Sightings from The Catbird Seat

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July 26, 2000

[Hand Delivered]

Dr. Hamilton McCubbin, CEO
Kamehameha Schools
567 South King Street, Suite 200
Honolulu, Hawaii 96813

RE: Kamehameha Schools and P&C Insurance Company, Inc. – Equity 2048

Dear Dr. McCubbin:

Thank you for the opportunity to meet with representatives of Morgan, Lewis & Bockius, LLP on this date. As I understand the major focus of your investigation to be the improper use of outside legal counsel, accounting firms and other third-parties, the following is a list of individuals and companies that, in my opinion, colluded to improperly transfer trust assets from the Kamehameha Schools and related companies:

Attorneys and Law Firms

Cades Schutte Fleming & Wright (Michael Hare)

Chee & Markham (Kevin Chee)

Devens Lo Nakano & Youth

Watanabe Ing & Kawashima (Douglas Ing and James Kawashima)

Goodsill Anderson Quinn & Stifel

Law Offices of Stanford Manuia (Stanford Manuia)

Torkildson Katz Jossem Fonseca Jaffe Moore & Heatherington

Carlsmith Ball Wichman Murray Case & Ichiki

Nathan Aipa, Louanne Kam, Lyn Anzai and Colleen Wong often directly engaged these firms to handle insurance claims without the required authorization of the insurance companies, including P&C.

Once the firms were engaged, these KSBE employees “controlled” and “managed” the claim directly with outside counsel, deliberately disregarding insurance company guidelines regarding the use and payment of these firms. Nathan Aipa, as principal executive of the Legal Group, had ultimate approval of all legal bills including P&C’s.

Aipa would frequently pay these legal fees and costs from his General Counsel Account, without approval from the insurance companies. Often the amounts billed by the law firms exceeded allowable fees and costs provided in the insurance company guidelines. When, if ever, KSBE submitted the legal bills to the insurance company, many of the charges were disallowed. This practice led to the loss of millions of dollars that were never recovered from the insurance companies.

In the case of claims under P&C Insurance Company policies, Nathan Aipa, Louanne Kam or other KSBE attorneys directed that P&C pay the bills even though the outside firms flagrantly disregarded P&C’s written guidelines.

These outside legal firms reported directly to in-house counsel, rather than to the insurance companies. In-house attorneys, including Aipa, often would not disclose critical information to the insurance carriers in these “sensitive” claims, resulting in further millions lost to the estate due to “non-cooperation”.

This situation became particularly suspect and troublesome when these same KSBE employees handled claims in which they also had participated in the original financial transactions. They may have been potential witnesses— even defendants— in resultant lawsuits. These were extremely serious “conflict of interest” situations.

With P&C this became even more critical due to the obvious violation of “arms-length” principles, which potentially exposed the estate to unlimited losses beyond the actual insurance policy coverages and limits of liability.

During my years at KSBE, the following are just some cases in which KSBE and P&C funds were misused in the handling of insurance claims:

McKenzie Methane

Kona Enterprises

Ted Fields

Robert Trent Jones Golf Club

McConnell vs. KSBE

William Rosehill

From all public accounts and from my personal experience, these imprudent practices have continued— unhindered and unabated— from the time of my departure until the present, under both the ex-trustees and the interim trustees.

Accounting Firms/Representatives

Coopers & Lybrand LLP (Dennis Tsuhako)

Price Waterhouse (Mark McConoghy)

The roles that these two firms played in questionable activities are documented in my own RICO lawsuit, Chronology, and Documents.

Insurance Companies and Agent/Brokers

Marsh & McLennan (Hawaii) (Rocco Sansone, Christine Lee)

M&M Insurance Management Services (Peter Lowe)

Federal Insurance Company

The roles of these firms are also detailed in my RICO lawsuit, Chronology, and Documents.

Outside Contractors (Other)

Stay and Sons

The role of this “hazardous waste contractor” is detailed in the enclosed documents.

Kamehameha Schools’ Executives and Employees

Nathan Aipa

Colleen Wong

Louanne Kam

Allen Yee

Rodney Park

Wally Chin

Yukio Takemoto

Milton Holt

Mitch Gilbert

Gilbert Ishikawa

Dennis Fern

Bruce Nakaoka

Eric Martinson

Christine Lee

It is clear that the ex-trustees did not operate alone in the alleged theft of hundreds of millions of dollars from the estate. It takes the consent and cooperation of key executives and managers to facilitate such a broad misuse— even embezzlement— of trust funds. The enclosed documents provide details.

