State targets
Chun’s accountsThe attorney allegedly mixed
"ill gotten gain" with personal funds
The state insurance commissioner will go to court tomorrow seeking an order prohibiting Honolulu attorney Jerrold Y. Chun and others from withdrawing or distributing $6 million deposited into his personal and client accounts.
Chun was charged by the state attorney general this week with three counts of first-degree theft of more than $12 million from the estate of an insurance company that was declared insolvent after Hurricane Iniki.
Chun, of Chun & Nagatani, had been hired by HUI / UNICO -- the successor to Hawaiian Underwriters Insurance Co. and United National Insurance Co. -- as counsel to the liquidator to help administer the estate.
According to a civil complaint filed Friday by Insurance Commissioner J.P. Schmidt, at least $3.5 million of the $12 million was deposited into Salomon Smith Barney accounts in the name of Chun or his law firm.
An additional $2.69 million was deposited into Salomon Smith Barney accounts under the name of Michael Chong of Adjusting Services of Hawaii, according to the civil complaint. Chong has not returned calls seeking comment.
Schmidt said it is believed that the money was placed in client-trust, business and personal accounts.
"It is this co-mingling of the monies in these accounts that poses a risk to liquidator and HUI / UNICO, its insured, policyholders and other creditors, which would lead to irreparable harm if the accounts are not 'frozen' to permit the necessary accounting to separate the 'ill-gotten gain' from any other deposits made within," the complaint said.
During an investigation into irregularities uncovered in financial reports, Chun had indicated he was entitled and was authorized by the former liquidator, Wayne Metcalf, to "success fees" resulting from the settlements of certain claims pending against HUI / UNICO.
Schmidt said Chun was not authorized to receive any such fees and that Metcalf has said there was no such agreement. The court which oversaw the liquidation had not approved of such an arrangement.
Chun may have paid some of the settlements from the $12 million that was deposited into the client-trust account but at least half the amount was illegally diverted into his and others' accounts, Schmidt said.
Chun could not be reached for comment.
