BY JIM DOOLEY – The newly-hired head of the state’s securities enforcement office allegedly defrauded a business associate in 2010 and failed to pay $900,000 in tax and child support debts over the past 10 years, according to public records.
Peter C. Hsieh was also reprimanded last year by the Hawaii Supreme Court for mishandling funds belonging to clients of his law practice in 2006, as reported March 30 by Hawaii Reporter.
Hsieh (pronounced Shay) disclosed the reprimand before the state Department of Commerce and Consumer Affairs hired him February 13 as its senior securities enforcement attorney, DCCA Director Keali’i Lopez said last week.
Lopez said today the department “did not know about” Hsieh’s tax and child support debts or the fraud allegation lodged against him in February in U.S. Bankruptcy Court.
“We are extremely concerned and we have begun our own internal investigation,” Lopez said through spokesman Brent Suyama.
The civil fraud allegation was filed February 21– after Hsieh took the state job — by attorney Joseph Huster, who provided legal services to Hsieh’s law firm on a contract basis, according to court records. (See the Huster suit here)
Huster alleged that Hsieh “stole and/or fraudulently transferred” tens of thousands of dollars in legal fees owed to Huster for work performed in 2007-08.
Hsieh has denied that allegation and a scheduling conference in the case has been set for April 13 in Bankruptcy Court.
Hsieh declared personal bankruptcy last year, disclosing that he owed more than $600,000 to the IRS and more than $146,000 in state tax arrearages. Hsieh bankruptcy
Hsieh also reported that he owed his ex-wife $141,000 for unpaid child support, education and medical coverage obligations.
Hsieh was discharged from bankruptcy earlier this year and some of his tax debts are believed to have been forgiven.
But other tax debts are covered by liens filed against him and he is obligated to pay them. Child support debts are not dischargeable in bankruptcy.
One lien filed against him in 2008 by the state Tax Department said Hsieh owed $29,000 in general taxes for the years 2005, ’06 and ’07; $12,298 for unpaid 2006-07 withholding taxes; and $1,947 in 2007 Honolulu rail tax surcharges.
One IRS lien filed against Hsieh in 2009 said he owed $139,531 for 2006-07 personal income tax arrearages.
Hsieh did not respond to questions submitted by Hawaii Reporter to him via email and telephone.
Huster said today he was “shocked” to learn from Hawaii Reporter that the state hired Hsieh as its top securities enforcement lawyer. He did not respond to a request for additional comment.
In the fraud claim, Huster said Hsieh paid him $27,000 in 2010 for his past legal bills, but the payment was “far short” of the total amount owed.
Huster alleged that Hsieh first told him the $27,000 payment covered all of Huster’s outstanding bills, then later said that he “lacked sufficient funds” for additional payments to Huster, according to court files.
Huster claimed that Hsieh received “far in excess of the amount” owed when contingency fees were paid in a lawsuit handled by Hsieh.
Hsieh was under a fiduciary obligation to segregate Huster’s fees from his own, but failed to do so, Huster alleged.
Mishandling of segregated funds was the cause of Hsieh’s Supreme Court reprimand last year.
The state Office of Disciplinary Counsel, an arm of the Supreme Court, said that Hsieh: took money from his client trust account in six matters before he earned them; took fees for nine matters when his clients did not have funds in the account; did not reconcile his ledgers in 2006; and did not list his client trust balances which agreed with the reconciled client trust account bank balances for each quarter of 2006.
The Hawaii Supreme Court issued a public reprimand of Hsieh in October 2011.
Hsieh owes $3,975 to the Office of Disciplinary Counsel for costs it incurred in pursuing the case against him, according to bankruptcy records.
Public records show that last year Hsieh cited the then-pending disciplinary action as a reason to reduce the level of child support owed to his ex-wife.
He told a child support hearings officer that because the Disciplinary Counsel wanted to suspend his law license for three months he could not find work with a private law firm.
Hsieh said his Disciplinary Counsel problems were caused by “the mishandling of client trust accounts by his bookkeeper.”
A hearings officer declined to reduce the level of Hsieh’s child support and said his unpaid support bills as of December 2010 totalled nearly $48,000.
Lopez of DCCA said last week that when Hsieh applied for the securities enforcement job, he “gave a detailed and reasonable explanation about the facts surrounding” the Supreme Court reprimand.
“Given those details and Peter’s depth of experience, we felt the people of Hawaii would benefit from his addition to our team,” Lopez said.
Hsieh has been a litigation attorney for 30 years. His DCCA duties include oversight of four attorneys and seven investigators in a branch that is “heavily involved in litigation cases.”
Lopez added: “Peter has been with DCCA for a short time, but has demonstrated his willingness to serve the public and make the most of this opportunity.”
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It is apocryphal that Lopez and her hiring staff were unaware of these facts. But, if they were, it demonstrates that they did not do their due diligence in hiring what I would consider to be a high level position that enforces integrity.
How in the world does an agency who’s mission is to regulate criminals, and enforce integrity, hire someone who is a criminal and obviously that obviously has no integrity.
