The Legitimate Government in Hawaii Series: Whistleblower Greg Wongham's Files on KSBE/Kamehameha Schools - Part I of II
Reviewed by Amelia Gora (2022)
Reminder to Everyone about the Goldman-Sachs Stocks invested in by the CORRUPT. PIRATED entity Bernice Pauahi Bishop Estates/Kamehameha Schools aka’s:
I, Amelia Gora, a Royal person, one of Kamehameha’s, Mataio Kekuanaoa’s, his last wife Kalima’s descendants, Akahi (w), Kalola 
descendant and heir of the first cousin of Bernice Pauahi on Probate of Bernice Pauahi did send the Bernice Pauahi Bishop Estates/Kamehameha Schools aka’s Trustees a Cease and Desist Notice saying that they cannot invest any further in the Goldman – Sachs Stocks. They own more than 40% interest, and the Congressmen/U.S. Congressmen have been feeding off the wealth of these stocks, etc. along with U.S. President Obama whose ancestor was a namesake of Bernice Pauahi who was on the Will of Bernice Pauahi. Research incomplete.
This is Greg Wongham’s Info —note that in 2007 Federal Judge Ezra moved to remove his website………criminal deviants for sure!
but found it again at another site http://www.kycbs.net/Bishop.htm and am posting it on the WordPress website aloha.
Dirty Money, Dirty Politics and Bishop Estate
Stealing the Legacy of an Hawaiian Princess
Sightings from The Catbird Seat
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PART I – The Stealing Begins….
PRINCESS BERNICE PAUAHI was born on December 19, 1831, the last in the royal lineage of Kamehameha the Great, conqueror and first king of the Hawaiian Islands.
As was the custom for Hawaiian royalty, it had been planned from childhood that Pauahi would marry her hanai brother, Lot Kamehameha. She doted upon her brother but declined to take him as a husband. Instead, the attractive young Pauahi met and fell in love with a commoner, a foreigner from Sandy Hill, New York — Charles Reed Bishop.
The love between Princess Pauahi and the foreigner faced great opposition from her family, other ali’i and members of the community. But the young princess was intelligent and independent, and in June 1850, at age 18, she married the young “haole” businessman.
The Princess and her husband eventually won over many of their critics and their relationship came to be admired by Hawaiians and westerners alike, and she eventually reconciled with her family and the other ali’i.
Pauahi grew and developed as a young matron and counselor to her people. At the age of 25, she inherited over 16,000 acres of land from her parents. Other inheritances followed as other members of the royal family passed away. The greatest of the inheritances came from Princess Ruth, her first cousin. Ruth had declared Pauahi sole heir to her entire estate. The amount of land was mind-boggling: about 353,000 acres.
Ruth’s gift to Pauahi made her the largest landowner and the richest woman in the Kingdom. At the same time, she presented Pauahi with the greatest challenge and responsibility of her life. Pauahi now owned a giant estate, and she would have to decide how it would be used.
The Bishops had a multitude of blessings, except one. They never had children of their own. Possibly from this came Pauahi’s inspiration to use her legacy to establish the Kamehameha Schools for all the children of Hawaii.
On Thursday, October 16, 1884, the princess passed away. Charles was by her side.
The newspapers reported that a heavy downpour of rains reached a crescendo just about the time Pauahi died. In ancient days, the Hawaiians said when rain fell at a the time of a person’s death or funeral, “Kulu ka waimaka, uwe `opua.” (The tears fall; the clouds weep.), for the gods mingle their tears of affection with those who weep in sympathy and aloha.
Of all the eulogies that were held upon her death, perhaps that of Reverend J.A. Cruzan was the most moving and prophetic:
“The great loss which Hawaii sustained last Thursday was not that the last of this great line of High Chiefs died, nor that the possessor of great wealth died, but that a true woman died…True in all times and among all races…
That Bernice Pauahi Bishop was such a true woman her life bears witness….Refusing a crown, she so lived that she was crowned. Refusing to rule her people, she did what was better, she served them, and in no way so grandly as by her example….
‘The world can do without its masters better than it can without its servants.’…For fifty-three years her royal life here has borne unswerving witness in favor of virtue and purity…
She hated that which was impure with an intense hatred. She had only loathing and contempt for that which was coarse and low. Place, power, wealth, nor influence could win her favor or regard if it was joined with degraded character. And her womanly example was all the more potent for good because it was so quiet…
The things that are most noisy are not the most powerful. Nay, things that make no noise, and make no pretension, may be really the most powerful. This quiet, modest, true womanly life has been for years, and still is, and will be for years to come, a mighty power for good here in Hawaii.
Only the God who loveth purity and righteousness can measure this one true woman’s influence for good upon her people…”
– Source: PAUAHI: THE KAMEHAMEHA LEGACY,
by George Hu`eu Sanford Kanahele
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It was from Pauahi’s legacy that vast amounts of wealth eventually flowed, until the Bishop Estate became the wealthiest charitable organization in the United States. It is her estate that has been systematically looted over the last decades by persons “with degraded character” that the princess undoubtably would have viewed with only “loathing and contempt.”
In 1997, responding to a surging tsunami of criticism from the faculty, students and alumni of the Kamehameha Schools, and from concerned citizens of all ethnic backgrounds in Hawaii, Governor Ben Cayetano took an unprecedented action and directed the state’s attorney general, Margery Bronster, to investigate the practices of the Estate’s five highly paid trustees.
But the attorney general was not the only one investigating the estate. The IRS had already been auditing the records of the estate for several months — empowered by the “interim sanctions” regulations which had been passed by Congress in early 1996. At the same time, the court-appointed “master” who is charged by the probate court with oversight of the operations of the estate, was digging deeper into the activities of the trustees than a long line of previous masters.
Suddenly the trustee’s were, for the first time in the schools’ 115-year history, under siege from all sides.
The full and sordid story of the looting of the estate is too long to relate here. To give you an idea of the magnitude of the financial losses, however, the Master’s Report on the 109th Annual Account of the Trustees revealed that the Estate’s investment portfolio suffered substantial losses in 1994, the year under review. The records relating to the various investments showed that combined losses and loss reserves of $264,090,257 were recognized in fiscal year 1994 alone.
The short story is that, after long and hard-fought court battles, the five former trustees were forced to resign, and five interim trustees were selected to take their places until a new trustee selection process was created and implemented. The removal of the five former trustees was one of the non-negotiable conditions of the IRS to prevent the loss of the estate’s tax-exempt status.
The long story can be found herein and in the volumes of news articles and court proceedings in the on-line archives of the Honolulu Star-Bulletin.
The removal of the incumbent trustees was good news, hailed by many as the beginning of the healing process….
March 12, 2000
Bishop Estate’s first trustees
played key role in overthrow
By Bob Dye, Honolulu Advertiser
They were American annexationists, these first five trustees of the estate of Bernice Pauahi Bishop.
Within three years of their appointment, they helped strip King Kalakaua of his power. When, upon his death in 1891, Pauahi’s hanai sister Lili‘uokalani succeeded to the throne, they joined with others to depose her, establish a provisional government and a so-called republic.
The annexationists realized their ultimate political goal four years later when the Hawaiian Islands became a U.S. territory. Their political agenda had a profound effect on Bishop Estate and the Kamehameha Schools.
Princess Bernice Pauahi Bishop was the last of the Kamehameha dynastic line. Upon Pauahi’s death, in the 11th year of Kalakaua’s reign, the royal lands of the Kamehamehas — one-ninth of all land in Hawaii — passed to the control of five esteemed haoles — the trustees.
None had a drop of Hawaiian blood.
Those lands became a base of wealth for two great estates — those of Bishop and Damon.
The trustees were:
Charles Reed Bishop, president, founder of Bishop Bank (now First Hawaiian Bank) and Pauahi’s husband. Born in Glenn Falls, N.Y., in 1822, he came to Hawaii in 1846 and accepted a clerkship in the U.S. Consulate. He became the Collector General of Customs in 1849, and a year later, he married the princess. She was 16 and he was 26. Her missionary teachers at the Royal School — Amos Starr and Juliette Montague Cooke — encouraged the courtship.
“I’m decidedly in favor of annexation, not only because I’m an American, proud of the ‘stars and stripes’ and expect to gain something by such a move, but because I’m an Hawaiian too, and believe that while such a change might bring its evils, it would be the best thing for the great majority of the population both native and foreign,” he wrote in 1853.
In 1873, as Lunalilo’s minister of foreign affairs, he urged the cession of Pearl Harbor to the United States for a naval base. In addition to being a trustee of the Punahou School, he headed the public board of education. He served as president of the Legislative Assembly, and was a member of the House of Nobles.
The Rev. Charles McEwen Hyde, vice-president. Hyde was born in New York City on June 8, 1832. His father, an attorney, was treasurer and general agent of the American Bible Society, and his uncle William was a board member of American Board of Commissioners of Foreign Missions.
A graduate of Princeton Theological Seminary and the holder of a doctor of divinity degree from Williams College, Hyde came to Hawaii in 1877 to be secretary of the Hawaiian Evangelical Association. He reorganized a Honolulu theological school as the North Pacific Missionary Institute, and served as principal. He was named a trustee of Punahou School in 1877.
Supporters called Hyde a “typical American, combining all the energy and persistency of the New Englander with the refinement and culture of the Christian Gentleman.”
Charles Montague Cooke, secretary. A son of missionary parents and teachers of Princess Pauahi, Amos Starr and Juliette Montague Cooke, he was born in Honolulu on May 16,1849.
He began his business career with Castle & Cooke, a firm founded by his father.
At the time of his appointment, he was a partner in Lewers & Cooke. He married missionary daughter Anna Charlotte Rice in 1874. They had six children. He became a trustee of Punahou School in 1880. He was a charter member of the Hawaii Society of the Sons of the American Revolution.
Samuel Mills Damon, treasurer of the board. A son of missionary parents, the Rev. Samuel Chenery Damon and Julia Mills Damon, he was born in Honolulu on March 3, 1845. A partner of Charles Reed Bishop in the Bishop Bank after Sept. 1, 1881, he inherited from Bernice Pauahi Bishop the ahupua‘a of Moanalua. That bequest contained about 7,000 acres, and stretched from the Koolau Range to Keehi Lagoon. He coordinated her funeral.
Earlier he had coordinated the funeral of Princess Ruth. He married missionary daughter Harriet Melinda Baldwin. Her brother, Henry P. Baldwin, was a founder of Alexander & Baldwin. At the time of appointment Damon was a member of Kalakaua’s privy council. With Charles R. Bishop, he was an executor of Princess Pauahi’s will.
William Owen Smith, trustee. A son of missionary parents, Dr. James William and Melicent Knapp Smith, he was born at Koloa, Kauai, in 1848. He became the sheriff of Kauai in 1870, and of Maui in 1872. In 1875, he was admitted to the practice of law. The following year he married Irish-born Abbey Hobron, the daughter of Capt. T.H. Hobron, founder of the 3,000 acre Grove Ranch on Maui. They had five children. He was named a trustee of Punahou School and an editor of Planters’ Monthly in 1882.
When appointed to the Bishop Estate board, he was a trustee of Lunalilo Estate. A member of the Hawaiian legislature, he was politically allied with Sanford Ballard Dole, a childhood friend. Smith, who had extensive trust experience, resigned as trustee on Oct. 20, 1886, and was replaced a day later by Joseph Oliver Carter, another trust expert.
Schooling Hawaiians
The trustees met at least once a month in the board room of Bishop & Co., but usually more often than that. Hyde’s biographer reported that trustee commissions “hovered”‘ about $1,000 a year during the first years.
But apparently individual commissions varied. Cooke returned every penny he received from his trusteeship in the first five years — a total of $989.79 — and pledged all future commissions to establish a library at the school.
