Wednesday, January 5, 2000

Stender blames
trust woes on state

By Rick Daysog


The attorney general's office failed to protect the interests of the beneficiaries of the Kamehameha Schools prior to 1997 by refusing to investigate the affairs of the $6 billion trust, former trustee Oswald Stender has charged.

But the state attorney general's office said Stender didn't do enough to prevent alleged breaches of trust by his fellow $1 million-a-year board members.

In papers filed in state probate court yesterday, an attorney for Stender said the former trustee is not responsible for damages brought on by the alleged conduct of his fellow trustees.

The state is asking the probate court to surcharge former trustees Stender, Gerard Jervis, Lokelani Lindsey, Henry Peters and Richard "Dickie" Wong, alleging they took excessive compensation, mismanaged the trust-run Kamehameha Schools and jeopardized the tax-exempt status of the trust, which recently changed its name from the Bishop Estate to Kamehameha Schools.

The state's suit is set for trial in September.

Crystal Rose, Stender's lawyer, said the state failed to prevent many of the alleged breaches by Stender's co-trustees prior to 1997. According to Rose, Stender met with Deputy Attorney General Kevin Wakayama in 1992 and 1995 to request an investigation but the state failed to take action.

Rose is asking the probate court to dismiss the surcharge claims against Stender.

"The attorney general failed and refused to investigate, took no action to protect the interests of the beneficiaries and therefore, the attorney general has breached its duty to protect Kamehameha Schools," Rose said.

Stender resigned from the trust in May after the Internal Revenue Service threatened to revoke the estate's tax-exempt status. Peters, Wong, Lindsey and Jervis also have resigned since then, avoiding a December trial seeking their removal.

Lindsey also was removed by Circuit Judge Eden Elizabeth Hifo, the former Bambi Weil, who found that Lindsey breached her duties, misused trust assets and intimidated Kamehameha Schools staffers and students.

Deputy Attorney General Hugh Jones said Stender's counterclaim "defies logic and common sense." Jones said that Stender should have gone to court to address and prevent alleged breaches by his fellow trustees before 1997.

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