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Friday, December 17, 1999



LOKELANI LINDSEY STEPS DOWN

Tapa


By Craig T. Kojima, Star-Bulletin
Lokelani Lindsey, a prime target of Kamehameha Schools protests
since 1997 against the Bishop Estate trustees, fought longest to retain
her post. A critical blow was the IRS decision that the estate would
lose its tax-exempt status if the trustees were not replaced.



'End of the line'

The three-year ordeal that rocked
one of the state's largest institutions,
ripped through the Kamehameha Schools
and divided Hawaiian people
came to an end with yesterday's
resignation of the last trustee,
Lokelani Lindsey

By Rick Daysog
Star-Bulletin

Tapa

Like a raging bonfire, it burned its way through the Kamehameha Schools ohana and the Hawaiian community before making its way into the political arena and the state's court system.

But the 2-1/2-year Bishop Estate controversy came full circle yesterday with the permanent resignation of former trustee Lokelani Lindsey.

Lindsey -- whose micromanagement of the Kamehameha Schools sparked the 1997 campus protest that culminated in the collapse of the Bishop Estate's former board -- said she has exhausted her resources and "has come to the end of the line" of the legal fight to preserve her $1 million-a-year post.

She is the last of the estate's embattled board members to voluntarily step down from the trust.

Probate Judge Colleen Hirai accepted Lindsey's resignation, saying it is in "the best interest of the estate" to conclude the controversy and allow the trust "to move forward."

"Today, we close a very controversial chapter in the history of the Kamehameha Schools," said retired Adm. Robert Kihune, chairman of the Bishop Estate court-appointed board of interim trustees.

"Tomorrow we go back to restructure the governance of the Kamehameha Schools."

Lindsey, who was ousted permanently from the estate by Circuit Judge Eden Elizabeth Hifo in May, stepped down on the condition that her resignation not take effect until 30 days after her appeal of Hifo's order is decided.

Lindsey will remain out of office under Hifo's May 6 ruling, which found that she misappropriated trust assets, mismanaged the estate-run Kamehameha Schools and intimidated teachers and students.


Star-Bulletin
The original board, from left, included Richard Wong,
Henry Peters, Oswald Stender and Gerard Jervis.



But even if Hifo's decision is overturned, Lindsey's resignation will kick in.

Lindsey, the first female Bishop Estate trustee, appointed to the board in 1993, denied wrongdoing on her part and blamed her downfall on an "entrenched elite" at Kamehameha Schools, and Democratic power brokers who care little about the will of the estate's founder, Princess Bernice Pauahi Bishop.

Lindsey's lawyer, Michael Green, said his client's legal battles "cost her everything -- emotionally and financially."

Fighting back tears at times, Lindsey said she is trying to put her life back together. She has worked as an education consultant to the Los Angeles public school district and recently was hired by an undisclosed university to teach in its education department.

"In my heart, I know that I never did anything to damage or hurt the estate and I expressly deny any wrongdoing in the discharge of my duties as a trustee," Lindsey said in a two-page resignation letter to Kihune.

"And so I have fought. I have fought to preserve the will and I have fought to prevent this last bastion of Hawaiian wealth from being subverted to benefit non-Hawaiians."

Founded in 1884, the Bishop Estate is a $6 billion, nonprofit trust established to educate children of native Hawaiian ancestry.

The trust, the state's largest private landowner, is one of the nation's wealthiest charities, whose far-flung investments include large stakes in the Goldman Sachs investment banking firm, the Saks Fifth Avenue department store chain and a Southern California savings and loan.

However, the estate's operations have been under intense scrutiny by the state attorney general's office and the Internal Revenue Service following a May 1997 protest march by Kamehameha Schools parents and alumni upset with the trustees' management of the Kamehameha Schools.

One of the key complaints was that Lindsey was attempting to undermine popular school President Michael Chun.

The controversy hit a crisis point this April when the IRS threatened to revoke the estate's tax-exempt status if Lindsey and fellow trustees Henry Peters, Richard "Dickie" Wong, Oswald Stender and Gerard Jervis were not replaced.

The threat, which could have resulted in nearly $1 billion in losses to the estate, prompted Probate Judge Kevin Chang to remove four of the five trustees on an interim basis, accept Stender's resignation and replace the board on a temporary basis with five local community leaders.

The interim board has since sued for the permanent removal of Wong, Peters and Lindsey, saying they threatened the estate's nonprofit status by taking excessive compensation, mismanaging trust assets and neglecting the trust's core educational mission.

Peters and Wong resigned this month, avoiding a trial set to begin this week. Jervis resigned earlier this year after he overdosed on sleeping pills. Jervis' overdose came after a trust attorney committed suicide after she and Jervis were discovered having sex in the restroom of a Waikiki hotel.

Wong and Peters also are targets of grand jury indictments stemming from an alleged kickback scheme involving Bishop Estate land in Hawaii Kai.

Lindsey's removal trial was to begin yesterday but was postponed as her attorneys and Bishop Estate lawyers huddled behind closed doors for hours to negotiate terms of her resignation.

"When we first marched, we never thought this would result in the five trustees being booted out. We just wanted to get together and solve this thing," said Roy Benham, president of the Kamehameha Schools Alumni Association's 1,500-member Oahu region.

"We never dreamed that this would happen."

Defiant to the end, Lindsey criticized the closing agreement between the estate and the IRS, which she characterized as "probably the most powerful group of bureaucrats in the nation." Lindsey believes the IRS deal will harm the estate and place its control in the hands of the federal and state governments.

"It is inevitable that (Pauahi's) will will be trashed by the closing agreement," Lindsey said.

"It is a sad day for the princess, and I only wish I can go to her grave site and place black ribbons on her grave."

Kihune took issue with her interpretation of the IRS deal, saying it will strengthen the estate and the Kamehameha Schools.

"If you look at it very carefully, I think you will see it is for the best interest of the schools. It is something that will focus all of our resources toward educating children rather than concentrating it on business," Kihune said.

"I think it's for the best that we end this controversy now instead of later. It was going to cost money for the schools, and every cent should go to the children."

State attorneys, meanwhile, objected to the terms of Lindsey's resignation. Deputy Attorney General Daniel Morris said that Peters, Wong, Stender and Jervis resigned with no strings attached.

Morris said the state will continue to press its surcharge claims against Lindsey and her fellow trustees for causing tens of millions of dollars of damage to the estate. Trial is scheduled for next September.

"It is our view that anything short of an immediate and unconditional resignation is inappropriate," Morris said.



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