The Rev. Hyde recommended a site for the Boys’ School, and enunciated “the objective, aims, method, time, and extent of the school.” Called The Prospectus of the Kamehameha Schools, the report was unanimously adopted. After Princess Pauahi’s will called for the establishment of a school to educate Hawaiian children, the document became the principal guideline for the development and management of the schools.
Hyde became the “lead trustee” for the schools and advocated appointing the Rev. William Brewster Oleson as principal. Oleson began his duties on July 1, 1886, and soon traveled to the United States to visit similar schools and recruit faculty.
Planning an overthrow
Calling King Kalakaua “a bully and a coward,” Hyde advocated his overthrow.
He wrote to the Rev. Judson Smith, head of the American Board of Commissioners of Foreign Missions, on Nov. 20, 1886: “I have learned facts about the King’s measures and objects, which convince me that with the cunning of the savage and the tirelessness of revengeful animosity, he is seeking the overthrow of Christian institutions and the utter demoralization of society. His aim is to restore heathenism with its absolute power of the chief and licentious orgies of wasteful indulgence … we should have a revolution.”
A Jan. 13, 1887, correspondence from Hyde to Smith states: “By the Constitution, he is not responsible to anybody for anything he chooses to do. He can steal, murder, defraud. He cannot be called to account. But if twelve of the leading men of this community should agree upon a line of policy that they believe the King ought to pursue, and publicly demands, he would have to succumb. That is my idea in reply to your question what means there are of checking this irresistible rush to disgrace and ruin.
“But there are no such twelve men to be found in this community … But if circumstances should put me in a position in which I should have to defend the interests of Christ’s Kingdom, as against the King, I should have neither fear nor hesitancy in doing so.”
Months earlier, the king had confided to an aide that he feared he might be overthrown. Members of his staff spent the night guarding him for several weeks after as he slept in the palace.
It was confirmed later that a secret organization, called the Hawaiian League, had been formed about the first of the year, consisting of some of the most powerful businessmen and their pastors. All were white, male and mostly Protestant.
Hyde refused to join the Hawaiian League, “objecting to the secret, underhand plottings involved in such a style of procedure.” But his co-trustee Cooke was among the first to sign up. Kamehameha School principal Oleson was on its executive committee and vice principal Henry S. Townsend, was a member.
Members pledged to keep the League secret and to “protect the white community” of the kingdom “against any arbitrary or oppressive action of the government.”
The League held its first meeting at the home of Sanford B. Dole. By June 30, 1887, it had 405 members. Meetings usually took place in the evening, and in different parts of the city, to frustrate police efforts to gather information on them.
Seizing control
The revolution was bloodless.
Kalakaua was stripped of power and the government fell into the hands of the Hawaiian League. On July 5, 1887, the Honolulu Rifles were ordered out in full uniform. Their cartridge belts were full. Charles Bishop’s nephew, Eben Faxon Bishop, was one of the officers as a first lieutenant of Company B. In addition, League members armed themselves.
At the palace a New York Herald correspondent asked King Kalakaua:
“What means have you of self-defense?”
“I have my bodyguard of sixty men, who are passably well armed and drilled,” he replied, “an Austrian battery of six field pieces, two brass cannon with sweeping fire, good bolts to outside doors and good hearts within. Then, too, there are two companies of native volunteers called the Queen’s and King’s Own, composed mainly of old retainers.”
“But outside, as I understand it, there are three hundred men, over a thousand rifles and ammunition enough for a siege.”
“Yes,” replied the king, nervously wetting his lips, “but they have not got in yet.”
Hyde told a different story. He wrote that Kalakaua had “ordered his military to assemble at the palace Friday night, but only 20 assembled out of 200. When he asked them how many would fight for him, only 2 said they would.”
Hyde also wrote: “The backbone of the whole movement is the money furnished by some of our capitalists, while the brains came largely from the ‘missionary ring’ and the muscle from the sturdy mechanics, carpenters, and masons and machinists who have no great regard for royalty but do believe in right and justice.”
A man credited with financing the revolution was Trustee Damon, the banker. In July 1889, the “reform” cabinet named him minister of finance. Kalakaua died in 1893 and was succeeded by Queen Lili‘uokalani.
-Bob Dye is a Kailua historian and writer.
http://the.honoluluadvertiser.com/2000/Mar/12/opinion6.html
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IMAGES OF THE BEAUTIFUL LEGACY OF
PRINCESS PAUAHI BISHOP
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The Catbird Chronicles: Bishop Estate
1986 – Bishop Estate joins golf course designer Robert Trent Jones and North Carolina developer Clay Hamner in the purchase of 1,100 acres at Lake Manassas, Virginia.
1989 – Bishop Estate trustees approve the McKenzie Methane acquisition, with trustees, principle executives, managers, family members, business cohorts and other insiders co-investing millions of their personal money. Among the investors are the estate’s tax-adviser, Mark McConaghy of Price Waterhouse.
1989 – HFH, a holding company originally comprised of four major investors, William E. Simon, Sr., Gerald L. Parsky, Larry B. Thrall, and Roy Doumani, to purchase HonFed Savings & Loan Association, sells approximately 23 percent of its ownership stake in the thrift.
1991 – Bishop Estate and partners set up RTJ Acquisition LP to develop the Lake Manassas property, which is to become the Robert Trent Jones Golf Club — the object of controversy and a lawsuit in which the later owners of the club claimed fraud was involved in the sale. The purchasers allege Bishop Estate was both the buyer and the seller (BE trustee Henry Peters also served on the golf club’s board of trustees), and also had failed to inform them of a $33 million development debt they would have to pay off — to Bishop Estate.
1992 – Bishop Estate trustees invest $250 million of the trust’s money in Goldman Sachs.
1992 – Bishop Estate invests $31 million in Mid Ocean Reinsurance Co. with partners J.P. Morgan & Co, Marsh & McLennan Co. and Texas deal-maker Richard Rainwater. While a director of Mid Ocean, estate trustee Henry Peters received substantial director’s fees and received options to acquire 6,000 shares of Mid Ocean Stock.
1993 – Bishop Estate, The MacArthur Foundation, and Duke University Endowment Fund back the formation of a Boston merchant bank called Orion Capital Partners LP.
1993 – Robert Rubin, worth an estimated $100 million at the time, resigns Goldman Sachs to join the Clinton administration. Rubin makes a phone call to Bishop Estate and the estate “insures” Rubin’s stake in Goldman Sachs for $100,000 a year — a real “sweetheart deal” for poor Rubin?
1994 – Bishop Estate invests another $250 million in Goldman Sachs.
1994 – The records relating to the various investments held by the Trust Estate and its Pauahi Holdings, Inc. subsidiary, showed that combined losses and loss reserves of $264 million were recognized in fiscal year 1994.
1995 – The Wall Street Journal exposes the estate nationally with their in-depth, front-page article, Bishop’s Gambit – Hawaiians Who Own Goldman Sachs Stake Play Clever Tax Game.
1995 – According to The Cheating of America: “Tax attorneys for Verner, Liipfert, Bernhard, McPherson and Hand– the Washington, D.C.-based law and lobbying powerhouse whose members include the likes of Bob Dole and former treasury secretary Lloyd Bentsen – prepared a thirty-page confidential report for a client (Kamehameha Schools/Bishop Estate) in search of a new home. The attorneys surveyed the tax and legal consequences of relocating in 49 states (only Hawaii was excluded), then recommended a single location to their client: the Cheyenne River Sioux Reservation in South Dakota.”
1996 – Bishop Estate lends $1 million to Charles M. Harmon, Jr., an investment banker and former general partner at Goldman Sachs, and together with Larry L. Landry, chief investment officer of the MacArthur Foundation; and Brad Heppner, a consultant at Bain & Co. and former director of private investments at the MacArthur Foundation, they form Crossroads Group to purchase Bigler Investment Management, a Conn. firm that manages fund-of-fund accounts. Bigler’s clients include: Connecticut State Treasury; Massachusetts’ Pension Reserves Investment Management Board; Rhode Island Employees’ Retirement System; City & Co. of San Francisco Retirement System; and pension funds of E.I. duPont de Nemours & Co.
1996 – The estate spends more than $330,000 on federal lobbying – most of it going to three firms to fight, unsuccessfully, the “interim sanctions” law that created penalties for employees or officers of charitable institutions who gain undue “excess benefits” from their positions. The three lobbying firms were Verner, Liipfert, Bernard, McPherson & Hand, a prominent Washington, D.C. firm that employs former Hawaii governor (and friend of Bill Clinton), John Waihee; Hecht Spencer & Associates; and Price Waterhouse. Other Verner firm members enlisted in the effort included former Treasury Secretary Lloyd Bentsen of Texas, former Senate Majority Leader George Mitchell of Maine and former Texas Governor Ann Richards. Also, enlisted to fight the “interim sanctions” regulations was the Rev. Jesse Jackson.
1996 – In October, Bobby Harmon, the estate’s Risk Manager and president of P&C Insurance, reports suspected fraud and collusion between Trustee Henry Peters; Nathan Aipa, the estate’s general counsel, and Marsh & McLennan, Inc. to the organizations’ auditors, Coopers & Lybrand. In November, Harmon is terminated from both positions.
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The Chronicles Continue in Part II.
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IF YOU WANT TO TAKE A CLOSER LOOK AT SOME OF THE CAREFULLY HIDDEN NESTS INHABITED BY THESE BIRDS OF A FEATHER, JUST TRAIN YOUR FIELD GLASSES BELOW!
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Bedford Property Investors, Inc. – From a Bedford Properties press release: Bedford Property Investors, Inc. announced the appointment of Scott R. Whitney as Sr. V.P. and CFO. Whitney, 45, has been serving as Sr. VP/CFO of WCI Communities (a Bishop Estate investment) of Naples, Florida since 1995.
Before joining WCI Communities, Whitney was with Equity Group Investments, Inc. Prior to joining Equity Group Investments, Whitney worked with Balcor/American Express, Inc. as V.P. Banking and Sr. Controller.
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From Midweek, 3/7/01, by Robert M. Rees: Years of pursuing the Bishop Estate trustees revealed more than the self-seeking greed and hubris of its five now-deposed incumbents….
Bina Chun, widely referred to as “the queen of the school,” (and wife of Kamehameha Schools’ president, Michael Chun) had her own rewards. In 1992, for example, Bedford Properties paid her a cool million just for negotiating the purchase price of the Kalele Kai condo project with the trustees….
For more, GO TO > > > Paradise Paved; The Grand (and dirty) Ko `Olina
Benson Forests – Kamehameha Schools’ 390,000-acre timberland investment in Michigan.
For more, GO TO > > > Part II
Blackstone Group – A New York-based private investment bank.
From The Conspirators: Secrets of an Iran-Contra Insider, by Al Martin:
GOVERNMENT FRAUD, CORPORATE FRAUD,
AND MORE FRAUD
People in the media often ask me to give them examples of frauds that began in Iran-Contra and continue to this day, albeit under different names.
It’s essentially the same fraud and the same cast of characters.
The examples I always give (about which I have substantive information, since I was involved in all three of the original frauds and also involved in marketing some of the partnerships for the secondary fraud) are the Ocean Reef Development Group, Ltd., the Omni Development Group, Ltd., and the Tri-Lateral Investment Group, Ltd.
Who are the common players who are links between all three deals during Iran-Contra?
They are Frank Carlucci and Richard Armitage.
When Frank Carlucci and Richard Armitage left government service immediately after Iran-Contra (they literally had to leave in order to avoid being subpoenaed as part of the overall coverup), they became principals with Pete Peterson, the infamous Republican player and GOPAC money launderer, in the Blackstone Investment Group, which is a big organization.
