808 5238509 ~

,
IS~P
.,
25 '00 10: 55AM HON STAR BULLETIN § Docket No. 8,
§
COMMISSIONER OF INTERNAL §
REVENUE, §
§
Respondent. § IADN!SSrOffa

PEIjTION
I
'o
L...
Petitioner Henry Haalillo Peters hereby petitions for redeterrr~natior'~lIi\.is.-
r . - . :-:~ -

deficiencies set forth by the CommissIoner of Internal Revenue in the Notic e of Deficiency
~
[TE/GE:ReD: AD] dated May 5,2000 respectingthe caJendartaxyears19~15,1996,1997,

1998. and 1999, and as the basIs for his case,alleges as follows:

1. PetitionerHenryHaalilioPeters(MPetttfone~is an indivjdu~I. Petitioner's

~.~~ 'T~ ~ CO ~
I
legal residence and mailing address Is 87-641 Farrington Highway. W~ianae, Hawaii

96792. Petitioner'staxpayer identification number is 575-42-0747, No ret' ~msfor the tax

periods at Issue were requiredto be filed with the Internal Revenue Servic

2. The Notice of Deficiency (a copy of which is attached,incJudinQ any relevant

material,statementsand schedulesaccompanyingthe notice)was mailedtc,Petftloneron

May 0, 2000, and was 'issued for the Commissioner (also referred to 1ereinafter as
MRespondenf') by the Director of Exempt Organizations Examr~ationsin IL.osAngeles,

California.

3. The deficiencies detem1lnedby the Commissioner are in excise taxes

regarding certain charitable organizationsand are as follows:

 808 5238509
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...

Deficiency Under Deficiency Under Deficiency Under

~ G49S8la}(1} ~4958lb~ ~ 4958la}{21 IQ3!
1995 $64,326 $514.606 $50.000 $628,932
1996 176,395 1,411,1SB 50,000 1.537.~53
'997 179,739 1.437.908 50,000 1,667.647
1998 231,134 1.849,Oee 50,000 2.130,202
1999 35,848 286.762 50,000 372,630

4. The determination'oftheexcise taxes set forth in the Notic~~of Deficiency is

based upon the following errors by the Commissioner:

a. The Commissioner erred in determining that an\l portion of the

compensationpaid Petitionerby the Kamehameha School 3/BishopEstate

(UKSBE"')constitutedan Kexcsssbenefit-within the meal \ing of Section

4958(c)(1)of the Code.

b. The Commissioner erred in detem'llning that the fac that a state or

local legislative or agencybody or court has authoriZedl')r approved a

particularcompensationpaokage
paid to a disqualifiedperson sho uld not be
affordedany weightas to determiningthe reasonableness01compensation

paid for purposes of Section 4958 of the Code;

c. . The Commissionererred in detem1iningthat therFi are no facts

indicatingthat Petitionerengagedin any arms-length negotia1 ions regarding

the terms of Petition~r'soompensationj

d. The Commissioner erred in dete~lning that the size and complexity

of the KS8E organization Is ~nly a minor factor in the analysis!of reasonable

compensation.

~
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.~(

e. The Commissioner erred in determining that the duties and

responsibilitiesof a trustee under Hawaiianlaw do not incluje operating and

managingbusfnessesand investment$owned directly or:indirectly by the

trust;
f. The CommissionererTedin determiningthat Petitio ,er did not have

any special experience In managing large business and inv~stment assets;

g. The Commissioner erred in detem1iningthat Petitio!1er did not offer

any unique or In-eplaceab/e

skills necessary for the con~~uct of KSBE's

business and investments;

h. The Commissioner erred in determining that Petitione~ 's qualifications

to operatethe businessand investmentsof KSBE were notlcommensurate ~

with the compensation paid to Petitioner by KSBE for the ser vices provided;

The Commissioner erred In determining that Petlt/onel's performance

as a trusteedid not further KSBc's tax exemptpurposest')f operating a

school;

j. The Commissioner erred in determining that there wa~ evid'encethat

KSBE was operatedfor a non-exemptpurposeand in determii lingthat KSBE

failed to engage in activities that primarily furthered KSEE's charitable

.
purpose;

k. The Commissioner erred in determining that thl? Petitioner's

performance as a trustee did not justify the compensaticn paid for

Petitioner'sservices;

3
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AlleaedExcess Benefit

1995 $257.303

1.996 $705,579

1997 $718,954

$924,534

$143,391

q. The Commissioner erred in assertingagainst PetitioI ler an initial tax

on a disqualifiedperson under Section 4958(a){1) of the ;Code for each

taxable year at issue;

r. The Commissioner erred in asserting against Petitioro~ranadditionsl

tax on a disqualified person under Section 4958(b) of the Code far each

taxable year at issue:

s. The Commissioner ened In asserting against Petitione rthe additional

tax under Section4958(b) before the time has expired for :orrecting any

1(f)(6);
t. The Commissioner erred in asserting agaInst Petttion~:( the initial tax

on an organj~ation manager under Section 4958(a)(2) of the Code for each

taxable year at issue;

u. The Commissioner e/Ted in determining that Pet/tlcIners alleged

participation in these excess benefit tran~actions as an organization

manager waswilful and was not due to reasonable cause wlthi , the meaning

of Section 4958(a)(2~

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v. The Commissioner erred in determining tf'lat the I bindIng written

contract exceptionin Section 1311(d)(2)of P.L. 104-168dl)es not apply in

Petmoner'ssttuation;and

w.. !he Commissionererred in determiningthat exciseItaxes for 1995

could be timely assessed.

