Monday, June 29, 1998

Lindsey investment
raises questions

Her co-investor in a
gold deal was key to a losing
Bishop Estate investment

By Rick Daysog


Bishop Estate trustee Lokelani Lindsey lost thousands of dollars of her own money in a Las Vegas gold deal that involved another investor who later played a key role in a controversial Bishop Estate investment.

An attorney for Lindsey denied any conflict of interest on Lindsey's part, saying the two investments are unrelated.

In a September 1996 lawsuit filed in Clark County, Nev., Lindsey alleged that she invested more than $400,000 in a fraudulent gold venture headed by now-deceased Las Vegas resident Robert Kerkez.

Lindsey's co-plaintiff in the suit -- which was filed against Kerkez's widow, Janet Wang-Kerkez, but was later withdrawn -- was Los Angeles investment adviser Benjamin Franklin Bush III, who said he also lost large sums of money.

Bush, president of Pacific Palisades, Calif.-based Ben Bush Investment Management, has a prominent role in a separate 1997 Bishop Estate investment in a New Jersey start-up known as KDP Technologies L.L.C., which develops Internet software for the entertainment industry.

Bush had served as a director of KDP Technologies and was instrumental in the estate's decision to invest more than $1 million in the New Jersey start-up company.

The estate recently put a hold on its investment in KDP Technologies and is considering writing off its investment in the venture, a source familiar with the deal has said.

Lindsey served as president of locally based KDP Ltd., which oversaw the estate's investment in KDP Technologies. She stepped down from the local company earlier this year.

One critic of the Bishop Estate, local trust attorney Randall Roth, said the two investments may not necessarily present a conflict of interest in themselves. But he noted that both deals "invite further inquiry" from the state attorney general, given the role of Bush in both transactions.

Attorney General Margery Bronster is looking at the estate's investment in KDP Technologies as part of her investigation into charges of financial mismanagement and breaches of fiduciary duties by Bishop Estate trustees.

'It's almost beyond belief'

Roth, co-author of the "Broken Trust" article which criticized trustees' management of the estate, said the two deals aren't the type of investment that a prudent investor should undertake.

These transactions appear to show that Lindsey is ill-suited for the job of managing the vast assets of the multibillion-dollar estate, Roth said.

"It's amazing that a majority of the trustees would approve something like this," Roth said. "It's almost beyond belief."

Michael Green, Lindsey's attorney, stressed that there's no connection between the two investments. Lindsey may have lost money in a private investment, but that investment is not related to any investments made by the Bishop Estate, he said.

He said the investments would be an issue only if Lindsey made money on a personal deal involving an estate investment, which was not the case.

Green said KDP Technologies appeared to be a promising venture for the estate.

"I don't see this as a problem," Green said. "What does this have to do with anything?"

The Las Vegas investment involved a proposed sale of a large quantity of gold bullion to Arab investors by a seller in the Philippines.

Lindsey was suspicious

In the suit, Lindsey said Kerkez offered her a share of millions of dollars in broker commissions for financing the gold sale.

Lindsey noted that she paid for airplane tickets, passports and accommodations for Kerkez's various trips to the Philippines. But she became suspicious of the venture in May 1995 and began to investigate after Kerkez died in April 1996, the suit said.

After his death, Lindsey and Bush said they later searched Kerkez's Las Vegas office where they said they found evidence of forged and altered documents.

Lindsey and Bush also alleged that Kerkez's widow took part in the alleged scheme and received the money from her ex-husband.

Wang-Kerkez could not be reached comment. But her attorney, Michael Singer, denied the charges, saying his client had been divorced from Kerkez since 1992.

Bush also could not be reached for comment, and his San Francisco-based attorney, Alan Ellis, said he was not aware of Bush's investments with Kerkez.

Bush currently is awaiting sentencing after pleading guilty in April to money laundering charges. The Securities and Exchange Commission last year filed an injunction against Bush, claiming he misappropriated about $450,000 from several mainland investors.

The SEC alleged Bush used clients' money to pay for rent, alimony, jewelry and hockey tickets.

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