Thursday, June 17, 1999

Wong is off the
hook in land case
—for now

A judge says the grand jury
was misled by the attorney general

Holt before grand jury

By Rick Daysog


Bishop Estate trustee Richard "Dickie" Wong calls a judge's decision to throw out criminal charges against him a first step toward clearing his name.

However, the attorney general's office may seek a new criminal indictment against the chairman of the multibillion-dollar charitable trust.

Circuit Judge Michael Town yesterday ruled an Oahu grand jury was tainted and he dismissed charges against Wong, his wife and Wong's brother-in-law, local developer Jeffrey Stone, in connection with an alleged kickback scheme involving Bishop Estate land.

The decision could have a major impact on separate civil and criminal cases against the 66-year-old Wong and other trustees. Lawyers for trustee Henry Peters, who faces similar kickback charges, plan to ask Town today to dismiss criminal charges against their client.

"The prosecutors' conduct invaded the province of the grand jury and denied the defendants a fair and unbiased grand jury," Town said. "If the grand jury is tainted, the result is tainted."

Town said that the attorney general's office "illegally bolstered" the testimony of former local attorney Richard Frunzi, who played a key role in the grand jury's April indictment of the Wongs and Stone.

Frunzi, Stone's former attorney, is serving a jail sentence on the mainland after he was convicted of federal money laundering charges. Defense lawyers contended state prosecutors did not inform the grand jury of Frunzi's conviction when Frunzi went before the panel.

They also argue that as Stone's attorney, Frunzi is prohibited from testifying unless Stone waives his attorney-client privilege.

"Overall, the testimony at a minimum prejudiced the grand jury," Town said.

Town's order stopped short of accusing prosecutors of flagrant misconduct. His ruling also allows the attorney general's office to seek a new grand jury indictment.

Deputy Attorney General Lawrence Goya said he would recommend to Attorney General Rick Keller that a new grand jury probe be sought.

"Obviously, it will mean a delay in these matters coming to trial," Goya said. "It isn't a closed matter."

In its indictment, the grand jury alleged that Wong received $115,000 from Stone in exchange for preferential treatment on a Bishop Estate land deal in Hawaii Kai. Stone and his partners acquired the estate's fee interest to the 219-unit Kalele Kai condominium project for $21.9 million in 1995.

Wong, who appeared in court yesterday with his wife, Mari, believes Town's ruling could strengthen his case for reinstatement as a trustee of the Bishop Estate.

Wong and Peters, along with trustees Lokelani Lindsey and Gerard Jervis, were temporarily removed from their $1 million-a-year posts May 7 by Probate Judge Kevin Chang. Trustee Oswald Stender voluntarily resigned.

Wong continues to face a barrage of legal actions, including the criminal proceedings, a long-running Internal Revenue Service audit of the estate, a permanent-removal suit by the attorney general's office and an interim-removal action.

"It's been difficult to be in two or three courts in the same building on one particular day. I think that's too much for any citizen in this state to endure," Wong said.

"Now I think we are much stronger. At least it has given us a breath."

Mari Wong, who broke into tears after the ruling, said the ordeal has been trying for her and her family.

"We've been devastated as a family," said Mari Wong. "I really feel like I'm waking up from a nightmare."

Stone, meanwhile, said there was never a sweetheart deal, noting that he and his partners paid $10 million more than the market value of the land.

Stone called the state's action an "excessive and unreasonable" abuse of power, saying he had been threatened with ruin.

John Edmunds, Stone's lawyer, said he is looking into suing the attorney general's office for wrongful prosecution. He believes the office will have trouble getting a grand jury to indict Stone and the Wongs a second time, since it has an obligation to present evidence to the grand jury that shows how profitable the Kalele Kai transaction has been for the estate.

"They are not going to run the same railroad that they ran last time," Edmunds said. "We're not going to take this lying down."

Seitz also is considering suing for what he called "illegal" and "vengeful" conduct by former Attorney General Margery Bronster, who initiated the grand jury investigations.

Bronster could not be reached for immediate comment.

"Margery Bronster deserved to be thrown out of office as she was," Seitz said.

"My clients are entitled an apology and to be made whole for being exposed to the criminal process when it should have never happened."

Holt to tell grand jury
of estate contributions

Former state Sen. Milton Holt went before an Oahu grand jury today to answer questions about an alleged illegal campaign contribution scheme involving Bishop Estate employees.

Holt, who appeared in Circuit Court with his attorney Reginald Minn, had no comment as he entered the grand jury room this morning.

Holt earlier was indicted by a separate federal grand jury for diverting campaign funds for his personal use. He has pleaded not guilty and is asking for a dismissal of that indictment.

The Oahu grand jury is investigating an alleged scheme in which estate employees directed vendors to pay campaign debts owed by Holt and state Sen. Marshall Ige.

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