The Rise and Fall


Sightings from The Catbird Seat

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= = = THE RISE = = =

May 12, 2000

Summit Communications
Enters the Call Center Arena

By Rob Kay and Jeff Bloom, Pacific Business News

Over the past two years Tim Bajarin, one of the top analysts in Silicon Valley, has come to Hawaii advocating that our state focus on developing call centers as an industry. He understood that Hawaii may not have the infrastructure to support full bore Silicon Valley companies but we surely did have a chance to grow a call center sector which didn’t demand the kind of high powered engineers that software companies or manufacturing facilities depend upon….

One of the most interesting companies to do so is Summit Communications, a 40-person operation that got its start at the Manoa Innovation Center but will soon move to a 4000 square foot office at 1132 Bishop Street. A telecommunications company, Summit originally based its business on setting up shared tenant services for office buildings and hotels. Shared tenant services become possible after the state deregulated the telecommunications industry. This allowed smaller telecom to provide and aggregate telephone services, Internet access, long distance calling and other traditional telecommunications services in large buildings.

Recently Summit has gotten into the call center business in a big way. Early this year they won a bid to provide a call center that would field all calls for the Hawaii Visitor’s and Convention Bureau. The three year contract will be worth about $400,000 a year to Summit and will entail hiring an additional 15 operators and supervisory personnel. The jobs will pay anywhere from $10-13 per hour, which translates as about $25,000 to $28,000 per year.

Oddly enough, currently the call center for the HVCB is located in Arizona. However, the powers that be decided it was time to inject a little more Aloha spirit into the tourism promotion business by utilizing local people and wisely decided to move the operation back to the Islands. Multi-lingual operators would be employed with fluency in German, Spanish, Mandarin, Japanese, Korean and French. The new call center will be web-enabled and have the latest technologies in place such as “click to talk” capabilities. That means that a web surfer looking at the HVCB site need only click an icon to speak with an operator.

Summit Communications’ General Manager, Chad Johnston, told us that the company is not a newcomer to call centers. “We’ve been providing telecommunications services to Physicians Exchange, a doctor’s call center here in Honolulu since 1998,” said Johnston, so we have experience supporting mission critical operations.”…

Summit is proving something that we’ve believed in all along.

You don’t need super high tech companies to build our economy and provide meaningful employment. By making our state more business and technology friendly we can grow or tattered economy. However, without prior deregulation of the state’s telecommunications industry, Summit would never have had the opportunity to expand and eventually branch out into the call center arena.

The key in our estimation is for local companies to leverage available technologies and enter niches that the larger, stodgier companies would hesitate to attempt. This is exactly what Summit has done and we wish them the best of luck.


 = = = THE FALL = = =

February 15, 2002

Summit Communications files bankruptcy

The local telecommunications company has debts
between $1 million and $10 million

By Lyn Danninger, Honolulu Star-Bulletin

Summit Communications, a local company that provides telecommunications services for clients including Hawaii Visitors & Convention Bureau, filed for Chapter 11 bankruptcy protection yesterday.

Summit, founded in 1996, listed debts of between $1 million and $10 million, estimated assets of between $1 million and $10 million and between 50 and 99 creditors on its bankruptcy filing.

Telecommunications services provided by Summit include alternative local and long-distance telephone services to multi-tenant buildings and call center services.

Company president Grant Johnston said the company does not plan to lay off any of its 40 employees. Summit reduced its staff by about 20 percent in June 2000. Management and administration staff also took a 20 percent pay cut, he said.

“Now the plan is to get some temporary relief from creditors to re-group and get back on track,” he said.

With approximately $3 million in annual revenues, Johnston said the company had been growing. But economic ups and downs in the telecom industry, the fallout from Sept. 11 and difficulty getting vendor financing hurt the company….

Summit’s contract with the Hawaii Visitors and Convention Bureau is worth between $30,000 and $50,000 per month, depending on the bureau’s marketing activities and the volume of calls handled by Summit, said Barbara Okamoto, HVCB’s vice president of customer trends and communications.

Okamoto said the Bureau plans to retain its contract with Summit.

“Summit has kept HVCB informed of their re-structuring plans,” she said.

Okamoto said Summit assured the bureau that it intends to continue to provide uninterrupted service for HVCB’s toll-free number as well as respond to visitor e-mail inquiries.

