Federal agents have started
their own investigation into
Bishop Estate transactions

By Rick Daysog
Star-Bulletin

As a state grand jury investigation into the Bishop Estate begins its first day of testimony today, federal agents have started a separate grand jury investigation into estate-related matters.

The federal grand jury is focusing on political contributions involving former state Sen. Milton Holt, a Bishop Estate employee since 1987, whose 1996 campaign debts were paid for by local companies with business ties to the estate.

William McCorriston, attorney for the estate, said he recently delivered records subpoenaed by federal investigators for the grand jury. But he said he had no idea what witnesses or what additional records are being sought by the federal investigators.

Steven Alm, U.S. attorney, would not confirm or deny the federal grand jury proceedings. Reginald Minn, Holt's attorney, declined comment.

Holt, now a special-projects officer at the estate, was investigated by the FBI and the Honolulu Police Department after the state Campaign Spending Commission found that his unsuccessful 1996 campaign fund was missing $43,000.

The commission found that Holt loaned himself $11,000 and paid himself about $10,000 from his campaign funds.

Besides the federal criminal inquiry, Holt's alleged campaign violations are a likely target of the state's grand jury investigation, which has been convened at the request of state Attorney General Margery Bronster.

State investigators say Holt's campaign owed a combined $31,000 to local printer Ryan's Graphics and the Starr Seigle McCombs advertising agency.

But at the request of an estate employee, Holt's debts were paid off by five companies that received nonbid work from the estate, she said.

Sources have indicated that the state grand jury also is looking into allegations that two trustees -- Richard Wong and Henry Peters -- received kickbacks from Wong's brother-in-law Jeffrey Stone from a Hawaii Kai land deal.

Stone paid inflated prices for Makiki condos previously owned by Wong and Peters and, in return, the trustees gave Stone and his partners a sweetheart deal when they bought the 229-unit Kalele Kai upscale condominium project in Hawaii Kai, Bronster said.

Witnesses' testimony to the state grand jury was delayed this morning until the afternoon. One source close to the estate said the state grand jury had subpoenaed trustee Lokelani Lindsey as a witness.

The subpoena had implied the questioning would involve Peters' and Wong's role in the Kalele Kai project, the source said.

Michael Green, Lindsey's attorney, declined comment yesterday when asked if Lindsey had been subpoenaed.

Yesterday, McCorriston responded to the kickback allegations, saying the estate did not give Stone and his partners a sweetheart deal.

The estate's interest in Kalele Kai had been dogged by financial problems relating to the project's original developer, California-based Bedford Properties.

But Bishop Estate later profited from the venture when Stone and his partners took over Kalele Kai and acquired the estate's interest at more than double its appraised value, McCorriston said.

"We know from the petition that the attorney general doesn't understand this business transaction," said McCorriston.

"It should worry everyone that some miscarriage of justice may be in place."

Hugh Jones, deputy attorney general, would not confirm whether the Kalele Kai transaction is a major part of the state's grand jury inquiry.

But he said the state wants to know how Wong and Peters were able to sell their high-end condos at above-market prices to Wong's brother-in-law who in turn profited from an estate deal in which he had little or no financial risk.

Renee Yuen, Peters' attorney, questioned the timing of the state grand jury, saying the state investigation is designed to boost Gov. Ben Cayetano's election efforts.

She believes Bronster is forcing the issue of a grand jury because federal officials won't likely reach an indictment in their grand jury before the November elections.

Bronster has denied that politics has played a role in her investigation, saying the timing has to do more with stonewalling and delay tactics by the estate.

As part of her yearlong investigation of the estate, Bronster last week petitioned the state probate court to remove at least three trustees, alleging they engaged in a pattern of self-dealing, cronyism and mismanagement.

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