5 The facts supportingPetitioner's case are as follows:

The Unique History of the

Kamef'lDmenaSchooJs/BishoREsl~te
a. fhe KamehamehaSchools/BishopEstate(hereinafteriKSBE" or "The

Iculturalhistory
in the State of Hawaii. The benefits KS8E providesto the ~;tate of Hawaii
..a..,.
" in which the
emanate from the Will of Princess Bernice Pauahl Bishor:

Princess createda chan'tabletrust for educationalpurpO~~$,

b. Princess Pauahi Bishop died In 1884 in Hawaii as the fi, ,al heir of King

Kamehameha of Hawaii. The tt'Ust established under he! Will became

known as The Bfshop Estate. or Kamehameha Schools/J

3ishop Estate
(hereinafter"KSBE'"or'11'le Bishop Estate"). The primary ~~urposeof the

trust was to manage Its bequests and legacies, and thereupon expendsame
.
to build and operate the KamehamehaSchools, such soh,)cls serve as

ryo
c. In the I~te 1911\
century.at about the same time that Pnhcess Pauahi

Bishop bequeathed her estate for the education of Hawaiian c:hiJdren,other

Hawaiianroyal family membersestablishedsimilar trusts and estates with

6
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different goals. all of which related to health and family servic~es. Only KSBE

has survivedto the presenttime as a significantpart of Ha\'/aiian culture.

d. KSBE survived in part because it waS oliginaJl

approximately 430,000 acresof land in the Hawaiian islal,ds, which has

since become some of the world's most expensive real e! ,tate. Until the

1960's, KSBE was restricted with respect to disposition of t~,ese lands and

therefore obtained most of Its income from leasing operatior

e. In the mid-1980's, after litigation that went to the Supre "e Court of the

United States, KSBE was forced to sell some of its reside ,1tial leasehold

properties. The sale changed KSBE from a land.burdened )rganizatlonto

an entity with a greatervariety of assets to be preserved anc developed by
~

tJ1etrustees.

f- By the time of the transactionsthat are the subject cf this Petition.

KSBE had grown to become one of America's wealthies\ philanthropic

organIZations. Its endowmenthad grownto becomeone of the world's

richest for an educational institution, approximating or EIxceedlng the

endowments of Harvard.Princetonand Yale.

g In 1984. when Petitioner was appointed as a KSBI trustee,

Kamehameha provided education far less than 2,700 studerIts at a single

campus. By 1999,approximately16,700studentswere serveri throughthe

Kamehameha Schools statewic;ie on a day or boarding b In the

aggregate, KSBE covered over 94% of the costs of edl lcatlng these
students. KSBE also provided more than $15 million of past-high school

7
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financialaid. Moreover~KSBE

supported another29,000 students.

h. Truste~ of the Bishop Estate have a fiduciary to manage the

~

expensive and complex assets of the estate. Bishop Estate

also are boundby such duty to manage the Thus,

the trusteeshavethe responsibilityand complex duties resurt from

managing one of the largestprivateendowmentsin the but using it to

benefit children of Hawaiian and aborfginal ancestry the complex

political climateof a multi.racialstate such as Hawaii.

i. The governing instrument of the trust, as construed the Hawaiian

courts, authorizesits trusteesto payout or set aside sums support of Its

charttabteand educationalpurposes.

j. since 1939,the InternalRevenueService has KSBE as

an organizationexemptfromfederalincometaxes.

is based upon Section 501(c)(3}of the Code. In the the Internal

Revenue Service classified the trust as a school in section

170(b)(1)(A){il)of the Code. As a result of the trust was

treatedas a public charity described in section 509(a)(1) of Code.

Irnstee ComDensation
J Will
k. Regarding the appointmentof KSBE trustees. the

provides that the number of trustees shall be kept at that any

~
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vacancies shall be tilled by the choice of the majority of Justicesof the

Supreme Court of Hawaii.

I. Becaus,of the uniquecomplexityof servingas a of such a

large philanthropicorganizationwith politicalovertones, Court

routinely appointed trustees to lifetime appointments mandatory

retirement at age 70. These lifetime apPointments designed

specificallyto give trustees sufficient timE' to learn to deal the complex

economic and political issues that relate to the Schools.

m. The Princess' Will

for the trustees. However. from the inception of KSSE. the practiceof
the SupremeCourt(and the other ~urts of Hawaii) to the KS6E

trustees (and other trustees) to be paid commissions upon the

statutory schedule applicableto executors,administrators guardians.

That schedule was adapted as part of the Civil Code of and was

enacte.dwhile Hawaii was still a sovereignnation. In 1928, the

practice approvedby the courts of Hawaii for trustees was

incorporated Into a statute of the then Territory of Hawaii.

n. During the five years in issue, the formula far I

set forth in Hawaii Revised Statutes (HRS) Sections and 607.20.

HRS Section 607.18 provides the formula for trustee

commissions allowa91eupon Income of a non-charitable estate and

upon the principalof the estate. HRS Section607~20 the case of

~
 808 5238509
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a charitabletrust and sets forth the commission based on per Icentages of the

trust income. As the Notice of Deficiency admits by quotlrIg the staMory

language.these sectIons of the Hawaiian statutes expressfYIloply to estates

in. existence when the statuteswere adopted. such as KS8E The statutes
of Hawaiidid not expresslyauthorizepaymentsto trusteesfo rotherbeneflts

such as pensionbenefitsor health insurance. Petitioner r ~S borne such

expenses out of the commissions paid.

o. The text and the legislative history of HRS Section 60 r -18 expressly

authorize and condone the compensation to trustees tha t Is based on

percentages of income to the trust. In 1959. the HawaiiIan legislature

modified the allowedpercentagesas they relate to revenue Ind income on

the charitabletrust

p. Despite the staMory authority for commission income. IPetitionerand

the other trustees of KSBE have regularlY and volurltarily waived

commissions to which their services for KS8E otherwise enti tIed them.

Q. The Notice of Deficiency cites and relieson an amend". entto Section

607-20 for the proposition that trustees are limited t/.~ reasonable

compensation. That provisionbecameeffectiveJanuary II 1999, and

cannot be applied retroactively to Petitioner's compensation fcIr the years in

issue. Moreover. no change was legislated to HRS Sectic f1 607-18. 50

percentagecompensationIs stili appropriate.

r. For example, in computing the percentage of Jncoml~ payment of
,
compensationto trustees during the years in jssue, the trusrteestook no

10

~
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,

without the actions of Petitioner and his

KS8E. the tens of thousands of Hawaiian children by KSBE could

-
not have been~sowell served.

Petitioner worked well in excessof 40 hours per for the benefit

of KSBE and subsidiary businesses for each of the issue.

bb.

plan. medical benefrts.dental benefits or the other nom1ally

associated with employment agreements at large with

comparable assets. Petrtioner',

adoptedwith the knowledgethat Petitionerwould have purchase or

otherwise provide for his own social services and benefits.

~

HRS Section560: 7-306articulatesthat a trustee is liable

on contracts entered into in the trustee's fiduciarycapacity: the courseof

administration of the trust estate. unless otherwise provided the contract.

