Summit, which provides call-center and telephone services, was founded in 1996 by Harry Johnston , a former executive of Hawaiian Telephone, and Richard Ichikawa, a former engineer of Hawaiian Telephone.
resigned as president and was replaced by his son,Grant Johnston.
The report said the company had kept poor track of its finances, even in bankruptcy and that several questionable thousand-dollar payments had been received by Grant and Harry Johnston
, which should be investigated by a trustee....
In a court document, Summit said the examiner, Mark Yee, focused on matters that happened before Harold Johnston stepped down, which provided an inaccurate picture of Summit's situation.
Sandwich Isles Communications Inc., headed by Al Hee, loaned the money in March 1998 to Summit through Summit's then-chief executive and part-owner, Harold C. Johnston , according to a lawsuit.
In 2001, Harold Johnston
received $8,400 in interest payments from Summit
for the loan .
denied loaning the money to Summit
The trustee, Derek J. Sakaguchi, filed a lawsuit April 30 in U.S. Bankruptcy Court against Harold Johnston and his sons Grant Johnston and Chad C. Johnston, who were all officers of Summit.
The five-count suit said Harold Johnston
misled some of Summit's
directors, investors and creditors about the relationship with Sandwich Isles
, which allowed the company to continue to operate under the status quo when it was in trouble .
The lawsuit also accuses the Johnstons of receiving excessive compensation and benefits ....
Hee, president of Sandwich Isles, and Harold Johnston confirmed that Sandwich Isles made a loan to Johnston.
"Whatever happened between me and Sandwich Isles
is a private and personal matter," Johnston
They declined to answer any questions about the loan, including its status or its purpose.
However, the lawsuit said: "A loan for $456,793to SCI
made in March of 1998 was shown on SCI's
financial statements as a loan made by Harold Johnston
In fact the $456,793 was loaned and funded by Sandwich Isles
The loan was secured by a pledge of Harold Johnston's
stake in Summit
, the lawsuit said . Harold Johnston
owned 37.7 percent of Summit
as of January 2003, while Ichikawa owned 25.1 percent .
Al Hee said the loan to Johnston
did not involve any federal funds.
That was around the same time that Sandwich Isles
loaned the money to Johnston
Also around that time, Johnston stopped spending time with Summit and became general manager for Sandwich Isles.
After Harold Johnston began working for Sandwich Isles, Chad Johnston became responsible for day-to-day operations at Summit.
In a letter to Summit
shareholders, Harold Johnston
was not aware until January 2001 that Summit was not paying its taxes.
said an outside accountant had been handling those affairs, and was terminated.
declined to name the accountant.
The court-appointed examiner has described Summit's pre-bankruptcy books as worthless ....
accepts some responsibility for Summit's financial problems, but he
did not commit fraud or other misdeeds.
The lawsuit seeks repayment of the $8,400 in interest that Harold Johnston
allegedly pocketed from the loan to Summit
, as well as repayment of a $50,245 loan Summit allegedly made to Harold Johnston