Funds from Bishop Estate's
nonbid contractors were allegedly
used to cover for Marshall Ige
and Milton Holt
COMPLETE TEXT:By Mike Yuen
Attorney General's Petition for Removal
Bishop Estate trustees, for years suspected as influence peddlers in the corridors of power, have been accused of directing a scheme in which nearly $49,300 in illegal campaign contributions were paid to two isle politicians.
The alleged payoffs:
$18,300 to Senate Government Operations Co-chairman Marshall Ige.
$31,000 to former Senate Vice President Milton Holt.
That's the assertion of Attorney General Margery Bronster, who said funds from the estate's nonbid contractors were used to cover the campaign debts of Ige and Holt.
But Ige maintains that he had no knowledge of an alleged bogus billing scheme supposedly used to conceal how a 1994 campaign debt of $18,261.71 was paid.
Nonetheless, Ige said the state attorney general's office has told him that he is a target in connection with Bronster's investigation of Bishop Estate.
The allegation against Ige (D, Kaneohe) and a similar one against Holt -- with a campaign debt of $31,025.16 -- were cited in a 58-page petition that Bronster filed yesterday with state Probate Court.
The petition seeks the permanent removal of trustees Henry Peters, Richard "Dickie" Wong and Lokelani Lindsey. Peters is a former House speaker; Wong, a former Senate president.
Bronster's report asserts that the three majority trustees used trust assets to enrich themselves. The report also states that possibly all five trustees knew of illegal campaign contributions to Ige and Holt and of lobbying expenses used to entertain lawmakers. The expenses, the report states, weren't disclosed to the state Ethics Commission or the federal Internal Revenue Service.
Estate critics have long said that the trust, the state's largest private landowner, uses its clout to gain influence at the Legislature. Critics also are convinced that trustee appointments have been used as political plums for key lawmakers who protected the estate's interests.
Holt, 45, an estate employee since 1987 who is now a special projects officer, could not be reached yesterday. His attorney, Reginald Minn, said he had no comment about the latest allegations involving his client. The FBI and the city prosecutor's office have been examining Holt's campaign finances; Holt allegedly used campaign funds for his personal benefit.
Bronster declined to say if any wrongdoing alleged in her report would lead to criminal charges.
Graphics firm was owedIge, a Peters protege who served as Peters' vice speaker in the House, said he learned about the allegations when he answered a subpoena from Bronster about 1-1/2 months ago.
Ige, 44, acknowledged that following his unsuccessful bid for the Senate in 1994, he owed $18,262.71 to Ryan's Graphics Corp., whose clients also included Holt.
Bronster, in her petition, said Ryan's Graphics contacted Holt for help in collecting what was owed by Ige, who was elected to the Senate in 1996. A Bishop Estate employee -- whom Bronster did not identify -- supposedly called officials at Ryan's and told them to bill Ige's campaign debt to Kajioka, Okada, Yamachi Architects Inc.
Kajioka, which has received nonbid contracts from the trust, then paid the bogus invoice, Bronster said.
A similar scheme to pay off Holt's campaign debts involved Kajioka and several other firms receiving nonbid contracts from the estate, she added. The firms, Bronster said, "were receiving, have received and continue to receive lucrative nonbid contracts from the trust."
Bogus invoices allegedPrincipals of the companies did not return telephone calls from the Star-Bulletin yesterday.
Bronster said after Holt lost his re-election bid in 1996 to then-Rep. Suzanne Chun Oakland (D, Liliha), he owed $12,334.44 to Ryan's Graphics, which was paid by parceling the campaign debt into three separate false invoices of $4,111.48 each that were paid by Kajioka and two engineering firms, Ronald N.S. Ho & Associates Inc. and Sato & Associates Inc.
Holt also owed Starr Seigle McCombs Inc., his media and advertising consultants, $18,690.72 that the firm had paid Ryan's Graphics, Bronster said.
She gave this account as to what subsequently unfolded:
Yukio Takemoto, chief executive for the estate's budget and review group, who reports directly to Peters, succeeded in getting another trust nonbid contractor, the engineering firm of Akinaka & Associates Ltd., to help with Holt's debt.
In 1993, Takemoto was forced to resign as state budget director when a special Senate investigative panel raised questions about his role in state nonbid contracts. He was never charged with any wrongdoing.
Takemoto told the Akinaka firm that the Kajioka company would get in touch, which it did.
Shortly thereafter, a Bishop Estate employee -- whom Bronster did not identify -- ordered Ryan's Graphics to send four bogus invoices -- each for $4,672.68, which is one-fourth of the debt of $18,690.72 -- to Kajioka, Ho & Associates, Akinaka & Associates and Okita, Kunimitsu & Associates Inc., an architectural firm.
