David C. Farmer, Successor-Trustee vs. Harmon
(Formerly Woo vs. Harmon & Nicholson vs. Harmon)
CV05-00030 DAE KSC
U.S. District Court For the District of Hawaii
Judges: David A. Ezra; Kevin S. Chang
Address to be determined.
Former head of the Hawaii Campaign Spending Commission.
January 10, 2003
Charitable trust settles
Kamehameha Schools agrees
to pay a $10,000 fine
By Rick Daysog, Star-Bulletin
The Kamehameha Schools has agreed to pay a $10,000 fine (compare that to the half million dollar fine to Defendant Harmon for being a whistle blower in this case) to settle the state Campaign Spending Commission's 2 1/2-year-old investigation into the estate's political activities.
Without admitting or denying wrongdoing, the $6 billion charitable trust agreed to settle with the commission, ending the only remaining investigation of the Kamehameha Schools' former trustees Henry Peters, Richard "Dickie" Wong, Lokelani Lindsey, Oswald Stender and Gerard Jervis. The fine, which will be paid to the Hawaii Election Campaign Trust Fund, requires the approval of the commission's five-member board, which will meet on Thursday.
Kamehameha Schools' Chief Executive Hamilton McCubbin said the agreement avoids a costly, protracted legal battle and will allow the trust to focus resources on its educational mission.
"It resolves one of the last remaining issues relating to the former management of the trust," McCubbin said.
Bob Watada, the commission's executive director, said he did not seek a larger fine against Kamehameha Schools since the former trustees who took part in the political activities have resigned and the estate's current managers and board of trustees have implemented significant reforms.
Watada also noted that former staffers such as the late Namlyn Snow, who headed the government relations division, have either died or have left the trust, while recipients of the estate's political support such as former state Sens. Milton Holt and Marshall Ige have been convicted of criminal charges.
"I think it's clear the Kamehameha Schools has taken steps to make sure that they don't get involved in political campaigns," Watada said.
The commission began its investigation in April 2000, looking into more than $200,000 in polling that the trust conducted on behalf of several prominent state lawmakers during the 1990s.
The commission also was looking into tens of thousands of dollars in political fund-raising tickets that the trust funneled to its employees and outside contractors.
Watada said evidence included in more than 40,000 pages of internal trust documents and witness interviews indicated that the trust operated an in-house network that distributed fund-raiser tickets to trustees and their relatives, staffers and to the estate's engineering, architecture and law firms.
Recipients included Honolulu Mayor Jeremy Harris, former Mayor Frank Fasi, U.S. Rep. Neil Abercrombie and former Honolulu City Councilman Arnold Morgado.
Under federal tax law, charities like the Kamehameha Schools can lose their tax-exempt status for making political contributions.
In the early 1990s the trust also hired a pollster, QMark Research & Polling, to conduct political research in the districts of their biggest legislative supporters, including former state House Speaker Joe Souki and former state Sens. Holt, Ige, Robert Herkes, Donna Ikeda and Whitney Anderson.
The estate's former trustees had argued that the polls were conducted to gauge public sentiment on controversial issues such as land use and leasehold reform in those districts.
But Watada noted that the polls also asked specific questions about candidates the trustees supported.
The polls were delivered to the legislators in unmarked envelopes in an apparent attempt to conceal their source, he added.
Neither the trust nor the candidates declared the polls as campaign contributions as required by law. A poll is considered a campaign contribution if its findings are shared with a limited number of candidates and if its value exceeds $1,000.
Bob Watada is expected to testify regarding the illegal political lobbying activities of the trustees, employees, attorneys and independent contractors of Kamehameha Schools/Bishop Estate.
Bob Watada is also expected to testify regarding his participation in the “Broken Trust” Forum held on July 5, 2006, as reported in Small Business News, and excerpted as follows:
'Broken Trust' Forum Calls for
Release of Corruption Documents
By Malia Zimmerman
The full story of the corruption that permeated Hawaii's $10 billion charitable trust, the Kamehameha Schools/Bishop Estate, to the highest levels of government in Hawaii, has never been told.
But the information that has become public is categorized by 60 Minutes as "The biggest story in Hawaii since Pearl Harbor;" by The New York Times as "A feudal empire so vast that it could never be assembled in the modern world;" and by Howard M. McCue III, the Chairman of the Charitable Planning Committee for the American College of Trust and Estate Counsel, as "The most significant legal dispute of our time ... a tale of unbridled ambition, infectious greed, and high drama ... ."
