Sightings from The Catbird Seat

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June 1, 2005

Hawaii’s Felix Consent Decree
Ends with a Whimper

Parents of Special Needs Students Say the DOE Has Now
Dismantled Services to Pre-Felix Levels

By Laura Brown, Hawaii Reporter

U.S. District Judge David Ezra in his chambers out of public view last Friday, May 27, 2005, quietly called an end to Hawaii’s 11-year-old Felix Consent Decree that mandated the state provide appropriate services to special needs children.

In response to the news, a parent writes, “How is this possible? All of the families I know have had their services cut, reduced or eliminated.”

A military parent of a special needs child who recently relocated from a Department of Defense school in Europe comments that she cannot believe Hawaii’s absolute ignorance of special education and disregard of children needs.

A Maui parent wrote a letter to Hawaii Reporter last year about Jennifer Felix, one of the original plaintiffs in the Felix lawsuit, “As a naive, optimistic parent of a Felix-classed child, I would like to hear that Jennifer is home on Maui, in a good placement with competent and qualified providers, with good and effective educational, behavioral, individualized service programs, and is happy. That is what I want to hear. Auwe, unfortunately, that is not where Jennifer is at. It’s not going so well.”

These parents and many others interviewed by Hawaii Reporter say despite the state’s initial promises to the court, services did not even begin to improve for years until mental health services to children were privatized.

By 2001, allegations of widespread corruption, fraud and waste resulted in the formation of a Joint Senate-House Investigative Committee, a bi-partisan group of lawmakers, who spent more than 100 hours examining and hearing testimony on the Felix program, which at that time had exceeded $1.5 billion.

Judge Ezra interfered in the committee’s proceedings by quashing legislative subpoenas of the court monitor and technical assistance panel — one of whom had just been indicted on 44 counts of fraud and embezzlement of a federal grant.

Judge Ezra found the state to be in contempt of court in 2000, but reversed his stance in 2002 by finding the state in substantial compliance. He then ordered a sustainability plan and continued monitoring for 18 months….

DOE Internal Sustainability Report and External Felix Monitor Report Conflict

The DOE reports that it has developed the tools to assist in administrative decision-making, but the final Felix Monitor report says, “Reductions in services, pay levels and undue focus on procedural controls will result in a gradual erosion of the effectiveness of the educational and behavioral health system and send a clear message to middle management that serving kids with special needs is not important.”

The DOE reports $284 million spent on special education for SY 03-04, but also reports that only $5.6 million is spent for contracted services and approx. $1 million for early intervention services.

According to the final Felix monitor report, “Family Guidance Centers and district personnel say students receiving intensive services are presenting problems with increasing complexity and severity.” …

The DOE reports that training of school level personnel has been delayed, because there were problems with the software. However, 80 formal trainings for 3,001 other staff has been done in the first quarter of 2005. The state school based behavioral health and autism education specialists will then train district staff who will then train principals, counselors, special education teachers, psychologists, and so on, ad infinitum, with the ultimate objective being “improved state system performance.”

The DOE plan’s punch line is that a State Office of Accountability will be established to “review compliance with state and federal programs,” previously a function of Superintendent.

As of July 1, 2005, most remaining privatized services set up under the consent decree will be effectively dismantled by the DOE, leaving parents no recourse except due process to obtain services for their children.

Current special education litigation costs and judgments are reported to be approx. $2.7 million, depleting resources needed instead for services.

Judge Ezra signed off on the DOE’s contemptuous promises to do something after years of ignoring the needs of children but parents question why he washed his hands of the “charade” out of the public eye.

Laura Brown is the education reporter and researcher for Hawaii Reporter and the education policy analyst for the Grassroot Institute of Hawaii. She can be reached via email at


August 29, 2002

Cayetano and Anzai Block Investigation
into Misuse of Millions Under Felix

By Laura Brown, Hawaii Reporter

The sudden removal in May of Deputy Attorney General Dewey Kim by State Attorney General Earl Anzai from the investigation into fraud in the state’s special education system mandated under the Federal Felix Consent decree, after Kim announced preliminary findings, doesn’t bode well for those in favor of getting to the truth.

Kim’s removal reveals a probability that U.S. District Judge David Ezra, who oversees Felix, was told all along by his court advisors that the Felix Emperor has clothes, when, in fact, the Emperor has been running through the streets, naked and screaming for attention.

