Posted on: Tuesday, August 3, 2004
No-contest plea accepted in insurance theft
By David Waite
Advertiser Staff Writer
A Honolulu attorney accused of orchestrating a scheme to steal nearly $8 million while liquidating two failed hurricane insurance companies pleaded no contest in circuit court yesterday to 14 criminal counts, including first-degree theft, unlawful operation of a business and money laundering.
Defendant Jerrold Chun then asked Circuit Judge Derrick Chan to defer accepting his no-contest plea at a hearing set for Sept. 29, which would allow Chun to avoid a permanent criminal record provided he abides by a number of conditions similar to probation for a set period of time.
The judge allowed Chun to plead no contest despite objections from deputy attorney general Mark Miyahira, who said Chun should have been made to plead guilty given the nature of the charges against him, the amounts involved and the fact that Chun is a lawyer.
"The defendant's misconduct reflects poorly on the entire legal community and helps to support the view of a portion of the public that believe there is something wrong with the judicial system," Miyahira said in a written statement submitted to the judge. "If the court does not require him to enter a plea of guilty in a case involving the theft of a large amount of money and the abuse of a position of trust, it will send a message to the community that (lawyers) ... shouldn't have to admit their guilt about their own crimes."
But Chun's attorney, Brook Hart, said Chun took over two companies that faced $70 million in deficits from claims for damage by Hurricane Iniki in 1992 and spent the next decade working with the companies to the point that they eventually showed a $20 million surplus.
Chun essentially paid himself an "unauthorized success fee," or a bonus that he may have been legally entitled to had he gone through the proper channels, Hart said.
Miyahira painted a far different picture, saying Chun billed the two faltering insurance companies $250 an hour for his services and racked up $279,450 for his services between January and August 2003 alone. Chun used three transactions in June and July 2003 to amass the $8 million by requesting more money than was needed to pay off claims and then pocketing the surplus.
After the court hearing yesterday, Hart said Chun was suffering from a "psychological problem," brought on in part from medicine used to treat a back ailment, when those claim settlements took place last year.
He said Chun was questioned about the transactions almost within a week's time and repaid $3.4 million of the $8 million that went directly to him almost immediately.
Hart said Chun has cooperated fully with state investigators trying to recoup the remainder of the money, which went to two other insurance company executives.
Reach David Waite at dwaite@honoluluadvertiser.com or 525-8090.
