James Nicholson vs. Harmon - Witness Judge Ronald Moon

Pay for the governor, state executives, judges and legislators will all increase, thanks to a little-noticed salary commission appointed last year.

By taking no action to stop the raises, the state Legislature gave tacit approval this year to the commission's recommendations.

The increases vary by position. For instance, by 2012, pay for the Supreme Court chief justice will rise to $213,840 from $144,900, while the governor's pay will rise to $143,748 from $112,000.

The Legislature cannot accept raises until after the next election, according to the state Constitution, but after 2009 the legislative salary will rise to $57,852 from the current $37,500 by 2014.

The report stated that "there were long periods during which other state employees received pay increases while elected and appointed officials and justices and judges did not receive pay increases."

Under the plan, all state executives, including the governor and lieutenant governor, chief of staff, department heads and deputies, will get a 5 percent raise on July 1.

Judges will get a 10 percent raise and then raises of either 3.5 percent or 10 percent every year through 2012.

By 2012, circuit judges will see their pay go to $185,736 from the current $125,856, and district judges' pay will rise to $175,032 from $118,611.

The commission was created by a state constitutional amendment approved by voters last year that called for the governor, Senate president, House speaker and chief justice to name members.

The commission chairman was Ben Kudo, while Paul Oshiro was vice chairman. The members were Barbara Annis, Doris Ching, Michael Irish, Stan Shiraki and Wayne Yamasaki.

The commission filed a report in March with the Legislature, which did not hold hearings or publicize the report. Under the constitutional amendment, the salary increases went into effect when the Legislature adjourned last week.

"The only way they can be stopped is if they are voted down, and the only way they can be voted down is if they are brought up. And these were not brought up," said Sen. Sam Slom, a critic of past salary commission reports.

This report surprised Slom (R, Hawaii Kai-Diamond Head), who said he had thought it was not yet completed.

"The public is being hoodwinked," he said. "They don't get tax relief, and they get a higher bill for this."

The price tag for the raises will be $20.5 million by 2014, according to the commission's report.

House Speaker Calvin Say said the legislative increases are needed because many office holders have no other job. "I am happy the Legislature is getting an increase," he said.

Legislators have difficulty finding an employer that allows them to leave work for the four-month legislative session, Say said. "This is why those who depend on their legislative salary, they are struggling. The Legislature is a full-time obligation."

Commission Chairman Kudo said the report was subject to a legislative veto, but because no action was taken, the raises go into effect automatically.

He said all the commission meetings were open, but they relied on the state administration to send out notifications. "We didn't issue a press release," Kudo said.

The commission held eight meetings starting Dec. 28. The final report was completed March 14, and then the Legislature was briefed.

The pay raises are needed, he said, because each branch of government is paid less than counterparts in other states.

"What we honestly found is that the pay scales were very much under what we would have expected," Kudo said.

Gov. Lingle will pick the next chief justice unless
the people alter the Constitution

Gov. Linda Lingle says she wants the next chief justice of the Hawaii Supreme Court to be a hard-working legal scholar who will not legislate from the bench.

Candidates would not be favored if they were prosecutors, "but it wouldn't hurt their chances, either," the Republican governor said in a recent interview with the Star-Bulletin.

Although Attorney General Mark Bennett has been mentioned in legal circles as a top contender, the governor said it is too early to mention any names.

But in explaining the qualities she would like to see in judges, Lingle made clear that she believes they should interpret laws and leave legislation to elected officials.

Her remarks suggest that her appointment of the state's next chief justice could be monumental for the five-member high court. Known for a long tradition of rendering "activist" decisions, the court has been hailed by civil rights advocates but criticized by others as going beyond reviewing and applying the laws.

Lingle's appointment would be the first time that a Republican governor would name a chief justice in more than 40 years. Democratic Gov. John Burns appointed William Richardson in 1966, and Democratic governors appointed the next two: Herman Lum and the current chief justice, Ronald Moon.

The only way Lingle would be prevented from making the appointment is if state lawmakers place on this fall's ballot -- and voters approve -- a proposed constitutional amendment to lift the mandatory retirement for judges who turn 70.

Unless the state Constitution is amended, Moon must retire when he turns 70 on Sept. 4, 2010, about three months before Lingle's term expires.

The state Senate approved a controversial measure last week that raises the mandatory retirement age to 80, and sent the proposal to the state House. But key senators acknowledge that it will be difficult for the amendment to pass because voters rejected a similar proposal in 2006 that eliminated the mandatory retirement provision. Voters rejected the amendment by 80,000 votes, 58 percent to 35 percent.

"It's an uphill battle," said Sen. Brian Taniguchi, Senate judiciary chairman. "I'm not going to die if the bill dies."

Senate President Colleen Hanabusa agreed with the prognosis. "I'm not sure it will make it out of the Legislature because we just put it on the ballot," she said.

Taniguchi maintained that he views the proposal as a civil rights issue against age discrimination and a "compromise" by retaining the retirement age but raising it to 80.

Opponents, including Lingle, contend the measure is aimed at preventing her from naming the next chief justice.

Bennett and City Prosecutor Peter Carlisle, who opposed the 2006 proposal, submitted testimony in opposition to the current measure before Taniguchi's committee last month.

The proposal's supporters include the Hawaii Government Employees Association and the Japanese American Citizens League.

