honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser

Updated at 2:25 p.m., Thursday, October 17, 2002

Ex-trustee, sister sentenced in Las Vegas

Associated Press

LAS VEGAS – A federal judge today sentenced former Bishop Estate trustee Lokelani Lindsey and her sister to six months each in federal prison for a 1995 bankruptcy fraud scheme.

U.S. District Court Judge David Ezra denounced Lindsey’s “misguided sense of greed and arrogance” in the fraud and also required her to undergo three years of supervised release and pay $35,000 in restitution.

Lindsey, appearing in court separately from her sister, apologized to the judge through tears.

“I just want to say how sorry I am,” she said, her voice breaking. “All I want to do is to stay home and take care of my husband.”

Ezra granted Lindsey six months to care for her disabled husband, Stephen, who is scheduled to have surgery next month. She is to report June 2 to a federal women’s prison camp in Dublin, Calif.

Prosecutors said Lindsey helped her bankrupt sister Marlene Lindsey hide stock earnings in 1995 and took $35,000 for her efforts, all while she was earning $835,000 a year as a Bishop Estate trustee.

“The crime reflected a certain amount of arrogance on their part,” said Assistant U.S. Attorney Michael Seabright.

Marlene Lindsey pleaded guilty in February to filing a false income tax return and was to testify against her sister. Lokelani Lindsey pleaded guilty to two felony money laundering charges on the day her trial was to begin in June.

Ezra said that without the plea agreements he would have issued longer prison sentences.

Marlene Lindsey was also ordered to a year of probation and to pay a $1,000 fine. She must report by Jan. 6 to the same prison camp.

Marlene Lindsey failed to report $136,908 on her 1995 tax return. She filed for bankruptcy that year when her hair styling business failed, and prosecutors say she and her sister concealed $100,000 by transferring stock in Lokelani Lindsey’s name to a third party.

“We’re disappointed with the sentence. But we understand the significance of the case,” said Marlene Lindsey’s lawyer, William Domingo of Honolulu.

The case was moved from Honolulu to Las Vegas after a federal judge found Lokelani Lindsey could not get a fair trial in Hawaii. Ezra is based in Honolulu.

A judge removed Lokelani Lindsay from her $1 million-a-year post as trustee in the Bishop Estate in Hawaii three years ago after finding she had misused and mismanaged trust property.

The $6 billion trust was established by the 1884 will of Princess Pauahi Bishop to educate children of Hawaiian ancestry. The Bishop Estate changed its name to Kamehameha Schools in 2000.

Ezra emphasized in court today that Lindsey’s position as former trustee had no bearing on the fraud case or her sentencing.