Within the next few weeks, a judge in federal Bankruptcy Court in Honolulu may decide the fate of a company that is logging thousands of tons of sandalwood from lands high above Kealakekua Bay, in what was once one of the densest stands of sandalwood in the islands.<\/p>\n
The company, Jawmin, LLC, is in bankruptcy not because it has no income, but because it defaulted on a note it gave to acquire 2,800 acres at the top of Hokukano Ranch, some eight miles mauka of the Hawai`i Belt Road at an elevation of more than a mile above sea level. Jawmin was to pay $9 million for the land: $1 million down, $3.5 million due June 13, and the balance on August 12, according to the promissory note it gave to seller Tom Pace, owner of Hokukano Ranch.<\/p>\n
A month after Jawmin missed the June payment, Pace brought a foreclosure lawsuit in 3rd Circuit Court. But before that could move forward, Jawmin filed for Chapter 11 protection in Bankruptcy Court, putting on hold any action in state court.<\/p>\n
More than six months later, it remains there, with a pending motion from Pace\u2019s attorneys for a court-appointed trustee to manage the company\u2019s assets and another motion, from Jawmin, asking the court to approve a reorganization plan. On January 25, Judge Robert J. Faris is scheduled to hear the motions.<\/p>\n
\u2018Cat Will Be Out of the Bag\u2026\u2019<\/i><\/b><\/p>\n
Documents filed with the court show the behind-the-scenes maneuvers of Jawmin\u2019s principals \u2013 Wade Lee, Arthur \u201cJeff\u201d Lee, Matthew Charbonneau, and Allen Gourley \u2013 to obtain the land without disclosing to Pace their interest in the sandalwood. According to a statement of Wade Lee, made in a November deposition, at first, he and his partners were looking at lands for sale that might be suitable for growing koa. But then \u201cthe topic of sandalwood had come up, brought up by my brother Jeff\u2026 He had heard that the sandalwood world was looking for a new supply because the Chinese had just bought out all the sandalwood in Fiji.\u201d<\/p>\n
Wade Lee acknowledged in the deposition that he had no prior knowledge of sandalwood markets. \u201cTo see what kind of market really existed there for Hawaiian sandalwood and what people knew about it,\u201d he said, he advertised sandalwood for sale online, through another company of his called Keala Ke Aloha.<\/p>\n
At this point in the process \u2013 early 2009 \u2013 Lee had no access to a source for sandalwood other than \u201cseveral logs,\u201d he said, and the only reason he made the internet posting was to test the market. When a potential buyer did come forward, Lee sent him photos of sandalwood logs belonging to someone else.<\/p>\n
By March of 2009, emails among the Jawmin principals were focused on the presence or absence of sandalwood on the several properties in North and South Kona that were then being offered for sale. In an email dated March 19, referring to the \u201cPace acreage,\u201d Jeff Lee wrote that the most important thing \u201cis being clear that the resources are owned\u201d when the option to purchase is exercised. \u201cI may be a little over sensitive to undermining strategies but I believe this is a great opportunity and I know Tom [Pace] is surrounded by torpedoes.\u201d (Pace needed quick cash to settle several outstanding claims on other properties owned by him or Hokukano Ranch.)\u00a0<\/p>\n
The \u201ccat will be out of the bag soon enough on Sandlewood [sic],\u201d he continued. \u201c\u2026 Better get the option formalized so that opportunity is protected.\u201d<\/p>\n
Even as Lee and his partners were calculating how much value was in the sandalwood on Pace\u2019s upper-elevation lands, they were representing to Pace that their interest in purchasing the property was solely in reforesting the area for some \u201cfuturistic\u201d profit, Pace said in a deposition last July. At no time, he insisted, did they show any interest in logging sandalwood.<\/p>\n
Student Help<\/i><\/b><\/p>\n
In his deposition, Lee described his intention to have Randy Senock prepare a thorough forest management plan sometime in the coming summer months. Senock, formerly a professor at the University of Hawai`i-Hilo and now with California State University-Chico, has a private consulting firm called On Solid Ground that conducted a sandalwood inventory for Jawmin last year.<\/p>\n
Developing the new management plan will involve, among other things, taking inventory of and grading every tree on the property, \u201cprobably 160, 170,000 trees,\u201d Lee said.<\/p>\n
\u201cHow much is this going to cost to mark every single tree?\u201d Hokukano attorney William Harstad asked.<\/p>\n
\u201cAbout $50,000,\u201d Lee replied, adding that Senock would be doing the marking along with two assistants and 20 graduate students \u201con a two-credit course from the University of Hawai`i and Chico State.\u201d<\/p>\n
\u201cAre they being compensated for this?\u201d Harstad asked.<\/p>\n
Lee replied that they would not be, but \u201cJawmin is\u2026. We\u2019re negotiating that now, but it looks like for their one-month stint each student will pay Jawmin $2,000 to gain the experience.\u201d Jawmin would be paying Senock for the forest management plan, but as far as his teaching role was concerned, \u201cthe university will be paying him,\u201d Lee said.<\/p>\n
Environment Hawai`i<\/i> asked Senock about this arrangement. He acknowledged in an email message that even though this was a \u201cprivate consulting project for me, I have considered trying to incorporate the project into a CSU-Chico \u2026 intersession course offering on tropical natural resource management.\u201d The Hokukano project would be one part of the overall course, he wrote.<\/p>\n
The students would pay, not for the \u2018privilege\u2019 of working, he said, but for the \u201copportunity \u2026 to experience firsthand the real-life issues of ecological restoration.\u201d<\/p>\n
Such courses, he added, need to be self-supporting, \u201cwhich means that student tuitions have to have a minimum enrollment to cover most of the cost of the course, including the instructor\u2019s salary. System employment rules\/regs will not allow me to collect additional salary, and I certainly cannot and would not expect any additional compensation from Jawmin for this.\u201d<\/p>\n
Patricia Tummons<\/b><\/p>\n
Volume 21, Number 7 — January 2011<\/p>\n","protected":false},"excerpt":{"rendered":"
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