Kukui Gardens probe is on
State attorneys will investigate whether trustees of the housing charity had misplaced loyalties
The state attorney general's office is investigating allegations that some trustees of Kukui Gardens Corp. might have violated their fiduciary duties in activities related to the pending sale of the affordable-housing project.
Deputy Attorney General Hugh Jones said, "We are investigating potential conflicts of interest and potential claims of trust violation."
Jones added, "We think these are serious enough that the court should appoint a special master to investigate the allegations and report back to the court."
A spokesman for Kukui Gardens could not be reached yesterday.
The attorney general's office oversees charitable organizations. Kukui Gardens Corp. was formed as a tax-exempt charitable housing organization to build and operate Kukui Gardens, an 857-unit affordable-housing project on the edge of Chinatown.
The investigation was triggered by allegations made in a lawsuit filed last week by Wallace Ching, the only board member to vote April 27 against selling the complex to San Francisco-based Carmel Partners for about $131 million.
In his lawsuit, Ching alleges that the other trustees, including his brother, Lawrence, violated their fiduciary duty to the trust by subordinating its interest to those of St. Francis Healthcare System of Hawaii and the Marianist Center of Hawaii, which operates Chaminade University and Saint Louis School.
Ching alleges in the suit that trustees who have longtime ties with those organizations put their needs first at the expense of Kukui Gardens and its 2,500 residents.
In addition to conflicts of interest, Ching also alleges he was denied access to trust documents and information he needed to make decisions about the sale. He also has raised questions about votes and the appointment of two trustees.
