Woo vs. Harmon - Witness Harold Johnston

James B. Nicholson, Trustee vs. Harmon

(Formerly Woo vs. Harmon)

CV05-00030 DAE KSC

U.S. District Court For the District of Hawaii

Judges: David A. Ezra; Kevin S. Chang

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HEARING ON MOTION FOR CONTEMPT OF COURT

DATE: January 16, 2007, 10:30 AM

JUDGE: Hon. David Ezra

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DEFENDANT’S WITNESS

HAROLD C. JOHNSTON

Former executive of GTE Hawaiian Tel; former executive and principal owner of Summit Communications, Inc.

This witness is expected to testify regarding his relationships with Steven Guttman, James Duca, Stanley Hong, Haunani Apoliona, Bob Awana, Linda Lingle, Summit Communications, Sandwich Isles Communications, Gilbert Tam, Robert Kihune, Federal Communications Commission, Michael Powell, Rupert Murdoch, Francis Keala, Henry Peters, Randy Funn, Grant Johnston, Chad Johnston, Clayton Hee, Al Hee, Lynne Waters, Tom Okamura, Guido Giacometti, Sukamto Sia, Hawaii Visitors & Convention Bureau, Bank of Hawaii, Maui Planning Commission, Hawaiian Home Lands, Hawaii Land Use Commission, Robert Clarke, Edwina Clarke, Eric Yeaman, Robbie Alm, Judge Steven Alm, Carol Muranaka, James Wriston, David Farmer, and other entities yet to be named.

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NEW DISCOVERY (10-11-08): Additional facts regarding conflicts of interests between Steven Guttman and numerous parties related to this case:

www.kycbs.net/Google-Steven-Guttman.htm

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September 10, 2002

State, feds seek
Summit trustee

The telecom firm owes more than $1 million
to the state and feds

By Tim Ruel
truel@starbulletin.com

The fate of a million-dollar tax delinquency is coming to blows in the bankruptcy of telecommunications services firm Summit Communications Inc.

In the past several weeks, the U.S. Attorney's Office, the U.S. Trustee's Office and the state Department of Taxation have raised the heat in Summit's bankruptcy proceedings. They support the appointment of an outside trustee to manage and investigate the firm's finances.

Summit owes $528,603 to the state and $512,315 to the federal government for taxes, according to claims in Summit's Chapter 11 reorganization bankruptcy case.

In an early August court filing, attorneys for the U.S. government cited Summit's "gross mismanagement and incompetence" as a justification for the appointment of a trustee.

Summit opposes the appointment of a trustee and disputes the government's assertions. It says the appointment of a trustee will raise the expense of administering its bankruptcy case, a point the U.S. government concedes. Having a trustee at the helm would reduce confidence in the firm, potentially warding off customers, and make it harder for Summit to emerge from bankruptcy successfully, according to a filing by Summit's attorneys Steven Guttman and James Duca.

Summit is seeking an extension of time to submit its in-house plan for reorganization, which was due two months ago. The government says Summit shouldn't get an extension. A hearing on the disputes is scheduled for Monday before U.S. Bankruptcy Judge Robert Faris.

During a brief hearing yesterday, Summit and its creditors said they would meet outside court to talk things over. One of the potential topics was whether the government's desire to appoint a trustee would merit the potential loss of tax dollars, according to Carol Muranaka, special assistant U.S. attorney.

"We are in a bad place, I think, the state and United States," Muranaka said during yesterday's hearing.

Among the U.S. government's assertions:

>> Summit's current management is related to the management that led the firm to its tax situation. Shortly before Summit filed bankruptcy, Grant Johnston, the son of a Summit co-founder and owner, became president;

>> Summit has made a couple major revisions to its financial statements. As such, the firm's numbers are not reliable.

In response, Summit said the relationship between its management teams is not relevant. If there's a question of whether the relationship has interfered with efforts to fix Summit, "no such claim can factually be proven," the company said.

The company blames its erroneous financial statements on disarray in its finances at the time of filing bankruptcy. Since then, the company says it has hired an outside accountant.

In a March interview, Grant Johnston said Summit ran into major cash-flow problems that were more important at the time than paying taxes. According to Johnston, the firm discovered the tax problem after it changed management in 2001. Johnston could not be reached for further comment yesterday.

Unpaid taxes make up about one-third of Summit's $3 million total claims.

In a court filing, Summit noted it is current on its post-bankruptcy financial obligations, and it has made $38,223 in adequate protection payments to the federal government.

The state Tax Department, which has supported the federal government's case for appointing a trustee, has its own bone to pick with Summit. In a recent filing, the state claims Summit has been "tightfisted" with information, hindering a state audit.

Before filing bankruptcy in February, Summit hadn't filed general excise tax returns since 1997. Also, Summit has refused to file public service company returns, the state said....

www.starbulletin.com/2002/09/10/business/story4.html

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This witness is expected to testify regarding her financial, professional, political and personal relationships with Hawaii State Bar Association, Jeffrey Sia, Hugh Jones, Chevron-Texaco, Tesoro, Governor Ben Cayetano, Governor Linda Lingle, Greg Dunn, Bradley Tamm, Louise Ing, Kamehameha Schools/Bishop Estate, Lokelani Lindsey, Nathan Aipa, Colleen Wong, Louanne Kam, William S. Richardson, Dianne Plotts, Sukamto Sia, Bank of Honolulu, Guido Giacometti, Susan Tius, Kenneth Hipp, Matt Tsukazaki, Robert Katz, Howard K.K. Luke, Lyn Anzai, Earl Anzai, Hawaiian Airlines, Joshua Gotbaum, American International Group (AIG), Mary Lou Woo, Alan Ma, Steven Guttman, James Duca, Summit Communications, Marsh & McLennan, Mercer Consulting, Marsh Affinity Group Services, Hawaiian Electric Co., Edwina Clarke, Donald P. Hodel, Puna Geothermal, John Waihee, Bert Kobayashi, JMB Realty, Dwight Yoshimura, Eric Yeaman, Joseph Ferreira, Jr, Grant Sumida, Bruce Bennett, Gary Grottke, Judge Lloyd King, Judge Robert Faris, Judge Kevin Chang, Judge David Ezra, Mark Polivka, Bishop Museum, Haunani Apoliona, Faye Kurren, Judge Barry Kurren, Nature Conservancy, Colbert Matsumoto, Valerie U. Katz, Island Insurance Co., Lisa Ginoza, Sherry Broder, Jon Van Dyke, William McCorriston, Prudential, Judith Neustader Fuqua, Peter Hanashiro, John Edmunds, David Farmer, and others to be named upon discovery.