In July, Special Master Jeff Portnoy blamed the Felix Investigative Committee in his recommendation to the court for continuance of the Felix Consent Decree, complaining: “It would be inappropriate for this court to lessen its oversight when the legislative branch of state government appears so dissatisfied with special education services.”

Ironically, Portnoy’s recommendation for continued oversight did not include mention of:

>        The $2.3 million in Impact Aid monies diverted from school facility repair through PREL for mainland Felix consultants, which included a $600,000 contract awarded by Superintendent Paul LeMahieu to an intimate friend’s company, Na Laukoa;

>        The use of millions of dollars for the experimental Multisystemic Therapy program tested out first on Hawaii’s children at a great cost to Hawaii;

>        The Court Monitor Ivor Groves’ conflicts of interest — being that he is the court monitor who says whether or not the schools are compliant with the Felix Consent Decree and also is a vendor that sells training materials and provides training to public school personnel until they are compliant;

>        Nor did he mention the more than 100 pages of signed affidavits submitted to the court in June by advocates and attorneys for children documenting wholesale removal of services, blacklisting, witness tampering and more;

>        Portnoy also failed to mention that the shifting of mental health services from state Departments of Health to Education under the guise of “School Based Behavioral Health” occurred before the Department of Education had the infrastructure in place to sustain services as was previously provided through private contracting under Department of Health.

Privatization of mental health services under the Felix Consent Decree began in 1996 with the Kapiolani Big Island Demonstration Project and involved the Department of Health’s contracting with Kapiolani Health Hawaii for mental health services through non-profit organizations.

In 1998, the State Auditor found that the Child and Adolescent Mental Health Division of the Department of Health failed to manage the $8.8 million contract to ensure that services were provided professionally and cost effectively.

Critical contract terms were not enforced and public funds were wasted. The division overpaid Kapiolani HealthHawaii between $2.3 million and $3.5 million for services not rendered. Department of Health leadership decided not to pursue recovery of these funds.

Last year, the Felix Investigative Committee questioned Legislative Auditor Marion Higa on these findings, but she added that the state Legislature had not yet requested a follow-up to her 1998 audit.

The removal of Kim makes it appear that Attorney General Earl Anzai, and Gov. Benjamin Cayetano who appointed Anzai, are hiding politically damaging evidence of fraud and waste in the wake of Felix.

The state attorney general and governor have shot one of the messengers, Dewy Kim. And that is too bad.

They’ve blamed the children rather than themselves for the increasing costs associated with compliance and the fraud and waste now ingrained in the system.

They have not held the state or federal government accountable for the problems.

But the House-Senate Special Felix Investigative Committee, formed last year to audit where the $1.4 billion was spent on Felix compliance since 1994, may yet reveal that the true cost of Felix consists of a series of political payoffs to cronies.

Laura Brown is a resident of Mililani and a parent of children in the Hawaii public education system. She can be reached via email at

Hawaii Reporter


July 19, 2002

Official reverses finding
that state is OK on special-ed

The federal court has reportedly
been asked to continue oversight

Star-Bulletin staff and news services

The official appointed by U.S. District Judge David Ezra to monitor the Felix consent decree reportedly has reversed his recommendation that the state be found in compliance in providing services for special education students.

Key state lawmakers said yesterday they understand Ivor Groves now recommends the federal court continue close supervision of mental health and education programs.

Attorney Jeff Portnoy, who is Ezra’s special master for the consent decree, confirmed that Groves has revised his recommendations, but said the report remains confidential…

In April, Groves drafted a 41-page report saying federal oversight of the Felix programs could be eased because the state had made progress in providing the services for special-needs students.

But Groves’ report also said the state is not completely out of the woods and needs an additional two years of court supervision to address remaining challenges and to prove that it can maintain its progress, including keeping track of the $340 million annual budget for special-education resources.

Groves was appointed to monitor the state’s effort to meet requirements under the 1994 consent decree that stemmed from a 1993 federal class-action lawsuit accusing the state of failing to provide federally mandated coordinated mental health and education services to disabled children.

State Sen. Colleen Hanabusa, D-Nanakuli-Waianae-Makaha, and Rep. Scott Saiki, D-Moiliili-McCully-Ala Wai, who head the Legislature’s joint Felix investigative committee, said they’ve heard Groves now wants another year of compliance supervision. They said they have not seen Groves’ new report.