Becau~e KSBE is one of the largest endowedpublic the United

States.Petitioner'sserviceas a KSec: trustee exposed substantial

personalliability.
Petitionerbelievedthat the availableInsurancedid coverhis

exposureto various potentialliabilities.

dd. As with most contingent compensation Petitioner's

compensation agreement Intentionally created to
render the investment assets under his dominion and more

productive. Petitioners contingentcompensation was entered

13
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pursuantto a free bargainbetweenKSBEand Petitionerbefi)re any services

were renderedand was not influenced by any consideratlcn on the part of

KSBE other tt1an that of securing on fair and advantagj~OU$terms the

s~rvlces of Petitioner.

!!ustee_Comoensation Was Reasonable

ee. Forthe taxableyearsat issue, KSBE calculated the cornmissions paid

to Petitioner according to the formulas permitted by HRS SeCilion607~18and

Section 607-20. In each of the years, Petitioner and his cc,.trusteeseach

waived a portionof the maximum commissions to which his IQreementwith

KS8E otherwise entitled him. Respondent's Notice of Deficle 1CYrecognizes

-..
that the commissionscomputedby referenceto the 5tatutesIessthe portion

PetitionerwaivedconstitutesPetitioner'scompensationfor tt Ie years under

examination.

ft. The schedule below details the commissions Petitior er received In

1995 through 1999, accounting for the amounts waived by !:Jetltioner and

amounts PetitIonerdeferredunderthe KSBE defelTedcampi~nsatlonplan;

~ ~mmissions
1995 $ 886,214
1996 $ 863,579
1997 $ 876.954
1998 $1,082,534
1999 $ 301,391

Each of these amountsconstitutesreasonablecompensationfor the year in

issue.

14
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I=\UG .SEP 25 ' 00 10: 58RM HONSTR-R'-BULC[ffr-:p'65432 LEnKFELD NO.t:J".:j~ 'P.15/17

rn determiningreasonable compensation.the to be

taken in to considerationare those

serviceswas rpade.not those existingon the date the contract is

questioned. In Petitioner's case. the circumstances be taken into

consideration are those existingat the date of his hire into

the contract for services with KSBE.

hh. . The possibility of was naturally

foreseen and expresslycontemplatedat the time that commission

agreement wasenteredinto by Petitioner and KSBE.

ii. The incentivecompensationpaid to Petitioner and otherKS8E

trustees was not challenged by Respondent in earlier in whIch the "
asset mix of KSBE producedrelativelylittle Income.

jj. The compensation paId to KSBE trustees was by the

probate court of the State of Hawaii and by the Attorney as parens

patrie annually from the inception of KSBE. No to

compensation haveeverbeen made despite the State's to do so.

Thus, there was a century..long pattern and history of,

compensation of KS8e trustees. Petitionerandthe '--'-' ..- on

.
this historic approval in setting compensation for the years issue.
The fair marketvalue of the servicesrenderedby to KSBE

exceededthe benefitsreceivedby Petitionerfor each of the in issue.

II. Aftematively.if for any reasonthe Courtshould find the benefits

received in any year exceededthe fair market value of the

15
 808 5238509
25 '00 10:59AM HON STAR BULLETIN P.16/17

to seNiceS

and legally
rom.

compensation
nn.
at a time

whUeHawaii
00.
Congressof

the United States.

of the

of July 7,
Thus, the

;~.

state on

pursuant
nation of

by

decades.

16

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':" ~.~\! .':";."i:.:;.:,., ,

~..";.).:~.~/~.:..,;-..:t

~
 808 5238509
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AUG.~~'='..-6~_'00 ~9AM ~9N STAR BULLETIN65432 LEnRfELD NO. 833 "/-(t'
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At all times relevant, a binding written contract ~xisted between

Petitioner and KSBE. The c:pntractwas approved by the crobate court's

vesting order dpted May 16.19841which grantedto Petitior,er the power to

act as trustee of KSBE pursuantto the terms of compens.~tionin place at

that time.
Petitioner relied on compensation experts accepting the

compensation paid to him and in approvingthe compensati<

)n paid to other

trusteesof KSBE. Furthermore, Petitioner relied on the legis lature of HawaII

in accepting and approvingthe compensation.

fT. Alternatively, to the extent that Respondent is EIntitled to any

determination of possibleexcisetaxes against Petitioner.tt lat tax must be

"'-

computedas a percentageof the amount by which the behefrts received

exceeded reasonable compensation. Here, the reasonable compensation

for Petitioner is far in excess of the amounts presumed by Reo;pondentin his

Notice of Deficiency.

55. Respondent's determination of excess benefn relied on

compensation opinions that were fatally flawed by inappropricite comparable

data. The uniquesocial. politicaland financial historyoft~e Bishop Estate

make it impossibleto compareservice as a KSBE tru~ee ~ virtually any

other fiduciary posttlonin the United States.

17
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, ...~STRR BULLETIN~432
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TheManacst -.TaxIs In3ngraDr~m

.
tt. The other trustees of KSBE also were compensate!1 b'y percentage

commission.. Similarto the facts statedaboveregar'ling Petitioner's

I
compensation.the compensatIonpaid to the other four tn lsteesof KSBe

was reasonablean~ appropriateunder the circumstances. I

uu. The value of the servicesrenderedby the other fo Jr trustees also

I .
!t Issue.

w. Petitioner relied upcn the Hawaiian statutes. the ,reviewsby the

probate oourt of the State of Hawaii. the op,inions of third part , compensation

experts,the approxImately 100 years of Hawaiian experien 08 In pe~ltting

percentagecompensationto trustees, and all the ofher facts and ~

circumstances in approving the compensation paid to the ctll erfourtrustees

of KSBEfor the years 1995,1996.1997.1998 and 1999..ReIlanceon these

factors was reasonable. Petitioner never wiltfulfy neglecte.j his duties as

trustee in deteM'nlnlngthe compensationof others, nor did ~ettb'onerever

I
Jstee.

bgalrDefen.ses
ww. Respondent'sNoticeof Deficienqy1.llegally
and erroneouslyattempts
to apply Section 4958(0)(1)to the oompensationarrangsntentsbetween

KSBE and its trustees. Becausethe trusteesof KSBE, incluc'ing Petttioner,

were compensated by percentage commissions based in whole on the

18
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""'.'4'
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I
revenues of KSBE, these compensation arrangementssr governed by
Section 4958(0)(2)rathertnanSection 4958(c)(1).
xx. The purpose of Sectlon49~8(c)(2) was to assure rusteeswhose

compensation arrangements were based upon percentages of revenuesor

incomethat their arrangements would not be subject to exi:fse tax unless

and until the Secretaryprescribed regulatIonsto give fair ,'otice to those

tnJsteesthat cartainpercent.gecompensation
arrangemen
s were subject

to scrutiny as "excess benefit transaotlons." Section 4958(;:)(2) expressly

prQvides that percentagecompensationarrangementscan only be

scrutinized for excessbenefits-[t]o the extent providedIn regul~tJons

prescribedby the Secretary,"

~

)"Y. Section 4958(0)(2} requires ~ulatlons to be ad~pted by the

Secretaryof the Treasurybefore that section becomes: effective and

enforceable. No such regulationshave been adoptedor eye~ proposed by

the Secretary.

zz. As of the date of the Notice and as of the date of thl a PetitIon,the

Secretaryhas yet to exercisethe discretiongranted by Sectil)n 495S(c)(2).

