By Rob PerezSunday, February 17, 2002
Hawaiian royal bonds
This is a tale of money, controversy and international intrigue, including a link to a faraway Caribbean island.
It involves a planned sale of $1 billion in tax-free Hawaiian bonds, backed by gold held in Switzerland.
Or so says the marketing pitch.
But these aren't bonds to be sold in the usual fashion, through a Wall Street brokerage or investment firm on behalf of a government or private business.
These investments supposedly will be sold by an organization that isn't registered to sell securities in Hawaii, isn't even registered to do business here, lists a mail drop at a Honolulu high-rise as an address and has no published phone number.
And the bonds are being sold under the auspices of the Hawaiian Kingdom, an entity not seen in these parts since the late 1800s.
The state is stopping short of saying that. But it plans to investigate the matter after learning about it from the Star-Bulletin.
Royal Kupuna Exchange says on its Web site (www.royalkupuna.com) that it offers digital financial services 24 hours a day, 365 days a year.
The site also notes that by special order and proclamation of the kingdom's prime minister, Samuel Keolamauloa Kaluna II, $1 billion of treasury bonds will be issued and sold through Royal Kupuna. These investments aren't pegged to your ordinary U.S. greenbacks, either.
The bonds are based on Hawaiian Kingdom dollars, which, according to the Web site, have five times the value of U.S. dollars. That is, for every $5 of U.S. currency invested in the bonds, the investor gets an investment worth $1 in Kingdom dollars. The bonds, the site says, are sold in minimum $200 denominations, or $1,000 U.S. A link is provided for those interested in investing.
The kicker comes further into the site, with a declaration of sovereignty.
Using a tactic that has landed other sovereignty advocates in jail or convicted of crimes, the Web site notes that the laws of the United States and the state of Hawaii are not valid in the islands because neither has jurisdiction here. The kingdom, after all, still reigns.
Some sovereignty advocates take that position by arguing that the 1893 overthrow of the monarchy was illegal, therefore the establishment of all succeeding governments here was illegal. Using that logic, U.S. and Hawaii law today are meaningless in the islands.
State and federal authorities have not bought that argument in the past -- remember the Perfect Title Co. case? -- and are not likely to buy that now.
"We'll definitely be taking a look into this," said Patricia Moy, senior enforcement attorney for the state Securities Enforcement Branch with the Department of Commerce and Consumer Affairs.
Efforts to contact people involved with Royal Kupuna were unsuccessful.
A note left by the Star-Bulletin at Royal Kupuna's mail drop at Century Center prompted a call from someone who originally said he was part of the organization, then phoned later to say he wasn't. He wouldn't identify himself (other than to give a first name) and said he would get a message to one of Royal Kupuna's principals, none of whom called the Star-Bulletin.
Home phone numbers for Kaluna and John Paki Dudoit, listed as the kingdom's finance minister on the Web site, could not be located.
A search of registration records for the site indicated it was created in October 2001 and lists Steve Renner, a Minneapolis businessman, as a contact. He could not be reached for comment.
Renner is founder of Cash Cards International, a company based in the Caribbean island of St. Kitts, part of a twin island federation known for its strict confidentiality laws pertaining to financial transactions and other matters.
People who sign up as members of Royal Kupuna are linked to Cash Cards, which has an online system for conducting financial transactions worldwide.
According to the Royal Kupuna Web site, a "Kupuna Action Council" on Jan. 17 -- the 109th anniversary of the overthrow -- met to officially resurrect the kingdom and kingdom law.
It says the kingdom's treasury gold is held in "allocated storage" in Switzerland.
With a few exceptions (such as securities backed by the U.S. government or those issued and guaranteed by a bank), Hawaii law requires that securities sold in Hawaii be registered by type with the state. The seller also has to be registered.
Royal Kupuna is not registered, according to department records. It also is not registered under that name to do business in Hawaii.
Moy cautioned people considering turning over money to Royal Kupuna to first find out more about the organization and the investment.
"Like any other investment you're looking at, investors need to do their homework about who and what and how the money is being invested," she said. "Who are these people? What is their history? What is their experience with financial instruments? Do your homework by not assuming anything."
Using 19th century kingdom law to operate Hawaii businesses has gotten people in trouble in the past.
One of the most publicized cases involved Perfect Title Co., which cited kingdom law to declare current property titles void. The company was shut down several years ago and its founder prosecuted for failing to obtain a general excise tax license or file a tax return.
Star-Bulletin columnist Rob Perez writes on issues
and events affecting Hawaii. Fax 529-4750, or write to
Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210,
Honolulu 96813. He can also be reached
by e-mail at: firstname.lastname@example.org.