HOW TO PLUCK A NON-PROFIT: Sightings from the Catbird Seat

How To Pluck
a Non-Profit!

~ o ~

This is a simple, self-help course in how to enrich yourself by becoming a trustee or director of a tax-exempt, non-profit organization:

STEP 1 - Sell your soul to the DEVIL. (You won't be able to accomplish your goal if you have any bit of conscience left.)

STEP 2 - You will need to rent or buy the following: a big-five accounting firm, an international insurance broker, an off-shore bank and/or insurance company, a high-profile law firm, a well-connected lobbyist or two, several government regulators, a few judges, a large assortment of politicians, and some plain, brown paper bags. (Don't worry about the money for these ingredients; this will come from the Trust's own cash reserves, from selling off trust assets at bargain prices to your cronies, and from US taxpayers in the form of grants and tax credits.)

STEP 3 - Select the trust you want to head and inform those whom you bought in STEP 2 that you wanna be a Trustee!

After you are appointed a Trustee (or a director), then you will have no trouble finding hundreds of ways of feathering YOUR nest with trust funds and finders fees (a.k.a. "kickbacks") - in addition to whatever ample salary and fees you are paid.

That's it!

To see how it all works, just take a look at the following examples:

EXAMPLE #1

The MacArthur Foundation

John D. MacArthur (1897-1978) was one of the three wealthiest men in America at the time of his death, and was sole owner of the nation's largest privately held insurance company. One of seven children, he was born in an impoverished coal-producing area of eastern Pennsylvania. His three brothers who survived childhood all achieved success in their fields: Alfred in insurance; Telfer in publishing; and Charles MacArthur as a notable newsman, playwright, Hollywood screen writer, husband of Helen Hayes and father of Hawaii 5-0's "Danno," James MacArthur.

In 1935, John D. MacArthur borrowed $2,500 to acquire the financially impaired Bankers Life and Casualty Company of Chicago. Five years later, Bankers had more than $1 million of assets. At his death, MacArthur's insurance companies had more than 3 million policyholders, with $5.5 billion of insurance in force.

In the 1960's, MacArthur's attention turned to real estate and development. At one time or another, MacArthur's holdings included 100,000 acres of land in Florida, primarily in the Palm Beach and Sarasota areas; several development companies and shopping centers; paper and pulp companies; 19 commercial, office, and apartment buildings in New York City; several publishing enterprises; hotels; radio and television stations; banks and 12 insurance companies.

According to its website, the John D. and Catherine T. MacArthur Foundation is a private, independent grantmaking institution dedicated to helping groups and individuals foster lasting improvement in the human condition. When the John D. and Catherine T. MacArthur Foundation began operations after the death of Mr. MacArthur in 1978, it inherited almost 100,000 acres of undeveloped land, mostly in Florida.

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Journal Inquirer, 6/29/00, by Don Michak:

Key Players in Silvester Case
Have Escaped Attention

The Paul Silvester scandal is in many respects about "crony capitalism," or who knew whom well enough to profit from the hundreds of millions of dollars in public pension fund investments authorized by the now-disgraced former state treasurer.

The focus has been on the lobbyists, lawyers, and politicians from both parties who covertly collected "finder's fees" for lining up deals with Silvester, but a few key players have managed to escape attention.

These are the well-connected people who routinely have private meetings in public offices, after board meetings of philanthropic institutions, inside downtown restaurants, and at secluded golf courses. The contracts that for years have guaranteed them a small but lucrative percentage of nearly every state pension investment have been, until recently, none of your business.

The continuing federal and state investigations of Silvester's admitted racketeering and money laundering have changed that, Treasury officials say they expect several "private-sector" individuals to face indictments, and the probes at the very least could tarnish the sterling reputations of some of these elites.

The founder of one investment partnership Silvester backed, Lawrence L. Landry, already stands publicly accused by the president of another, his protégé, Brad K. Heppner, of relaying an extortionate demand by Silvester.