Republican Sen. Fred Hemmings, who voted against the measure last week, said in an interview that the proposal was "petty politics at its worst."

"I think they (Democrats) will try to do whatever they can to put it on the ballot," he said.

Taniguchi said he believes Moon is doing an "all-right job," but said the motivation behind the measure is not to keep him as chief justice. The senator noted that Moon was a Republican before he got to the bench.

The speculation that Bennett will be Lingle's choice has been fueled by his role as a trusted adviser to the governor. In addition, his was one of three names Lingle submitted to the White House for a lifetime tenure as a U.S. district judge here. In 2005, President Bush chose Michael Seabright, now a federal judge, from the list.

The speculation prompted Taniguchi to ask Bennett at last month's hearing about the chief justice's job.

In an interview, Bennett gave the same answer he gave to the senator: If the job somehow opened up now, he would not apply for it.

"My plans right now are, when I'm done as attorney general, to return to private practice and/or teach," he said. "But I would not even begin to speculate about what my feelings might be in two years."

Lingle's appointment would be subject to Senate approval. The Democratic-dominated Senate has rejected some of her appointments, including Ted Hong to the Circuit Court and Randal Lee to the Intermediate Court of Appeals.

But if Lingle gets the names for Moon's replacement early in 2010 and her appointment is rejected, she would be able to name another person from a list of four to six names submitted by the Judicial Selection Commission.

If the Senate rejects all of her choices, the commission would chose the chief justice from its list, according to the state Constitution. The commission's selection would not be subject to Senate approval.

Hanabusa said "it's almost positive" that Bennett will be appointed by the governor. She said one of the criticisms is that he is sometimes almost "overzealous" in representing the administration over the legislative and judicial branches. Hanabusa cited his efforts against the mandatory retirement amendment that was placed before the voters by the Legislature in 2006.

Hemmings, however, said he is a "big fan" of Bennett and applauded him for his work with prosecutors and police in pushing for legislation. "It's hard to deny his success and record," Hemmings said.

Another name mentioned is Mark Recktenwald, a former assistant U.S. attorney who was Lingle's director of the Department of Commerce and Consumer Affairs before the governor named him chief judge of the Intermediate Court of Appeals last year.

Hanabusa said Recktenwald is considered a good administrator and would have support, but indicated senators might wait to see how he does as the chief appeals court judge.

Recktenwald said he has been chief judge for only about 10 months and is focused on doing a good job. "I haven't given consideration to anything else," he said.

Lingle's appointment would oversee a Hawaii Supreme Court whose history includes expanding the public's rights to beaches and surface waters; recognizing the rights of native Hawaiians go onto private property for traditional religious and food gathering practices; and striking down laws the court believed infringed on the rights of criminal defendants.

In its landmark and highly controversial case, the high court issued a 1993 decision that paved the way for same-sex marriages in Hawaii. That ruling prompted state lawmakers to complain that the court was creating new law, and it led to a constitutional amendment that essentially negated the ruling.

"I continue to try to reflect what the public would like to see in a judiciary, and that is a judiciary that really interprets the laws that elected people pass rather than try to make law as a judge from the bench," Lingle said.

Lingle notes that unlike the three previous Democratic governors, she is not a lawyer who might be familiar with judicial candidates. She suggests that helps bring a fresh prospective to her judicial appointments.

Because her appointments are for 10-year terms, the judges Lingle has selected -- and will select -- will remain on the bench for years after she leaves office.

Lingle said she wants her legacy to be that the courts will be a place where people "get a fair shake."

"I think the very highest achievement you can have for a judiciary is that the average citizen of a state or of a country will get fair treatment no matter who they are," she said.

The Judicial Selection Commission reviews and evaluates applications for all judicial vacancies, and vote, by secret ballot, to select qualified nominees. Established by a 1978 state constitutional amendment, the Commission is governed by the Judicial Selection Commission Rules.

The names of the nominees are then forwarded to the appropriate appointing authority. The governor is the appointing authority to nominate judges of the Supreme Court, Intermediate Court of Appeals, and Circuit Court for an initial ten-year term. The governor selects appointees from a list of not less than four and not more than six names submitted by the Judicial Selection Commission. The commission submits a list of at least six names to the chief justice who nominates judges for district and district family court to six-year terms. All nominations are subject to confirmation by the state senate.

The Commission also determines whether a justice or judge shall be retained in office. The Commission publicizes the fact that a justice or judge is seeking retention so that all persons who might have an interest in the matter be informed of the opportunity to comment.

