By Timothy Hurley
Advertiser Maui County Bureau
WAILUKU, Maui — Two dozen investors in a bogus Maui land deal have new hope for getting their money back following a recent ruling by the Hawai‘i Supreme Court.
The high court on Feb. 22 ruled that the general partners in the real estate investment are just as liable as the lead partner, Kihei real estate broker William Weimer, who was sentenced to 30 months in prison after being convicted on federal charges of mail fraud and filing false income tax returns.
He had admitted diverting money from two partnerships to his own use.
The investors, most of them Maui residents, lost more than $500,000 in the deal. The victims had been stymied in their attempts to get their money back.
The investors filed civil complaints in Maui Circuit Court against Weimer and five other men who were involved in a joint venture between Kailua Estate Partners and Kailua Partners.
The partners include Maui contractors B.J. Kim, Mickey Hewitt and Richard Jorgensen, and businessmen Gordon Au and Ross Kaaa.
Jorgensen on Monday filed a motion for reconsideration of the Supreme Court decision, arguing that a joint venture did not exist.
The partnership solicited investments in 1991 and 1992, describing plans to develop a 29-acre residential project in Kailua, East Maui.
The subdivision was never built, and the landowners withdrew from an agreement to sell in February 1992.
The investors, including several retirees who lost their life savings in the deal, never got their money back.
Weimer, who was sentenced nearly two years ago, admitted collecting $700,000 from the two partnerships, some of which he diverted to his own use.
According to records in the case, other partners received payments from the investment money.
The state Securities Commission also charged the partnerships with committing fraud.
In a 1999 ruling, commission referee Ryan Ushijima found that Weimer misrepresented the investment to his victims, never registered the partnership and never reported the sale of securities, which amounted to securities fraud. Similar charges were filed against Kim, and both were fined $50,000.
Au was fined $5,000 by the state Securities Commission, while Hewitt, Jorgensen and Kaaa were sent notices advising them to conform their conduct to the state’s securities laws.
Ushijima ordered that the investors be repaid, with 10 percent interest, but the victims still needed to pursue a court order for repayment.
Wailuku attorney Joy Yanagida, representing several of the investors, said the Supreme Court ruling gives her clients new legal footing to win repayment.
It also overturns lower-court orders requiring her clients to pay legal fees to the partners.
Yanagida yesterday said the state action taken against the partners was not adequate, and she urged the state Securities Enforcement Unit to reopen the case.
But senior securities enforcement attorney Patricia Moy said the case is closed and probably will not be reopened unless new facts are discovered.
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