Dirty Money, Dirty Politics and
Bishop Estate
PART VII - The Princess weeps...
Sightings from The Catbird Seat
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October 29, 2008
Judge orders names be made
public in Hawaii school suit
BY RICK DAYSOG, Advertiser Staff Writer
The identities of four unnamed, non-Hawaiian students challenging Kamehameha Schools' admission policy must be made public in 10 days, a federal judge ruled yesterday.
In a 22-page order, U.S. Magistrate Judge Barry Kurren said the public, as in other civil rights cases, has "a strong interest in knowing who is using the courts to vindicate their rights."
"The severity of the threatened harm and the reasonableness of plaintiffs' fears do not weigh in favor of anonymity," Kurren wrote. "At most, plaintiffs are vulnerable children who have a reasonable fear of social ostracization."
Kamehameha Schools spokeswoman Ann Botticelli said the schools appreciated the ruling, saying, "Judge Kurren obviously deliberated carefully on the matter."
David Rosen, one of the attorneys representing the students, declined comment yesterday.
Rosen and California attorney Eric Grant previously argued that the disclosure of the students' identities would expose them to public humiliation and retaliation.
Parents of the students — who are simply known as Jacob, Janet, Karl and Lisa Doe — have said in court papers that they may drop the lawsuit if the children are not allowed to pursue their lawsuit anonymously.
The Does, who are not of Hawaiian ancestry, applied for admission to Kamehameha in the 2008-09 school year, but were rejected.
Kurren's ruling came after a 1 1/2-hour, closed-door hearing on Oct. 21.
By issuing a 10-day stay to his ruling, he allowed the students and their parents to consider whether to continue pursuing the action.
The stay also allows the Does' attorneys to appeal the ruling to U.S. District Judge Michael Seabright, who is assigned to the case.
Founded by the 1884 will of Princess Bernice Pauahi Bishop, Kamehameha Schools is a charitable trust that educates children of native Hawaiian ancestry. The estate is the state's largest private landowner and is one of the nation's wealthiest trusts, with assets of more than $9 billion.
Lawyers cite threats
In their court filings, Rosen and Grant cited anonymous threats posted on the Internet and hostile remarks attached to the comments sections of local news stories about the admissions controversy.
Grant and Rosen have noted that the threats were serious enough to prompt U.S. Attorney Ed Kubo in 2003 to issue a warning against anyone looking to harm another non-Hawaiian student, Brayden Mohica-Cummings, who was admitted to the school under a settlement agreement.
Kurren, however, ruled that Grant and Rosen didn't provide evidence of "any threat of physical or economic harm" against the Does.
Botticelli, the Kamehameha Schools spokeswoman, added that the trust's leadership "would never take any action that puts a child in danger."
"We would never engage in or condone any racial threats or actions, and we know our community wouldn't either," she said.
Adrian Kamali'i, a 2000 Kamehameha Schools graduate and president of the student-parent group Na Pua a Ke Ali'i Pauahi, said Kurren's ruling "levels the playing field."
Allowing the students and parents to pursue the lawsuit anonymously takes away any accountability and hides from the public "who is doing what and why," added Jan Dill, a 1961 graduate.
"I think it's tremendous that the judge has demanded transparency in a process that affects thousand of native Hawaiian children," Dill said. "People who take actions like this should stand up and take responsibility rather than hide behind confidentiality."
School hails ruling
Attorneys for the trust — Paul Alston and former Stanford University Law School Dean Kathleen Sullivan — said anonymity has allowed the students' lawyers to portray their clients in a sympathetic light, but gave the trust no means to say whether that portrayal is accurate.
They also noted that in the previous lawsuit challenging the school's admission policy, Grant's co-counsel John Goemans abused his client's anonymity by leaking the details of a confidential settlement.
In that suit, a separate John Doe sought to overturn the trust's Hawaiian-preference admission policy. The policy was upheld by the full 9th U.S. Circuit Court of Appeals and was headed to U.S. Supreme Court before it was settled.
The trust was able to save its admissions policy but ended up paying the student $7 million.
Beadie Dawson, a native Hawaiian attorney and former lawyer for Na Pua, said that given the stakes involved, she expects the Does to appeal Kurren's decision.
"They are looking for another damages settlement, a free hand-out," she said. "Giving them anonymity encourages others to file what I consider to be frivolous lawsuits."