Respondentthu5is estoppedand legally barredfrom aS$e;S6ing any excise

tax under that provision.

Baa. The compensation agreementbetWeenKSSe and F'etfticner was

wtthfn the compensationrangeestablishedby Hawaiianstatutes and was tl1e

.18waii. For
Respondent to substitutehis own interpretationof rea~onable, l)mpensaticn

19
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for the interpretationadoptedbythe sovereignSta1eofHawsiiconstitutesan

arbitrary and capricious determination. Moreover r suc , determination

contravenesth.escope and authoritygrantedto Respondent by the Code.

To the extent that the Notice of Deficiency asserts he organization

manager excise tax against Petitioner under Section 49,56(a)(2) without

simuttaneously assessing the same tax against the otherfol. r KSee

tNstees
faith.
At all times relevant. Petitioner was not a disqua:mad person as

defined In Section4958(f)(1)and was not an organlzatic

)n manager as

defined in Section 495B{f}{2).

At all times relevant,Petitioner'sactivities while actin! I as a trustee of

~

KseE were proper.appropriateand legal.

At all times relevant.Petitionerexercisedordinarybu~rinesscare and

prudence,and Petitioneractedwith reasonablecauseand n )t wilfUl neglect

in carrying out any transactionsin which trustee eoml,enaation was
determined.

fff. Under Sections4961 and 4962 of the Code. Petition,~r has the right

to discretionaryabatementof the initial and addttionsl ex.ci~

Ie taxes In this
...
matter.
To the extent that Respondent refuses to abate thf~ excise taxes

proposed in the Notice of Ceficlency, Respondent has abusechis discretion.

20
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express agreements that Respondentha5 abrogated. the extensions

are

Iii. P~titionersactionsas trustee arid his of benefitsas

trusteealways were based on reasonable cause and f1eglect.

jjj. Petitioner never knowingly or willfully accepted permitted any

excess'benefitfromKS6E.
The Notice of Deficiency was Issued on May 5. By that date,

the statute of limitationson excise taxes under Sections relating to

KSSE'strusteecompensation for 1995 had expired.

Ill. ~

to written agreementsthat we~ bindingand in force 14,

1995 and that did not materially change. Thus, to Proposed

Regulations, the excisetaxes proposedby Respondent this case are

inapplicable.
mmm. To
for transactionsthat predatethe adoptionof the 1996

2. the excise tax donstitutes an ex post facto law In of the

.
Constitution of the United States. SpecificallY1the date of the

provisions Imposing the excls& taxes at Issue was 14,1995. but

the provisions were not. signed Into law untfl July 30. 1998.

nnn. To the extent that Respondent's Notice proposes \ taxesfor

transactions that predatethe adoption of the 1996 Taxpayer

21
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808 5238509
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.-

orthe adoptionafregulationsenforcingSection4958. the Nctice constitutes

retroactiVe application of th. Code in violation of the due pn.~cess

clauseof
i.

The compensationarrangement between KSBE aTId Petitioner is

entitled to a presumptionof reasonableness.

Re5pondent's Notice of Deftclency erroneously and "' !gallyattempts

to tax Petitioner underSection 4958(f)(6) of the Code forfafll~ a to correctthe

allegedly excessbenefittransactionwith KSBE.Qg(gm

anyd ~terminationis
made that the transaction in fact constitutedan excess benE.
!flt. and befole.

the period for correctionof the 'transactionhas expired.

WHEREFORE. Petttionerprays that afterdue proceedIngsare r ad, this Court

redetermine that:

1. The Noticeof DeficiencyIs invalid;

2. There are no deficiencies In federal excise taxes for 1995. 1Sf 16,1997,1998

and 1999 with respectto Petitioner:

3. Petitioners compensationfor the performance of services W1's reasonable;

4. The Petitioner did not engagein any excessbenefittransactiol1for any of the

years at issue;
.
5. The CommIssionererredin deteminingthatthe Section495~~(8)(1)excess

benefit transactionexcisetax a~pliedto Petitionerfor 1995, 1SeG,1997, l' 198and 1999;

6. The Commissioner erred In determining that the Section 495 B(b) InitIal tax
,
on a disqualified person applied to Petitioner for 1996. '986. 1997, 1998 a nd 1999;

22

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8085238509
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1. The Commissioner erred in determining that the Sec:ion 4958(a)(2)

organization management penalty applied to Petitioner;

8. That Respon~,nt bearsthe burden of proof as to all issues

that the Court provide PetitIonerwith such other and further relief as Is al Ipropriate.

~ Respectfullysubmitted.
.
I~X~ ~~~~~~::::=-
u. S.

L.
1'A% ~ ~UP.%

'

R NEE M'
Tax Court 0 YROO78
Attomey at I: WI
~i~'
aw C )rporation
Haseko Center.Sutte 70' A
820 MililaniStreet
Honolulu, HI 86813-2937
(808) 523~O12S

~814 v5. Flete/'&P'3IiIIon.Wpd

QOQDC,
oODD$2B:7
/24J200~

23
 808 5238509
NO.~ FP.7/2r3
~0~MHO.N
_11_: ~TF_R- 81Jj".LE_T_I_t'£I56543Z
LE:~rELD
AULS.E£, . .2";>_':_00

Intemal Reveaue Sen'ice Departmeotof 1~reuury

Director7EO Examinanons Westem~ ('1tFJGE)

