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A lawsuit involving Lokelani Lindsey, convicted of bankruptcy fraud and conspiring to commit money laundering, highlights a gray area in enforcing an IRS tax levy on assets that may have been temporarily insulated through a trust fund and pension plan.
The suit, brought by Bank of Hawaii, also names the Internal Revenue Service. Bankoh is caught between a levy by the IRS and the intentions of its longtime customer Lindsey, who set up a trust and pension plan in 1993 with the bank's trust department.
Lindsey is scheduled to report to federal prison authorities on Monday to serve a six-month sentence. She pleaded guilty June 2002, but was given two delays in serving her sentence, because her husband, Stephen, is gravely ill. Recently she was reported saying that her husband is bedridden and she cannot afford outside medical care.
Lindsey created the trust and pension plan with Bankoh to provide for the couple. She once earned as much as $1 million a year while serving as a trustee for Bishop Estate, now Kamehameha. Schools, a position from which she resigned under fire along with four other trustees in...