August 3, 2008
Trustees’ pay to soar
Kamehameha Schools' 5 board members
await court decision on pay
BY RICK DAYSOG, Advertiser Staff Writer
The five Kamehameha Schools trustees stand to receive pay increases of 65 percent to 123 percent under a plan submitted by a court-appointed panel.
Board members Diane Plotts, Robert Kihune, Corbett Kalama and Doug Ing could see their annual compensation jump from about $100,000 to about $187,000, according to the report filed in state Probate Court on Thursday.
Chairman Nainoa Thompson could see his compensation increase to a maximum of $217,500 from the $97,500 he earned last year.
The Probate Court-appointed trustee compensation committee said its recommendations reflect the complexities of a board that sets policy for a $9.1 billion charitable trust.
The recommendations are based on a study by an outside expert, San Francisco-based Mercer LLC, which found that Kamehameha Schools board spends more than twice as much time on trust matters — 2 1/2 to 3 days a week — than do the boards of comparable nonprofit organization and for-profit corporations.
"It is Mercer's opinion that this is a reasonable annual amount of compensation which takes into account the difference between the role of a typical corporate director or exempt organization trustee and that of a KS trustee," the Mercer report said.
pay hikes questioned
Others question the necessity of pay increases of 65 percent or more.
Bill Coleman, chief compensation officer at Waltham, Mass.-based Salary.com, said it's highly unusual for a board to receive such a steep pay hike unless the board was severely underpaid in previous years.
"There aren't a lot of jobs that have a pay increase of 65 percent," Coleman said.
Roy Benham, a 1941 graduate of Kamehameha Schools and a former president of the school's alumni association, said he'd rather see money for pay increases go toward the trust's main purpose: educating Hawaiian children.
Benham said he sees no reason to up the pay since the current compensation levels haven't deterred qualified people from applying for recent board openings.
"Give me a break," he said. "I can understand a cost-of-living increase, but 65 percent or more is a little bit out of hand."
The recommendations require the approval of Probate Judge Colleen Hirai.
Trust spokesman Kekoa Paulsen declined comment until the probate court makes a final ruling on the matter.
trustee compensation
Kamehameha Schools, which was established by the 1883 will of Princess Bernice Pauahi Bishop, is a nonprofit trust that educates Hawaiian children. It is one of the nation's largest charities and is Hawai'i's largest private landowner with more than 360,000 acres.
The issue of trustee compensation played a major role in the late 1990s turmoil at Kamehameha Schools.
The Internal Revenue Service threatened to revoke the trust's tax-exempt status due in part to the $1 million a year paid to then-board members Richard "Dickie" Wong, Henry Peters, Lokelani Lindsey, Gerard Jervis and Oswald Stender.
The IRS later settled with the estate after board members resigned and the trust reformed its governance and pay policies.
The trustee compensation committee was set up in the aftermath of the controversy to cap trustee pay at "reasonable" levels.
In 2004, the committee recommended increasing the maximum pay for a trustee by more than 70 percent to as much as $180,000 for regular board members and $210,000 for the board's chair. The probate judge approved most of the increase but all five trustees agreed to turn down the raise.
skewed comparisons
The current committee — whose members include Kamehameha Schools alum Michael Rawlins, insurance executive Douglas Goto and attorney Rosanne Goo — said its recommendations are based on an analysis of board pay at multibillion-dollar foundations, publicly traded corporations, for-profit real estate investment trusts and some local publicly traded companies such as Bank of Hawaii Corp. and Alexander & Baldwin Inc.
The Mercer study did not include the pay policies of local nonprofit boards due to "lack of comparability," the committee said.
Board members of most local nonprofits receive no pay for their work.
Salary.com's Coleman believes the report might be skewed toward the higher end due to its inclusion of for-profit corporation.
He believes a more accurate study would have compared Kamehameha Schools board pay with that of large tax-exempt organizations such as the $12.3 billion in assets of the Ford Foundation and Robert Wood Johnson Foundation, which holds $9.4 billion in assets.
Board members of those foundations receive $21,500 to $46,500 a year.
