Settlement talks leading to the possible sale of the financially troubled RightStar group of cemetery and funeral services companies are continuing and "all customer contracts are being honored," a judge overseeing operation of the companies emphasized yesterday.

"There is no present danger to any consumers and no need for public panic," Circuit Judge Sabrina McKenna said.

State Attorney General Mark Bennett is trying to negotiate a settlement among the lender who foreclosed on the RightStar companies last year, state regulators and other parties with legal and financial stakes in the future of the companies, attorneys told McKenna in a brief morning hearing.

At the attorneys' request, McKenna ordered the court-appointed official examining the financial records of the RightStar companies to "suspend" his activities for two to three weeks while the settlement talks continue.

That official, John Candon, issued a report last week that said some $20 million to $30 million held in trust for the benefit of 40,000 to 50,000 RightStar customers had been misappropriated from trust accounts.

The RightStar companies include four cemeteries in Hawai'i: Valley of the Temples on O'ahu, Homelani and Kona Memorial Parks on the Big Island, and Maui Memorial Park.

Bennett's office has filed a civil suit against the former owners of RightStar and former trustees of its "pre-need" trust accounts, including former Gov. John Waihee. The attorney general also is conducting a criminal investigation of RightStar.

Bennett was out of state and unavailable for comment yesterday. Deputy Attorney General Lawrence Goya, who oversees the criminal probe, would not comment on its status.

Reach Jim Dooley at jdooley@honoluluadvertiser.com.