Comments about justices and judges seeking appointment or retention should be submitted to:

Contact Information:
Judicial Selection Commission
417 South King Street
Honolulu, Hawai`i 96813-2902
Telephone: (808) 538-5200

The Commission is composed of nine members, no more than four of whom may be lawyers. The members, who serve staggered six-year terms, are selected or elected as follows:

Chairperson
Rosemary T. Fazio	Chairperson
Philip Hellreich	Vice-Chairperson
Shelton G.W. Jim On	Secretary

Member	Term	Appointing/Electing Authority
Susan Ichinose	04/02/07 - 04/01/13	(Bar)
Frederick Okumura	04/02/07 - 04/01/13	(CJ)
Melvin I.Chiba	04/02/02 - 04/01/08	(Senate)
Rosemary T. Fazio	04/02/03 - 04/01/09	(Bar)
Thomas Fujikawa	04/02/03 - 04/01/09	(House)
Philip Hellreich	04/02/03 - 04/01/09	(Governor)
Shelton G.W. Jim On	04/02/05 - 04/01/11	(Governor)
Ralph R. LaFountaine	04/02/05 - 04/01/11	(House)
Sheri N. Sakamoto	04/02/05 - 04/01/11	(Senate)
Frederick T. Okumura	04/02/07 - 04/01/13	(CJ)

The Judicial Accountability Initiative Law, J.A.I.L., is a single-issue national grassroots organization designed to end the rampant and pervasive judicial corruption in the legal system of the United States. J.A.I.L. recognizes this can be achieved only through making the Judicial Branch of government answerable and accountable to an entity other than itself. At this time it isn't, resulting in the judiciary's arbitrary abuse of the doctrine of judicial immunity, leaving the People without recourse when their inherent rights are violated by judges.

"Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."

With His Ruling on the Kauai Property Tax Case, Justice Ronald Moon Says the Government Officials Have More Power than the People, but He Used Cowboy Tactics to Manipulate the Case and Justices Acoba and Duffy Call Him on It

HONOLULU, HAWAII – Pacific Legal Foundation Managing Attorney Robert Thomas presented oral arguments in County of Kauai v. Baptiste on Feb. 15, asking the Hawaii Supreme Court to support a Kauai taxpayer-driven county amendment that rolls back island property taxes to 1998 rates and caps the annual property tax hike at 2 percent.

Five months later on Aug. 6, 2007, 3 of 5 justices in a majority report authored by Chief Justice Ronald Moon, ruled against the Kauai taxpayers.

But it was how the chief justice went about crafting his 70-page majority decision that has Justice Simeon R. Acoba, Jr., and Justice James E. Duffy, Jr. peeved and engaged in a harsh exchange of words with Moon over what they are calling an “unwise and dangerous precedent.”

It started with Gordon G. Smith, Walter S. Lewis, Monroe F. Richman and Ming Fang and their simple plan to limit their skyrocketing property taxes and to curb the government spending driving the tax increases. Many residents, including those on fixed incomes, saw their property taxes double in 7 years.

The group’s members, who quickly grew to more than 100, believed their government officials -- and their high property tax rates -- were ultimately going to push people from their homes. Because property values were skyrocketing, with the median price of a home on Kauai exceeding $665,000 in 2005, representing a 48 percent increase in one year, and the rate of property tax imposed on the residents not changing, the local county government raked in the cash.

Soon, two thirds of its total operating budget, now $122 million, was being collected from property tax, with total property tax collections shooting up from $31 million in 1999 to $67 million in 2005. As the property tax collection grew, so did the size of county government, but the population of 65,000 increased at only a modest pace.

Hoping they could reason with county officials, Ohana Kauai members tried to persuade Kauai County Council’s seven members to embrace property tax relief, but they were ignored. Members of Ohana Kauai say their government representatives were quickly becoming greedy, out-of-control spenders. The only option they had been to get the issue on the ballot in the next election with 3,000 signatures they successfully collected. The amendment passed with two-thirds of the vote despite a last minute opposition campaign mounted by Kauai Mayor Brian Baptiste, Kauai County’s 7 council members and public union leaders.

That should have been the end of the story, but Kauai property owners wouldn’t live happily ever after, in lower taxed homes, after all. Rather than accepting the voters’ decision, county officials conspired to kill the amendment, filing a lawsuit against the county administration over the amendment claiming it was illegal. In what became known as County of Kauai ex rel. Nakazawa v. Baptiste, the state’s Fifth Circuit Court sided with the county government.

The judge ruled the charter amendment was not actually a charter amendment rather it was a ballot initiative that levied or repealed a tax, which is not legal under Kauai County Charter.

This logic passed muster with the judge even though the charter amendment was accepted as such by the Kauai County Clerk before the election and put on the ballot by the very county officials challenging it.

Pacific Legal Foundation appealed on Ohana Kauai’s behalf saying it was unheard of for a case to move forward with the government suing itself and both sides wanting the same outcome.

Honolulu attorney Gary Slovin, retained at $250,000 by the county to present its case to the Hawaii Supreme Court, argued that allowing people to vote to limit the taxes they pay would create chaos. County council members said Kauai voters could take this issue so far, they might decide they shouldn’t have to pay taxes at all.

Powerful public union members, such as Russell Okata of the Hawaii Government Employees Association, who have a great deal at stake if the county taxpayers had a say in how much they are taxed, sat in the front row during oral arguments to support the county’s position. The HGEA joined in the case with a friend of the court or "amicus" brief.

During the 5 months it took for Hawaii Supreme Court to issue a ruling, Chief Justice Moon did something two of his peers called “dangerous.”

The 67-year-old Moon took the Kauai tax case apart like a jigsaw puzzle. When he put it back together in a 70-page decision against Kauai’s taxpayers, he not only changed who the plaintiffs and defendants were, he added in his own research to support his case manipulation.

Moon left Justice Acoba, Jr., stunned enough to issue a lengthily scathing dissenting opinion supported by Justice Duffy, Jr.

