Wednesday, March 31, 1999

Lawyers argue over
trustee’s removal

By Rick Daysog


Self-serving, malicious and hostile.

Those are some of the words used by attorneys for Bishop Estate trustee Oswald Stender to describe trustee Lokelani Lindsey's five-year reign over the estate-run Kamehameha Schools.

But Lindsey's defense team portrayed their client as an advocate for educational change who was unfairly blamed for morale problems that grew out of actions initiated by the full board or school President Michael Chun.

While not entirely blameless, Lindsey did not endanger the trust in any way, they said.

The opposing views represent a summary of what both sides believe they have proven in the four-month trial over Lindsey's potential removal as an $840,000-a-year trustee of the multibillion-dollar estate.

Stender and fellow trustee Gerard Jervis sued for Lindsey's removal, alleging she breached her fiduciary duties and was unfit to serve as a board member.

After hearing testimony from more than 60 witnesses, Circuit Judge Bambi Weil last month ordered lawyers for the Stender-Jervis team and for Lindsey to file proposed findings of fact by this morning, and has scheduled closing arguments for tomorrow.

Weil is expected to rule in the next few weeks.

In a 262-page filing yesterday, Stender's lawyers said they have demonstrated that Lindsey has harmed the trust and her continued presence on the board would hurt the schools.

They pointed to her controversial December 1997 education report that criticized students' academic progress at the schools.

The so-called Lindsey report, entitled "An Imperative for Educational Change," said the longer students stayed at Kamehameha Schools, the worse they performed as measured by standardized test scores.

The report also said about 40 12th-graders in the class of 1997 could barely read at grade level.

Stender's lawyer, Crystal Rose, said testimony from lay and expert witnesses has shown the report is inaccurate and that it damaged school morale. Students, teachers and administrators testified they were "hurt, shocked and angered" by Lindsey's "self-serving release of the report," Rose said.

Lindsey, according to Rose, misappropriated estate funds, taking more than 16 trips to Las Vegas at the estate's expense. Lindsey also used trust employees to obtain shoreline certifications on her Punaluu home at the expense of the estate, and received free trips from estate vendors to the 1997 Super Bowl game in New Orleans and the 1996 Olympic Games in Atlanta.

Many of the expenses, which were later repaid by Lindsey, were the subject of inquiries by the Internal Revenue Service, which is conducting an extensive audit of the Bishop Estate.

"Mrs. Lindsey is unable, or unwilling, to distinguish between her personal assets and those of the charitable trust," Rose said.

"Mrs. Lindsey's micromanagement of Kamehameha Schools, along with her demeaning remarks and inappropriate conduct, has created an intense animosity with the Kamehameha Schools teachers and staff which continues today. She created a climate of fear and intimidation which lingers like a black cloud over the Kamehameha Schools campus."

Lindsey fired back with a 48-page proposed finding, denying that she breached her fiduciary duties or misused trust assets.

Michael Green, Lindsey's lawyer, said the estate's full board gave Lindsey broad powers over management of the school and instructed her to improve its academic programs.

Green defended the release of Lindsey's education report, saying any embarrassment the study may have caused would be outweighed by reforms the report would bring to the schools' programs.

Green said Lindsey's tenure as a trustee was marked by great uncertainty brought on by board's decision to cut the estate's long-running outreach programs and Chun's plan to reduce teacher contracts from five-year terms to the current one-year term. Many unfairly blamed Lindsey for those changes, he said.

Green also said Stender initiated a rumor campaign against Lindsey, with Stender giving interviews to reporters and releasing confidential board memos to vocal critics of the trustees in an effort to discredit Lindsey and other board members.

"She did not act dishonestly nor was there substantial evidence that she acted from a motive other than furthering the purposes of the trust," Green said.

"Based on the case law and the facts, it is going to be a stretch to remove her," he said.

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