Dare.: May 5, 2000 TaxpayerJdCddr= tiORNumben

515-42..0747
Tas Yea.-&adDcftciclq:
CERTJ1IUDMAD. D~- 31, I: ~5 S 628,932
necsaber31.1.!t96 $1,637.553
~~31.1!197 S 1.661,647
Decaaba'31. ldea S2.130,=
December31.1S99S 372.630
HeBt7 II. Peren ~. J)8J'rw Jmar Tu COG"J'edtSoa:
"-641 FamapG mpway Aucast 3. 2000
Waf.aa., BI "792
1'- to CoaacC
AlaDDi'ei:zea
Badge No. Ps.02:t4S
~to:.'I'E/(iB:PEV:.AD .
ConDd T,Iephuae N _bel':
(323) 869 3.943
~) M9 39S2(JrAX)

w. haw ddermiDedtbaI~ 11addcie8'1 ~) iA your c=iIe tax UDderCbapt8"~ ~ottbe ~

~
ReveDUeOgde as showa Iboye. 1'&Js1~ is . NO'l'ICI OF~ ~ .. . )'DU . rcqW~ ~ Jaw.'Ibe
Stat=t=t shows bow ~ ~
BZSClosed ~ d8Gd=cy.
rt)'Ol&~tO ~areR U dtficielJQyj4 ~ ~ makjaSmy pa.ymlat,)'aU ~ 90 day: a-om=eabOYe
m.i~ I daicat'tbLt1ett='to tile a p«ition 'With- U~ StIra Tg ~ for a ~ ::L
--~. E;~Loftba de5cimcy.
The~g. shouldbe:fil8d~ tbetJ8c.I S1IIIS~ ~ 400Sa:oa4S~ NW~ WIIbiDI_.D.c.=17,
IDdtho~P1 oftbis 1~ shouldbelttIcbal to the~ Thetime in wbi= you mw* 51eoe ieeUd= ~ 'tbc
Court ~ OaYl)js &= by l8w ID4t!I8Court~t =nsider-.mJI"
easeif YOu!'~ga~ &
ff)'au dispUteCOtmore tbIa $50,000far any ODe'tax ysr, a simpl~ plaoeaureiI provide I by ~ TaxCom
for SInIl1~ =ses. You ~ .. ~D ~ tbiI pz~ as~ u a ~OA ~ )'0\11 \loSe,
by ~ =
to the Clerk ottbe United St&ta Ta: Court..,oo SecaDdsa.. NW., \V&Ihia~ :D.c. 20211. rYou sbouId dg tbIs
~ if you ~d to file a ~Uoa Wb me Tax COWt.

ltyou d=ide nOtto 61ea pec"dOQ with the ~ CoUrt,we WDuldappreciae it if'you ww14 ~ =.aDdretwu the
mclgs~ ~ form. 'I'bis wI1Ipenait us Ig iIRG the deSci=cy qu1GklyID4 wiU limit dze~ auJ~ODof
1Dt8'e.ct.
on. etlcJosed
~ .vea. is "YOUI"=avcai~--l!')'O1idKideaDI~ sip aDd~ --=-
IDdyoudoDotdmelyp~on mera ~ meJawrequjres
usto ~ Ia~bill ~ for rbeddicisq 8ftar
90 days&om the ,aboy.lzilUiDl dateg(~51etta'.

YoualJobawtho
rlshttoeoatact
- am~ottheT~ ~ ~~YW' ~ sboWdj Snt ~the
patOft whose DImeaDd_baa 111mb..
is &~ abovesiaoethII ~ bas~ ~ tax
to YF
~o~ ~3IdDe AD Cbi& ~ aDd~ aDSWa'~« ~ 1batJOII might have. YOqcan Q]l
1-30G0&29-1040 ad .a.skfor a T ~ Ad'YO(8t8's &tdIIaD:e. Or YOI1~ =ara=me~a yCf' .4d'Voata ~ yom-
~ ~ The J~ Taxpayer Advocu.'s~ is SlOp
:e:~ 300AlaMcaamvG..#50019, J~~Ollllu,HI
.96&50aDdtbe pbOMau=b=- is (808) 5392870. T~)'eI" Ad~ aSliSllDce~ be \I;ed 1&I subsdaat8b'
estabtilbedIat=D81KeYelZUe Ser\'i~ ~ror;8JuIt3,;fb=saJappealIFoc=s.e.. =. no T~ A4'I ~ is DDtable
to ia'"T~~ lecalor ~ca11y ~ ~ ~. ..imDons.nor ~ u. time5X- by law matYO'!~ ro me a
~QD iu theU.S.Taxc~ TbeT~ M~ ~ ~, 1= tba1I.ta,matta'thIt ~. DOtbaw bem
~1v!G tbmushft=ma1cba=els.gets~pt IA4 ~ baJ1~-

300N. Lol Augcl~ Street Letter S3 1

LosAngeles.CA .90012
 808 5238509
AUGSEP 25 '00 11:01AM HON STAR BULLETI~565432 LEHRFELD NO. 833 Fp.'"8/20

" 'lnterualRevenue Service

Department of' rr=SlIry
. Director~ EO mmingriom Westem Area d 'ElGE)

If ygu havo :aDyquestions.pJea.3C

co~ the pa'$O[lw~ DameaDdteJephoucnumba IZ"e
~ above.

SiDOetefy yours,

C ~ Cl.I'--
kf
Commj ssionet
By

~J jJ.;.Jli
(a
Fr\
MarceloGama
EO ~ M~~
(A~)

EDdowr~:
No~ 1214
~cnCDt
Waiv=- FOfm408~
Euvdope
C4py of this lena
"-

300N. Los AD~cs Street letterS3!

Los An,cle$, CA 90012
 808 5238509
~SEP 25 ' 00 11-:-01I=1MHON STAR BOLLETil'i565432 L- ..'(FELD NO. 833 F'p .'"'9/20

HENRY H. PET~RS

Calendar Years
1995, 1996, 1997, 1998, 1989

~~
Ithat is known
oolS/Bishop
'auahi praced
~d that two
s are now
use of the
loots for the
!n giving

~
Ized KSBE as
!of section
,ervice
:rpcses,

~, be kept at
majority of

;4. 1984.
KSBE

~999, when
,trustee.
In an order
'nanent

Id
 808 5238509
11:01RM HON STRR BaCLEfi~S654:32 l-,;..:~FE:LD NO. 833 p~~
P.10/20
'AUt::SEP 25 '00

.2-

(a) Fromtime of creationof the trust. . distributionof

the assets of the trust, a trustee has the power to ~erfOm1.without
cour1authorization,every act which a prudent psrsPn would
performfor the purposesof the trust includingbut limited tp the
powers specified in,subsection(c),
.
(b) In the exercise of the trustee's powers ~ ~ the I

powers granted by this chapter. a trustee has a d~ act with due

regard to the trusteeis obligation ?os a fiduciary, incl ding a duty not
to exercise any power under ~his chapter in such a y as to -

deprf'ie the trust of an otherwise available tax --

deduction, Orcredit for tax purposes~. . .