Then they simply continued the same real estate development frauds which were begun under Iran-Contra.
This time all the original deals went bankrupt. A certain set of banks got burned. The property reverted to them, and then they refinanced the property again through Blackstone.
Subsequently they entered into an arrangement with another similar sounding company (there’s always been some confusion) the Capstone Development Group, which was also a post-Iran-Contra creature.
They are two separate organizations.
Some people will try to claim that Capstone was simply a subsidiary of Blackstone.
It is not. It is a separate company. Look at the directors. They are none other than Larry Eagleburger and Bernie Aronson, former co-workers of Frank Carlucci and Assistant Secretary of State, Richard Armitage.
However, the real estate frauds continued essentially until the early 1990s. It’s interesting to note how former government officials who were in the Reagan-Bush Administration during Iran-Contra profit by subsequent frauds – post-Iran-Contra frauds, if you will.
For instance, in 1994-95, there was the great Mexican Diversion Fraud, when Blackstone immediately opened an office in Mexico City to take advantage of American taxpayers’ money being lent to Mexico vis-a-vis the OCED and OPEC and other United States lending and/or guaranteeing agencies.
The opportunity to commit fraud against the United States Treasury during that Mexican bailout was just like a walk in the park.
You buy a busted out Mexican company for pennies on the dollar, pump it up, make it look nice, make sure you’ve got your hands out for a twenty or thirty million dollar loan from somebody else, like the IMF, or a direct United States lending agency, and you would be given Brady Bonds which could then be rehypothecated.
And it was such a scam.
Dinnerstein alone documented $130 million of fraud committed by former officials of the Reagan-Bush Administration during the “Great Mexican Turkey Shoot” as it became known.
And then what happened?
The Russian bailout.
Blackstone suddenly opened an office in Moscow and promptly proceeded to do the same thing again. This time they were raping and pillaging the American taxpayer with the same corporate schemes to get money out of U.S. agencies and/or collateral guaranty or fidelity instruments that could be rehypothecated.
It’s exactly the same scheme.
It was another $38 million of fraud according to our estimates at the time.
To follow fraud from the Iran-Contra period and to continue to do it to this day – just look at where the Blackstone Investment Group is opening up offices in the world. . . .
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For more, GO TO > > > Birds that Drink from Cesspools; The Blackstone Group; Predators in Paradise
Bruce Nakaoka – Former investment manager at Kamehameha Schools/Bishop Estate.
Ex-estate workers to talk to Bronster
They were granted immunity from suits that could come up
By Honolulu Star-Bulletin Staff
Two former investment managers at Kamehameha Schools/Bishop Estate have agreed to comply with subpoenas issued by Attorney General Margery Bronster in the state’s investigation of the $10 billion charitable trust.
Bruce Nakaoka and Eric Martinson agreed to meet with the attorney general before Nov. 26, after they were granted immunity from civil suits that may arise from their cooperation, said Deputy Attorney General Hugh Jones.
The agreement was approved today by Circuit Court Judge Kevin Chang.
In another Bishop Estate investigation, retired Circuit Judge Patrick K.S. Yim today said he met with the five estate trustees Monday to update them on the progress of his fact-finding report into management of the schools.
Yim did not disclose the nature of the discussion. He is required by court order to complete his report on or by Dec. 5.
None of the trustees commented on the meeting.
Critics of the trustees’ management said Yim was wrong to privately meet with the group before he releases his report….
See also: Eric Martinson
Cades, Shutte, Fleming & Wright – GO TO > > > The Morgan, Lewis & Bockius Report
Carlyle Group – a Washington-based merchant bank that is chaired by Frank Carlucci, the former Secretary of Defense in the Reagan Administration.
For more, GO TO > > > A Connecticut Yankee in King Kamehameha’s Court; Birds That Drink From Cesspools
Central Pacific Bank – one of Hawaii’s largest commercial banks, formerly majority-owned by Japan’s giant Sumitomo Bank. The major financial asset of Senator Daniel K. Inouye (D-HI).
See also: Dan Inouye; Sumitomo Bank; Yakuza
For more, GO TO > > > Behind the Blinds at Central Pacific Bank
Chubb Corporation – Chubb is a holding company whose subsidiaries are engaged in two industries: property & casualty insurance and real estate.
The second largest institutional investor in Chubb is Putnam Investment Management, a subsidiary of the world’s largest insurance broker, Marsh & McLennan. The third largest institutional investor in Chubb is Citigroup, which was formed through the mega-merger of Citicorp and Travelers Insurance Company.
Citigroup is co-headed by Robert Rubin, the former U.S. Treasury Secretary and former co-chairman of Goldman Sachs. A leading institutional owner of Goldman Sachs is Hawaii’s wealthy Bishop Estate.
The broker for Bishop Estate is Marsh & McLennan. Marsh & McLennan placed the estate’s Directors & Officers Liability insurance policy in Federal Insurance Company, a Chubb subsidiary.
Federal Insurance Company provided the excess liability insurance policy for Bill Clinton that defended him in the Paula Jones lawsuit.
Just one big happy flock.
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From the RICO lawsuit: Harmon v. Federal Insurance Co, et al.:
Defendant Federal Insurance Company, Inc. (Federal), a member of The Chubb Group, conducts business in the United States and was, at all times, registered with the Insurance Commissioner, State of Hawaii, as an admitted foreign insurance company. Federal conducts business through insurance brokers as well as through licensed general agents of the company. In Hawaii, one of Federal’s licensed general agents is Marsh & McLennan, Inc. (M&M).
On or about October 27, 1995, Plaintiff, in his capacity as Risk/Insurance & Safety Manager for Kamehameha Schools Bishop Estate (KSBE), caused Federal, through its agent M&M, to bind coverages under an Association Liability Insurance policy. . . .
Plaintiff alleges that the failure of Federal, and its agent, M&M, to provide defense coverage to Harmon in Civil No. 97-0512-02 constitutes mail fraud, wire fraud, misrepresentation and fraudulent inducement to purchase this insurance….
As detailed in Plaintiff’s complaint, there was collusion among the Defendants, the primary purpose of which was to increase their profits through the awarding of non-bid insurance contracts to Federal and its agent, M&M.
Profits were further enhanced by Federal through reduction in their claims payments by means of fraudulently “back-dating” an exclusion endorsement in their Association Liability Policy in order to wrongfully deny defense coverages to Plaintiff….
For more, GO TO > > > The Chubb Group; Claims By Harmon; Woo vs. Harmon
Coconut Island – Better known to millions of TV viewers as “Gilligan’s Island”.
From sheep to science – Coconut Island
by Nathalie Parkvall, editor, HPU Student Newspaper
Before 1930, Bishop Estate-owned Coconut Island, or Moku O Lo ‘e, was a 12-acre island used as a base for local shepherds and fishermen. Little did anyone know that the island would gain national notoriety by being featured in the opening credits of the popular ‘60s TV show Gilligan’s Island, and few could foresee the many changes that would make the island a rather special place today.
Over the decades, the Kaneohe Bay-located island was transformed many times. It was as a location for a tuna-packing factory, it became a rich man’s private paradise with a bowling alley and a small zoo, and today it is the Hawai’i Institute of Marine Biology’s research center (HIMB) owned by University of Hawai‘i. . . .
Coconut Island, named after its many coconut palm trees, has a long history of many different owners. In the 1930s, Christian Holmes, owner of Hawaiian Tuna Packers (now Coral Tuna) bought the island from Bishop Estate to use as a tuna-packing factory. As he wasn’t satisfied with the size of the island, he decided to enlarge it to 28 acres, more than double its original size, using material taken from a sandbar in Kaneohe Bay.
Holmes had a vision of creating a private paradise, so while working on increasing the size of the island he also enhanced it by building a saltwater swimming pool and fishponds (which later became useful for HIMB) and adding numerous exotic plants and trees. He also built a bowling alley, brought a shooting gallery from an amusement park in San Francisco, and built bars at several spots on the island. He also made a bar with a movie theater out of a 4-masted schooner, Seth Parker, which he couldn’t sail anymore since it leaked. This boat was later featured in the movie Wake of the Red Witch starring John Wayne.
Holmes wasn’t satisfied with his paradise until it also housed a small zoo, including such animals as donkeys, monkeys, a giraffe, and a baby elephant, which were later donated to the Honolulu Zoo when Holmes died in 1944. After his death, the Kaneohe Marine Corps Air Station (now Kaneohe Marine Corps Base Hawai‘i) used the island as a rest and recuperation post for its officers until five wealthy oil men purchased the island in 1947.
Eventually one of the men, Edwin Pauley, became the sole owner and utilized the island as a summer residence for his family, entertaining many famous people, including Harry Truman, Lyndon B. Johnson, Red Skelton, Richard Nixon, and Ronald Reagan.
In 1951, Pauley invited scientists from UH-Manoa to establish a marine lab on a part of the island. He leased the land “rent-free” to help establish the Hawai‘i Marine Lab, which moved into the barracks previously built by the Marine Corps. In 1961, a fire destroyed the marine lab, but with help of a $300,000 donation from Pauley, a new lab was built, which became the Hawaii Institute of Marine Biology in 1965.
After Pauley’s death in 1981, the estate was put up for sale. After 17 months with no buyer, a proposal was made for the state to buy the island. However, the negotiations took several years and before the state made up its mind, Katsuhiro Kawaguchi, a Japanese real estate developer, made an offer of $ 8.5 million for the private part of the island and bought it in 1987.
In 1992, Kawaguchi was deported due to criminal activities and forced to sell the property….
© 2001, Kalamalama, the HPU Student Newspaper. All rights reserved.
See also: Katsuhiro Kawaguchi
For more, GO TO >>> Vampires on Gilligan’s Island
Crossroads Group – In 1996, Hawaii’s Bishop Estate loaned approximately $1 million of the trust’s funds to Charles Harmon, Jr., an investment banker and former general partner of Goldman Sachs, to buy into a joint investment of the estate.
For more, GO TO > > > A Connecticut Yankee in King Kamehameha’s Court
Dan Inouye – U.S. Senator (D)from Hawaii, called by some Hawaii’s “Political Godfather”.
From AllPolitics:
FISCAL 1997 PORK TOTALS: Per Capita, Per State, June 9, 1997
Rank: #1 – Hawaii
Population: 1,183,723
Pork/per Capita: $131.01
Pork Dollars: $155,078,000
(For comparison: Michigan ranked at the bottom of the pork barrel with a Population of 9,594,350, with Pork/per Capita of $0.96, for total Pork Dollars of $9,594,350.)
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ABC News, 2/2/97, by James Walker:
The King of Pork
“Dan Inouye is the second largest industry in the state of Hawaii,” says Richard Borreca of the Honolulu Star-Bulletin.
That’s because in just the last five years, Inouye has brought home almost half a billion in federal tax dollars. The senator has mastered the recipe for pork: one part seniority, mixed with a choice assignment on a powerful spending committee. . . .
Pork Barrels at Sea
When local historians wanted to build a replica of a Polynesian canoe, they went to Sen. Inouye and he delivered.
Two million dollars in federal funds and the Hawaii`iloa was built– all 57 feet, 17 thousand pounds of it. The goal was to show how the first Hawaiians sailed to their new home.
Donald Duckworth of Bishop Museum is an admirer of Inouye’s ways. “Certainly out here, we admire and respect Senator Inouye’s translation of our needs.”
But what some call need, others call waste.
How does a boondoggle like this get funded anyway?
Read Between the Lines
Sen. John McCain, R-Ariz, says it’s because some lawmakers slip requests for special projects into huge appropriations bills that no one is likely to scrutinize.
McCain claimed he knew nothing of the Polynesian canoe. “Many times we don’t know what’s in these bills until after they’re signed into law.”
