HARMON’S ANSWERS TO TRUSTEES’ INTERROGATORIES


 

A Sighting from The Catbird Seat

~ o ~

CIVIL NO. 97-0512-02

P&C INSURANCE COMPANY, INC.

AND

RICHARD S.H. WONG, OSWALD K. STENDER, LOKELANI LINDSEY,

GERARD A. JERVIS AND HENRY H. PETERS, AS

TRUSTEES OF THE ESTATE OF BERNICE PAUAHI BISHOP,

Plaintiffs,

v.

BOBBY N. HARMON,

Defendant.

 


 

HARMON’S ANSWERS TO PLAINTIFFS’ INTERROGATORIES

 

                     1. With respect to Paragraph 3 of the Counterclaim, please state the specific citation to the federal and/or State of Hawaii laws, regulations and/or rules, you allege were violated by Plaintiffs.

ANSWER:

         A. Tax fraud: Failure to disclose financial information in Federal Tax Returns regarding personal investments of Trustees and executives in companies controlled by KSBE. Breach of IRS rules regarding the maintaining of “arms-length” relationships between a tax-exempt charitable organization and its for-profit subsidiaries, including the improper allocation of insurance premiums and claims costs among the estate and its various for-profit subsidiaries (e.g., SoCal Holdings, Southern California Savings & Loan, AFCO, Paradise Petroleum, Unison Pacific and Sino Finance), and KSBE control of the operations of P&C Insurance Company, Inc. by the actions of Henry H. Peters, Nathan Aipa and Louanne Kam. Trustees, managers and independent contractors engaged in “excess benefit” transactions (e.g. payments to Marsh & McLennan, Inc., and Stay & Sons for non-bid or improperly bid contracts). Improper financial reporting in annual financial statements prepared by Coopers & Lybrand (e.g., failure to disclose large claims; improper reserves). Failure to report to the IRS, the state tax director, the court-appointed Master, the Probate Court and to the Attorney General conflicts of interest and financial transactions among KSBE, its trustees, employees, independent contractors, government officials, and officers and directors of P&C and other for-profit subsidiaries which resulted in unjust enrichment, private inurement, and private benefit to these individuals and entities.

         B. Intentional non-compliance with State and Federal Regulations under the Americans with Disabilities Act; the Environmental Protection Act; the Occupational Safety and Health Act; and the Civil Rights Acts regarding equal employment opportunity.

         C. Violation of State of Hawaii insurance regulations, Act 431: Article 13: Unfair Methods of Competition and Unfair and Deceptive Acts and Practices in the Business of Insurance. Fraudulent claims practices.

         D. Coercion of employees by means of threats of discipline or termination to violate laws or to “look the other way” while superiors engaged in illegal or unethical acts; unlawful altering, falsifying and/or destruction of staff reports, board minutes, contracts and other legal documents; collusion with independent contractors to conceal and cover-up wrongful acts; and misuse of the “attorney-client privilege” to prevent the disclosure of wrongful acts.

 

                   2. With respect to Paragraph 3 of the Counterclaim, please list each act or practice which you allege was a violation by Plaintiffs of federal and/or State of Hawaii laws, regulations and/or rules, and in which you refused to participate.

                             a. Identify all persons having knowledge, information or belief of such facts or evidence; and

ANSWER:

         A. Tax fraud: Breach of Arms-Length Principles between KSBE, P&C and other Subsidiaries; Failure to Report to the IRS and to the Hawaii State Tax Collector, Conflicts of Interest; Private Benefit and Private Inurement Transactions.

      KSBE--

         Henry Peters, Trustee

         Richard S.H. Wong, Trustee

         Oswald Stender, Trustee

         Lokelani Lindsey, Trustee

         Gerard Jervis, Trustee

         Matsuo Takabuki, (former) Trustee and current consultant

         William Richardson, (former) Trustee and current consultant

         Myron Thompson, (former) Trustee

         Rodney Park, Director of Administration Group

         Wally Chin, Controller

         Yukio Takemoto, Budget Director

         Leeann Crabbe, Budget Mgr.

         Gilbert Ishikawa, Tax Manager

         Myron Mitsuyasu, Asst. Tax Manager

         Dennis Fern, (former) Internal Auditor

         Andrea Oshiro, (former) Internal Audit Dept.

