Saturday, August 21, 1999

Decision to
quit estate earns
Jervis praise

Critics of the old estate board
applaud the move and urge the
holdouts to do the same

By Rick Daysog


Gerard Jervis, whose meteoric rise to the trusteeship of the Bishop Estate was overshadowed by his recent role in a sex and suicide scandal, may have regained some lost respect by resigning his $1 million-a-year post, members of the Kamehameha Schools ohana said.

The 50-year-old Jervis, who was temporarily removed from his board seat in May, announced his permanent resignation yesterday in a letter to the estate's interim board of trustees, saying the move is in the best interest of the trust.

The resignation, which requires state probate court approval, carries no conditions, according to Melvin Agena, Jervis' attorney.

"For the good of Kamehameha, I'm glad he did that," said Gladys Brandt, former principal of the estate-run Kamehameha School for Girls and co-author of the 1997 "Broken Trust" article that called for major reforms of the Bishop Estate.

"I'm pleased to get that news because I think it's the right thing to do for the image of Kamehameha in particular, and for the principles of education in general."

Nathan Aipa, acting chief operating officer of the estate, had no comment.

Jervis is the second Bishop Estate trustee to step down. Oswald Stender voluntarily resigned on May 7 after the IRS threatened to revoke the estate's tax-exempt status.

On the same day, Probate Judge Kevin Chang temporarily removed Jervis along with fellow trustees Richard "Dickie" Wong, Henry Peters and Lokelani Lindsey and replaced them with five interim trustees.

Circuit Judge Bambi Weil had permanently removed Lindsey the day before, after a five-month trial that found Lindsey had misappropriated trust assets and intimidated Kamehameha Schools teachers and students.

Jervis said his decision to step down was "involuntary" and was based on the IRS's threat. The IRS has not specified the trustees' alleged wrongdoings, but Jervis said he came to believe that the tax-exempt status was "seriously jeopardized."

"As an incumbent trustee, my fiduciary duty to the estate must drive my decisions," Jervis said in his letter to interim trustee Chairman Robert Kihune. "I recognize that my final act as a trustee must be the protection of the estate's valuable tax exemption."

Youngest member of the board

Known for his temperament, Jervis has served as a trustee since December 1994 and was the youngest member of the old board.

His term would have expired in December 2018.

Before becoming a trustee, Jervis was a successful attorney who made his name handling personal injury cases. A longtime associate of former Gov. John Waihee, Jervis quickly rose up the political ladder, serving on the University of Hawaii's Board of Regents and as as a member of the state Judicial Selection Commission.

U.S. District Judge Sam King, a co-author of the Broken Trust essay, said he "always thought of Gerard Jervis as a good lawyer" and that his legal background led him to make the right decision.

"His own knowledge has led him to the right conclusion," said King.

Observers credit Jervis for joining Stender in 1998 in a suit that resulted in Lindsey's permanent removal. But his reputation plunged after he and a trust lawyer, Rene Ojiri Kitaoka, were discovered having sex in a restroom at the Hawaii Prince Hotel in Waikiki in March.

Kitaoka committed suicide by carbon monoxide poisoning at her Kaneohe home the next day. A week later, Jervis took an overdose of sleeping pills and was rushed to Castle Medical Center.

By resigning, Jervis will avoid a soon-to-be filed suit for his permanent ouster.

The estate's interim board of trustees -- retired Adm. Kihune, attorney Ronald Libkuman, former Honolulu police chief Francis Keala, American Savings Bank executive Constance Lau and former Iolani School headmaster David Coon -- are scheduled to file court papers on Tuesday calling for the old board's permanent removal based on findings in the IRS audit.

Peters and Wong will likely oppose the permanent removal suit. Peters said he is looking forward to a trial in which the allegations raised by the IRS could be contested in a court of law.

Jervis still faces litigation

Randall Roth, a University of Hawaii law professor and co-author of the "Broken Trust" essay, said Jervis made the logical choice. He believes Wong and Peters are prolonging the inevitable.

"The handwriting has been on the wall for quite some time," said Roth.

"None of the former trustees will ever be reinstated. If the others would follow Jervis' lead, it would save everyone a lot of time, trouble and money."

To be sure, Jervis will continue to face litigation related to the Bishop Estate controversy. The attorney general's office is seeking fines against all five trustees and the IRS may seek penalties against individual board members for taking excessive compensation.

Deputy Attorney General Dorothy Sellers said the state will continue to seek surcharges against Jervis and his fellow board members for money-losing deals in which trustees failed to exercise proper due diligence.

The state also is seeking fines for using trust money for lobbying against federal laws barring excessive trustees' compensation and for awarding nonbid consulting work to their friends, such as former state Rep. Terrance Tom and local attorney Albert Jeremiah, Sellers said.

"We are going to pursue the surcharge issues," Sellers said.

Healing process under way

Jervis, meanwhile, defended his actions, saying many of his decisions at the trust were made only after consulting with staff and outside consultants.

He added that the IRS threat is based on practices and decisions adopted before he became a trustee in 1994.

Members of the Kamehameha Schools community see Jervis' resignation as a sign that the healing process is under way and hoped that it would prompt others to step down.

Roy Benham, president of the Kamehameha Schools Alumni Associations, Oahu Region, added that alumni and the Kamehameha ohana would prefer to see all the trustees step down on their own except for Oswald Stender.

"It's for the betterment of the schools and the estate," said Benham. "This is a good move."

Larry McElheny, president of the Kamehameha Schools Faculty Association, said he is sympathetic to the tragedy that surrounds Jervis but wondered about how his replacement will be selected.

The state Supreme Court in 1997 refused to take part in future trustees' selection, ending a century-old practice.

The interim board as well as other native Hawaiian groups recently have petitioned state probate court for new methods of selecting future board members.

Contributing to this report were Star-Bulletin writers
Susan Kreifels and Gordon Y.K. Pang.

Gerard Jervis

Age: 50
Appointed to board: November 1994
1998 compensation*: $1 million
Education: University of Hawaii, William S. Richardson School of Law
Other positions: President, White Hat Development Corp.
*For the year ending June 30, 1998

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