U S Dept of Justice, David C Farmer, Trustee vs. Bobby N. Harmon

THE UNITED STATES DEPARTMENT OF JUSTICE

OFFICE OF THE U.S. TRUSTEE

David C. Farmer, Successor Trustee
vs.
Bobby N. Harmon

(Formerly Mary Lou Woo vs. Harmon and James Nicholson vs. Harmon)

CV05-00030 DAE/KSC

United States District Court, District of Hawaii

Judges: David A. Ezra; Kevin S. Chang

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DEFENDANT’S WITNESS

EDWARD H. KUBO, JR.

PJKK Federal Building
300 Ala Moana Blvd., #6-100
Honolulu, HI 96850
Phone: (808) 541-2850
Fax: (808) 541-2958

From the U.S. Attorney’s Office, District of Hawaii, website:

United States Attorney Edward H. Kubo, Jr.

Mr. Kubo is a 1971 graduate of Waipahu High School in Hawaii. He thereafter graduated from the University of Hawaii with a Bachelors degree in Political Science, and then obtained his Juris Doctorate from the University of San Diego School of Law (California). He was admitted to the Hawaii Bar in 1979.

On September 4, 2001 (1 week prior to the 9-11 attacks), President George W. Bush nominated Mr. Kubo to be the U.S. Attorney in Hawaii. His nomination was supported by virtually every federal and state law enforcement agency in Hawaii. On November 30, 2001, the United States Senate confirmed Mr. Kubo's nomination and he was officially sworn in on December 7, 2001 .

As the U.S. Attorney, Mr. Kubo leads an office of approximately 65 members, including attorneys and staff. There are 28 Assistant U.S. Attorneys who practice federal, criminal, and civil areas of the law. Mr. Kubo also supervises all military and civilian Special Assistant U.S. Attorneys assigned to work for the office.

U.S. Attorney Kubo's Administration focuses on the federal oversight of all Anti-Terrorism initiatives, establishing "Safe Neighborhoods" in Hawaii, Drug Interdiction, and Safeguarding Hawaii's Tourism Industry. Of course, Mr. Kubo also remains a strong proponent of white collar and political corruption investigations. Finally, Mr. Kubo is very concerned about the quality of life for our military in Hawaii, and he will protect our military families from being victimized by crime.

From 1990 to 2001, while serving as an Assistant U.S. Attorney, Mr. Kubo was responsible for the prosecution of major violent crimes, narcotic offenses, white collar crimes, and crimes on government reservations.

Mr. Kubo previously served as a Deputy Prosecuting Attorney with the Office of the Honolulu Prosecutor's from 1980-83 and 1985-90. During his tenure, he prosecuted homicides, sexual assaults, narcotics offenses, and organized crime cases. Between 1983-1985, Mr. Kubo was in private practice and with the law firm of Carlsmith and Dwyer where he specialized in construction litigation and insurance defense.

Finally, Mr. Kubo has been an instructor at the Honolulu Police Academy, the State of Hawaii Sheriff's Academy, and the Pearl Harbor Department of Defense Police Academy, and he has also taught at other state and federal law enforcement agencies throughout Hawaii.

http://www.usdoj.gov/usao/hi/about/usa_bio.html

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August 21, 2009

Court blasts conduct at '07 trial
By Jim Dooley, Advertiser Staff Writer

A federal appeals court has sharply criticized the conduct of a federal prosecutor in a 2007 criminal trial here of a man charged with assaulting military police officers at Mokule'ia.

Gentler criticism was also leveled in the same opinion at the defense attorney and judge involved in the case.

"Everyone could have done more to protect defendant's rights at trial," said the opening sentence of the opinion, written this week by Alex Kozinski, Chief Judge of the 9th U.S. Circuit Court of Appeals.

The ruling overturned the conviction of Rex Harrison on one of two counts of assault and vacated his sentence of two years in prison, and ordered that the case be returned to U.S. District Judge David Ezra for resentencing.

But Harrison, a civilian contractor who installed secure computer networks at military bases, has already served all but three months of his two-year sentence, his current lawyer, Hawai'i Federal Public Defender Peter Wolff said.

Wolff pointed out that while the majority appellate decision written by Kozinski dismissed one of the charges against Harrison, a dissenting opinion written by Judge Edward Bybee was even more critical of the government's trial conduct and said the whole case should be overturned.

Kozinski's opinion said the prosecutor, Special Assistant U.S. Attorney Gabriel Colwell, repeatedly engaged in improper questioning of Harrison during cross examination.

