Friday, May 21, 1999

Bishop probe
examines two isle
architect firms

The attorney general's office
contends that the firms channeled
illegal contributions to
state politicians

State shows why ouster
of trustees is sought

By Rick Daysog


An Oahu grand jury investigating the Bishop Estate has examined evidence about an alleged illegal campaign scheme involving trust employees.

The secret panel yesterday heard testimony from John Okita and Ron Kunimitsu, who head the Okita, Kunimitsu & Associates Inc. architecture firm.

The grand jury -- directed by the attorney general's office -- also questioned an employee with Kajioka Yamachi Architects Inc. The employee declined comment.

Okita and Kunimitsu had no response as they left Circuit Court yesterday. Deputy Attorney General Kurt Spohn also had no comment.

The attorney general's office in September alleged that the Kajioka and Okita firms in 1996 took part in an illegal campaign contribution scheme involving Milton Holt, a high-ranking estate employee and a former state senator.

The attorney general's office also charged that the Kajioka firm in 1994 paid an $18,262 campaign debt owed by state Sen. Marshall Ige, a longtime friend of Bishop Estate trustee Henry Peters.

The Kajioka firm is headed by Allen Kajioka, who served as trustee Richard "Dickie" Wong's campaign chairman when Wong was president of the state Senate.

Earlier this week, the estate disclosed that it paid the Kajioka firm more than $1 million for nonbid work that it conducted for the Kamehameha Schools and its new Maui campus during the year ending June 1998. Wong and Peters -- temporarily removed as trustees of the multibillion-dollar estate two weeks ago by Probate Judge Kevin Chang -- have denied involvement in the alleged illegal campaign scheme. Holt and Ige have denied wrongdoing.

In a related matter, an attorney for Wong's brother-in-law Jeffrey Stone yesterday filed court papers joining Wong's Monday petition to dismiss grand jury indictments relating to an alleged kickback scheme involving Bishop Estate land in Hawaii Kai.

In April, the grand jury charged that Wong received a $115,800 kickback for his alleged role in the 1995 sale of the estate's fee interest to the 219-unit Kalele Kai condominium project to Stone and his mainland partners. Wong and Stone have denied the charges, and Wong's attorney, Eric Seitz, on Monday asked Circuit Judge Michael Town to dismiss the indictment, saying the grand jury proceedings were flawed.

John Edmunds, Stone's lawyer, alleged that the indictments relied on faulty testimony from Stone's former attorney Richard Frunzi, who was convicted of federal money laundering charges and is prison on the mainland.

Edmunds alleged that the state induced Frunzi, whose law license was suspended, to improperly testify about his relationship with Stone, violating their attorney-client privilege. Goya has denied the charges. A hearing is scheduled for Tuesday.

State shows why ouster
of trustees is sought

It is alleged that trustees Peters and
Wong helped conceal $350 million

By Rick Daysog


Two weeks after a state judge temporarily removed four of the five trustees of the Bishop Estate, the state attorney general's office today filed court papers in a separate proceeding spelling out why trustees Henry Peters and Richard "Dickie" Wong should be temporarily ousted from their $1 million-a-year jobs.

In an 89-page proposed findings of fact, Deputy Attorney General Hugh Jones argued that Peters and Wong helped conceal $350 million in trust income that should have been spent on the estate-run Kamehameha Schools, paid themselves $131,000 more than they were entitled to and failed to adopt strict conflict-of-interest policies at the trust.

The result of these actions deprived scores of native Hawaiian children of an education at the Kamehameha Schools, Jones said.

"Worst of all, Peters and Wong have broken the dreams of a generation of children and families from which they come," said Jones. "These actions inflicted serious past and continuing harm on the beneficiaries and potential beneficiaries and their families."

The attorney general's proposed findings represent a summary of what the state believes it has proved in the five-week trial before Probate Judge Colleen Hirai. Wong and Peters are expected to file separate proposed findings of facts later today.

Both sides will deliver their closing arguments on Tuesday. The suit is one of several removal proceedings that began late last year. The proceedings have been continuing despite a May 7 ruling by Probate Judge Kevin Chang to temporarily remove four of the five trustees and accept the voluntary resignation of a fifth.

The attorney general's office last September sued for the interim removal of four of five trustees, saying they mismanaged Kamehameha Schools and violated the will of the estate's founder, Bernice Pauahi Bishop, by accumulating $350 million in trust income.

Glenn Sato, Wong's attorney, and Renee Yuen, Peters' lawyer, could not be reached for immediate comment this morning. But during the five-week trial, the trustees' lawyers relied on testimony from expert witnesses who characterized the accumulation of income as a prudent move in keeping with the will of Pauahi.

In the suit before Hirai, the attorney general's office is seeking the temporary removal of trustees Wong and Peters until its suit for the trustees' permanent removal can go to trial. A permanent removal suit won't likely go to trial until the middle of next year.

Chang's ruling -- in response to an Internal Revenue Service threat to revoke the estate's tax-exempt status if all five trustees were not permanently ousted -- removed the trustees for a period of as much as 180 days.

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