Thursday, June 11, 1998

Bishop Estate faces
loss in controversial

The investment of $1.2 million
in a New Jersey start-up
comes under state scrutiny

By Rick Daysog


It had the elements of a cheap novel: An investment partner who operates an Internet dating service, an ex-FBI agent and a deal going sour.

But the Bishop Estate's investment in KDP Technologies L.L.C. is hardly the stuff of fiction.

The multibillion-dollar charitable trust could lose much of its $1.2 million investment in the Rutherford, N.J.-based start-up. While the amount is relatively small compared to the trust's megadeals, the estate's involvement in KDP Technologies has attracted the attention of the state attorney general's office, which is investigating allegations of financial mismanagement and breaches of fiduciary duties by individual trustees.

KDP logo Founded in February 1997, KDP Technologies developed and operates an Internet site, dubbed Starbook, for actors, actresses, models and other entertainment talent to showcase themselves to agents, casting executives, producers and advertising agencies.

The estate purchased $500,000 in notes issued by KDP Technologies in February 1997. The trust later acquired a 20 percent stake in the company for about $700,000.

One source familiar with the transaction said the estate had the option to invest an additional $800,000 but pulled back late last year after it began to see problems.

That's when the Securities and Exchange Commission filed an injunction against one of KDP's directors, Benjamin Franklin Bush III, for allegedly misappropriating $450,000 from mainland investors.

Bush, president of Ben Bush Investment Management Inc. of Pacific Palisades, Calif., used the money to pay for rent, alimony, jewelry and hockey tickets, the SEC said. Bush also induced investors to purchase bonds issued by the Brazilian government in 1902 and 1915.

Bush, who could not be reached for comment, pleaded guilty to money laundering charges in April and will be sentenced later this month.

While the SEC's action was unrelated to Bush's role at KDP Technologies, it prompted managers at the estate to question its involvement in the company.

The estate has not yet written off its investment in KDP Technologies but may do so soon, a source said.

Kai Patterson, KDP Technologies' founder, said the Bishop Estate originally invested in his company on the advice of Bush. Patterson said Bush knew Bishop Estate trustee Lokelani Lindsey and introduced him to the trustee during the Super Bowl festivities in New Orleans in January 1997.

According to state business records, Lindsey served as president and director of the Bishop Estate-owned KDP Ltd. beginning in February 1997. She stepped down from the local company earlier this year.

KDP Ltd. administers the estate's investment in KDP Technologies L.L.C.

An attorney for Lindsey declined comment on her involvement with KDP, saying he was unfamiliar with the investment.

KDP Technologies also has ties to the Bishop Estate boardroom through a brother-in-law of trustee Richard Wong. Film producer Randy Stone, whose sister Mari is married to Wong, has held preliminary discussions with KDP Technologies to market its services, Patterson said.

Bishop Estate trustee Oswald Stender objected to the estate's initial investment in the venture in 1997. Stender, through his attorney, said he thought the investment was not "reasonably prudent" from the standpoint of the business concept and the original investors in the company.

The investment was approved by a majority of the estate's trustees.

A personal attorney for Lindsey hired an ex-FBI agent to investigate the history of investor lawsuits against Ben Bush, according to a summary of attorney-client correspondences filed in state Circuit Court by Lindsey's attorneys.

The former FBI agent -- local private investigator Hilton Lui -- also dug into KDP Technologies and Patterson, Lindsey's court filings show.

Lui tried to track down Patterson and filed a confidential, three-page report on the matter in April.

Patterson, meanwhile, said he finds it absurd that Lindsey hired an investigator to look into his business since he was always open about his dealings with the trust.

At one time, the estate expressed much interest in KDP Technologies L.L.C. but now the project appears on hold, Patterson said.

He said he was concerned about the impact the issue would have on his other companies.

Besides KDP Technologies L.L.C., Patterson also heads a similar sounding New Jersey company known as KDP Technologies Inc. That company, which does not involve Bishop Estate money, operates an Internet dating service known as Love Mate.

Critics of the Bishop Estate questioned the estate's investment in a high-risk venture like KDP Technologies L.L.C. Longtime Bishop Estate watcher Desmond Byrne said the trust's interests are better served pursuing more stable investments such as its $500 million stake in the Goldman Sachs & Co.

"I don't know why they mess around with this stuff," Byrne said. "On the face of it, it sounds pretty flaky."

Education unions back
new Kamehameha group

The newly formed Kamehameha Schools Faculty Association has gained the support of two prominent Hawaii education unions.

The University of Hawaii Professional Assembly, which is the faculty union, and the Hawaii State Teachers Association have sent letters of support and sizable donations to the Kamehameha Schools teachers union, said KSFA President Larry McElheny.

McElheny said the union received 130 personal checks last week from HSTA members, and the money will go toward defraying legal fees incurred by the fledgling union.

Roy Alameida, KSFA vice president, said union representatives look forward to mutually beneficial negotiations with Kamehameha Schools Bishop Estate representatives as soon as meetings can be scheduled.

Faculty members in March voted 198-36 to form a union. The vote represented 91 percent of Kamehameha's 237 faculty members at the Kapalama campus.

The new union has targeted as its top issue the year-to-year contracts awarded by the school. Teachers also have said the union will allow them to speak out on what's wrong with the campus without fear of retribution.

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