After accusing each other of fraud and ineptitude, the state Attorney General's Office and Las Vegas-based lender Vestin Mortgage Inc. have agreed to settle their differences and move forward with an auction of the assets of the scandal-plagued RightStar group of cemetery and funeral services companies here.

The agreement, which ends a complex legal dispute between the parties which began in 2004, sets a minimum auction price of $25 million and requires that at least $9 million of the proceeds go toward restoring "pre-need" and "perpetual care" trust funds maintained by the RightStar companies for the benefit of an estimated 50,000 customers.

Another $11 million would go back into the trusts if it is recovered from continuing litigation against other parties, according to the agreement.

The state has previously alleged that between $20 million and $30 million was improperly removed from the RightStar trusts by company officials after they bought the companies in 2001.

Vestin financed that purchase and filed a foreclosure action against the Rightstar companies in 2004 after they defaulted on payment of more than $40 million in loans. Yesterday's agreement said Vestin is now owed nearly $50 million.

Attorney General Mark Bennett filed another suit in 2004, accusing RightStar owners and others, including former Hawa'ii Gov. John Waihee, of improperly allowing the removal of tens of millions of dollars from the trust funds. Bennett's office later accused Vestin of misconduct for requiring, as a condition of their loan, that another $21 million in RightStar trust funds be placed in a real-estate investment program operated by Vestin.

Yesterday's agreement stipulates that the $21 million investment will remain with Vestin until it matures. Bennett said yesterday that the investment has lost approximately 20 percent of its value, although Vestin officials have previously noted that the investment has been regularly paying dividends.

In a press release, Bennett said the agreement "will help secure the financial stability of the funeral and cemetery trust funds" at RightStar.

The agreement "requires that any new operator must honor all valid consumers contracts" at RightStar as well as providing necessary "perpetual care" of the cemetery properties, Bennett said.

The RightStar group, which has been operated by a court-appoint official since November 2004, includes Valley of the Temples Memorial Park on O'ahu, Homelani and Kona memorial parks on the Big Island and Maui Memorial Park on the Valley Isle.

RightStar also controls numerous pre-need funeral plan providers, including 50th State Funeral Plan.

Waihee was one of four trustees who were charged with overseeing the more than $70 million in customers' funds held by RightStar to pay for future funeral services.

Waihee and the other three trustees denied any wrongdoing, as did former RightStar principals John Dooley, his wife, Katheryn Hoover and Los Angeles businessman Richard Bricka.

The agreement announced yesterday does not "release any officers, directors, employees, trustees or agents of RightStar from any claims of any type."

Giacometti, the court-appointed official who has been operating the RightStar businesses since 2004, recently completed an exhaustive analysis of RightStar's financial records, but details of those findings, including the precise amounts of shortfalls in the trust accounts, have not been made public.

Bennett declined to discuss specifics of the trust accounts yesterday.

The agreement and subsequent auction still must be approved by Circuit Judge Sabrina McKenna.

Reach Jim Dooley at jdooley@honoluluadvertiser.com.