Fourth Status Report – January 9, 2006
January 9, 2006
FOURTH STATUS REPORT
Here is an update on the HICP case. Although the court filings do not reflect much activity, there has actually been quite a large amount of work which has and is being done on a daily basis. We now have over 220 complaints from students who enrolled and attended and who applied, were accepted, but deferred, thereby losing their seat deposits. Because of the large number of victims in this case, all future status reports will be posted online in lieu of mailings.
Settlement Discussions . There have been no settlement discussions since September.
Receivers’ Activities . In late September, the co-receivers appointed by the court took possession of all of HICP’s leased spaces in the Campbell and Bank of Hawaii Buildings in Kapolei. All of the books, papers and documents were boxed up and are now being either by the receivers or in our offices. All of the computers were “ghosted,” i.e. their contents copied and saved by the Receivers. In November the receivers held an auction of the property and equipment. They have, as a result, returned the leased spaces to the landlords. They also took possession of the company car and are in the process of selling it. In addition, they have, with our assistance, located a number of small bank accounts on the mainland, have frozen them and are taking possession of the funds therein. HICP had a few positive balances on various accounts payable and those funds are being turned over to the receivers. The Kapolei condominium owned by Ms. Criswell has been sold, pending court approval. The receivers, with the assistance of their legal counsel, are negotiating a return of the $200,000 deposit paid to purchase the 3.7 acre parcel of land in Kapolei. They are reviewing the mainland properties bought by Monroe and Criswell to determine whether there is any equity in them. In addition, the receivers are reviewing financial records to determine whether there are any other assets to be pursued and we will jointly pursue them.
New defense counsel . In December, the Honolulu law firm of Ayabe, Chong, Nishimoto, Sia and Nakamura entered a formal appearance in our case on behalf of the Defendants Pacific Educational Services Company, Monroe and Criswell. They have been appointed by an insurance company, Executive Risk Indemnity.
Insurance . HICP had obtained at least three different insurance policies—each from a different company and each covering a different type of risk. The policy issued by Executive Risk Indemnity is what is called a “director and officer” liability policy. Executive Risk has filed its own lawsuit in federal court here in Honolulu seeking a ruling that it is not obligated to provide coverage for the claims we have asserted. We have asked permission from the federal court to intervene in that case so that we may argue that there is coverage. We hope to learn whether the federal court will permit us to intervene in March. The policy has a coverage limit of $1 million, but any amounts paid to the Ayabe firm to defend our case would decrease that amount. At this point it is too early to determine whether we will be allowed to appear in the federal case, whether there is any coverage under this policy and, if so, how much. The other two insurance companies may file similar suits as well.
Transcripts . Amongst the many boxes of documents which we have been reviewing the last three weeks, we have located what appear to be “unofficial” transcripts—which is to say, they are not printed on HICP letterhead nor are they authenticated by a dean, registrar or other school official. I do not know if they are of any value to you, but if you would like a copy of your transcript, please contact investigator James Dooman.
IRS 1099 forms . The receivers will be sending out 1099 forms for employees so that they may complete their tax returns.
What Happens Next? We are currently completing the review and copying of forty two boxes of documents taken from HICP’s premises. When we are finished we will turn them over to the new defense lawyers. We will then begin reviewing an additional ten boxes of financial records and the electronic records. Following that we will begin the process of questioning various witnesses under oath. This will take months and months of time. Once we have learned what these witnesses know, we will then begin the legal process to move the case forward and to obtain a date for a trial. My best estimate is that this could all very well take two years or more.