After Call From Senator's Office, Small Hawaii Bank Got U.S. AidAbout This StoryThis article was reported jointly with Paul Kiel of ProPublica, an independent, non-profit newsroom that produces investigative journalism in the public interest. ProPublica is supported entirely by philanthropy and provides the articles it produces, free of charge, both through its own Web site and to leading news organizations.-----------------------By Paul Kiel and Binyamin AppelbaumProPublica and Washington Post Staff WriterWednesday, July 1, 2009After Call From Senator's Office, Small Hawaii Bank Got U.S. AidSen. Daniel K. Inouye's staff contacted federal regulators last fall to ask about the bailout application of an ailing Hawaii bank that he had helped to establish and where he has invested the bulk of his personal wealth.The bank, Central Pacific Financial, was an unlikely candidate for a program designed by the Treasury Department to bolster healthy banks. The firm's losses were depleting its capital reserves. Its primary regulator, the Federal Deposit Insurance Corp., already had decided that it didn't meet the criteria for receiving a favorable recommendation and had forwarded the application to a council that reviewed marginal cases, according to agency documents.Two weeks after the inquiry from Inouye's office, Central Pacific announced that the Treasury would inject $135 million.Many lawmakers have worked to help home-state banks get federal money since the Treasury announced in October that it would invest up to $250 billion in healthy financial firms. But the Inouye inquiry stands apart because of the senator's ties to Central Pacific. While at least 33 senators own shares in banks that got federal aid, a review of financial disclosures and records obtained from regulatory agencies shows no other instance of the office of a senator intervening on behalf of a bank in which he owned shares.Inouye (D-Hawaii) declined a request for an interview but acknowledged in a statement that an aide had called the FDIC to ask about Central Pacific's application. Inouye said he was not attempting to influence the outcome. The statement did not address Inouye's personal role in the inquiry, including whether he directed the aide to make the call or knew at the time that it had been made.Even if Inouye were directly involved, it would not violate the rules the Senate sets for itself, experts said.Both the FDIC and the Treasury said the decision was not affected by the involvement of Inouye's office.Inouye reported ownership of Central Pacific shares worth $350,000 to $700,000, some held by his wife, at the end of 2007. The shares represented at least two-thirds of Inouye's total reported assets. Inouye has requested a delay in filing his annual financial disclosure for 2008, which was due this spring, and he declined to provide the current value of his investment. Since the end of 2007, the bank's stock has lost 79 percent of its value.Central Pacific was founded in 1954 by a group of World War II veterans including Inouye who were emerging leaders in Hawaii's Japanese American community."The time had come to fund a bank that could provide equitable service not only to the Japanese, but to all communities," Inouye is quoted as saying in an exhibit in the lobby of one of the company's Honolulu branches. Inouye, who became the bank's first secretary, said that he initially invested $3,000, the minimum amount possible.Central Pacific is Hawaii's fourth-largest bank, holding about 15 percent of the state's deposits. In recent years, it increasingly used the money to make loans in California, funding several large residential developments. By last year, the bank was facing the consequences of California's collapsing housing market. In July , Central Pacific reported a quarterly loss of $146 million, matching its total profit in the previous three years.In October, shortly after the government announced that it would invest billions of dollars in banks to spur new lending, Central Pacific submitted an application under the initiative, called the Troubled Assets Relief Program, or TARP.The bank faced long odds. More than 1,600 banks submitted applications to the FDIC in the three months after the program was announced, according to a report by the FDIC's inspector general's office. The agency forwarded 408 applications to Treasury, which approved only 267, or roughly 16 percent of the total.Central Pacific's situation was even bleaker because it was in trouble with the FDIC. Regulators had raised concerns about the bank earlier in the year. The bank would soon sign an agreement with its state regulator and the FDIC requiring it to raise an additional $40 million in capital and to improve its management practices.After the bank applied for bailout funds, weeks passed. Andrew Rosen, a spokesman for Central Pacific, said that regulators had told the bank that the process would take "some time" because of the glut of