainment clubs and casinos using money from the charitable trust’s coffers, reportedly inviting state legislators on such trips; and
Lobbying Congress to defeat or alter legislation designed to give the IRS more authority to penalize their multi-million dollar compensation packages.
As U.S. District Judge Samuel King told the Honolulu Star-Bulletin:
"It's another indication of how arrogant, greedy and insensitive this whole bunch is ... Their claim that they are supporting Princess Pauahi's will is laughable."
While looking into a move to the Cheyenne River Reservation, KSBE trustees paid $900,000 for Verner, Liipfert to lobby Washington against the 1996 "Intermediate Sanctions Act" which, as Lewis and Allison explain:
...(would impose) an excise tax on "insiders" at non-profit organizations who partake in "excessive benefit transactions" --exactly the sort of transactions that the Bishop Estate trustees were involved in for years.
Among those enlisted by the Bishop Estate was former Hawaii governor John Waihee, who after leaving the gubernatorial mansion joined Verner, Liipfert. Waihee met with Clinton’s then deputy chief of staff, Erskine Bowles, in late 1995 to discuss the bill; he and his wife have also spent the night at the White House as a guest of the President (Clinton). Waihee’s partner at Verner Liipfert, former Senate majority leader George Mitchell, also contacted Clinton’s then chief of staff, Leon Panetta, about the bill.
The Akaka Bill is justified by its supporters as necessary for the defense of public and private native Hawaiian entitlement programs set up beginning with the 1884 founding of the Bishop Estate, continuing with the 1920 Hawaiian Homelands Act and the 1978 creation of the Office of Hawaiian Affairs.
These programs are thrown into question by what Hawaiian leaders refer to as "the lawsuits" -- starting with Rice v. Cayetano. The Feb. 23, 2000, U.S. Supreme Court decision in the Rice v Cayetano case ended Hawaiian-only elections for the Office of Hawaiian Affairs (OHA). Rice’s attorney at the time of filing in 1996 was John Goemans, a former Hawaii Democratic state legislator who describes himself as a "left wing liberal" in an Oct. 27, 2003, interview with The Honolulu Advertiser. Representing the state of Hawaii before the U.S. Supreme Court was John Roberts. Roberts is now President Bush’s nominee for the U.S. Supreme Court.
But these were not the only attacks on Hawaiian entitlements in the 1990s. In fact what Hawaiian leaders refer to as "the lawsuits" began almost exactly at the same time as the Broken Trust scandal revelations emerged. Lokelani Lindsey, the last of the five "Broken Trust" Bishop Estate trustees, was forced to resign Dec. 16, 1999. A few months later, in 2000, the first version of the bill that bears his name was introduced by Sen. Daniel Akaka.
Passage of the Akaka Bill would open up debate and negotiations on the form and scope of a new Hawaiian government. This could bring lobbying for an Indian Reservation by those political forces wishing to restart their looting of Princess Bernice Pauahi’s legacy.
The corrupt forces who believe in moderation to avoid detection may favor the Alaskan Native Corporation model. To understand the danger posed by adoption of the Indian Reservation model, consider this: over 100 Hawaii Democrat politicians (and one Republican) have been charged, convicted and sentenced for campaign spending violations and other illegal political schemes since 1997.
Current OHA trustees include OHA Vice President, John Waihee IV, son of former governor John Waihee III.
Another current OHA trustee is Oswald Stender who resigned as a Bishop Estate trustee in 1999. Singled out for praise by the five authors of the key "Broken Trust" Honolulu Star-Bulletin article, Stender nonetheless was one of the five trustees whose high pay forced the IRS to threaten to revoke non-profit status for KSBE.
OHA Chief Counsel, Robert Klein was an associate justice of the Hawaii Supreme Court until he resigned on Feb. 1, 2000. He authored the PASH decision in 1995 which includes the statement, "western understandings of property law … are not universally applicable in Hawaii." An editorial in the Jan. 19, 2000, Honolulu Star-Bulletin explains:
Klein’s most notable act as a Supreme Court justice may have been his authorship of a decision allowing native Hawaiians to go onto private property to engage in traditional religious, cultural and gathering practices ...