Acoba wrote: “With all due respect, our role is to protect the judicial process, not to subvert it. … The only way the merits in this case are reached by the majority is through the manipulation of the parties and the lawsuit -- a course that, in my view, fosters unwise and dangerous precedent,” Acoba wrote.

“Under these circumstances, there are no manageable limits to the approach employed by the majority -- moving a party from one position to another position in the same lawsuit allows this court to decide what case will be deemed justiciable at its own behest. If it can do that in this case, then the majority can do the same in any case.”

Moon went even further than switching the parties around and doing his own research -- he made up his own argument -- which became the main argument on which he based his majority report. Neither Pacific Legal Foundation’s Robert Thomas nor the county’s private attorney Gary Slovin had either argued for or against Moon’s argument or even had a chance to counter it.

Acoba scolded Moon for creating a controversy by adding in his own argument where there once was none:

“In sua sponte deleting Defendant-Appellee Kauai County Council (County Council) as a defendant in this case and adding it back as the putative plaintiff in order to create a supposed controversy between the County Council and Defendant-Appellee Mayor of Kauai (Mayor) and Defendant-Appellee Finance Director of Kauai (Finance Director), the majority does exactly that, manipulating the lawsuit so as to create a controversy that did not in fact exist when the suit was filed, when it was decided by the Circuit Court of the Fifth Circuit (the court), when it was appealed to this court, and when it was argued by the parties before us.”

“In accomplishing the alteration of this lawsuit, the majority misconstrues the amended complaint, in effect substituting the County Council in place of Plaintiff-Appellee County of Kauai (County) as the plaintiff, and misapplies the rules of court, in this case Hawai`i Rules of Civil Procedure (HRCP) Rule 21, in order to drop the County Council as a named defendant.”

“HRCP Rule 21 was never intended to authorize a realignment of the parties in order to birth a controversy, but is applied in the cases when an underlying controversy exists in the first place.”

Acoba adds that “most tellingly, there cannot be a controversy between two sides of a lawsuit where, as in this case, "both [sides] desire precisely the same result." Moore v. Charlotte-Mecklenburg Bd. of Educ., 402 U.S. 47, 48 (1971) (per curiam).”

In the end, Justices Steven Levinson and Paula Nakayama ignored Acoba’s harsh warning and backed Moon in siding with the Kauai county government. They said in essence that property taxpayers have no right to determine how much they are taxed and that only the county and the mayor has that power.

Pacific Legal Foundation attorney Robert Thomas says the decision represents a “real loss to the people of Kauai.” “We’re disappointed that the court allowed this fabricated lawsuit to go forward. It has told the people of Kauai that their votes don’t count, and that if government officials disagree with a result, they can create lawsuits against themselves, funded by public money, asking a court to strike down a vote. This decision says that it is government officials who have the exclusive say on property taxes, not the people who pay them.”

Ohana Kauai’s Walter Lewis says although he was down about the ruling, he was not surprised mainly because of Hawaii’s political overtones, which typically favor big government and public unions.

He says he was disappointed with the way the three justices sought justification for their seemingly predetermined outcome through such extensive manipulation.

While he has no regrets about taking the Ohana Kauai case to the Supreme Court, Lewis says he is concerned the Moon decision will adversely impact the incentive of citizens groups wanting to improve their government and hold elected officials accountable.

There are not many realistic options to appeal -- possibly none -- but Lewis and his group will review their options anyway.

On the upside, Lewis says his group did successfully send a message to the Kauai county council about its concern over high taxes.

After the 2004 election, and in the midst of all the legal battles, the Council passed a bill that mandates property taxes will not be increased by more than 2 percent per year. “We are happy that happened,” Lewis says.

Several constitutional lawyers consulted for this story who did not want to be named because they fear retaliation from the chief justice or his peers, say Moon’s “cowboy” tactics, while not uncommon, are not democratic or proper. They note the only way to override the damage that Moon caused to Hawaii’s democratic process with this ruling is through a Constitutional Convention, which could allow the public to clarify whether the term "counties" in the Hawaii State Constitution means exclusively "county councils," rendering the people’s of Kauai authority to amend their Charter moot, or whether it is the people of the county who have control over their government.

The question of whether Hawaii voters want a Constitutional Convention comes up every 10 years on the General Election ballot.

Hawaii voters will be able to vote in the 2008 election on whether or not they want to hold a Constitutional Convention.

Hawaii voters backed a Con-Con in 1998, but upon a challenge, the Hawaii Supreme Court ruled that blank votes counted as "no" votes against the Con-Con, rather than simply not counting for or against the Con-Con, so it was never held.

The Supreme Court’s majority and dissenting opinions may be found at Pacific Legal Foundation’s website: http://www.pacificlegal.org

HONOLULU - The oceanfront land under the 196-unit Kahala Beach apartment building will remain leasehold property under a 5-0 ruling issued today by the Supreme Court of the State of Hawaii. The justices upheld an earlier ruling by Circuit Judge Eden Elizabeth Hifo that the Kahala Beach lessee-applicants did not have the requisite minimum of 25 applicants needed to condemn the property under Chapter 38, the repealed city ordinance that allowed residential condominium lessees to purchase their fee-simple interest through condemnation.