Inouye also used a 203-page military-appropriations bill to get a company a 30-year monopoly on the cruise business in Hawaii.
“You give one company a monopoly to cruise the very beautiful islands of Hawaii, the consumers are going to pay, and clearly, far in excess of what they otherwise would if there was competition,” said Sen. McCain.
Senator Inouye declined ABC News’ request for an interview.
Meanwhile, the pork projects keep flowing into Hawaii. And Senator Inouye keeps spending your money. . . .
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What the preceding article doesn’t tell you: Bishop Museum was endowed by Charles Reed Bishop, the husband of Princess Bernice Pauahi Bishop … AND THE TRUSTEES FOR THE C.R. BISHOP ESTATE ARE THE SAME POLITICALLY-CONNECTED TRUSTEES AS FOR THE KAMEHAMEHA SCHOOLS / BISHOP ESTATE !
AND WHO WAS THE PROJECT DIRECTOR FOR THE $2 MILLION CANOE? Try guessing NAINOA THOMPSON – one of the five NEW TRUSTEES (and son of retired trustee, Myron Thompson, one of the co-investors in the infamous McKenzie Methane deal!) Another coincidence?
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Honolulu Star-Bulletin, 10/28/96, by Ian Y. Lind: Isle Woman Part of Campaign Probe – Former resident Nora Lum figures in congressional investigation into ‘92 finances. Congressional investigators have renewed a probe of former Hawaii resident Nora T. Lum, and a 1992 campaign project which she headed, because of their links to Democratic National Committee fund-raiser John Huang and former DNC official Melinda Yee.
David Bossie, staff investigator for Rep. Dan Burton, said last week that investigators are “extremely interested” in Lum’s association with Huang and Yee in the Asian Pacific Advisory Council (APAC-Vote), a DNC project that operated out of offices in Torrance, Calif, during the fall of 1992.
Bossie said APAC-Vote is drawing new scrutiny because its “cast of characters” included Huang, then an officer of the Indonesian-owned Lippo Bank in Los Angeles; the late Secretary of Commerce, Ron Brown, then chairman of the DNC; and Melinda Yee, an assistant to Brown at the DNC and national director of Asian Pacific American affairs for the 1992 Clinton-Gore campaign.
Following the 1992 elections, Brown was appointed secretary of commerce and named Huang and Yee to key positions in the department. . . .
Huang and Yee have been ordered to testify in a lawsuit by the conservative organization, Judicial Watch, which wants to know whether Commerce Dept trade missions were used to raise funds for the Democratic Party. . . .
APAC-Vote officially opened its office on Sept 9, 1992, the same day then-candidate Bill Clinton announced the formation of the Asian Pacific American Committee for Clinton-Gore, whose roster included Sen. DAN INOUYE, Sen. DAN AKAKA, Rep. PATSY MINK, and then-Gov. JOHN WAIHEE. . . .
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Portland Free Press, Jan 1997, by Ace R. Hayes: New York Mob at Mena . . . Yet another CIA-Mafia drug connection: Richard Brenneke puts mob boss John Gotti and CIA boss Donald Gregg in the middle of contra drug operations at Mena Airport.
In Dec 1996, the Portland Free Press secured a copy of Richard Brenneke’s 21 June 1991 sworn-deposition before Congressman William Alexander, Jr, and Chad Farris, chief deputy attorney general of Arkansas. . . .
We secured former congressman William Alexander’s fax number and sent him a request for confirmation. We got more than we hope for – Jan 1997: “… the Brenneke transcript, along with other evidence of money laundering by Barry Seal at Mena, Arkansas, was delivered to Judge Walsh for action. Nothing followed. I agree that the American people deserve to know the truth about our government. Thank you for providing it. Good luck.” (signed Bill Alexander)
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The American people, since World War II, or World War I, or the Spanish American War– take your choice– have witnessed the tip of many criminal icebergs. The official investigations of the criminal icebergs almost always stopped at the waterline. The other 90 percent of the criminal icebergs were never hauled onto the beach for complete examination, prosecution and correction.
The criminal cases of 1980 to the present are in perfect harmony with this honored tradition. This is, of course, why Americans are the most profoundly ignorant people on planet earth. The illusion of knowledge is far worse than knowing you don’t know.
The Iran-Contra-cocaine criminal iceberg was subjected to a series of bogus investigations and damage control “exposes.” The Tower Commission and Select Committee of the House and Senate on Secret Military Assistance to Iran and the Nicaraguan Opposition in 1987, began the damage control operation for the Imperial state.
But the Hall of Shame did not stop with John Tower, Ed Muskie and Brent Scowcroft or Dan Inouye and Lee Hamilton. It included Senator John Kerry and his Special Counsel Jack Blum and Staff Aid Dick McCall. It reached to the Special Counsel, Judge Lawrence E. Walsh …
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From Shadow, by Bob Woodward: . . . THE REAL THREAT to the Reagan presidency, (Harold) Baker and (Arthur) Culvahouse knew, lived across town in the Watergate Hotel . . . In room 609 of the hotel, Lawrence E. Walsh, 75, had set up living quarters after being named by the three-judge panel as the independent counsel for Iran-contra. . . .
One of Walsh’s first stops was the CIA, which gave his team space and filing cabinets in the basement of agency headquarters in Virginia so they could look at top-secret codeword documents. Early in the investigation, the IRS gave Walsh 11 agents who were experts in tracing hidden money so Walsh could attempt to understand the “Enterprise” that North had set up using Swiss bank accounts for the Iran arms sales, the secret contras resupply and other covert operations.
Iran-contra had dozens of tentacles, and Walsh chose to pursue nearly all of them. He was not sure if he was chasing rabbits or where they might take him. His authority from the three-judge panel called on him to prosecute any related crimes he uncovered, even by underlings.
His preoccupation became (Oliver) North and (John) Poindexter, the operational officers….
Iran-contra would not go away for Bush. Although on September 29 the judge in the (Caspar) Weinberger case dismissed a key obstruction charge, ruling the independent counsel had not shown that Weinberger corruptly worked with others, he demanded a proper reindictment within the next month. . . .
On Wednesday, October 28, six days before the election, Barrett faxed a copy of the new indictment to Walsh in Oklahoma….
Walsh was determined to proceed with the Weinberger trial. He approved an expenditure of $32,600 for Brosnahan to conduct a mock trial before 36 citizens who were paid to act as jurors. After the presentation of the prosecution and defense cases, the 36 people were divided into three separate juries. Two of the mock juries found Weinberger guilty on all four counts, the other found him guilty on three of the counts. The story leaked, unleashing a fresh attack on Walsh. Many Republicans were now publicly urging President Bush, who would be leaving office in January, to exercise his constitutional power to pardon Weinberger.
Bob Bennett, Weinberger’s attorney, told Gray his client’s trial could be embarrassing for Bush, who might be called as a witness.
Gray said he was exploring the pardon option.
“What can I do?” Bennett asked.
“Get some Democratic cover,” Gray said, “and I’ve got to be convinced it’s a one- or two-day story.”
Among others, Bennett recruited House Speaker Tom Foley, the Washington State Democrat, to phone Gray pledging his support for a Weinberger pardon.
Bennett also enlisted Senators Daniel Inouye, a Democrat from Hawaii, and Warren Rudman, who headed the Senate Iran-contra probe, to write a letter of support. . . .
Bush had some reservations. On Tues, Dec 22, he dictated into his diary, “The pardon of Weinberger will put a tarnish, kind of a downer, on our legacy.”
Before going to Camp David that Christmas weekend, where he planned to make the final decision on pardons, Bush was in the Oval Office . . . “Okay, Marlin,” Bush asked Fitzwater. “What’s your final recommendation?”
“Pardon all of them.” . . .
Gray was strongly in favor of pardons. It would end the Walsh investigation. He had his deputies call around to the lawyers for other convicted Iran-contra figures to see if they would accept pardons. Four did: two CIA officers, Elliott Abrams, and former national security adviser Bud McFarlane.
Gray helped draft a three-page executive order explaining the reasoning. Bush signed it on Christmas Eve, December 24, 1992. . . .
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Compiled by Associated Press from financial disclosure forms filed June 12, 1998:
1998 Financial Profile: Sen. Daniel K. Inouye, Indian Affairs Committee ranking Democrat
Earned Income: $135,340
Major Assets: Stock in CPB Inc. worth $100,001-$250,000. Over $100,000 in bank accounts. . . .
Major Sources of Unearned Income: Dividends of $5,001-$50,000 from CPB stock, and bank interest in the same range.
Inouye’s major investment is in CPB, a holding company for Central Pacific Bank, one of Hawaii’s largest commercial banks.
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The Honolulu Advertiser, 2/16/01: Bush May Stop VIP Cruises – The search for survivors and the quest for answers continued yesterday from Oahu to the Pentagon.
It prompted President Bush to suggest that the military review its practice of allowing civilians to ride aboard sophisticated warships like the submarine that sank a Japanese fishing vessel seven days ago. . . .
At the Pentagon, Pietropaoli confirmed earlier reports that retired Adm. Richard Macke of Honolulu had helped arrange for “individuals for the Missouri Battleship Memorial Association” to tour the sub while on its training maneuvers. He said 14 of the 16 guests were involved with the Missouri association.
Yesterday, retired Adm. Robert Kihune, vice chairman and president of the USS Missouri Memorial Association, said he had not seen the guest list and therefore did not know whether any of the association’s more than 3,000 members were involved. . . .
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See also: Central Pacific Bank; Dean R. O’Hare; Gene & Nora Lum; James Riady; John Waihee; Leon Panetta; Lucent Technologies; Robert Kihune; Richard Macke; Sukamto Sia; Sumitomo Bank; USS Missouri Memorial Association; Yakuza
David Ige – From Honolulu Star-Bulletin, April 30, 1998
He entertained them at Bishop Estate expense, IRS records show;
several of them deny it
By Rick Daysog
Former state Sen. Milton Holt reported that he entertained state legislators at Bishop Estate’s expense at local restaurants and hostess bars, according to records the estate submitted to the Internal Revenue Service.
But several lawmakers denied that the meetings took place. . . .
Sources familiar with the records sent to the IRS told the Star-Bulletin that Holt charged more than $2,500 on the estate’s Visa cards at local restaurants, drinking establishments and nightclubs between 1992 and 1997, listing lawmakers as his guests.
Some $1,500 of the total was spent at two local hostess bars in 1992 and 1993.
These expenses are in addition to some $21,000 that Holt ran up in credit card charges and cash advances on estate Visa cards at Las Vegas casinos and local hostess bars and restaurants since 1992.
One critic of the Bishop Estate called the expenditures unsuitable for a tax-exempt trust that has a mission to educate native Hawaiian students.
“To me these are totally inappropriate expenses for the estate to be paying out,” said longtime Bishop Estate watcher Desmond Byrne.
“You wonder if this is just the tip of the iceberg. You wonder what else is out there.”
During a Feb. 10, 1993, outing, Holt ran up a $540.50 tab at the Crystal Palace hostess bar, naming as his guests Senate President Norman Mizuguchi and Sen. Robert Bunda then a state representative, sources said.
That came after Holt ran up a $751 bill on the estate’s charge cards at the former Monte Carlo hostess bar in August 1992, listing Mizuguchi, Bunda and Sen. Joe Tanaka as his guests.
Holt charged $260 on an estate credit card at the Monte Carlo club in April 1993, listing Bunda, House Finance Chairman Calvin Say and House Judiciary Chairman Terrance Tom as guests. . . .
Holt declined comment on credit card charges involving lawmakers other than Mizuguchi, saying the information was supposed to be confidential. An estate spokesman had no immediate comment.