Landry's firm, moreover, has acknowledged being "one of many subjects" of a State Ethics Commission probe of finder's fees, like the $1.09 million it says Silvester directed him to pay to a mysterious New Yorker, Andrew F. Moses.

Landry, 57, is the former chief financial officer and chief investment officer of the rich and powerful John D. and Catherine T. MacArthur Foundation.

He left the Chicago-based foundation two years ago to run a real estate partnership in Florida after Silvester invested $100 million in the venture.

The partnership, Westport Senior Living Fund, develops and buys retirement communities, comprising a mix of apartments, assisted living suites, and skilled nursing beds. . . .

Landry spent nine years at the MacArthur Foundation, which is perhaps best known for its awarding of generous fellowships some call "genius grants."

The $4 billion foundation is named after a couple that made a fortune in insurance and real estate and spent most of their lives in south Florida, where until recently it was the largest owner of undeveloped land in Palm Beach County.

Landry not only oversaw the sale of those assets but also launched the foundation on an ambitious, aggressive investment strategy aimed at achieving bigger-than-usual returns.

His plan involved selling off hundreds of millions of dollars worth of foundation holdings in New York City real estate and putting the proceeds into private equities and debt, investments that carry bigger-than-usual risks but can sometimes pay off in what Wall Streeters call "excess returns."

Landry started by moving $83 million in MacArthur money into private investments . . .

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NOW, HERE'S A CLOSER LOOK AT

SOME OF THE BIRDS THAT FLOCK AROUND

THE MacARTHUR FOUNDATION

Adele Smith Simmons - Adele Smith Simmons has been a Director of Marsh & McLennan Companies since 1978. President of the John D. and Catherine T. MacArthur Foundation from 1989 to 1999. She is also a director of the Synergos Institute and the Union of Concerned Scientists and a member of the Council on Foreign Relations.

Simmons presided over the MacArthur Foundation's billions during the period when most of the foundation's Florida real estate was sold off -- the last of which was sold to WCI Communities at the same time Ms. Simmons announced her decision to resign as president of the foundation.

Alfred Hoffman, Jr. - Chair, Watermark Communities, Inc.

Al Hoffman, Jr. heads Watermark Communities (WCI), a $550 million-a-year company that builds golfing-centered retirement communities. One of Florida's largest developers, he is also one of the state's largest owners of undeveloped land. Hoffman paid $550 million for Westinghouse's real estate arm in '96.

He also paid $32 million in '97 for a Coral Gables yacht club that had been hammered by Hurricane Andrew; he bought the land from Gov. Jeb Bush's ex-partner Armando Codina, a leader of the right-wing Cuban American National Foundation.

Hoffman was Jeb Bush's state finance chair and headed his inaugural committee.

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From The WCI website: . . . The Man Behind the Westinghouse Deal -

It's been almost a year since Al Hoffman, Jr. sat down for a half hour with Westinghouse executives and negotiated a $550 million deal for WCI Communities Inc., holders of a real estate portfolio estimated at $1.1 billion.

It was a deal that caught just about everyone by surprise and has generated a great deal of interest . . .[Hoffman], between WCI and Sun City Center-based Florida Design Communities, controls more than 75,000 prime acres of both coasts of the Sunshine State. . . .

Hoffman founded FDC in the early 1980s . . . Well-known for buying struggling real estate assets from major corporations and revitalizing them, he has acquired projects from American Cyanamide and Beatrice Foods, purchased Sun City Center from First Chicago Bank in 1987, and bought Ft. Myers' Gulf Harbour Yacht & Country Club from the FDIC in 1993....

Andrew Ferdinand Moses - "a mysterious New York investment banker."

From Journal Inquirer, 11/22/00, by Don Michak: . . . A former top official with one of the nation's wealthiest foundations denied Tuesday that he was able to start his own investment partnership with $100 million in Connecticut pension money because he agreed to go along with an extortionate demand by former state Treasurer Paul J. Silvester.

But Lawrence L. Landry, who until two years ago was chief financial officer at the Chicago-based MacArthur Foundation, confirmed that he paid at least $1.09 million in "finders fees" to a mysterious New York investment banker, Andrew Ferdinand Moses, only after Silvester suggested that Moses was the man to help him get the state's backing.