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February 20, 2002

Local Telecom Reorganizing

Summit Communications files for Chapter 11

By Kelli Abe Trifonovitch

Summit Communications, Inc., a Hawaii-based telecommunications firm has filed for Chapter 11 protection and has named a president. The company provides local and long distance service to multi-tenant buildings and call center services. The state of Hawaii has highlighted Summit in the past as an example of a high technology company doing business in Hawaii.

Summit was co-founded in 1996 by former GTE Hawaiian Tel executive Harold Johnston, who still holds a major stake in the company. His son, Grant Johnston, has been named President. Grant joined Summit in 2001 as general manager of the call center operation.

Grant Johnston says Summit has had steady sales growth since it was founded. “Economic conditions within our industry as well as the events of September 11th negatively affected business, so the filing allows the company some breathing room,” he said in a statement.

Johnston also said that they are in the process of contacting customers to discuss Summit’s plans for continuing and expanding the business.

He said, “We are a Hawaii company and will be here for our customers for the long term since we value our reputations and understand our responsibilities.”…

* * *

September 10, 2002

State, feds seek Summit trustee

The telecom firm owes more than $1 million
to the state and feds

By Tim Ruel, Honolulu Star-Bulletin

The fate of a million-dollar tax delinquency is coming to blows in the bankruptcy of telecommunications services firm Summit Communications Inc.

In the past several weeks, the U.S. Attorney’s Office, the U.S. Trustee’s Office and the state Department of Taxation have raised the heat in Summit’s bankruptcy proceedings. They support the appointment of an outside trustee to manage and investigate the firm’s finances.

Summit owes $528,603 to the state and $512,315 to the federal government for taxes, according to claims in Summit’s Chapter 11 reorganization bankruptcy case.

In an early August court filing, attorneys for the U.S. government cited Summit’s “gross mismanagement and incompetence” as a justification for the appointment of a trustee.

Summit opposes the appointment of a trustee and disputes the government’s assertions. It says the appointment of a trustee will raise the expense of administering its bankruptcy case, a point the U.S. government concedes. Having a trustee at the helm would reduce confidence in the firm, potentially warding off customers, and make it harder for Summit to emerge from bankruptcy successfully, according to a filing by Summit’s attorneys Steven Guttman and James Duca.

Summit is seeking an extension of time to submit its in-house plan for reorganization, which was due two months ago. The government says Summit shouldn’t get an extension. A hearing on the disputes is scheduled for Monday before U.S. Bankruptcy Judge Robert Faris.

During a brief hearing yesterday, Summit and its creditors said they would meet outside court to talk things over. One of the potential topics was whether the government’s desire to appoint a trustee would merit the potential loss of tax dollars, according to Carol Muranaka, special assistant U.S. attorney.

“We are in a bad place, I think, the state and United States,” Muranaka said during yesterday’s hearing.

Among the U.S. government’s assertions:

>> Summit’s current management is related to the management that led the firm to its tax situation. Shortly before Summit filed bankruptcy, Grant Johnston, the son of a Summit co-founder and owner, became president;

>> Summit has made a couple major revisions to its financial statements. As such, the firm’s numbers are not reliable.

In response, Summit said the relationship between its management teams is not relevant. If there’s a question of whether the relationship has interfered with efforts to fix Summit, “no such claim can factually be proven,” the company said.

The company blames its erroneous financial statements on disarray in its finances at the time of filing bankruptcy. Since then, the company says it has hired an outside accountant.

In a March interview, Grant Johnston said Summit ran into major cash-flow problems that were more important at the time than paying taxes. According to Johnston, the firm discovered the tax problem after it changed management in 2001. Johnston could not be reached for further comment yesterday.

Unpaid taxes make up about one-third of Summit’s $3 million total claims.

In a court filing, Summit noted it is current on its post-bankruptcy financial obligations, and it has made $38,223 in adequate protection payments to the federal government.

The state Tax Department, which has supported the federal government’s case for appointing a trustee, has its own bone to pick with Summit. In a recent filing, the state claims Summit has been “tightfisted” with information, hindering a state audit.

Before filing bankruptcy in February, Summit hadn’t filed general excise tax returns since 1997. Also, Summit has refused to file public service company returns, the state said.

