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Monday, July 3, 2000

Law firm
to probe legal
work for estate

The ex-trustees may have
personally benefited, a
court-ordered report says

By Rick Daysog


The Kamehameha Schools has hired a mainland law firm to conduct an internal investigation of its outside attorneys and accountants.

In court papers filed Friday, the $6 billion charitable trust said it has retained Morgan, Lewis & Bockius L.L.P. to review court-appointed special master Robert Richards' scathing report last May that recommended millions of dollars in surcharges against former trustees Henry Peters, Richard "Dickie" Wong, Oswald Stender, Gerard Jervis and Lokelani Lindsey.

The Richards report, which will be a subject of a hearing in August, said that the estate's outside law firms conducted millions of dollars in legal work that personally benefited the former trustees and that two of the firms, Cades Schutte Fleming & Wright and McCorriston Miho Miller Mukai, took part in a costly attempt to silence the former trustees' critics.

The Richards report prompted the estate to suspend its outside law firms, pending an internal review. The law firms and former trustees have denied wrongdoing.

The estate said Morgan Lewis will investigate the activities of its outside law firms to see whether there are grounds to fire them or seek disgorgement of their fees.

But the estate did not say whether Morgan Lewis will investigate possible breaches of trust by estate staffers. The estate's chief operating officer, Nathan Aipa, recently took a paid leave of absence in the wake of the Richards report. Aipa formerly served as the estate's general counsel and had supervised the work of the trust's outside firms.

The investigation, to be completed by Sept. 30, will be headed by William Gardner, a Morgan Lewis partner based in Washington, D.C. Yale law professor John Langbein and John Leubsdorf, a law professor at Rutgers University, will also assist the investigation.

The Kamehameha Schools disclosed its hiring of Morgan Lewis in court papers opposing the attorney general's petition to enlarge the scope of Richards' review of the trust's legal bills. The estate said that widening Richards' inquiry would duplicate its own efforts and be a waste of trust assets.

The Cades Schutte law firm also filed an objection, saying that Richards abused his powers as a court master and that his report made false and inflammatory accusations against the firm.

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