applications.In late November, still waiting for an answer, the bank's government-affairs officer called Inouye's office to ask that it check on the status of the application, according to Rosen. (Rosen said in an initial interview that the bank had not contacted Inouye's office about the application. After Inouye was contacted for this story, Rosen said that he'd been mistaken, that the bank had called Inouye's office.)One day after the bank's request, an Inouye aide called the FDIC's regional office in San Francisco, which regulates Central Pacific. Inouye said in a statement that the staffer, Van Luong, "simply left a voicemail message seeking to clarify whether Central Pacific Bank's application for TARP funds had actually been received by the FDIC." The statement said that the bank was soon notified that the application had been received, "and that closed the matter.""This single phone call was the entire extent of my staff's contact with regard to Central Pacific Bank, to any outside agency," Inouye said.Internal FDIC e-mails obtained through the Freedom of Information Act show that Luong's question was referred from San Francisco to FDIC headquarters in Washington. A few days later, Alice Goodman, who heads the FDIC's office of legislative affairs -- and whose office is typically the point of contact for congressional inquiries -- called Luong to say that the application "was still under process."The internal e-mails show that the application had been forwarded to an inter-agency council headed by the Treasury Department that reviews cases in which a bank did not meet the criteria for a federal investment. Those criteria require banks to demonstrate their viability without the benefit of federal funding.Shortly after the Inouye staffer's phone call, the council approved Central Pacific's application.So far, more than 600 banks have received federal investments. While some recipients have started to repay aid, the Obama administration announced this spring that it would continue to accept applications from community banks until November. The crush of calls from Capitol Hill on behalf of specific applicants led the Treasury to announce earlier year that it would start releasing a weekly list of congressional inquiries. It has yet to do so.The question of what role members of Congress have played in influencing the Treasury's decisions is under review by the special inspector general appointed to oversee the financial rescue program. A spokesman for the special inspector general said a report is expected later this summer.Such contacts by members and their staff do not violate the rules Congress has established to govern itself. "Congress has never been willing to adopt strong conflict-of-interest rules for its members, but for the most part, has left it up to each member to decide for themselves whether they have a potential conflict of interest," said Fred Wertheimer, president of Democracy 21, a watchdog group.The most similar known case comes from the House. Rep. Maxine Waters (D-Calif.) arranged a meeting between regulators and OneUnited of Massachusetts, a bank in which her husband held shares. Rep. Barney Frank (D-Mass.), who did not own shares in the company, subsequently inserted language into the bailout bill that effectively directed the Treasury to give special consideration to that bank.The report by the FDIC inspector general found that 26 of the 408 companies whose applications were sent to the Treasury faced enforcement actions as severe as those against Central Pacific. Because the FDIC inspector general did not name these 26 banks, it is unclear how many ultimately won the Treasury's approval. Nor is it clear whether any other bank used the Treasury money -- as Central Pacific did -- to address a capital shortfall identified by regulators.Several financial analysts said they know of no other instances in which Treasury money was used this way. But they said it was impossible to be sure because banks are not required to disclose such regulatory actions, for instance those requiring that firms raise additional capital. Central Pacific had made this disclosure voluntarily.Andrew Gray, an FDIC spokesman, said the Central Pacific decision was not unique, but he declined to name other banks, citing a policy against commenting on specific institutions.ProPublica is an independent, nonprofit newsroom that produces investigative journalism in the public interest.
