Insurance would not have aided UH in concert fiasco

The type of insurance the University of Hawaii had planned to buy for its ill-fated Stevie Wonder concert wouldn’t have protected it against the apparent fraud that was perpetrated, a prominent local attorney said.

What was specified in UH’s contract with local promoter Bob Peyton "is what we call third-party insurance," said James Bickerton, a partner in the firm of Bickerton Lee Dang & Sullivan. "It means UH would be protected against people claiming for a refund. As far as getting their own money back, no, it would not have protected them."

Bickerton, who is not representing any of the parties involved in the concert debacle, examined a copy of the 12-page redacted June 12, 2012, contract between UH and Peyton obtained by the Star-Advertiser under the state’s open records law.

UH President M.R.C. Greenwood has said the school was the victim of fraud that has apparently cost it $200,000. That money, along with an additional $50,000 from Peyton, was wired to a Florida-based company, Epic Talent, which purported to represent or be in contact with representatives for Wonder. UH officials later learned Epic was not authorized to book Wonder, and that the school’s money was missing.

Bickerton told the Star-Advertiser, "I don’t know if you can buy the kind of insurance that would protect you against (external) fraud."

An Aug. 21 external investigation report, which was commissioned by UH after the alleged fraud was discovered, noted that while UH’s contract with Peyton called for cancellation insurance, university officials started selling tickets before the insurance was in place. The investigation found:

» "The promoter was required to secure cancellation insurance and name UH and the State of Hawaii as additional insureds. However, no one at UH insisted that the promoter furnish the required cancellation insurance before ticket presales began."

» "No one has accepted responsibility for failing to ensure that the (cancellation) insurance was in place before tickets were sold and the money was transferred."

» "No one has explained why the terms of the agreement were not followed."

UH used the money from ticket presales to fund the $200,000 deposit.

Sean Ashford, an agent with Dodson Insurance Brokerage of Texas, the insurer UH was to have engaged, also said he doubted that the type of insurance the school sought would have protected UH even if it had followed through on the purchase.

Still, Bickerton said, "it is a sign of general sloppiness, the lack of enforcement that they let (UH) even start ticket sales."

UH’s "real problem seems to be in making sure that they were dealing with the right people," Bickerton said. "And that’s a failure of judgment, not the failure of the contract. The basic problem comes from people not investigating who they are dealing with, which is a fundamental part of business."

He added: "It should have been somebody’s responsibility to check out who they were doing business with. And it was nobody’s job. It was the administration’s fault for not having that be somebody’s job."