"It's black letter law that a prosecutor may not ask a defendant to comment on the truthfulness of another witness ... but the prosecutors here did just that," Kozinski wrote.

And the questions were not "isolated incidents," the judge said.

"Improper questioning was an organizational theme for the prosecutor's entire cross examination," the opinion said.

Colwell, who is now in private practice in Los Angeles, declined to comment yesterday on the 9th Circuit ruling.

admission of error

U.S. Attorney Edward Kubo's office "conceded the impropriety" of the prosecutor's questions in the appeal but said Colwell and his co-counsel were "Special Assistant United States Attorneys on loan from the military," Kozinski wrote.

"That's no excuse at all," the opinion continued.

"When the United States Attorney endows lawyers with the powers of federal prosecutors, he has a responsibility to properly train and supervise them so as to avoid trampling defendants' rights," Kozinski wrote.

The judge also found fault with the defense lawyer and Ezra.

"Indeed, everyone involved could have done better," said Kozinski.

"The defense attorney should have objected as soon as he saw the prosecutors step out of line. And the respected and experienced district judge should not have tolerated this protracted exhibition of unprofessional conduct."

Defense lawyers Victor Bakke and Dean Hoe, who represented Harrison during the trial, could not be reached for comment yesterday.

ezra: no comment

Ezra declined comment.

The majority opinion upheld Harrison's conviction on the more serious felony charge of assault and reversed his conviction on a misdemeanor assault count because of what it termed "plain error" in Ezra's instructions to the jury.

That ruling was based in part on another 9th Circuit decision which was issued after the Harrison trial concluded.

"This partial affirmance does not condone what happened at trial," Kozinski wrote.

"Rather, this mixed result suggests only that trials can sometimes serve justice despite strenuous efforts to the contrary," Kozinski concluded.

In his dissenting opinion, Bybee said the "outrageous behavior of the lead prosecutor" in the case was "so extensive that summarizing it all is no easy task."

"We do not permit attorneys to support or undermine witnesses by either vouching for their veracity ("Brutus is an honorable man") or branding them unreliable ("All Cretans are liars")," Bybee said.

The prosecutor's improper questions tainted the jury's ability to impartially judge the credibility of the prosecution witnesses who testified against Harrison, Bybee said.

Some of the questions were "designed to depict Harrison as an absurd, paranoid individual by forcing him repeatedly to accuse other witnesses of lying," Bybee wrote.

Wolff said he may ask that all 29 members of the 9th Circuit Court of Appeals review the case as a group "in light of the strong dissent of Judge Bybee."

Because of the conviction, Wolff said, Harrison has lost the security clearance he needs to perform his work duties on military installations....

Honolulu Advertiser

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NEW DISCOVERY (06-20-08):

June 20, 2008

Mortgage fraud crackdown

More than 80 people in Hawaii's mortgage loan industry are under FBI investigation. Five have already been indicted.

Gene Park, Honolulu Star-Bulletin

More than 80 people in Hawaii's mortgage loan industry are under investigation in about a dozen separate federal cases targeting mortgage schemes, the FBI announced yesterday.

The investigations are part of a nationwide crackdown against mortgage fraud, as the federal government steps up efforts to address the subprime-loan crisis.

Five people were indicted in Hawaii last month as part of Operation Malicious Mortgage, which has brought charges against 406 people nationwide. Almost 300 people have been arrested since March in cities such as Chicago, Dallas and Miami.

FBI Special Agent in Charge Janet Kamerman declined to comment on details on the Hawaii investigations but said that the suspects vary in prominence in the mortgage industry and in the type of schemes planned.

"They range from foreclosure bailout, illegal property flipping to identity theft," Kamerman said. "It's a combination of some companies that are new and some companies that have been here for years."

The FBI said property flipping is the most common cause of mortgage fraud in Hawaii. Illegal flipping is when property is purchased and resold quickly for an artificially inflated price after little or no meaningful rehabilitation.

U.S. Attorney Ed Kubo said mortgage fraud is not as prevalent in Hawaii as it is on the mainland. Hawaii is 38th in the nation for mortgage fraud, according to the Mortgage Asset Research Institute in 2005.

"However, notwithstanding our ranking, these crimes are very real and very damaging for those suffering monetary losses," Kubo said.

Federal officials said local banks are not under investigation as perpetrators, just as victims. They encourage anyone who suspects they are victims of mortgage fraud to contact federal authorities, or else they could be held liable in the scheme....

