Court freezes
company’s accountsThe firm allegedly diverted cash
from two insurance companies
A Circuit Court judge has frozen $2.7 million in the accounts of a company that allegedly diverted money from the estate of two insurance companies ordered into liquidation after Hurricane Iniki in 1992.
Attorneys for state Insurance Commissioner J.P. Schmidt, who is also the liquidator of the estate, had asked the court to freeze the assets of Honolulu attorney Jerrold Chun and Michael Chong, owner of Adjusting Services of Hawaii.
Yesterday, Judge Dexter Del Rosario ordered $2.7 million in Adjusting Services account frozen until it can be determined to whom that money belongs.
Chun is charged with theft for allegedly diverting at least $12 million from HUI/UNICO, the estate of the two insurance companies, to a client trust account of Chun & Nagatani.
Of that amount, according to investigators, $3.5 million was allegedly deposited into Salomon Smith Barney accounts in the name of Chun and Chun & Nagatani.
At least $2.7 million was alleged to have been deposited into accounts held by Chong and Adjusting Services of Hawaii.
Yesterday, Wendell Fuji, attorney for the state insurance commissioner, said about $6 million was transferred in June, July and September to Chong's accounts.
On Oct. 10, Chong and Adjusting Services of Hawaii complied with the request of the deputy liquidator and turned over $3.3 million. But they have refused to deposit the remaining balance of $2.7 million into an escrow account, Fuji said.
Nothing in the files of HUI/UNICO shows that Chong or Adjusting Services of Hawaii provided any services that benefited the estate during the period of the transfer, Fuji said.
Lyle Ishida, attorney for Chong and Adjusting Services of Hawaii, argued that the state is not entitled to the $2.7 million. He said the state has not shown evidence that Chong received any of the disputed funds or that Chong or his company were paid for services by Chun or Chun & Nagatani.
While Chong's firm did provide some adjusting services to HUI/UNICO early in the liquidation, they have not done so recently or during the time the funds were transferred, Schmidt said.
Since the motion was filed, Chun has agreed to place the $3.5 million in dispute that was attributed to him in an escrow account, and the transfer was expected to occur yesterday or Monday, Fuji said. Because the escrow fund was set up, Chun's assets were not included in yesterday's court action.
The return of some of the money by Chun and Chong does not necessarily absolve them of any wrongdoing, Schmidt said. The Insurance Division is continuing its investigation into whether other money was improperly diverted to other accounts or individuals.
