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The Honolulu Advertiser
Posted on: Friday, May 2, 2003

Fong family entangled in another lawsuit

By Dan Nakaso
Advertiser Staff Writer

The ongoing legal battles between former U.S. Senator Hiram Fong and his youngest son escalated yesterday when Marvin Fong alleged in a lawsuit that his father and brother invested $1 million from one of their family-controlled companies into a Laotian gold mine that turned out to be what the suit describes as a "scam."


The 1997 gold mine investment "was clearly a scam, fraud and Ponzi scheme," according to the lawsuit filed yesterday in state Circuit Court. The investment generated no return but gave Hiram Fong Sr. and Hiram Fong Jr. unspecified payments, according to the suit.

Although most of the actions cited in the lawsuit occurred in the 1990s, Marvin Fong said yesterday that he filed suit to protect what assets remain of the family-owned Ocean View Cemetery. "It's just the right thing to do," he said. "We have exhausted all of our negotiations. If we let it continue, they're going to drain it. They've drained it already but there's still some equity left. We've got to protect the shareholders."

Marvin and other minority shareholders of Ocean View Cemetery also alleged in the suit that Hiram Fong Sr. and Hiram Fong Jr. and Marvin's other older brother, Rodney, granted themselves personal loans that totaled $682,533 in 2001.

They asked the court to remove the current board of trustees — specifically Rodney Fong, cousin Bernard Fong and Marvin's twin sister, Merie-Ellen Fong Gushi. They could not be reached for comment last night.

"Because of their close family relationship with Hiram L. Fong Sr. and Hiram Fong Jr.," according to the suit, "Bernard Fong, Rodney Fong and Merie-Ellen Fong Gushi will not hold Hiram L. Fong Sr. and Hiram Fong Jr. accountable or take action against them."

The suit is the latest litigation involving Marvin and his family over control of various Fong-family assets. The Fongs have interests in at least three separate businesses and boards — Market City Ltd., which owns the Market Center Shopping Center managed by Marvin and his wife, Sandra Au Fong; Finance Factors Ltd., which Sen. Fong helped found in 1952; and the Ocean View Cemetery Ltd., whose holdings include the Ka'ahumanu Building in 'Aiea, a 50 percent interest in the historic Kress Building in Hilo and the Ocean View Cemetery near Kahala Mall.

Sen. Fong, 96, is a self-made millionaire who became the country's first Asian-American senator. Hiram Fong Jr., 63, is a lawyer and former state legislator and Honolulu City Councilman. They were identified throughout the suit but not named as defendants, according to the suit, because they are protected by their individual bankruptcy filings.

Sen. Fong, who is in failing health, filed bankruptcy in March. Hiram Fong Jr. filed for bankruptcy protection in 2001.

Hiram Fong Jr. said yesterday that neither he nor his father would comment until they have seen the lawsuit. "Oh, my goodness," Hiram Jr., said when told of his brother's lawsuit. "What a guy. Oh, boy."

Marvin Fong said in an interview that his father approached all three boards in 1997 requesting $1 million each for the Laotian gold mine. The plan was the idea of a friend of Sen. Fong's for more than 30 years who was part owner of a company trying to develop the gold mine, according to the lawsuit.

Marvin said he successfully argued against the plan before two of the boards. "Our expertise is in real estate," he said in an interview. "We know nothing of gold mines."

But the Ocean View Cemetery board invested the $1 million and financed it by mortgaging the Ka'ahumanu Building through Finance Factors. At the time, the Ocean View Cemetery board consisted of Hiram Fong Sr., Hiram Fong Jr., Bernard Fong, Marvin Fong and Douglas Hee.

Marvin was the only director to vote against the investment, according to the suit.

The Ocean View Cemetery board "knew or should have known that (the friend) planned to use the ... investment to pay off other investors in that scheme rather than use it for working capital and that the Laos Gold Mine was essentially a Ponzi scheme," the suit says.

The suit also alleges that in 1997 a slate of new board candidates that included Marvin Fong won election to the Ocean View Cemetery board. But Hiram Fong Sr. conducted his own tally of the votes, according to the suit, and the old board retained control.