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Tuesday, September 28, 1999




Feds subpoena tax records of Lindsey, Wong, Peters

A grand jury subpoena
has been issued for the
Bishop Estate files

Stender submits unconditional resignation

By Rick Daysog
Star-Bulletin

Tapa

A federal grand jury has subpoenaed the Bishop Estate for the tax records of ousted Bishop Estate trustees Henry Peters, Richard "Dickie" Wong and Lokelani Lindsey, indicating that the Internal Revenue Service may be stepping up its criminal inquiry of the embattled board members.

The 26-member secret panel issued several subpoenas on Sept. 14 that requested copies of the ousted trustees' canceled paychecks, reimbursement records and other payroll records for 1994 through 1997, sources familiar with the trust said.

The grand jury also asked the estate for copies of the trustees' 1099 tax forms, which detail the amount of commissions paid to the ousted board members in the 1994-1997 calendar years.

The records are due Oct. 9.

Lindsey's attorney, Michael Green, acknowledged that the IRS is looking into the personal taxes of Peters, Wong and Lindsey as part of a preliminary inquiry. But Green believes the probe will not turn up evidence of criminal wrongdoing since the trustees relied on their accountants for their tax advice.

"I just can't imagine that there's criminality there," Green said.

An attorney for Peters could not be reached for immediate response and Wong's lawyer, Eric Seitz, had no comment, saying he was not aware of the subpoenas.

Assistant U.S. Attorney Les Osborne, identified in previous media reports as heading a grand jury investigation of the former trustees, declined comment.

The subpoenas are believed to be related to a federal grand jury's request for the ousted Bishop Estate trustees' banking records earlier this year.

In January, a federal grand jury, working with the IRS criminal investigation division, subpoenaed First Hawaiian Bank and the Bank of Hawaii for the former trustees' loan records, personal checking and savings account information and other banking-related documents.

Attorneys for the trustees said at the time that they turned over the documents to the grand jury and were cooperating with the federal investigators.

Sources say that the federal grand jury's investigation is unrelated to the IRS's four-year audit of the Bishop Estate and its ousted trustees.

The IRS audit, conducted by the federal agency's tax-exempt division, has alleged that the ousted $1 million-a-year trustees took excessive compensation, mismanaged trust assets and de-emphasized estate's core educational mission.

The IRS civil division subsequently threatened to revoke the estate's tax-exempt status, prompting Probate Judge Kevin Chang to temporarily remove Peters, Wong, Lindsey and Gerard Jervis on May 7. Jervis and Oswald Stender have since resigned from the trust and Lindsey has been permanently removed.


Stender submits no-
strings resignation

In his letter to the Bishop
Estate's interim trustees, he backs
a new focus for the
charitable trust

By Rick Daysog
Star-Bulletin

Tapa

Oswald Stender, whose criticism of fellow Bishop Estate trustees helped launch reforms of the multibillion-dollar trust, has offered his unconditional resignation.

In a letter to court-appointed interim trustees of the estate yesterday, Stender said his permanent resignation will pave the way for the appointment of a new board of trustees that would rebuild the trust and refocus its energies on the estate's core educational mission.

Stender previously offered his resignation on May 7 on the condition that fellow trustees Lokelani Lindsey, Richard "Dickie" Wong, Henry Peters and Gerard Jervis were permanently removed from their $1 million-a-year posts.

Jervis has recently resigned unconditionally.

Lindsey was removed on May 6 after a five-month trial in which Circuit Judge Bambi Weil found that Lindsey had breached her fiduciary duties.

Wong and Peters, who have been temporarily removed from their $1 million-a-year posts by Probate Judge Kevin Chang, are the targets of a permanent removal suit, which is scheduled to go to trial on Dec. 13.

Stender, who is now a commercial broker affiliated with Coldwell Banker Commercial Pacific Properties Ltd., cited recent efforts to implement a new governance system at the trust headed by a chief executive officer.

Stender, who has advocated such a chief executive officer-based management system for many years, lauded the new interim trustees of the estate for their efforts to implement such a plan.

"While I would have preferred to have been able to serve out my term, I resign knowing that I have served to the best of my ability for the honor and mission of Ke Alii Pauahi and the children of Kamehameha and Hawaii nei," Stender said.



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