Landry said the corrupt former treasurer also had arranged for Moses to meet him and his associates in the Palm Beach Florida-based Westport Senior Living Investment Fund, which buys and develops retirement communities. . . .

State treasury records show Moses received a $437,500 fee in connection with one other investment authorized by Silvester.

Landry and Magee said Westport signed a contract with Moses' company, New York Capital Partners, which also was supposed to find investors in other states for the partnership.

Moses met with little success, however, and Westport, which was seeking $400 million for investors, ended up with a total of $160 million-- with $100 million put up by Silvester.

During his half hour presentation to the IAC, Landry revealed that the biggest backer of Westport Advisers Ltd., the general partner in Westport Senior Living Investment Fund is Kamehameha Schools/Bishop Estate, a $10 billion Hawaiian education trust that owns 69.2% of Westport.

Similarly, Landry disclosed that Bishop Estate is also the second-biggest investor in the Westport Senior Living Fund itself, having put up $25 million....

Brad Heppner -

Crossroads Group - In 1996, Hawaii's Bishop Estate loaned approximately $1 million of the trust's funds to Charles Harmon, Jr., an investment banker and former general partner of Goldman Sachs.

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From The Hartford Courant, 10/29/99, by Mike McIntire and Jon Lender: . . .The Texas-based managers of an investment fund with a solid track record handling state pension money say they lost a $100 million investment deal in 1998 because they refused a directive from then-Treasurer, Paul Silvester, to pay a finder's fee to someone of his choosing....

Silvester had been negotiating a possible $100 million investment in the Crossroads Constitution Fund. The state already had $300 million invested in Crossroads dating back to 1987, when, during an era in pension deal-making, the Hartford-based Crossroads had a contract to pay millions in fees to a partnership involving Democratic power broker Peter G. Kelly. ...

By the time Silvester began talking to Crossroads in 1998, the fund's assets had been acquired by a group of Texas investors, who were not interested in forking over the kind of fees Crossroads had paid Kelly and his associates. So when Silvester told Crossroads representative Larry Landry that a fee would need to be paid, the new management at Crossroads said no.

Last summer, Landry, a former chief investment officer of the philanthropic MacArthur Foundation, left Crossroads to set up the Westport Fund . . .

Silvester has alleged that he had arrangements with others to whom he steered fees, whereby they would kick back some of the money...

Lawrence Landry - From Journal Inquirer, 11/22/00, by Don Michak: . . . A former top official with one of the nation's wealthiest foundations denied Tues that he was able to start his own investment partnership with $100 million in Connecticut pension money because he agreed to go along with an extortionate demand by former state Treasurer Paul J. Silvester.

But Lawrence L. Landry, who until two years ago was chief financial officer at the Chicago-based MacArthur Foundation, confirmed that he paid at least $1.09 million in "finder's fees" to a mysterious New York investment banker, Andrew Ferdinand Moses, only after Silvester suggested that Moses was the man to help him get the state's backing.

Landry said the corrupt former treasurer also had arranged for Moses to meet him and his associates in the Palm Beach, Fla-based Westport Senior Living Investment Fund, which buys and develops retirement communities....

A protégé and longtime business partner of Landry's, Brad K. Heppner, heads another partnership that has received several state pension fund investments since 1987: The Crossroads Group of Dallas, Texas.

Landry was one of the owners of Crossroads until he left to start Westport, which he said was originally intended to be operated as a unit of Crossroads.

Heppner said that while he wanted Silvester to invest another $100 million with Crossroads, Landry told him Silvester wouldn't do a deal unless the Texas company paid a further finder's fee to someone whom Silvester would designate.

Heppner said he ... refused to accept Silvester's condition. That, he added, led Landry to sell his interest in Crossroads and start Westport, which ended up with the money from Silvester.

Landry, after a presentation before the state's Investment Advisory Council, a state panel that oversees pension plan deals ... denied Heppner's allegation. . . .

