Tuesday, November 16, 1999

Dickie Wong
considers permanent

A judge has removed him
temporarily; he's thinking now
of officially retiring from Bishop
Estate though the state
won't make a deal

Herkes: IRS forcing him not to run

By Rick Daysog


Richard "Dickie" Wong, who was removed on an interim basis from his $1 million-a-year Bishop Estate trustee post in May, is considering resigning on a permanent basis from the multibillion-dollar trust.

Eric Seitz, Wong's attorney, said Wong may step down even after an offer to discuss a settlement was rebuffed last week by Attorney General Earl Anzai.

"He's tired of this," Seitz said. "He doesn't think this is productive."

Seitz said he approached Anzai last week through local attorney David Fairbanks, a court-appointed mediator, offering to open settlement negotiations if the state would drop its criminal investigation of Wong.

Wong, a former state Senate president, also offered to drop his federal court suit accusing the attorney general's office of wrongful prosecution.

Seitz said the attorney general's rejected the talks and continues to pursue its criminal investigation into kickback allegations against Wong and his brother-in-law, local developer Jeffrey Stone.

Earlier this year, Circuit Judge Michael Town threw out grand jury indictments against the three, saying the state illegally bolstered the testimony of Stone's attorney, Richard Frunzi. Frunzi pleaded guilty to unrelated federal money laundering charges.

Wong's offer to resign -- raised once before by the former trustee's legal team -- comes one month before Wong and fellow trustee Henry Peters are scheduled to go to trial over a suit seeking their permanent removal.

The court-appointed interim trustees of the Bishop Estate have sued for the permanent ouster of Wong and Peters, saying the two jeopardized the estate's tax-exempt status and have placed more than $900 million of trust assets at risk.

Probate Judge Kevin Chang temporarily removed Wong and Peters in May after the Internal Revenue Service threatened to revoke the trust's tax-exempt status.

Fellow trustees Oswald Stender and Gerard Jervis have since resigned while Lokelani Lindsey was removed for numerous breaches of trust on May 6 after a five-month trial.

Rep. Herkes:
IRS forcing him
not to run again

The South Kona Democrat,
already working for Bishop Estate,
will now take an expanded
job with the trust

By Rod Thompson


HILO -- Supporters have urged state Rep. Robert Herkes to run for mayor of the Big Island.

Herkes found the idea appealing but preferred to remain in the Legislature, he said.

Finally he decided an Internal Revenue Service ruling would force him to drop out of politics, he concluded during a news conference yesterday. "There are too many rumors around and I want to put them to rest," he said.

Herkes, a Democrat representing South Kona, Kau and part of Puna, said he won't run for re-election. Instead, he will take an expanded role working for Kamehameha Investment Corp. in Kona, he said. The company is a for-profit subsidiary of Kamehameha Schools Bishop Estate.

In the shake-up of the estate, the IRS made an agreement with the estate, which says its employees must choose between political activity or working for the estate, Herkes said.

The IRS did not consult directly with Herkes, he said.

"To have an outside agency decide that for us is kind of strange. I suppose I could challenge that on a civil rights basis, but I'm not about to do that."

House Speaker Calvin Say, joining in the news conference, said, "It came as a shock that a third party could interfere with an employer and employee."

Herkes conceded that his age, 68, was a factor in not fighting the IRS.

But more important, Bishop Estate is planning a major increase in activity in west Hawaii, he said.

"We're not ready to tell you the whole story and what my job is, but it's greatly enlarged," he said.

Until two years ago, Herkes said he was doing consulting for Kamehameha Investment Corp. Then he was called back to a more active role because of changes in the Kona real estate market, he said.

The IRS ruling lets Herkes serve out his current term this spring.

Among his goals will be to promote legislation which would give companies greater flexibility in bringing voice telephone, data, cable, and Internet service into people's homes.

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