         Ramona Hinck, Accounting Mgr.

         Doyal Davis, (former) Budget Mgr.

         Maryanne Inouye

         Bruce Nakaoka, Real Estate Investments Department Manager

         Eric Martinson, Financial Assets Manager

         Aaron Au, Financial Assets Division

         Daniel Jones, Financial Assets Division

         Nathan Aipa, General Counsel & Director, Legal Group

         Louanne Kam, Director, Litigation and Risk Management Division

         Gilbert Tam, (former) Director, Administration Group

         Guido Giacommetti, (former) Director, Asset Management Group

         Mitch Gilbert, (former) Financial Assets Manager

         Sydney Keliipuleole, Asset Management Div.

         Charles Maeda, Information Systems Div.

         Neil Hannahs, Asset Management Group

         Michael Chun, Pres., Kamehameha Schools

         Ed Tabangay, (former) Engineering Dept.

      PRICE WATERHOUSE:

         Mark McConaghy

      P&C INSURANCE COMPANY, INC:

         Henry H. Peters, Chairman, Board of Directors

         Gilbert Tam, Director

         William S. Richardson, Director & Secretary/Treasurer

         Peter J. Lowe, Vice-President

         Rocco Sansone, Marsh & McLennan, Inc., Broker

         Nathan T. K. Aipa, Asst. Sec./Asst. Treasurer

      PAUAHI HOLDINGS CORPORATION:

         Richard Wong, President

         Glenn Hara, Treasurer

         Henry Peters, Chairman, Board of Directors

      ROYAL HAWAIIAN SHOPPING CENTER, INC:

         Richard Wong, President

         Glenn Hara, Treasurer/Controller (?)

      COOPERS & LYBRAND

         Cary M. Okawa, C.P.A.

         Dennis Tsuhaka, C.P.A.

         Carl Kobayashi, C.P.A.

      MASTERS

         Peter Trask, Esq.

         James Duffy, Esq.

         Benjamin Matsubara, Esq.

         Colbert Matsumoto, Esq.

      STATE OF HAWAII

         Rey Graulty, Insurance Commissioner

         Wayne Metcalf, (former) Insurance Commissioner

         Margery Bronster, Attorney General

         Kevin Wakayama, Deputy Attorney General

 

         B. Intentional non-compliance with State and Federal Regulations under ADA; EPA; OSHA; Civil Rights Acts:

KSBE--

         Henry Peters, Trustee

         Richard S.H. Wong, Trustee

         Oswald Stender, Trustee

         Lokelani Lindsey, Trustee

         Matsuo Takabuki, (former) Trustee and current consultant

         William Richardson, (former) Trustee and current consultant

         Myron Thompson, (former) Trustee

         Rodney Park, Director of Administration Group

         Nathan Aipa, General Counsel & Director, Legal Group

         Louanne Kam, Director, Litigation and Risk Management Division

         Colleen Wong, Esq.

         Neil Hannahs, Asset Management Group

         Michael Chun, Pres., Kamehameha Schools

         Sam Hata, Director of Administration

         Allen Young, Engineering Dept.

         Karen Wilkenson

         Ed Tabangay, (former) Engineering Dept.; current Consultant

         Gil Tam, (former) Director, Administration Group

      ROYAL HAWAIIAN SHOPPING CENTER, INC:

         Richard S. H. Wong, President

         Glenn Hara, Treasurer/Controller

         Jonathan Kim, Property Manager

 

         C. Insurance Fraud: Violation of State of Hawaii Insurance Regulations, Act 431: Article 13; Failure to disclose information to insurance carriers. Unfair Methods of Competition. Deceptive Claims Practices. Unfair Discrimination in the Settlement of Claims.

      KSBE

         Phillip Chang, Esq.

         Lyn Anzai, Esq.

         Colleen Wong, Esq.

         Nathan Aipa, Esq.

         Louanne Kam, Esq.

         Carol Koza

         Kathie Reis

         Kapu Smith

         Christine Lee

      P&C INSURANCE COMPANY, INC.

         William S. Richardson

         Peter Lowe

         Rocco Sansone

         Christine Lee

         Patricia Onogi

      JOHN MULLEN & CO.

