James Pflueger

BY MALIA ZIMMERMANRetired Auto Dealer Jimmy Pflueger has defaulted on his promise to pay several million dollars to Kauai residents who lost their loved ones – and property – when his Ka Loko dam breached in the early morning hours of Tuesday, March 14, 2006.

Pflueger, 85, is one of several defendants in wrongful death and property damage lawsuits filed by those who lost family members and property in the disaster.

Seven people were swept to their deaths, including Aurora Solveig Fehring, her husband Alan Gareth Dingwall, and their 2-year-old son, Rowan Grey Makana Fehring-Dingwall.

Christina Michelle McNees, who was 7 months pregnant, and Daniel Jay Arroyo, her fiancé who she was set to marry just hours later, also died along with Timothy Wendell Noonan, Jr., a friend of the Fehrings, and Carl Wayne Rotstein, the Fehring’s caretaker and business partner.

Waves, which witnesses called a “tsunami from the mountain,” reached as high as 25 feet when 370 million gallons of water from Ka Loko slammed into Kauai’s main Kuhio highway and bridge. The powerful waves destroyed 100-foot trees, cars and homes, and caused millions of dollars in damage to both public and private property.

Property damage claims filed against Pflueger, his family trust, the state, the county and private companies, were litigated in a civil case filed by lead plaintiff Bette Midler, a Hawaii-born Hollywood star. That case was later combined to include the lawsuit filed on behalf of the victims’ families against the same defendants.

The cases alleged that Pflueger covered the dam’s main safety feature, its spillway, causing it to breach; that the state did not inspect the dam as required; and that the county allowed illegal grading there. The dam’s former owner and operator also paid a portion of the settlement.

The lawsuits were settled for an estimated $25 million in 2009, and there may be another $25 million settlement for the victims from an insurance company. The terms of the settlement were not disclosed.

Pflueger’s attorney William McCorriston did not return calls and emails from Hawaii Reporter about his client’s decision not to pay the Ka Loko victims by the September 1 deadline.

However, Pflueger’s attorneys have told attorneys for the victims that Pflueger does not have the money to pay his share of the undisclosed civil settlement, and that he would like a 2-year extension.

Plaintiffs interviewed by Hawaii Reporter are not pleased.

Bob Warren, whose property was damaged in the breach, said he does not believe that Pflueger would pay the settlement even if he has the money, and that this is just another delay tactic to avoid paying what he already agreed to.

Bruce Fehring, who lost his daughter Aurora, 2-year-old grandson Rowan and son-in-law Alan in the breach, and suffered considerable property damage including losing two of his homes, called Pflueger’s decision “unfortunate.”

Back Up Plan

The victims’ attorneys do have a back up plan. They’ve placed liens on some of Pflueger’s properties, including more than 384 acres along the pristine Pilaa Bay on Kauai. But because Pflueger already has a history of not paying his bills, there are at least two liens in front of them.

There is an estimated $5 million lien from Pflueger’s own family trust against him. When Pflueger was co-trustee of his grandmother’s Mary Lucas Trust, he bought the property for $6 million under his company, Pflueger Properties. He paid $1 million as a down payment and then never released the remaining $5 million, according to trust beneficiary, Christiane Lucas, Pflueger’s niece. Pflueger transferred that property to another of his entities, Pilaa 400, real estate records show.

In an earlier interview with Hawaii Reporter, Lucas was critical of the deal saying there were other buyers offering more money for the property. Lucas successfully took her uncle to court to have him removed as co-trustee over this and other matters.

The second lien for an estimated $4 million is from the state of Hawaii. In 2001, Pflueger’s extensive illegal grading activities on his property at Pilaa – combined with heavy rains – led to 1,000 tons of mud running into his neighbors’ homes and property and then into the pristine Pilaa Bay.

After a federal and state investigation, Pflueger was charged with 13 felonies and was convicted of 10. He avoided prison time. But the June 2006 settlement included the requirement that he pay $2 million in penalties to the state of Hawaii and the U.S. government and spend approximately $5.3 million on the remaining work.

