Posted on: Wednesday, October 22, 2003

Former insurance commissioner denies knowledge of alleged fraud

By David Waite
Advertiser Courts Writer

Former state insurance commissioner Linda Chu Takayama yesterday denied any knowledge of the alleged theft of up to $12 million from two liquidated insurance companies by attorney Jerrold Chun.

"Jerry was once my partner, but we have not been on good terms since my departure from the firm in 1999," Takayama said in a written statement.

Senate Minority Leader Fred Hemmings on Monday said that there are "serious questions" about the role Takayama, a Democratic Party insider, played in the liquidation of the two bankrupt insurance companies after Hurricane Iniki.

J.P. Schmidt, the insurance commissioner under the Republican administration of Gov. Linda Lingle, agrees with Hemmings, even though the liquidation was unusually successful and the state stands to gain a windfall of up to $15 million.

The liquidation was handled by Chun, who last week was arrested on three counts of felony theft and allegations that he diverted more than $12 million from insurance claims and creditor settlements resulting from the 1992 hurricane that devastated Kaua'i.

Takayama, as insurance commissioner, won court approval in 1993 to assign the liquidation of Hawaiian Underwriters Insurance Co. and United National Insurance Co., subsidiaries of Hawaiian Electric Industries' subsidiary The Hawaiian Insurance Group (HIG), to the McCorriston Miho Miller Mukai law firm, where Chun was assigned to handle the case, said Hemmings, R-25th (Kailua, Waimanalo, Portlock).

Takayama, an attorney, resigned as insurance commissioner in 1994 to become deputy director of the Department of Commerce and Consumer Affairs.

She and Chun later started the law firm, Chun Chipchase Takayama Nagatani, taking the liquidation case with them, said Schmidt, who has filed a civil claim against Chun seeking the $12 million for the state. That case doesn't name Takayama.

Takayama said that after Hurricane Iniki, HIG was unable to pay more than $300 million in claims.

She said she created restructuring and rehabilitation plans for the company that led to the eventual sale of HIG and the satisfaction of nearly all outstanding claims through the affiliated companies of HUI and UNICO, under the supervision of the Circuit Court.

Takayama said the Office of Disciplinary Counsel found no conflict when it considered the situation seven years ago.

She said she knew nothing of Chun's alleged scheme and will cooperate with the insurance commissioner's investigation of Chun's actions.