Klein disagreed with the decision by the other four justices in December 1997 to withdraw from the role of appointing trustees for the Bishop Estate, calling it an "uncharted leap of blind faith."
Klein admits giving "recommendations" for Kamehameha School admission while serving on the Supreme Court bench. As an April 3, 2001, Honolulu Star-Bulletin article explains:
'''In sworn testimony, the (Bishop) estate's admissions director, Wayne Chang, said that former (Bishop Estate) trustee Lokelani Lindsey ordered him to admit the child only after she received a request from then-state Supreme Court Associate Justice Robert Klein ..."
Chang -- in a Aug. 11, 1998, deposition taken in preparation for the trial to oust Lindsey -- said ex-board members Lindsey, Gerard Jervis and Henry Peters and senior school officials pulled strings for friends and relatives of several politically connected isle families, including:
A distant relative of ex-Gov. John Waihee.
A relative of Big Island rancher Larry Mehau.
Former state Sen. Milton Holt's sons.
The former trustees denied that they influenced the admission process. However, investigations by the Internal Revenue Service, the Attorney General's Office and the estate's internal auditors concluded that trust officials improperly influenced the Kamehameha Schools' admissions and financial aid awards.
Lindsey declined comment, but Klein confirmed that he spoke with the former trustee after the child's mother, a longtime friend, asked him to put in a good word. Klein said he saw no conflict in the request and added that school administrators were welcome to ignore his recommendation.
'''"The fact of the matter is, judges recommend children and people for jobs (and schools) all the time, whether it's Punahou Schools or Kamehameha Schools," said Klein, who is now in private practice. "That's what judges do. That's what people do in this community ..."
Those kind of "doings" would be facilitated by lack of state and federal legal oversight -- such as on an Indian reservation. Recent debate over the support for ANWR drilling by Hawaii Senators Daniel Akaka and Daniel Inouye is a further reflection of opposition to the Alaskan Native Corporations (ANCs). In an April 20, 2005, article published in Honolulu Weekly and later in the Hawaii Island Journal, Lance Holter, the Maui Group Chairman and Conservation Chair for the Hawaii Sierra Club, condemns as "corporate" those ANCs which dare to support oil drilling on their own lands:
[Inouye] speaks about these 229 tribes, which are really corporate entities. They are not tribal governments; they are not representative of the tribe.
Robin and Jade Danner are leaders of the Council for Native Hawaiian Advancement (CANH). Native Hawaiians who lived for many years in Barrow, Alaska before their return to Kauai, the Danner sisters have extensive experience with ANCs. They might reasonably be expected to champion the formation of one or more Hawaiian Native Corporations modeled on the Alaskan natives’ experience. Opposing the Danners publicly, are the secessionists calling for reestablishment of an independent Hawaii. A key series of 2003 articles attacking the Danners are authored by Anne Keala Kelly and reproduced on several secessionist Web sites. They are attacked for working with "corporate" ANCs and oil lobbyists in support of ANWR drilling. Kelly, a supporter of independence, spoke in Honolulu at an Aug. 23, 2005, Akaka Bill forum held in the Japanese Cultural Center.
Some Indian reservations (including Cheyenne River) have their own judiciary, legislature, and executive branches of government. The secessionists’ rhetoric could lead them to prefer these "sovereign" trappings. They claim the Akaka process represents a surrender of sovereignty on the part of the Hawaiian people. This sly choice of argument against Akaka will create a justification for participation in the Akaka process once that sovereignty has been "surrendered."
The "Nation of Hawaii" group led by convicted felon Dennis "Bumpy" Kanahele (who was pardoned by former Gov. Benjamin Cayetano) seems to be preparing for integration into the "official" Hawaiian institutions. One sign of this are the December 2004 speeches given by Kanahele’s attorney Francis Boyle in a series of "Nation of Hawaii" meetings across the state. The events were funded by the Office of Hawaiian Affairs. Boyle is a University of Illinois law professor who also works for the Palestine Liberation Organization, the Bosnian Government, and Chechen forces led by the recently departed Aslan Maskhadov. Notably, Boyle has also represented the Lakota Nation of the Cheyenne River Sioux Indian Reservation. At a 1998 UH Hilo meeting, Boyle spoke alongside a Lakota representative to Hawaiian sovereignty activists discussing "human rights, land titles and the Hawaiian Kingdom."