There’s a simple reason for that, Summit said: The firm is exempt from public service company taxes, and hasn’t compiled the information needed to compute the tax liability.

The state says Summit has failed to show how it can increase growth to finance a viable reorganization plan. Summit says the state misread the firm’s financial statements, and understated its June and July earnings.

The firm projects its operations will generate $15,000 each month to pay its tax obligation over several years. Summit provides long- and long-distance telephone services and call center services.

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September 17, 2002

Bankrupt Summit gets outside auditor

The telecom firm makes a deal
to avoid an appointed trustee

By Tim Ruel, Honolulu Star-Bulletin

Bankrupt telecommunications services firm Summit Communications Inc. has agreed with state and federal government officials to appoint an independent accountant to audit the firm’s financial records.

As part of the agreement, the U.S. Attorney’s Office is holding off on its request for a court-appointed bankruptcy trustee to manage and investigate Summit’s financial affairs.

Summit, which filed for Chapter 11 reorganization bankruptcy in February, will be allowed to continue running under its current management. Once the auditor’s report is released, the firm will have 30 days to submit a plan of reorganization for approval by creditors and U.S. Bankruptcy Judge Robert Faris.

Summit must also reduce its annual payroll by $68,000, under the new agreement. The firm has 34 employees.

The government wants to examine management salaries to see if compensation fits the job descriptions, according to the agreement.

Summit owes more than $1 million, or about one-third of its total debt, in unpaid state and federal taxes.

In early August, the U.S. Attorney’s Office asked the bankruptcy court to appoint a trustee to oversee Summit, alleging the firm had been mismanaged, a request that was supported by the state Department of Taxation and the U.S. Trustee’s Office.

In response, Summit says it is recovering from financial disarray caused by outside accountants and bookkeepers.

“My understanding is they just simply didn’t do a good job,” said Grant Johnston, who became president of Summit when the firm filed for bankruptcy protection.

The sheer size of the tax delinquency caused the government to raise an eyebrow, Johnston said.

“I think the size of the tax debt, it was just natural for them to question how it happened,” he said.

Since filing bankruptcy, the firm has submitted major revisions to its court-filed financial statements, a point seized upon by the government in asking for a trustee.

Summit has made no more accounting errors in recent months, Johnston said. In early August, around the time the government asked for a trustee, Summit retained a new outside accountant, Landis Char. Johnston said he sees the firm’s accounting cleanup as a positive step toward its financial rehabilitation.

Summit’s tax problem was caused when the firm ran into major cash-flow problems a few years ago, Johnston said. The firm, founded in 1996, had not yet turned a profit and faced going out of business if it didn’t pay certain bills, Johnston said. If the company had closed, the government would not have received any tax payments, he added. New management came in and discovered the tax liability in 2001.

The government wants a financial review to see if it is feasible for Summit to reorganize its debt under the bankruptcy process, said James Duca, attorney for Summit.

Johnston said he is confident the company can emerge from bankruptcy successfully, and pay its debts. The firm has been profitable since June, and plans to set aside at least $15,000 each month to pay its tax debt over several years, Johnston said.

Summit provides local- and long-distance telephone services, and call center services. Since filing bankruptcy, the firm has not lost any customers, and has added six call-center customers, as well as 150 new phone lines on its share-tenant service.

An independent auditor for Summit has not been named yet.

* * *

January 6, 2003

Examiner critical of Summit’s finances

The bankrupt telecom firm is a
“mini-Enron,” says a bankruptcy trustee

By Tim Ruel, Honolulu Star-Bulletin

An examiner hired to look at the books of bankrupt telecommunications services firm Summit Communications Inc. says the firm’s leaders have benefited to the financial detriment of creditors.

“It’s sort of like a mini-Enron, or mini-WorldCom,” said Mark Yee, who was hired to review Summit’s financial condition.

Yee, a bankruptcy trustee, has filed a court report that says Grant Johnston and Harry Johnston received questionable payments from Summit and from a separate company owned by Grant Johnston that works closely with Summit.

Summit, which provides call-center and telephone services, filed for Chapter 11 protection from creditors in February 2002. Summit owed more than $1 million in unpaid state and federal taxes, though the company said it has repaid one-fifth of what it owes to the Internal Revenue Service.

