Tuesday, July 27, 1999

Judge won’t halt
Peters grand jury

The ousted trustee had sought
an order stopping the
grand jury probe

Trustees ask more time for ouster

By Rick Daysog


A federal judge today refused to intervene in a grand jury investigation of Bishop Estate trustee Henry Peters.

U.S. District Judge Alan Kay rejected Peters' request for a temporary restraining order against the grand jury investigation, saying the request would be equivalent to an appeal of a lower-court ruling.

Kay also referred to Circuit Judge Michael Town's ruling that the attorney general's office, which is directing the grand jury investigation, did not commit prosecutorial misconduct.

Attorneys for Peters had asked for the restraining order, saying the state was trying to violate Peters' due process rights by convening a grand jury investigation. A previous grand jury in November had indicted Peters for theft for his alleged role in a controversial Bishop Estate land deal in Hawaii Kai.

The indictment was reversed this month by Town due to tainted testimony from a convicted attorney, Richard Frunzi. He previously was the attorney for local developer Jeffrey Stone, who was indicted along with Peters in November.

Today's ruling paves the way for the state to go back to the grand jury over the next two weeks to seek new indictments.

Trustee Richard Wong, Stone's brother-in-law, also was indicted by a federal grand jury on similar theft charges, but as in the Peters case, Town threw out the charges.
The state has said it will appeal that decision.

Trustees ask more time
to oust former trustees



The new trustees of the Bishop Estate want additional time to seek the permanent removal of the former board members.

The interim board yesterday filed court papers asking for a 19-day extension for a court-imposed Aug. 5 deadline to seek the permanent ouster of trustees Richard "Dickie" Wong, Oswald Stender, Henry Peters, Lokelani Lindsey and Gerard Jervis.

Carroll Taylor, attorney for the new board, said the additional time is needed because of negotiations with the Internal Revenue Service, which is auditing the multibillion dollar charitable trust's operations.

The negotiations with IRS not only cover the estate's tax-exempt status but also involve millions of dollars of taxes and penalties that the IRS is trying to impose on the estate, according to Taylor.

The IRS has threatened to revoke the trust's tax-exempt status if the former board members are not permanently removed.

Probate Judge Colleen Hirai has scheduled a hearing on Friday for the 19-day extension.

In his May 7 ruling temporarily removing the former trustees, Probate Judge Kevin Chang gave the new board or the attorney general's office 90 days to file a petition for the permanent ouster of the old board.

If the new trustees did not file a removal suit within the 90-day period, the former trustees were allowed to file a petition for reinstatement.

Yesterday's filing comes after retired Adm. Robert Kihune, chairman of the new board, asked the former board to voluntarily resign permanently in the best interest of the Kamehameha Schools.

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