Mansion, interrupted Honolulu Weekly, July 14-20, 2004 (Honolulu Diary item)

Construction plans for the latest multimillion-dollar mansion on Kailua Beach were abruptly abandoned last month after the property’s owner was arrested by Hong Kong police and charged with stealing $930,000 from an investment fund he managed. Charles L. Schmitt, CEO and owner of the Hong Kong–based Charles Schmitt & Associates, allegedly diverted the money from the $197 million CSA Absolute Return Fund. Financial authorities in Hong Kong were alerted to suspected problems by other top officials of the investment firm, and in turn notified police, according to published accounts. When questioned by authorities, Schmitt “was not able to provide satisfactory answers regarding transfers of client monies into bank accounts with which he is connected,” the Hong Kong Securities and Futures Commission said. The fund was immediately shut down, and authorities obtained a court order at least temporarily freezing Schmitt’s assets while investigation of the alleged theft continues. Real estate records show Schmitt and his wife, Bronwyn Alexander, purchased a $2.6 million oceanfront property on Laiki Place last year during what he later described as a “whirlwind summer holiday.” They almost immediately applied for a permit to demolish the existing home, valued at $296,500. In its place, Schmitt planned a two-story home with pool and spa, surrounded by a six-foot wall with five gates, according to a description submitted with the building permit application. Although the proposed home was listed at an estimated $775,000, permit applications typically understate actual construction costs, which could easily have exceeded $2 million. According to a February 2002 “Information Memorandum” for the CSA Absolute Return Fund, Schmitt previously worked for the New York Stock Exchange, Lehman Brothers and two smaller private banks, where his corporate clients included Citibank and John Hancock Life Insurance Company. —Ian Lind