The legislative committee, meanwhile, voted yesterday to subpoena 14 officials in the state Department of Health, including the seven branch chiefs of the department’s Family Guidance Center, to testify under oath about their roles in the Felix programs.

“We’re looking at the ways the contracts were issued, what kind of services were actually provided. We’re always looking at how the moneys were spent,” Hanabusa said.

The investigative committee also voted yesterday to pursue its subpoena of Judith Schrag, a member of Groves’ technical assistance panel set up by Ezra to measure compliance.

Ezra quashed the committee’s original subpoena and Hanabusa said negotiations on a narrower subpoena were recently broken off by Schrag’s attorneys with no explanation.

Saiki said Schrag’s testimony “is even more relevant now because she helped create the standards for the full consent decree and now there’s a reversal in the monitor’s recommendations and we’d like to know what happened.” l


November 1, 2001

Judge warns state about
special education inquiries

A committee hinders state progress in compliance, he says

By Debra Barayuga, Star-Bulletin

The joint legislative committee investigating the state’s spending to comply with the Felix consent decree is derailing the state’s progress in meeting crucial deadlines, a federal judge said yesterday.

“What they’re doing with respect to these continual attempts to subpoena people under the umbrella of this court borders on harassment and comes very close to obstruction of justice,” said Chief U.S. District Judge David A. Ezra, adding that he will not tolerate it any further.

Sen. Colleen Hanabusa, co-chairwoman of the joint House-Senate committee, countered, “The committee will continue. The committee has no intention of stopping this investigation. We have too many questions.

“We don’t believe this committee’s investigation has come near to obstruction of justice,” Hanabusa said.

Ezra yesterday granted a protective order that prohibits Judith Schrag from appearing tomorrow before the legislative committee looking into how the state is using more than $300 million to provide services to children with disabilities.

The investigation continues as the state’s special education system is under pressure to meet certain benchmarks today and on March 31, 2002, or else face takeover by a federal receiver.

Schrag’s was the third such subpoena thrown out by the judge since the committee began its investigation.

Schrag formerly provided technical assistance to the state on the federal consent decree under Felix court monitor Ivor Groves.

Ezra in July blocked subpoenas for Groves and his assistant Juanita Iwamoto, ruling that the committee had no authority to order court-appointed officials to testify.

Assistant U.S. Attorney Ted Meeker, representing the U.S. Department of Justice, argued yesterday that Schrag, as an official carrying out the court’s mandate, fell under the same scope as Groves and Iwamoto and is entitled to quasi-judicial immunity.

The state attorney general had no position on Schrag’s motion to quash the subpoena but contends that her judicial duties would be protected by quasi-judicial immunity.

Ezra said while he has no problem with the committee looking into state matters, it has no legal or constitutional authority to investigate the actions of officials appointed by the courts to ensure compliance with the federal consent decree.

He said the legislative committee has created a lot of publicity, but its efforts have not resulted in bringing to the court’s attention any evidence of fraud, waste, abuse or mismanagement of state funds for Felix spending.

As for Ezra’s comment that the committee appears to be acting for publicity purposes, Hanabusa said the intent of the committee has been clear from its beginning in June.

“We want to know where the money has been spent and are the children getting the services they need,” she said.

“No one has said we are either harassing them or obstructing them,” Hanabusa said. “The only people who seem to be raising those concerns are, in fact, the plaintiffs’ attorneys and whenever the judge issues a ruling.”

Whether the awarding of a particular contract by former schools chief Paul LeMahieu constituted a conflict of interest and a misuse of funds is for the Attorney General to decide and to investigate, Ezra said.

Deputy Attorney General Holly Shikada confirmed they do not have any information to support any allegations of waste, wrongdoing or conflict of interests by anyone under the consent decree.

Rep. Scott Saiki, co-chairman of the investigative committee, said Schrag was an important witness with a perspective as a private consultant hired to assist in special education. He said the committee is disappointed that the subpoena was quashed but is looking at its options, including a possible appeal to the 9th Circuit.

“We’ve always felt our objective was one the federal court shares — to make sure the services provided to Hawaii students is appropriate and our students benefit — that’s the bottom line for our committee,” he said.

The committee has done a good job of highlighting mismanagement and abuse, providing enough “ammunition” for the Attorney General’s Office to look into and conduct its own investigation, Saiki said.

