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The Honolulu Advertiser
Posted on: Thursday, August 30, 2007

Subpoenas planned in probe of Hawaii agency

By Derrick DePledge
Advertiser Government Writer

A state House and Senate investigative committee plans to subpoena Title Guaranty of Hawai'i executives and ask them whether the company has had improper access or influence with the state Bureau of Conveyances.

The committee, which is examining mismanagement at the bureau, agreed yesterday to subpoena Title Guaranty president Michael Pietsch and three other executives along with all contracts, agreements, invoices and other proposals between the company and the bureau over the past 25 years.

The committee also agreed to subpoena the executive director of the Hawai'i Land and Title Association and a former Island Title executive who has described preferential treatment and access by title companies at the bureau.

"I'm hoping we find some clarification, some clarity, some questions answered," state Sen. Jill Tokuda, D-24th (Kailua, Kane'ohe), the co-chair of the committee, said of the rare legislative subpoenas of private executives.

Title Guaranty has denied it received any preferential treatment at the bureau, which records real estate transactions.

"Title Guaranty looks forward to working with the committee in understanding the real estate industry, and the role title and escrow companies play in supporting the consumers, lenders and attorneys in real estate transactions," the company said in a statement yesterday.

The committee is investigating several potential problems at the bureau, including the security of land records and the lack of contracts with vendors or subscribers to bureau services.

The committee hopes to complete its work before the end of the year and make recommendations to the Legislature on how to improve the bureau.

Separate investigations are being done by the state Attorney General's office and the state Ethics Commission.

Yesterday, Marion Higa, the state auditor, told the committee the bureau had prepared a draft agreement setting guidelines for title companies and others who have been getting private, faster computer access to land records.

But she said the agreement was never finished and little formal oversight of the private access exists.

Bureau delays in indexing documents, which are as long as three months, had caused concerns within the title insurance industry about the bureau's release of daily filings.

Title Guaranty offered a software program to help the bureau release the documents to title companies and others each day instead of waiting until the indexing was completed.

The software was installed on a state computer without a contract and was in use until the computer was seized by the Attorney General's office this year as part of its investigation into bureau operations.

"Had that not been available the industry could have come to a screeching halt," Higa said of the improved access to documents.

Title Guaranty and other title companies have their own, or shared, indexing systems, so they can process the raw filings without waiting for the bureau's indexing.

The title companies and others have been receiving the documents from the state through free DVDs since the Attorney General's office removed the computer.

Tokuda said the existence of the draft agreement at the bureau confirms her suspicions that there were concerns about how title companies and others might use the documents.

"Right now, those documents are being basically thrown out the door for free," she said. "I have major concerns about that."

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.