Friday, April 17, 1998

Bishop trustees
not in contempt

The state lacked
'clear and convincing' proof,
a judge rules

By Rick Daysog


Saying the state attorney general did not offer "clear and convincing" proof that Bishop Estate trustees withheld Internal Revenue Service records, Circuit Judge Kevin Chang has denied a motion to find trustees in civil contempt.

Chang said yesterday that the estate, at a minimum, showed "substantial compliance" with his order that the estate deliver to the state records it filed with the IRS as part of the federal agency's audit of the trust.

Chang noted that the estate turned over four boxes of documents on April 6, or one business day after his order took effect.

William McCorriston, Bishop Estate's attorney, said yesterday's contempt proceedings and other recent actions by the state underscore its "shoot first and ask questions later" mentality.

McCorriston said he was concerned by what he called intimidation by the attorney general's office in its investigation of the charitable trust. He also called on Gov. Ben Cayetano to appoint an independent investigator to examine the state's inquiry.

"In my judgment, it's a smear campaign from the very beginning," McCorriston said.

The attorney general's office is investigating charges of financial wrongdoing by Bishop Estate trustees and subpoenaed the IRS documents, also known as information document requests, in October.

The IRS documents, which detail many of the estate's financial transactions since 1993, could show if trustees received benefits and perks at the expense of the estate, the state has said.

In January, Chang ordered Bishop Estate to hand over the documents to the state, but that order was suspended when the trust appealed Chang's ruling to the state Supreme Court. The high court denied the estate's appeal on April 3, effectively ordering the trust to deliver the documents.

The estate delivered four boxes of documents on April 6, prompting the attorney general's office to seek civil contempt charges against the estate.

Even with yesterday's ruling, the state still believes that documents are being withheld. Hugh Jones, deputy attorney general, said estate in-house counsel Nathan Aipa made representations that the documents were contained in 15 to 20 boxes.

Jones noted that Chang made no ruling as to whether the estate withheld documents. Chang ruled that the state did not meet its burden of proof to uphold the contempt charges, he said.

"There's substantial question whether we would have received additional documents . . . had we not filed the contempt motion on April 6," Jones said.

Chang's denial of the contempt charges came several hours after he ordered Kamehameha Schools' director of admissions, Wayne Chang, to submit to further questioning by state investigators by May 1.

Wayne Chang and his attorney Howard Luke previously agreed in court to be interviewed by the state on March 27. But during the March 27 meeting, Chang refused to answer investigators' questions after the Bishop Estate petitioned the courts for a protective order.

The state believes that Chang's testimony is crucial to discovering whether trustees of the Bishop Estate "improperly influenced" the selection process at Kamehameha Schools.

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