Tuesday, June 29, 1999

Wongs take
attorney general’s
office to court

By Rick Daysog


Bishop Estate trustee Richard "Dickie" Wong and his wife have sued the attorney general's office in federal court, saying it engaged in professional misconduct in attempting to get them indicted by an Oahu grand jury.

The Wongs -- who were subpoenaed to appear before the grand jury today -- also are seeking a temporary restraining order against the attorney general's office from prosecuting or threatening to prosecute them.

"We've reached the end of the rope. Up to now, our position is that we would cooperate with the attorney general because we have nothing to hide," said the Wongs' attorney, Eric Seitz.

"Unfortunately, we've now concluded that we are dealing with irrational, vengeful people and not reasonable people and that there's no point at this juncture in cooperating with the attorney general."

Storied allegations

The Wongs' suit -- which seeks unspecified general and punitive damages -- comes after Circuit Judge Michael Town earlier this month threw out a grand jury indictment against the Wongs, saying the proceedings were tainted by the testimony of Wong's brother-in-law Jeffrey Stone's former attorney Richard Frunzi, who is serving a federal prison sentence for money laundering.

The previous grand jury had alleged that Wong, who was temporarily removed as a trustee of the Bishop Estate on May 7 by Probate Judge Kevin Chang, received a $115,000 kickback from Stone in return for favorable treatment when Stone and his partners acquired the fee interest to the 219-unit Kalele Kai condominium project in 1995.

The grand jury also charged Wong's wife, Mari, with hindering prosecution.

Seitz said yesterday that he is recommending that the Wongs not appear before the state grand jury.

Others subpoenaed

In addition to the Wongs, the grand jury has subpoenaed estate attorney Nathan Aipa, land manager Paul Cathcart and Stone. Seitz said that Stone also won't appear before the panel.

A lawyer for the attorney general's office had no comment.

The federal suit is the second time that trustee Wong has gone to federal court to seek a dismissal of the state grand jury investigation. A previous suit, alleging the attorney general's office was violating his constitutional rights by seeking an indictment to boost its lawsuit to remove him from the estate, was dismissed by U.S. District Judge Alan Kay.

In a related move, attorneys for Stone and trustee Henry Peters sought to throw out separate criminal indictments stemming from the same Hawaii Kai deal.

Peter Savio, president of Savio Realty and the estate's agent on the 12,000 lease-to-fee residential conversions, testified that the Kalele Kai deal was a "creative solution" to the once-troubled project.

Savio -- who expressed an interest in the Hawaii Kai project when Mitsui Trust & Banking Co. put the leasehold interest in the 219-unit complex on the market -- said the estate didn't offer Stone and his partners a break when they sold the projects' fee interest for $21.9 million.

Savio said the price reflected the market rate at the time, adding that that price had been set many years before by the estate when it was negotiating to sell the fee interest to the original developer, Kapalele Associates.

'Creative solution'

Savio -- who was asked by Peters to review the terms of the Kalele Kai deal back in June 1995 -- said that while he was not aware of a comparable deal involving the Bishop Estate, the structure of the Kalele Kai transaction isn't a rare one when it comes to real estate deals in Hawaii.

He added that Stone's group did not receive the best financing terms available to the estate's lessees. He said a financing program that the estate has offered to "special needs" provided a lower interest rate than those offered to Stone and his partners.

"It's not an unheard of solution," Savio said. "It's a creative solution."

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