The indictment charged five people -- John Mendoza, Antonio Alcantara Jr., Ira Altwegg, Albert Alimoot and Evan Koizumi -- with conspiracy to commit mail fraud, wire fraud, and false statements on loan applications.

Federal prosecutors accuse the group of executing a scheme to defraud lenders by making false promises and forging documentation to misrepresent the credit worthiness of the loan applicants....

Trial is set for Sept. 23. If convicted, the defendants face up to 20 years in prison. Kubo said he expects the group to see a minimum of four to five years in prison.

The national roundup began three months ago, and authorities estimate victims lost more than $1 billion as a result of the frauds. Among those indicted were real estate agents, lawyers, appraisers and borrowers.

"Mortgage fraud and related securities fraud pose a significant threat to our economy, to the stability of our nation's housing market and to the peace of mind of millions of American homeowners," said Deputy U.S. Attorney General Mark Filip.

There are about 1,400 pending mortgage-fraud cases, many related to subprime loans made to people with poor credit, said FBI Director Robert Mueller.

http://starbulletin.com/2008/06/20/news/story01.html

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NEW DISCOVERY (December 13, 2007):

February 19, 2002

Extraordinary Heroes and Scoundrels of Hawaii -
Edward Kubo Total Power Corrupts: Highest Law Enforcement Officer Real, Real Busy

By Malia Zimmerman

Edward Kubo, 48, as the state’s newly appointed United States attorney and highest law enforcement officer, has his work cut out for him.

As one of only 92 in this same position throughout the nation, reporting directly to United States Attorney General John Ashcroft, Kubo oversees in Hawaii and surrounding territories prosecution of international drug traffickers, Internet crime and child pornography, and crimes against visitors and the military. But the most complicated cases come by way of more than 40 years of one-party rule in Hawaii and political corruption that inevitably follows.

Kubo has more independence to pursue the political corruption in the state, simply because he is not tied to the party in power. He was appointed by President George W. Bush, a Republican, and that is a considerably different situation from his predecessor Steve Alm, who had every reason to go after "safe" political corruption, or corruption that did not go too close to the top.

Alm was noted more for his work on weed and seed, or cleaning up communities from drug dealers, than for busting high-profile political powers that be. That focus was rewarded well by incumbent Democrat Gov. Benjamin Cayetano who recently appointed Alm a state judge over many other qualified candidates.

But if there was ever a time for a U.S. attorney to come to the rescue, it is now. Especially with every political office up for re-election in 2002 as mandated in the state constitution. The shake-up is breeding panic amongst long-time incumbents who want to find a place to continue their career in politics, and that panic is creating a money and power grab with more momentum than ever before.

The fanatical activity building everyday in Hawaii’s political arena is keeping Kubo busy, at work 7-days-a-week. Since he took office Jan. 4, 2002, the U.S. attorney’s office has taken on several major cases involving political corruption including some of the largest cases ever taken on by federal investigators.

Take the state Legislative Auditor’s report exposing abuse of federal and state funds set aside for special needs children. The state so far has spent $1.4 billion since 1994 to meet the Felix consent decree, or educational needs of special-needs children, much that is untraceable.

Questions are arising in state’s other than Hawaii including North Carolina, where federal investigators indicted Lenore Behar, who was appointed by U.S. District Court Judge David Ezra to set up and monitor Hawaii’s Felix program. Behar was under indictment for 46 counts of stealing federal and state monies from a similar program for children in her home state. She plead guilty in December 2001 to one count.

Besides the missing money and misappropriations relating to Felix and special education, there is the investigation into Honolulu Mayor Jeremy Harris, who is accused of using state and federal funds to pay off contributors through city contracts and for demanding those who receive contracts pay up or lose out. The investigation, involving several city, state and federal agencies, goes right to the heart of the corruption in the Democratic Party and the way the Democratic machine is funded.

Then there is voter fraud and voting irregularities, including an absentee ballot system abused in 1998 and 2000, naturally ignored by Kubo’s predecessor. There is the 40,000-page document in the state Campaign Spending office and the state attorney general’s office documenting wide-spread campaign funding raising abuse and bribery by former Bishop Estate trustees involving many of the people still in office today.

After being under investigation himself for more than a year, including federal screenings, interviews with congress members and background checks, Kubo is ecstatic by the chance he has been given to make a difference in the place he was born, spent much of his childhood and raised his children.

