Three Japanese nationals have filed suit alleging they were sold undeveloped land in Puna at inflated prices by another Japanese national who made fraudulent claims and who is not licensed to sell real estate in Hawaii.
The civil suit, which seeks unspecified compensatory and punitive damages plus attorney fees, was filed Feb. 12 in Hilo Circuit Court by Hilo attorney Bill Heflin on behalf of Toshiko Nishio, Yumiko Motoda and Tadao Motoda. The defendants are Benfact U.S.A. Inc., its owners Hiroshi Yamazaki, his wife Katsuko Yamazaki, formerly known as Katsuko Kurihara, and Katsuko Yamazaki’s son, Hisashi Yamazaki.
The suit alleges unfair and deceptive trade practices, fraud, breach of fiduciary duty as an agent and breach of contract.
“All I would say is, my clients have been wronged by the defendants in this case, as is alleged in the complaint,” Heflin said last week. He described his clients as small business owners who invested a considerable portion of their life savings into the properties.
The lawsuit alleges that on Oct. 17, 2006, Hiroshi Yamazaki and his former company, Hilo Hawaiian Corp., “unfairly and deceptively induced” Nishio’s husband, Tsuyoshi Nishio, who has since died, to buy a lot in Hawaiian Shores subdivision for $128,300, which the suit claims was “far more than the actual market value of the property at that time.”
The filing claims that Nishio had cancer when he made the purchase.
County property tax records indicate the current assessed valuation of the 0.27-acre lot zoned residential is $10,000. According to Bureau of Conveyance records, it had been acquired on Sept. 8, 2006, from Sayoko Asai by Hoonui Inc., a dissolved corporation that listed Katsuko Kurihara as president, for $26,350.
Other allegations in the suit were that Yamazaki and Hilo Hawaiian Corp. — which had no relationship to the hotel of the same name — made “deliberate and false representations that foreign ownership of property in Hawaii was not normally allowed,” that the property “was part of a ‘special’ development” by the state for foreign ownership only, and that lots on the property “were allocated on a ‘lottery’ basis administered only by select companies” such as Yamazaki’s. Yamazaki allegedly told the Nishios that they “had a better than average chance to win the ‘lottery’” because of Tsuyoshi Nishio’s cancer.
The suit also claims that Hiroshi Yamazaki and his current company, Benfact U.S.A., “unfairly and deceptively induced” Toshiko Nishio into purchasing a lot in Hawaiian Acres subdivision for $67,952 on May 24, 2012. The lawsuit alleges misrepresentations including that “the property could be subdivided into multiple properties that would generate enough income to pay for the property, and to give the owner an income stream” and that she “qualified” to buy the land as a “previous ‘lottery’ winner.”
Records state the current assessed valuation of the 3-acre agricultural parcel is $15,300. It was acquired by Hoonui from Takashi Iwataya on Aug. 15, 2006, for $30,000.
Yamazaki and Benfact also allegedly “unfairly and deceptively induced Nishio into buying a third undeveloped property on June 20, 2012. The lot in Hawaiian Beaches subdivision went for $79,012.35. Yamazaki allegedly told Nishio that “the property was an exceptionally valuable property … that was only available as a ‘bonus’ to previous lottery winners and purchasers of multiple properties in Hawaii.”
Records state the current assessed valuation of the 0.18-acre lot zoned residential is $48,900. It was acquired by Benfact from Akiko Matsumoto on March 7, 2012, for $7,000.
The suit alleges that Yamazaki is not licensed to sell real estate in Hawaii, but during the second and third purchases acted as Nishio’s “agent” and breached his fiduciary duty as such by not informing her of Benfact’s ownership of the properties.
Toshiko Nishio also referred Yumiko Motoda, her friend and business acquaintance, to Hiroshi Yamazaki, the filing claims, and Yamazaki and his wife had multiple conversations with Motoda and her husband, and sold them a lot in Hawaiian Shores for $94,962 on June 29, 2012.
Alleged “unfair and deceptive inducements” in that sale include that “foreign ownership of real property was difficult,” that Benfact “was specially licensed and bonded by the U.S. Embassy for the purchase of property in Hawaii,” that the land “was being sold far below market value” and that Benfact “had a special relationship” with the Japanese travel agency H.I.S. International Tours and that if the Motodas bought the land and built a house on it, they would be able to book short-term rentals through the agency “to generate monthly income” that would cover 16 percent of the annual purchase price.
It was also alleged that both Yamazakis acted as the Motodas’ agent, failed to disclose their ownership of the property and lied about the property’s value.
Records state that the current assessed valuation of the land is $10,000. The 0.44-acre lot zoned residential was acquired by Benfact from Yoshio and Akiko Nishiyama on March 29, 2010, for $12,000.
Other allegations include that the Yamazakis took about $9,895 from Toshiko Nishio and $10,000 from the Motodas for lot clearing and grading work that was never done.
Heflin said that Hisashi Yamazaki, who is believed to be a U.S. citizen and who lives on the Big Island, has been served with the suit.
“If anybody knows the whereabouts of Hiroshi Yamazaki and Katsuko Yamazaki, I would appreciate it if they would please give me a call,” he said.
Calls during business hours to numbers found online for Benfact in Honolulu and Pahoa went unanswered.
Email John Burnett at jburnett@hawaiitribune-herald.com.