Tuesday, April 13, 1999

Wong says he'll win in courtroom

The Bishop Estate trustee
was indicted by a grand
jury yesterday

Kalele Kai condo deal at
center of controversy

By Rick Daysog


An Oahu grand jury has indicted Bishop Estate chairman Richard "Dickie" Wong for allegedly taking a $115,800 kickback, making him the second board member in the history of the 114-year-old trust to face criminal charges relating to his duties as a trustee.

In the latest legal scandal to rock the multibillion-dollar charitable organization, the secret panel yesterday indicted the 65-year-old Wong, a former state Senate president, for first-degree theft, perjury and conspiracy over his alleged role in a scheme involving a 1995 Bishop Estate land deal in Hawaii Kai.

The grand jury -- convened in January by Attorney General Margery Bronster -- also voted to indict Wong's wife, Mari, for criminal conspiracy and for hindering prosecution. Wong's brother-in-law, local developer Jeffrey Stone, was charged with commercial bribery, criminal conspiracy and serving as an accomplice to theft.

By George F. Lee, Star-Bulletin
Bishop Estate Trustee Dickie Wong fled from the waiting
media at Circuit Court on Friday afternoon
following his testimony.

"Richard Sung Hong Wong violated his fiduciary duty to the Bishop Estate by accepting a bonus or commission for himself ... for acts he had done as a trustee for the Bishop Estate in connection with the administration of the Bishop Estate," the indictment said.

Wong yesterday said he was disappointed but predicted that he would prevail in court. His attorneys believe the charges are politically motivated.

Wong, a Bishop Estate trustee since 1993, is expected to surrender as early as today to authorities at District Court downtown, where he will be booked and fingerprinted. Wong's bail has been set at $5,000, while Mari Wong's bail was set at $2,000. Stone's bail was set at $3,000.

If convicted, each faces a maximum penalty of 10 years in prison in addition to fines of up to $50,000.

Wong's indictment comes at a time when many critics of the Bishop Estate are calling for board members to step down, saying their legal woes are crippling their ability to govern the estate and the trust-run Kamehameha Schools.

In November, a separate Oahu grand jury indicted trustee Henry Peters for first-degree theft over the same alleged kickback scheme, while trustee Lokelani Lindsey is the target of a soon-to-be decided removal suit by trustees Oswald Stender and Gerard Jervis over allegations of mismanagement and unfitness.

Peters has pleaded not guilty.

Jervis, meanwhile, is recovering at his Kailua home under a doctor's care after taking an overdose of sleeping pills last month. Jervis' apparent suicide attempt came after he and an estate employee, attorney Rene Ojiri Kitaoka, were caught in a compromising position in a Waikiki hotel restroom. Kitaoka committed suicide the day after the hotel incident.

Founded in December 1884, the Bishop Estate is one of the nation's wealthiest charitable organizations, set up to educate children of native Hawaiian ancestry. The estate operates and finances the Kamehameha Schools.

Yesterday's nine-page indictment charged that Wong received a $115,800 kickback from his brother-in-law Stone through a series of complicated real estate transactions.

According to the grand jury, Stone paid an inflated price for the Wongs' second-floor condominium in the upscale 1015 Wilder apartment complex in Makiki on May 17, 1996. That same day, the Wongs bought a $1.1 million Kahala home from Stone, using the proceeds from the sale of their condo as partial payment.

In return, Stone received a "sweetheart deal" when he and his mainland partner, National Housing Corp., acquired the estate's fee interest to the 219-unit Kalele Kai luxury condominium complex for $21.9 million in Nov. 1995, the state has alleged.

Wong, according to the grand jury, secretly met with Stone prior to the Kalele Kai transaction to mediate some of the aspects of the deal. The indictment further alleged that the Wongs provided incomplete testimony in sworn interviews with the attorney general's office in November 1998.

The charges against Wong and his family are a result of Bronster's 19-month investigation into alleged breaches of fiduciary duties and mismanagement by the estate's $840,000-a-year trustees. In September, Bronster sued for the permanent and interim removal of at least four trustees, saying they engaged in a pattern of self-dealing and mismanagement.

Senior Deputy Attorney General Lawrence Goya said that with the latest indictments the state has completed its investigation of the Kalele Kai transactions. But he did not rule out further criminal charges relating to other aspects of the state's investigation.

The state recently subpoenaed the campaign records of Sen. Marshall Ige, former state Sen. Milton Holt and various estate vendors who contributed to their campaigns. In its September removal petition, the state alleged that several trust vendors, at the request of Bishop Estate employees, helped launder Holt and Ige's campaign expenses.