This is unacceptable. These state agencies, even at the highest levels don’t do adequate background checks. I would like to thank the author, Jim Dooley for sharing these facts with the people. My contribution to help spread the word was to share this link on popular web 2.0 content sharing sites.
This is a debacle, egregious, and to put it plainly a cluster f***.
i am sure the dcca does a fine job.
ok stop laughing. ok. no, really stop laughing.
ok, are you done laughing? ready to get serious? hsieh really should not be in that position. this is very disconcerting.
remember when johnny carson would tell the future? well, i see the future. i see lopez trying her best to save face, and save her butt. 5 bucks says the person reporting to her gets canned, or she might skip a level. these guys are all in cahoots. who knows but. this is just another form of ol’ boy politics.
I actually stumbled upon this article from your link at stumbleupon.com, billray. As a former resident of Hawaii this article doesn’t surprise me in the slightest. Yet, disturbs me supremely. Are resources so thin, that state authorities need to hire such bottom of the barrel people?
I wanted to feel proud of the state that I was born and raised in. But, I suppose that’s the reason I left. The state government there always felt second rate. It’s hard not to write a spiteful, pointed comment at the leadership of the Consumer Affairs division.
The fact is though, someone did not do their fact finding prior to hiring this attorney. Those responsible don’t belong in their leadership positions. Regardless of if he’s been a valuable member of the team in the short time he’s there; 1) fact finding was not done 2) he has a very questionable past 3) this entire situation is entirely too hypocritical. How do you expect to have someone with such a sordid past to justly enforce the unjust and sordid?
billray, you called it right. This entire situation is messed up. I believe the best way to rectify the situation is to outsource that department altogether, or to simply replace the leadership with people who can lead the department competently, and justly.
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Ridiculous! How can the people of Hawaii rely on Hsieh to be a securities enforcer, whom clearly has a unlawful past? And who was responsible for hiring Hsieh? Securities Commissioner? DCCA Director? For such a trusted position, I would think simple due diligence would be done, which has clearly been omitted in this case. Hsieh should be removed immediately as well as the person who hired him. This isn’t a mom and pops business, this is a State agency responsible for enforcing regulations!!! Where is the accountability???
Another in the long line of crooks appointed by the chief crook. What’s the surprise? People reading this probably voted for him! He is frequently spotted under various bridges.
Here we go again! State workers and their reprehensible, unacceptable, and flagrant shenanigans.
What possible repercussions will this department, nay these high ranking officials including Hsieh face?
Nothing. Nothing will come of this. Do you know why? Because it takes an act of congress to remove someone from the State. Gross ineptitude, treachery, insufferable and flagrant acts against humanity aren’t enough to remove anyone from a State position, much less executive positions like the leadership that runs the Consumer Affairs Department.
There will be no repercussions against the deluded leadership. They will continue to live in a world of delusion contending that they have done nothing wrong. They will continue to ineptly run the department and hire inept, undeserving,unethical candidates. I’m willing to guess because in their delusions, they will mismanage this department to the ground. Oh, wait. This is a state government run department. They don’t have to run it like a business. Instead they can simply run this department as if they had unlimited funds. Tax payer funds.
Thank you Lopez for choosing the leadership that you choose. Please continue to set the fine example that you do for those aspiring to mismanage any business as well as maybe run their own criminal syndicate.
Per your email, I read this article. To put it succinctly, I’m angry. I am angry because, yes I agree with you 100%. Hsieh absolutely should not be in this position. Who is responsible for hiring Hsieh? They need to step down as well. I am wasting my breath. I believe you’re right. There will be no repercussions.
I will join you in thanking this department’s management for showing a fine example of how not to run a business. I would also like to thank this department in showing us just how evil government leadership can be. An especially big thank you for those responsible for hiring Hsieh. Keep up the gross incompetence. How do you even live your life?
All of you need to go to church or do something good for the community. Shame on you.
To be so ignorant of a applicant’s history and negligent of vetting them properly before hiring, the folks at the DCCA responsible for hiring this deadbeat dad should be fired. Once again another state agency is grossly failing the people of Hawaii and there should be a house cleaning of the department.
Either Lopez knew of this deadbeat lowlife’s history and was in cahoots to hire him, or she wasn’t aware and is obviously incompetent and in over her head as Director. Which is it?
@Kalia, don’t you think it was overkill to post this article on Facebook AND email everyone on your contact list about this article?
Well, I did the same. I thought this article was a joke until I realized that Dooley wrote this article. This is the real deal!
DCCA, Governor Abercrombie, how in the world did you hire someone with so many financial and legal problems. Putting someone with financial problems in charge of enforcing securities is like having a drug addict with multiple convictions in charge of regulating pharmacies, or being a pharmacist themselves.
Putting someone with financial problems in charge of enforcing securities is like having the mob run the police department.
Do you get what I am saying??? Of course you don’t. The state run DCCA doesn’t care about anything apparently. I am definitely not voting for the gov again if he’s going to appoint Directors that don’t give a rip about the kind of people they hire. The DCCA really screwed the pooch on this one.
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