Thursday, December 9, 1999

Lawyers for Peters, Stone
allege state misconduct

By Rick Daysog


In a rush to obtain a criminal indictment against ousted Bishop Estate trustee Henry Peters, the state attorney general's office trampled over his rights, attorneys for Peters and his co-defendant argued.

But state prosecutors said a grand jury investigation of Peters and local developer Jeffrey Stone was conducted properly, and that Peters' rights to keep confidential his discussions with estate attorneys lapsed after he was removed from the trust in May.

Those differing views were presented during closing arguments yesterday before Circuit Judge Michael Town on motions to dismiss Peters' grand jury indictment for theft and Stone's indictment for commercial bribery.

Peters and Stone are contesting the criminal charges, saying the attorney general's office conducted misconduct, relied on tainted testimony and obtained the indictments after the statute of limitations had lapsed.

The August grand jury indictment alleged that Stone bought Peters' Makiki condominium in 1995 for an inflated price in exchange for preferential treatment for the estate's fee interest to the 219-unit Kalele Kai condominium project in Hawaii Kai.

The indictment came a month after Town threw out similar charges against Peters and Stone, saying the state "illegally bolstered" the grand jury testimony of Stone's former attorney, Richard Frunzi, who has pleaded guilty to federal money laundering charges.

Peters' lawyer, Renee Yuen, argued that the state violated Peters' rights when it brought the estate's lawyer and acting chief operating officer, Nathan Aipa, to testify before the grand jury in July.

Yuen has argued that Aipa had served as the estate's lawyer and as attorney for the trustees. As such, all discussions between Peters and Aipa should have remained confidential.

Stone's lawyer, John Edmunds, added that senior Deputy Attorney General Lawrence Goya improperly introduced Aipa's testimony because the statute of limitations on the criminal charges against Stone and Peters was running out.

"I can't tell you if he is doing this deliberately or because of ineptitude," Edmunds said. "The taint is there.

But Goya argued that the attorney-client privilege no longer exists with Peters.

After the probate court temporarily removed Peters and appointed interim trustees to take over the daily operations of the Bishop Estate in May, the new board waived any attorney-client privileges involving the Kalele Kai deal.

"We believe we were on firm ground on this," Goya said.

Closing arguments resume tomorrow.

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