Silvester was convicted last year on federal racketeering and money-laundering charges, and investigators are continuing to examine how he funneled bribes, and kick-backs through his or others' political campaigns.

Landry and an investment banker associated with Westport, John Magee, meanwhile said they had no reason to suspect that Moses may have kicked back part or all of his finder's fee to Silvester . . .

State treasury records show Moses received a $437,500 fee in connection with one other investment authorized by Silvester.

Landry and Magee said Westport signed a contract with Moses' company, New York Capital Partners, which also was supposed to find investors in other states for the partnership. . . .

During his half hour presentation to the IAC, Landry revealed that the biggest backer of Westport Advisors, Ltd., the general partner in Westport Senior Living Investment Fund, is Kamehameha Schools/Bishop Estate, a $10 billion Hawaiian education trust that owns 69.2% of Westport.

Similarly, Landry disclosed that Bishop Estate is also the second-biggest investor in the Westport Senior Living Fund itself, having put up $25 million.

Bishop Estate, said to be the nation's wealthiest charitable trust, has been wracked by a scandal involving the former trustees, whom the Internal Revenue Service ordered removed after accusations that they mismanaged estate finances, took kickbacks, and paid themselves annual fees averaging around $900,000 each.

Its critics, like University of Hawaii professor Randall W. Roth, also say the trust was for years operated "as a multibillion-dollar candy store for the state's political establishment."

Landry, who has been quoted in the Hawaiian press as defending the estate's treasurer, protested Tuesday that the controversy surrounding Bishop Estate has nothing to do with him or Westport.

The fact that he, Westport, and Bishop Estate now also have a connection to the Silvester scandal, he added, is purely coincidental. . . .

WCI Communities, Inc. - Luxury homebuilders based in Florida.

March 12, 2002

WCI launches IPO, stock climbs

By Darcie Lunsford

WCI Communities has done what has been expected since it stormed into Palm Beach County in 1999 to pull off a $230 million land grab.

The Bonita Springs-based luxury homebuilder launched an initial public offering on Tuesday.

Trading as WCI on the New York Stock Exchange, the builder offered 16 percent of the company through the sale of 6.9 million shares. The $19-a-share offering price had jumped to $22.84 by mid-day.

Tapping the public markets has been a long-time objective, CFO Jim Dietz said.

"The timing was right from the standpoint that the markets have recovered from Sept. 11," he said.

WCI also is coming off a profitable year with its net income jumping nearly 25 percent in 2001 to $102.2 million on revenues of $1.1 billion, according to its most recent earnings report. In 2000, the builder's net income was $81.9 million on revenues of $882.2 million.

The cash raised through the IPO will be used to pay off about $50 million in construction loans on its condo towers, including the pricey One Watermark Place of the Palm Beaches in West Palm Beach. Construction of the 15-story building overlooking the Intracoastal Waterway is expected to be completed later this year.

The balance of the sale proceeds are earmarked to pay down an existing $450 million credit line with Fleet National Bank and other lenders, Dietz said.

The builder intends to use this boosted borrowing capacity to bankroll a wave of new developments. Chief among them is the 1,000-home Evergrene development and the Old Palm Golf Club, both in Palm Beach Gardens.

The two communities are slated to go on land WCI bought from the John D. and Catherine T. MacArthur Foundation in 1999.

The $230 million deal, arguably South Florida's largest in recent history, encompassed nearly 15,000 acres, spanning Palm Beach, Martin and St. Lucie counties. WCI has since sold all but 2,500 acres, generating $132 million.

It carries no lingering debt from the transaction, Dietz said.

