Wednesday, December 23, 1998

Trustee Wong’s
consulted on
shaky venture

Hollywood producer
Randy Stone got $100,000
to help KDP Technologies,
in which the estate was a
major shareholder

By Rick Daysog


A financially troubled Internet venture in which the Bishop Estate was a major shareholder paid $100,000 in consulting fees to a brother-in-law of estate trustee Richard "Dickie" Wong.

In testimony in the removal trial of estate trustee Lokelani Lindsey, Aaron Au, director of the estate's financial asset division, yesterday said KDP Technologies LLC issued two checks for $50,000 each to consultant Randy Stone last year.

Stone is a Hollywood film producer whose sister Mari is married to Wong.

Au testified that Stone was hired to introduce New Jersey-based KDP Technologies to business prospects in the entertainment industry.

Wong, chairman of Bishop Estate's board of trustees and former president of the state Senate, previously denied any wrongdoing involving KDP Technologies.

Founded in 1997, KDP Technologies is the developer of an Internet database, dubbed Starbook, for aspiring actors, actresses, models and other entertainers to showcase their talents to agents, casting directors, producers and advertising executives.

The estate initially acquired $500,000 in debt notes

issued by the high-risk venture in February 1997.

The trust later bought more than $800,000 in the company's shares and was prepared to invest another $700,000 before the deal went sour.

The Star-Bulletin reported in June that the estate considered writing off its $1.3 million investment in KDP Technologies after a company director and an acquaintance of Lindsey's, Los Angeles investment adviser Benjamin Bush III, was indicted on federal fraud charges.

Bush later pleaded guilty.

KDP Technologies' payments to Stone has been a target of state Attorney General Margery Bronster's 16-month investigation of the Bishop Estate trustees.

In her Sept. 10 petition for the permanent removal of trustees, Bronster cited the payments to Stone as an instance of self-dealing by Wong and fellow trustee Henry Peters.

Lawyers for estate trustees Gerard Jervis and Oswald Stender -- who have petitioned the state courts to remove Lindsey from the board -- point to the estate's investment in KDP Technologies as a breach of trust on Lindsey's part.

Lindsey previously served on the KDP Technologies board and was president of KDP Ltd., an estate-owned entity that administered the trust's holdings in the New Jersey company.

Lindsey stepped down as president earlier this year after Bush was indicted.

She also was a co-plaintiff with Bush in a 1996 suit in Las Vegas in which Lindsey alleged that she lost about $400,000 in a speculative gold bullion scheme.

Stender's attorneys allege that Lindsey failed to disclose her relationship with Bush and failed to mention Bush's legal problems when the board was considering its investment in KDP Technologies.

Under questioning from Stender's lawyer Crystal Rose, Au said Lindsey did not inform him about her prior business relationship with Bush.

She also failed to tell him that Bush had been indicted on federal fraud charges, said Au, who learned of the criminal charges against Bush after the Star-Bulletin published an account of the estate's involvement in KDP Technologies in June.

Au, who conducted the estate's due-diligence review in the Internet venture, also testified that Bush introduced the estate to KDP Technologies and was paid a finder's fee for the introduction.

The fee was to be paid partly through a $90,000 annual salary that was negotiated for Bush. But Au testified that Bush was not paid the full $90,000 amount.

Attorneys for Lindsey have previously denied any wrongdoing by her involving KDP Technologies.

In his cross-examination, Lindsey's lawyer, David Gierlach, attempted to demonstrate that estate managers were aware Lindsey and Bush were acquaintances, but did not investigate their business ties.

Au said that he knew that Lindsey and Bush had met before the estate invested in KDP Technologies.

But Au conceded that he did not look into their previous investments in the gold bullion venture in his due-diligence review.

Au's testimony was to continue this morning.

Estate attorneys file
writs to keep meeting
minutes out of
Lindsey trial

By Rick Daysog


Bishop Estate attorneys have renewed their efforts to keep the minutes of trustee board meetings from being used in the trial to remove trustee Lokelani Lindsey.

Estate lawyer Bruce Graham and the trust's general counsel, Nathan Aipa, filed separate writs of mandamus asking the state Supreme Court to direct Circuit Judge Bambi Weil to reconsider her ruling on the minutes.

Under such a writ, a higher court would direct a certain action from a lower court.

On Monday, Weil ordered Aipa to hand over the records to lawyer Douglas Ing, who last Friday subpoenaed boardroom minutes for the six-year period between March 1993 and November 1998.

Ing represents estate trustee Oswald Stender who, along with fellow trustee Gerard Jervis, are seeking Lindsey's removal on the grounds that she mismanaged the estate-run Kamehameha Schools, breached her fiduciary duties and is unfit to serve.

Weil reinforced that decision yesterday, giving Aipa until Saturday to produce copies of the documents for Ing and other attorneys involved in the case.

At one point during yesterday's hearing, Weil declared a recess after cutting off arguments from estate attorney William McCorriston and Aipa's lawyer, Howard Luke, who wanted the court to hear more on the matter.

Weil had said the Lindsey removal case would be a public trial and that the boardroom minutes -- which fill two large bankers' boxes -- would not be protected by attorney-client privilege.

The attorney general's office, meanwhile, supported Weil's decision, calling the estate's filings with the Supreme Court a "belated attempt to challenge" the judge's ruling. Deputy Attorney General Dorothy Sellers noted that Weil already had ruled on the matter during pretrial meetings.

"The judge made a correct ruling concerning attorney-client privilege," Sellers said.

In his filing with the high court yesterday, Luke said that Weil's ruling didn't give Aipa the opportunity to consult with the estate's trustees. The ruling placed Aipa in the difficult position of violating a court order or going against his client's wishes, Luke said.

Estate lawyer Graham on Monday filed a separate writ of mandamus asking the high court to order Weil to reconsider her ruling. Graham argued that many of the records sought by Stender's attorneys are confidential and have little relevance in the case.

The state Supreme Court has not yet taken action on the two writs.

If the high court decides to consider the requests, it probably would refer the case to a replacement panel selected from Circuit Court judges. Earlier this year, the high court, which had appointed Bishop Estate trustees, recused itself from hearing any appeals from the estate.

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