Chief Justice Ronald Moon and associate justices Simeon Acoba, Steven Levinson and James Duffy were joined in the decision by Circuit Judge Richard Perkins, sitting in for associate justice Paula Nakayama, who recused herself. The court found that several of the plaintiffs did not meet the criteria to apply for condemnation. Two lessee-applicants rented out their units while claiming they were owner-occupants as required by law; another admitted to living in his unit for only three days while the law required continuous occupancy for one year.

“We’re very pleased with this decision,” said Colleen Wong, vice president for legal services at Kamehameha Schools. “The land at the Kahala Beach is part of a six-acre stretch of oceanfront property and provides significant support to our educational mission now and in the future.”

“The decision supports the City Council’s and the Mayor’s decision to repeal Chapter 38,” noted Louanne Kam, senior counsel for Kamehameha Schools.

Kamehameha Schools currently collects $3.2 million a year in lease rent from the Kahala Beach Apartment, which is used to fund campus and educational outreach programs and community collaborations. Kamehameha Schools is a private charitable trust founded and endowed by the legacy of Princess Bernice Pauahi Bishop and is the sole beneficiary of the Bernice Pauahi Bishop Estate....

The Star-Bulletin and KITV
appealed to the state high court
but lost over a technicality

A state judge does not have to open the Estate of James Campbell legal proceedings to the public, the Hawaii Supreme Court has ruled.

The justices yesterday denied a petition for a writ of mandamus by KITV-4 and the Honolulu Star-Bulletin to overturn Probate Judge Colleen Hirai's recent decision to hold close-door hearings in the Campbell Estate case.

The Supreme Court's ruling came on the same day that Hirai held a secret hearing to approve a sealed settlement between the $2 billion trust and its former law firm, Ashford & Wriston.

Evan Shirley, attorney for KITV and the Star-Bulletin, said he was disappointed with the high court's decision and said he filed a notice of appeal yesterday with the Supreme Court.

"The Hawaii Supreme Court has been very supportive of the First Amendment and fundamental freedoms," Shirley said. "They got it wrong this time."

In a written order, the five justices -- Chief Justice Ronald Moon and Associate Justices Mario Ramil, Paula Nakayama, Steven Levinson and Simeon Acoba -- rejected the KITV and Star-Bulletin request for a writ largely on procedural grounds.

The news organizations should have sought an appeal of Hirai's order and not a writ, the justices said.

Unlike an appeal, which can take years to decide, a writ asks the Supreme Court to change or modify a lower court ruling due to a clear error or irreparable harm.

The high court decision was issued about the time that Hirai approved the secret settlement between the Campbell Estate and Ashford & Wriston yesterday morning.

The estate sued its former law firm in 1999 for legal malpractice, saying the firm mishandled a multimillion-dollar leasehold arbitration case.

Under the settlement, the two sides agreed to dismiss the lawsuit and set aside a sealed ruling made last year by former Probate Judge Kevin Chang.

Chang ruled in favor of Ashford & Wriston, saying the Campbell Estate's trustees were in a position of conflict and should have sought court approval when they sued their attorneys.

As alumni of the Kamehameha Schools debated the temporary removal of Bishop Estate trustees, Henry Haalilio Peters unexpectedly strolled into the well-attended conference room.

The atmosphere of the November 1997 meeting became tense. Graduates nervously eyed the trustee as he entered hostile territory. Hands that were previously 2 feet in the air were going up inches.

To say that the burly, 6-foot-tall Peters is an imposing presence in the Bishop Estate boardroom would be an understatement.

The 58-year-old former speaker of the state House of Representatives is the longest current serving trustee -- joining the five-person board in 1984 while still speaker -- and arguably the most powerful.

While trustee Richard "Dickie" Wong may be chairman, Peters, as treasurer and former acting asset manager, is the prime mover behind a financial empire that spans three continents and holds big stakes in names like Goldman Sachs Group and Saks Fifth Avenue.

Supporters see Peters as a larger-than-life folk hero who rose from a humble upbringing on the Waianae Coast to become House speaker and an $840,000-a-year trustee of one of the nation's richest charitable organizations.

They say he's remained down to earth, even as he rubs elbows with Wall Street investment bankers, Asian tycoons and U.S. Treasury secretaries.

Critics view him as a symbol of what's wrong with the Bishop Estate. Lawyers for trustee Oswald Stender regard Peters as key to the boardroom triumvirate that for years has ruled the estate and the estate-run Kamehameha Schools through a "fist of power."

Along with trustees Wong and Lokelani Lindsey, Peters has called for an investigation of teachers at the estate-run Kamehameha Schools over the release of a report critical of the trustees.

Peters -- who once broke his knuckles during an argument with a state lawmaker -- also has taken a hard line against critics within the Hawaiian community, calling them "Hawaiian shields" and "disgruntled and sophisticated country club Hawaiians."

He became so angry at Kamehameha Schools graduates who took part in the May 1997 march protesting trustees' management of the campus that he took down names of participants, implying future retaliation, according to court testimony of the estate's former spokeswoman. Peters denied the charge.

Peters often toys with his notoriety. He joked that his grandson asked him if the Bishop Estate was an evil empire and if Peters was Darth Vader.

His wisecrack response played on the theme of the popular "Star Wars" movies in which the menacing Vader redeemed himself in the end:

Like Darth Vader, Peters is a villain, so cast by state prosecutors in the 2-year-old Bishop Estate saga.