The four companies paid the bogus charges.
'It seems peculiar'Asked if he thought it was odd that an architectural firm had paid off his campaign debt, Ige said: "I did not know about it. So now that you mention it, of course it seems peculiar. But I didn't know about it at the time."
Ige said he was trying to settle his debt with Ryan's by paying the firm several hundred dollars each chance he got.
He will be paying the Kajioka company $4,000 to reimburse the firm for its payment and then will be paying the balance of more than $14,000 off with interest, Ige said.
Ige added that he knew that he owed Ryan's more than $18,000, but he could not explain why that debt never showed on the reports he filed with the state Campaign Spending Commission. His wife, Caryn Ige, is treasurer of his campaign committee.
She didn't know anything "because everything comes through me," Ige said.
"I accept full responsibility. It's not her. We got no bills (showing the $18,262.71 debt)."
Ige said he is ensnared in a politically motivated investigation meant to enhance Democratic Gov. Ben Cayetano's re-election hopes simply because he is Peters' friend.
That's not true, Cayetano said. He added that the evidence came from the Bishop Estate's own files.
The executive director of the state Campaign Spending Commission, Robert Watada, said the panel is conducting its own investigation into other "suspicious and questionable" aspects of Ige's campaign finances. He declined to provide details.
not estate, gained in deals
She claims to have foundBy Rick Daysog
kickbacks to Peters and Wong,
misuse of workers and
Attorney General Margery Bronster's allegations that Bishop Estate trustees Henry Peters, Richard Wong and Lokelani Lindsey enriched themselves at the expense of the estate focus on several complicated business transactions.
Here's a thumbnail sketch of the deals and the major players involved:
Back in 1995, a partnership affiliated with Jeff Stone, a local developer and brother-in-law of Bishop Estate trustee Richard Wong, acquired the leasehold interest to the 229-unit Kalele Kai luxury condominium project in Hawaii Kai from California developer Peter Bedford. The fee interest to the Kalele Kai project previously was owned by the Bishop Estate.
In January 1996, Stone bought an upscale Makiki condominium previously owned by Peters for an inflated price, according to Bronster.
In May 1996, Stone's Pacific Northwest Inc. bought Wong's Makiki apartment at a similarly inflated price of $613,800. That same day, Pacific Northwest sold Wong a Kahala home for $1.1 million.
Bronster believes the inflated prices paid by Stone's companies represent a kickback for past real estate deals involving the estate.
"The inflated prices were paid to Peters and Wong as a quid pro quo for conferring financial benefits on Wong's brother-in-law, Jeffrey Stone," Bronster said.
Stone and Wong could not be reached for comment. But in the past they have denied any link between the trustees' private deals and the estate. Wong said he recused himself from trust decisions affecting the Hawaii Kai project, but state investigators said he did not do so.
KDP TECHNOLOGIES LLC
Bishop Estate's trustees initially invested $500,000 in KDP but planned to invest as much $2 million in the New Jersey start-up, which operated an Internet database for the entertainment industry.
Despite its promise, the estate put a halt to its investment in KDP late last year when a company director and acquaintance of Lindsey's pleaded guilty to federal mail fraud and money laundering charges. The estate now plans to write off its $1.2 million that it put in the venture.
According to the state, Wong and Peters used their position as trustees to help a second brother-in-law of Wong's, Randy Stone, to obtain a consulting contract with KDP.
MID OCEAN LTD.
Until this March, Henry Peters had served on the board of directors of this Bermuda reinsurance company, in which the estate is a big investor. For his efforts, Mid Ocean's management granted Peters options to 4,500 shares of Mid Ocean stock. The company also paid him quarterly director's fees.
According to the state, the director's fees and stock options belong to the trust, not Peters. They argue that Peters is enriching himself at the expense of the trust and its beneficiaries.
Peters, meanwhile, said that his actions as a Mid Ocean director added millions of value to that estate investment. The estate's initial $31 million investment in Mid Ocean, which recently merged with Bermuda-based Exel Ltd., is now worth more than $100 million.
LINDSEY'S HAUULA HOME
In 1993, Lokelani Lindsey wanted to expand her beachfront home on the North Shore and filed for the necessary building permits. But rather than hiring a consultant with her own money, Lindsey used Bishop Estate employees to seek the permits, costing the estate about $12,000. After intense public criticism in 1997, Lindsey agreed to pay back the estate.
Lindsey denied any wrongdoing.
EDUCATION MANAGEMENT GROUP INC.
