Woo vs. Harmon - Witness Oswald Stender

David C. Farmer, Successor-Trustee vs. Harmon

(Formerly Woo vs. Harmon & Nicholson vs. Harmon)

U.S. District Court For the District of Hawaii

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DEFENDANT’S WITNESS

OSWALD K. STENDER

Office of Hawaiian Affairs (OHA) Trustee; former Kamehameha Schools/Bishop Estate Trustee; Witness in EQ2048; designated as a Real Party in Interest in CV05-00030 - David Farmer, Trustee vs. Harmon

c/o Kenneth Hipp, Esq., Marr Hipp Jones Pepper
1001 Bishop Street, Ste 1550
Honolulu, HI 96813

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PARENS PATRIAE. Beneficiaries of non-charitable (private) trusts have legal standing to sue the trustees of their trusts. That enables beneficiaries to hold trustees accountable. But charitable trusts technically lack beneficiaries other than the public-at-large. Rather than allow any member of the public to sue trustees of charitable trusts, trust law bestows upon the attorney general of each state both the power and the responsibility to represent the intended beneficiaries of every charitable trust (i.e., to act as their lawyer). This concept, called parens patriae, has been a part of the common law for centuries.

Prior to publication of the “Broken Trust” essay, however, a series of attorneys general in Hawaii had decided not to take action against Bishop trustees, even when trustee Stender repeatedly requested that they do so. Later, Stender sued the State, claiming that he had been damaged personally by the failure of the attorneys general to do their job properly. Stender eventually dismissed this lawsuit as a condition of entering into a global settlement that abruptly ended all investigations into wrongdoing at Bishop Estate.

http://www.brokentrustbook.com/legalissues.html

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NEW DISCOVERY (09/10/08):

August 17, 2007

Isle investors buying Mid Pac fuel chain

The purchase includes 36 of 51 Union 76 gas stations

By Jennifer Sudick, Star-Bulletin

A group of local investors led by First Hawaiian Bank Chairman Walter Dods Jr. is purchasing Mid Pac Petroleum LLC from a Singaporean investment firm.

Hawaii-based Koko'oha Investments Inc., formed this month by Dods and three other investors, will buy the petroleum distributor and marketer for $44 million from k1 Ventures Ltd. Mid Pac owns 36 of the 51 Union 76-branded gas stations in Hawaii. It is the second time control of the brand and the stations has changed hands in three years.

"It's very rare in Hawaii that a top-50 type company becomes available," Dods said in an interview. "I loved the fact that we were able to bring the company back home."

There will be "no disruption" to the company's 100 employees, he said.

The cash purchase, expected to close Sept. 1, includes Union 76 stations on Oahu, Maui, Kauai and the Big Island, with fuel-supply contracts for Hawaii's independently operated Union 76 stations. The deal also includes Mid Pac's trucking assets, marketing programs, and fueling terminals at Hilo and Kawaihae on the Big Island.

The former longtime First Hawaiian chief executive, who will become chairman of the company, is being joined by David Hulihee, president of Hawaii-based construction company Royal Contracting Company Ltd.; Bill Mills, chairman of Hawaii-based real estate investment company the Mills Group; and Jim Yates, who will serve as president and CEO of Mid Pac.

Yates is stepping down at the end of this month as president and CEO of local natural-gas supplier the Gas Co., where he worked for 12 years.

"This company has been really well run in the last three years since it was started up, so to some extent it will be business as usual," Yates said in an interview. "As compared to a foreign owner, we are just going to be able to offer more to the local community. I'm excited about it."

The investors will have an equal share in the company, Dods said, with no immediate plans for other purchases.

"We take a long-term approach," he said. "We want to build the company. We would love to use the company to buy additional energy-related vehicles over time."

K1 Ventures formed Mid Pac in 2004 -- its second foray into the Hawaii energy market. It acquired the Gas Co., now owned by New York-based Macquarie Infrastructure Co., in 2002.

Mid Pac was ranked as the state's 52nd-largest company with annual sales of $170 million last year in Hawaii Business Magazine's August issue.

Dods, who retired as CEO of First Hawaiian Bank and parent BancWest Corp. in 2004 after 16 years at the helm, teamed with Hulihee and Mills as part of a group of a dozen investors for a $30 million stake in Hawaiian Telcom Communications Inc. A Washington, D.C.-based private-equity firm, the Carlyle Group, acquired Verizon Communications Inc.'s Hawaii assets for $1.6 billion in May 2005, changing the company name from Verizon Hawaii to Hawaiian Telcom.

The three investors and longtime friends also have a majority ownership of Hawaii-based construction material supplier and contractor Grace Pacific Corp., Dods said.

http://starbulletin.com/2007/08/17/news/story09.html

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NEW DISCOVERY (09/10/08):

May 6, 2006

Tesoro agrees to buy 4 gas stations on Garden Island

By Dave Segal, Star-Bulletin

Kauai Petroleum Co. has agreed to sell its four company-owned gas stations, a storage facility at Nawiliwili Harbor and trucking operations to San Antonio-based Tesoro Corp., which operates Hawaii's largest refinery.