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Don't Bust a Move Dayne!by Juan Wilson on 5 May 2008On Wednesday, April 30th an anti-GMO meeting was held in Hanapepe at the United Church for Christ. Among the sixty or so people attending were Richard Hoeppner, of People for the Preservation of Kauai, and Dayne Aipoalani, of the Kingdom of Atooi. Dayne was with his wife Toni and twenty month old daughter Alana.Dayne and Richard have known each other and worked together. Richard is a retired police detective and Dayne wanted to have the Kingdom of Atooi marshals get some formal police training, especially in conflict resolution, and mediation.The two have also worked against the Superferry coming to Kauai and against Syngenta spraying herbicides next to Waimea Canyon Middle School. Dayne and Toni had become alarmed because neighborhood children had become sick and even one of their own had become ill after Syngenta spraying.The anti-GMO meeting broke up about nine p.m. The Dayne and the family got in their truck and headed to the parking lot exit to get on the highway going west and home to Kekaha. When he got to the stop sign, at the highway, Dayne noticed a darkened police cruiser parked next to Hanapepe Park. It turned on its lights and pulled up to the stop sign opposite him.Suspecting something, Dayne did not pull out onto the highway, but waited for the police car to move first. It didn’t. Fifteen seconds went by. Suddenly the cop car turned right onto the highway heading west. Dayne followed him.As Dayne pulled away he noticed two vehicles emerge from the church parking lot and follow behind his truck. A SUV and a sedan. At this time Rich Hoeppner was preparing to leave the church too. Rich drove east towards Kalaheo.As Dayne continued west there was little traffic as he came to Moi Street. But there another police cruiser was parked. It fell into line behind him and the two unmarked vehicles. In less than a minute Dayne was passing the National Guard facility on the makai side of the highway. Three police cruisers joined the parade.The police cruisers all at once turned on their flashers and in front of Salt Pond Store pulled Dayne over and boxed him in. Police swarmed Dayne’s truck. From the unmarked SUV four SWAT police emerged in camo and vests. They carried gas canisters and other special equipment.The police team was lead by police officers Steve Sueoka and Detective Hank Barriga. Dayne knew he was in trouble because of Sueoka’s role in the August 2007 Superferry demonstrations. In December of last year KPD Chief Darryl Perry recognized Sueoka for his exceptional assistance of the United States Coast Guard during that time.After Dayne’s car was surrounded by the police and SWAT team there was a lot of yelling. Sueoka said; “You are under arrest!”Dayne said; “What for? What did I do? Wait a minute.”When asked to get out of his truck Dayne did not understand why. He got on his cell phone and called friends for advise and help.Richard Hoeppner got a call as he was passing Kalaheo. He turned the car around and headed for Salt Pond Store.Sueoka continued; “We have a warrant.”Dayne answered; I’m not getting out of the car until I know what’s going on.”Sueoka showed Dayne the warrant. As it turned out the warrant the police were carrying was for failure to show up at a plea hearing on the charge of impersonating an officer. During the August Superferry demonstrations Dayne carried a badge identifying himself as an officer of the Kingdom of Atooi. He never claimed to be a KPD policeman.He was surprised by the police action because of a meeting he had to discuss the issue of Kingdom of Atooi marshals and their responsibilities. The meeting was in Lihue with Chief Perry on November 8th 2007, attended by KPD officer Roy Asher and others. It was understood by Dayne that a line of communication was opened with the KPD and that they would contact him if questions regarding the issue of the Atooi marshals needed attention.Moreover, the warrant regarding the plea hearing was not applicable because Dayne had demonstrated to the court that he was at the hospital emergency room at the time of the hearing. Dayne provided the court with paperwork for a medical excuse concerning his failure to appear. It seems the court had excused him without correcting the warrant paperwork.This came out in the exchange between Sueoka and Dayne. Sueoka said that if Dayne had paperwork with him to prove his excuse there would be no arrest.Dayne did not have the documents in the car. Referring to all the men and material used in the arrest proceeding Dayne countered;“Why didn’t you just call me on my phone to come in and take care of this matter?"As spoke Dayne pointed out that his cellphone number was prominently written on the warrant. ”Sueoka had had enough; “We have a warrant for you! We have to execute our order!”By this time Rich Hoeppner had made the last leg of his way to Salt Pond Store on foot. The police had closed the main highway near the store. Some of Dayne’s people from the Kingdom of Atooi had also arrived to witness the scene. More police arrived. Toni thought there might be as many as thirty policemen by that time.Police were breaking up any groups of passerby greater than three in number. No public assembly was allowed for local people. Richard, a haole, was able to get to the front of Salt Pond Store when one policeman asked him if he wanted to get a newspaper or something. Richard used that as