In 1994, the estate agreed to purchase more than $3 million worth of computer hardware, software and support services from this Scottsdale, Ariz. company, despite staff reports saying that the estate could purchase similar equipment much cheaper.
The EMG products, which include distance-learning curriculum for schools, have not performed well, prompting the estate to develop its own education technology system.
Lindsey, who played a key role in getting the estate to purchase EMG's service, traveled to the 1997 Super Bowl with EMG officials on their private jet, the state said.
The Bishop Estate's five trustees were each paid $844,600 in commissions for fiscal year 1997, a $1,491 raise from the previous year's $843,109.
The five trustees
Richard "Dickie" Wong, trustee board chairman and former state Senate president, who was appointed in 1993. His term expires in 2003.
Oswald Stender, former senior adviser to Campbell Estate, appointed in 1990. His term expires in 2001.
Lokelani Lindsey, former Maui educator, appointed in 1993. Her term expires in 2008.
Henry Peters, former state House speaker, appointed in 1984. His term expires in 2011.
Gerard Jervis, private attorney, appointed in 1994. His term expires in 2018.
Lawmakers express shock,By Mike Yuen
surprise over allegations
Democratic Gov. Ben Cayetano has expressed shock and surprise that a state senator and a former Senate leader have been implicated in schemes in which the Bishop Estate secretly directed its nonbid contractors to pay their campaign debts totaling nearly $49,300.
Cayetano said the allegations made against Senate Government Operations Co-Chairman Marshall Ige (D, Kaneohe) and former Senate Vice President Milton Holt (D, Kapalama) by Attorney General Margery Bronster certainly won't enhance the public's view of public officials.
But Cayetano added he hopes the public keeps in mind that it is a public official, meaning himself; and a public servant, Bronster, who are trying to resolve this kind of problem. So I think the people out there are smart enough to know that the government is trying to clean up wrongdoing.
Republican gubernatorial challenger Frank Fasi, former Honolulu mayor, said that if Ige and Holt did anything illegal, let them pay the penalty.
It could be at the bar of justice where the fate of Ige and Holt is decided, Fasi said.
Maui Mayor Linda Lingle, also seeking the GOP gubernatorial nomination, did not respond to the Star-Bulletin's request for reaction to the allegations involving Ige and Holt. She did comment in general on Bronster's report, saying Bronster made the right decision and that estate trustees will all have their day in court. I don't think, realistically, they could continue to do their job under this cloud.
The allegations against Ige could affect his status in the Senate, which earlier this year stripped Senate Education Co-
Chairman James Aki (D, Waianae) of his membership on the Consumer Protection and Transportation panels after he pleaded no-
contest to promoting gambling on his Nanakuli property in 1994.
Senate President Norman Mizuguchi (D, Aiea) said he will be reviewing Bronster's report to determine if any action should be taken against Ige at this time.
Parents, teachers supportBy Stan Constantino
Beadie Kanahele Dawson, attorney for Na Pua e Ke Ali'i Pauahi, a 3,000-member group of Kamehameha Schools parents, teachers and alumni, has urged members to continue backing the attorney general's effort to remove Bishop Estate trustees.
Dawson said she wants everyone present at court Oct. 2, when the court will "either accept or reject" the estate's court-appointed master Colbert Matsumoto's report. She also urged members to be present Oct. 23 when the court takes Attorney General Margery Bronster's recommendation to permanently remove Bishop Estate trustees Henry Peters, Richard Wong and Lokelani Lindsey.
"Let the world know that you care," Dawson said.
"I think it's our intent to take the trustees to court to defend our stand that we are the direct beneficiaries," said Julie Nurre, former assistant treasurer for the organization. "That's why we want to get more members."
In front of about 70 members last night, Dawson urged the collection of 1,700 signatures from Kamehameha Schools students, 3,000 signatures of parents, 9,000 signatures of alumni and 9,000 signatures of friends to help fight the Bishop Estate trustees in court.
Dawson, who has been working for free as legal adviser for the organization, said it is important to raise money to pay for legal costs.
"No one would have ever thought that we would have gotten this far," Nurre said yesterday. "People kept saying there's no way (the trustees) will ever be asked to be removed and yet today we're standing here and the attorney general asked for their removal. I think we've accomplished a lot."
Kamehameha Schools alumni echoed Nurre's sentiments.
Liane Ulumealani Stewart, a 1952 Kamehameha Schools graduate, said she recently joined the organization because "now is the time to stand up and be counted against the Kamehameha Schools trustees. This is ho'oponopono."
"If the trustees are mismanaging the funds, they should be removed, they should have people in there that are of character, that are of moral fiber," said Nathan Kilbey, a 1968 Kamehameha Schools graduate. "We want resolution and accountability."
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