Attorney General Margery Bronster has accused Peters and fellow trustees of an "educational tragedy" that has denied benefits to a generation of native Hawaiian children. Bronster has sued for the removal of Peters and trustees Wong, Lindsey and Gerard Jervis, alleging that the trustees jeopardized the estate's tax-exempt status and withheld $350 million in trust income from the Kamehameha Schools.

The temporary removal suit against Peters and Wong, now in trial before Probate Judge Colleen Hirai, is just one of several legal actions against Peters. Last November, an Oahu grand jury convened by Bronster indicted Peters for theft, making him the first board member to face criminal charges in the 114-year history of the charitable organization.

The indictment alleged that Peters took a $192,500 kickback from developer Jeff Stone, a brother-in-law of trustee Wong. In exchange, Stone and his mainland partner, National Housing Corp., received a "sweetheart deal" when they purchased the estate's fee interest to the Kalele Kai condominium project in Hawaii Kai in 1995, the state charged.

Critics say that Peters' legal woes not only tarnish the legacy of the estate's founder, Princess Bernice Pauahi Bishop, but also interfere with his daily duties at the trust. They are calling for him to voluntarily resign, noting that he recently stepped down temporarily from the board of a Southern California savings and loan, PBOC Holdings Inc.

"It certainly doesn't look good to the outside world that one of the trustees has been indicted for a crime directly related to the performance of his fiduciary duties," said Randall Roth, University of Hawaii law professor and co-author of the 1997 "Broken Trust" article critical of trustees' management of the Bishop Estate. "He's innocent until proven guilty, but in the meantime it's hard to have a lot of confidence in him as a trustee."

He believes that Bronster trumped up the criminal charge to leverage her removal case against him. Peters - who failed to get his indictment thrown out on jurisdictional grounds - said Kalele Kai has been a great deal for the estate and that Stone and his partners got no "sweetheart" transaction.

The $21.9 million price for the fee interest in Kalele Kai is almost 2-1/2 times that of an independently appraised value for the land and will serve as a benchmark for future leasehold conversions in East Honolulu, he said. The trial is set for January 2000.

(A separate grand jury on Monday indicted trustee Wong for theft, conspiracy and perjury in the same alleged kickback scheme. Wong expects to plead not guilty.)

In a recent interview, Peters characterized his legal woes as a Machiavellian setup.

He believes that former rival Gov. Ben Cayetano used the Bishop Estate controversy to bolster his position in the close re-election fight with Republican Linda Lingle last November.

The idea was to make the estate a scapegoat to divert attention from the state's fiscal woes, Peters said. Many of the estate's Hawaiian critics, he added, were enlisted to serve as "Hawaiian shields" in the Cayetano administration's campaign against the trust.

Peters' recent court filings accused Attorney General Bronster of abusing her powers and intimidating the state Supreme Court. Last year, the high court ended its century-old practice of selecting Bishop trustees and has recused itself from several estate-related cases.

He refers to Bronster as a "New York, Ivy League newcomer" who has embarked on a "personal crusade" against the Bishop Estate and its trustees because they don't share her "corporate missionary mentality."

I personally feel that the majority of Hawaiians have not been told the truth," Peters said. "When they find out that KSBE has been maligned by these untruths about our operations and our management, there will be an explosion in this town. It will be heard across the country and probably the world."

Peters conceded that his legal woes have taken a toll on him and his family. But Peters said he doesn't let the controversy affect his daily life.

He joked that he recently was stopped for speeding on the highway near Makakilo, but the officer didn't issue him a ticket after he recognized Peters. The officer told him he didn't need a ticket because he had enough troubles as it is, Peters said.

"This is not the first time that Henry Peters was involved in controversy and it probably won't be the last," he said.

Peters' great-grandfather, James Hakuole, was sent to Japan as a member of King Kalakaua's Hawaiian Youths Abroad program. Hakuole studied with members of the Japanese imperial family.

After graduating from Waipahu High School, Peters studied for two years to become a priest at the now-defunct Jackson College in Manoa before transferring to Brigham Young University, where he graduated with a degree in business administration.

While at BYU, Peters was a standout volleyball player, later playing against the likes of Olympic volleyball legend Pete Velasco and former Olympian Jon Stanley. Peters also had a tryout with the Pan American Games volleyball team but was left off the squad after he broke his ankle while playing basketball.

After a tour in the Army National Guard in the late 1960s, Peters became Waianae community advocate for the Model Cities program, a Nixon-era initiative to boost economic development in the inner cities. Waihee also worked on the staff of Model Cities, recalled local historian Bob Dye, who was former Honolulu Mayor Frank Fasi's liaison for Model Cities.

"Both Waihee and Peters were on parallel paths," said Dye. "I was personally surprised that Henry didn't end up as governor. That's always where I thought he was headed."

Peters was elected to the state House from Waianae in 1974 in a freshman class that included Cayetano, current state Senate President Norman Mizuguchi and U.S. Rep. Neil Abercrombie. He gained the confidence of then-Speaker James Wakatsuki, who guided Peters through the ranks to become speaker in 1980.

In 1984, Peters was named to the Bishop Estate board. Then-Chief Justice William Richardson said he believed Peters would become one of the best trustees ever.

