Opinion ID: 790487
Heading Depth: 2
Heading Rank: 3

Heading: Factual and Procedural Background for Dean Y. Kajioka

Text: 8 When REA staff took control of Assail on January 15, 2003, an Assail employee mentioned that Assail was in the process of installing certain joint equipment with Valdine. Valdine was located in the same office complex as Assail. This led REA staff to suspect that even though Valdine was not named in the FTC's complaint, it was part of Kimoto's scheme. REA's suspicions were confirmed when it visited Valdine's offices that same day. REA found Woody Davidson, Assail's head of technology, in the process of installing $100,000 worth of equipment to create a telemarketing call center, as well as linking Valdine and Assail's computer and telephone systems so that they would be fully integrated. Davidson and other Assail employees indicated that Valdine's offices were to become the control center for Assail's telemarketing operations. 9 Steven Henriksen, Valdine's president, secretary, treasurer, sole shareholder, sole employee, and sole bank account signatory, was quickly informed of REA's actions by his brother, who was the Chief Financial Officer of Assail and a defendant in the underlying action. In the two weeks following REA's raid, Henriksen, at the direction of Kimoto, paid out approximately $500,000 from Valdine's accounts to secure legal representation for the various defendants. 2 During this general time period, Henriksen also paid himself approximately $130,000 in bonuses. 10 On January 20, 2003, Henriksen retained Appellant Dean Y. Kajioka to represent him and Valdine for an initial retainer of $60,000. The next day, Henriksen withdrew $10,000 from Valdine's account to pay part of Kajioka's retainer. The day after that, January 22, Henriksen withdrew another $50,000 to pay the remainder of the retainer. 11 On January 23, 2003, Kajioka called REA and objected to REA's taking possession and control of Valdine, taking particular note of the fact that Valdine was not named in any court papers. REA informed Kajioka that it believed Valdine was an affiliated entity of Assail, and thus REA would not release Valdine's assets. Kajioka's claim that Valdine was not named in any court papers was mooted as a result of the court's preliminary injunction on February 4. Unlike the initial temporary restraining order, Valdine was expressly included within the scope of the temporary injunction. 12 On June 2, 2003, REA's counsel sent a letter to Kajioka demanding that he return the full retainer to REA because the funds had been transferred in violation of the court's asset freeze order. Kajioka refused REA's request. This refusal prompted the FTC and REA to file separate motions on August 21, 2003, requesting the court to issue an order forcing Kajioka and Henriksen to show cause why they should not be held in contempt. On September 5, 2003, the court issued such an order. 13 On October 2, 2003, the district court held a hearing for Henriksen and Kajioka to show cause why they should not be held in contempt. Henriksen asserted his Fifth Amendment right as to all substantive questions. Kajioka refused to testify under oath, but he did make an unsworn statement in open court. He acknowledged that he had been retained to represent Henriksen on January 20, 2003 and had received the $60,000 retainer. He also stated that he was retained to represent Henriksen in any potential criminal actions but had also provided representation in the civil case. 14 On October 9, 2003, the court issued an order holding Henriksen in contempt for dissipating Valdine's assets in violation of the temporary restraining order and the preliminary injunction. The court declined to hold Kajioka in contempt. The court found that because no criminal prosecution commenced, Kajioka could not have earned the entire $60,000 for services rendered in connection with Henriksen's potential criminal liability. The court did allow Kajioka to retain $10,000 for services rendered and ordered him to return the rest of the funds to REA or show cause why he should not be held in contempt. Kajioka filed several memoranda, as well as documentary evidence, with the court in support of his contention that he should be allowed to keep the full amount of the retainer. On November 26, 2003, the court issued its final order on the matter. The court reiterated its earlier determination that Kajioka was allowed to keep $10,000. 3 Kajioka now appeals from the court's final order, raising on appeal the identical issues as Draskovich.