In his December 2004 speeches, Boyle advised the assembled crowds: "what we really need now is a government of national unity for the Kingdom of Hawaii. We need all the disparate groups and factions to come together and settle ... this was the situation that confronted the Palestinians 35 years ago. There were many different groups, and organizations, and factions. And yet eventually the late president Arafat and his organization Fatah were able to pull them all together, and by the process of consensus and debate and argument and set up a government."
The demented idea that the West Bank and Gaza show a way forward for the Hawaiian people is so distracting that it may prevent readers from noting what underlies: an implied appeal for independence activists to involve themselves in OHA and other official Hawaiian bodies. The array of social programs administered by OHA, Department of Hawaiian Home Lands and the private trusts such a KSBE are certainly the closest thing to an Hawaiian "government of national unity" existing today.
With its own judiciary, legislature and executive branch and government-to-government relations with the U.S. government, the Indian reservation model provided by the Cheyenne River Sioux creates enough of an illusion of independence that they could justify it to their supporters. If the Akaka Bill passes, Hawaii can look forward to an effort on the part of the "sovereignty" activists and the corrupt to push this model.
Anyone following the stories of Enron, WorldCom, Martha Stewart, and other corporate disasters in the recent news knows that organizing as a corporation does not guarantee clean operations. But the corporate model does allow oversight by the state Attorney General, the IRS and other public agencies. This type of oversight brought these scandals to light and brought some malefactors to justice. This same oversight brought the Broken Trust trustees of KSBE and some of their cronies to heel, if only for them to then scatter and form new schemes. The Alaskan Native Corporation model maximizes the protection given Hawaiian beneficiaries and the body politic of Hawaii by increasing the enforcement power necessary to expose and prosecute corrupt activities.
Hnolulu Star-Bulletin on Akaka Amendments:
Recognition of Tribes:
PASH Decision: PASH decision KSBE activities:
(Note: This website was closed down by Order of Judge David Ezra at the request of the United States Department of Justice. It can now be found at http://www.kycbs.net/Bishop.htm. See http://www.kycbs.net/Confessions.htm for more information.)
Honolulu Star-Bulletin "Broken Trust" archive:
Articles attacking the Danners:
Boyle’s PLO Speech:
Andrew Walden is the publisher and editor of Hawaii Free Press, a Big Island-based newspaper. He can be reached via email at mailto:firstname.lastname@example.org
HawaiiReporter.com reports the real news, and prints all editorials submitted, even if they do not represent the viewpoint of the editors, as long as they are written clearly. Send editorials to mailto:Malia@HawaiiReporter.com
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New Discovery (11-17-07): Re: EQUITY No. 2048 - EXHIBITS RE DEPOSITIONS OF MARION MAE LINDSEY:
These documents, consisting of hundreds of pages, provide clear and material evidence of the many financial, professional, and political relationships between David Farmer, Bruce Graham and the Ashford & Wriston law firm, with the former and interim Trustees of Kamehameha Schools/Bishop Estate, Nathan Aipa, Governor John Waihee, and others. These Exhibits can be found on the internet at the Broken Trust Book website, under the heading, “Lindsey Deposition (3 volumes)”:
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From “Broken Trust: Greed, Mismanagement & Political Manipulation”, by Judge Samuel King and Randall Roth:
“Healing” and “Closure”
The day after the last of the trustees resigned, the interim trustees announced a name change. Looking forward, the historic trust would be called “Kamehameha Schools.” ... The stated reason was to provide a sense of “closure” on the turmoil of the past few years and to promote “healing.”
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THE FORMER trustees were gone, permanently, but the story was not over. Surely there would be serious consequences for the many individuals who had participated in the abuse of Princess Pauahi's trust, or who had witnessed it and done nothing to stop it. Trust law requires new trustees to hold former trustees (and their lawyers) accountable for harm done to a trust. Also, the new trustees had promised IRS officials a thorough "housecleaning."