Former Associate Supreme Court Justice Frank Padgett recalled that the selection of Peters was unanimous. While he may not have had the financial background back then, the justices believed that Peters would grow into the job and would benefit from the expertise of board member and legendary financier Matsuo Takabuki, Padgett said.

Padgett declined to comment on the current controversy, but said he had fond memories of Peters. When Padgett's wife suffered a stroke about a decade ago, Peters sent her two dozen roses.

Several credit lawmaker Peters with playing a key early role on ceded lands. Kamaki Kanahele, former Office of Hawaiian Affairs trustee and Peters' cousin, said Peters helped pass legislation in the early 1980s that would later serve as the basis for the state's sharing of revenues from its use of former crown lands.

"It was a historical decision because it was the difference between Hawaiians getting something or Hawaiians getting nothing," Kanahele said.

Larry Meacham, executive director of Common Cause/Hawaii, has a different perspective. Common Cause, a citizen watchdog group, often complained about Peters' dual role as a lawmaker and as a trustee of the state's largest private landowner, Meacham said.

While Peters may not have openly voted on issues that affected the trust, such as legislation involving trustees' compensation and the leasehold conversion, Meacham said he had an influence on the direction of the legislation.

"That's one of the reasons the management of the Bishop Estate has escaped scrutiny for many years," Meacham said.

Peters had an image as a brooding and intimidating person during his political career, earning the nickname of the House bouncer.

In one often-recounted tale, Peters broke his knuckles during a 1979 dispute over organizational issues with a fellow lawmaker, former state Rep. Mits Uechi.

Peters, then House majority leader, confronted dissident legislator Uechi and banged his hand on Uechi's office furniture, according to news reports.

Later that same day, Peters got into a shouting match with then-Rep. Oliver Lunasco, also a member of the dissident group. Peters called the incident unfortunate and said he doesn't intend to come across as intimidating.

"When he gives you a handshake, he means it 100 percent," Kanahele said. "But if you reneged on one, oh boy, you have an enemy."

The toughness that Peters developed in the athletic and political arenas is also present in his business dealings.

Deal promoters often approach large foundations and charitable trusts thinking they have deep pockets. But Peters brings a healthy skepticism to anyone who brings an investment to the estate, according to Landry.

"Henry is extremely bright and has the right kind of conservative (investment) philosophy," said Landry, who now serves as chief executive officer of Florida-based Westport Realty Advisers. "He's good at making sure that whoever they're dealing with have their skins in the game."

Some businessmen have complained that Peters can be heavy-handed. For instance, when a group led by Tokyo General Corp. acquired the Kahala Mandarin Hotel in 1993, Peters refused to give the partners a break on the annual lease rent even after the partners decided to invest at least $30 million in hotel improvements and agreed to pay the estate's $1 million litigation costs.

Those involved say Peters often overruled previous negotiations by then-asset manager Tony Sereno.

Peters is just as tough in the boardroom, according to sources. Peters once got into a shouting match with trustee Jervis over the estate's legal strategy. The confrontation ended after Peters reportedly uttered an ethnic slur disparaging Jervis' Portuguese background, sources familiar with the event said.

Supporters concede that Peters can be harsh but say that just shows he's taking his fiduciary duties seriously.

"He wants to make sure that never, never again will the Hawaiian people be ripped off," said Kanahele.

In his review of the estate's 1994-1996 accounts, court-appointed master Colbert Matsumoto and the accounting firm of Arthur Andersen said the estate -- during Peters' tenure as acting asset manager -- generated an embarrassing return on investment of minus 1 percent. During that period, the trust set aside more than $240 million in reserves for future losses.

That woeful performance came as Wall Street was in the midst of a record bull run in which investors could have made double-digit returns just by putting their money in an index fund.

Matsumoto's findings have served as a major foundation for the attorney general's removal petitions against the trustees.

Peters takes strong exception to the master's report, saying Matsumoto failed to understand the complexity of the estate's finances. Peters also suggests ulterior motives on the master's part.

Peters believes that the estate's investments are extremely healthy and cited top credit ratings by Standard & Poors and Moody's Investors Service. He also pointed to the estate's successful investment in Goldman Sachs Group, in which the estate has more than tripled its initial $500 million investment.

The Bishop Estate -- which until the late 1970s had been a land-rich, cash-poor trust that could barely meet school expenses -- has seen its investments grow at a compound, annual rate of 17.3 percent since the late 1980s, he added.

If the estate followed many of Matsumoto's and Arthur Andersen's recommendations, it would have suffered huge losses during the Black Tuesday stock market crash of October 1987 as well as the recent Russian and Asian economic crises, he said.

"This mastering process has become so political that it's an embarrassment to the Judiciary. ... It should be an embarrassment to the C.J. (state Supreme Court Chief Justice Ronald Moon) and it should be an embarrassment to the people of Hawaii," Peters said.

Last year, Peters joined with Wong and Lindsey to seek Matsumoto's removal as master and to invalidate his findings. They believe that he is a political crony of Cayetano's who is doing the governor's bidding.

Probate Judge Hirai in January rejected Peters' motion to remove Matsumoto after the master's attorney, James Duffy, likened Peters, Wong and Lindsey to "schoolyard bullies" who were attacking the master not because the report was inaccurate but because the findings were critical of them.