P&C Insurance Company, Inc.

Henry H. Peters, Chairman, Board of Directors

Gilbert Tam, Director

William Richardson, Director, Secretary/Treasurer

Peter Lowe, Vice-President

Nathan Aipa, Asst. Secretary/Asst. Treasurer

Rodney Park, President

Louanne Kam, Officer

Marsh & McLennan, Inc.

Bank of Hawaii

William M. Mercer, Inc.

Again, details are provided in the enclosed documents.

I hope this information will be helpful in your investigation. If I can be of any further assistance, please feel free to contact me.

Very truly yours,


Bobby N. Harmon, CPCU, ARM


Harmon vs. Trustees, et al. – RICO Case Statement

Harmon Chronology

Harmon Documents



August 22, 2000

VIA FAX @ 523-6313 , and U.S. Mail

Dr. Hamilton McCubbin
Chief Executive Officer
Kamehameha Schools
567 South King Street, Suite 200
Honolulu, Hawaii 96813

RE: Kamehameha Schools – Equity 2048 – Insurance Opinion by Special Master

Dear Dr. McCubbin:

This is in response to Colleen Wong’s letter dated August 15, 2000, which read:

“. . . The Interim Trustees and Dr. McCubbin recognized the concerns you have raised. They have authorized the filing of a petition to apprise (sic) and to seek direction from the Probate Court on these matters. In response, a special master was appointed to review and to formulate recommendations to the Court. The Probate Court has now ruled.”

“With this ruling, guidance and direction has been provided to us. The Interim Trustees and staff are all committed to abiding and complying with the Court’s ruling.”

Although Ms. Wong provided me a copy of my letter of July 21st, she did not provide a copy of the Probate Court’s ruling. Therefore, the following comments are made without the benefit of knowing the contents of that ruling.

Although I appreciate the fact that the Interim Trustees are committed to complying to the Court’s ruling (whatever that might be), I believe there is a larger issue here— which is, to restore honesty and accountability to the estate and to “stop the stealing!”

I seriously doubt that many of the concerns that I expressed in my letter were presented to the Probate Court, such as:

1.       “Just as the interim trustees should not be involved in this lawsuit (against the ex-trustees), neither should any officers, directors or employees of Kamehameha Schools or P&C Insurance Company, such as Nathan Aipa, Colleen Wong, Louanne Kam or Rodney Park. Since it is the duty of the liability insurance companies, including P&C, to provide defense for the ex-trustees, all of these individuals have serious conflicts-of-interest by being involved.”

2.       “The conflicts-of-interest issues in this case, however, appear to go beyond just the mechanics of handing the claims. The purpose of these deviations from procedures appears to be the intentional cover-up of thefts of trust funds by current employees of the estate in collusion with the ex-trustees and certain outside contractors. Some of these individuals and outside firms are known to me and were specifically named in my RICO lawsuit, so I will not repeat them all here. However, it is worthy of note that Aipa, Kam, Wong, Park, Federal Insurance Company, P&C Insurance Company, PricewaterhouseCoopers and Marsh & McLennan were all named as co-conspirators.”

3.       “There are other reasons that ‘deals’ should not be made with only Federal, XL and P&C at this time. It appears that all potential insurance carriers may not have been notified in this case. Specifically, SoCal and McKenzie Methane should also have Directors & Officers liability coverages. If Henry Peters or other trustees or employees of KSBE also served as Directors & Officers of these entities there may be coverages applicable under these policies.”

4.       “Also, if it is eventually found that Marsh & McLennan, Federal Insurance Company, PricewaterhouseCoopers, Mid Ocean Reinsurance, Underwriters Capital or others did, in fact, collude to defraud the estate, then the insurance policies of these entities may also be applicable.”

5.       “There are other types of insurance policies carried by the estate which provide for substantial recovery of losses. Many of the alleged acts involved theft of trust monies by the ex-trustees in collusion with other KSBE executives and staff members, and with outside individuals or firms. These situations are covered by KSBE’s Employee Dishonesty insurance policy. To collect under these Employee Dishonesty policies, these claims must be reported to the insurance carrier. . . . Therefore, it would be the responsibility of the interim trustees and the Chief Executive Officer or Chief Operations Officer to report these claims to the insurance carrier. . . . One example of this type of claim would be the elaborate scheme to reimburse Milton Holt for the theft of his campaign funds and subsequent legal defense costs. . . . This is only one example. From the Attorney General’s investigation, and other investigations, and from my personal experience, there are dozens of similar cases of fraud which should have been reported to the insurance companies, but were not. If the current interim trustees and principal executives continue to ignore, or cover-up, these thefts, they are also exposing themselves (and the insurance carriers) to further claims of theft and breach of fiduciary duties.”

