Bobby N. Harmon, CPCU, ARM
10951 Southgate Manor Drive, Apt. #4 Tel & Fax No. (502) 964-0694
Louisville, Kentucky 40229-1655
June 17, 2004
VIA fax only @ 808-523-6001
Mr. Matt Tsukazaki, Esq.
Torkildson, Katz, Fonseca, Moore & Hetherington
700 Bishop Street, 18th Floor
Honolulu, HI 96813-4187
RE: P&C Insurance Company - Tender of Defense - 74 166 00491 03 JAFA
Mary Lou Woo, Trustee vs. Bobby N. Harmon
Dear Mr. Tsukazaki:
I am enclosing an invoice dated June 16, 2004, from the American Arbitration Association showing an outstanding balance due of $6,050.00. As P&C Insurance Company’s purported attorney in this matter, would you please forward this invoice to the properly authorized party for payment.
As I stated in my letter to you dated May 26, 2004, if, for any reason, this authorized party is unable to remit payment, I ask that he, or she, respond directly to me, enclosing a copy of any letters of authority and/or claims licenses as may be reasonable to evidence that he/she is legally authorized to refuse to make this payment. As this case basically is a contractual liability claim, any declination of this claim should be properly documented with a Claim Number, the Date of Claim, and a copy of the applicable insurance policy.
I also request that any declination be accompanied by a signed copy of the indemnity agreement between P&C Insurance Company and myself, as its former president. If a signed copy of this agreement has been lost or misplaced in P&C’s office, then you may wish to check with P&C’s attorney Wayne Pitluck, Esq., who drafted and submitted the original incorporation papers. If a signed copy still cannot be located, I ask that the Claims Adjuster for this case obtain and send a copy of the blank agreement that is used for all officers and directors of this corporation.
Due to the lateness of this payment, I ask that the check, and/or a copy of any correspondence, be sent directly to the American Arbitration Association, Attention James B. Farris, Case Manager.
Also, I again request a reply to my letter of March 9, 2004, regarding evidence of your prior and current representations of P&C Insurance Company, Kamehameha Schools Bishop Estate, and any insurance carriers on whose behalf you have acted in these matters.
It is my understanding from the Arbitration Hearing held by video conference with Arbitrator Judith Neustadter Fuqua on June 15, 2004, that Louanne Kam, witness for the Claimant, Mary Lou Woo, has previously refused to submit this tender to P&C Insurance Company on the basis that she does not consider this to be a legitimate claim due to the fact that she believes that the claim lacks merit and does not contain sufficient specific details.
At this Hearing, Louanne Kam also expressed her opinion, as have you, that this claim is not valid because of certain terms contained in the Settlement Agreement. As I have stated repeatedly, I cannot disclose further details regarding this claim to you, or Louanne Kam, Clyde Mark, the Kamehameha Schools’ trustees, or any other party that is not an authorized Claims Adjuster for P&C Insurance Company. To do so would expose Kamehameha Schools to even further claims of violating the “arms-length” regulations of the Internal Revenue Service.
I further understand from the Arbitration Hearing that Clyde Mark has recently left his positions as president of P&C Insurance Co., and as Risk Manager for Kamehameha Schools. Again, according to my understanding of IRS regulations, this dual role would have been a clear violation of certain “interim sanctions” regulations which might again bring into question “excess benefit” benefit transactions and tax consequences for Kamehameha Schools and its trustees and executives.
To refresh your memory regarding “arms-length” issues, I quote from my RICO lawsuit:
2. THE DEFENDANTS AND THE ALLEGED MISCONDUCT AND BASIS OF LIABILITY OF EACH DEFENDANT.
1. a) Defendant Federal Insurance Company, Inc. (Federal), a member of The Chubb Group, conducts business in the United States and was, at all times, registered with the Insurance Commissioner, State of Hawaii, as an admitted foreign insurance company. Federal conducts business through insurance brokers as well as through licensed general agents of the company. In Hawaii, one of Federal's licensed general agents is Marsh & McLennan, Inc. (M&M).
Federal's schemes are multitudinous. On or about October 27, 1995, Plaintiff, in his capacity as Risk/Insurance & Safety Manager for Kamehameha Schools Bishop Estate (KSBE), caused Federal, through its agent M&M, to bind coverages under an Association Liability Insurance policy. Harmon obtained this "Errors & Omissions" insurance on behalf of KSBE and the majority of its subsidiaries, based on written proposals containing representations by Federal and M&M that this policy would protect KSBE, its trustees and employees, and the officers and directors of the for-profit subsidiaries of KSBE, against claims for "Wrongful Acts" as defined in the policy.
These proposals; the subsequent binders and policies; and premium invoices and payments were transmitted by mail and/or wire. Plaintiff relied upon these inducements and representations when obtaining this insurance on behalf of KSBE and its subsidiaries, and when accepting the position as P&C's president.
Plaintiff alleges that the failure of Federal, and its agent, M&M, to provide defense coverage to Harmon in Civil No. 97-0512-02 constitutes mail fraud, wire fraud, misrepresentation and fraudulent inducement to purchase this insurance.
Defendant Federal, its officers, directors and employees benefitted financially from the premiums charged for this policy in the form of salaries, commissions, bonuses, or other means of compensation.