         Robert Kuroda

         Neal Seamon

         Gary Gowdy

      MARSH & McLENNAN, INC.

         Patricia Onogi

         Rocco Sansone

         Christine Lee (former employee)

      M&M INSURANCE MANAGEMENT SERVICES, INC.

         Peter Lowe, Sr. Vice-Pres.

         Garrett Liu

      STATE OF HAWAII

         Wayne Metcalf, (former) Insurance Commissioner

         Rey Graulty, Insurance Commissioner

      UNITED EDUCATORS INSURANCE GROUP

         Joseph McCullough

      CHUBB INSURANCE GROUP

         Milton T. Perkins

         Michael Goolsby

         M. Tony Rangel

      ARKWRIGHT INSURANCE COMPANY/HOBBS GROUP

         John McGrath

         Tim McGrath

         Mary Brieghner

 

         D. Coercion of employees to violate laws or to “look the other way” while superiors engaged in illegal or unethical acts; unlawful tampering with, or destruction of, legal documents; collusion to conceal wrongful acts through threats of discipline or termination; and misuse of the “attorney-client privilege.”

KSBE--

         Henry Peters, Trustee

         Richard S.H. Wong, Trustee

         Lokelani Lindsey, Trustee

         Emalia Keohokalole, Secretary

         Rodney Park, Director of Administration Group

         Yukio Takemoto, Budget Director

         Nathan Aipa, General Counsel & Director, Legal Group

         Louanne Kam, Director, Litigation and Risk Management Division

         Colleen Wong, Esq.

         Phil Chang, Esq.

         Lyn Anzai, Esq.

         Allan Yee, Esq.

         Neil Hannahs, Asset Management Group

         Michael Chun, Pres., Kamehameha Schools

         Sam Hata, Director of Administration

         Allen Young, Engineering Dept.

         Sandie Wicklein, Director of Personnel

         Pat Chalfin, (former) Personnel Dept.

         David Dunigan, Litigation & Risk Management Div.

         Julie Kawakami, Litigation & Risk Management Div.

         Kim Kanalaupuni, Litigation & Risk Management Div.

         Daniel Pires, Documentary Dept.

         Leslie Yamashita, Notary Public

         Werylend Tomczyk, Notary Public

         Luana Sala, Notary Public

         Lori Loo, Notary Public

         Linda Jacobs, Legal Assistant and Notary Public

         Shevon Garnett, Legal Group Administrator

         Marcia Diver, Information Services Division

 

      P&C INSURANCE COMPANY, INC:

         Henry H. Peters, Chairman, Board of Directors

         Gilbert Tam, Director

         William S. Richardson, Director & Secretary/Treasurer

         Nathan T. K. Aipa, Asst. Sec./Asst. Treasurer

         Dennis Fern, Internal Auditor

         Louanne Kam, Litigation Manager

         Peter Lowe, M&M Insurance Management Services, Inc.

         Garrett Liu, M&M Insurance Management Services, Inc.

         Rocco Sansone, Marsh & McLennan, Inc.

 

                             b. Identify each and every document which refers to or relates to these allegations.

ANSWER :

A. Tax fraud: arm’s length issues/conflicts of interest/private benefit/private inurement:

Federal and State Tax Returns, Audited Financial Statements, and records of all invoices, credit memos, receipts and disbursements pertaining to insurance premium transactions, payments for insurance claims including legal expenses, and payments to independent contractors related to insurance brokerage, claims handling, safety and loss control services for Kamehameha Schools Bishop Estate (KSBE), Pauahi Holdings Corporation (PHC), and P&C Insurance Company, Inc. (P&C) for 1994, 1995, 1996.

Copy of my letter to Coopers & Lybrand dated 11/20/96, with all enclosures, and any written response or record of discussion between Coopers & Lybrand and Plaintiffs, or with M&M and/or M&MIMS, regarding this letter, including records of phone conversations, minutes of P&C Board of Director meetings, and staff reports to Trustees.

P&C’s application to the Insurance Commissioner, State of Hawaii, for a license to operate as a captive insurance company, including all supporting documents.

All minutes from P&C’s Board of Directors meetings.

         P&C’s Operations Manual.

Plaintiff’s draft of P&C’s “Arms-Length Guidelines”.