6.       “Another source of potential recovery would be the Trustee Bonds of each of the five individual ex-trustees. This could possibly lead to another $500,000 recovery.”

7.       “I would also like to comment briefly on the payment of fees for Trustees’ separate legal counsel as discussed in Davis Wright Tremaine’s memorandum dated 11/21/97 . . . and John Langbein’s letter of 11/23/97…. All that would have been required of Mr. Aipa would have been simply to report the claim to the insurance carriers. From that point on, these issues would have been handled by the insurance companies at their expense….”

As mentioned, I do not know what matters were discussed with the Probate Court; consequently, if these issues were indeed presented to the Court in the manner I presented them in my letter, then I apologize for my skepticism. However, since Colleen Wong and all the other individuals mentioned in my letter of July 21st appear to continue to exercise control over all insurance issues involving the estate, then serious conflicts of interest and questions of propriety still remain.

My purpose in continuing to bring these issues to your attention is my hope that you and the interim trustees will yet act to “stop the stealing” and restore trust and integrity to Princess Pauahi’s legacy.

Very truly yours,


Bobby N. Harmon, CPCU, ARM

cc: Ms. Dorothy Sellers, Esq., Deputy Attorney General



September 11, 2000

Colleen I. Wong, Chief Legal Officer
Office of the Chief Legal Officer
Kamehameha Schools
567 South King Street
Honolulu, Hawaii 96813-3036

Re: Kamehameha Schools Pension and Insurance Plans

Dear Ms. Wong:

Thank you for your letter of September 7, 2000. Since this appears to be your final “dialogue” on these issues, as a matter of courtesy I am responding directly to you rather than to Dr. Hamilton McCubbin.

You state that in your previous correspondence you addressed my allegations by correcting numerous inaccuracies and misstatements of facts included in my prior correspondence. In light of this statement, I have very carefully reviewed your two page letter of August 4th, and your two paragraph letter of August 15th, and I regret to say that I am unable to pinpoint ANY corrections of inaccuracies or misstatements of facts that you mention. But perhaps this depends on what your definitions of “inaccuracies” and “misstatements of facts” are, as compared to my understanding of these terms.

You state that in the past I have made numerous allegations of fraud, conspiracy, collusion and misconduct relating to actions of Kamehameha Schools’ employees, consultants, including external and internal legal counsel. This is an absolutely accurate statement.

Your letter continues: “You have raised questions of misconduct, conflicts of interest and impartiality with respect to myself and my legal staff as well as outside counsel retained to assist us in reviewing your allegations including such reputable law firms as Torkildson Katz Fonseca Jaffe Moore & Hetherton; Miller & Chevalier and most recently the Carlsmith Ball law firm.”

The only word I would question in this statement is “reputable”. My dictionary defines the word as “held in good repute”. The word “repute” is defined as “estimation of the view of others; reputation”. The word “reputation” is further defined as “the estimation in which a person or thing is held, especially by the community or the public generally.” My Webster’s goes on to say:

“REPUTATION and CHARACTER are often confused. REPUTATION is the word which refers to the position one occupies or the standing that he has in the opinion of others, in respect to attainments, integrity, and the like. CHARACTER is the combination of moral and other traits which make one the kind of person he actually is (as contrasted with what others think of him).”

So, if by your use of the word “reputable” you would mean such entities as William Clinton, Hillary Rodham Clinton, the Rose Law Firm or F. Lee Bailey — as opposed to another well-known lawyer like, say, Abraham Lincoln — then I would accept your statement as being accurate.

You go on to state in your letter, “To my knowledge, none of these complaints or allegations of wrongdoing have resulted in any adverse actions taken by any of those offices, agencies or courts against KS employees and/or service providers.”

Perhaps, again, it depends on what you mean by “adverse actions”. By my understanding of this term, however, I would say that the removal of the five ex-trustees, the conviction of Milton Holt, and the pending trials of Henry Peters, Richard Wong, Jeff Stone, and Marshall Ige would be considered by some to be “adverse actions”.

