Sia’s lawyers to pay
$6M in settlement
A Honolulu attorney and a high-powered law firm that represented imprisoned businessman Sukamto Sia during his bankruptcy proceedings must pay $6.25 million in a settlement over allegations they helped the former Indonesian investor hide assets from creditors.
Attorney Renton Nip and the former Washington, D.C., law firm Verner Liipfert Bernhard McPherson & Hand must pay the money to Sia's bankruptcy estate, a Singapore bank, casinos that are owed money by Sia and the Federal Deposit Insurance Corp.
Sia pleaded guilty to federal bankruptcy fraud in 2001 and is in prison in Big Springs, Texas. He was to be released next month but his sentence has been placed in an indefinite status because Sia was recently found in contempt for not complying with a U.S. Bankruptcy Court order.
Sia's bankruptcy trustee Guido Giacometti sued Verner Liipfert and Nip in 2002, saying they "entered into an overarching conspiracy to conceal and divert assets from (Sia's) bankruptcy estate." Later, the Singapore bank and the casinos filed separate lawsuits over similar allegations.
"I know in my heart that the suits were not fair and not right. The settlement, however excessive, brings the Chinese water torture finally to an end," Nip said yesterday. He declined to elaborate.
Warren Price III, attorney for the former Verner Liipfert law firm, said the defendants settled based on the decision of their insurance carrier, and that the settlement will be covered by insurance. Verner Liipfert and Nip dispute all of the claims against them.
"There were a number of parties involved and the defense costs were just going to be horrendous," Price said.
Nip, who shares a law office with former Gov. John Waihee, was once affiliated with Verner Liipfert, which has since merged into the national law firm Piper Rudnick.
Under the settlement, approved last week by U.S. Bankruptcy Judge Lloyd King, Nip and Verner Liipfert do not admit liability. The casino companies, including London Clubs International plc, Aspinall's Club Ltd. and Rio Casino, will get $2.5 million from the settlement, which is not as much as the $12 million in initial claims they filed against Sia's bankruptcy estate.
The suits against Sia's former lawyers will be dismissed and the casinos are waiving their right to seek more money from the bankruptcy estate.
Sia, who once was involved in selling land to the state for the $350 million Hawaii Convention Center, ran into financial problems with creditors in 1998. He filed bankruptcy in Honolulu, claiming he had nearly $300 million in debts and only $9.3 million in assets. Giacometti has since estimated the face value of Sia's assets at $53 million.
Giacometti has raised $7.4 million for creditors, and the estate will receive another $1.25 million of the new settlement with the lawyers. The FDIC is getting $1.25 million for its role as receiver for the now-defunct Bank of Honolulu, where Sia was once chairman and Nip was a director.
Another $1.25 million from the settlement will go to an Asian unit of Commerzbank AG, a major bank based in Germany.
Meanwhile, Giacometti said he is in talks to resolve the contempt order that is keeping Sia in prison. A local attorney for Sia declined comment yesterday.