The only question was, just how thorough would it be?
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In a 1998 court filing (Attorney General Margery) Bronster had asked the probate judge to appoint a single full-time, highly qualified administrator to run the Bishop Estate organization until all the legal issues could be sorted out in court. Judge (Kevin) Chang declined to take that approach in May 1999 when he emptied the boardroom at the Internal Revenue Service's behest. He chose instead to upgrade the five special-purpose trustees to "interim trustee" status, and left it to them to figure out how to run Bishop Estate....
THE MANAGEMENT and accounting systems were virtually dysfunctional. It was essential that the interim trustees hire the right kind of people to deal effectively with the many educational, business and legal issues that had accumulated during the years of abuse, controversy and turmoil. Saying that this required "a good law firm," the interim trustees retained Watanabe, Ing and Kawashima, a politically akamai firm -- Douglas Ing was one of its senior partners. The interim trustees also retained Bruce Graham and Michael Hare and their firms -- lawyers who had served the former trustees for more than a decade. That was the legal team.
To run the organization the interim trustees chose Nathan Aipa, explaining that "he knew where things were." Because Aipa had been the trust's chief in-house lawyer since 1986, he probably did have a lot of inside information. Under the circumstances, however, that hardly seemed like a good reason to promote him to the top executive position in the organization. The former trustees had literally set a world record for trust abuse on Aipa's watch. He may have been actively involved. In the 5701s, the IRS likened him to "a sixth trustee." Now, rather than being forced to resign like the five actual trustees, the "sixth trustee" was at the helm of the multibillion-dollar Bishop Estate. That gave him control over the flow of information to and from this brand-new board of part-time trustees.
To fill Aipa's old position, the interim trustees chose Colleen Wong, who had been Aipa's right-hand person for the last ten years. There had been no housecleaning; instead, the old guard had been put in charge and handed the keys.
ALL THIS shocked Dorothy Sellers, Hugh Jones and Daniel Morris, deputy attorneys general who had worked for the past two years on cleaning up the mess at Bishop Estate. They immediately contacted the interim trustees and explained that the lawyers who served the former trustees had either provided flawed legal advice or stood by silently -- and illegally -- as the trustees ignored good advice. The deputies also explained that the former trustees were sure to defend any legal action against them by arguing that they had just followed their lawyers' advice.
This meant that those lawyers -- the ones the interim trustees had just rehired and put in charge of the entire organization -- had a very strong personal incentive to prevent any finding of serious misconduct by the former trustees. They added that a lawyer such as Ing, who had recently represented a now-former trustee, should not be advising the interim trustees on their duty to pursue claims against former trustees, which included Ing's former client, Oswald Stender. The deputies explained that Ing had a classic conflict of interest, which might tempt him to try to protect his former client, even at the expense of the trust. The interim trustees listened and then essentially told the deputies to mind their own business.
IT WAS IRONIC, said the deputy attorneys general, that dealing with the interim trustees did not feel different from what they had experienced before: The former trustees had received legal guidance from Bruce Graham, Michael Hare, Nathan Aipa and Colleen Wong, and now, despite years of trust abuse, legal wrangling, emotional turmoil, and the complete change of trustees, the interim trustees were relying on these same four lawyers, plus Douglas Ing....
Legal tactics that the deputies described as "stonewalling" went on unabated....
Not long after taking control of Bishop Estate, the interim trustees announced their intention not to assist in efforts to surcharge the former trustees, a decision that appalled the deputy attorneys general. Lawyers for the interim trustees had advised their clients that any form of cooperation with the attorney general's office on this matter would jeopardize $75 million of insurance coverage: Insurance policies purchased by the former trustees essentially said that the companies did not have to pay any claim in which one policyholder sued, or assisted in a lawsuit against, another policyholder. This arguably included a present trustee suing, or assisting in a lawsuit against, a former trustee.
Such a contract provision, however, violated public policy, making it unenforceable. Trust law does not allow former trustees to tie the hands of their successor trustees like that.