* * *

From Multex Investor:

WCI Communities, Inc. (NYSE)

As of March 12, 2002

DIRECTORS & OFFICERS

Ackerman, Don E., (68) Chairman of the Board, Executive Vice President

Don E. Ackerman is the Chairman of the Board of Directors and Executive Vice President of WCI. From July 24, 1995 until the date of the merger, Mr. Ackerman served as Chairman of the Board of Directors and Executive Vice President of WCI Communities Limited Partnership. From 1985 until the date of the merger, Mr. Ackerman also served as a Director of Florida Design Communities. He is also a Director of First Fidelity Title, Inc., Financial Resources Group, Inc., Florida Lifestyle Management Company, Courtyards at Sun City Center, Inc., Sun City Center Office Plaza, Inc., Sun City Center Land Company and Aston Care Systems, Inc. From 1967 until 1991, Mr. Ackerman was a partner at J.H. Whitney & Co., a venture capital firm. Mr. Ackerman is President of Chandelle Ventures, Inc., his private investment company, and serves as Chairman of the Board of Walden University, Inc. Mr. Ackerman is a Director of Schlumberger Limited.

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Hoffman, Jr., Alfred, (67) Chief Executive Officer, Director

Alfred Hoffman, Jr. is the Chief Executive Officer and a Director of WCI. From July 24, 1995 until the date of the merger of WCI Communities Limited Partnership and Florida Design Communities, Mr. Hoffman served as Chief Executive Officer of WCI Communities Limited Partnership, and from July 1998 until the date of the merger, he also served as a Director of WCI Communities Limited Partnership. From 1985 until the date of the merger, Mr. Hoffman also served as Chief Executive Officer and Chairman of the Board of Directors of Florida Design Communities. He also served as President of Florida Design Communities from 1985 to 1989 and 1993 to 1994. Mr. Hoffman is Chief Executive Officer and Chairman of the Board of Directors of First Fidelity Title, Inc., Financial Resources Group, Inc., Florida Lifestyle Management Company, Courtyards at Sun City Center, Inc. and Sun City Center Office Plaza, Inc. He also is Chief Executive Officer and a Director of Sun City Center Land Company and is a Director of Aston Care Systems, Inc. Prior to establishing Florida Design Communities, Mr. Hoffman founded Tekton Corporation, a homebuilder which he sold to Union Camp Corporation in 1970, and from 1970 to 1975, he served as head of Union Camp Corporation's real estate homebuilding subsidiary. From 1975 to 1985, Mr. Hoffman was a private developer in the Tampa Bay area.

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Starkey, Jerry L., (42) President, Chief Operating Officer, Director

Jerry L. Starkey is the President and Chief Operating Officer and a Director of WCI. From 1998 until the date of the merger, Mr. Starkey was the President and Chief Operating Officer of WCI Communities Limited Partnership. From 1994 until the date of the merger, he also served as President and Secretary of Florida Design Communities. Since joining Florida Design Communities in 1988, Mr. Starkey has also held the office of Chief Operating Officer. Mr. Starkey is President of First Fidelity Title, Inc., Financial Resources Group, Inc., Courtyards at Sun City Center, Inc., Sun City Center Land Company and Sun City Center Office Plaza, Inc. Prior to joining the predecessor to Florida Design Communities, Mr. Starkey was Executive Vice President of George Thomas Homes, a production homebuilder with operations in Texas and Florida. Mr. Starkey is a member of the State Bar of Texas. In addition, Mr. Starkey was President and Secretary of Aston Care Systems, Inc. from 1996 to 1998.

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Dietz, James P., (37) Chief Financial Officer, Senior Vice President

James P. Dietz is a Senior Vice President and Chief Financial Officer of WCI. From October 1996 until the date of the merger, Mr. Dietz was the Chief Financial Officer and Treasurer of Florida Design Communities. Since joining Florida Design Communities in 1995, Mr. Dietz has also held the position of Corporate Controller. In addition, from 1996 until 1998, Mr. Dietz served as Chief Financial Officer of Aston Care Systems, Inc. Prior to joining Florida Design Communities, Mr. Dietz was Manager of Business Development at GTE Leasing Corporation, an affiliate of GTE. From 1986 until 1993, Mr. Dietz held various professional positions, including audit manager, at Arthur Andersen & Co.

