Suit claims trust
funds misused

Officials of RightStar funeral
services improperly withdrew $9M,
the class-action suit alleges

Hawaii's largest funeral services business and its officers and former trustees allegedly violated state law and their fiduciary duties when they improperly withdrew more than $9 million in trust funds since 2002, according to a lawsuit.

The law firm of Bickerton Saunders Dang & Sullivan filed the class-action complaint in Circuit Court yesterday on behalf of Yahnina Hackney, Delores Carter-Chin and the proposed class. They are seeking damages and injunctive relief, including a court order that RightStar, which owns and operates about 13 cemeteries in Hawaii, follow state law and end its unlawful acts and practices.

Until June 2004, RightStar trustees included Stephen E. Harris, M. Tyler Pottenger, Reed B. Rohrer and John D. Waihee III. Officers include John F. Dooley, Kathy Hoover and Richard Bricks.

State law requires RightStar to deposit 70 percent of the amounts paid by purchasers into trust accounts. The trust funds can be used for only two purposes: to pay for the funeral or interment services or to issue refunds. RightStar must also prudently invest the trust principal and maintain proper trust accounting records.

The lawsuit contends RightStar mismanaged trust funds maintained by RightStar 50th State, LLC and RightStar CPF, LLC. These two trust funds, according to the most recent data filed with the state, held about $30 million before $9 million was improperly withdrawn by the officers and trustees, according to the complaint.

RightStar allegedly invested trust principal improperly and failed to file financial statements and actuary reports as required.

Hackney represents her deceased stepmother, Norma Courtney, who had purchased a pre-need funeral services plan in 1998 that provided a casket and cemetery plot at the Valley of the Temples. She made monthly payments until 2001, when she suffered a series of strokes and was admitted to a care home. When she died in October 2004, RightStar kept all of the $1,800 that Courtney had paid to date, according to the complaint. Unable to afford to bury her, Hackney used state welfare funds to cremate her.

Carter-Chin purchased a pre-need funeral services plan in 1993 and took eight years to pay it in full. When she canceled her plan in April 2004, RightStar kept 30 percent even if she received no goods or services.

RightStar officials could not be reached for comment.