At the time the will was executedand at.c Pauahi's

death in 1884.therewas'nostatutoryprovisionfor the payment0 fees to the
trustees of a trust In 1928; the practiceapprovedby the state co rt for
compensating trustees was Incorporatedin a statute originally de igned as
section 378-3. During the years at issues. the formula for computi 9 the
maxImum compensation payableto uusteesof charitableand non haritable
trusts was set forth in HRS § 607-18 and § 607-20. HRS § 607-1 providesa
fomula for computing trustee commrssionsallowable upon incom of a
noncharftabletrust estate and upon the principal of the estate. H S § 607-20
applies in the case of an estate of a charitable trust and sets forth he
commission schedule based on percentagesof the trusfs l

In pertinent part, HRS § 607-18 states;

Upon the principal of the estc..te,Trustees. -

as commissfons . . . two and one-halfpercentupona I cash

principalreceivedafter U1einceptionof the trust and ither being
nor representingprincipal upon which the two and on a/f percent
has previously at any time been charged,payableat t e receiptout
of principal.and two and one-half percent upon the fin I payment
af any cash principalpriorto the temination of the tru , payable at
the final payment out of the principal,provided that s:U five-tenths
of one percent on the principal shaUnot applyto cha bletrusts,
nor to the extent the trustee has employed others to p rfonTI
bookkeepingand cleri~1 services at the expense of the estate as
permitted by the trust document or as providedin , . 554A-3.

In pertinent part, HRS § 607-20 states:

No{withstandingany
otherprovisions.in , . of an
estate of a charftabletrust, the commissions of the TruSteesshall
be limited to the following sCheduleof percentages on moneY5

~
.AUC"SEP25 ' 00
808 5238509
NO. 833 R ?O :>7
-i r:rSZAM Hm STAR'BULLrnt-f565432~ ",F"ELD P.ll/20

-3-

receivedin the natureof revenueor incomeof the f1 state, such as

rents, interests, and general profits: ten per cent on the first $1,000:
I

seven percent on the next $4,000; five percent on tH Ie next

$100,000: three per cent an the next $100,000; and two per cent
on all [sic] over $2051000. This schedule of percent iges shalf be
applied not oftener than once a year.

The Trustees shall also be entitled to just and reasonable

allowances for bookkeeping,clerical. and special seT,vices and
expenses incidental thereto.
I
This section shall applyas wellto futureacco~
existing estates as to new estates.
In 1998. the Hawaii Legislature enacted Act 310 to amend I-'RS § 607-201
effectiveJanuary1, 1999.to read as follows:

(a) Notwithstandingany other provisions,in tf1eQse J~f a charitable

trust, the compensationof the Trusteesshallbe fill,fted to an
amount that Is reasonableunderthe circumstance s.
(b) This section shall apply to exi~tin9 and new charita ble trum ~
estabJished after the effective date of this Act; pro~ided that any
provisions in existing trust agreements regarding T1'Ustee
compensanon shall supersede this sectlon.

No chance wasJeaislated to tlBS ~ 607-18~

For the years at issue. KSBE ~Jculated the commission paid to

Mr. Peters accordIng to the formulas permitted by HRS § 607-18 and § 607-20.
In each of the years under examination, Mr. Peters elected to waive portion of
the commissionsto which the estatedeterminedhe wasentitled. Tne
commissions computed by reference to the statutes less the portion Iv1r.Peters
waives is Mr. Fete~J c:ompensatfon for the years under examination.

Attachedas Exhibit~~ is a scheduleof the commissions~. ~ tetST$

receivedin 1995 through 1999, after his waiver of certain amounts b~Jt including
the amou"ntshe deferredpursuantto the KSBE deferred compensati()n plan.

~
Seccon 4958 of the Internal RevenueCode states:
(a) Initial taxes.-
(1) On the d~quaJtfled person. There is hereby imposed on ea ~h excess
benefit transaction ~ tax Gqu~rto 2.5 percent of the excess benE~fit.The tax
 808 5238509
NC"I.833 p~'~"
P.12/20
AUGSE:P 25 '00 11:02RM HON STRR BULLEtrN565d32 LEHRrELD

-4-

imposed by this paragraph shall be paid by any disqualifiEd parson

referred to in subsection (f)(1) with respect to such transal ~on.
(2) On the management. In any case in which a tax is Im[~osedby
paragraph(1), there is hereby imposed on the participatiol , ofany
organization manager in the excess benefit transaction.krlowingthat it is
such a transaction.a tax equalto 10 percentof the excess,benefit, unless.
'such partjcipation is not willful and is due to reasonable ca lJse. The tax
imposed by this paragraph shall be paid by any organizatidIn manager
who participated in the exress benefit transaction.
(b) Additional tax on the disqualified person.
In any case In which an initial tax is imposed by subsection (a)(1) on an
excessbenefittransactionandthe excessbenefitInvolved in such
transaction is not corrected within the ~ble period r there is hereby
imposed a tax equal.to 200 percent ofthr:!. excess benefit in!valved. The
tax imposed by this subsection shalf be paid by any disquaJffiedperson
referred to in subsection (f)(1) with respect to such transacti on.
(c) Excess benefit transactIon; excess benefit.
For purposes of this section -
(1) Excess benefit transaction.
(A) In general. The term -excess benefit transaction" me ~nsany
transaction in which an economic beneftt is providedby ~n applicable
tax-exempt organization directly or Indirect'y to or for the JSSof any
dIsqualIfied person If the value of the economic benefit p,ovided
exceeds the value of the consideration (including the pen orrnanceof
services) received for pr~viding such benefit. For purpose,s of the
preceding sentence, an economic benefit shall not be trec lted as
consideration for the perfomance of services unless suc~
organization
clearly indicated .its intent to so treat such benefit.
(B) Excess benefit. The term -excess benefir means the excess
referred to in subparagraph (A).

