Monday, July 19, 1999

Peters again
faces grand jury
in land deal

The Bishop trustee and
two others are to appear
in court Wednesday

By Rick Daysog


State prosecutors are going to a new grand jury to seek a new indictment of Bishop Estate trustee Henry Peters.

Less than a month after a state judge threw out criminal charges against Peters, local developer Jeffrey Stone and isle businessman Leighton Mau, the attorney general's office has subpoenaed the trio to appear Wednesday before a grand jury, sources said.

The attorney general's office also issued grand jury subpoenas last week to Nathan Aipa, the trust's general counsel and acting chief operating officer, and Bishop Estate land manager Paul Cathcart, according to an estate source.

The grand jury is investigating an alleged kickback scheme involving Bishop Estate land.

Renee Yuen, Peters' lawyer, had no immediate comment. Stone's attorney John Edmunds also had no response. In the past, Edmunds threatened to sue the state for wrongful prosecution.

Brook Hart, Mau's lawyer, confirmed that his client received a subpoena to appear before the grand jury. Hart said he would to see what panel does on Wednesday before taking action.

All three have denied wrongdoing.

Last November, an Oahu grand jury indicted Peters for theft, and Stone for commercial bribery and conspiracy. The panel alleged that Stone and Cleveland-based National Housing Corp., who formed One Keahole Partners, received favorable treatment in 1995 when they acquired the estate's fee interest to the 219-unit Kalele Kai condominium project for $21.9 million.

In return, Stone -- a brother-in-law of Bishop Estate trustee Richard "Dickie" Wong -- indirectly acquired Peters' second-floor condominium at the upscale 1015 Wilder Ave. complex for $192,000 more than it was worth, the indictment said.

However, Circuit Judge Michael Town threw out indictments against the three earlier this month, saying the grand jury proceedings were tainted by the testimony of Stone's former lawyer Richard Frunzi.

Frunzi improperly testified about client matters that should have been privileged, and jurors were not told that Frunzi was serving a federal jail sentence for a money laundering conviction, the judge said.

Town dismissed the previous indictments without prejudice, allowing the state to bring a new case against Peters, Mau and Stone provided that it goes to a new grand jury and does not use Frunzi's testimony.

Stone, Peters and Mau have pleaded not guilty to the previous kickback charges, saying Stone's One Keahole Partners overpaid the estate in the Kalele Kai transaction. They have noted that the original developer of the project faced financial problems and that One Keahole's purchase of the fee interest rescued the project.

Peters -- who along with his fellow board members was temporarily removed from their $1 million-a-year post by Probate Judge Kevin Chang in May -- has alleged that the state was using the criminal case to leverage its civil case seeking his removal as a trustee.

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