He agreed to apply for the position of U.S. attorney after meeting and hearing President George W. Bush speak at the presidential inauguration in January 2001.

"I was approached by the Hawaii Bush Presidential Committee and asked if I would consider the position. Just after the inauguration, one of the best experiences in my lifetime, I agreed to seek the position. Just looking back on the inauguration and the speech the president gave, gives me goosebumps."

Kubo, the first public school graduate appointed to this position, for the last 30 years has put in considerable energy, enthusiasm and effort into his law enforcement career. After graduating from Waipahu High School and the University of Hawaii at Manoa, he attended the University of San Diego School of Law, graduating in 1979. During law school, Kubo volunteered with the San Diego Legal Aid Society and interned with the University of San Diego Legal Clinic. Returning to Hawaii in 1979, he clerked for a year with Kobayashi, Watanabe, Sugita & Kawashima Attorneys at Law.

Deciding to take a stab at prosecution, he went to work for the City & County of Honolulu Prosecutor Toga Nakagawa for three years as a deputy city prosecuting attorney. For two years, from 1983 to 1985, he took a break from the prosecutor’s office and went to work in private practice as a senior associate trial attorney with Carlsmith & Dwyer Attorneys at Law. There he specialized in contract, personal injury and insurance litigation.

Charles Marsland, the first elected city prosecutor for the City & County of Honolulu, whom Kubo had worked for before, convinced Kubo to return to the city prosecutor’s office. In addition to his caseload, Kubo worked in two other aspects of law enforcement for several hours each day. He headed for 5 years the Jury Training Unit and was an instructor for police recruit classes and police refresher courses for the Honolulu Police Academy, teaching officers about the legalities of search and seizure laws, laws of arrest, and police testimony in court....

Then, 11 years ago, in December of 1990, Kubo made a decision that would change his life forever. He agreed to take on the job of assistant U.S. attorney offered to him by the then U.S. Attorney Dan Bent.

"My father was in the military and my mother was a substitute teacher. Because of what they taught me, I always believed in the importance of serving your country."

Many of the hundreds of cases Kubo has overseen, tried or assisted with, whether for the city or federal government, have left a lasting impression on him, especially those involving domestic violence or crimes involving minors. Many of the cases he’s overseen have made lasting changes on Hawaii’s case law.

One case in 1989 involved Boy Carvalho and his wife, whom Carvalho beat to death before the couple’s two children. The mother bled to death in Castle Medical Center, running the blood bank dry of 12 gallons of fluid before she died with 44 broken bones and knee caps shot off by a shot gun. But the defense used an unusual strategy to get Carvalho off the hook, by picking men only for the jury.

"The defense attorney began knocking off all women jurors. I objected based on a prior case that said jurors cannot be excluded because of race. I took the case to the Hawaii Supreme Court on a writ (legal demand for a specific action) and the Hawaii Supreme Court was the first in the nation to rule that women could not be excluded as a class."

Other cases Kubo took on as a deputy U.S. attorney include a case in 1999, United States vs. Kaisa Tai, et. al., where Kubo was the sole prosecutor assigned to the case involving an organized group of individuals who were transporting large quantities of both crystal methamphetamine and cocaine to Hawaii from Los Angeles, with some of the drugs destined to distributors in American Samoa. After a hard fought jury trial, two were convicted and sentenced, and one was acquitted, and the case is now on appeal....

The kinds of cases Kubo will now direct his assistant U.S. attorneys to take on are in line with that of the U.S. Attorney General Ashcroft, with the first priority being identifying and preventing terrorist attacks.

"9-11 has changed the priorities of the Bush administration and the federal government – with the number one priority being terrorism. The underlying priority for us is to make people safe, but to do so in a way that is balanced and fair and keeps in mind their liberties and rights."

Kubo also will focus on preventing gun violence by tracking down people who possess or sell firearms illegally and keeping guns out of the hands of violent criminals. He’ll continue to address drug trafficking and addiction, help to prevent violence against military families and their property, and assist local authorities in their efforts to prevent attacks on visitors.

"I know there has been a great deal of crimes focused on the military people here and we are stepping up the effort to protect them and their families. This is important to me, probably because of my background growing up with a father in the military."

Kubo’s upbringing, partially in Germany because his father was transferred there twice in his youth to that snowy country, was different from most of his peers. His family moved every three years, and so he transferred to various new schools, including schools in Germany, where he spent third through fifth grade and his first three years of high school.

