Posted at 7:39 p.m., Wednesday, May 9, 2007
State will auction assets of cemetery owner Rightstar
Associated Press
The corporate assets of one of Hawai'i's largest funeral service operations will be sold at auction by the Circuit Court under an agreement announced today by state Attorney General Mark Bennett.The agreement will help secure the financial stability of the funeral and cemetery trust funds of the RightStar corporations in Hawai'i, Bennett's office said.
"This is an excellent agreement that will help protect Hawai'i consumers," Bennett said.
RightStar owns and operates Valley of the Temples on Oahu; Maui Memorial Park; and Homelani and Kona Memorial parks on the Big Island. The company purchased the cemeteries in 2001.
In April 2006, the state sued several RightStar officials and Vestin Mortgage Inc., the company's mortgage holder, in connection with a shortfall of more than $20 million missing from the funeral accounts of as many as 50,000 customers.
The state claimed RightStar improperly removed millions of dollars in trust fund assets in 2002 and transferred the money to operational accounts.
The agreement, which includes Vestin and the funds' current trustee, calls for the assets to be auctioned off for a minimum of $25 million.
It mandates $9 million from the proceeds will provide additional funds to the pre-need and perpetual care trust funds. In addition, 75 percent of any additional net proceeds from the foreclosure sale and litigation will go to the trusts until they receive an additional $11 million.
The new operator must honor all contracts for pre-need services made with RightStar or its predecessors, and perpetual care of the cemeteries must be provided.
The agreement creates a platform for the state, the trustee and affected creditors to continue to pursue civil litigation against those responsible for RightStar's fiscal problems, state officials said.
