Tuesday, July 20, 1999

By George F. Lee, Star-Bulletin
Bishop Estate trustee Henry Peters and his attorneys may go to
court today or tomorrow in an attempt to halt grand jury proceedings
seeking a criminal indictment against him for a Hawaii Kai land deal.

Peters claims
to be victim of
‘witch hunt’

The Bishop Estate trustee wants
disciplinary action against
his prosecutors

Anzai cleared to deal with estate
Trustees' compensation examined
Ige wants jury trial

By Rick Daysog


Accusing state investigators of conducting a "witch hunt," Bishop Estate trustee Henry Peters said he will file a formal complaint with the Office of Disciplinary Counsel against the attorney general's office and its former head Margery Bronster.

On the steps of the attorney general's downtown headquarters yesterday, Peters also hinted that he may file a federal court challenge to an Oahu grand jury's investigation into an alleged kickback scheme involving Bishop Estate land.

State prosecutors subpoenaed Peters, local developer Jeffrey Stone and isle businessman Leighton Mau to appear before an Oahu grand jury tomorrow. The state also subpoenaed Bishop Estate land manager Paul Cathcart and Nathan Aipa, the estate's acting chief operating officer.

The subpoenas were issued less than a month after Circuit Judge Michael Town threw out criminal indictments against the trio.

"The case has already gone to court and it has been shown that there is no evidence and no basis for indictments," Peters said. "Even thought I am innocent, I expect the attorney general's office will continue their malicious attack because they have gone too far to stop now ... They feel that as long as they are spending taxpayers' money, it is OK to continue with this unsupported, reckless and malicious prosecution."

A spokeswoman for the attorney general's office could not be reached for immediate comment.

Bronster -- who earlier was rejected by the state Senate for a second, four-year term as attorney general -- also was not available for response.

Stone's attorney, John Edmunds, had no response.

Brook Hart, Mau's lawyer, said he would wait to see what the panel does tomorrow before taking action. The Office of Disciplinary Counsel is an independent agency that polices attorney conduct in Hawaii.

Carole Richelieu, chief disciplinary counsel, noted that the office has the authority to issue an informal admonition against a local attorney or dismiss the grievance, pending an investigation and review by its 18-member board of directors. In extreme cases, the disciplinary counsel can recommend disbarment proceedings to the state Supreme Court.

Peters' pending complaint to the Office of Disciplinary Counsel comes after an Oahu grand jury last November indicted Peters for theft and Stone for commercial bribery and conspiracy. The panel -- directed by the attorney general's office -- 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 complex for $192,000 more than it was worth, the indictment said.

Circuit Judge Michael Town earlier this month dismissed the previous indictments without prejudice, allowing the state to bring a new case against Peters, Mau and Stone. He said 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.

Tomorrow's proceedings will be before a new grand jury.

Peters would not say whether he would appear before the panel.

Peters -- who along with his fellow board members was temporarily removed from his $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.

Yesterday, Peters said the state's investigation was created by the Cayetano administration to further the political goals of the so-called Democratic political machine and not to protect the interests of the Kamehameha Schools or its beneficiaries.

Anzai connections don't bother counsel

Star-Bulletin staff


The Judiciary's chief disciplinary counsel, Carol Richelieu, has found no problems with Attorney General Earl Anzai representing the state in its investigation of the Bishop Estate.

Anzai's wife, Lyn Anzai, formerly worked for the estate, one of the nation's largest charitable trusts and the state's largest private landowner. His daughters are clerking this summer at a law firm which represents the Bishop Estate.

Richelieu said yesterday that if Anzai "reasonably believes that his representation will not be materially" influenced by those connections, then he "would not be precluded from participating in any matter regarding Bishop Estate."

She added: "Given the extent that Bishop Estate has permeated the community, such a belief on his part would be reasonable."

Anzai said he intends to put "the interest of the state first" in matters pertaining to the estate.

Anzai, who was denied a second four-year term by the Senate in late April, needs to win confirmation from the Senate when it meets next year if he is to continue as the state's chief legal officer.

The state Ethics Commission has found no obstacles to Anzai representing the state on matters involving the Bishop Estate.

Firm to study pay levels
for Bishop trustees

By Rick Daysog


A court-appointed panel has hired the national consulting firm of Towers Perrin to set the reasonable compensation for the trustees of the Bishop Estate.

The trustee compensation committee -- whose members include the estate's court-appointed master Colbert Matsumoto, local attorney Allen Hoe and isle resident Mike Rawlins -- yesterday selected the Towers Perrin firm, which specializes in compensation issues, to study and develop pay levels for future trustees of the $6 billion Bishop Estate.

Rawlins, committee chairman, said the review will likely be completed by September.

Towers Perrin, which over the years has conducted studies for the Bishop Estate and the $2 billion estate of James Campbell, was picked ahead of SCA Strategic Consulting Associates, which also has conducted compensation studies for the estate, Rawlins said.

Critics of the Bishop Estate have charged that trustees' pay -- which hit $1 million during the year ending June 30, 1998 -- has played a large role in the two-year controversy surrounding the estate.

Probate Judge Kevin Chang named a compensation committee in May after the state Legislature passed a law last year limiting the pay of trustees of charitable trusts to reasonable levels.

Chang gave the panel until July 30 to come up with a pay plan but also gave members the option to extend the deadline to Nov. 30.

Chang's decision came as he froze trustees' pay and temporarily removed trustees Henry Peters, Richard "Dickie" Wong, Gerard Jervis and Lokelani Lindsey. Chang also accepted the voluntary resignation of Oswald Stender.

In a related move, the five interim trustees of the Bishop Estate sent letters to the five trustees asking them to step down permanently.

Ige seeks jury trial in
campaign finance case

The criminal case against state Sen. Marshall Ige is headed for a jury trial in state Circuit Court.

District Judge Tenney Tongg today set an Aug. 2 date for Ige's arraignment and plea on misdemeanor charges that Ige violated state campaign finance laws.

Birney Bervar, Ige's lawyer, who requested the jury trial, said his client will plead not guilty. Bervar criticized the attorney general's office for using the grand jury process to come up with "relatively" minor misdemeanor charges.

In a seven-count criminal complaint filed last week, the state alleged that Ige (D, Kaneohe) failed to disclose campaign debts, accepted improper campaign loans and provided false, unsworn testimony about campaign loans.

The charges against Ige are an outgrowth of the state's investigation into alleged campaign finance abuses by the Bishop Estate.

"It certainly appears that they were looking for felonies," Bervar said.

"We're looking forward to fighting this all the way."

Deputy Attorney General Kurt Spohn disputed Bervar's statement that the state's case involved minor charges, noting that Ige faces up to a year in prison for each count if convicted.

He added that none of the allegations against Ige were presented to a grand jury.

Spohn declined comment on when asked if the state has completed its investigation of Ige.

"I think there shouldn't be any mistake that these are serious matters," Spohn said.

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