By Star-Bulletin Staff

The two co-founders of Perfect Title Co. were arrested and their office records, payroll, computers and other equipment confiscated, all but shutting down - at least for now - their controversial title search business.

A Big Island judge also has barred the company from filing any documents with the state Bureau of Conveyances for five years, cutting the company off from the forum it used to file its disputed reports.

The title searches, based on 19th-century Hawaiian kingdom law, basically conclude that Hawaii's existing land titles are no good - a claim that has caused havoc in the real estate industry.

Some Perfect Title clients are on the verge of losing their homes because they have used the company's reports - which cost $1,500 each - as justification to stop paying mortgages.

As part of a state criminal investigation, Honolulu police Friday arrested Donald A. Lewis, David Keanu Sai and a company secretary for investigation of theft, racketeering and tax evasion.

They were taken from Perfect Title's downtown office in handcuffs and were questioned and jailed for several hours before being released. No charges were filed.

Lewis and Sai, who as Hawaiian kingdom subjects claim not to recognize the state's authority, said they were being falsely accused, and questioned the motivation behind the arrests, as did some Perfect Title clients.

"This whole thing is being blown up for a media blitz," Sai said. "If we had something to hide, we would be panicking. But we are probably the most open company on the face of the Earth."

Attorney General Margery Bronster, during an afternoon news conference yesterday, would not discuss details of the allegations against the Perfect Title co-founders. But she said the company was misleading people by issuing liens - the title searches - that aren't based on law.

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