It may be true that no legal actions have yet been taken against Marsh & McLennan, Rocco Sansone, PricewaterhouseCoopers, Mark McConaghy, William Richardson, Gil Tam, Rodney Park, Yukio Takemoto, Gil Ishikawa, Nathan Aipa and others named in my letters; however, to the best of my knowledge, investigations are still ongoing— including the one by Miller & Chevalier which I understand is not due to be submitted until September 30, 2000.

You state in your letter, “It is clear that any investigations performed by internal KS staff members and/or outside service providers to review your allegations will be met with further claims by you of conspiracy, collusion and other allegations of wrongdoing.” This is not entirely correct. There are still many persons inside Kamehemaha Schools which I feel are trustworthy — at least one of whom is in the Legal Group. As for outside service providers, I have trust in the extensive investigations that were performed by Goodenow & Associates, and in the investigations by the court-appointed Master, Robert P. Richards, as detailed in his thoroughly researched and documented EQUITY NO. 2048 – REPORT OF MASTER REGARDING RETENTION OF NON-STAFF COUNSEL, filed May 18, 2000.

I do agree with the Master’s numerous conclusions, including: “MILLER & CHEVALIER. This is another Washington D.C. law firm that was retained to work on the IRS examination. The retention letter dated 11/25/98, [was] after the date the Attorney General had filed its action seeking removal. The firm invoiced the following amounts, which were paid ($653,511.71 Total). . . . It does not appear that this firm had done any previous work for the Estate and was then brought into the Audit for purposes of ‘explaining’ that work to the IRS. . . . In so doing they, according to their 12/1/98 acknowledgment letter, were to ‘coordinate with [CPA] Mark McConaghy’. . . . The Special Purpose Trustees appointed by this Court continued the services of Miller & Chevalier to defend with regard to the IRS Audit. As stated above, it is the recommendation that all fees of Miller & Chevalier be surcharged the trustees.”

Based upon personal knowledge, I am in even greater agreement with these comments by the Master: “In January 1998, Cades Schutte Fleming & Wright began work with reference to the IRS audit. There is no applicable trustee minute authorization or retention letter, but we do know from later correspondence to Miller & Chevalier that, pursuant to the instructions of the trustees, Michael Hare was to act as ‘local contact/counsel’ with reference to the audit. During the pendency of this action the firm billed … $735,605.19 Total. … This Master does not recommend surcharging the entire amount. … The remaining sum, $511,609.94, is, however surcharged to all trustees, jointly and severally.”…

Randy Roth was one of the authors of the Broken Trust article which criticized the actions of the trustees. In August (1997) his ‘claims were investigated.’ Then the claims of employee (Bobby) Harmon, who also criticized trustee conduct, were investigated.”

Senior Federal Judge Sam King was also one of the authors of Broken Trust. In what can only be described as chilling and wholly inappropriate legal work, the firm spent 16 hours researching and drafting a memo ‘limits on freedom of federal judge regarding public statements on social issues and conclusions of law.’ This best illustrates the conclusion of this Master that no stone would be left unturned by the trustees in attempting to silence or at least discredit their critics. To charge the trust for such legal work is outrageous!” . . .

“This firm researched the issues of remedies in the event Mr. Harmon spoke about the conduct of trustees, in violation of the injunction gotten against him. What was the benefit to the trust? It is clear what the benefit to the trustees was, hope that employees would be silenced by fear of reprisal.”

You conclude your letter by stating, “Since we have attempted to explain and/or correct inaccuracies in your allegations which you continue to ignore, I believe it would not be fruitful to continue any further dialogue with you. However, any external investigations pursued by agencies or offices who have valid legal authority over the operations of the Kamehameha Schools will be met with our full cooperation.”

It pleases me to learn that your office is now committed to providing “full cooperation” with all legal agencies in their investigations. As you and I and these agencies well-know, this has not always been the case in the past.

I am also pleased to hear that you now believe it would not be fruitful to continue any further dialogue with me on these matters. On a personal note, I must say that I came to that unpleasant conclusion over ten years ago when you, Nathan and I were “discussing” the use of Watanabe, Ing and Kawashima to defend against William Rosehill’s wrongful termination lawsuit.