. !
Cd) Special.~Jes.
For PU~O$esof this section -
(1) Joint and severalliabilfty. If more than 1 person is liable for anytax
imposed by subsection (a) orsubsectfon (b), all such persons $halJbe
jointfy and severally liable for such tax.
(2) Limit for management With respect to any 1 excess bene,~
transaction,the maximum amount of the tax imposedby SUbSE ~ction(a}(2)
sh~" not exceed $10.000.

~
 808 5238509
11: 02AM HON STAR BULLEfIN56S432 LEHRrELD NO. 833 F'p:1'372"0
I=\UCSEP 25 '00

-5-

(e) Applicable tax-exempt organization.

For purposes of thIs subchapter,the term "applicable:
organizationW means -
(1) any organizationwnich(Withoutregardto any excess . be
described in paragraph
undersection . exe~Pt from tax
(3) or (4) of section 501(c) and
501(a),and

(2) any organiZationwhich was described in paragraph (1) t any time

during the 5-year period ending on the date of the transacti n.
. .
Such tem1shall not include a privatefoundation (as defined in
509(a».
(f) Other definftions.
For purposes of this section -

respect to any transaction -

(1) Disqualifiedperson. The term -disqualifiedperson~ :~wIth

(A) any personwho was,at anytime duringthe ending

on the date of such trans.ctlon, In a posrtionto exercise
influence over the affairs of the organization,
~
(B) a member of the family of an jndrvidualdescribed in
(A), and
(C) a 35~percent~ontrolledentity.
(2) Organizationmanager. The term .organization : '""' " with
respect to any applicable tax-exemptorsanization, any off'icefLdirector, or
trustee of such organization(or any indivIdualhaving powers hr
responsibilitiessimilar to those of officers, directors, " of the
organization),

(5) Taxableperiod. The tenon-taxableperiod~means,with any

excess benefit transaCtion.the period beginningwith the date
the transaction occurs and ending on the earliest of - .
.' .
. (A) tne date of mailing a notice of deficiency under section with
respect to tJ1etax imposed by subsection (a)(1). or
(B).the ~ate on which the tax imposed by sub~ection (a)(1)
assessed. . .
(6) Correction. The telTnS wcorrection" and .correCt" mean, "-

any excess benefit trans'action) undoing the exce.$$benefit to ~e extent

possible, and taking any additional measures necessary to p/ade the
organizationin a financial positIonnot worse than that in I would be
 ..~._- . -
P.14/20
~s'fP"25 "'roo
'. .
0-

if the disqualified person were dealing under the highest

standards.
Treasury Regulation§1.162-7of the IncomeTax.
various criteria for detem'tiningthe reasonableness of .. for personal
services. .
~~vemment PosffioQ
KSBE at all relevanttimeshas been recognizedas .
organization under section 501(c)(3) of the"Code. ~erefore, is an
appncabletax-exempt organization,as defined in section 495B(e).

As a trustee of KSBE until he was temporarily removed in . Mr.

Peters was in a position to exercisesubstantial influence over the dffairs of
KSBE. Therefore,Mr. Peterswas a disqualified person with ) KSBE
within the meaning of section 4958(f)(1)(A) of the Code.

Section 4958(0)(1) of the Code provides that an excess .

transactionis anytransaction
in which an economicbenefitis prcvi ed by a
section 501(c){3) or 501(0)(4)organizationto a dIsqualifiedperson the value 9f
the economicbenefit providedexceedsthe valueof the considereti n (incluamg
the performance of services)-
receivedfor providingsuch benefit. us,
compensation paid may not exceed Whatis reasonable under all th
circumstances.Compensationfor the perfomanceof services is re sonabJeif tt
is only such amountas would ordInarilybe paid for like services.by I ke
enterprises under li}(ecircumstances. The fact that a state or local I isfatNe or
agency body or court has authorized or approved a particularcomp nsation
package paid to a disquarrfiedperson is not determinativeof U1e L
of compensation paid for purposes of section 4958.

Therefore.it is neces;sary
to . .' paid by
KSBE to Mr. Peters exceeded the value of the services Mr. Peters P~On'r1edfor
KSBE. In making this determination.the following factors are.
account
.
~ Arm's-Lenath ~arQainina - Compensation resulting - arm's-
length bargaining is a strongfactorsupportingthe reas nabJeness
of compensation received. Inthe presentcase,therea nofads
indicating that Mr. Peters engaged in any ann's-length egotlations
over the terms of his compensation. Instead, state law royided a
formula for determiningthe maximum compensationa t &tee
could
in be paid.
reviewing the However. the Special
Annual Accounts Master
of the of thecriti
Trustees,J. Pro . ate Court,
ed the
KSSE trustees, including Mr. Peters, for the methods I to
calculate compensation under the statutory formula.

~
 808 5238509
RU(;SEP 25 ' 00 11: 03AM HON STAR BULLETI~~65432 ~~ NO. 833 rp ~5720

-7-

~ Size and Corncle~of the OroanizatioD' .. - - _.-

organization, in terms of a~ets, income. and empf ees, is a
signmcantfactor in detenT1iningreasonable campen ation. The
entire KSBE organizationis large and complex. alth ugh this
complexity is atlributable to the organization's busin and
investment activities and not to its tax..exemptacti' of operatinga
schoot. Nevertheless.
organization shouldbethe s~ into
taken and complexity.of
account in th entire
. theKSBE
reasonablenessof Mr. Peters' compensation.

ij1 -
Nature of the Trustee's Duties The duties and.
i
trustee are described in Hawaii law and do not inclU operating.
and managing businessesand inv\:lS'b11ents.Mr. Pe rs and the
other four ~stees should be treated as having equ I responsibrlity
a

for the operation and management of the entire

organiZation.

~ . Neither did
Mr.~ers have any spec~experience in managing arge
business and investment assets. A person's qualffi .ons for a
position and prior compensation received are factors n determining --.
reasonable compensation. Mr. Peters did not offer a y unique or
irreplaceable skills necessary for the conduct of KSB 's business
and Investments. Mr. Peters' qualifications to ope:rat the business
of KSBE were not commensurate with the: . , paid to

Mr. Peters for by KSBE.for the services.