Trustees pay to soar - Honolulu Advertiser
and
Googling...The Kamehameha Schools
July 2, 2008
Trustee Message: Petition Filed
to Find Successor Trustee
Aloha mai kaakou,
The Board of Trustees of Kamehameha Schools has filed a Petition for Appointment of Successor Trustee, which starts the process of selecting a replacement for Trustee Robert Kihune, whose term expires in one year, on June 30, 2009. A hearing of the petition has been granted by the court for August 8, 2008.
As a Trustee, Admiral Kihune has consistently kept his focus on the mission of Kamehameha Schools, always holding Ke Ali'i Pauahi’s interests paramount, being adamant about educating Hawaiian children with need. From the day he stepped forward as an Interim Trustee until today, he has stood for effective governance, inspired leadership and a bias for action to move Kamehameha Schools’ mission forward. He has consistently supported programs to expand the educational reach of Kamehameha Schools and has taken the kuleana of land stewardship very seriously. His contributions have been enormous. As he embarks on his final year as Trustee, he does so with our deepest gratitude.
Under the Will of Ke Ali`i Bernice Pauahi Bishop, the Trustees were to be selected by a majority of the members of the Supreme Court of Hawai'i. However, in 1997 three of the five current Supreme Court Justices – Chief Justice Ronald Moon and Associate Justices Paula Nakayama and Steven Levinson – gave notice that they would not be exercising the power to appoint Trustees as granted by Pauahi’s Will.
The Justices maintained that position in 2006, when a replacement was selected for then-Trustee Constance Lau. If the Justices maintain this position in 2009, the upcoming vacancy cannot be filled as Pauahi intended. In that case, the Petition for Appointment of a Successor Trustee suggests that the court follow the selection procedure established in 1999 for the selection of the current Board of Trustees.
According to that process:
1. The Probate Court appoints a Screening Committee of seven persons who are knowledgeable about Kamehameha Schools and Pauahi’s legacy and vision and experienced in the management and operation of a large institution, educational or otherwise.
2. The Screening Committee will accept applications and nominations, and may solicit applicants who have not applied.
3. The Screening Committee will select and interview 6 semi-finalists.
4. The Screening Committee will select three finalists, whose names are published in the newspaper.
5. The Screening Committee will receive comment from the community, including the Trustees and the Attorney General, for 30 days, and submit a report detailing the input to the Court.
6. The final selection will be made by the Probate Court.
Our duty as Trustees in this matter is to file the Petition for Appointment of a Successor, and then continue to do our best to fulfill Pauahi’s vision and the mission of Kamehameha Schools while the selection process is underway.
I mua, Kamehameha!
Nainoa Thompson,
Chair, Board of Trustees
http://www.ksbe.edu/article.php?story=20080702094001824
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September 1, 2000
Interim trustees Constance Lau
and Robert Kihune are
among the candidates
By Rick Daysog, Star-Bulletin
A special court-appointed panel today nominated seven business and community leaders as finalists for the trusteeship of the Kamehameha Schools.
The Trustee Screening Committee selected attorney Douglas Ing, former Amfac/JMB Hawaii Inc. president Chris Kanazawa, retired Adm. Robert Kihune, American Savings Bank chief operating officer Constance Lau, former Hemmeter Corp. executive Diane Plotts, Grace Pacific Corp. chairman Dwayne Steele and Hawaiian navigator Nainoa Thompson.
Kihune and Lau currently are serving as interim trustees of the $6 billion charitable trust.
The selection committee filed its list of finalists with the state Probate Court this morning. The court will name the five permanent trustees from the list but not before a 30-day period during which the public will have the opportunity to comment.
The selection process marks a milestone in the 116-year history of the Kamehameha Schools, whose most recent past has been wracked by controversy and dissension.
Previously, trustees were picked by the state Supreme Court as spelled out in the will of the estate's founder, Princess Bernice Pauahi Bishop. But the turmoil prompted the high court to step away from the selection process in December 1997.
Critics have charged that politics tainted the Supreme Court's selection of previous trustees.
The screening committee said the nominees, who were picked from a field of more than 200 applicants, represent a deep sense of commitment and have the ability to ensure that Bishop's legacy continues.
The nominees -- screened for their business experience, community involvement and leadership experience -- represent a diverse cross-section of the local community. Ing is a Kamehameha Schools graduate who represented former trustee Oswald Stender in his successful suit to remove ex-board member Lokelani Lindsey. Thompson is well known as the navigator on the Hokulea voyages across the Pacific.