Bishop Estate, the state’s largest private landowner, has long enjoyed a close relationship with the state Legislature. The multibillion-dollar estate’s five trustees include former Senate President Richard Wong, and former House Speaker Henry Peters.
In the past, the estate has said that it did not incur any lobbying expenses at the local level, according to Byrne. But Holt’s expenditures raised significant questions as to whether it was trying to influence legislation, he said. “Unless they have hope to obtain some benefit, why should the estate being paying this kind of money for entertainment?” Byrne asked.
The restaurant and bar tabs were included in the estate’s response to inquiries from the IRS in its audit of the trust. The IRS is looking at various estate expenditures and wants to know whether employees and trustees received benefits or perks at the expense of the trust.
The attorney general’s office subpoenaed the estate for Holt’s records along with volumes of other confidential IRS records, also known as information document requests, in its investigation into potential wrongdoing by trustees.
The Star-Bulletin obtained details of several other credit card transactions at traditional isle restaurants listing lawmakers as Holt’s guests.
Here are some examples . . .
An October 30, 1995, charge for $115.32 at the Gordon Biersch Brewery Restaurant, naming Sen. Les Ihara and Sen. David Ige as Holt’s guests. . . .
Under state law, legislators aren’t required to list gifts less than $200 in their annual disclosure statements. But they are prohibited from accepting gifts intended to influence or reward lawmakers. . . .
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From Honolulu Star-Bulletin, Feb 11, 1998:
Editorials
Legislator shouldn’t be utility lobbyist
CONFLICTS of interest are natural and expected in Hawaii’s Legislature, where part-time lawmakers are obligated to make decisions that affect the companies they work for during the remainder of the year. Conflicts become more serious when legislators accept company positions devoted to influencing government decisions.
State Sen. David Ige, a Democrat who represents Pearl City, has accepted such a position.
Ige is an electrical engineer by training and, until recently, by profession. He held such a position at GTE Hawaiian Tel (now Verizon), when he was appointed in 1985 by then-Gov. John Waihee to fill a vacant seat in the state House of Representatives.
Eventually, Ige was promoted to the job of Hawaiian Tel’s network design senior administrator. When the position of government affairs director became open, Ige applied. He was appointed to the post at the beginning of this year. In plain English, that means Ige’s new job is chief lobbyist for the phone company, one of the most regulated companies in Hawaii.
Recognizing the anachronism of a legislator who is also a lobbyist, Ige has gone to great pains to gain acceptance of his dual role. He said that he will lobby only federal and county officials, not state officials or legislators, leaving that responsibility to Hawaiian Tel’s vice president for external affairs.
Ige has registered with the city as a lobbyist but not with the state Ethics Commission. And, as co-chairman of the Senate Consumer Protection Committee, Ige has promised to allow co-chairman Wayne Metcalf to assume responsibility for matters relating to the Public Utilities Commission, which regulates Hawaiian Tel. Ige pledges not to vote on matters that present a conflict.
However, all the maneuvering in the world by Ige to avoid the appearance of impropriety will not erase the impression that he was assigned to his present job at the phone company because of his position as a state senator. The interweaving of city, state and federal functions makes the confined activities that Ige prescribes for himself impossible to perform.
Senator Ige’s conflict is inescapable and unacceptable. His district would be better served by an engineer rather than a lobbyist.
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Business Briefs – Reported by Star-Bulletin staff & wire:
Sunday, April 29, 2001
NEW JOBS
>> Michael Loo has been named controller for the Kamehameha Schools. He will oversee accounting, purchasing, financial and investment reporting and systems functions. Loo was previously controller and treasurer of Hawaiian Airlines.
>> David Ige has been named vice president of engineering for NetEnterprise. Ige comes to NetEnterprise from Pihana Pacific, where he was a project manager. Ige is a state Senator.
>> Alison Mortlock has been named branch manager for the captive insurance division of Marsh Hawaii. Mortlock, who also serves as vice president, will be responsible for tracking the captive insurance industry and for creating new programs for clients. Mortlock joins Marsh Hawaii from the company’s Bermuda office.
>> Gordon S. Wood has been named project manager at AM Partners’ Honolulu office. He joins the company from the city and county Department of Planning and Permitting, where he was a project manager. Wood will be responsible for community planning projects.
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See also: Broken Trust
Dean R. O’Hare – CEO of Chubb Corp.
See also: Chubb Corporation; Dan Inouye
Dennis Fern – From the Kukui, Inc. website:
MANAGEMENT OF KUKUI OPERATING COMPANY
Dennis E. Fern – President
Mr. Fern is a graduate of Willamette University in Oregon with a Bachelor’s degree in Mathematics. A Certified Public Accountant, Mr. Fern worked for PricewaterhouseCoopers (formerly Coopers & Lybrand) in their auditing division.
In 1983, Mr. Fern joined Kamehameha Schools Bishop Estate (KS), the largest private landowner in the state of Hawaii and an education trust, as their Internal Auditor.
In 1991, in his role as Internal Auditor, he became involved in KS’ investment in coalbed methane projects in Alabama, Colorado, and New Mexico. In 1996, he took over responsibility for KUKUI, INC., a wholly owned taxable subsidiary of KS, which had been assigned KS’ interest in the coalbed methane project (aka the McKenzie Methane deal).
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Testimonial letter to The Woodlands Resort:
“It’s taken me quite a while to calm down after our stay at The Woodlands Resort & Conference Center. I thought it best to take some time to gather my thoughts and I now feel able to put in writing my views on your staff and facility. After Liz Edwards, of our Houston office, and I toured your property and met with you and Dana Denton, I believed The Woodlands would meet our every need. I was wrong! I apologize for the use of some very strong “f” words to describe the experience of our group…………..fun, fantastic, fabulous, or some “e” words…….exceptional, extraordinary, excellent, or a plain old “g” word……great!
The Woodlands exceeded our every expectation. Bob……Mahalo (Thank you) for making this years annual gathering (our fourth annual holiday gathering) truly a memorable one. We speak of the aloha spirit here in the islands. We found an example of it at The Woodlands.”
Dennis E Fern
President
KUKUI, INC.
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See also: Claims By Harmon; McKenzie Methane; The Woodlands
For more, GO TO > > > The Sinking of the Ehime Maru
Eric Martinson – A Kamehameha Schools manager from 1984 to 1996, at one point managed the estate’s substantial financial holdings, which included a multibillion interest in Goldman Sachs.
From the RICO lawsuit – Harmon v. Federal Insurance Co, Marsh & McLennan, Trustees of Bishop Estate, et al.:
o) Unison Pacific – As a subsidiary of KSBE, General Liability, Directors & Officers Liability and other insurance coverages for this entity were combined under KSBE’s master policies, and premium charges were allocated according to the entity’s risk exposures. After this arrangement had been in effect for several years, Eric Martinson, KSBE Assets Manager and officer of Unison Pacific, directed KSBE’s accounting department to reallocate Unison’s premiums. This had the effect of KSBE paying the premiums for this subsidiary.
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From Harmon’s letters to the Hawaii Insurance Commissioner: Deceptive Business Practices; Conflicts of Interest; Mail Fraud.
At the direction of Henry Peters and other managers for KSBE, premiums that should have been charged to subsidiaries were actually paid by KSBE. One example is Eric Martinson’s memorandum of September 24, 1996 to Ramona Hinck regarding the reallocation of premiums for the SoCal, AFCO, Unison and SINO subsidiaries. As a result of this directive, premium charges that had been previously allocated by me to these subsidiaries were transferred to KSBE. Eric Martinson was the Financial Assets Manager for KSBE, and was also the Secretary/Treasurer, Sino Finance Group LLC, and Vice President, Unison Pacific Investment (US) Limited.
Under the lease agreements for various commercial properties that are owned and managed by the estate, insurance costs are directly passed on to the lessees and tenants through monthly maintenance fees. As a result of the overcharges by M&M, and the improper allocations of premiums and claims costs to the various subsidiaries, these lessees and tenants were wrongfully and deceptively billed a share of these higher costs. The various commercial properties would include Royal Hawaiian Shopping Center, Windward Mall, Bishop Commerce Center (Georgia), Desert Springs Marketplace (California), and Velvet Cloak Inn (North Carolina), among others.
These monthly maintenance billings and payments are normally done by mail and involve interstate commerce since many of KSBE’s properties, and the home offices of various lessees, are located on the mainland. As a result, these acts may be subject to the 1994 Federal Insurance Crimes Act, which covers crimes by persons engaged in the business of insurance whose activities affect interstate commerce. …
Gene and Nora Lum – From freerepublic: Lum Pleads Guilty to Tax Fraud –
Tulsa, Okla (AP) 8/13/98 – Democratic fund-raiser Gene K.H. Lum changed his plea in a tax fraud case to guilty Thursday as part of an agreement that seeks his cooperation in other investigations.
Lum, who pleaded guilty in 1997 to making illegal donations to Democratic campaigns, admitted he filed tax returns that claimed more than $7.1 million in false deductions for him and his wife.
Lum, 59, faces up to six years in prison and $500,000 in fines at a Nov 23 sentencing. . . .
Under the pleas agreement, the government agreed not to seek indictments against his wife, Nora, or their corporations. . . .
The Lums, who operated a Tulsa-based gas pipeline company at the time of the violations, pleaded guilty last year to a charge of felony conspiracy for laundering $50,000 in illegal donations to 1994 congressional campaigns.
Their daughter, Trisha C. Lum, pleaded guilty to a misdemeanor violation in a separate campaign finance incident.
Gene and Norn Lum each received 10 months in prison and $30,000 fines in that case.
The tax charges stemmed from information uncovered by independent counsel Daniel S. Pearson during his investigation of Commerce Secretary Ronald H. Brown. Pearson closed his inquiry when Brown was killed in an airplane crash. He transferred his findings about other people to the Justice Dept for continued investigation and prosecution.
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Comments in the freerepublic forum: . . . Of some interest to me was the fact that the golf course Michael Brown (son of Ron Brown) was given a membership to (and which Bill Clinton often uses …) in suburban Virginia was owned by the Bishop Estate of Hawaii. . . . Bishop put close to 100 million into a company called McKenzie Methane Gas a few years before Dynamic. Bishop also bought into a Red Chip bank with Mochtar Riady’s brother in law. Bishop hired as its Washington law firm Verner Liipert whose lobbyist is ex Gov. John Waihee. Waihee appointed 4 of the 5 Bishop Trustees. Waihee attends Clinton coffees. Waihee appointed Sen. Akaka. Verneer Liipert has another big name partner ex Sen. George Mitchell. Mitchell’s son in law was president of Lum’s company Dynamic Energy. Bishop owns 11% of Goldman Sachs. Sec of Treasury Robert Rubin’s blind trust managed by Bishop, etc, etc. (abwehr, 8/13/98)
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See also: John Waihee; Mochtar Riady; Sports Shinko; Yakuza
George Mitchell – Former Senate Majority Leader; lobbyist for the tobacco industry.
From The Courier-Journal, Dec 28, 2001:
Mitchell to Oversee Fund for Red Cross
NEW YORK – Former Sen. George Mitchell was named yesterday to oversee the $667 million American Red Cross fund created to help victims of the terrorists attacks.
The charity also announced that it will exceed its goal of distributing $275 million in aid from the Liberty Fund by Dec. 31. It said it expects to hand out $317.5 million by year’s end.
Mitchell, who is from Maine, has spent his post-Senate life trying to negotiate peace in the Middle East and Northern Ireland.
As independent overseer of the Liberty Fund, Mitchell will supervise the development and carrying out of a plan to distribute the fund’s balance, said Harold Decker, chief executive of the Red Cross. The plan is scheduled for release by the end of January….