~ -
Trustee'sPerfomJanceAn important factorin - - - .
~ ~

reasonablecompensaUon is job perfom1ance.The p ormanceof

a KSBE trustee should be measuredprimarilyin temt of school
perfom1anceand ,secondarilyin tenns of inves'tmentp lfom1ance.
In some respeCt$, Mr. PetersJperformanceas a tnJste did not
further KSBEJstax.exempt purpose of operating a sch 01. Instead.
it substantIallyimpeded the accomplishment of thispu ose. The
IRS concluded that therewassubstantialevidenceof e operation
of KSBE for a ,non...exemptpurpose and, therefore, co cluded that
KSBE failed to engage in activitiesthat,primarily furthe d KSBEJs
charitable purpose,and that unrelatedbusiness incom revenue
was not properlyreportedon KSBEJsIRS Fom1s990- .
.
vi. Mr. Peters perfonT1snce as a trustee does not justify th
compensation paid for his services as trustee, The In mal
Revenue SeMce determinedthat. during Mr. Peters te ure as
trustee, KS8E's exempt status should be revoked beca se it was
not operated in a manner that primarilyfurthered the m exempt
purpcseof KSBEandthat KSBEwas liablefor , ~busines~
 808 5238509
r-AU<SEP 25 '00 11: 03AM HON STAR BULLETI~S6S432 LEHRrELD NO.833 rp '-16/20
-8-

income tax on revenue. To resolvethe revocation and unrelated

business tax issues, the five incumbenttrustees, inqluding
Mr. Petershad to resignor be removedand KSSErJaid tax and
Interest on the unreported unrelated business incom- in the
amount of $13,992,500.89. In addition, a major restr~cturingof the
operationsof .KSBE under new managementwas rei~uiredby the
Service. Simultaneously. independentdiscrete'inves~gationsby the
Attorney General of Haw;ii and the Special MaSterdf the Probate
Court concluded that Mr. Peters ~rfonnanoe as a trUsteewas not
prudentand that his conduct placed KSBE at.risk of 'losingits tax
exempt status. These findings are public fnfonnatioriavailablein
Equity No. 2048. Estate of Bemice P. Bishop.CircuitCourt for the
First Circuit. State of Hawaii.
. ,
~ -
~omp~n~ation Scale for All Emolov-~~~ Another fac tor
determining the reasonablenessof compensationits -elationto
other salaries paid to others in the same organization. Mr. Peters'
compensation was substantiallyout of proportion in n Ilation to the
other execlItfves employed by KS8E. For example. irJ 1996,the
next highest paId KSBE executive receIved$207,000land the next
four highestpaid executivesreceivedcompensation~ inging from
$156,000 to $176,000. ~

viii. .'_ndscendentInvestor Test.. It is not probable an outsi.je investor

would approveof sucha compensation plan as reasonable.
The Intemal Revenue Service compensation consultant dew!,-ninedthat
reasonable compensation
ranges: . for Mr. Peters In 1995 and 1996 was fn tl1~ following

-
$84.000 $147.000
-
$90,000 $158,000

Thus, a reasonable level of compensationfor Mr. Peters in .1~195 was no

more than $147,000 and fn 1996. '997, 199Band 1999 was no ~rj ~than
$158,000 per year. Since the compensationKSBe:paid to Mr. Peter $ in each of
these years exceeded a reasonable level of compensation,the follo~"ing
amounts of compensation represent excess benefits Mr. Peters race ,ived aG a
result of having entered into excess benefit transactions with KSaE ~Inder
section 495B(c)(1)ofrt1e Code. (See ExhibitA.) I

1995 $257,303

705,579
 808 5238509
HQ~ STAR BULLETI~565432 L~MKFELD NO. 833 F'P:-i7.720
. ~~_:..00 _l!~~~.AM
P.U~~F;.P.
-9-

718.954

924,534

1999 143,391

As of the date of this notice. Mr. Peters has not corTected.,Yithinthe .

meaning'of section 4958(1)(6)of the Code. any of the excess bern~flt b-ansactions
with KSBE.

As a tnJstee of KSBE, Mr. Peters was an organiZationman~Iger Within the

meaning of seCtion 496B(f)(2) of the Code. Separately, the Intem~I'Revenue.
Service has detem'lined that +J1efour other trustees of KSB c were eact1
disqualified persons with respect to KSBE. In addition. a portion c)fthe
compensation KSBE paid to each of these KSBE tnJstees during 1995 to 1999 .
was unreasonable and therefore constituted ex~~s benefit transa, ::tions
between KSBE and each trustee. As a trustee himself, Mr. petersl carncipatedin
these excess benefit transactions, knowing that these transactions were excess
benefit b'ansactions. In addition. Mr. Peters' participation In these 4~~cessbenefit
transactions was willful and was not due to reasonable ~use, with' n the
meaning of section 4958(a)(2) of the COde.
"-
Finally, the binding written contract exoeption in section 131' l(d)(2) of PoL
104-'68 does not applyIn the presentsituation.

Conclu~ions
Under sedjon 4958(a)(1) of the Code. there is hereby imposl~ on the
excess benefit transactions tl1atoccurredin 1995 to 1999 between KSBE.and
Mr. Peters a tax equal to 25% of the excess.benefrts.as follows. -n lesetaxes
are payable by Mr. Peters. (S.eeExhibitA.)

$ 64,326

1996 176,395
, 179,739
1997

231,134
.
1999 35,846

Since Mr. Peters has not corrected,within the meaning of sel:tion

4958(1)(8)of the Code, any of the ex~ benefit transactionsthat oc:curredIn
1995to 1999 between him and KSBE,there is hereby imposed on tt p.seexcess
 808 5238509
ALKSEP 25 ' 00 11: 04AM HON STAR- BUCLETI~~c5432 LEHRFELD Nn.833 F'P.T8/20
- 10-

benefit transactions. under section 4958(b). a tax equal.to 200% ,f the ex~~ss
benefits. as follows. These taxes are payable by Mr. Peters. {Se ExhibttA.)

1995 $ 514,606

1.411.158

1,437,908
'1998 11849,068

286,782

Under section 49Sg(a)(2)of the Code, there Is hereby impooedonthe .

participation by Mr. Peters, an organizationmanagerwith respect 1p KSBE, In
excess benefit transactions between disqualified persons with res~'ect to KSBE,
and KSBE, a tax equal to 10% of the excess benefitS,as follows. '
rhis tax,
limited to $10,000 of each excess benefit 'b'ansaction under secb'oJ, 495B(d)(2),is
payable by Mr - Peters. (See Exhibtt A.)

$59,000 ~

50,000
1997 50,000
1998 50,000

1999 50,000
 808 52 -- ,-
AUGSEP 25 '00 11: 04AM HON STAR BULLETIN565432 LEHRFELD NO.833 PP:'19/20
~
O)!. ~ !
;
I
.
~
N
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