Peters now believes that he probably should have worked closer with Matsumoto and critics within the Kamehameha ohana about their concerns on the management of the estate and the Kamehameha Schools.

"I'm disappointed it's gotten this far. In hindsight, could we have done something differently or better?" Peters said last week. "Would it have helped? I'm not sure. It could have. I'm a great Monday quarterback."

Justices must recuse themselves to avoid the
appearance of impropriety, she says

State Attorney General Margery Bronster is urging Hawaii Supreme Court justices to act quickly on a motion to recuse themselves from matters involving the Bishop Estate.

In court papers filed yesterday, Bronster renewed calls that the high court recuse itself from estate hearing issues to avoid the appearance of impropriety.

Bronster, who is investigating allegations of financial mismanagement and breaches of fiduciary duties by individual trustees, is examining the trustees selection process.

She said that she may have to subpoena Supreme Court justices who, until recently, had selected Bishop Estate trustees.

"The appearance of impropriety results from the fact that each of the justices has been individually involved in the process of selecting and appointing trustees," Bronster said.

But Moon cited Bronster's recusal motion last month when he temporarily suspended a state subpoena seeking estate documents filed with the Internal Revenue Service.

Moon said the temporary stay was needed so the high court or a substitute court could study Bronster's recusal motion.

The state has argued that the IRS documents are critical to its investigation because they could show whether trustees benefited at the expense of the estate.

(A Circuit Court judge ruled in the state's favor, but trust attorneys have appealed the decision to the Supreme Court, saying the IRS records should be confidential.)

In her filing yesterday, Bronster said the Supreme Court has known since August that she is investigating the trustee selection process. She said the high court could have ruled on the state's recusal motion as early as five weeks ago.

"I'm wondering what's taking the justices so long to recuse themselves," said Beadie Kanahele Dawson, attorney for Na Pua a Ke Ali'i Pauahi, which represents students and parents.

In a related matter, a Circuit Court hearing was to be held today on Bronster's request for sanctions against Bishop Estate for allegedly withholding subpoenaed documents. The state claims the estate initially withheld records, which included some $21,000 in estate Visa card charges at local hostess bars and Las Vegas casinos by Milton Holt, a Bishop official and former state senator.

Jervis and Stender have argued that Lindsey damaged the administration of the estate and was unfit to serve as trustee. Lindsey has denied the charges, saying she was being made a scapegoat.

Attorneys for Jervis and Stender -- Ronald Sakamoto and Crystal Rose, respectively -- said they pushed for a hearing during the summer when Kamehameha Schools was not in session.

But attorneys for Lindsey said they were unavailable until a later date. Michael Green, an attorney for Lindsey, said he was concerned that his client receives due process and is well-represented.

"It was very disturbing that Mrs. Lindsey, through her attorney, rejected out of hand the needs of the students," Sakamoto and Rose said.

Embattled Bishop Estate trustees have agreed to meet with leaders of a group of concerned parents and alumni of Kamehameha Schools following several weeks of protests.

The protests, letter-writing and petitions culminated with a two-hour march yesterday as members of Na Pua o Pauahi took issues first to Supreme Court Chief Justice Ronald Moon and finally the trustees, who have been criticized for "micromanaging" the operations of the Kapalama Heights campus.

Moon met briefly with six representatives of the protest group and again reiterated that although the state's five high court justices do appoint trustees of one of the richest nonprofit organizations in the country, the court has no power or authority to interfere in Bishop Estate's daily operations.

Addressing a crowd of more than 500 at Kawaiahao Plaza, headquarters of the Bishop Estate, Roy Benham, one of the group's organizers, said there were three major concerns:

Return the management of the Kamehameha Schools, with a student enrollment of nearly 4,000, to its principals and its popular president, Michael Chun.

Reinstate "talk story" sessions, where the Bishop Estate trustees meet openly with alumni, parents and students. (Two recent meetings slated for May 13 and May 15 during the height of the current controversy were canceled.)

Lift the shroud of retribution and vindictiveness that makes Kamehameha faculty, staff and others fearful of expressing "their thoughts and concerns."

Benham presented former Senate President Richard Wong, chairman of the Bishop Estate board of trustees, with those and other written concerns.

Fred Cachola, a retired Kamehameha Schools staff member, also gave Wong written concerns from Kamehameha Schools faculty members.

Their request to send a representative to participate in yesterday's three-mile march from the Royal Mausoleum in Nuuanu Valley had been rejected by trustees.

"Let our absence here today speak louder than words ever could," Cachola read from a brief statement released by some faculty members.

Elisa Yadao, Bishop Estate spokeswoman, said part of the reason for the rejection possibly was the end of school year demands and upcoming finals.

Following the rally, Benham, who graduated in the class of 1941, said he was satisfied with yesterday's events.

"I think we have their attention," Benham said. "They are going to have to do something."

Also of equal importance is "the school's need to be autonomous" with only guidance coming from the five trustees. At the center of the controversy are charges that trustees, especially Lokelani Lindsey, a former Maui schools district superintendent, has been micromanaging the operations.

The trustees have maintained that the administration of Kamehameha Schools and the estate rests solely with them, Yadao repeated yesterday.

"They are accountable for every facet of this organization and its operations and they conduct themselves in the manner which they deem most prudent," she said.