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Comments in the freerepublic forum: . . . Of some interest to me was the fact that the golf course Michael Brown (son of Ron Brown) was given a membership to (and which Bill Clinton often uses …) in suburban Virginia was owned by the Bishop Estate of Hawaii. . . . Bishop put close to 100 million into a company called McKenzie Methane Gas a few years before Dynamic. Bishop also bought into a Red Chip bank with Mochtar Riady’s brother in law.
Bishop hired as its Washington law firm Verner Liipfert whose lobbyist is ex Gov. John Waihee. Waihee appointed 4 of the 5 Bishop Trustees. Waihee attends Clinton coffees. Waihee appointed Sen. Akaka. Verner Liipfert has another big name partner ex -Sen. George Mitchell. Mitchell’s son in law was president of Lum’s company Dynamic Energy. Bishop owns 11% of Goldman Sachs. Sec of Treasury Robert Rubin’s blind trust managed by Bishop, etc, etc. (abwehr, 8/13/98)
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In the 02/18/00 edition of The Honolulu Advertiser, reporter Sally Apgar revealed that the ousted Bishop Estate trustees used the trust money to “enlist” the aid of U. S. Sens. Dan Inouye and Daniel Akaka in 1995 to influence fellow members of Congress to vote against “interim sanctions” regulations that threatened the trustee’s $1 million-a-year paychecks. According to Apgar:
Thirteen confidential memos during the fall of 1995 through April 1996 detail the trustees’ strategy against the bill . . .
The memos express the trustees’ intent “to kill the measure” and their recruitment of influential contacts such as Inouye, Akaka and the Rev. Jesse Jackson. They also targeted others, including Sen. Daniel Patrick Moynahan of New York and even White House insiders such as Leon Panetta, then President Clinton’s chief of staff, to win support. . . .
The memos give a glimpse of the behind-the-scenes political power and influence the former trustees once wielded and describe a costly, intensive effort to protect their interests.
As previously reported, the ousted trustees hired former Gov. John Waihee and his Washington, D.C.-based law firm Verner Liipfert Bernhard McPhearson Hand to lobby against the federal legislation…
Other Verner firm members enlisted in the effort included former Treasury Secretary Lloyd Bentsen of Texas, former Senate Majority Leader George Mitchell of Maine and former Texas Gov. Ann Richards. . . .
The state Attorney General’s Office has said previously that the trust paid the firm more than $900,000 for its lobbying efforts on intermediate sanctions legislation between 1995 and 1998.
Waihee alone was in charge of swaying Erskine Bowles, then assistant to the president and deputy chief of staff, and Doug Sosnick, then assistant to the president and director of political affairs. . . .
Mark McConaghy of PriceWaterhouseCoopers LLP, a longtime tax adviser to the trust, was charged with contacting Leslie Samuels, then assistant secretary for tax policy. . . .
Congressman Neil Abercrombie (D-HI) is also mentioned in the memos. For example, the Oct. 12 memo said, “Congressman Abercrombie is prepared to speak to Rep. Gibbons, the ranking minority member, Charles B. Rangel (D-NY) and Andrew Jacobs, Jr. (D-Ind) as well as GOP Rep. Nancy Johnson. . . .
Gilbert Tam – From RICO lawsuit Harmon v. Federal Insurance Company; P&C Insurance Company; Marsh & McLennan, Inc. et al.:
Gilbert Tam is a Director, P&C Insurance Company, Inc. and the former Administrative Group Director for Kamehameha Schools Bishop Estate. Tam is currently an officer with Bank of Hawaii, which has substantial financial connections with KSBE.
Tam was also a co-investor in the McKenzie Methane deal at the time he was a KSBE manager. Plaintiff alleges that Tam’s actions, through his complicity, deceptions, and breach of fiduciary duties, in collusion with some or all of trustees of KSBE, with other managers and employees of KSBE, with other officers and directors of P&C, and with outside contractors, attorneys, politicians and others, constituted a conspiracy to defraud P&C and the beneficiaries of the Estate of Bernice Pauahi Bishop; racketeering; mail fraud; wire fraud; extortion; and violation of IRS interim sanctions regulations. . . .
For more, GO TO > > > Predators in Paradise
Goldman Sachs – The Goldman Sachs Group is a leading global investment banking and securities firm with three principal business lines: Investment banking; Trading and Principal Investments; and Asset Management and Securities Services.
From Goldman Sachs, by Lisa Endlich:
GOLDMAN SACHS had been expanding the size of its partnership steadily for decades. There had been fifty partners in 1973; there were seventy-five in 1983 and one hundred fifty by 1993. But as the size of the partnership increased, the profits of the firm had to grow at breakneck speed if existing partners’ income levels were to be maintained. . . .
With his ascendency in 1990, Robert Rubin openly discussed with the partnership the need for an expanding pie . . .
In addition to the firm’s limited partners (retired partners who choose to leave capital in the firm), Goldman Sachs has taken on three groups of financial partners. Sumitomo’s investments in 1986 entitled the Japanese bank to 12.5% of the firm’s annual profits. Kamehameha Schools/Bishop Estate, the giant Hawaiian education trust, which also made two major cash infusions into the firm, first in 1992 and again in 1994, receives about 11% of what the firm makes every year. Finally, a group of insurers has injected $225 million into the capital structure.
Goldman Sachs will go down in history as the last major partnership on Wall Street. . . .
Quoting one former partner:
“Greed changed the firm, and the view was to take as much
risk as we can, and make it as fast as we can.”
~ ~ ~
“1986,” Institutional Investor magazine proclaimed, “was the year they sold Wall Street.” During the five preceding years John Weinberg had watched his major competitors incorporate, merge, or simply cease to exist….
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From USA Today, May 3, 1999: Trust Scandal Haunts Goldman — Sullied Bishop Estate Owns 10% of Bank: . . . Daytime television has nothing on the Bishop Estate, a charitable trust that will make a huge windfall in Goldman Sachs’ initial public offering expected Tuesday… The trustees of the estate are mired in an explosive scandal with subplots of greed, cronyism, sex and suicide that are worthy of the tawdriest soap opera. . . .
Kamehameha Schools/Bishop Estate was set up 115 years ago to educate Hawaiian children as stipulated in the will of Princess Bernice Pauahi Bishop, the last direct descendant of the king who united the islands. With assets of about $10 billion, it is one of the richest trusts in the USA and the largest private landowner in Hawaii. . .
Among its assets: a 10% stake in Goldman Sachs, the leading investment bank that is ending its long reign as a private partnership. When Goldman goes public, the estate stands to at least triple the value of its $500 million investment. . .
* * *
From The Wall Street Journal Interactive Edition, May 4, 1999: Goldman Sachs Leaves Little To Chance With Red-Hot IPO.
The IPO which raised $3.66 billion, ranks as the largest financial-services IPO ever …
Top executives at Goldman, such as Mr. Paulson, received shares in the company valued at as much as $200 million. . .
Goldman itself sold 51 million shares. Two Goldman shareholders, Kamehameha Activities Association and Sumitomo Bank Capital Markets, a unit of Sumitomo Bank, also sold nine million shares each, leaving them with Goldman stakes of 4% and 5%, respectively….
See also: Dan Inouye; Lucent Technologies; Sumitomo Bank; Xiamen International Bank; Yakuza
For more GO TO > > > Dirty Gold in Goldman Sachs?
Hanford’s Creations, Inc. – A company that makes Christmas decorations. Owned by Elizabeth Hanford Dole, a friend of Mark McConaghy of PricewaterhouseCoopers, before she sold it to a group headed by Bishop Estate. The estate promptly lost money on the deal.
See also: Bob & Elizabeth Dole; Mark McConaghy; PricewaterhouseCoopers
Henry Peters – Ex-trustee of Kamehameha Schools/Bishop Estate.
From the RICO lawsuit : Civil No. CV 99 00304-DAE – Harmon v. Federal Insurance Co., P&C Insurance Co. Inc.; Marsh & McLennan, Inc., PricewaterhouseCoopers, et al: . . .
Defendant Trustee Henry H. Peters, was appointed in 1984 by the Justices of the Supreme Court of the State of Hawaii, acting as individuals, and was entrusted with the fiduciary duty to administer the Estate of Bernice Pauahi Bishop for the education of the children of Hawaii…
Defendant Peters is also Chairman of the Board of Directors of P&C. Peters has also served on the Board of Directors of Mid-Ocean Reinsurance Co. (a Bermuda company); Underwriters Capital (Merritt) Insurance Co. (a Bermuda company); SoCal Holdings, Inc.; and numerous other companies owned by, or related to, KSBE….
Beginning around March 1996, Harmon began questioning what appeared to be excessive premium charges being made by Marsh & McLennan … and for fees M&M was billing to P&C.
For the next several months, Plaintiff was subjected to threats, intimidation and various abuses from Aipa and Kam for questioning the excessive fees of M&M . . . Harmon asked Aipa about the status of his transfer (to P&C). Aipa’s response was that it wasn’t going to happen because “arms-length was no longer an issue,” (referring to previous legal opinions from Price Waterhouse that the IRS might revoke the Trust’s tax-exempt status if it did not maintain arms-length from its taxable subsidiaries)….
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From Equity No. 2048, Petition of the Attorney General on Behalf of the Trust Beneficiaries to Remove and Surcharge Trustees:
“The Trustees have been unfaithful to the Will and the purpose of the Trust. They have failed to comply with clear directives of the Will. They have subordinated the sole purpose of the Trust to their personal gain. They have squandered Trust assets intended for education by their excessive compensation, and by imprudent and improper Trust management and investments.
They have violated Hawaii statutes and court orders. They have engendered hostility between themselves and the Beneficiaries whose interests the Trustees were appointed to serve…
Peters became lead trustee for asset management in 1993 and assumed responsibility for Trust investments and for due diligence on prospective investments….
Peters as lead trustee purposely withheld information on existing and potential investments from his co-Trustees, dismantled the Trust’s internal audit function, instructed staff employees to withhold information from the co-Trustees, and used his position to approve Trust payment of improper non-Trust expenditures….
As to Peters, the effect of these violations has been that Trust assets have been mismanaged and misspent to the detriment of the Trust purpose. . . .
Trustees Peters, Wong, and Lindsey have violated their duty of loyalty to the Beneficiaries by using their positions as Trustees and by using Trust assets and opportunities to benefit themselves and their relatives and friends….
In 1992, the Trust invested approximately $31 million in Mid Ocean, Ltd. (Mid Ocean), a Bermuda-based insurance company, and acquired 310,000 Mid Ocean Class A shares. . . . In 1993, when Matsuo Takabuki retired as a Trustee of the Trust, Peters succeeded to Takabuki’s seat as a director of Mid Ocean. . . . Peters served as a Mid Ocean director until early 1998. . . . Peters’ service as a Mid Ocean director fell within his duties as Trustee and was a Trust opportunity. . . . While a director of Mid Ocean, Peters received substantial director’s fees and received options to acquire 6,000 shares of Mid Ocean stock. . . . The Mid Ocean fees and stock options are assets that belong to the Trust and not to Peters individually. . . . Peters has enriched himself at the expense of the Beneficiaries by retaining the fees and stock options for his personal benefit. (Note: Marsh & McLennan, and its subsidiary, Guy Carpenter, were major players in the creation and management of Mid-Ocean.)…
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From Honolulu Star-Bulletin, 4/14/99, by Rick Daysog:
EMBATTLED EMPIRE . . . Larry Landry, former chief financial officer for the $4 billion John D. and Catherine T. MacArthur Foundation, which is a co-investor with the estate in a Boston-based investment fund and a Florida apartment complex, describes Peters as a savvy and thorough investment manager. . . . Deal promoters often approach large foundations and charitable trusts thinking they have deep pockets. But Peters brings a healthy skepticism to anyone who brings an investment to the estate, according to Landry….