Kauai Petroleum, founded in 1948, is a supplier for Union 76. With the deal, Tesoro would be making its first entry into the Kauai market. The company has 33 branded stations on Oahu, Maui and the Big Island. Thirty of those are company operated and three are run by independent dealers.

"I'm glad we're being acquired by a major oil company," Kauai Petroleum General Manager Baltazar Manibog said yesterday. "Part of the reason why the owners wanted to sell is the margin on fuel as a (supplier) is diminishing. To keep up with the changes in the petroleum industry, you have to have more resources and deeper pockets, and we're just a small company."

Kauai Petroleum has nine full-time employees and nine part-timers, according to Manibog.

"They'll offer employment to our present employees they want to retain," he said.

Tesoro, which operates six refineries in the western United States and has more than 475 branded gas stations, said it was interested in Kauai Petroleum because it allows Tesoro to expand and capitalize on its operations in the state.

"Since ... Kauai is the fourth-largest fuel market in Hawaii and has the fastest-growing jet-fuel demand, we believe this acquisition will provide another strategic outlet for our gasoline and jet-fuel production from our (94,000-barrel-a-day) Kapolei facility," said Bruce Smith, chairman, president and chief executive of Tesoro.

Tesoro said it expects to complete its due-diligence review of Kauai Petroleum's assets within 30 days. The acquisition needs to be approved by Kauai Petroleum's three dozen shareholders before it can close.

Manibog said he was confident a majority of shareholders would approve the deal, and Tesoro said it expected the sale to close by the end of next month.

Kauai Petroleum has been hurt by the state gas-cap law that went into effect Sept. 1. The law linked the price of fuel in Hawaii to prices on the mainland and limited the margin that goes from the refinery to the service station.

However, state lawmakers voted this week to indefinitely suspend the gas cap law and allow gasoline companies to charge whatever the market will bear. Gov. Linda Lingle yesterday signed the legislation to suspend the cap, effective immediately.

"With the gas cap and all the changes in the petroleum industry, and the increased government regulations, the owners of the company decided that we should just exit the petroleum industry," Manibog said. "When the gas cap went into effect, I did lose some accounts. And when you lose accounts, your volume decreases."

http://starbulletin.com/2006/05/06/business/story02.html

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NEW DISCOVERY (02-09-08): Kamehameha Schools made a “confidential” settlement agreement with the plaintiff in the John Doe vs. Kamehameha Schools case, which my former attorney, John Goemans, Esq., says, according to what he has learned from the IRS, violates the rules for a non-profit charitable trust:

February 9, 2008

$7M

An attorney involved in a challenge to Kamehameha Schools' Hawaiians-only policy reveals the amount of a settlement

By Ken Kobayashi, Honolulu Star-Bulletin

Kamehameha Schools made the first move to settle a legal challenge to their admissions policy giving preference to native Hawaiians and later agreed to pay $7 million, a lawyer involved in the case said yesterday.

John Goemans, an attorney for an unnamed non-native Hawaiian student who filed a lawsuit contesting the policy, said the charitable trust offered for the first time to talk about an out-of-court settlement last May, just days before the U.S. Supreme Court was to decide whether to hear the case.

Goemans, a former Big Island attorney recuperating in Florida from heart surgery, and Sacramento, Calif., lawyer Eric Grant, the lead attorney, represented the unnamed student and his mother.

"They (the schools) approached Eric and said we wanted to settle and we have to settle by Friday morning," when it was believed the high court was to make a decision about accepting the case, Goemans said.

He said it appeared the high court would accept their appeal of an 8-7 decision by the 9th U.S. Circuit Court of Appeals that upheld the policy.

"They (the schools) were worried about losing in the Supreme Court," Goemans said.

Goemans said he did not know how Grant and the Kamehameha Schools arrived at the $7 million figure.

The hotly disputed federal civil rights lawsuit caused a firestorm of controversy among Kamehameha Schools supporters who believed the challenge struck at the more than century-old admissions policy and the heart of the charitable trust's mission to educate children of Hawaiian ancestry.

The confidential settlement was announced on May 14. Those connected with the case repeatedly refused to disclose the terms.

Goemans said he was disclosing the amount because he said he recently learned from Internal Revenue Service officials that Kamehameha Schools, a tax-exempt charitable trust, cannot keep the figure confidential.

"Because exempt organizations operate in the public good, you got to report all your expenses with particularity, and you cannot keep information relative to those expenses confidential," he said. "It's in the public interest to have full disclosure."

Ann Botticelli, Kamehameha Schools spokeswoman, said yesterday the settlement contained a confidentiality clause.

"We intend to honor the terms, and we will not be discussing the settlement or John Goemans' assertions," she said.

Grant said yesterday he had no comment.

Kamehameha Schools, a multibillion-dollar charitable trust and the state's largest private landowner, was established under the 1883 will of Princess Bernice Pauahi Bishop. It educates more than 6,700 students at its flagship campus at Kapalama Heights, two other campuses on Maui and the Big Island, and 31 preschools throughout the state.