If asked, the court would have declared invalid that provision of the contract -- but the interim trustees did not ask any court to do that. Instead, they treated this convenient but illegal contract provision as clearly enforceable. Reminded of their fiduciary duty to hold their predecessors accountable for harm done to the trust, the interim trustees responded that they had no interest in "seeking retribution." They said it was time to "look forward, not backward."
IN MAY 2000 a new master, Robert Richards, reported on legal fees that the former trustees paid out of trust funds during their last eight months on the job. Richards concluded that the former trustees should be required to repay $5 million of the total amount to Kamehameha Schools, and that some of the law firms that had received trust funds should be required to return all or part of the money to Kamehameha Schools.
Richards, a no-nonsense litigator who had played professional football before going to law school, did not spare the feelings of his fellow lawyers. ... (For example,) Richards criticized Bruce Graham's firm, Ashford and Wriston, for not seeing that there were "hopeless conflicts related to trustee misconduct."
Regarding the work done by Bill McCorriston's firm, McCorriston Miho Miller and Mukai, Richards reached what he called "certain inescapable conclusions:" "The most critical is that this was a defense of the trustees, not of the trust. There were monumental efforts made to keep trustee conduct from coming to light or, if it did come to light, to rationalize it." Richards was equally critical of Cades Schutte Fleming and Wright. ...
INSTEAD of following Richards' recommendations, the interim trustees listened to their own lawyers' advice, which was to hire two large mainland firms, Philadelphia-based Morgan Lewis and Bockius and Washington, D.C.-based Miller and Chevalier, plus law professors John Langbein from Yale and John Leubsdorf from Rutgers. For fees totaling $1 million, this team prepared a follow-up report that -- unlike the Richards report -- was somewhat sympathetic to the former trustees' lawyers, essentially concluding that most of them were skilled advocates who had just followed their clients' instructions. This follow-up report included practical advice:
"In considering whether to file a claim, the Trustees will want to consider both the cost of prosecuting such an action as well as the length of time such a proceeding might take. The Trustees will also want to consider the impact on Kamehameha Schools of negative publicity and controversy that would accompany prolonged litigation -- precisely the type of controversy that Kamehameha Schools has worked so hard over the last 18 months to put behind it."
Deputy Attorney General Sellers could hardly believe what was happening. She pointed out that Miller and Chevalier as well as Professor Langbein had themselves rendered significant legal services for the former trustees, so the study was "not independent." It was also "self-serving," according to Sellers, because the interim trustees were currently paying the Cades firm to do what the former trustees had previously paid that firm to do: "hinder the attorney general."
THE INTERIM trustees did not respond to Sellers' accusations. Instead, they announced that they would not be suing any of the former trustees' lawyers or seeking a refund of trust money paid to them for work that, according to the Richards report, did not benefit the trust.
Before copies of the $1 million follow-up report could be made and distributed, lawyers for the trust asked Judge Chang to place it under seal, which he did.
Even lawyers from the attorney general's office, whose job it was to monitor all charitable trusts, were denied further access, for the sake of "closure."
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Not long after taking control of Bishop Estate, the interim trustees announced their intention not to assist in efforts to surcharge the former trustees, a decision that appalled the deputy attorneys general. Lawyers for the interim trustees had advised their clients that any form of cooperation with the attorney general’s office on this matter would jeopardize $75 million of insurance coverage. Insurance policies purchased by the former trustees essentially said that the companies did not have to pay any claim in which one policyholder sued, or assisted in a lawsuit against, another policyholder. This arguably included a present trustee suing, or assisting in a lawsuit against, a former trustee.
Such a contract provision, however, violated public policy, making it unenforceable. Trust law does not allow former trustees to tie the hands of their successor trustees like that. If asked, the court would have declared invalid that provision of the contract – but the interim trustees did not ask any court to do that. Instead, they treated this convenient but illegal contract provision as clearly enforceable. Reminded of their fiduciary duty to hold their predecessors accountable for harm done to the trust, the interim trustees responded that they had no interest in “seeking retribution.” They said it was time to “look forward, not backward.”
