$8M no ‘common’ theft

A lawyer chooses not to contest
charges he stole client trust funds

A Honolulu lawyer pleaded no contest yesterday to stealing nearly $8 million in claims arising from Hurricane Iniki in 1992 from insurance companies taken over by the state.

Jerrold Chun, 55, an attorney who was hired to help administer the estate of HUI/UNICO -- two insurance companies that were declared insolvent by the state insurance commissioner in 1992 -- entered the pleas in Circuit Court to three counts of first-degree theft, racketeering and 10 counts of money laundering. Chun asked for a deferral of his pleas, which would allow him to clear his record if he meets conditions similar to probation.

"There are mitigating circumstances which he is the first to tell you does not excuse him, but what we have found explained what happened and tells us this is not a common white-collar theft," said Brook Hart, one of two attorneys representing Chun.

Chun was indicted in October of diverting a total of $7.9 million from the client trust account of his law firm, Chun & Nagatani, into his and two other individuals' personal accounts.

The money was transferred into the client trust account by HUI/UNICO at Chun's request to pay for settlements in two cases and outstanding tax assessments owed to the state. According to state attorneys, Chun requested more money than was needed to pay the claim and kept the surplus.

Although claimants were paid, Chun kept $3.3 million for himself and distributed the rest to two individuals to disguise the illegal nature of the transfer, said Deputy Attorney General Mark Miyahira, who argued that Chun should enter a guilty plea, not a no-contest plea.

Chun should be held to a higher standard because, as an attorney, he knew he was breaking the law and abused his position of trust by stealing a large amount of money that he did not need and should have gone to people who had suffered losses, Miyahira said. Allowing Chun to plead no contest and not admit his guilt would undermine the public's trust in the judicial system, he said.

At the time he took the money, Chun was living a good lifestyle and had billed HUI/UNICO $279,450 for services rendered from January to August, Miyahira said. "Simple greed fueled this case."

Chun, who was scheduled to go to trial his month, entered his plea because he is taking full responsibility, said William Harrison, also Chun's attorney.

Chun has repaid nearly $8 million of the amount the state says was diverted, is paying accumulated interest and is cooperating in the lawsuit filed by the state against him, his attorneys said.

The state actually obtained a $20 million windfall after Chun turned the company with a $70 million deficit around, Hart said.

"The short of it is, he did a wonderful job helping the people who were injured enormously and then inexplicably took a success fee, which was unauthorized."

Deputy Attorney General Chris Young, who heads the criminal justice division, questioned where the state savings are if the money Chun took was indeed a "success fee," as he claimed.

And just because a defendant pays back the losses does not fix the fact that he committed the crime, he said.

"But for the fact he was caught, the money would not have been recovered," Young said.

Chun will be sentenced Sept. 29. Each of the counts he pleaded to carries a maximum 10 years' imprisonment.