Thursday, August 5, 1999

Jervis destroyed
evidence, AG says

He is accused of being a party to
the destruction of expense records
involving a tragic affair
with a woman

Peters, Stone indicted again

By Rick Daysog


Ousted Bishop Estate trustee Gerard Jervis helped destroy evidence of a tragic affair with a female trust employee, according to the attorney general's office.

In a supplement to its September 1998 petition to permanently remove the estate's trustees, the attorney general's office yesterday said Jervis used trust credit cards to cover travel and entertainment expenses that he and lawyer Rene Ojiri Kitaoka ran up.

Jervis later directed or took part in the destruction of expense records linking the two, despite a state subpoena for the records and a 1997 state judge's order barring the destruction of trust records, the state said.

"By using trust money to subsidize his personal relationship with a subordinate, and part participating in the destruction of trust records concerning that personal relationship, trustee Jervis has proven himself unfit to serve as a trustee," said Deputy Attorney General Dorothy Sellers.

Kitaoka committed suicide at her Kaneohe home on March 3 after she and Jervis were caught the day before having sex in a Waikiki hotel bathroom by a security guard.

Jervis took an overdose of sleeping pills one week later but survived.

Sellers declined to estimate the amount of estate money that the couple spent.

But sources familiar with the state investigation said the charges ranged in the thousands of dollars and included $200 dinner tabs charged to Kamehameha Investment Corp., a for-profit estate subsidiary formerly headed by Jervis.

Mel Agena, Jervis' attorney, could not be reached for comment.

The 50-year-old Jervis has been a Bishop Estate trustee since 1994. On May 7, Probate Judge Kevin Chang temporarily removed Jervis and his fellow trustees from their $1 million-a-year posts after the Internal Revenue Service threatened to revoke the estate's nonprofit status.

Chang's historic order came one day after Circuit Judge Bambi Weil permanently removed trustee Lokelani Lindsey for numerous breaches of trust.

The charge that Jervis destroyed evidence is one of several new allegations raised in the state's 66-page supplemental petition to remove all five trustees. According to the state:

Bullet Trustees ordered the estate to buy board insurance to pay for their personal legal costs arising from the estate's investigation of the trust.

Bullet Trustees violated court orders calling for stricter conflict of interest policies, strategic planning for trust assets and the adoption of a management system headed by a chief executive officer.

Bullet Trustees Richard "Dickie" Wong, Henry Peters and Lokelani Lindsey ordered the estate to pay excessive compensation to the trust's outside law firm, McCorriston Miho Miller Mukai, to protect their personal interests.

Bullet Wong, Peters, Lindsey and Jervis refused to resign in the wake of the IRS threat to revoke the estate's tax-exempt status. Revocation could cost the estate about $100 million a year.

Peters, Stone indicted
again by grand jury

By Rick Daysog


A month after a state judge threw out similar criminal charges, an Oahu grand jury has indicted ousted Bishop Estate trustee Henry Peters on theft and conspiracy charges.

After deliberating for 30 minutes yesterday, the secret investigatory panel -- directed by the state attorney general's office -- also indicted local developer Jeffrey Stone for commercial bribery, conspiracy, perjury and for serving as an accomplice to a theft.

The 58-year-old Peters, a former state House speaker, is expected to surrender to the sheriff's office this week. Bail has been set at $10,000 for Peters and $12,000 for Stone.

If convicted, Peters and Stone face up to 10 years in prison.

"Henry Peters violated his fiduciary duties to the Bishop Estate by accepting a bonus or commission for himself from Jeffrey R. Stone," the indictment said.

Lawrence Goya, senior deputy attorney general, declined to discuss specifics of the indictments. Peters and Stone have denied wrongdoing.

According to the investigative panel, the estate granted Stone favorable treatment when he and his Cleveland-based partner, National Housing Corp., acquired the estate's fee interest to the 219-unit Kalele Kai condominium project in 1995 for $21.9 million.

In return, Stone indirectly acquired Peters' upscale Makiki condominium for $192,500 more than it was worth, the panel said.

Unlike the initial November indictments, the grand jury did not indict local businessman Leighton Mau. Goya said the state will not seek charges against Mau, who testified before the grand jury yesterday.

Goya declined to say what role Mau's testimony played in new indictments but said he expects Mau to testify at trial.

Renee Yuen, Peters' lawyer, said the indictments were expected, charging that they are part of a politically motivated plot orchestrated by Gov. Ben Cayetano.

Peters -- who earlier yesterday filed a formal complaint against the attorney general's office with the Office of Disciplinary Counsel -- has charged that the attorney general's office abused its powers by using the criminal charges to leverage a separate lawsuit seeking his removal as a trustee.

Peters said the state is too deep in its criminal case to pull back, without having to face millions of dollars in potential liability from a wrongful prosecution suit.

No crime could have been committed in Kalele Kai fee sale since the estate made millions of dollars in the deal, Peters said. He also has denied any connection between the trust deal and the sale of his home. "The community should know that I am innocent and in the final analysis we will prove that," Peters said.

Stone's attorney, John Edmunds, could not be reached for comment.

The indictment comes after Circuit Judge Michael Town last month rejected a previous grand jury's indictments, saying that testimony by Stone's former attorney Richard Frunzi denied the defendants a fair hearing.

Frunzi, who is in a federal prison on the mainland after he was convicted on money-laundering charges, did not testify before the new grand jury.

Peters has served as a trustee of the multibillion-dollar estate since 1984 but was temporarily removed along with his fellow trustees from their $1 million-a-year posts on May 7 by Probate Judge Kevin Chang.

Chang's decision -- which also named five interim, replacement trustees -- was in response to a threat by the Internal Revenue Service that it would revoke the estate's tax-exempt status if all five trustees were not permanently removed.

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