Fighting over finances tears a family apart

By Dan Nakaso
Advertiser Staff Writer

Marvin Fong and his wife, Sandra Au Fong, say the lawsuits against Marvin Fong's family have hurt. Yet they are determined to keep the companies they run sound. At the Market City Shopping Center, Marvin is president and chief operating officer. Sandra is senior vice president/secretary. Eugene Tanner • The Honolulu Advertiser

His wife, Sandra Au Fong, wrestles with her own thoughts at night by sipping Sleepytime Herb Tea.

Marvin and Sandra swear that every phone call, letter and e-mail they have received over the past few months has been sympathetic and supportive since their legal troubles with Marvin's father, Hiram Fong Sr. — the 96-year-old, former U.S. senator from Hawai'i — became public.

But they also hear second- hand what others are saying about them:

That Sandra, a 1969 Chinese Chamber of Commerce Narcissus Court princess, is manipulating her 55-year-old husband to wrest control of the family business.

And that Marvin's lawsuits against his father's and brother's business dealings are fueled by jealousy toward his oldest brother, Hiram, 63. "Junior," as Hiram is called, is a former state legislator and Honolulu city councilman whom Marvin repeatedly says, "is my father's favorite."

The truth, Marvin and Sandra say, is the lawsuits have wounded them and their family. It's tragic, they say, that their two sons haven't seen the grandfather they call "Gung Gung" since the youngest graduated from Punahou School last spring.

"We have gone through hell," Marvin said. "My family has really put a lot of stress on us."

On Thursday, Marvin himself increased the tensions by filing a Circuit Court lawsuit that alleges his father and brother earned unspecified payments from a "scam" to invest $1 million in a Laotian gold mine in 1997. The suit also alleges that Sen. Fong, Junior and Marvin's other older brother, Randy, granted themselves personal loans from the family owned Ocean View Cemetery.

The suit seeks to remove the Ocean View Cemetery board of directors for failing to hold Sen. Fong and Junior "accountable or take action against them."

In another Circuit Court suit filed in October, Marvin alleged that his father and mother, Ellyn, reneged on an agreement to option their stock in another family company — Market City Ltd. — to Marvin and Sandra. The stock plan, Marvin said, was his father's idea and was intended to raise cash for the senator's financial problems.

Hiram and Ellyn Fong countered in court that they either did not sign the agreement or did it without understanding the terms.

In December, minority shareholders of Market City filed a lawsuit alleging that Marvin and Sandra have mismanaged the Market City Shopping Center.

Marvin and Sandra know their latest lawsuit will only further deteriorate the relationship between them and Sen. Fong, the country's first Asian-American senator and a self-made millionaire who filed for bankruptcy in March.

They also know that Hiram Fong's deteriorating health has generated good will toward him and sympathy for his financial situation.

But they maintain that they have a financial responsibility to the three companies that both Marvin and his father play a role in: Market City Ltd., Finance Factors Ltd. and Ocean View Cemetery Ltd.

Worked too hard to give up

Marvin and Sandra believe that history eventually will prove that their approach has been right. They cite the 100 percent occupancy of the 87,000-square-foot Market City Shopping Center in Kapahulu that they run together.

And they say they never once considered giving up, rather than fight Marvin's family.

"We worked too hard, 19 years," Sandra said, "and we've done nothing wrong."

Marvin carries the titles of president and chief operating officer of Market City, Ltd., which owns the shopping center, a retail center in Oregon and has a 50 percent interest in Hilo's historic Kress Building. Sandra is listed as Market City's senior vice president and secretary.

The shopping center is home to Hawai'i's first and highest-volume Foodland Super Market, Blockbuster Video, Ben Franklin, Fun Factory, smaller retailers and a wide variety of restaurants that Marvin and Sandra eat at daily.

By contrast, they say, Sen. Fong's business dealings have led to a series of financial problems that include his bankruptcy filing, a foreclosure complaint against Senator Hiram Fong's Plantation & Gardens attraction park in Kahalu'u, forfeiture of a Kahalu'u home because of mortgage problems and his resignation from the Finance Factors Ltd. company that Fong helped found in 1952. Junior also filed for bankruptcy in 2001.

Hiram, Jr. said Friday that the family would not comment for a story about Marvin and Sandra.

