National Park Service acquires ‘Great Crack Property’ in foreclosure sale

  • Hawaiian Volcano Observatory scientists investigate a portion of the Great Crack in the Keaiwa flow field on Kilauea volcano’s Southwest Rift Zone in 2016. (U.S. GEOLOGICAL SURVEY/COURTESY PHOTO)

HILO — The National Park Service has acquired a 1,952-acre oceanfront property in Ka‘u from a Florida real estate developer.

The $1.95 million purchase by the park service of the “Great Crack Property” from Joseph Gillespie III is the last piece of a settlement between First Citizens Bank of Raleigh, North Carolina, and Hilo businessman Ken Fujiyama and his Ken Direction Corp. to settle the bank’s foreclosure claim concerning a defaulted mortgage on the then-Naniloa Volcanoes Resort.

ADVERTISING


Dismissals of all claims with prejudice, which means they cannot be reclaimed, were filed on behalf of all plaintiffs and defendants Aug. 28 in Hilo Circuit Court. Those dismissals indicate the sale of the property closed last month.

The property’s name comes from a distinguishing topographic feature — a 6-mile long “crack” in a lava field along Kilauea’s Southwest Rift Zone.

The crack, which is 60 feet wide and 60 feet deep in some places, is located on the makai side of Highway 19 between the 46- and 47-mile markers, about 4 1/2 miles by road to the northeast of Pahala, just beyond the southwestern boundary of Hawaii Volcanoes National Park.

Despite being on private property, the Great Crack is popular among hikers and can be found on numerous internet sites aimed at visitors.

The foreclosure suit’s settlement, filed in July in Hilo Circuit Court, outlines an agreement between Gillespie, who owns Inner Circle Investments LLC, and the National Park Service to transfer four adjoining parcels of land zoned agricultural and conservation plus a road lot to the park service for $1.95 million.

Under terms of the agreement, the park service will pay closing and escrow costs on the deal.

Calls by the Tribune-Herald to Cindy Orlando, Hawaii Volcanoes National Park superintendent, and Greg Gress, National Park Service land acquisition officer, weren’t immediately returned Thursday.

The property previously was listed for sale, at one point for $8 million, at another for $4 million, but apparently there were no qualified buyers.

Gillespie gained control of the Great Crack Property on March 23, 2016, via a transfer from HPAC LLC. That was a day before a court hearing on the bank’s motion to appoint a receiver to take control of Ken Direction Corp.’s assets. Honokaa attorney Jerry Hiatt was appointed receiver.

The state Department of Commerce and Consumer Affairs’ website lists Nani Mau Inc. as the only member of HPAC LLC. Nani Mau’s only listed officers are Lee Harlow, Fujiyama’s wife, as president, secretary and director, and Kristie Komides, Fujiyama’s daughter, as vice president, treasurer and director.

In addition to Fujiyama and Ken Direction Corp., other defendants in the 2017 suit included Gillespie, Inner Circle Investments LLC, HPAC LLC, Harlow, Nani Mau Inc., Komides, Mana Land Co. LLC, Doris K. Iwaoka and Ian Fujiyama.

Ian Fujiyama, an investment banker and Ken Fujiyama’s son, Iwaoka, Harlow and Hirayama Brothers Electric all claimed encumbrances on the property, and all held up in court.

Under the settlement, Ian Fujiyama will be paid more than $1.35 million for a mortgage note to his father on the property made before the bank claim, Harlow will receive more than $169,000 for a mortgage note, Iwaoka will get $104,646 for a mortgage note and Hirayama Brothers will receive $12,500 on a lien for services provided.

Hirayama Brothers, which was not a party to the suit, has an option under the agreement to file a legal claim for the remainder of the $37,554 the electrical firm said it was owed.

The county agreed to accept $306,276.46 for past due real property taxes, interest and penalties.

ADVERTISING


Because of the legal encumbrances on the property by other parties, the bank itself will receive nothing.

Email John Burnett at jburnett@hawaiitribune-herald.com.