Very truly yours,


Bobby N. Harmon, CPCU, ARM


encl: Sept 7, 2000 letter to Trustee Screening Committee

cc: Robert K.U. Kihune, Trustee
Ronald D. Libkuman, Trustee
Constance H. Lau, Trustee
David P. Coon, Trustee
Francis A. Keala, Trustee
Dr. Hamilton I. McCubbin, CEO
Dorothy Sellers, Esq.
Billy Beaver, U.S. Dept of Labor
Trustee Screening Committee



September 7, 2000

Trustee Screening Committee
c/o Inkinen & Associates
1001 Bishop Street
Pauahi Tower, Suite 477 (VIA Fax: 521-2380)
Honolulu, HI 96813

SUBJECT: Candidates for Kamehameha Schools’ Trustees

Dear Committee Members:

As the former Risk/Insurance & Safety Manager for Kamehameha Schools for eight years, and as the first president of P&C Insurance Company, Inc., I respectfully submit the following comments regarding the current trustee candidates:

FIRST, I wish to make you aware that many of the organization’s unsafe and corrupt practices that I learned of while employed by the estate have yet to be disclosed to the beneficiaries and the general public. In fact, these practices have been allowed to continue, if not grow, under the tenure of the current interim trustees. One major cause of the problem rests with the interim trustees’ retention of many of the executives that knowingly assisted, and collaborated with, the ex-trustees in many of the questionable activities which led to their ouster.


Because the interim trustees have not acted promptly and prudently to correct the ongoing improprieties, my first recommendation is that none of the interim trustees should be considered as candidates for permanent trustees. I do not make this recommendation because I believe that Robert Kihune and Constance Lau lack the ability or integrity to handle the job, but their failure to take action on these issues after a year and a half, raises considerable doubt if they will take any action in the future.

SECOND, I wish to make you aware that there was an instance while I was at KSBE when I was ordered by Nathan Aipa and Colleen Wong to use the law firm of Watanabe Ing & Kawashima for the adjustment of an Employment Liability insurance claim. Aipa and Wong then proceeded to exclude the insurance company claims adjusters and myself from any involvement in the claim, including providing important information needed for proper claim handling and settlement. The reason given for this unorthodox procedure was because “Douglas Ing may be our next boss.


Because of the close working relationship between J. Douglas Ing and Nathan Aipa, Colleen Wong and the ex-trustees, it seems highly improbable that Mr. Ing would be impartial in taking any action against these individuals should he be selected as a trustee. Also, because of his past representation of one or more of the ex-trustees, it would appear that this would constitute sufficient conflict-of- interest to disqualify him from consideration.

THIRD, a comment about candidate Nainoa Thompson. Although I admire his accomplishments, there is the obvious question of whether his appointment would be based upon merit and ability, or is it “political”?

Also, there is the matter of the “McKenzie Methane deal” in which his father, Former Trustee Myron Thompson, was one of the co-investors, along with Henry Peters, Matsuo Takabuki, William Richardson, Rodney Park, Wallace Chin, Gilbert Ishikawa, Mitch Gilbert, Gilbert Tam, Mark McConaghy, and others, many of whom are still connected with the estate. This matter has not yet been resolved by current management and the interim trustees. If Nainoa Thompson is selected, would he actively pursue reimbursement for estate monies that were improperly used to bail-out these co-investors?


No one that is closely related to any of the prior trustees should be appointed as a trustee so long as there remain any unresolved criminal or civil issues that might involve that relative.

FOURTH, a comment and a question regarding R. Dwayne Steele. I know very little about this individual, except that Rocco Sansone and Marsh & McLennan were strongly “lobbying” for his selection when he was a candidate for the open trustee seat in 1994, and that he is a close friend of former trustee, Oswald Stender. Does the committee know what business relationships, if any, exist between Grace Pacific Corporation and Marsh & McLennan; between Grace Pacific and Kamehameha Schools or any of its subsidiaries; or between Grace Pacific and the state and city governments?


All business and “political” relationships between candidates and any entity connected with the estate should be fully disclosed before the final selections of trustees are made.

As further background behind the reasons for these recommendations, I refer you to the following internet website:


Thank you for the opportunity to present these recommendations.

Very truly yours,


Bobby N. Harmon, CPCU, ARM

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A CATBIRD NOTE: On May 2, 2003, Dr. Hamilton McCubbin submitted his resignation, which took effect immediately.





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Last updated May 10, 2005, by The Catbird