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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HSDC Capital Fund, LLC
(MN Capital Partners, LLC)
Davies Pacific Center, Suite 1515
841 Bishop Street
Honolulu, Hawaii 96813
Fax: (808) 524-4644
Member, Board of Advisors of Kamehameha Schools; co-founder and managing director of MN Capital Partners, LLC; director on the HiBEAM business accelerator board; director of the Japanese Cultural Center of Hawaii; administrator for the Matsuo Takabuki, Goldman Sachs, and William S. Richardson Commemorative Scholarship Fund; Regent, University of Hawaii; Director, Sopogy (along with witness Michael May), Managing Director and Vice President, Tradewind Capital Group (a wholly-owned subsidiary of Island Holdings, Inc.).
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Type of Fund: Fund of Funds
MN Capital LLC is the managing member and HSDC is a member of this limited liability company. This organization was established to transfer HSDC's investment portfolio in various funds into a newly created fund of funds. Unlike other venture capital partnerships, the fund of fund invests in a portfolio of venture funds, which in turn invests in start-up companies.
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NEW DISCOVERY (07-07-09): More of David Farmer’s undisclosed and unacknowledged financial and professional conflicts of interest with the University of Hawaii, including witnesses William S. Richardson, Eric Martinson, June Jones, Linda Lingle, etc.:
GOOGLING FOR ERIC MARTINSON
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January 5, 2009
Lingle names 5 new UH regents
Pacific Business News (Honolulu)
Gov. Linda Lingle has chosen five people to replace the University of Hawaii regents who had stayed on after their terms expired.
Lingle announced Saturday that the new regents are Dr. Ramon de la Pena, a University of Hawaii professor and agronomist who will serve as the regent from Kauai; Mark Fukunaga, Chairman and CEO of Servco Pacific; Dr. Chuck Gee, former dean of the UH School of Travel Industry Management; Eric Martinson, managing director and vice president of Tradewind Capital Group (a wholly-owned investment subsidiary of Island Holdings, Inc.) and Grant Teichman, a UH student majoring in history and political science.
Lingle was ordered by the Hawaii State Supreme Court in December to replace six regents whose terms had expired June 30, 2008.
Lingle has requested more time to find a replacement for the last regent.
The current regents are Al Landon, regent chairman, Honolulu seat; Howard Karr, Honolulu seat; Dennis Hirota, Honolulu seat; Ronald Migita, Honolulu seat; Artemio Baxa, Maui seat; James Haynes II, Maui seat; Carl Carlson, West Hawaii seat; Harvey Tajiri, East Hawaii seat; and Teen Rasmussen, at large seat.
Hawaii Business News
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NEW DISCOVERY (01-01-09):
December 30, 2008
The Scam That Outscams
By Dan Solin, Huffington Post
The Bernie Madoff Ponzi scheme is generally regarded as the biggest financial scam of all time. I don't agree.
Hedge funds, and particularly "fund of funds," make Bernie's despicable conduct look like small potatoes.
The underlying premise of hedge funds -- outsized returns with no increase in risk--is fatally flawed. Numerous studies have demonstrated the vast majority of these funds do not beat the returns investors could obtain for themselves, by investing in a simple S&P 500 index fund.
It was only a matter of time before these funds started to implode. According to a web site that tracks hedge fund failures, 108 funds at 66 firms have gone of business since 2006. Many more are sure to follow.
While the pitch of hedge funds is a scam standing alone, the "fund of funds" embellished the con. These funds charged 1% or more for selecting and monitoring the performance of "the best" managers.
This scam relied on the gullibility of investors who believe "best managers" is not an oxymoron. The data clearly indicates that it is. If you own an actively managed fund, the odds of it beating its benchmark over 1 year is 1 in 3, over 5 years it's 1 in 5, over ten years it's 3 in 100 and over 25 years it's essentially zero!
How anyone can claim to be able to beat these odds and convince so many sophisticated investors they should pay them to do so, is the poster child for a combination of greed and cognitive dissonance.
Enter the track record of Bernie Madoff. Fifteen years with steady returns of 11%. This was something fund of funds could really sell -- and they did.
Some funds reaped hundreds of millions of dollars of fees for simply forwarding billions of dollars of assets to Madoff. These investors felt privileged to gain access to him and were happy to pay the fund fee, secure in the knowledge that Madoff was being closely monitored.
You know what happened next.
Here's the real scam: How motivated were these "fund of funds" to carefully monitor Madoff's performance? Did they really want to kill the golden goose? Or is it likely they either knew his returns were too good to be true or engaged in "willful blindness" to his fraud?
It would not have been difficult to detect his misconduct. He used an obscure accounting firm. He had no independent custodian. These are major red flags.
Or, they could simply have read a 2001 story about Madoff written by Erin E. Arvedlund in Barron's.