Grant Johnston is president of Summit. Harry Johnston is Grant’s father and is a co-founder and principle shareholder of Summit.

Grant also owns a company, Summit Exchange Inc., which provides similar services as Summit Communications, and has its work done by the staff of Summit Communications, Yee’s report said. Yee said the companies should be treated as one and the same. Grant Johnston disagreed.

Grant Johnston also took exception to having Summit Communications labeled a “mini-Enron.”

“(Yee’s) comment … confirms in my mind that he and others are on a fishing expedition,” Grant Johnston said. “They’re looking and fishing for wrongdoing.”

The Johnstons say Yee’s report is inaccurate and misleading, and said they will rebut any allegations of wrongdoing. The fundamental problem with the report, they said, is that they were not given a chance to clear things up before it was filed with the court.

When asked to respond to specific accusations within Yee’s 17-page report, they repeatedly declined.

“There is available an explanation to every question that (Yee) may have come across,” Grant Johnston said Friday. “Whether or not he chooses to believe our answers is up to him.”

It may also be up to U.S. Bankruptcy Judge Robert Faris. Last year, the U.S. Attorney’s Office, the state Department of Taxation and the U.S. Trustee’s Office all backed the court appointment of a trustee to replace Summit’s current management. Summit, in opposition, says the appointment of a trustee would only make it harder for the company to stay in business and pay off debts.

Yee’s appointment was a temporary compromise between Summit and the government. His report supports the appointment of a trustee, as well as further investigation of the firm’s finances. A lawyer for the U.S. government could not be reached for comment Friday.

In his report, Yee said Summit’s latest financial statements to creditors are not to be believed, and that the company is not producing the profits that it claims. Plus, he describes Summit’s past records as being in a mess that is so bad, he said, there is no point in trying to figure it out.

“To get those books in order is going to take a major undertaking,” Yee said.

Summit has acknowledged in the past that it had major problems with record-keeping under previous management, though the Johnstons said the more recent financial statements are accurate.

Summit recently lost approximately 20 percent of its overall business from one of its bigger customers, Sandwich Isles Communications Inc. Summit had provided technical support for Sandwich Isles, which is building a $500 million communications system that would link all Department of Hawaiian Home Lands residents.

Grant Johnston said that loss will not hurt Summit’s plans to reorganize its finances, stay in business and pay off its debts over time. Summit has pared down expenses and increased its call-center business and other revenues, he said.

Since filing for bankruptcy, Summit has reduced its work force to 28 employees from 40.

For more, GO TO > > > Act 221; Vultures of the Sandwich Isles; Woo vs. Harmon

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January 13, 2003

U.S. Attorney renews call for
trustee at Summit

The bankrupt telecom firm says the move would hurt
the company by scaring off customers

By Tim Ruel

The U.S. Attorney’s Office has renewed its call for a court-appointed trustee to replace the management of bankrupt telecommunications firm Summit Communications Inc.

The move follows the December filing of an examiner’s report that said Summit’s financial situation was worse than company leaders were saying.

A hearing on the appointment of a trustee is scheduled for Jan. 24 before U.S. Bankruptcy Judge Robert J. Faris.

The examiner, bankruptcy trustee Mark Yee, supported an earlier motion by the government to appoint a trustee to investigate Summit’s finances.

Yee would not be able to serve as a trustee in this case, since he served as examiner.

A trustee is needed, in part, to review and collect questionable payments that went to Harry Johnston, Summit’s former president, and to Harry’s son Grant Johnston, who is Summit’s current president, Yee’s report said.

The Johnstons say the report contains inaccuracies that could have been cleared up before the document was filed in court. Grant Johnston said Summit was given the 17-page report only hours before it was filed.

The Johnstons accused the government of going on a fishing expedition for wrongdoing after revelations about the firm’s tax problem.

When Summit filed Chapter 11 reorganization bankruptcy in February 2002, it owed more than $1 million in unpaid taxes, penalties and interest, according to claims by the state and federal government. Summit has since paid one-fifth of its bill to the Internal Revenue Service, the company has said.

Summit plans to respond to and rebut the examiner’s report at the upcoming hearing, Grant Johnston said Friday.