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Hastings, Vivien N., (50) Senior Vice President, General Counsel

Vivien N. Hastings is the Senior Vice President and General Counsel of WCI. From 1995 until the date of the merger, Ms. Hastings was Senior Vice President and General Counsel of WCI Communities Limited Partnership. Prior to serving as General Counsel, Ms. Hastings held various positions in WCI Communities Limited Partnership's legal department. Prior to joining WCI Communities Limited Partnership, from 1982 to 1989, Ms. Hastings was Vice President and Co-General Counsel of Merrill Lynch Hubbard, Inc., a real estate division of Merrill Lynch & Co. From 1977 until 1982 Ms. Hastings was an associate with the Chicago law firm of Winston & Strawn. . . .

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Landry, Lawrence L. , (58) Director

Lawrence L. Landry has been a Director of WCI since May 1999. From July 24, 1995 until August 1998, Mr. Landry served as a Director of WCI Communities Limited Partnership. From January 1996 until March 1999, Mr. Landry served as a Director of Florida Design Communities. Mr. Landry is the President and Chief Executive Officer of Westport Advisors, Ltd., which is the general partner of Westport Senior Living Investment Fund L.P. From February 1989 until June 1998, Mr. Landry was the chief finance and investment officer of the John D. and Catherine T. MacArthur Foundation. The MacArthur Foundation has been a stockholder of WCI since 1995. Mr. Landry is a member of the Board of Trustees of Clark University and also serves on the Board of Directors of Greystone Communities, Inc.

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McWilliams, Thomas F., (58) Director

Thomas F. McWilliams has been a Director of WCI since March 1999. Mr. McWilliams has been employed by Citicorp Venture Capital, Ltd. since 1983 and has been a member of its investment committee since 1984. Mr. McWilliams serves on the boards of Chase Industries, MMI Products, Polar Corporation, Ergo Science Corporation, Pursell Industries, Strategic Industries and Royster-Clark Group Inc.

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Mintz, Joshua J., (46) Director

Joshua J. Mintz has been a Director of WCI since October 2000. Mr. Mintz is the Vice President and General Counsel of the John D. and Catherine T. MacArthur Foundation. Prior to joining the foundation in 1994, Mr. Mintz was with the law firm Sidley & Austin for thirteen years, specializing in commercial litigation and business reorganization, the last five of which he was a partner.

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Sugarman, Jay, (39) Director

Jay Sugarman has been a Director of WCI since 1995. Mr. Sugarman is Chairman of the Board and Chief Executive Officer of iStar Financial, Inc., a publicly traded finance company focused on the real estate industry. From 1996 to 1997, he was Senior Managing Director of Starwood Capital Group, LLC and from 1993 to 1996, was President of Starwood Mezzanine Investors, L.P. . . .

For more, GO TO > > > Vultures in the WCI Communities

Westport Advisers, Ltd. - The Hartford Courant, 10/29/99, by Mike McIntire and Jon Lender: . . .

The Texas-based managers of an investment fund ... say they lost a $100 million investment deal in 1998 because they refused a directive from then-Treasurer (Conn.), Paul Silvester, to pay a finder's fee to someone of his choosing. . . .

Silvester had been negotiating a possible $100 million investment in the Crossroads Constitution Fund. . . .

Last summer, Landry, a former chief investment officer of the philanthropic MacArthur Foundation, left Crossroads to set up the Westport Fund. . . .

Silvester has alleged that he had arrangements with others to whom he steered fees, whereby they would kick back some of the money . . .

EXAMPLE #2

THE KAMEHAMEHA SCHOOLS

January 11, 2002

Trust may sell land under golf club

By Rick Daysog, Honolulu Star-Bulletin

The Kamehameha Schools is exploring the sale of land under the exclusive Robert Trent Jones Golf Club in northern Virginia as it looks to unload several of its underperforming mainland assets.

The $6 billion charitable trust has held preliminary talks with the club's members, who would like to acquire the fee interest in the 18-hole course, considered one of most prestigious golf facilities in the Washington, D.C., area.