The article was skeptical of Madoff's track record and noted "[T]hree option strategists for major investment banks told Barron's they couldn't understand how Madoff churns out such numbers using this strategy."
Of course, real monitoring would have included replicating Madoff's results. No one has been able to do so....and with good reason.
The real beneficiaries of the scam are these funds. Their rewards dwarfed those received by Madoff.
They are the ones who engaged in the scam that outscams "The Scam."
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October 22, 1997
Bishop Estate had argued
that the attorney general's subpoenas
were too broad
By Jim Witty, Star-Bulletin
A Circuit Court judge this morning upheld the validity of three state subpoenas involving Bishop Estate documents and testimony, rejecting arguments that they were "overly broad."
Judge Kevin Chang ruled that the attorney general's subpoenas - seeking a list of Bishop Estate contractors with annual billings, a roster of estate employees with phone numbers and addresses, and an interview with trustee Lokelani Lindsey - are relevant and provide adequate notice of the subject matter requested. And he denied the estate's request for a protective order covering the subpoenaed documents.
Chang also ruled that while subpoena recipients are entitled to have legal counsel present during questioning, a Bishop Estate attorney cannot sit in at this point in the investigation.
In addition, Chang ordered Attorney General Margery Bronster not to give unlisted telephone numbers provided on the employee list to any third parties.
"The judge's rulings are quite clear," said Bronster after this morning's hearing. "They're consistent with the law. He made it quite clear we're entitled to the information and if the trustees have a valid basis for confidentiality, he will look at it."
But Bishop Estate attorney Bill McCorriston said the ruling sets a bad precedent and the trust may appeal. "We're disappointed at the judge's refusal to require some specificity of the matters being investigated," McCorriston said.
"The judge's ruling makes it possible for the attorney general to investigate any business for any reason at any time. It's a bad precedent for constitutional rights."
McCorriston argued that the subpoenas are too broad and would mean "virtually every person and every document in Kamehameha Schools would be subject to this investigation. . . . They are so absolutely general, so absolutely undefined. That cannot be the law."
Bronster countered, "What is really going on here is an effort to delay the progress of the investigation."
She argued that the roster of employees is needed for quick reference in the future and that she isn't asking for all contracts, but a list of independent contractors over the past five years and contract amounts.
Chang ruled that the focus of the subpoenas - as part of an investigation of alleged financial misconduct and breach of fiduciary duties - is adequate.
Earlier this month, Chang ordered Bishop Estate trustees to comply with a state subpoena and turn over all nonprivileged trustee minutes since January 1993.
He is in the process of determining whether the balance of those minutes, deemed proprietary by Bishop Estate, should be kept from public view.
Rockne Freitas: "Whatever our obligations are, we're going to do our best to meet them."
State: Bishop Estate’s
lawyer impeding probe
By Harold Morse. Star-Bulletin
The state attorney general's office says Bishop Estate attorney William McCorriston suggested that two estate employees not comply with subpoenas in an investigation.
State Attorney General Margery Bronster filed a motion yesterday to compel Bruce Nakaoka, Bishop Estate manager for real estate, and Eric Martinson, a financial analyst, to answer their subpoenas.
The attorney general is investigating possible breaches of trust and fiduciary duty by trustees of Bishop Estate/Kamehameha Schools.
"Today's problem is that William McCorriston, counsel for the trustees of Bishop Estate/Kamehameha Schools, sent counsel for the (sic) Mr. Nakaoka and Mr. Martinson a letter suggesting that they not comply with the subpoena," says a memorandum signed by Deputy Attorney General Hugh Jones.
McCorriston said later that his advice to Robert Hackman, attorney for Nakaoka and Martinson, was solicited by Hackman and it was up to Hackman whether to advise his clients to honor the subpoenas.
The memo said the substance of McCorriston's letter is erroneous. The memo says McCorriston wrote Hackman, counsel for witnesses Nakaoka and Martinson, that it was "premature" for Attorney General Margery Bronster to examine Nakaoka and Martinson.
"The primary problem with Mr. McCorriston's letter is not that it is substantively inconsistent with representations made to the court the day before but that it was sent at all," the memo says. "Mr. McCorriston's letter was obviously intended to impede the investigation and to intimidate properly subpoenaed witnesses."
The attorney general wants the court to order trustees, whether or not acting through counsel, "to cease attempts to thwart the participation and cooperation of witnesses properly subpoenaed in the attorney general's investigation."
McCorriston said he doesn't want confidential information disclosed without a guarantee that it will be kept out of the public eye and there has been no agreement with the attorney general on the matter.
Also, Hackman was upset that his clients Nakaoka and Martinson were given only 24 hours or less to respond to the subpoenas, McCorriston said. He called it a lack of courtesy.
