Wednesday, November 25, 1998

Henry Peters indicted

A grand jury hands down
the first indictment of a
Bishop Estate trustee


Bishop Estate trustee Henry H. Peters has been indicted by an Oahu grand jury on a charge of first-degree theft stemming from the sale of his Makiki condominium unit at an inflated price to a developer.

In January 1996, developer Jeffrey R. Stone paid $192,500 to Peters for the 1015 Wilder Ave. condominium, and the indictment charges that Peters "violated his fiduciary duty to the Bishop Estate by accepting a bonus or commission for himself from Jeffrey R. Stone for acts he had done as a trustee..."

Attorney General Margery Bronster has alleged that in return, Stone and partner National Housing Corp. received a "sweetheart deal" in 1995 when they acquired the fee interest to the 229-unit Hawaii condo project known as Kalele Kai.

The indictment charges that the project was sold for $21 million when the amount that the estate owed on the property was $23.9 million.

Stone is a brother in law of Bishop Estate trustee Richard S.H. Wong, who also sold his Makiki condominium to Stone allegedly at an inflated value, the attorney general has said.

Wong, Peters and Stone have denied the allegation.

Also indicted today with Peters were Stone and Leighton Mau, a business partner of Stone's. Stone and Mau were charged with criminal conspiracy and accomplice to theft. Stone also was charged with commercial bribery and perjury.

Peters held a news conference to say the charge was false and that he would be vindicated in the courts.

Trustee Wong
appears before
grand jury

He faces questions over
alleged kickbacks

By Rick Daysog


Bishop Estate trustee Richard "Dickie" Wong today was questioned by an Oahu grand jury that is investigating allegations of financial wrongdoings involving the estate's trustees.

Wong, accompanied by attorney Eric Seitz, appeared at Circuit Court this morning after the grand jury subpoenaed his testimony.

"We came in to tell the truth," Wong said. "That's what it's all about."

Seitz said that Wong is cooperating with the state attorney general's office, which has identified Wong as a potential target in its yearlong investigation of the multibillion-dollar trust. But Seitz said he hopes the state attorneys will back off once they receive the facts about the allegations raised against Wong.

Lawyers with the state attorney general's office declined comment today.

The grand jury, which was convened at Attorney General Margery Bronster's request in September, is investigating charges that Wong and fellow trustee Henry Peters received kickbacks worth "several hundreds of thousands of dollars" from Wong's brother-in-law, Jeffrey Stone.

In her Sept. 10 trustee removal petition, Bronster said that Stone paid an inflated price in 1996 for Wong's high-end condo. Wong in turn used the proceeds of the condo sale to buy a home in Kahala from Stone for about $1.1 million.

Wong's transactions came after a company affiliated with Stone, One Keahole Partners, acquired the fee interest on a 229-unit Hawaii Kai condominium project, known as Kalele Kai, from the Bishop Estate under favorable terms, Bronster said.

Wong has denied the kickback charge, saying he has recused himself from decisions involving the Kalele Kai project. Peters also had denied the kickback allegation.

Stone, meanwhile, has denied receiving preferential treatment from the estate, saying that the Hawaii Kai complex was financially troubled when One Keahole Partners acquired the leasehold interest from California developer Peter Bedford in 1995.

Stone has said that the partnership paid Bishop Estate $21.9 million for the fee interest, or nearly three times the $8.3 million appraisal offered by the property's lender.

Besides Wong, the grand jury has already heard testimony from Stone and Bishop Estate trustee Lokelani Lindsey during the past few months. Estate employees Paul Cathcart and Nathan Aipa also have provided information to the grand jury.

Wong's testimony before the grand jury had been held up recently by a dispute with the attorney general's office over conducting an appraisal of his Kahala home. But Seitz today said the state attorneys inspected the home about two weeks ago after Wong invited them to do so.

In a related matter, the grand jury is requesting additional records involving Bishop Estate trustee Henry Peters, sources said. Peters' attorney Renee Yuen met with state investigators early this morning at the grand jury room but declined comment.

Lindsey, school hurt by
rumors, witness says

The trustee's lawyers try to show
shewas a victim of untrue
'horror stories'

By Rick Daysog


Attorneys for Bishop Estate trustee Lokelani Lindsey said they believe Lindsey is a victim of a "sewage" of unsubstantiated rumors about her management of the Kamehameha Schools.

During a lengthy cross-examination yesterday by Lindsey's lawyer, the longtime head of the schools' performing arts department, Randie Fong, said that Lindsey has been the subject of some "horror stories" that turned out to be untrue.

Fong, a 1978 Kamehameha Schools graduate, also testified that some of the recent morale problems at the Kapalama Heights campus were due to inaccurate information.

Fong's testimony comes in the second week of the trial to remove Lindsey from the estate's five-member board.

Fellow trustees Oswald Stender and Gerard Jervis are seeking Lindsey's removal on the grounds that she breached her fiduciary duties and is unfit to serve as a trustee.

The trial, before Circuit Judge Bambi Weil, was scheduled to continue today.

Lindsey's attorney, Michael Green, has argued that his client ran into widespread resistance at the campus when she tried to improve the schools' educational programs.

Green and David Gierlach, who also is representing Lindsey, are trying to demonstrate that much of the controversy involving their client is based on unsubstantiated reports circulated on the Kamehameha Schools campus last year.

They allege that a key component in Jervis and Stender's removal petition -- retired Circuit Judge Patrick Yim's fact-finding report about the schools -- was based on rumor and innuendo.

Yim's report alleged that Lindsey intimidated staffers and students and fostered an environment of favoritism at Kamehameha Schools.

Last week, Fong testified that Lindsey yelled and swore at him during an April 11, 1997, meeting.

Fong also has said he believed he had been a victim of harassment, alleging that his job contract with the schools was pulled because of his difficulties with Lindsey.

Green yesterday attempted to poke holes in Fong's testimony that he was harassed.

The attorney argued that Fong's contract was initially pulled and later reinstated by the estate's legal department, which reviewed a letter by Fong offering his resignation.

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