This saga, involving Bishop Estate trustees, state Supreme Court justices, a former governor and leaders in the Hawaii State Legislature, peaked in 1997.
However, nearly one decade later, critics say there has been no accountability for the many influential people who wrongfully took advantage of Princess Pauahi Bishop's charitable trust - a trust she established in 1884 to fund the education of Hawaiian children, not to fatten the pockets of politicians and trustees.
University of Hawaii Law Professor Randall Roth and U.S. Federal Judge Samuel King, co-authors of a newly published book, Broken Trust: Greed, Mismanagement and Political Manipulation at America's Largest Charitable Trust, documented the story of the trust from its inception 100 years ago through current times.
At a July 5 forum hosted by Small Business Hawaii, and moderated by Hawaii Reporter, Roth and King shared their thoughts on what led to the extensive problems at the Bishop Estate and what still needs to be done to ensure there is justice and accountability for past wrongdoings.
Joining them were four other prominent Hawaii citizens who played a major role in pushing for reforms including Hawaiian attorney Beadie Dawson, former Honolulu Star-Bulletin Managing Editor Dave Shapiro, former Campaign Spending Director Robert Watada and Congressman Ed Case....
Before the 90-minute panel wrapped up, the panelists shared some of the following insights from their experiences:
Congressman Case was a freshman state legislator in 1995 when he tried to make two major reforms related to the Bishop Estate - take the Supreme Court justices out of the trustee selection process and limit trustee compensation to what was “reasonable” - both of which made him forceful enemies within the legislative leadership, the court and the Bishop Estate.
“I got nailed pretty bad,” Case says of his first attempt in 1995.
The Hawaii Supreme Court justices admitted that they were split on whether they should be in the business of appointing trustees because of perception of cronyism and favoritism.
In 1997, Roth, King and three other well-respected Hawaiians signed their name to a compelling essay entitled “Broken Trust” that documented the power, influence and wrongdoing in the highest levels of the Bishop Estate and the Hawaii government.
Shapiro, then the managing editor of the Honolulu Star-Bulletin, published the oped, which rocked the very core of the Hawaiian, political and legal communities.
That was the final catalyst for all but one justice - Robert Klein (now an attorney/lobbyist for the Office of Hawaiian Affairs) - to voluntarily step aside from the duty.
Case’s bill to limit trustee compensation also passed, despite major obstacles. At the time, trustees were making more than $1 million a year.
The House, which had Bishop Estate-backed leadership, including House Speaker Joe Souki, and Reps. Terrance Tom and Calvin Say, agreed to a bill that would study the issue. But the Senate sides with Case in establishing compensation limits. In a highly unusual move, Case moved to suspend the rules and adopt the Senate version. Because of extensive pressure from the Hawaiian comunity, the media and the public, the House agreed to the bill by a vote of 50 to 1 with Rep. Say (who is presently the House Speaker) as the one dissenting vote.
Now, as a Congressman for the second district who is running for U.S. Senate against Sen. Daniel Akaka, Case has distinguished himself from his opponent on this issue. Akaka was sympathetic with the ousted trustees, while Case pushed for more accountability and less compensation. Today, Case says there are still “broken trusts” in Hawaii, which need to be addressed.
Hawaiian attorney and advocate Dawson says the Bishop Estate controversy was significant for the Hawaiian people because it is the first time they began to use their voices and their numbers to take a stand politically.
The tremendous power was evident when Kamehameha Schools alumni, students, faculty and supporters marched in 1997 from the Capitol to the Bishop Estate headquarters, demanding reforms, including the removal of trustee Lokelani Lindsey, who was micromanaging the school in a highly destructive manner.
A great deal of the information Roth and co-author Judge King used to write the Broken Trust was given to them by Watada, the director at the time of the state Campaign Spending Commission.
But Roth says there are still between 1 million and 2 million more documents sealed by the courts that he wants to review and catalogue and believes should be made public.
He hopes trustees will some day be held accountable for their mismanagement. But that is unlikely: they did not pay legal fees for the most part, they took millions of dollars for themselves, they paid off political cronies with trust funds, and held what Roth calls a "world record for breaches of trust."
Roth and King maintain the Broken Trust saga is not over, and neither are the problems for Kamehameha Schools if further safeguards and reforms are not implemented....
Documents, News Articles and Related Links
First Amendment Rights/Obstruction of Justice
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