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In 2002, a panel of substitute Supreme Court justices – selected by Chief Justice Moon – threw out the criminal indictments against Peters, Wong, and Stone on procedural grounds. Without deciding whether crimes had or had not been committed, the substitute justices sharply criticized the attorney general’s office for being overzealous in its efforts to secure indictments: “The State’s interest in prosecuting these crimes is, at this point, clearly outweighed by the lack of fundamental fairness that would ensue were we to allow these prosecutions to continue.”
The justices did more than just throw out indictments. They unanimously declared the entire mater pau (completely done); no new round of indictments could be sought.
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The various civil investigations were also ended abruptly.
A team of investigators that had been hired by Margery Bronster to look into Bishop Estate’s political activities asked her successor, Earl Anzai, for authority to interview various politicians regarding possible bribery and campaign spending violations. Saying that it was unlikely the individuals in question would admit to anything and that any violations were probably of minor significance, Anzai refused; he had decided that further investigation would be too expensive and was beyond what the public wanted.
Anzai did not make the investigators’ report public, nor did he share it with the deputy attorneys general who had worked on Bishop estate matters exclusively for the past three years. In each case, the reason given for the decisions to seal information and to let investigations lapse was to provide “closure” and “healing.”...
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Proposed Successor-Trustee David C. Farmer, was an associate of Ashford & Wriston from 1998 to 2001 – during the period of Defendant’s RICO lawsuit and his bankruptcy proceedings. Kamehameha Schools/Bishop Estate is a major client of this firm.
NEW DISCOVERY (10-30-07): In August, 1999, Robert Bruce Graham of Ashford & Wriston filed a petition for the salaries of the Interim Trustees, Robert Kihune, David Coon, Francis Keala, Constance Lau, and Ronald Libkuman. (Reference: http://www.ksbe.edu/newsroom/filings/compensation.pdf)
In the same month, Bruce Graham filed a Petition on behalf of these same Interim Trustees to establish procedures for the selection of new trustees. (Reference: http://www.ksbe.edu/newsroom/filings/selection.pdf )
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NEW DISCOVERY (10/20/07): RE ASHFORD & WRISTON
May 20, 2000
fires law firms
A special master's report
says much legal work served
board members' interests,
not the trust's
By Rick Daysog, Star-Bulletin
Kamehameha Schools has terminated several of its law firms, one day after a court-appointed special master issued a scathing report on their roles in the three-year trust controversy.
In a brief statement yesterday, the estate's interim board and Chief Executive Officer Hamilton McCubbin said they would immediately discontinue the firms' services pending the completion of an internal investigation.
The estate said it would decide what action, if any, it would take against the firms once its inquiry is completed.
"The report of the special master ... raises question about the propriety of services rendered by some of these advisors," the estate said.
The charitable trust did not identify which firms were terminated, but one, Cades Schutte Fleming & Wright, confirmed its suspension. At least one other firm, Ashford & Wriston, also was terminated, a person close to the trust said. Partners at the Ashford firm did not return calls.
In a report filed in Circuit Court on Thursday, court-appointed special master Robert Richards said several of the estate's outside attorneys assisted in a "Herculean effort" to circumvent disclosure to the attorney general's investigation and took part in a "destroy the opposition" effort by former majority trustees Henry Peters, Richard "Dickie" Wong and Lokelani Lindsey.
The Richards study, which examined legal work by 12 of the estate's outside firms in the 1998-1999 period, also recommended that the probate court surcharge the former trustees for nearly $5 million in fees, saying much of the law firms' work served the interests of the board members and not the trust.
Richards singled out Cades Schutte's work as "the most troubling" and urged the probate court to order the disgorgement of $880,000 of the $1.3 million that it earned between 1998 and 1999.
Richards said the firm spent considerable trust funds researching the free-speech limitations of senior U.S. District Judge Samuel King, an outspoken critic of the trust, and looked into possible remedies against Bobby Harmon, the former head of the estate's insurance subsidiary, in an apparent attempt to silence criticism.
The law firm also reviewed sets of photographs taken of a May 1997 protest march, in an apparent attempt to assist the former majority trustees in identifying opponents, Richards said.