Shelby Floyd, one of the Felix plaintiff attorneys, called the committee’s investigation a “colossal waste of time for everyone concerned outside of the Legislature.”…

Jeff Portnoy, the special master appointed by the court to monitor the state’s compliance with the Felix consent decree, said he sees encouraging signs of the state’s progress over the past several months.

But he warned that anyone interfering with the state’s efforts to implement the consent decree will be dealt with severely by the court. He also said that the departure of LeMahieu will not be an excuse for the state’s failure to meet the court-ordered deadlines.


October 21, 2001

Contractor admits
fling with LeMahieu

Legislators question if her
business was deserving of the
Felix consent contract


By Crystal Kua, Star-Bulletin

A Hilo woman whose company was awarded a controversial $600,000 special education contract acknowledged to state lawmakers that she had an affair with former state superintendent of schools Paul LeMahieu.

“We did cross the line,” Kaniu Kinimaka-Stocksdale told a Joint Senate-House Investigative Committee yesterday. “It was a single time and it was the latter part of October of last year.”

LeMahieu used similar words Friday when he said his relationship with Kinimaka-Stocksdale developed to where “we crossed the line that shouldn’t be crossed.”

“We regretted it. We ended it,” the former public schools chief told the Star-Bulletin Friday.

Although the committee asked Kinimaka-Stocksdale few questions about the relationship, committee chairpersons said her testimony didn’t clear up conflict-of-interest questions.

“It’s very difficult to understand, still, how given the significant amount of this contract, plus what the contract was supposed to accomplish, with all the resistance … that Dr. LeMahieu went to great extents to try and validate it,” Sen. Colleen Hanabusa (D, Waianae) said after the hearing. “I can’t see any administrator in the state of Hawaii bending over backwards like that.”

Both Hanabusa and investigative committee co-chairman Rep. Scott Saiki (D, Moiliili) said they also are not satisfied with answers about whether Kinimaka-Stocksdale’s company, Na Laukoa, could do the job.

“The primary issue for us was whether or not Na Laukoa was qualified to provide the services,” Saiki said.

“I don’t think they have a grasp on what exactly they were supposed to be providing,” Hanabusa said.

The committee is investigating how the state — through the departments of Health and Education — spent millions of dollars to comply with the Felix consent decree, the federal court mandate to improve mental health and educational services to special needs children.

As part of the investigation, the committee also plans to subpoena LeMahieu to appear some time next month, they said.

“He wants a chance to tell us his side,” Hanabusa said. “Simply because he’s resigned doesn’t mean he’s not important to our investigation.”

LeMahieu submitted his resignation to the Board of Education Thursday.

After resigning, LeMahieu said that allegations of wrongdoing surfacing from the committee aren’t true because his relationship with Kinimaka-Stocksdale didn’t occur until after the August 2000 contract was awarded.

He said he was truthful when he previously characterized his relationship with her as a friend and business associate because that’s what they were at the time the company received the contract. He said he had seen her socially on several occasions including attending the Merrie Monarch hula festival in Hilo months before the contract was awarded.

LeMahieu used extraordinary powers granted by the federal court to award a $2.3 million contract to Pacific Resources for Education and Learning. Those powers included bypassing procurement laws that were barriers to complying with the consent decree in the granting contracts.

The PREL contract resulted in Na Laukoa receiving a $600,000 subcontract. LeMahieu at the time sat on PREL’s board but he resigned from the board earlier this year.

LeMahieu originally explored awarding the contract outright to Na Laukoa to help 15 school complexes comply with the consent decree.

Kinimaka-Stocksdale, who said she first met LeMahieu in 1999, said she knew there was opposition from within the DOE to her company receiving the contract from when she attended a July 7, 2000, meeting with DOE officials…

Most of her career was as a hula dancer, entertainer, in public relations and as a business owner of several companies including a modeling agency, she said.

Na Laukoa — which means to prepare for flight — helped kids with behavioral problems through Hawaiian cultural practices, she said….

LeMahieu has said that the umbrella contract was awarded to PREL because Na Laukoa lacked the administrative support to handle a large contract….

Kinimaka-Stocksdale denied suggestions made at previous hearings that she was supposed to get $170,000 under the contract and said that figure has wreaked havoc with her company. She said she’s made $36,000 so far under this contract.

She also said that she never told another service provider that she and LeMahieu had an “intimate” relationship. “I told her that we were close friends. I never mentioned the word intimate.”

Read the complete story, with photos, at:


Related references:



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Last Update September 3, 2006, by The Catbird