The company strongly objects to the examiner’s recent public comparison of Summit’s situation to that of Enron and WorldCom, describing it as “defamatory and damaging.”

“His comments may have caused a substantial and irrevocable economic loss to Summit,” Johnston said. Clients and vendors are showing concern, he said.

Even if Yee believed his comments to be accurate, “you don’t say something like that until you have proven they are true,” Johnston said.

The appointment of a trustee will only hurt Summit’s financial condition, and its creditors, because it will ward off customers, Johnston said.

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January 25, 2003

Court ousts Summit management

A trustee will reorganize the finances of the
Honolulu telecommunications firm

By Tim Ruel, Honolulu Star-Bulletin

A U.S. Bankruptcy Court judge has ordered the management of Honolulu telecommunications firm Summit Communications Inc. to be replaced by an appointed trustee who will attempt to reorganize Summit’s finances while it remains in bankruptcy.

In a hearing yesterday, U.S. Bankruptcy Judge Robert Faris rejected an assertion by management that Summit’s immediate ability to do business would suffer under a trustee. Faris said there were big risks in not appointing a trustee.

The decision brings to an end to a growing dispute between Summit’s management, some of its shareholders and its largest creditors – the state of Hawaii and the U.S. government – over the appointment of a trustee.

The argument goes back to revelations that the company once owed more than $1 million in back taxes, including penalties and interest. Taxes receive a high priority for repayment in bankruptcy. Since Summit’s assets would yield little in a liquidation, the only way to pay the taxes and other creditors is for the firm to stay in business.

The government has long sought the appointment of a trustee, alleging that Summit’s management is made up of essentially the same people that led the company to such a major tax problem.

Summit, which provides call-center and telephone services, was founded in 1996 by Harry Johnston, a former executive of Hawaiian Telephone, and Richard Ichikawa, a former engineer of Hawaiian Telephone.

The firm’s tax problems started in late 1997 and worsened over the next several years, though Summit’s board of directors was not told about the tax liability until late 2001, according to sworn court declarations by Ichikawa and Alan Brown, who were board members at the time.

Harold Johnston resigned as president and was replaced by his son, Grant Johnston.

Ichikawa left Summit’s board shortly before the company filed Chapter 11 reorganization bankruptcy a year ago, though Ichikawa still owns one-quarter of Summit. Ichikawa initially opposed the appointment of a trustee, because he was afraid the firm would be liquidated, but eventually changed his mind.

The government’s call for a trustee was backed by an examiner’s scathing report of Summit in December. The report said the company had kept poor track of its finances, even in bankruptcy and that several questionable thousand-dollar payments had been received by Grant and Harry Johnston, which should be investigated by a trustee.

Following disclosure of the examiner’s report, Summit convened a board meeting and discussed several options, including liquidation, though that was ruled out, Grant Johnston said.

In a court document, Summit said the examiner, Mark Yee, focused on matters that happened before Harold Johnston stepped down, which provided an inaccurate picture of Summit’s situation.

Summit said Yee’s report was based on a superficial review of records, in which the company was not given a chance to give its side of the story. Summit later deposed Yee.

In court yesterday, Summit attorney Steven Guttman said there was no major problem with how Summit presented its finances after filing for bankruptcy.

Judge Faris noted that the examiner did his job as spelled out in an agreement last year between Summit and the government.

In court, Summit conceded that it needs investment badly to stay in business, but said it had found an investor who was willing to put in $500,000.

Judge Faris pointed out that $500,000 would not likely cover the outstanding amount of the tax claims.

After yesterday’s court ruling against the company, Grant Johnston said, “Obviously we’re disappointed because I felt that our argument was compelling.”

The U.S. Trustee’s Office will appoint a trustee to Summit shortly, after talking with all sides in the dispute.

For more, GO TO > > > Act 221

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May 14, 2003

Summit loans questioned

Money loaned to the bankrupt firm’s CEO resulted in improper payments, a new lawsuit contends

By Tim Ruel, Honolulu Star-Bulletin

A politically adept telecommunications company financed primarily by the federal government has several connections to troubled firm Summit Communications Inc., including a $456,793 loan that is being questioned by a bankruptcy trustee.