He took care of his own family, settling down in 1979 to raise three children: Diana, 22, Dawn, 20; and Ed, 19. He became a grandfather three years ago to Alayna.

"Today I carry my background with me. Because I suffered racial slurs in Germany, I learned to be more independent. My mother taught to be compassionate, to be fair and look at both sides. And my father, a U.S. Army veteran of both the Korean and Vietnam wars, who retired as a Rank E-9 command sergeant major, taught me the importance of service to our country and getting the job done no matter what it took. These experiences and lessons are all going to help me with the tasks I’ll face in this job."

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EDWARD KUBO PHOTO GALLERY

www.usdoj.gov/usao/hi/about/usa_bio.html

the.honoluluadvertiser.com/.../FP704060381.html

http://starbulletin.com/2002/01/05/news/story5.html

starbulletin.com/2007/06/13/news/story07.html

http://www.khon2.com/home/ticker/20591059.html

http://www.midweek.com/content/paina/image_full/1995/

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NEW DISCOVERY (12/13/07):

November 30, 2007

Former American Savings Bank Assistant Manager Indicted on 10 Counts of Theft, Embezzlement and Fraud

Ewa Beach Resident Marilyn DeMotta Is Being
Apprehended by Federal Agents in Las Vegas

By Malia Zimmerman

Hawaii’s U.S. Attorney Ed Kubo today announced the indictment of Marilyn DeMotta, 41, a former operations manager at American Savings Bank accused by a bank security manager in 2004 of stealing more than $1 million from 91-year-old bank customer Ada Lim.

DeMotta, a resident of Ewa Beach, was indicted in Hawaii’s U.S. District Court on Nov. 15, 2007, on 10 counts including bank fraud, embezzlement by a bank employee, and theft of public funds, but the indictment was sealed until she could be located and apprehended in Las Vegas, Nevada, where she also has a home.

The 18-page indictment alleges that DeMotta:

> Became involved with the personal financial affairs of Lim (referred to in the indictment as “A.L.”);

> Used her position with the bank to access the accounts of Lim and move funds belonging to Lim into other accounts at American Savings as well as other financial institutions;

> Used a variety of financial transactions to redirect Lim’s funds into accounts, which DeMotta controlled at American Savings Bank as well as other financial institutions;

> Altered checks belonging to Lim, so that the money was deposited into DeMotta’s father’s account, which DeMotta had opened;

Falsely endorsed the reverse side of the cashier’s checks as “refunded to customer” which were to be used for Lim’s payment of federal and state tax.

Spokesperson for the U.S. Attorney's office, Larry Butrick, says the federal agents are speaking with DeMotta’s attorney to determine whether she will surrender on her own or if a warrant will be issued for her arrest. Either way, DeMotta will be brought back to Hawaii so she can be arraigned next week.

DeMotta Took Advantage of Her Position

As Hawaii Kai Branch operations manager for American Savings Bank, DeMotta could easily befriend Lim, a frail elderly widow living in an East Oahu retirement home. Lim had no reason to distrust DeMotta when in 2003, the polite bank employee offered to help her with her finances.

Despite declaring bankruptcy in 2001, DeMotta offered to manage the upcoming sale of Lim’s $1.4 million property in Wahiawa, to prepare Lim’s federal and state tax forms, and to act as her “financial manager.” DeMotta even told Lim to get rid of her accountant because he was “too expensive.”

Lim allowed DeMotta to take control of the $668,000 netted from the sale of the property previously rented to Zippy’s Restaurant for $7,000 a month and to prepare her 2003 tax forms. Signing blank checks, Lim gave her banker full access to those funds and more totaling $900,000.

Alarmed at DeMotta's actions, Dennis Kohara, Lim’s long-time accountant, told Hawaii Reporter that he twice took his concerns to an American Savings Bank branch manager who he knew personally, because he believed an investigation was in the best interest of his client and the bank. Angie Ho, Lim’s Realtor, says she also was worried because Lim had a simple lifestyle with few expenses, but her money was rapidly being depleted.

Meanwhile, DeMotta continued as the bank’s assistant manager.

In late 2004, DeMotta allegedly used Lim’s money to open an I-Plan account at the Hawaii Kai Bank Branch under her own father’s name.

The indictment alleges that this money was supposed to go to the Internal Revenue Service and State Tax Collector to pay Lim’s taxes.

But instead, DeMotta allegedly deposited more than $200,000 from the money into an American Savings I-Plan account.

