Thursday, June 10, 1999

Judge details
reasons for removing
Lokelani Lindsey

Judge Bambi Weil releaseed
her 'findings of fact and conclusions'
in the ex-Bishop trustee's
removal from office

By Rick Daysog
Honolulu Star-Bulletin


Bishop Estate trustee Lokelani Lindsey wasted and misused trust assets, made important trust decisions without board approval, micromanaged the estate-run Kamehameha Schools and created a climate of fear and intimidation at the Kamehameha Schools.

In a stinging, 190-page finding of facts and conclusions of law filed today, Circuit Judge Bambi Weil laid out the reasons behind her groundbreaking May 6 decision to permanently remove Lindsey from her $1 million-a-year post.

Weil's report -- based on testimony from more than 70 witnesses and thousand of pages of court exhibits introduced during five-month trial that ended in April -- concluded that Lindsey's breaches of trust were so serious and frequent that her continuance in office would seriously harm the multibillion-dollar trust.

Each breach by itself is enough to warrant Lindsey's removal, Weil said.

"She used trust property and personnel for her personal benefit, mismanaged trust property and the Kamehameha Schools and has shown a consistent lack of judgment demonstrating that she is unfit to be a trustee," Weil wrote.

"She failed to act and administer the trust solely in the interests of the trust and its beneficiaries, failed to inform her co-trustees of all material facts relating to the administration of the trust and made unilateral decisions without the knowledge or approval of her co-trustees."

Weil's ruling comes after attorneys for trustees Oswald Stender and Gerard Jervis sued for the 60-year-old Lindsey's ouster in December 1997, saying she was unfit to serve as a trustee. Stender's attorney Crystal Rose today commended Weil's decision, saying it validated years of complaints made by students and teachers of the Kamehameha Schools of Lindsey's conduct.

"The court found that she breached her duties by clear and convincing evidence, Rose said. "I believe it establishes pretty much all the findings that we presented to the court.

Michael Green, Lindsey's lawyer, said he plans to appeal Weil's decision to the state Supreme Court and will ask Weil for a stay on her decision. If she refuses, Green said he plans to ask the state Supreme Court, or its replacement judges, to issue a stay freezing Weil order until an appeal can be heard.

Green believes that Weil abused her discretion during the trial when she refused to allow Lindsey to testify in rebuttal to several key witnesses in the case. After Lindsey took the witness stand for about eight days at mid trial, Lindsey was barred from rebutting later testimony by trustee Jervis, school President Michael Chun, and retired Circuit Judge Patrick Yim, Green said.

Yim's court-sanctioned fact-finding report -- which Green said was "devastating" for Lindsey -- stated that Lindsey intimidated students and teachers, fostered an atmosphere of favoritism and was the cause of much of the morale and problems at the Kamehameha Schools.

"I've never heard of a the defendant or respondent not given the opportunity to testify in this case," Green said.


What Judge Weil found

Judge Bambi Weil's findings of fact and conclusions of law in her May 6 order permanently removing Lokelani Lindsey as a Bishop Estate trustee were filed yesterday in Circuit Court. Among the report were these conclusions:

Bullet Trustee Lindsey breached her duty of loyalty by using estate assets for her own purposes, including her Punaluu home and family travels.

Bullet In disregarding contract provisions, escrow instructions and counsel advice, to the detriment of KSBE, trustee Lindsey breached the duty of loyalty.

Bullet Trustee Lindsey's failure to disclose the shared sour investment and potential conflict of interest regarding her relationship with (Ben) Bush before the KDP investment (a New Jersey Internet company) and her post-investment failure to disclose knowledge of an FBI investigation involving Bush breached the duty of loyalty. The latter breach was aggravated by the fact it occurred while she was an officer and manager of the KDP entities and while she knew the investment was in trouble yet receiving additional funding from KSBE sources.

Bullet Trustee Lindsey also breached her duty of loyalty by placing her personal interest above those of the trust and its beneficiaries.

Bullet Trustee Lindsey committed breach of trust when she acted without consulting co-trustees in connection with the Baker-Van Dyke collection (of Hawaiian books and photographs, a $250,00 purchase), when she failed to disclose information about Bush in connection with KDP ... and when she made the unauthorized public release of her confidential education report.

Bullet She converted her authority as lead trustee for education to investigate matters at the school into one of control over major education decisions, inserting herself as a separate and independent decision-maker between the president of Kamehameha Schools and the board. She held a de facto veto over school operational, budget and policy matters intended for decision by the full Board and exercised that de facto power without consulting or informing other trustees, thus committing breach of trust.

Bullet Trustee Lindsey breached her fiduciary duty by her involvement in the mismanagement and waste of trust assets.

Bullet Trustee Lindsey also breached her trust duty by claiming to have special skill as an educator but acting contrary to the manner in which such expertise would be exercised. She failed to use common sense let alone educational expertise in the Kuala'au incident. ... She further failed by preparing a biased, inaccurate, and incomplete report of educational quality and personnel at Kamehameha Schools, and then released the report to the public knowing it would damage the school's reputation.

Bullet Trustee Lindsey breached her duties by abusing the discretion conferred upon her as trustee, including but not limited to the liaison capacity of lead trustee for the Education Group, the alteration of contract and escrow terms in connection with the Baker-Van Dyke Collection, and use of trust personnel to obtain government permits for her Punaluu residence. These abuses include every incident encompassed by the above referenced findings of fact and include but are not limited to release of her education report, unilateral mandates regarding Hawaiian language, the change to quarter system for intermediate grades, funding for the Shintani Diet, suspension of the Hawaiian Cultural Project in violation of NAIS (National Association of Independent Schools) standards, micromanagement of Kamehameha Schools in violation of NAIS standards, intervention on behalf of her grandson in violation of NAIS standards, and summoning Kuala'au in violation of NAIS standards.

Bullet The hostility between trustee Lindsey and beneficiaries is extensive, pervasive and interferes with the proper administration of the trust; specifically, Kamehameha Schools.

Bullet Having failed properly to use her education experience, trustee Lindsey has no other experience or qualifications to recommend her as the fiduciary of a $2 billion charitable estate. Indeed the business venture (KDP) and technological investment (EMG) she initiated were both questionable and were ultimately abandoned after more than $7 million of KSBE assets were invested. The major acquisition she negotiated for the 1996 purchase of the Baker-Van Dyke Collection is still not consummated, and good title to the photo segment remains undetermined. The record is replete with examples of trustee Lindsey's lack of due care and abuse of discretion which together with the breaches of loyalty including misappropriation of trust assets to her own benefit lead this court to conclude that trustee Lindsey was not sufficiently careful and diligent in the performance of her duties to meet the requirements of good stewardship of the trust. She must therefore be removed as KSBE trustee.

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