Ex-trustee's sister guilty
By David Waite
Advertiser Court Writer
The bankruptcy fraud trial of former Bishop Estate trustee Lokelani Lindsey is set to begin in Las Vegas next month, even though her sister, Marlene Lindsey, pleaded guilty yesterday to a tax charge and agreed to testify for the prosecution.
Advertiser library photo • May 7, 1999
Kathleen Sulmonetti, a special agent and public information officer for the IRS' Criminal Investigation Field Office in Portland, Ore., said Marlene Lindsey agreed to plead guilty to filing a false federal income tax return for 1995.
Lokelani Lindsey was ousted as a Bishop Estate trustee in 1999.
As part of a plea agreement with federal prosecutors, Marlene Lindsey agreed to testify against her sister at Lokelani Lindsey's bankruptcy fraud trial March 26 in Las Vegas.
Sentencing for Marlene Lindsey is set for June 24 in Honolulu before federal judge David Ezra. She faces maximum penalties of three years in prison and a $250,000 fine.
Marlene Lindsey was indicted in Honolulu on Dec. 20, 2000, and Lokelani Lindsey a week later. The sisters were accused of conspiracy and money laundering in an attempt to hide assets from bankruptcy trustees and creditors in Marlene Lindsey's bankruptcy case.
The government will drop the conspiracy and money laundering charges against Marlene Lindsey in exchange for pleading guilty to the false filing and agreeing to testify against her sister, Sulmonetti said.
Honolulu attorney William Harrison, representing Lokelani Lindsey, said Marlene Lindsey's guilty plea was expected and would not affect Lokelani Lindsey's plans to go to trial.
"We always knew (Marlene Lindsey) had tax problems and was cooperating with the prosecution since day one of the indictments," Harrison said. "The tax thing was something the government was holding over (Marlene Lindsey's) head."
The tax charge filed yesterday against Marlene Lindsey, a beautician, claimed she reported $38,255 in adjusted gross income for 1995 when the true figure was $175,763.
Sulmonetti said Marlene Lindsey admitted as part of her guilty plea that she had acquired 100 shares of stock in Atlantic Pacific International Services Inc. in 1994 but failed to disclose the stock holding when she filed for bankruptcy on Jan. 20, 1995.
The stock was later sold, and Marlene Lindsey failed to report that she received more than $100,000 from the sale, according to her guilty plea.
Lokelani Lindsey and three other Bishop Estate trustees were ousted in 1999 after state and federal investigations found evidence of mismanagement and abuse of power. A fifth trustee resigned. The multibillion-dollar charitable trust, now called Kamehameha Schools, runs Kamehameha Schools for children of Hawaiian ancestry.
U.S. District Judge Helen Gillmor agreed with Harrison last summer that the overwhelming negative publicity Lokelani Lindsey had received in the last four years because of the Bishop Estate/Kamehameha Schools controversy made it virtually impossible to ensure a fair trial for her in Hawai'i. She granted Lindsey's request for a change of venue.
Harrison said a hearing is set for March 5 before Ezra in Honolulu on Lokelani Lindsey's request to dismiss the charges against her based on the statute of limitations. Harrison claims the offenses were alleged to have happened in 1995, and would have expired under a five-year statute of limitations.
Reach David Waite at dwaite@honoluluadvertiser.com or 525-8030.