Bishop Estate Archive
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November 12, 1997
to talk to Bronster
They were granted immunity
from suits that could come up
By Star-Bulletin Staff
Two former investment managers at Kamehameha Schools/Bishop Estate have agreed to comply with subpoenas issued by Attorney General Margery Bronster in the state's investigation of the $10 billion charitable trust.
Bruce Nakaoka and Eric Martinson agreed to meet with the attorney general before Nov. 26, after they were granted immunity from civil suits that may arise from their cooperation, said Deputy Attorney General Hugh Jones.
The agreement was approved today by Circuit Court Judge Kevin Chang.
In another Bishop Estate investigation, retired Circuit Judge Patrick K.S. Yim today said he met with the five estate trustees Monday to update them on the progress of his fact-finding report into management of the schools.
Yim did not disclose the nature of the discussion. He is required by court order to complete his report on or by Dec. 5.
None of the trustees commented on the meeting.
Critics of the trustees' management said Yim was wrong to privately meet with the group before he releases his report.
Bishop Estate Archive
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June 25, 2003
Reported by Star-Bulletin staff & wire
On the board
>> Japanese Cultural Center of Hawaii has elected the following new directors: Dean Hirata, City Bank executive vice president, chief financial officer and treasurer; Neal Kanda, Central Pacific Bank executive vice president and chief financial officer; Eric Martinson, MN Capital Partners partner; Colbert Matsumoto, Island Insurance Co. chairman; Sanford Murata, Kamehameha Schools commercial assets division director; Joanne Ninomiya, KIKU-TV manager and JN Productions Inc. owner and president; Brian C. Nishida, BC&G International president; Miki Okumura, Goodsill Anderson Quinn & Stifel executive vice president; Raymond Ono, First Hawaiian Bank executive vice president and segment manager; Al Tomonari, Neiman Marcus Hawaii general manager; and Donna Tanoue, Bank of Hawaii vice chairman and Federal Deposit Insurance Corporation past chairman. Neighbor Island board representatives are: Tommy Hirano, Stationers' Corporation of Hawaii, Big Island; Charles Kawakami, Big Save Inc. president, Kauai; and Yuki Lei Sugimura, former economic development specialist for the Maui Mayor's Office.
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This witness is expected to testify with regard to his relationships with Defendant, William S. Richardson, William K. Richardson, Matsuo Takabuki, Robert Rubin, Henry Paulson, Goldman Sachs, Bruce Nakaoka, LeeAnn Crabbe, Queen Liliuokalani Trust, Colbert Matsumoto, William McCorriston, HMS Hawaii Management Partners, HMS Investments GP, University Connections, University of Hawaii, UH Foundation, Dee Jay Mailer, Gilbert Tam, Robert Kihune, Sandwich Isles Communications, Summit Communications, Communications-Pacific, Inc., Steven Guttman, Mary Lou Woo, Adele Smith Simmons, Mark McConaghy, PricewaterhouseCoopers, Guido Giacometti, Susan Tius, Sukamto Sia, Kevin Showe, Jeffrey Stone, Michael McKenzie, McKenzie Methane, Dennis Fern, William S. Simon, Nathan Aipa, Colleen Wong, Louanne Kam, The MacArthur Foundation, Rocco Sansone, Marsh & McLennan, Michael May, Hawaiian Electric Industries, Edwina Clarke, Dr. Elizabeth K. “Doc” Buyers, C. Brewer & Co., Brewer Environmental Industries, Robert Katz, Gensiro Kawamoto, Carlsmith Ball, Donna Tanoue, Bank of Hawaii, Silicon Valley Bank, James Nicholson, David C. Farmer, Linda Lingle, and others to be named upon discovery.
Documents, News Articles and Related Links
IRS - PricewaterhouseCoopers, Arm’s Length and Intermediate Sanctions
IRS - Closing Agreement for Kamehameha Schools
Hawaii Dept. of Labor - CV 98-2394-05 - Unemployment Insurance Appeal
RICO Lawsuit - 99-CV-00304-DAE-BMK
Equity 2048 -The Richards Report
XL Reinsurance Policy No. XLRKS-01796
Equity 2048 - Related Correspondence and Documents
Apartheid, Hawaiian Style
Excerpts from “Broken Trust” by Samuel King and Randall Roth
Excerpts from “Lost Generations” by J. Arthur Rath
KITV Special Report
July 1, 2005: Originally posted on www.the-catbird-seat.net
March 13, 2007: The U.S. Dept of Justice gets Order signed by Judge David Ezra to shut down website
July 7, 2009: Latest update on www.kycbs.net
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THE CATBIRD SEAT ARCHIVES
The Catbird Seat Archives: 2000-2002
The Catbird Seat Archives: 2002-2007
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SONGS OF THE WHISTLER
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