Plotts served as developer Christopher Hemmeter's top executive as he built several five-star hotels during the 1980s economic boom, while Kanazawa headed Amfac during the late 1990s as the company was phasing out its agricultural operations.
Lau and Kihune have served as interim trustees of the Kamehameha Schools since May 1997, replacing ousted trustees Oswald Stender, Henry Peters, Richard "Dickie" Wong, Lokelani Lindsey and Gerard Jervis. Steele is chairman of Grace Pacific, an asphalt paving company, and is an outside director of Pauahi Management Co., a for-profit unit of the Kamehameha Schools.
Under a court-revised plan, the annual pay for permanent trustees is capped at $97,000. The chairman will receive no more than $120,000 a year.
Screening committee members include Hawaiian educator Nona Beamer, business executive Kenneth Brown, attorney Melody MacKenzie, Kamehameha Schools alum Mike Rawlins, the estate's court-appointed master Colbert Matsumoto, Hawaii Community Foundation head Kelvin Taketa and Roy Benham, president of the Oahu region of the Kamehameha Alumni Association.
http://www.starbulletin.com/2000/09/01/news/story1.html
May 17, 2008
Kamehameha ups pay
for executives
By Rick Daysog, Advertiser Staff Writer
In a year it hit several educational and financial milestones, Kamehameha Schools rewarded Chief Executive Officer Dee Jay Mailer with a $17,437 pay increase.
In its annual tax filings with the Internal Revenue Service, Kamehameha Schools said it paid Mailer $591,677 in salary, benefits and other compensation during the fiscal year ending June 30, 2007.
That pay package was up from Mailer's year-earlier compensation of $574,230.
The $9.1 billion trust's highest compensated executive was Kirk Belsby, vice president of endowment. He received $689,560 last year, which was up nearly 3.9 percent from his 2006 compensation of $663,724.
Mailer's and Belsby's compensation were on the high end of what large Hawai'i foundations and trusts pay their top executives. But it was well below the $820,000 average that the state's largest healthcare nonprofits pay their CEOs.
Kamehameha Schools spokesman Kekoa Paulsen said the trust's compensation policies are performance based and reflect the credentials and qualifications of its executives.
The estate's endowment grew by a record $1.4 billion in its 2007 fiscal year, paving the way for future expansion of its educational programs.
Founded by the 1884 will of Princess Bernice Pauahi Bishop, Kamehameha Schools educates children of Hawaiian ancestry.
The trust, the state's largest private landowners and one of the nation's wealthiest charitable trusts, spent a record $250 million on its educational programs last year and reached 35,000 Native Hawaiian students and families last year.
Kamehameha Schools said it expects to spend another $270 million to $277 million this year. And under a longer-term plan, Kamehameha Schools aims to increase the number of students it serves to 55,000 by the year 2018.
According to its tax filing, two dozen Kamehameha Schools employees and trustees received more than $100,000 in compensation last year.
Two former trustees — Henry Peters and Matsuo Takabuki — also receive six-figures payments through a decades-old deferred compensation [plan] that was discontinued in the early 1990s.
Peters, who resigned in 1999 after the IRS threatened to revoke the school's tax-exempt status, took home $488,619 in deferred pay last year while Takabuki, who retired in 1993, received $307,806 in deferred pay.
A deferred compensation plan is a tax-savings strategy that allows an executive to postpone the payment of part of his or her annual compensation until a later date, when the executive is in a lower tax bracket.
Among its officers and managers, Kamehameha Schools said it paid Vice President of Strategic Planning Christopher Pating $422,088, Financial Assets Director Elizabeth Hokada $325,864 and Commercial Assets Director Paul Quintiliani $302,111.
Special Projects Director Susan Todani earned $231,756 last year while Michael Chun, headmaster of the Kapalama campus, received $237,888.
Kamehameha's board members Douglas Ing, Nainoa Thompson, Diane Plotts and retired Adm. Robert Kihune earned between $97,500 and $113,500 each last year while Constance Lau, who stepped down from the board during the 2007 fiscal year after she became Hawaiian Electric Industries Inc.'s CEO, received $73,500.
Her replacement, First Hawaiian Bank executive Corbett Kalama, earned $27,000. Trustee's pay is set by the state Probate Court.