All sections in KSBE’s Policy and Procedures Manual which relate to: risk, insurance and safety; compliance with the ADA, EPA, OSHA, DOSHA and Civil Rights Acts; conflicts of interest; maintaining arms-length relationships; bidding and contract procedures for third party contracts.

The following documents relating to the Waterpark Tower Environmental Remediation project: Bid Specifications; List of Bidders; Bid Bonds; Contracts; Performance Bonds; Staff Reports; Certificates of Insurance from all independent contractors; Evidence of Environmental Impairment Liability (Pollution) insurance carried by all independent contractors; invoices; copy of Ed Tabangay’s contract for services.

All sections of KSBE’s Employee Manual which relate to: risk, insurance and safety; conflicts of interest; and the ADA, EPA, OSHA, DOSHA and Civil Rights Acts.

All KSBE Staff Reports; IRS correspondence, internal and external letters, memorandum, and written opinions relating to “arms-length” and conflicts of interest issues.

All information, correspondence and staff reports relating to the “Taxpayers Bill of Rights II”, including KSBE’s lobbying activities and funds expended in its unsuccessful efforts to defeat the bill.

All information, correspondence and staff reports relating to compliance with the ADA, EPA, OSHA and Civil Rights Acts.

The following Bate-stamped documents which were returned to KSBE under court injunction:

Document numbers:

6-50; 139-141; 142-151; 152-153; 154-155; 156-157; 158-159; 160-162; 165; 167; 176; 177-180; 182; 183-184; 185-188; 225-226; 227; 228; 229; 230; 242; 243; 258-259; 260; 261-262; 263; 264; 265; 266; 267; 268; 269-270; 271; 272; 274-275; 276-279; 281-282; 283-344; 391; 393-394; 397; 407-408; 409; 410-421; 440-441; 442-453; 454; 459; 461; 462-472; 473-474; 475-476; 477-478; 479-498; 543; 544-545; 546-547; 548; 549; 550-552; 553; 554; 562-564; 565-569; 621; 622-624; 733-734; 840-925; 976-977; 978-979; 980-991; 1008-1009; 1019-1023; 1076-1077; 1078-1079; 1080; 1081-1082; 1089; 1133-1150; 1151-1212; 1260-1261; 1270-1272; 1273; 1422-1427; 1428-1429; 1430-1433; 1434; 1435-1444; 1445; 1446; 1447; 1451-1458; 3073-3129; 3130.

 

B. Insurance Fraud: Deceptive Business Practices /Misrepresentations /Unfair Methods of Competition /Deceptive Claims Practices

Copy of my letter to Coopers & Lybrand dated 11/20/96, with all enclosures, and any written response or record of discussion between Coopers & Lybrand and KSBE/PHC/P&C, and between these entities and M&M or M&MIMS, regarding this letter, including records of phone conversations, computer records, minutes of P&C Board of Directors and staff reports to Trustees.

P&C’s application to the Insurance Commissioner, State of Hawaii, for a license to operate as a captive insurance company, including all supporting documents.

All minutes from P&C’s Board of Directors meetings.

         P&C’s Operations Manual.

My draft of P&C’s “Arms-Length Guidelines”.

All sections of KSBE’s Policy and Procedures Manual which relate to risk, insurance, claims and safety.

All KSBE Staff Reports; internal and external letters, memorandum, and written opinions relating to the formation of a captive insurance company.

The following Bate-stamped documents which were returned to KSBE under court injunction:

Document Numbers:

61-63; 64-121; 160-188; 198; 232-235; 236-239; 240; 241; 242; 243; 274-275; 276-279; 281-282; 283-344; 391; 398-399; 410-421; 422-423; 424-432; 434-436; 442-453; 459; 461; 462-472; 473-474; 479-498; 546-547; 548; 549; 550-552; 553; 554; 562-564; 565-569; 570-571; 572; 573-620; 621; 622-624; 639-675; 688-689; 690; 691; 692; 693; 694; 695; 696; 698; 699-703; 704; 706-710; 711; 713-717; 719-720; 721; 722; 723; 724; 725-726; 727; 728-729; 730; 731-732; 733-734; 735-737; 738-739; 740-741; 742; 743-747; 748-753; 754; 755; 756; 757-760; 761-762; 768; 773; 773-786; 787-792; 793-794; 795-798; 799-801; 802; 804-805; 835.