As a result, DeMotta’s Hawaii Kai Branch won a company-wide competition in December 2004, and employees and management personnel subsequently received bonuses of $1,000 and $5,000 each.

Bank Security Manager Bert Corniel pushed for the bank’s senior management to aggressively pursue an investigation into DeMotta and to reimburse Lim the full amount that was stolen.

Instead, the bank’s senior officials claimed they believed DeMotta’s claim that she borrowed the money and that it had all been repaid.

American Savings management wanted to make sure it was on record that DeMotta “borrowed” the money from Lim.

On February 2005, DeMotta picked up three bank employees from the legal and human resources departments and took them to meet with Lim.

Bank general counsel Stanley Chong, who suggested the meeting, went along in hopes that Lim would sign a statement saying she had in fact lent DeMotta the money. With big smiles, and candy and flowers in hand, the four bank employees arrived at Lim’s home with the release. She signed it.

“Mrs. Lim was in no condition to turn them down. She would have agreed to anything to anyone who was nice to her,” attorney Lyle Hosoda said about his client Ada Lim, maintaining his client was improperly manipulated.

DeMotta was fired from the bank in 2005, but was able to secure a job with a local mortgage company.

Corniel filed a complaint with the FBI in 2005 saying DeMotta alleged stole more than $1 million from Lim between 2003 and 2005. It was his report that triggered a federal investigation by four federal agencies.

Corniel was fired from the bank in June 2006.

Two Lawsuits Filed Against Bank Aug. 2, 2006

Corniel filed a lawsuit on Aug. 2, 2006, in First Circuit Court, alleging that he was fired in retaliation for blowing the whistle on the cover-up of DeMotta’s theft by the bank’s top senior officials.

Ten days after Corniel was fired, FBI agents seized his computer and files from the American Savings Bank security headquarters. Sources say federal agencies investigating the case feared evidence might be lost or destroyed. Hawaii Reporter broke that story on Aug. 12, 2006.

Federal agents also issued at least a half-dozen subpoenas in the fall of 2006 to American Savings Bank senior management officials in preparation for a grand jury proceeding at Hawaii’s U.S. District Court.

Federal agents from at least four departments have been involved in the case, including the FBI, U.S. Attorney, Office of Inspector General for Tax Administration and Department of the Treasury. U.S. Attorney Ed Kubo says in his Nov. 30 release that these federal agencies continue their investigation.

Corniel’s lawsuit against American Savings was settled in 2007 for an undisclosed sum on the condition that Corniel agree to strict confidence in terms of the settlement and what he uncovered during his investigation while at the bank.

Meanwhile, Lim also sued American Savings Bank, filing her lawsuit on Aug. 2, 2006 -- the same day as Corniel’s in First Circuit Court.

Lim’s attorney, Lyle Hosoda, said that American Savings, which had been notified twice about DeMotta before she took Lim’s money, did not take action to stop her -- at least not in time, and as a result, DeMotta transferred Lim’s money to a series of accounts benefiting DeMotta and her family members.

Specifically, Lim’s lawsuit alleged that $304,000 went to DeMotta’s account at the Bank of Hawaii; $212,000 went into DeMotta’s father’s retirement fund in American Savings; $110,000 in cash was used to purchase a condo in Waipahu in DeMotta’s own name. In addition, records show another $57,000 going to pay DeMotta’s credit card debt, and several thousand dollars both transferred to the Philippines and set up in a local account for DeMotta’s children.

Hosoda says the bottom line is Lim’s money disappeared within a few months and the 91-year-old is penniless. She once made $9,000 a month from rent and social security and believed she was set financially for life. But Lim was left unable to afford the rent in the East Oahu elderly care home and was forced to move out into low-income housing in Red Hill.

Worse, Lim’s taxes were not even paid, even though she believed the $304,000 was going to pay her taxes and signed cashiers checks prepared by DeMotta for that amount. Today, Lim owes nearly $500,000 in back taxes and penalties for the sale of the property and at this point, has no way to pay the government.

Bank president and Chief Executive Officer Constance Lau, who also serves as president of the Hawaii Bankers Association, and was named by U. S. Banker magazine as one of the top 25 most powerful women in banking and “Business Leader of the Year” in 2004 by Pacific Business News, did not speak publicly about either the civil lawsuits or criminal federal investigations into American Savings Bank.

But in a series of press releases, Lau adamantly denied American Savings Bank has done anything illegal.