The club -- whose members include former President George Bush, U.S. Supreme Court Justice Sandra Day O'Connor, ex-AT&T Corp. Chairman Robert Allen and Washington power broker Vernon Jordan -- operates under a 40-year lease with the trust, but members hold an option to acquire the fee.

A Kamehameha Schools spokesman had no immediate comment. Jordan, the club's president, did not return calls.

The proposed sale was detailed in a recent internal memo listing the trust's underperforming assets.

The memo noted that the trust officials have had early discussions with the club and planned to follow up. It also noted that the trust's initial $45 million investment in the club is now worth about $35 million.

The move comes as the estate is looking to sell off many of its money-losing mainland ventures, which were initiated by the estate's previous trustees during the late 1980s and early 1990s. The sell-off is part of a series of reforms of the trust's investment policies initiated by the estate's current board and Chief Executive Officer Hamilton McCubbin in response to investigations from the Attorney General's Office, the estate's court-appointed masters and the Internal Revenue Service.

The estate recently sold 608 acres of industrial land near Atlanta to a mainland investor, Genoa Realty Services, for about $13 million. The parcel is part of the 1,200-acre Gwinnett Progress Center project, which the estate and its partners launched in the late 1980s.

The trust's board also has approved the sale of its assets in its Treyburn LLC subsidiary. Treyburn is the developer of master-planned residential communities in the Research Triangle area in North Carolina. The estate invested $59.5 million in the various Treyburn projects, but the properties are now worth about $14 million.

For the estate, the Robert Trent Jones Golf Course has not lacked controversy. The club -- the site of the President's Cup international golf tourney in 1994, 1996 and 2000 -- was completed in 1991 by a partnership that included the estate and Durham, N.C., developer Clay Hamner. It was designed by legendary golf course builder Robert Trent Jones. But the club ran into financial problems in 1994, prompting the partners to sell the leasehold interest in the club and its two-story, 40,000-square-foot clubhouse to members. The estate retained the fee interest.

That deal was largely engineered by former Kamehameha Schools trustee Henry Peters, who also served as a trustee of the golf club.

That relationship prompted two club members -- Benjamin Stone and Robert Basham, president of the Outback Steakhouse restaurant chain -- to sue Peters and other partners*, saying the fee price was too high and that Peters had a conflict since he served as a trustee of both institutions.

Peters denied the conflict, saying he recused himself from taking part in the transaction as a Kamehameha Schools trustee.

The suit was settled after club members were given a favorable, 40-year lease and an option to buy the fee interest....

* * *

March 13, 2002

Hawai'i trust sees WCI stock boom

Advertiser Staff and News Services

Kamehameha Schools' investment in Florida development company WCI Communities Inc. paid big dividends this week when WCI raised more than $130 million in an initial public stock offering.

WCI Communities Inc.'s shares rose 19 percent after the stock sale for the builder of residential communities and luxury condominium towers in Florida. Shares of WCI rose $3.67 to $22.67 in New York trading.

The offering raised the value of the 7.1 million shares owned by Kamehameha Activities Association, a subsidiary of Kamehameha Schools, to $160 million. Kamehameha, the largest single shareholder, with more than 16 percent of WCI shares, invested in the Bonita Springs, Fla., company in 1995. Kamehameha Schools' initial investment in WCI was worth about $37 million, trust officials said.

The Kamehameha Schools trust and its subsidiaries have about $3 billion invested in stocks, bonds and other securities. The value of its WCI investment now makes up about 5 percent of that portfolio, which is the main asset base for the $4.4 billion non-profit network of private schools serving Hawaiians.

The trust has not decided what to do with its stock after the expiration of a six-month "lock-out" period, after which initial investors in WCI can sell shares, said Wally Chin, president of Kamehameha Activities Association. . . .

WCI originally filed with the Securities and Exchange Commission to go public Sept. 7, a plan that was delayed by the terrorist attacks four days later.

The shares sold represent a 16 percent stake. The IPO values WCI at $822 million.

The company, which traces its roots back to 1946, was once a unit of Westinghouse Electric Corp. The company is now headed by chief executive officer