 

C. Unjust Enrichment/ Private Inurement/ Private Benefit/ Conflicts of Interest between KSBE, its trustees, employees, independent contractors, government officials, and officers and directors of P&C and other for-profit subsidiaries/Breach of fiduciary duties to the Estate of Bernice Pauahi Bishop/Breach of fiduciary duties to P&C Insurance Company, Inc.

Copy of my letter to Coopers & Lybrand dated 11/20/96, with all enclosures, and any written response or record of discussion between Coopers & Lybrand and KSBE/PHC/P&C, or between these entities and M&M and M&MIMS, regarding this letter, including records of phone conversations, computer records; minutes of P&C Board of Director meetings, and staff reports to Trustees.

P&C’s application to the Insurance Commissioner, State of Hawaii, for a license to operate as a captive insurance company, including all supporting documents.

All minutes from P&C’s Board of Directors meetings.

         P&C’s Operations Manual.

My draft of P&C’s “Arms-Length Guidelines”.

All sections in KSBE’s Policy and Procedures Manual which relate to: conflicts of interest; maintaining arms-length relationships; bidding and contract procedures for third party contracts.

The following documents relating to the Waterpark Tower Environmental Remediation project: Bid Specifications; List of Bidders; Bid Bonds; Contracts; Performance Bonds; Staff Reports; Certificates of Insurance from all independent contractors; Evidence of Environmental Impairment Liability (Pollution) insurance carried by all independent contractors; invoices; copy of Ed Tabangay’s contract for services.

All sections of KSBE’s Employee Manual which relate to conflicts of interest.

All KSBE Staff Reports; IRS correspondence, internal and external letters, memorandum, computer records and written opinions relating to “arms-length” and conflicts of interest issues..

All information, correspondence and staff reports relating to the “Taxpayers Bill of Rights II”, including KSBE’s lobbying activities and funds expended in its unsuccessful efforts to defeat the bill.

All information, correspondence and staff reports relating to compliance with the ADA, EPA, OSHA and Civil Rights Acts.

The following Bate-stamped documents which were returned to KSBE under court injunction:

Document Numbers:

6-50; 61-63; 64; 65-66; 67-80; 81; 82; 83; 84; 85; 86; 87; 88; 89-90; 91; 92-93; 94; 103-105; 106; 107; 108; 109; 110-111; 112-114; 115-116; 117; 118-119; 120-121; 139-141; 142-151; 152-153; 154-155; 156-157; 158-159; 160-162; 163-164; 165; 166; 167; 168; 169; 170; 172-173; 174; 175; 176; 177-180; 181; 182; 183-184; 185-188; 190-192; 193-197; 199-201; 202; 203-205; 225-226; 227; 228; 229; 230; 232-235; 236-239; 253-254; 255; 258-259; 260; 263; 264; 265; 266; 267; 268; 269-270; 271; 272; 274-275; 276-279; 281-282; 283-344; 391; 393-394; 397; 398-399; 407-408; 410-421; 424-432; 434-436; 440-441; 442-453; 454; 459; 461; 462-472; 473-474; 475-476; 477-478; 479-498; 546-547; 548; 549; 550-552; 562-564; 565-569; 570-571; 572; 621; 622-624; 688-689; 691; 719-720; 733-734; 740-741; 761-762; 835; 840-925; 976-977; 978-979; 980-991; 1008-1009; 1010-1012; 1013; 1014-1018; 1019-1023; 1061-1067; 1081-1082; 1083-1086; 1104-1106; 1107-1111; 1112; 1113-1114; 1115-1118; 1208-1212; 1260-1261; 1270-1272; 1273.

 

D. Coercion of employees to violate laws or to “look the other way” while superiors engaged in illegal or unethical acts; collusion to conceal wrongful acts through threats of discipline or termination and misuse of the “attorney-client privilege”.

Document Numbers:

1-3; 4-5; 6-50; 61-63; 65-66; 67-80; 89-90; 183-184; 185-188; 274-275; 276-279; 454; 546-547; 549; 550-552; 565-569; 621; 688-689; 1428-1429; 1434; 1435-1444.

 

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