On Tuesday, Aug. 22, 2006, American Savings asked the state’s First Circuit Court to dismiss the two lawsuits against the $6.9 billion financial institution and subsidiary of the state’s second largest company, Hawaiian Electric Industries.

In a 10-page filing, the bank attorneys maintained “there have never been any actions by American Savings Bank to conceal any improprieties by bank personnel." The filing also states former security manager Corniel was never coerced or kept from submitting any reports required by law.

After considerable negative press in the local and national trade press, however, American Savings Bank, in a dramatic turn, agreed to a settlement with Lim.

Neither Lim’s attorney, nor the bank, would discuss the terms of the arrangement, which was announced on Sept. 18, 2006, but her settlement is reportedly more than $1 million.

Bank Hires Top Guns, Fights Federal Inquiry

American Savings Bank, Hawaii’s 3rd largest bank with $6.7 billion in assets, retained Washington D.C.-based law firm of Fried, Frank, Harris, Shriver & Jacobson LLP to defend the bank during the federal inquiry.

One of the attorneys hired was former U.S. Department of Justice Inspector General Michael Bromwich, who since entering private practice 7 years ago, has defended both financial and other corporations under investigation by government agencies.

While working with the Department of Justice, he attempted to prosecute Oliver North during the Iran-Contra controversy in the late 1980s and investigated government agencies for their management of such crises as Oklahoma City bombing and the 1993 terrorist attack on World Trade Center.

Bromwich’s experience and that of his co-counsel, Thomas Vartanian, who is an expert in banking law, makes the firm the ideal one to defend the bank against any criminal or civil charges, sources say.

Behind the scenes, the bank’s board and attorneys brokered a deal with the federal U.S. Attorney’s office to delay any indictments while the bank conducted its own audit.

After the bank’s audit was completed and turned over to the U.S. Attorney, key bank employees involved with this case suddenly left the bank.

That includes Abel Malczon, senior vice president of operations, who was considered one of the bank’s most powerful and politically connected officers; and Stanley Chong, general counsel for the bank, who sent the delegation of four employees including DeMotta to get Lim’s signature on the form that stated DeMotta had borrowed the money from her. Wilson Ho, the bank branch manager supervising DeMotta during her alleged crime spree, was transferred to another branch and ultimately demoted. Ken Newman, brought in to replace Corniel when he was fired, also left the bank in recent weeks.

Financial experts familiar with the case say the federal investigation could lead to criminal charges against bank officers, and if they are proven serious enough, the bank could lose its federal charter.

DeMotta Maintains Her Innocence

All along, DeMotta has dismissed any allegations of wrongdoing.

In an interview with Hawaii Reporter in the fall of 2006, DeMotta explained that she was not responsible for Lim losing nearly $1 million.

DeMotta says that she befriended Lim while Lim lived in a Hawaii Kai elderly care home and “became like family.”

DeMotta told Hawaii Reporter that she did not steal any of Lim’s money. She says she merely "borrowed" $304,000 from Lim to “help her out” and paid her back on time and in full. She admits she put $212,000 in her father’s retirement account during a related bank promotion, but she says that money was part of the $304,000.

“Mrs. Lim wanted me to invest her money and I could not find anything that was good in the short-term so I borrowed it and gave her 2 percent interest. I did not need the money. I have plenty of my own.”

DeMotta says she took the $110,000 from the Lim family for a Waipahu condo purchase. DeMotta bought the condo in her name, even though she says she did so as an investment on behalf of the Lims. They were repaid $125,000, DeMotta maintains, saying she kept the additional $55,000 in profit from the condo resale of $180,000 because “she earned it.”

She says she realizes now that she probably should not have borrowed money from a customer, or volunteered to help her with her finances or tax preparation, but that she was not responsible for Lim being forced to move from her Hawaii Kai elderly care home into a low-income housing complex in Red Hill.

DeMotta blamed Lim’s daughter and granddaughter for financially taking advantage of Lim to the point where the senior citizen was impoverished.

But public records show DeMotta emerged from bankruptcy in 2003. She told Hawaii Reporter she was on the financial rebound after her parents’ Waimanalo home was sold. Public records shows the Waimanalo home was sold in 2005, however, not in 2003.

Under bank rules, DeMotta was not allowed to represent herself as a financial planner and tax specialist or to even touch the client’s money. Despite this mandate, DeMotta says she was only going out of her way to make sure Lim was a "satisfied bank customer."