The first signs of business problems between father and son began in 1978 when Marvin graduated from California Western School of Law in San Diego, moved back to Hawai'i and got involved with the family's real estate investment group. Rent had been collected on the properties, Marvin said, but wasn't being paid to the banks.

Turned retail site around

In 1984 Sen. Fong asked Marvin to manage Market City. The shopping center was developed out of a 3.5-acre vegetable patch and overgrown ditch in 1948 by Hiram Fong, Mun On Chun and brothers K.K. Chang, Y.K. Chang and Charlie Chang, all friends of Chinese descent who bought the property for $100,000.

By 1984, Market City was in trouble. Timber Town, a wholesale and retail lumber and home products store, pulled out of the 50,000-square-foot site that dominated the shopping center. When Timber Town left, so did most of the shopping center's cash flow.

"Nobody knew what to do," Sandra said. "The board just wanted to collect income."

It took Marvin and Sandra half a year just to clean up the shopping center and $100,000 to rebuild it to accommodate smaller businesses and begin a search for a new anchor tenant. They took courses in shopping center management and even attended sessions as far away as Michigan State University.

Marvin took over management of Market City when no one else in the family wanted it, he said. Three years later, he said the center became profitable and has grown steadily since — although he wouldn't disclose revenues.

"My dad gave me a chance and I didn't know if I could do it," Marvin said. "But I did."

He and Sandra won't say how much they earned in salary. But a secretary who once asked for a raise would have made more money than Sandra, she said.

"You know how families are," Marvin said. "They want you to work for free."

In November 2000, Marvin took over as president from his father.

"The community can judge what our track record has been," Marvin said. "They also can see what my father and brother have done. ... We're doing what we're doing to make the company survive, or else my father would come in and raid it. He thinks of it as his personal piggy bank to pay his personal debts. But that's not right. He doesn't own the company. He's just a minority shareholder."

As Market City's occupancy and revenue picked up, Sen. Fong's business problems seemed to increase, Marvin said.

The senator started the plantation that carries his name. An idea quickly failed for a $3.6 million, four-tiered barge and showboat restaurant called The Oceania on Honolulu's waterfront.

"My father's financial problems started with Oceania and the farm," Marvin said. "It was one thing after another. He owed money to all of the banks."

The big rift began in 1997 when Marvin said his father requested $1 million from each of the three companies' boards to invest in the Laotian gold mine.

"Even if there was gold," Marvin said, "the government wouldn't let us take it out."

Marvin said he was able to block each of the proposals except for the one before Ocean View Cemetery board, which is chaired by his father. The company owns a cemetery near Kahala Mall, among other assets, and the board includes Marvin's twin sister, two older brothers and a cousin.

To raise the $1 million, Marvin said the Ocean View board mortgaged the Ka'ahumana Building in 'Aiea that it had owned outright.

"Since 1997, there's been no gold, no money and now every month they have to pay that mortgage," Marvin said.

The gold mine has been one more thing to fight about at contentious board meetings, where Hiram Fong, Marvin and Sandra sometimes sit elbow-to-elbow.

Never liked to fight

In a way, Marvin said, it's ironic that the family business is causing so much stress.

Marvin clerked for Supreme Court Chief Justice William Richardson and worked for his father's law firm between 1978 and 1979. But Marvin chose business over law because he didn't care for the adversarial life of an attorney.

"I don't like to fight with people," he said.

Marvin prefers to remain in the background, his personality more suited to computer chess than confrontation, he said. By contrast, Marvin said, "Sandy's the outgoing type."

Their families knew each other for years and attended the same church, the First Chinese Church of Christ. Sandra's grandfather, Charles Bao, hired Hiram Fong Sr. as his attorney. Sandra's aunt, Patricia Bao — Chinatown's first Narcissus Queen — had been trying to introduce Sandra to Marvin for years.

During Sandra's time as a Narcissus princess, Marvin drove the Narcissus court to functions but never met her.

They were finally introduced in 1971 at a Cherry Blossom Festival dance. This July, they'll celebrate their 29th anniversary.

It'll be a muted celebration, just like all of the other holidays, birthdays and big events of the past year that uncharacteristically have gone on without Marvin's father, mother and brothers and sisters.

Despite all of the tensions since the lawsuits began, Sandra said their marriage has become stronger.

"We can go through anything now," she said.

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.