“Henry is extremely bright and has the right kind of conservative (investment) philosophy,” said Landry, who now serves as CEO of Florida-based Westport Realty Advisers….
In his review of the estate’s 1994-1996 accounts, court-appointed master Colbert Matsumoto and the accounting firm of Arthur Andersen said the estate — during Peters’ tenure as acting asset manager — generated an embarrassing return on investment of minus 1%. During that period, the trust set aside more than $240 million in reserve for future losses….
That woeful performance came as Wall Street was in the midst of a record bull run in which investors could have made double-digit returns just by putting their money in an index fund…
Peters, charges stand out in lengthy Bishop Estate investigation. The state’s exhaustive investigation into the Bishop Estate appears to focus on trustee Henry Peters as a central figure in the two-year controversy that’s rocked the multibillion-dollar charitable trust….
In a September Probate Court petition to permanently remove several trustees, Attorney General Margery Bronster alleged that Peters took part in repeated acts of self-dealing and mismanagement. The state’s charges include: … Between 1993 and 1998, Peters received options to acquire 6,000 shares of stock as well as substantial director’s fees from a Bermuda-based insurance company, Mid Ocean Ltd. The estate was a big investor in Mid Ocean. Peters has since declined to exercise the stock options, which would have been worth more that $400,000 under Mid Oceans’s 1993 merger with competitor Exel Ltd. [another Marsh & McLennan financial venture]….
Peters directed trust managers and the estate’s former Royal Hawaiian Shopping Center subsidiary to hire his friends and relatives for unbudgeted positions and outside consulting work, according to the state. The employees included former state Rep. Terrance Tom, local attorney Albert Jeremiah and Office of Hawaiian Affairs trustee and former state Sen. Clayton Hee…
Starting in 1995, a company headed by Peters’ nephew received more than $1.3 million in nonbid and subcontracting work from the estate. . . . The company, Rhino Roofing, conducted renovation work on Peters’ Maili home….
Since 1995, Peters’ former employer, Dura Constructors Inc., received more that $2.7 million in nonbid work from the estate. . . . In one case, Dura billed the estate $465,000 to build an athletic locker room at Kamehameha Schools that was later deemed unsafe for student use. The trust would up correcting the building deficiencies itself and did not pursue Dura for the faulty work. Dura also conducted work on Peters’ Maili home….
Along with his fellow trustees, Peters received compensation well above that of comparable organizations. In 1997, each trustee earned about $840,000 in commissions.
Peters and fellow trustees also spent more than $900,000 of trust money to lobby Congress against the passage of federal legislation limiting salaries for board members of charitable trusts….
* * *
Reporter Sally Apgar, in the 02/18/00 edition of The Honolulu Advertiser, revealed that the ousted Bishop Estate trustees used the trust money to “enlist” the aid of U. S. Sens. Dan Inouye and Daniel Akaka in 1995 to influence fellow members of Congress to vote against “interim sanctions” regulations that threatened the trustee’s $1 million-a-year paychecks.
According to Apgar:
Thirteen confidential memos during the fall of 1995 through April 1996 detail the trustees’ strategy against the bill . . .
The memos express the trustees’ intent “to kill the measure” and their recruitment of influential contacts such as Inouye, Akaka and the Rev. Jesse Jackson. They also targeted others, including Sen. Daniel Patrick Moynahan of New York and even White House insiders such as Leon Panetta, then President Clinton’s chief of staff, to win support. . . .
The memos give a glimpse of the behind-the-scenes political power and influence the former trustees once wielded and describe a costly, intensive effort to protect their interests.
As previously reported, the ousted trustees hired former Gov. John Waihee and his Washington, D.C.-based law firm Verner Liipfert Bernhard McPhearson Hand to lobby against the federal legislation… Other Verner firm members enlisted in the effort included former Treasury Secretary Lloyd Bentsen of Texas, former Senate Majority Leader George Mitchell of Maine and former Texas Gov. Ann Richards….
The state Attorney General’s Office has said previously that the trust paid the firm more than $900,000 for its lobbying efforts on intermediate sanctions legislation between 1995 and 1998.
Waihee alone was in charge of swaying Erskine Bowles, then assistant to the president and deputy chief of staff, and Doug Sosnick, then assistant to the president and director of political affairs….
Mark McConaghy of PriceWaterhouseCoopers LLP, a longtime tax adviser to the trust, was charged with contacting Leslie Samuels, then assistant secretary for tax policy….
Congressman Neil Abercrombie (D-HI) is also mentioned in the memos. For example, the Oct. 12 memo said, “Congressman Abercrombie is prepared to speak to Rep. Gibbons, the ranking minority member, Charles B. Rangel (D-NY) and Andrew Jacobs, Jr. (D-Ind) as well as GOP Rep. Nancy Johnson….
* * *
Honolulu Star-Bulletin, 5/21/99, by Rick Daysog:
It is alleged that trustees Peters and Wong
helped conceal $350 million
Two weeks after a state judge temporarily removed four of the five trustees of the Bishop Estate, the state attorney general’s office today filed court papers in a separate proceeding spelling out why trustees Henry Peters and Richard “Dickie” Wong should be temporarily ousted from their $1 million-a-year jobs. . . . In an 89-page proposed findings of fact, Deputy Attorney General Hugh Jones argued that Peters and Wong helped conceal $350 million in trust income that should have been spent on the estate-run Kamehameha Schools, paid themselves $131,000 more than they were entitled to and failed to adopt strict conflict-of-interest policies at the trust….
The result of these actions deprived scores of native Hawaiian children of an education at the Kamehameha Schools, Jones said. . . .
See also: Dan Inouye; George Mitchell; Marsh & McLennan; Mid-Ocean Reinsurance; Milton Holt; National Housing Corp; P&C Insurance Co; Sun International Hotels; Xiamen International Bank
HonFed Savings & Loan – Another major investment for Bishop Estate, later sold to Bank of America.
March 21, 2003:
In the United States Court of Federal Claims
Nos. 95-660C and 95-797C
Filed March 21, 2003
BANK OF AMERICA, FSB, et al.,
Plaintiffs
v.
THE UNITED STATES,
Defendant
~ ~ ~
FACTS
A.
In 1986, a group of investors, led by the former Secretary of the Treasury, the late William E. Simon, Sr., approached the Bank Board about the possibility of acquiring HonFed, a then-failing thrift based in Honolulu, Hawaii. Recognizing the need to recapitalize HonFed, the investors proposed a plan by which the thrift would be converted from a mutual association to a stock association, with its stock to be sold to raise capital for the resulting institution. The proposal additionally envisioned the creation of HFH, a holding company that was to be wholly owned by the investors and created for the sole purpose of acquiring the thrift. Finally, the proposal anticipated the issuance of approximately $35 million in subordinated debentures to further bolster the thrift’s flagging capital levels….
On June 17, 1986, HFH, together with HonFed, submitted a formal application to the Bank Board seeking approval of the proposed restructuring and recapitalization of HonFed….
On August 29, 1986, the Bank Board adopted Resolution No. 86-910 approving HFH’s application to acquire HonFed….
B.
On August 6, 1989, Congress enacted FIRREA, directing, inter alia, the promulgation of regulations setting forth new minimum capital standards. The resulting regulations, issued by the Office of Thrift Supervision (“OTS”) on November 6, 1989, provided that unidentifiable intangible assets, such as the goodwill arising from HFH’s acquisition of HonFed, would have to be excluded when determining compliance with the statute’s core capital requirements. The regulations additionally restricted HonFed’s ability to include subordinated debt in regulatory capital.
Shortly after the promulgation of these regulations, OTS informed HonFed that, based on its quarterly financial report, HonFed was in danger of failing one or more of the new capital requirements. Although HonFed objected to the conclusion that it was required to meet the more stringent FIRREA capital requirements rather than the capital requirements set forth in Resolution No. 86-910, HonFed nonetheless took steps to bring itself into compliance with the new capital standards. Toward that end, HonFed conducted a private equity placement involving the sale of preferred stock to a Hawaiian charitable trust, the Kamehameha Schools, Bernice Pauahi Bishop Estate. As a result of that placement, HFH relinquished approximately 23 percent of its ownership stake in the thrift but raised an additional $45 million to be counted toward the thrift’s regulatory capital.
HonFed continued operating under this shared ownership for an additional two years, but on October 10, 1991, BankAmerica Corporation and its wholly owned subsidiary, the Bank, acquired ownership and control of HFH and HonFed through the purchase of the outstanding shares of HonFed and HFH. Following this acquisition, both HonFed and HFH became wholly owned subsidiaries of the Bank. Within the next year, each entity was abolished, HonFed through a conversion of its shares into shares of the Bank and HFH through a liquidation and dissolution. It is on the basis of these transactions that the Bank now claims to stand as the successor in interest to the rights and interests of HonFed and HFH….
OPINION
WIESE, Judge
Plaintiff Bank of America, Federal Savings Bank (“the Bank”) is the successor in interest to H.F. Holdings, Inc. (“HFH”), a bank holding company, and Honolulu Federal Savings & Loan Association (“HonFed”), a thrift institution. The Bank is joined in this suit by Beverly W. Thrall (successor by operation of law to the claims of Larry B. Thrall) and Roy Doumani, members of the original investor group that formed HFH and acquired, through their investment in HFH, a majority ownership interest in HonFed. (1) …
——————————
(1) The original investor group consisted of four individuals: William E. Simon, Sr., Gerald L. Parsky, Larry B. Thrall, and Roy Doumani, each of whom filed suit here in his individual capacity. William Simon and Gerald Parsky subsequently withdrew their actions, while Larry Thrall (now represented by his successor in interest, Beverly Thrall) and Roy Doumani have been permitted to join in the Bank’s claim as intervenors pursuant to RCFC 17…
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For more on William Simon and Gerald Parsky, GO TO > > > The Opal File: A Secret History of Australia and New Zealand; William Simon Says
Industrial and Commercial Bank of China – From The Straits Times-Asia, 10/31/00:
ANTI-GRAFT AUDITS TO INCLUDE TOP LEADERS
China’s chief auditor plans to take his fight against corruption to almost the top of the country’s political system, according to state media.
This follows the discovery of US$11 billion in mismanaged funds at Chinese government offices and businesses.
The astounding sum, reported by Mr. Li Jinhua, Auditor-General of China’s National Audit Office, is one of the strongest indications of how mismanagement is in China. . . .
“Corruption thrives under a lack of efficient supervision,” the paper said . . .
According to earlier official reports, the auditing led to the discovery of misuse of funds at the Industrial and Commercial Bank of China, and the Construction Bank of China, causing losses worth more than 10 billion yuan (S$2 billion). . . .
Mr. Li’s auditors found that individual officials and managers had misappropriated 590 million yuan. But this marked only a fraction of the 96.17 billion yuan mismanaged, if not embezzled, by offices and firms, the China Daily said.
The reports did not give details of how the funds were misused . . . But in previous reports over the past 18 months, Mr. Li has criticised officials for diverting government subsidies and spending lavishly on offices. There has also been talk of speculation in stocks. . . .
* * *
Asia 2000, 11/8/00, by Jeremy Page:
CHINA SENTENCES 14 TO DEATH IN SMUGGLING CASE
China sentenced 14 people to death on Wednesday, including senior police and customs officials, in the first verdicts of a multi-billion dollar smuggling scandal, the biggest corruption case of the Communist era.
Those sentenced to death included the former customs chief and deputy mayor of the southern port of Xiamen, and the former deputy police chief of southern Fujian province . . .