Sources say the state also has subpoenaed the election records of other state legislators.

Meanwhile, Eric Seitz, Wong's attorney -- said Wong recused himself from all aspects of the Kalele Kai negotiations, which were finalized by trustees Lindsey, Jervis and Peters.

Seitz -- who attempted unsuccessfully last week to postpone the grand jury proceedings against Wong -- denied that Stone received a "sweetheart" deal, arguing that the lease-to-fee conversion was of enormous benefit to the estate.

The $21.9 million price paid by Stone and his partners is almost 2-1/2 times the value that an independent appraiser placed on the Kalele Kai property in 1995, said Seitz, who noted that the project had been stalled under the original developer, Peter Bedford's Kapalele Associates, of California.

"This is the most disgraceful indictment I've ever seen or heard of," said Seitz.

"They don't have a case. I rarely predict a victory, but in this case it's a slam dunk."

Seitz believes that much of the state's evidence against Wong comes from testimony by local attorney Richard Frunzi, who once served as vice president in Stone's now-defunct company, Honolulu International Telecommunications Inc. Frunzi allegedly told the grand jury that Stone expected Wong to receive "some payoff" as a result of the Kalele Kai transaction, Seitz said.

Wong was asked by the grand jury about Frunzi's remarks and called the allegation a lie, said Seitz. Frunzi, who was sentenced by a federal judge to five years in prison last February for laundering drug money, is telling his story to help shorten his own jail time, Seitz said.

"Whatever Mr. Frunzi told them, I'm more than happy to have him repeat it in front of a jury because at that time he'll be in prison, he'll be disbarred. He's a scumbag," Seitz said.

"He's a crook and a criminal and a disgrace to the bar and a liar."

Members of the Stone family, meanwhile, say they feel intimidated by the attorney general's latest legal assault. Wong's mother-in-law, the Rev. Beverly Bates, who testified before the grand jury on Thursday, said her daughter, Mari Wong, and her daughter-in-law and Jeff Stone's wife, Lorrie Stone, are in "deep depression" over the ordeal.

Bates believes that the attorney general is unfairly attacking members of Wong's family to get him to resign.

"I know my family never did this. This is unconscionable that Margery Bronster can so abuse her power and take Richard's family hostage," Bates said. "Our lives are ruined."

Ironically, Wong -- a former state Senate president for 13 years -- and his attorneys believe that he is a victim of a game he once mastered: politics.

Ronald Malone, a mainland attorney for Wong, argued that Bronster is attempting to use the indictment to unfairly influence a separate civil suit by her office to remove Wong temporarily and permanently as a Bishop Estate trustee.

The interim removal suit -- which alleged that Wong, Peters, Lindsey and Jervis jeopardized the estate's tax-exempt status, mismanaged Kamehameha Schools and withheld some $350 million of trust income from Kamehameha Schools -- is now in the third week of a scheduled five-week trial.

"This is totally political," Malone said.


At a glance

Richard "Dickie" Wong

Bullet Title: Chairman of the board of trustees, Bishop Estate
Bullet Age: 65
Bullet Appointed to board: 1993
Bullet Term ends: 2003
Bullet Outside positions: Realtor
Bullet Experience: Former state Senate president, assistant division director, United Public Workers union

Summary of charges

Charges in yesterday's indictment:

Richard S.H. Wong

Bullet First-degree theft: Allegedly received a kickback of $115,800.

Bullet Perjury: Falsely told the grand jury that he never knew an appraiser assessed his Wilder Avenue condominium, the indictment says. This was allegedly to show that he disavowed any knowledge that he knew he was receiving an improper commission from Jeffrey Stone.

Bullet Criminal conspiracy: Allegedly conspired with brother-in-law Jeffrey R. Stone and wife Mari Stone Wong to buy a $1 million Kahala house by taking an inflated price of $613,000 for the Wongs' Wilder Avenue condo. Stone later had the condo sold for $425,000.

Jeffrey R. Stone

Bullet Commercial bribery: Allegedly gave a $115,800 kickback to Richard Wong, a Bishop Estate trustee, with the intent of influencing Wong's actions.

Bullet Accomplice to first-degree theft: Allegedly aided Richard Wong in planning and committing first-degree theft.

Bullet Criminal conspiracy: In the Makiki condo-Kahala house scheme.

Mari Stone Wong

Bullet Hindering prosecution: Allegedly rendered assistance to Richard Wong by making a false statement to attorney general's investigators and attorneys that she was not aware of an appraisal done on the Wongs' Makiki condo.

Bullet Criminal conspiracy: In the Makiki condo-Kahala house scheme.

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