Lawyer gets 10 years
for $7.9M client theft

Chun diverted money from firms
he was helping to liquidate

A Honolulu attorney was sentenced to 10 years in prison yesterday for stealing $7.9 million from insurance companies in liquidation after Hurricane Iniki struck Kauai in 1992.

Jerrold Chun, 56, pleaded no contest in August to three counts of first-degree theft, unlawful ownership or operation of a business and 10 counts of money laundering.

He was accused of diverting the $7.9 million to himself on three occasions in June and July 2003 from HUI/UNICO in Liquidation Inc., two insurance companies that were taken over and merged by the Insurance Commissioner after claims exceeded their available funds.

Chun was assigned to help liquidate the assets of HUI/UNICO and continued the work when he formed his own law firm, Chun and Nagatani.

Defense attorney Brook Hart argued that Chun believed he was entitled to the money as a bonus for the work he had done for HUI/UNICO, taking the companies from a $70 million deficit over a 10-year period to a point where they showed a $20 million surplus.

Chun was also diagnosed with a bipolar disorder in 1999 that affected his ability to judge between right and wrong and contributed to his belief that he was entitled to the money, Hart said.

But state prosecutors said Chun had no authority to take a success fee or bonus and that his acts were deliberate and deceptive.

"The defendant himself is a sophisticated individual who had it all and wanted more," said deputy attorney general Mark Miyahira, who opposed Chun's request for a deferral or probation.

Chun, a graduate of the University of California-Berkeley law school, has been practicing law since 1977 and was a partner in his law firm.

Although Chun pleaded no contest, cooperated by being interviewed and returned the money in his possession immediately, the serious nature of the crime warrants the 10-year prison term, Miyahira argued.

According to state prosecutors, Chun orchestrated the scheme by requesting more money than was needed from HUI/UNICO to pay off claims, and kept the surplus. "He was biting the very hand supporting his lifestyle," Miyahira said.

In one case, he settled an insurance claim for more than $2.5 million but requested that HUI/UNICO transfer to his firm's client trust account $5.7 million to cover the settlement and related obligations. He never mentioned a success fee, which was never authorized, Miyahira said.

Of the $2.3 million surplus, Chun wrote a check to himself for $1.36 million; to George Oda, chief operating officer and president of HUI/UNICO, for $769,740; and a little more than $1 million to Michael Chong of Adjusting Services of Hawaii for "consulting fees," Miyahira said.

In another instance he requested $3.9 million to resolve a case that had been actually settled for a little more than $247,000. The remainder was transferred into his law firm's operating account. He then wrote a check to himself for $1.4 million, a check for $894,000 to Oda and $1.3 million to Adjusting Services.

To settle HUI/UNICO's outstanding tax liabilities, Chun requested $1.2 million from the company, when only $229,564 was owed. After the taxes were paid, he wrote a check to himself for $408,554. Another $239,000 went to Oda and $350,000 to Adjusting Services.

Chun apologized to the court and expressed the shame and humiliation he has gone through because of his actions.

"The worst part is knowing it's all my fault," he said. "I'm sorry. I'm very sorry."

Circuit Judge Derrick Chan rejected the defense's request that Chun begin serving his sentence beginning in January and ordered that he be taken into custody immediately.

Neither Chong nor Oda has been charged in this case.