Others executives listed in the tax filing included:
Neil Hannahs, director of the trust's land assets division, who earned $204,510.
Human Resources Director Richard Lau, who earned $221,109.
Ann Botticelli, the trust's vice president of community relations and communications, who made $182,293 in pay and benefits.
Colleen Wong, vice president of legal services, who earned $257,350.
April 24, 2008
Kamehameha wants
$2 million returned
School points to breach in terms of
confidential settlement paid in 2007
By Jim Dooley, Advertiser Staff Writer
Kamehameha Schools is trying to get back as much as $2 million of the $7 million it paid last year to settle a lawsuit that challenged its admissions policy favoring Hawaiian students, according to legal papers filed in federal court in California.
The papers are contained in new litigation filed after publication of an Advertiser news story in February that revealed that the settlement was $7 million.
The money was paid to a Big Island mother and child in return for their agreement to drop the lawsuit just before the U.S. Supreme Court was to decide whether it would hear an appeal of the case.
The plaintiffs, who have never been publicly identified and are known as Jane and John Doe, alleged in the California case that the schools "threatened" to publicly identify them if they did not place $2 million in an escrow account for possible return to the schools because terms of the confidential settlement had been revealed.
Ken Kuniyuki, a Hawai'i lawyer who now represents the pair, is alleging that David Schulmeister, an attorney for the schools, said that if the schools were forced to file suit over the issue, the names of the Does would become public.
Kuniyuki made the allegation in a sworn declaration filed this month in federal court in Sacramento, seeking a court order barring public identification of the plaintiffs.
Schools attorney Paul Alston denied that Schulmeister threatened to reveal the plaintiff's identities.
"Schulmeister told Kuniyuki that the (Kamehameha Schools/ Bishop Estate) believed the settlement agreement had been breached and that the estate was entitled to damages," Alston said in court papers filed April 14 in Sacramento.
"He further explained that a public lawsuit could make it difficult for the Does' anonymity to be preserved" and suggested that the $2 million be held in escrow while the parties discussed resolution of the dispute short of a lawsuit, according to Alston.
Alston stressed on Tuesday that Kamehameha Schools has not filed a lawsuit or taken any action that would publicly identify the Does.
"Kamehameha Schools is closely scrutinizing how to proceed," he said.
Tuesday night and yesterday, the Kamehameha Schools board of trustees and Chief Executive Dee Jay Mailer sent a mass e-mail to parents and alumni notifying them of the new legal skirmishing in California and alerting them that The Advertiser was preparing a story on the subject.
"A breach of confidentiality has occurred, and an investigation into the line of responsibility is in process. Legal action as appropriate shall follow," the trustees' e-mail said.
"It is aggravating to be drawn into this complicated and unsavory infighting," the trustees' message continued. "However, we will not allow this latest legal maneuver to distract us from our mission."
'Fear for our safety'
Jane and John Doe filed legal papers in Sacramento federal court denying any role in the release of the settlement figure by John Goemans, an attorney who used to represent them but who now is involved in a dispute over compensation for his services in the case.
Their attorney, Kuniyuki, also asked the federal court to issue a restraining order against all parties in the case preventing any attempts to disclose the identities of Jane and John Doe.
He attached an April 2 sworn statement from Jane Doe that said, "both John Doe and I fear for our safety if our identities are made public."
She noted that more than 1,550 reader comments were posted on the Advertiser's Web site following the February story that disclosed the settlement amount.
"Many of them are extremely critical of us. Some include threats of violence against us," she said.
"I have lived in Hawai'i for many years. The negative comments and threats posted to the Honolulu Advertiser's February 8, 2008 article are entirely consistent with my experience with many local residents regarding the admissions policy of the Kamehameha Schools."
If their identities become public, she said, "we are prepared to move and go into hiding."
Last week, following a hearing before U.S. District Judge Frank Damrell Jr., all parties in the federal court case stipulated that they would not disclose the true identities of the Does.
Goemans told The Advertiser in February that he believed the settlement amount should be a matter of public record, given Kamehameha Schools' status as the wealthiest and most influential nonprofit institution in Hawai'i.
Attorney's troubles
In a separate civil case now pending in Sacramento state court, Goemans was sentenced earlier this month to serve eight days in jail and fined $4,000 for violating a court order to keep the settlement amount secret.