As detailed in Plaintiff's complaint, there was collusion among the Defendants, the primary purpose of which was to increase their profits through the awarding of non-bid insurance contracts to Federal and its agent, M&M. Profits were further enhanced by Federal through reduction in their claims payments by means of fraudulently "back-dating" an exclusion endorsement in their Association Liability Policy in order to wrongfully deny defense coverages to Plaintiff in Civil No. 97-0512-02, P&C et al. vs. Bobby N. Harmon. Federal further engaged in misrepresentations, deceptions, delays, and continual denials of Plaintiff's legitimate claims, and refused to respond to Plaintiff's numerous good-faith offers to negotiate an out-of-court settlement. These wrongful acts constitute extortion, and extortion by color of official right, and the wrongful denial of money and benefits rightfully owed to Plaintiff.
b) Defendant P&C Insurance Company, Inc. (P&C), is a single parent captive insurance company formed in September, 1994, and was a wholly-owned subsidiary of Pauahi Holdings Corporation which, in turn, was a wholly-owned, for-profit subsidiary of KSBE. Plaintiff Harmon was instrumental in the formation of P&C, and was named its president shortly after its formation.
Although Harmon was the president of P&C, he alleges that he was actually set up as a "straw man" to be controlled by Henry H. Peters, Trustee of KSBE and Chairman of the Board of P&C; Nathan Aipa, KSBE General Counsel and Assistant Secretary/ Assistant Treasurer of P&C; Louanne Kam, Esq., Litigation Manager for KSBE, and others known and unknown. Although it was Harmon's firm understanding that he was to be transferred from his employment as Risk/Insurance & Safety Manager at KSBE, to President of P&C, due largely to "arms-length" requirements of the I.R.S., Peters and Aipa never allowed this transition to materialize. Harmon remained as a paid employee of the tax-exempt charitable trust, KSBE, and an unpaid officer of the for-profit insurance company, P&C, despite written opinions from KSBE's and P&C's professional tax advisor, Price Waterhouse, that this arrangement could jeopardize KSBE's tax-exempt status, and have other detrimental consequences to KSBE. This arrangement continued until Plaintiff was terminated from both positions on November 20, 1996.
Plaintiff Harmon alleges that a major reason for his terminations was his refusal to follow the directives of Henry Peters, Nathan Aipa and Louanne Kam for P&C to pay M&M substantial service fees for work that was not under contract and which could not be justified, in addition to KSBE's payments of premiums to M&M for insurance which could be obtained through other insurance brokers at substantially lower cost. Aipa, Kam and Trustee Richard Wong, were also attempting to improperly influence the settlement of a P&C claim involving flood damages to the property of a Bishop Estate lessee, Larry Ching.
These "sweetheart deals" with M&M, the attempted claims settlement with Ching, and the threats to Harmon that he could be terminated for failing to follow the directives of Peters, Aipa and Kam to "go along" with these improper deals, constitute conspiracy to defraud P&C and the beneficiaries of the Estate of Bernice Pauahi Bishop; racketeering; mail fraud; wire fraud; extortion; breach of fiduciary duties; and violations of the "interim sanctions" regulations of the I.R.S., as detailed in Plaintiff's complaint.
< END OF QUOTATION >
The entire RICO Case Statement can be found on the Internet at the following address:
www.the-catbird-seat.net/RICO-BH.htm
Please feel free to contact me if you have any questions. Your immediate response to this urgent matter will be appreciated.
Sincerely,
Bobby N. Harmon
enclosure
cc’s: James B. Farris, American Arbitration Association (via fax @ 559-490-1919)
Steven Guttman, Attorney for Mary Lou Woo (via fax @ 808-529-7177)
Dee Jay Mailer, CEO, Kamehameha Schools (via fax @ 808-523-6313)
Clyde Mark, President, P&C Insurance Co., Inc. (via fax @ 808-523-6313)
Susan Tius, Esq., c/o Rush Moore Craven Sutton Morry & Beh
(via fax @ 808-521-0597)
Gerard Jervis, Lokelani Lindsey, Henry Peters, Oswald Stender, and Richard Wong, c/o Kenneth Hipp, Esq., Marr Hipp Jones & Pepper
(via fax @ 808-536-6700)
Jeffrey H.K. Sia, Esq., Ayabe Chong Nishimoto Sia & Nakamura
(via fax @ 808-526-3491)
Robert S. Tameler, ALPS, Claims Administrator for Bradley Tamm and Greg Dunn (via fax @ 406-728-7416)
Michael F. Perlis, Esq., Stroock & Stroock & Lavan, LLP, Attorney for Federal Insurance Company (via fax @ 310-556-5959)
Lori Chung, Aon Insurance Managers (via fax @ 808-540-4301)
XL Insurance (Bermuda) Ltd. (via fax @ 441-296-4352)
Casimer Fidele, Tradewind Insurance Company (via fax @ 808-521-7489)
Hugh Jones, Deputy Attorney General (via fax @ 808-586-1477)
Governor Linda Lingle, State of Hawaii (via fax @ 808-586-0006)
J.P. Schmidt, Hawaii Insurance Commissioner (via fax @ 808-586-2806)
Janet Hughes, Internal Revenue Service (via fax @ 303-844-3596)
Billy Beaver, Pension & Welfare Benefit Admin. (via fax @ 626-229-1098)
Ralph F. Boyd, Jr., U.S. Dept. of Justice (via fax @ 202-514-1116)
PricewaterhouseCoopers, c/o Warren Price III, Esq. (via fax @ 808-533-0549)
Marsh & McLennan, Honolulu Office (via fax @ 808-585-3510)
Terry Mullen, CEO/Pres., John Mullen & Co. (via fax @ 808-531-0053)
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