Sandwich Isles Communications Inc., headed by Al Hee, loaned the money in March 1998 to Summit through Summit’s then-chief executive and part-owner, Harold C. Johnston, according to a lawsuit. In 2001, Harold Johnston received $8,400 in interest payments from Summit for the loan.

Harold Johnston denied loaning the money to Summit.

Summit filed Chapter 11 reorganization bankruptcy in February 2002, owing more than $1 million in federal and state taxes, including penalties and interest.

Because of revelations over Summit’s tax problem, the company’s management was removed by the U.S. Bankruptcy Court. Now, the trustee in Summit’s Chapter 11 bankruptcy case says Summit’s dependency upon Sandwich Isles was not disclosed to the company’s board of directors.

The trustee, Derek J. Sakaguchi, filed a lawsuit April 30 in U.S. Bankruptcy Court against Harold Johnston and his sons Grant Johnston and Chad C. Johnston, who were all officers of Summit.

The five-count suit said Harold Johnston misled some of Summit’s directors, investors and creditors about the relationship with Sandwich Isles, which allowed the company to continue to operate under the status quo when it was in trouble.

The lawsuit also accuses the Johnstons of receiving excessive compensation and benefits.

Harold Johnston denied the allegations, and accused the trustee of throwing out “the kitchen sink” in hopes of recovering any funds in Summit’s bankruptcy case.

Harold Johnston said the suit was based on erroneous information provided in part by a dissident Summit shareholder and company co-founder, Richard Ichikawa.

Hee, president of Sandwich Isles, and Harold Johnston confirmed that Sandwich Isles made a loan to Johnston. “Whatever happened between me and Sandwich Isles is a private and personal matter,” Johnston said.

They declined to answer any questions about the loan, including its status or its purpose.

However, the lawsuit said: “A loan for $456,793 to SCI made in March of 1998 was shown on SCI’s financial statements as a loan made by Harold Johnston. In fact the $456,793 was loaned and funded by Sandwich Isles.”

The loan was secured by a pledge of Harold Johnston’s stake in Summit, the lawsuit said. Harold Johnston owned 37.7 percent of Summit as of January 2003, while Ichikawa owned 25.1 percent.

The Johnstons battled with the federal and state government over various allegations after the company filed bankruptcy. An examiner appointed by the U.S. Bankruptcy Court issued a blistering report last year that said questionable payments went to Johnston family members.

The Johnstons said the report was inaccurate. The lawsuit appears to delve beyond the examiner’s report, although Harold Johnston took issue with the lawsuit as well.

Al Hee noted that Sandwich Isles has not been sued by the bankruptcy trustee.

“They can say whatever they want to say. Obviously, if we were germane to the filing … we would have been named in the filing,” Hee said.

Sandwich Isles is working on a $500 million fiber-optic cable telecommunications system that would link all Department of Hawaiian Home Lands residents who lack telephone service. Of that, $400 million will be paid through a loan from the U.S. Agriculture Department’s Rural Utilities Service, which will be almost entirely repaid by the Federal Communications Commission.

The federal funds are meant to pay solely for the construction of the telecommunications network, a Sandwich Isles spokeswoman said.

Al Hee is brother to former Office of Hawaiian Affairs Chairman Clayton Hee.

Robert Kihune, trustee of the Kamehameha Schools, is chief executive of Sandwich Isles.

Al Hee said the loan to Johnston did not involve any federal funds.

Claiborn Crain, spokesman for the Rural Utilities Services in Washington, D.C., said yesterday he was not aware of any problems with the Sandwich Isles’ federal loan.

Sandwich Isles has another connection to Summit Communications. Summit, founded in 1996, began providing technical services to Sandwich Isles around April 1998, the lawsuit said. That was around the same time that Sandwich Isles loaned the money to Johnston.

Also around that time, Johnston stopped spending time with Summit and became general manager for Sandwich Isles.

Sandwich Isles soon provided nearly half of Summit’s total annual revenue through the technical services arrangement, nearly $1 million a year, the lawsuit said.

But the money began decreasing “dramatically” in the fall of 2001, a few months before Summit filed for Chapter 11 reorganization bankruptcy, the lawsuit said.

Summit has other sources of revenue. Another large source was a contract to provide call-center services to the Hawaii Visitors & Convention Bureau, starting in May 2000, which brought $30,000 to $50,000 in revenue for Summit each month. The bureau said it is negotiating a new contract with Summit.