In July 2005, the Hawaii Board of Land and Natural Resources fined Pflueger $4 million for damages to Pilaa from sediment runoff to the beach and coral reef. He appealed the case. Colleen Hanabusa, who was then a state senator and now is in Congress, represented Pflueger against the state.

In late 2006, Kauai’s Fifth Circuit Court found against Pflueger and the fine was upheld. That brought the fines by the state and federal government agencies against Pflueger to a total of $12.5 million. Pflueger is appealing the Department of Land and Natural Resources fine before the Intermediate Court of Appeals. Until then, the state has the second lien – totaling $4 million – on Pilaa.

Civil attorneys for Ka Loko have the third lien – for $4 million – on the same Pilaa property.

Property records for Pilaa show that Pflueger also has not paid two years worth of property taxes on Kauai totally about $40,000.

While the land is worth an estimated $6 million today, it could be subdivided and sold as 22 parcels. That would increase the value, but selling real estate on Kauai during tough economic times is especially challenging, island realtors say.

Lawyers for the Ka Loko victims will have to decide whether they should try to sell the properties and collect the money or wait another two years to see if Pflueger in fact pays the settlement.

Pflueger Sells Kauai Home for $4.5 Million Same Day As Defaulting on Ka Loko Settlement

Meanwhile, on September 1, 2011, the same day he defaulted on his payment the victims of Ka Loko, Pflueger, who owns several properties throughout the state, sold his luxury Kauai home set upon a lush 33-acre estate for $4,565,000.

Pflueger built the old Hawaiian estate style-home with spectacular views of the ocean, mountains and Kilauea river in 1991 and named it Hale Me Kihapai (house with orchards).

Pflueger was the original owner of the home until April 20, 2006, but he transferred the property to his long time partner Cynthia Foster for $0 just days after his dam breached on March 14, 2006.

In this case, the Kauai estate was transferred again on October 1, 2008, by Foster for $0 to a New York-based trust (39 C Trust) managed by J. Mark Seelig.

Real estate records show that the property was transferred back to Pflueger again in 2010.

Money Hidden Away?

While Pflueger’s attorneys say he is short of cash, some believe Pflueger has money hidden away, including the IRS.

He is facing federal charges for tax fraud, in part for allegedly placing $14 million from a California property sale into a Swiss bank account without reporting the transaction to the IRS.

That case is set to go to trial next year. His son Alan, who runs the family business, Pflueger Auto, his accountant and some of his employees are also facing federal charges related to tax fraud.

Pflueger Faces Criminal Trial for Ka Loko Breach

That isn’t Pflueger’s only upcoming criminal trial.

A separate criminal case filed against Pflueger in November 2008 by the state attorney general charged him with 7 counts of manslaughter and one count of reckless endangerment in the first degree.

The state alleges Pflueger covered the dam’s main safety feature, the 118-year-old earthen dam’s only spillway, despite repeated warnings from people who told him that it was dangerous. The prosecution alleges Pflueger illegally graded the area around his dam and reservoir because he wanted to build homes there for profit.

The criminal case has not gone to trial because Pflueger has filed several appeals. He blames every other defendant involved in the civil lawsuit including the state and county and former dam owner and manager, but does not admit responsibility for the breach.

In Search of Good Publicity

Meanwhile Pflueger’s partner Cindy Foster is doing her best to get Pflueger some good publicity.

The multi-million dollar heir to the Campbell Estate is financing a movie about Pflueger’s life.

According to a producer who contacted Hawaii Reporter about the project, the movie will review Pflueger’s childhood, his career and athletic accomplishments and address “that incident on Kauai.”

They have hired John Long, who according to his biography in Wikipedia, “is an acclaimed American rock climber and author whose stories, ranging from adventure yarns to literary fiction, have been translated into many languages. He has more than forty titles and two million books in print.” Long also has documentary experience including writing and producing ABC and BBC specials, feature films, and working on dozens of motion pictures, including the Rambo series.

 

Hawaii Reporter editor Malia Zimmerman was subpoenaed in the Kaloko Dam breach civil and criminal cases by both the defense and prosecution respectively.

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