Court vindicates
ex-trustees

A ruling admonishes the state
in favor of Henry Peters
and Richard Wong

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By Rick Daysog
rdaysog@starbulletin.com

Saying the state's prosecution represented a "serious threat to the integrity of the judicial process," the Hawaii Supreme Court upheld the dismissal of theft charges against former Kamehameha Schools trustees Henry Peters and Richard "Dickie" Wong.

In a strongly worded 39-page ruling yesterday, the high court said the Attorney General's Office denied Peters' and Wong's rights to due process by introducing tainted grand jury testimony.

The state also acted improperly by halting testimony from a local developer that would have exonerated Peters and Wong's former brother-in-law, local developer Jeffrey Stone, according to the ruling.

"The state's actions cannot but have improperly influenced the grand jury and prevented it from operating with fairness and impartiality," the court said. "The state's interest in prosecuting these cases is, at this point, clearly outweighed by the lack of fundamental fairness that would ensue were we to allow these prosecutions to continue."

Eric Seitz, Wong's attorney, called the ruling a "ringing denunciation" of the Attorney General's Office.

"I've won a number of prosecutorial misconduct cases in my day, but I haven't seen one as strong as this," Seitz said.

Senior Deputy Attorney General Lawrence Goya said he was disappointed by the ruling and did not agree with the court's reasoning. He declined to discuss specifics.

Both Peters and Wong were indicted in 1998 by Oahu grand juries over their alleged roles in the Kamehameha Schools' sale of its fee interest in the Kalele Kai condominium complex in Hawaii Kai to a Stone-led company.

The indictments alleged that Peters and Wong received kickbacks in exchange for favorable treatment on Kalele Kai. Stone was indicted by the same grand juries on commercial bribery charges.

All three have denied wrongdoing, saying the Kamehameha Schools, then known as Bishop Estate, earned millions when it sold the fee interest to Kalele Kai.

Yesterday's ruling upholds Circuit Judge Michael Town's dismissals of indictments against Peters, Wong and Stone. Town found that the state violated Stone's right to attorney-client privilege when it allowed Stone's former attorney, Richard Frunzi, to speak to the grand jury about matters involving his former client.

At the time, Frunzi was serving time in a federal jail after pleading guilty to money laundering.

Town also dismissed the theft charges against Peters after the state introduced improper testimony from the estate's former general counsel, Nathan Aipa.

In 1999, Peters, Wong, Gerard Jervis, Oswald Stender and Lokelani Lindsey resigned from their $1 million-a-year jobs as Kamehameha Schools trustees after the Internal Revenue Service threatened to revoke the $6 billion charitable trust's tax-exempt status.

Yesterday's ruling was made by Circuit Judges George Masuoka, Ronald Ibarra, Dan Kochi, Shackley Raffetto and Gary Chang. The judges were serving as substitutes for the five Supreme Court justices, who recused themselves from all cases involving the Kamehameha Schools. Until recently, the high court selected the trustees of the Kamehameha Schools.