Clearly, the loss of income from Sandwich Isles was a blow to Summit. The contract expired in December 2002, according to previous statements by Summit.

When asked why Sandwich Isles cut back on its business with Summit, Hee said the decision was handled by his operations people. Hee declined to give their names.

After Harold Johnston began working for Sandwich Isles, Chad Johnston became responsible for day-to-day operations at Summit.

During this time, the company expanded too quickly, misused corporate funds, failed to pay bills and didn’t keep the board informed, the lawsuit said.

In a letter to Summit shareholders, Harold Johnston said he was not aware until January 2001 that Summit was not paying its taxes.

Harold Johnston said an outside accountant had been handling those affairs, and was terminated. He declined to name the accountant.

The court-appointed examiner has described Summit’s pre-bankruptcy books as worthless.

Today, Summit continues to operate as a company while in bankruptcy, and has about 23 employees. Summit provides local and long-distance telephone services as well as call-center services.

“We will have our day in court and the truth will come out,” Harold Johnston said.

Johnston said he accepts some responsibility for Summit’s financial problems, but he did not commit fraud or other misdeeds.

The lawsuit seeks repayment of the $8,400 in interest that Harold Johnston allegedly pocketed from the loan to Summit, as well as repayment of a $50,245 loan Summit allegedly made to Harold Johnston. The lawsuit also seeks actual damages and punitive damages.

For more, GO TO > > > Act 221; Vultures of the Sandwich Isles; Woo vs. Harmon

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July 9, 2003

Audit spurs criminal probe

The Attorney General’s Office is investigating issues raised at the Hawaii Visitors & Convention Bureau

By Tim Ruel, Honolulu Star-Bulletin

The state Attorney General’s Office has opened a criminal review into points raised by the critical audit of the Hawaii Visitors & Convention Bureau.

The criminal justice unit of the Attorney General’s Office is looking into the matter, said Linden Joesting, a deputy attorney general. Joesting declined to say what aspects of the audit are being probed, because it’s an internal matter.

The Hawaii Tourism Authority asked the Attorney General’s Office to review findings of the state audit, which was released last week. The audit faulted the authority for lax oversight of the bureau’s $151.7 million in state contracts to market Hawaii to travelers. The authority was created in 1998 to contract with the Hawaii visitors bureau, a private agency funded mainly by taxpayer dollars.

On Thursday, bureau officials admitted the organization had done some things wrong, none intentionally. Tony Vericella, president and chief executive of the visitors bureau, said he had paid back $670 in state-funded personal expenses, and apologized.

The bureau said it never should have paid invoices forwarded by Joe Blanco, Gov. Ben Cayetano’s tech czar, which bureau Chairman Tony Guerrero described as “wrong, wrong, wrong.” The audit questioned the arrangement as a way of evading the state procurement code. Blanco denies the accusation.

The bureau will no longer allow Japan Airlines to pay for the benefits of bureau Vice President Kiyoshi Mukumoto, which the audit said carried the appearance of a conflict of interest.

And the bureau said that, if it could do things over again, it would have put a Taiwan promotional contract out to bid, rather than awarding it to a company run by Wei-Wei Ojiri, who was a bureau vice president at the time. The bureau said Ojiri had technically resigned before the contract was awarded to her company.

Guerrero could not be reached for comment yesterday….


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Act 221

Aloha, Harken Energy!

Apollo Advisors

Arbitrate This!

A Connecticut Yankee in King Kamehameha’s Court

The Bankruptcy Buzzards

Birds that Drink from Cesspools

The Blackstone Group

Broken Trust

Buzzards of Paradise

Claims By Harmon

Dirty Money, Dirty Politics & Bishop Estate

Flying High In Hawaii

Global Crossing

Investigating Investcorp

Pointing the Finger at WorldPoint

Predators in Paradise

RICO in Paradise

The Indonesian Connection

The Morgan, Lewis & Bockius Report

The Sinking of the Ehime Maru

Tracking The Murdoch Flock

Vampires on Gilligan’s Island

Woo vs. Harmon

Yakuza Doodle Dandies



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Last update June 14, 2006, by The Catbird Seat.