But state media said the mastermind of the smuggling scam, businessman Lai Changxing had fled overseas after being tipped off by police. …
Lai’s Yuanhua Group smuggled more that $6 billion worth of cars, luxury goods, oil and raw materials in the early 1990s, paying off city and provincial officials to facilitate and cover up duty evasion, Xinhua said.
“The group also used money and women to seduce a number of government officials for the convenience of their smuggling activities,” Xinhua said.
The smuggling “caused serious damage to the normal economic order, brought huge financial losses to the state, led to rampant corruption, and impaired the social, political and economic life in China,” it said. . . .
The death sentences included Xiamen’s former customs chief Yang Qianxian and former vice mayor Lan Pu, and former Fujian deputy police chief Zhuang Rushun, Xinhua said.
Ye Jichen, head of the Industrial and Commercial Bank of China in Xiamen, was also given a death sentence . . .
See also: Henry Peters; William Simon; Xiamen International Bank
Investcorp – Investcorp is a leading global investment group with offices in London, New York and Bahrain. Since 1982, it has completed transactions in North America and Western Europe, with a total acquisition value of approximately $19 billion.
* * *
May 24, 1996
Stock offering by Saks a boon
to Bishop Estate
Its holdings gain more than $24 million in value on
the first day of trading
By Rick Daysog, Honolulu Star-Bulletin
Bishop Estate’s investment in Saks Fifth Avenue increased by more than $24 million in a single day.
The charitable trust owns 4.1 percent of the upscale department store chain’s parent, Saks Holdings Inc., whose shares soared with the successful launch of its initial public offering Wednesday.
The stock, priced late Tuesday at $25 per share, closed Wednesday at $34.621/2 on the New York Stock Exchange, a 38.5 percent increase.
That gave Bishop Estate a paper profit of $24.1 million for the 2.5 million Saks shares it owns. Saks’ stock closed on Thursday at $32.50 a share but regained 50 cents on Friday to close at $33.
The estate stressed that it has not realized any gains because it has not sold any of its stock.
“We’re very pleased with the results there,” said Kekoa Paulsen, spokesman for the estate. “(But) bottom line, it’s a paper gain.”
Paulsen said the estate is positive about Saks’ future and its current management, noting that the investment in Saks is for the long-term. Bishop Estate purchased its stake in Saks Holdings back in March 1993 from Bahrain-based Investcorp S.A. for about $50 million.
Bishop Estate, the state’s largest private landowner, lists about $1 billion in assets but critics have said that figure may be as high as $10 billion.
Founded in 1867, Saks Fifth Avenue was privately held and operated as a division of Gimbel Bros. Inc. until it was purchased by British giant BAT Industries Plc in 1973. In 1990, BAT sold Saks to Investcorp for $1.6 billion.
The retailer currently owns 45 Saks Fifth Avenue department stores, 19 Off 5th outlet stores and the Folio catalog.
In Hawaii, Saks operates an off-price outlet at the Waikele Center and has expressed an interest in opening a department store in central Honolulu.
In Wednesday’s public offering, Investcorp sold 16 million shares in Saks, or about a quarter of the retailer’s equity. Saks said it would use the proceeds to pay down debt, which it listed as nearly $976 million.
An offering prospectus said that Bishop Estate’s 4.1 percent stake represents the fifth largest block of the company’s stock. Investcorp is the largest with 17.3 percent of the Saks’ equity, followed by SIPCO Ltd., a Cayman Island-based investor, with 17.28 percent.
Honolulu Star-Bulletin Business
( http://starbulletin.com/96/05/24/business/story1.html )
~ ~ ~
For much more, GO TO > > > Investigating Investcorp
JMB Realty Corp. – A major US commercial real estate investment firm which owns, develops and manages real estate projects throughout North America, including regional malls, hotels, planned communities, and office complexes.
* * *
Honolulu Star-Bulletin, 6/16/00 – Kamehameha Losses Top $335 Million – Despite unprecedented financial growth, the Kamehameha Schools recorded more than $335 million in losses and writeoffs during the past decade. . . . The troubled investments underscore criticisms that the estate’s embattled former trustees mismanaged assets and took ill-advised bets on speculative ventures. . . .
The estate’s largest write-off was for $50 million. It involved a 1987 investment in Cadillac Fairview Corp, a Toronto-based office and retail property developer.
The estate, following the advice of Chicago-based JMB Realty Corp, joined 38 institutional investors in the $2.6 billion leveraged buyout of Cadillac Fairview, but the investment went south after the mainland recession of the early 1990s forced the developer into bankruptcy protection. . . .
* * *
Honolulu Star-Bulletin editorial, 1/30/98: Waiahole Ditch – The Waiahole Ditch was built in 1916 by the sugar companies and was operated by them to transport water from Windward to Leeward and Central Oahu to irrigate sugar cane. But with sugar dead the ditch’s current owner, Amfac/JMB, has considered shutting down the facility or reducing service. For this reason, Governor Cayetano wants to buy the ditch for $8.5 million, with an additional $1.7 million to be spent on improvements and operation costs. . . .
* * *
Honolulu Star-Bulletin, 2/18/98: Liberty House to Eliminate 500 Jobs . . . Liberty House Stores is eliminating 500 jobs, or more than 10% of its work force, in the wake of the weak local economy and the growing Asian economic crisis. . . . The downsizing is the worst in Liberty House’s 149-year history…. Liberty House, a unit of Illinois-based JMB Realty Corp, operates 11 department stores and 30 resort and specialty shops in Hawaii and Guam…. Its annual sales are in the $400 million range….
* * *
Honolulu Star-Bulletin, 3/19/98: Liberty House Bankrupt . . . Liberty House Stores, Hawaii’s largest and oldest department stores chain, filed for bankruptcy protection this morning. . . . The company filed for Chapter 11 … listing assets of $284.2 million and liabilities of $248.4 million. . . . Liberty House becomes the largest Hawaii company to file for bankruptcy reorganization . . . Founded in 1849, Liberty House is a unit of … JMB Realty Corp, which acquired the department store chain when it bought out then-parent Amfac Inc. in 1988….
* * *
Honolulu Star-Bulletin, 10/9/98: Judge: Law Firm Can’t Work for Liberty House . . . A federal judge today ruled that a New York law firm could not work for Liberty House because it also represents some of the retailer’s major creditors….
U.S. Bankruptcy Judge Lloyd King ruled that the firm, Cleary, Gottlieb, Steen & Hamilton, has conflicts of interest because it represents major banks and other creditors in the bankruptcy….
JMB argued Cleary, Gottlieb has a conflict because it represents creditors claiming more that $140 million in the Liberty House bankruptcy.
Those clients include Bank of America NT&SA; Merrill Lynch, Pierce, Fenner & Smith; Oaktree Capital Management LLC; Sanwa Bank; Capital Management LLC; and Canyon Partners…
* * *
Honolulu Star-Bulletin, 5/6/99: Liberty House is Hit with $138 Mil Claim . . . The Liberty House retail chain has been hit with a claim for $138 million in allegedly unpaid taxes and interest, adding a new difficulty to it already complex bankruptcy reorganization effort….
* * *
Honolulu Star-Bulletin, 5/9/00: Liberty House Parent Settles Part of IRS Tax Claim . . . Liberty House parent JMB Realty Corp will pay a reduced $4.2 million tax claim to the IRS, answering a major tax question that has stalled the Liberty House bankruptcy since last year.
The IRS last week filed an amended claim in U.S. Bankruptcy Court, cutting its original bill from about $103 million to $4.2 million for 1992 through 1994.
The actual liability to Liberty House, then a member of a consolidated group whose taxes were paid by JMB affiliate Nortbbrook Corp, is expected to be about $500,000 . . . but even though the tax logjam has been unclogged, another IRS claim totaling about $35 million for the years 1995 through 1996 still remains.
JMB believes its tax payments for those years are in order. The IRS recently began an audit of Northbrook’s taxes, a process that could take several years…
* * *
Pacific Business News, 9/1/00: ERS Forecloses in Kaanapali – The state Employees’ Retirement System is foreclosing on two Kaanapali Beach golf courses, claiming in a lawsuit that golf course owner Amfac/JMB Hawaii LLC defaulted on $77.4 million in loans and interest earlier this year.
ERS, which invests retirement funds for state and county employees, is pulling the plug on a $66 million mortgage loan it provided to Amfac/JMB for the 18-hole, championship North and South golf courses that serve the sprawling West Maui resort destination. The 1st Circuit Court lawsuit ERS filed on Aug 24 is five inches thick….
* * *
Honolulu Star-Bulletin, 11/16/00: Final Harvest for Sugar Fields – “See my eyes?” asks Joe Maneja. “Not angry. Just sad. No one can help the company. No one can fix it.” Maneja is one of a crew of about a dozen Lihue Plantation heavy-equipment operators and haul-cane truck drivers eating lunch at a field station near Wailua Falls…
It is the last field to be harvested this year. It is the last Amfac field to be harvested ever.
Maneja, a 28-year old Amfac employee, is one of about 400 at Lihue Plantation and Kekaha Sugar Co who will be unemployed at the close of business tomorrow, when Amfac shuts down its two sugar operations….
It is the largest layoff of agricultural workers in Kauai’s history and will cut the island’s farm labor force of 850 almost in half. But for each of the employees, it is a loss of a way of life….
Sugar was king for more than 100 years. . . . The two Amfac/JMB sugar mills that will shut down tomorrow represent half of the surviving four sugar mills in Hawaii.
Sugar was first grown commercially in Hawaii at Koloa Plantation on Kauai in 1835. At one time there were 32 plantations in Hawaii. Collectively, they imported the 385,000 workers from Asia, Europe and North America who created Hawaii’s unique multi-cultural society.
Lihue Plantation, which will officially close its doors tomorrow, has been producing sugar for 151 years. Kekaha Sugar Co, which also shuts down tomorrow, dates back to 1878.
Both are owned by Amfac/JMB, which traces its roots to a ship chandlery, Hackfeld & Co, started on Kauai by Hendrich Hackfeld, a German sea captain.
The firm, which remained in German ownership, was seized by the U.S. government during World War I and auctioned off to a group of Hawaii businessmen who changed its name to American Factors. In 1966 the name was shortened to Amfac and in 1988 the company was purchased by JMB Realty of Chicago and its name became Amfac/JMB….
Two years ago, the property that was the site of the Makee Plantation was sold by Amfac/JMB to Kealia Plantation Inc.
It is being developed into lots for multi-million-dollar homes….
See also: John Waihee
James Ahloy – President, Ali’i Petroleum; Trustee for Lunalilo Trust; President, Aloha Petroleum (the company in the political spotlight because of its spinoff from Harken Energy Corporation – George W. Bush’s tenacious albatross).
January 9, 1991
Excerpted from a Letter from Bruce N. Huff, Sr. V.P., and CFO, Harken Energy Corp. to Edmund Coulson, Chief Accountant, Securities and Exchange Commission:
. . . June, 1989, the Company decided to sell Aloha (Petroleum) due to the lack of strategic fit and the need to redeploy assets and management effort . . . determined that Intercontinental Mining & Resources, a major shareholder of the company, was the most logical buyer.
. . . At the end of March, 1990, IMP completed the sale of its interest in Aloha to Advance Petroleum Marketing Co.
. . . Advance at this time raised the possibility of a long and costly dispute over environmental liabilities. . . .
. . . Prior to entering into the Letter of Intent dated February 22, 1990 with Advance concerning this sale, IMR through its affiliate Quadrant Management Co. had contacted a number of potential third parties towards locating a prospective purchaser of IMP’s interest in Aloha including potential purchasers in Japan, New York and in Hawaii, after which it determined that Advance constituted the most acceptable purchaser for its interest….
. . . Concessions:
– Assumed Jimmy Ahloy’s Employment Contract obligation.
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