Senior U.S. District Judge Alan Kay upheld the school's Hawaiians-first policy, but a panel of the appeals court in San Francisco ruled 2-1 that the practice violated federal civil rights laws. That decision triggered statewide protests and marches by school supporters.

Later, a larger appeals court panel voted 8-7 to uphold the policy.

It was an appeal by Grant of that 8-7 ruling that was on the doorsteps of the U.S. Supreme Court when the settlement was announced.

At the time, school officials indicated that the settlement calling for the dismissal of the lawsuit leaves intact the appeals court's 8-7 decision upholding the admissions policy.

But the dismissal does not guarantee that another lawsuit might surface and make its way to the high court, although it would first have to go through the federal trial and appeals courts, where the 8-7 ruling would be considered to be binding on the issue. But even if those who file the new lawsuit lose on those two levels, they could still ask the high court to review the case.

Honolulu attorney David Rosen said he has plaintiffs for a lawsuit to challenge the admissions policy. He said the settlement does not affect his case. Rosen said he expects the suit will be filed this year.

Goemans said Grant received 40 percent, or $2.8 million of the $7 million. Goemans said he is preparing to file his own lawsuit seeking to recover a "reasonable percentage" of the $7 million for his work in the case.

Goemans said he found the unnamed student and arranged for Grant to be the attorney for the student and his mother.

"I put the whole thing together," Goemans said. "But for me there would not have been a $7 million payment."

The student never was admitted to Kamehameha Schools because his case was pending. He has since graduated from high school and had been attending college, Grant said last year.

http://starbulletin.com/2008/02/09/news/story02.html

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February 9, 2008

Amount of settlement
raises critical concern

By Robert Shikina, rshikina@starbulletin.com

Supporters and critics expressed surprise yesterday at the $7 million Kamehameha Schools paid a student to settle a lawsuit disputing its Hawaiians-first admission policy.

One Kamehameha Schools alumnus says disclosure of the settlement with the anonymous, non-Hawaiian student will prompt questions among Hawaiians.

"I'm not happy with $7 million," said Kamehameha Schools alumnus Jan E. Hanohano Dill. "Unfortunately, that's a lot of money, and it's going to create a lot of questions in the Hawaiian community whether it was right or wrong and to continue."

Dill, also a board member of Na Pua a Ke Ali'i Pauahi, a nonprofit group whose members include students, parents, and alumni of Kamehameha Schools, said he continues to support the school's decision.

"I don't know the details, and I think that's something that has to be cleared," he said. "You settle because you want to avoid costs that would be incurred as you go forward."

He added, "I have to believe that they understood that this was something good for the Hawaiian people. ... It will be clear as things unfold whether that was true."

Dill, who is also president of the nonprofit Partners in Development Foundation, said the admissions policy must eventually be addressed and that the settlement avoids this case but does not stop other cases.

Marion Joy, former vice president of Na Pua, called the settlement a "misuse of trust funds."

"The trust is continually going to be challenged," she said. "This is not going to be the last. ... As far as settling for the particular lawsuit, it's not in the best interests of the beneficiaries (of the 1883 will of Princess Bernice Pauahi Bishop)."

Kamehameha Schools declined comment.

Honolulu attorney David Rosen, who has sought potential clients to sue Kamehameha over its admissions policy after the settlement, sent out a statement yesterday that said the $7 million settlement was used to "buy off this case."

He added that the trustees should open a campus on the Leeward Coast of Oahu and possibly Molokai where increased educational opportunities are needed.

H. William Burgess, a retired attorney and founder of Aloha for All, a group opposed to Hawaiian sovereignty, said the settlement raises questions about the proper use of the trust funds.

"Normally, trustees, if they're doubtful about doing something, they ask the court to give them instructions," he said. "Yet in this case, the biggest charitable trust, probably in the nation, instead of welcoming the opportunity to get the highest court in the land to settle it, they pay $7 million to leave it open. And it is very much open."

http://starbulletin.com/2008/02/09/news/story03.html

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From The Catbird Seat website:

The Wise Old Owl asks: How much of the settlement amount came from Kamehameha’s insurance companies, and how much came from the trust funds? How much did Kamehameha Schools (and/or their insurance company) spend for defense costs in this case before they decided to settle? Who is their insurance company? Their insurance broker? Who actually signed the Settlement Agreement?

http://www.kycbs.net/Bishop7.htm

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Oswald Stender is expected to testify as to the facts and circumstances of the settlement, and to provide evidence, in the form of an Attorney of Record letter or similar document, that Kenneth Hipp, Esq. was his legally appointed attorney in Harmon’s RICO lawsuit, and that Mr. Hipp’s appointment was approved, in writing, by Federal Insurance Company and XL Insurance Co. He is also expected to testify regarding Kamehameha’s purchase of Hamakua Sugar Company, and the relationship between Bishop Estate and James H. Case, Carlsmith Ball LLP, in this purchase.