Lawsuits, foreclosures, other issues trail isle CPA – The Maui News

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WAILUKU – Certified public accountant Lloyd Kimura is facing a flood of lawsuits for unpaid loans, foreclosures and for claims of mismanagement by buyers of a commercial condominium he developed and managed in the Wailuku Industrial Park.

Neither Kimura nor his lawyer, Phil Lowenthal, returned phone messages seeking comment.

In November, the state Division of Financial Institutions ordered Maui Industrial (also known as Maui Finance, or MILFCO) to stop taking deposits. Kimura has owned and managed Maui Finance since 1969.

Kimura is being sued by at least two families who lent money to Maui Industrial Loan and Finance Co.

In court papers filed within the last two weeks in 2nd Circuit Court, Peter and Joan Meagher of Honolulu allege that since 1988 they had handed over a total of $869,000 on promissory notes. The money was supposed to be returnable on two-days’ notice, but they say they cannot get it back.

Philip Mulligan Jr. and his wife are claiming more than $2 million.

In November, Commissioner of Financial Institutions Nick Griffin said Maui Finance was licensed as a nondepository financial service that could make loans but not take deposits.

The Meaghers’ lawsuit says they gave Kimura amounts from $20,000 to $100,000 over the years, being promised from 9.5 to 12 percent interest. They let the interest accumulate. The money came from their personal revocable trusts and from the Mauka Kai Realty Inc. Defined Benefit Pension Plan.

Pete Meagher lived on Maui in the 1980s and developed an office building in Makawao.

A number of people who did business with Maui Finance described their relationship with Kimura, although none would be quoted by name. They cited their long friendship with Kimura, who has operated his accounting firm for 40 years and been a member of various civic boards. Two said that although they have money with Kimura they cannot get back, they did not want their names associated with his troubles because their children were friends with the Kimuras’ children.

They have held off seeking legal redress, hoping to be made whole in time, as one said Kimura promised to do.

Kimura is being investigated by the Department of Attorney General. Several people who had business dealings with him say they have been interviewed or had letters of inquiry.

At least one person told The Maui News he spoke to the FBI about his dealings with Kimura. But an FBI spokesman in the Honolulu office says the agency never comments to confirm or deny an inquiry. The FBI says it has not charged Kimura with anything.

Kimura has numerous business interests, including a commercial condominium in Wailuku Industrial Park, a tire business and a tax consultancy.

A thread that links several of these is his borrowing and lending through Maui Finance. In one lawsuit, condominium owners allege that he placed their maintenance fees with Maui Finance. That could be questionable because such fees are supposed to be kept separate and placed only in depository institutions like banks, in certain U.S. Treasury bonds and other safe investments.

Industrial loan company accounts are not insured, even where they are permitted.

One person who lent money to Kimura for use by Maui Finance said he understood that it "was like a deposit."

Another said Kimura took money and paid high interest rates – up to 25 times what banks were paying at the time on insured deposits. In turn, Maui Finance lent money out at 22 percent to 24 percent, often on short-term loans.

Some were described as "loans for Filipino weddings," but Maui Finance apparently also made auto loans.

Some lenders collected their interest quarterly. Others left it with Maui Finance to increase their capital.

Copies of promissory notes filed with the Meaghers’ lawsuit were simple, two-page documents by which Kimura promised to return their balances within two working days. Demands since last August were, the lawsuit says, not responded to.

Other foreclosure lawsuits indicate that Kimura and his businesses began missing payments last June or July.

In November, Griffin said his office, part of the Department of Commerce and Consumer Affairs, was "continuing to look into it," but that no enforcement actions had been filed against Kimura.

There are three types of complaints about the Kimura businesses.

The first is the alleged taking of deposits by Maui Finance and the failure to return money on demand.

The second was filed by several businesses at the Maui Three condo on Hookahi Street in the Wailuku Industrial Park.

The owners, Du-Watts Electric, Certified Sounds, Wayne’s Carpet Maui and S&J Bakery, say they bought units between 1999 and 2003. Kimura and his wife, Jennie, retained the management of the condominium association.

However, the lawsuit says, they never registered the association with the state, as required. The owners are now seeking after-the-fact registration for an Association of Apartment Owners of Maui Three.

The lawsuit names both the Kimuras and the Lloyd Kimura CPA firm, which was the auditor for the apartment owners association.

It alleges that as developer, Kimura was liable for common area maintenance fees, but that he did not pay them to his other arm, the association.

He did, it says, collect maintenance fees from the condo owners, but instead of placing them in approved financial accounts, he transferred them to MILFCO.

Attorney Deborah Wright was retained to seek the money that should have been in a common area maintenance fund account. Kimura did not respond, and Wright is scheduled to go before 2nd Circuit Judge Joel August next month to enter a judgment against Kimura.

She is also preparing another lawsuit against his Wailuku Tire Center for back rent but that has not yet been filed.

Hawaii National Bank in Honolulu has sued Kimura and Wailuku Tire for more than $700,000 for a series of revolving credit arrangements and mortgages on property in Kihei, where Kimura was planning to build a Parts Plus store, although last spring he asked the Maui Planning Commission for an extension of his permit.

According to that lawsuit, the bank offered Kimura a $300,000 line of credit in 2005, which was extended and expanded, backed with first and second mortgages on real property and $200,000 worth of tires and equipment in inventory.

However, in December, Goodyear sued to claim $240,000 that had not been paid for tires.

In at least one case, a final judgment was rendered. In November, RNI-NV, a Nevada limited partnership with offices in Honolulu, obtained a final judgment in 2nd Circuit Court against Maui Industrial Loan for $1,892,000 for a breach of contract. Other details of that case were not immediately available.

The local holders of Maui Finance promissory notes held a meeting in December. Fourteen people showed up. Two participants said they decided to wait, because Kimura told them he had assets and could restore their position within a few months.

But at least two others have gone to court to recover their money. Those two claim they are owed together about $3 million, and an estimate of the total that the various friends had invested in promissory notes reaches at least $7.5 million.

Lawsuits, foreclosures, other issues trail isle CPA – Mauinews.com | News, Sports, Jobs, Visitor’s Information – The Maui News

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