Auction bids to purchase the scandal-ridden and debt-plagued RightStar group of funeral homes, mortuaries and cemeteries were due to be delivered Friday, but some officials were expressing doubt that any buyer would be willing to offer the minimum purchase price of $25 million.

State Sen. Les Ihara Jr., D-9th (Kapahulu, Kaimuki, Palolo), said local funeral home and cemetery operators have told him that "they don't believe the numbers pencil out and they doubt that there will be legitimate bidders. They say there's just too much debt."

Guido Giacometti, the court-appointed receiver who has been operating the RightStar companies since 2005, said Friday, "I'm sure that the level of debt is an issue. I don't know what the bids will be or how many there will be. But we've had a fair amount of interest from American corporations that are qualified to purchase and operate a company like this one."

Giacometti said he's hired a Mainland consulting firm, The Foresight Companies LLC, to oversee the auction of RightStar, which in 2001 bought properties including Valley of the Temples, Homelani, Kona and Maui memorial parks.

The deadline for submitting bids to the Phoenix company was Friday.

"We'll be looking at the offers Monday or Tuesday and then submitting a report to the court," Giacometti said.

Asked what would happen if there isn't a qualified bid, he said "We go back to court, bring the parties together and say, 'Under these circumstances, what do we do?' I do have backup plans, but I'm not going to go into that now."

Giacometti said "The bottom line is that all of RightStar's customers will have their contracts honored. That has been our practice and will continue to be our practice."

Attorney General Mark Bennett, who has alleged in a state court suit that the former owners and trustees of RightStar improperly removed some $30 million from the company's "pre-need trust funds," couldn't be reached for comment Friday.

Paul Alston, lead local attorney for Vestin Mortgage, a Las Vegas-based lender that claims RightStar owes it $50 million, also was unavailable for comment.

Bennett's office and Vestin sued and countersued each other in a drawn-out legal battle that began in 2004 and ended last year with an agreement to auction the RightStar companies for a minimum of $25 million.

The agreement requires that at least $9 million of the sales price be used to "restore" pre-need and perpetual care trust funds maintained by the RightStar companies for the benefit of some 50,000 customers here.

Another $11 million would go back into the trusts if it is recovered from continuing litigation against other parties, according to the agreement.

In announcing the agreement last year, Bennett said it "will help secure the financial stability of the funeral and cemetery trust funds" at RightStar.

The agreement "requires that any new operator must honor all valid consumers contracts" at RightStar as well as provide necessary "perpetual care" of the cemetery properties, Bennett said.

RightStar purchased sites including Valley of the Temples Memorial Park on O'ahu, Homelani and Kona memorial parks on the Big Island and Maui Memorial Park in 2001 from the previous owner, which was in bankruptcy proceedings in Delaware.

RightStar also purchased numerous pre-need funeral plan providers, including 50th State Funeral Plan.

The seller of the properties is now claiming in bankruptcy court here that it is still owed $10 million by RightStar. Bennett's office is also claiming another $2 million that's been held in an escrow account since the 2001 sale to RightStar.

Last year's settlement deal between the state and Vestin did not include other claims Bennett's office is pursuing against former RightStar owners John Dooley, his wife, Kathy Hoover and California businessman Richard Bricka, as well as four former trust fund officials, including former Gov. John Waihee.

Bennett has accused the former owners and trust fund trustees of improperly allowing removal of tens of millions of dollars from the funds.

Waihee and the other three trustees have denied any wrongdoing, as have the former RightStar principals.

Ihara said Friday he is concerned that if a qualified buyer of RightStar is not found, "the Legislature may be asked to fund a financial bailout of the company."

FORMER OWNER INDICTED BUT ELUDES ARREST

The former chief executive of the RightStar companies here was indicted by the O'ahu grand jury in December 2006 on a theft charge, but he hasn't been arrested because authorities don't know where he is.

The indictment was handed down Dec. 12, 2006, and requires that John Dooley, once he is arrested, be held in lieu of $100,000 bail.

Lawrence Goya, the deputy attorney general who handles criminal investigations for the office, declined to comment on the Dooley indictment Friday.

In federal bankruptcy court Friday, an attorney representing Dooley in a bankruptcy proceeding was allowed to withdraw from the case after presenting a sworn affidavit from Dooley.

"I am presently without the financial means to pay any past or future attorney's fees," Dooley said in the affidavit, which was dated Dec. 7, 2007, and was filed by local attorney Terence O'Toole.

O'Toole said after the hearing that he does not know where Dooley is and can only communicate with him by e-mail.

O'Toole said no one from the attorney general's office has ever questioned him about Dooley's whereabouts.

Attempts to contact Dooley via e-mail on Friday were unsuccessful.

Dooley previously told The Advertiser he did nothing wrong in his acquisition and operation of the RightStar business, saying that he and other RightStar officers fully informed state regulators of their activities. He blamed some of the company's financial problems on poor record keeping by previous owners.

Allegations of fraud and other financial misconduct made against Dooley by the attorney general's office in civil suits were false, he said.

"When the truth comes out, it's going to be a totally different picture" from the one painted by the state, he said.

— Advertiser Staff

Reach Jim Dooley at jdooley@honoluluadvertiser.com.