“American Savings is a family-oriented bank, which encouraged employees to go out of their way to help customers,” DeMotta told Hawaii Reporter.

Saddened that she was fired from the bank in 2005 for "unrelated reasons," DeMotta says she realizes that she should not have “helped” Lim with her finances, even though she was only doing so out of the goodness of her heart.

She says because she was generous to Lim, her own family is suffering.

American Savings Bank’s public relations officials did not return calls or emails to Hawaii Reporter by press time to comment on this indictment.

Federal officials would not comment on whether other bank officials will be charged in this case, and would only say the investigation involving four federal agencies is ongoing.

Malia Zimmerman, editor and president of Hawaii Reporter, can be reached via email at mailto:Malia@hawaiireporter.com

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April 6, 2007

Ex-prosecutor John Peyton, 62, dies in car crash

By Ken Kobayashi, Honolulu Advertiser

John Peyton, a former longtime federal prosecutor here who later served as head of the state Department of Public Safety, died this week in a car crash in Africa.

Peyton, 62, who was helping the legal system in Malawi in southeast Africa, and his wife, Eileen, were on vacation on their way to Victoria Falls when they were involved in the car crash, first assistant U.S. attorney Elliott Enoki said.

Peyton's wife was hospitalized, but did not suffer life-threatening injuries, Enoki said.

Federal and state officials expressed sadness upon learning of Peyton's death.

"I know Hawai'i is going to miss this true leader," U.S. Attorney Ed Kubo said. "I know he served the people of Hawai'i to the best of his ability. He loved Hawai'i and always wanted to come back and visit."

Kubo said Peyton's leadership as a supervisor in the U.S. attorney's office was "exemplary."

Kubo himself worked under Peyton before becoming U.S. attorney....

Peyton worked at the U.S. attorney's office for two decades, starting in 1983. His most famous case was prosecuting Ronald Rewald, who was imprisoned in 1985 for defrauding victims of millions of dollars through the bogus firm of Bishop, Baldwin, Rewald, Dillingham & Wong.

Peyton's tenure also included an assignment to the U.S. Embassy in Sarajevo, Bosnia-Herzegovina, as its legal adviser.

In 2003, Gov. Linda Lingle appointed Peyton to head the Department of Public Safety. He resigned the following year to return to Bosnia and help the nation's legal system. He later worked for the United States Agency for International Development to help with the Republic of Malawi's legal system.

Lingle described Peyton as "a good man and a dedicated public servant."...

Kubo said services are pending.

the.honoluluadvertiser.com/.../FP704060381.html

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This witness is expected to testify regarding his business, professional, political and personal relationships with Alberto Gonzales, John Peyton, Michael Chertoff, Jack Abramoff, Linda Lingle, Jeremy Harris, Mufi Hannemann, Mark Bennett, Bob Awana, Gary Rodrigues, United Public Workers, Faye Kurren, Barry Kurren, Ben Cayetano, Earl Anzai, Colleen Hanabusa, Micah Kane, Peter Carlisle, William Casey, William Colby, Robert Gates, Porter Goss, Central Intelligence Agency, Ronald Rewald, Calvin Gunderson, Scott Barnes, George Ariyoshi, John Waihee, Kenneth Starr, Jack Lord, Air America, Barry Seal, Bird Air, Frank Carlucci, Carlyle Group, Henry Kissinger, Mitch McConnell, Otter Creek Correctional Center, Corrections Corporation of America, Wackenhut, Henry Paulson, Goldman Sachs, AIG, Chubb Group, Marsh & McLennan, Investcorp, BCCI, Blackstone Group, V.K. Durham, Barack Obama, Rodney Stich, Lokelani Lindsey, Mark Bennett, Hugh Jones, Carol Muranaka, James B. Nicholson, Judge David Ezra, David Farmer, American Savings Bank, Hawaiian Electric Company, Constance Lau, Francis Keala, Admiral Robert Kihune, Mary Lou Woo, Judge Lloyd King, Marilyn DeMotta, John Marshall, Dee Jay Mailer, Edwina Clarke, Fred Black, Paul Alston, Louise Ing, Steven Alm, Robert Alm, First Hawaiian Bank, Dan Case, Steve Case, AOL-Time Warner, Suzanne Case, The Nature Conservancy-Hawaii Chapter, Ed Case, The Consuelo Zobel Alger Foundation, Jeffrey Watanabe, Colbert Matsumoto, The Filipino Community Center, and others to be named upon discovery.