The way was paved when former Waikiki nightclub owner Steve Crouch turned to unconventional sources to finance initial stages of the project, his first venture. Details of the resulting deal emerged in court files after Crouch defaulted on a series of loans and was hit with a foreclosure lawsuit.

Crouch, who ran the Masquerade nightclub until it closed in 1990, had bought, bartered and talked his way into majority ownership of four acres of land on Aiea Heights.

When he couldn't get a bank loan to develop the property, Crouch sought help from Gabriel "Gabe" Aio, a longtime friend. Aio, a security coordinator for Matson Navigation Co., also claims a lengthy relationship with Hawaii Protective Association, a private security firm headed by politically influential Big Island rancher Larry Mehau.

The contact got results: Aio took Crouch to meet with crime figure Jesse James Bates, who agreed to help arrange a $300,000 loan in exchange for an exclusive construction trucking contract for the development and a discount on the purchase of two homes, Aio and Crouch said. Bates, in turn, set up a meeting with Bill Chee, president of Prudential Locations Inc., where Bates' wife, Kathleen "Bunny" Bates, worked as a broker.

Aio told the Star-Bulletin he has known Jesse Bates since the two spent time together as teen-agers at the state Youth Correctional Facility in the 1960s.

Bates was convicted of manslaughter and bank robbery in the early 1970s, and later served prison sentences for counterfeiting and armed robbery. He was paroled in 1989 and, at the time of the meeting with Crouch and Aio, was starting a trucking company.

Federal court records in a later drug case say he had also been involved in cocaine distribution since 1990.

Aio and Crouch both say Bates agreed to help, then told them he was in business with Chee. Aio said Bates was never specific about the alleged relationship. "He said, I got this guy I work with. We're sort of partners in this thing," Aio said.

Bates denied any business links to Chee in a written declaration earlier this year.

Chee said he met Bates only twice before the meeting with Crouch and Aio, both times at company events. "I knew him as Jesse, Bunny's husband. If I had put together Jesse James Bates at that time, I think I would have had a totally different impression," Chee said.

Bunny Bates said any suggestion of other business deals between Chee and Jesse Bates is "absolutely false."

Chee said he assumed the men came to him because he is a director of Home Financial Services, Location's mortgage affiliate.

During the first week in January 1993, when the men met for a second time, Chee agreed to loan the $300,000 Crouch requested, plus another $127,000 to pay off other mortgages on the property. Loan documents show that prepaid interest of $143,000 (or 33.3 percent) was added, bringing the amount to be repaid to $570,000. Under the terms of the loan, the full amount of interest had to be paid whether the loan was paid off in one day or one year.

The loan had several other unusual aspects, court records show:

• Chee used $427,000 of his own funds to make the loan, but took deliberate steps to conceal his involvement. According to internal company documents later disclosed in court proceedings, Chee instructed loan administrators that "Crouch is not to know the source of the proceeds."

• Chee approved the loan without a current appraisal, without a credit check, and without knowing whether Crouch or his wife was employed or had any current income, according to his deposition filed in the case. Chee also acknowledges that other officials of Resco, Locations' parent company, said the loan was too speculative for any corporate funds to be invested.

  Chee said the "collateral loan" was adequately secured by Crouch's interest in the property, which Chee believed to be worth well over $2 million.