Legal problems continue for Aloha Tower Marketplace.
Photo by Dennis Oda, Star-Bulletin

Circuit Judge Allene Suemori yesterday named local real estate executive Sanford Murata as receiver to oversee the retail and restaurant property, and issued a temporary restraining order against the developer from conducting some business transactions with outside companies affiliated with its officers.

The move comes after lender Mitsui Trust & Banking Co. alleged in court documents that it has evidence indicating that Aloha Tower Associates may be "improperly diverting income."

Chad Griffith, Mitsui's attorney, said the judge did not rule on the merits of the bank's allegations that the developer may have diverted income. He said the ruling simply means that the bank has the right to name a receiver to oversee the property under its loan agreement with the developer.

According to a motion filed by Mitsui Wednesday, Aloha Tower Associates' officers and professionals received $600,000 in payments between May and August. During the same period, the company hasn't paid $1.8 million it owes to creditors.

One creditor, a trolley operator, is owed $200,000 and had threatened to discontinue its services, Mitsui said.

"This case ... presents an all-too-common scenario: a (borrower) is in default of its obligations secured by commercial real property and appears to be diverting income generated by the property to insiders rather than using such income to pay its loan, costs necessary to keep the property properly operating and rent to the state," Mitsui said.

Rick James, Aloha Tower Associates' attorney, declined comment. A partner in Aloha Tower Associates, U.J. "Rick" Rainalter, also declined comment.

Griffith met with the developers yesterday after the judge issued her ruling. They told Griffith that the payments in question were for services that officers conducted in the past but weren't paid for.

The legal action should have no affect on the daily operations of the marketplace, Griffith said.

Yesterday's ruling was part of a foreclosure suit filed by Mitsui last month against Aloha Tower Associates. Mitsui's suit alleged that the developers made no payments on a $60 million loan that it issued back in September 1993.

In May, Aloha Tower Associates sued Mitsui, alleging that the lender reneged on more than $600 million in financing.

In the midst of the financial and legal turmoil, Mitsui is negotiating to sell the $60 million mortgage to the project to an undisclosed investor. According to Griffith, the lender and borrower are working closely to resolve their dispute.

"Everybody appears to be cooperating very much," Griffith said.