×

Suit filed against Bank of America

Maui group seeks to force bank to uphold $150M committment

A woman walks past a Bank of America branch on Jan. 14 in Woodmere Village, Ohio. A Maui-based Native Hawaiian housing advocacy organization has filed a federal lawsuit against the bank, pushing for the company to uphold the commitment it made to provide $150 million in home loans available on state Hawaiian home lands. AP photo

A Maui-based Native Hawaiian housing advocacy organization filed a federal lawsuit on Tuesday against Bank of America to uphold a long-standing commitment to make $150 million in home loans available on Hawaiian home lands.

The nonprofit Na Po’e Kokua, and its pro bono attorneys from Oahu and Florida, filed a lawsuit in Hawaii District Court against the bank for damages, injunctive and equitable relief under the Racketeer Influenced and Corrupt Organizations Act, also known as RICO, and the Ku Klux Klan Act of 1871, relating to the violations of Native Hawaiians’ constitutional rights under “color of law” by Hawaii state employees, according to a news release.

“We don’t have the mechanisms in the government to hold these banks accountable,” Na Po’e Kokua Board President Brandon Maka’awa’awa said. “The regulators need to police the banks and treat them like criminal organizations because they act like they’re above the law. Until the people whose job it is to hold them accountable actually do their job, the federal courts are our best recourse.”

The issue goes back nearly three decades ago, when Bank of America acquired Hawaii-based Liberty Bank. At the time, the Federal Reserve Board conditioned its approval on Bank of America originating $150 million in home loans on Hawaiian home lands within four years, according to a news release from the plaintiffs.

By the 1998 deadline, Bank of America had originated just $3 million in mortgages. Allegedly, in an effort to avoid jeopardizing regulatory approval of its $62 billion merger with NationsBank, Bank of America again promised bank regulators it would fulfill its Hawaiian commitments and agreed to capitalize a native-owned bank.

Since 1998, Bank of America has only provided a total of $13 million, far from the $150 million threshold, the news release said.

Last year, Na Po’e Kokua filed a whistleblower complaint with the U.S. Securities and Exchange Commission that it called the “last warning” to Bank of America.

The bank has countered the group’s claims, saying in a 2020 lawsuit against Maui County that while it failed to meet the deadline, it continued to lend and invest to promote native Hawaiian ownership and eventually met its goal.

“While we respect the issues faced by the native Hawaiian community, the Bank fulfilled its pledge made in 1994 and this was confirmed by the State in 2007,” the bank said in a statement to The Maui News on Wednesday evening.

The bank has previously pointed to a 2007 letter from the state Department of Hawaiian Home Lands that says “the statement of BoA contributions toward fulfillment of its commitment appear to be in order.”

But according to public documents and news reports, the Hawaiian Homes Commission in 2012 disputed the earlier letter, saying that decision had been made without commission approval and agreeing that the bank had still not fully followed through on its pledge.

In 2018, Gov. David Ige invited bank officials to meet with Na Po’e Kokua in Hawaii and work out a fair settlement, but the issue was never resolved.

On Tuesday, Oahu-based attorney Frederick J. Arensmeyer along with Florida-based attorney Bruce Jacobs filed the lawsuit.

“I think we put together a massive lawsuit. It is the first of three series we are going to be filing,” Jacobs told the Maui County Council’s Government Relations, Ethics and Transparency Committee on Tuesday.

“Everything that we needed to do has been done now,” he later said.

The 106-page lawsuit details an affidavit obtained earlier this month by Na Po’e Kokua from a former community investment officer at Bank of America.

“I believe Bank of America made a deliberate decision to create this false narrative stating that there was no commitment and if there was a commitment that (Bank of America) honored it … (Bank of America) can play fast and loose with its words for almost as long as it can masterfully play around with numbers, all while another generation of Native Hawaiians endure a housing crisis in their homeland,” the former executive said.

Plaintiffs claim that the bank used “subterfuge and a series of false and fraudulent acts, statements and documents to claim simultaneously that the commitment had been fulfilled and that were was no commitment.”

Maui County had long been mulling legal action of its own. In July 2020, within hours of the full council voting to pursue claims against the bank and other mortgage lenders, Bank of America filed a lawsuit against the county in federal court.

In December 2020, a U.S. District Court judge granted a motion by Maui County to dismiss the suit, paving the way for the county to pursue possible claims against the bank for not fulfilling the loan promise and other issues.

However, the county was not involved in the lawsuit filed Tuesday due to an apparent breakdown in communication between Maui County attorneys and outside hired legal counsel, Na Po’e Kokua and its attorneys alleged.

During the committee meeting Tuesday, Maka’awa’awa said there was no outreach by the county or the outside counsel of Bronster Fujichaku Robbins, which includes former Hawaii Attorney General Margery Bronster.

Bronster said when they were contacted early on, she and her team quickly responded and had a Zoom meeting. They also responded when contacted, Bronster said.

She added that their research into the case took time as they sought out state officials and other families that were affected by the discriminatory practices.

Maka’awa’awa said he and Jacobs had to do the outreach. But when Jacobs contacted the county’s legal team, he was met with issues over attorney-client privilege in which the other side could not share information. When Bronster later asked him for his legal work on the case, he did not provide it, feeling they were not on the “same team.”

“We tried many, many, times to work with corp counsel and special counsel,” Jacobs said during the committee meeting. “They never seem to want to work with us.”

He asked for support from the council, saying “we did the work, we filed. The fight is on.”

Bronster said she did not know about the lawsuit being filed on behalf of Na Po’e Kokua until several days prior when she received a media inquiry. Both she and Maui County Corporation Counsel Moana Lutey told council members that were not currently planning to file a lawsuit on the matter.

Both said they could discuss the reasons with members in executive session, with Lutey pointing out that what they share publicly could be used by Bank of America.

Following executive session, committee Chairman Mike Molina said he would defer the matter and bring it up in the future.

Molina said it seems like the county had an opportunity to bring up the legal challenge, but “for some reason now the answer is ‘no.'”

“To be honest, I’m quite embarrassed … the other folks took the initiative to move forward,” he said.

A county spokesperson said Wednesday afternoon that Victorino had departed for the Climate Mayor’s Leadership Forum in Reno, Nev., so he was unable to comment on the matter.

* Melissa Tanji can be reached at mtanji@mauinews.com.

NEWSLETTER

Today's breaking news and more in your inbox

I'm interested in (please check all that apply)
Are you a paying subscriber to the newspaper?
     

COMMENTS

Starting at $4.62/week.

Subscribe Today