Goemans, 73, now living in Florida with his sister, said by telephone, "I have zero money, I have serious health issues, and now I've been ordered to serve an eight-day jail sentence in California in the middle of May. I don't know what's going to happen."
The California state case was filed against Goemans by Eric Grant, a Sacramento attorney who litigated the Does' lawsuit from the time it was first filed in Hawai'i in 2003 through its settlement in May 2007.
Under the terms of the settlement agreement, Grant was entitled to 40 percent of the $7 million total, or $2.8 million.
He sued Goemans in Superior Court in Sacramento last year to try to settle the outstanding question of how much Goemans should be compensated.
Goemans conceived the civil rights lawsuit against the schools, found the plaintiffs on the Big Island and brought them together with Grant.
Goemans said the only money he has received was a $20,000 loan from Jane Doe but believes he is entitled to as much as 25 percent of the total settlement, or $1.75 million.
According to documents filed in the California state case, Grant became concerned early this year that Goemans intended to reveal the amount of the legal settlement and on Feb. 5 obtained a court order against Goemans blocking any such disclosures.
Three days later, The Advertiser published a news story based on Goemans' statements about the settlement amount.
Goemans said in a sworn statement filed with the California court March 17 that he is "not medically or mentally 100 percent" and had no memory of being informed of the Feb. 5 court order.
"I want to emphasize to the court that it was not my intent to deliberately and knowingly violate the court's order," the statement said.
But he reiterated his belief that Kamehameha Schools, as a tax-exempt organization, should not and cannot keep the terms of the settlement confidential.
After the settlement terms were made public, Grant filed a new federal lawsuit March 28 in Sacramento against Kamehameha Schools and his own clients, Jane and John Doe, asking the court for a ruling that he was not responsible for the disclosure and has no financial liability because of it.
Grant and an attorney who represents him did not return telephone requests for comment.
Alston filed a lengthy legal memo in the case last week questioning the Sacramento court's jurisdiction in the matter since the Does and the schools are in Hawai'i.
Reach Jim Dooley at jdooley@honoluluadvertiser.com.
www.kycbs.net/KS-Seeks-Recovery-4-24-8.mht
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441 F.3d 1029
John DOE, a minor, by his mother and next friend, Jane DOE nfr Jane
Doe, Plaintiff-Appellant, and
Josephine Helelani Pauahi Rabago, Intervenor,
v.
KAMEHAMEHA SCHOOLS/BERNICE PAUAHI BISHOP ESTATE; Constance Lau, in her capacity as Trustee of the Kamehameha Schools/Bernice Pauahi Bishop Estate; Nainoa Thompson, in his capacity as Trustee of the Kamehameha Schools/Bernice Pauahi Bishop Estate; Diane J. Plotts, in her capacity as Trustee of the Kamehameha Schools/Bernice Pauahi Bishop Estate; Robert K.U. Kihune, in his capacity as Trustee of the Kamehameha Schools/Bernice Pauahi Bishop Estate; J. Douglas Ing, in his capacity as Trustee of the Kamehameha Schools/Bernice Pauahi Bishop Estate, Defendants-Appellees.
No. 04-15044.
United States Court of Appeals, Ninth Circuit.
February 22, 2006.
John W. Goemans, Esq., Kamuela, HI, Eric Grant, Esq., Attorney at Law, Sacramento, CA, for Plaintiff-Appellant.
Emmett B. Lewis, Miller & Chevalier, Chartered Metropolitan Square, Washington, DC, David Schulmeister, Esq., Cades, Schutte, Fleming and Wright, Honolulu, HI, Kathleen M. Sullivan, Stanford Law School, Stanford, CA, Jay L. Carlson, Esq., Crystal K. Rose, Esq., Bays, Deaver, Hiatt, Lung & Rose, Honolulu, HI, for Defendants-Appellees.
Before MARY M. SCHROEDER, Chief Judge.
ORDER
Upon the vote of a majority of nonrecused regular active judges of this court, it is ordered that this case be reheard by the en banc court pursuant to Circuit Rule 35-3. The three-judge panel opinion shall not be cited as precedent by or to this court or any district court of the Ninth Circuit, except to the extent adopted by the en banc court.
Notes: Judge Clifton is recused
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