an invitation."Yeah, I need a newspaper".Richard asked the policeman if that wasn’t Dayne’s truck in the middle of all the trouble. Then Richard was confronted by another KPD officer, D. Martin, who called out that;“We know who you are. I saw you at the Superferry!”Martin told him to get his paper and get out of there.The police proceeded to yank open the doors on Dayne’s truck. Police officers tried, unsuccessfully, to pull Dayne from his truck. SWAT team members pushed cans of gas in Dayne’s face. They opened up the back to expose Alana. Dayne was concerned his wife and daughter would be caught in the middle of a violent confrontation. He sensed that the actions of the police seemed to be an attempt to provoke him into making a mistake. They had overwhelming force at the scene.Dayne decided to comply with the order to leave his vehicle. He told Sueoka and Barriga that he would get out of the truck if they did not harass his family, adding;“I’ll go with you guys, but I’m not under your jurisdiction.” Dayne was never read his rights when they took him down.Dayne was brought to the Lihue station, booked and given a copy of the arrest record. The bail is set at $2,175. Immediately friends and family tried to call the 24/7 bail bondsmen on the island to free Dayne. Toni and Richard found that none would respond that night.While in Lihue an unidentified police officer asked Dayne about the Iolani Palace occupation by sovereignty advocates on Oahu. He was casually asked how many of his people were there. Dayne won’t be free that night.Later the police took the arrest record from him. Dayne was taken to the Kauai Correctional County Center (KCCC) and spent the night in jail without bond. Richard was up all night trying to free Dayne.Toni drove home quite upset. She was not followed but got a call shortly from a friend who had spotted two police cruisers parked in the dark down her street watching her house.The next morning a guard at KCCC also asks Dayne about the Iolani palace incident. apparently sovereignty activists anywhere in the state were being connected to the palace occupation. Later Dayne was transferred to court; not in his own clothes but in an orange jumpsuit in shackles on his hands and feet. Toni and Richard Hoeppner was at the court the next morning and were very upset. Before the the judge, Kathleen Watanabe, Dayne stated;“There was no notification of a court date after I missed my plea hearing”.The judge said that no notification was necessary. A plea of not guilty was entered and a jury trail on the impersonation of an officer was set for June 30th. Toni had pulled together the bail money. After some more legal hassles Dayne was finally free to go home around three in the afternoon.Sometime after, early Friday morning, that Richard had a heart attack. He was flown to Oahu and is still in the Staub Hospital. Dayne sister Keikeilani went over to visit him. Richard is scheduled for a triple-bypass operation on Thursday. He is in Room #302. You can call him at 1 (808) 522-4000.One lesson to be learned from this behavior by the Kauai Police Department is how seriously the connections between the anti-Superferry, anti-GMO and the sovereignty movement are taken by Hawaiian authorities. Dayne is involved with all three and he is Hawaiian. This makes him a danger to the status quo.In addition, Hawaii State Attorney General Mark Bennett is deeply involved with not only the conspiracy of the State with the Superferry Corporation to avoid the law, he is also facing a disenfranchisement of the State of Hawaii to manage Hawaiian government land. The recent Hawaii Supreme Court decision to deny the State "ownership" of ceded land is a fundamental problem for the whole apparatus of control.The Kingdom of Atooi has made a direct challenge to title of ceded lands on Kauai that is right under the feet of the westside GMO companies and the PMRF easement agreement that was negotiated with the State. Challenges to the status quo are certainly simmering.If you carefully follow the events of the night it becomes clear that the KPD was stalking Dayne Aipoalani with a great deal of manpower, equipment and expense.That kind of police action might be appropriate for arresting an armed murderer or to bust a meth factory, but not to execute a warrant on a failure to make it to court on a charge of carrying a “phony” badge. This huge KPD effort was over a failed court appearance where there was a medical excuse on record.It is further evident to me that the police were trying to taunt Dayne, to make him angry, to make him make a mistake - the result would have easily provokes a violent response by the police. This kind of baiting is unforgivable behavior for a force of professional “peace keepers”.God forbid you are on their list for your activities and have an open can of beer at the beach or are having a fight with your spouse. Don’t tase me bro!
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