Cades Schutte strongly disagreed with the master's findings and said its work for the trust was appropriate. The firm said its staff was not trying to silence criticism when it reviewed photos of the march but was attempting to prepare documents in response to various subpoenas and legal requests.
The firm, which has represented the estate for at least 30 years, said it expects to be vindicated once the Probate Court hears its side of the story.
"There was never any attempt by us to identify any of the people in the photographs," the firm said.
"The master's report was wrong about that, and about other allegations, in large part because he never talked to us. We are amazed and disappointed that he took several months to prepare his report and made serious allegations without ever asking our attorneys or staff members about what they did or why."
Meanwhile, the attorney general's office applauded the estate's decision to suspend some of their outside firms in light of the disclosures in Richards' report.
"This is a prudent course of action," said Deputy Attorney General Hugh Jones.
"The attorney general strongly supports the announcement by the estate's chief executive officer."
Bishop Estate Archive
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From the Ashford & Wriston website:
The firm was established in 1955. We currently have twenty-six lawyers and six paralegals.
The firm's practice is real estate oriented with sub-specialties in real estate transactions and development, condemnation, title insurance, commercial leasing (including rent re-openings), condominiums, quiet title and representation of financial institutions in foreclosures, bankruptcies and workouts. The firm also has corporate, intellectual property, employment, estate planning and family law departments. While much of the firm's litigation practice is real estate related, the litigation department also handles a broad range of general commercial litigation, arbitration and mediation cases. The firm's clients include many of Hawaii's largest landowners as well as shopping centers, banks, credit unions and title companies.
American Savings; Barnwell Industries; Department of Hawaiian Home Lands; Ford Motor Credit Corp; Hawaii Credit Union League; Hawaii Medical Service Assn.; Hawaii Reserves, Inc.; Hawaii State Federal Credit Union; Kahua Ranch, Limited; Kamehameha Schools; Kaneohe Ranch; Knudsen Trust; Lunalilo Trust; Old Republic Title Co.; Parker Ranch; Queen Liliuokalani Trust; McCandless Ranch; The Queen Emma Land Company; Roman Catholic Church, State of Hawaii; Territorial Savings & Loan Assn.; The Rehabilitation Hospital of the Pacific; Title Guaranty of Hawaii; Title Guaranty Escrow Services, Inc.; Ticor Title Insurance Co.
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Robert Bruce Graham is expected to testify regarding his business, professional, and personal relationships with Nathan Aipa, Colleen Wong, Louanne Kam, Hamilton McCubbin, Morgan Lewis & Bockius, Miller & Chevalier, Henry Peters, Richard Wong, Jeffrey Stone, Peter Savio, Judith Flanders, Walter Flanders, James Campbell Estate, Oswald Stender, James Wriston, Howard Luke, Rosemary Fazio, Ben Cayetano, Margery Bronster, Earl Anzai, Lyn Anzai, Tom Foley, Dan Foley, Oswald Stender, Prudential Insurance Co., Ko Olina Resort, Pauline Sato, Judge Eden Elizabeth Hifo (fka Bambi Weil), Judge Kevin Chang, Judge Barry Kurren, Faye Kurren, The Nature Conservancy, Jeffrey Watanabe, Dee Jay Mailer, Edwina Clarke, Eric Martinson, Bruce Nakaoka, Marshall Ige, Terrence Tom, Al Jeremiah, Guido Giacometti, Susan Tius, Sukamto Sia, Carol Asai-Sato, Gensiro Kawamoto, David Farmer, Sanford Murata, Queen Emma Foundation, Colbert Matsumoto, John Garibaldi, Steve Case, Dan Case, Hawaii Superferry, and others to be named upon discovery.
Letters, Documents, News Articles and Related Links
Equity 2048 -The Richards Report
XL Reinsurance Policy No. XLRKS-01796
Equity 2048 - Related Correspondence and Documents
IRS Closing Agreement for Kamehameha Schools
The Na Kumu Book Advisory Group
Broken Trust: Greed, Mismanagement & Political Manipulation
Lost Generations: A Boy, A School, A Princess
KITV Special Report
TO GO TO THE WOO VS. HARMON WITNESS INDEX