The city said Wednesday it plans to demand that former
police Chief Louis Kealoha repay the $250,000 severance he received upon retirement in 2017 now that Kealoha has been convicted of multiple felonies and waived his right to appeal.
The city’s planned action
underscores a new reality for
Kealoha and his wife, former deputy prosecutor Katherine Kealoha.
Both will be dealing with payment demands potentially totaling hundreds of thousands of dollars following the separate plea deals they struck this week with prosecutors. The deals included waiving the right to appeal their convictions.
Louis Kealoha, 59, pleaded guilty Tuesday
to one count of bank fraud,
a felony, and Katherine
Kealoha, 49, pleaded to a count each of bank fraud, aggravated identity theft and “misprision” of a felony, or the failure as a law enforcement officer to report
Those guilty pleas are on top of the four felony counts of conspiracy and obstruction of justice that they each were found guilty of in June following a jury trial. Two police officers also were found guilty of the same charges.
The four defendants conspired to frame Gerard Puana, Katherine Kealoha’s uncle, for a crime he didn’t commit and then lied about their actions to federal
authorities, the jury found.
Louis Kealoha’s Tuesday plea deal is prompting the city to take action.
“The Department of the Corporation Counsel (COR) believes Kealoha’s guilty plea triggers his obligation to repay the severance pay that was agreed upon by the police commission,” city spokesman Andrew Pereira said Wednesday in a written statement. “COR will be sending a formal demand letter to Kealoha, and if the letter is not acted upon, the city will be filing a lawsuit seeking the repayment of the severance pay.”
Even as Louis Kealoha was the target of a federal
investigation, the Honolulu Police Commission in January 2017 approved a controversial package that allowed him to retire with his normal benefits but included the $250,000 payment.
The retirement agreement, which was negotiated in secret, included a provision that Kealoha had to repay the $250,000 if he were convicted of a felony within six years. It also said that Kealoha didn’t have to repay the money until all appeal opportunities were
The commission approved the agreement by
a 5-1 vote.
Louis Kealoha’s waiver
of his appeal rights is key to why the city intends to issue the demand letter now rather than after the June convictions, according to Pereira.
Appeals sometimes can take years.
The city won’t be the only one seeking money from the Kealohas.
The plea agreements also include a requirement that the Kealohas pay restitution of more than $165,000 to two minor children whose accounts the couple stole from to help fund an extravagant lifestyle, according to the court documents.
The sentencing agreements that were part of Tuesday’s deal also say Florence Puana, Gerard’s mother and Katherine Kealoha’s grandmother, and Gerard Puana are entitled to nearly $290,000 in restitution as victims of the conspiracy.
Katherine Kealoha’s sentencing agreement says all four of the convicted defendants are liable for the $289,715 owed to the Puanas but that the parties “will jointly recommend” that Katherine Kealoha pay the full amount.
Louis Kealoha’s agreement says the parties agree that all four are liable for a quarter of the overall amount.
The final restitution amount is subject to court approval.
Whatever the final arrangements, the Kealohas will owe tens of thousands of dollars in restitution.
Yet the Kealohas’ financial situation was so precarious that the federal court determined they couldn’t afford their own attorneys for the criminal cases and appointed court-paid counsel for them.
In the paperwork that Louis Kealoha filed last week seeking to end the couple’s 23-year marriage, he listed $9,000 as his monthly income and zero for his wife’s.
Attorney Eric Seitz, who represents the Puanas in a federal lawsuit against the Kealohas and several police officers who were involved in Gerard Puana’s case, said he doesn’t have much confidence his clients will get restitution from the Kealohas.
“We have no idea at this point,” Seitz said.
But because the lawsuit
is against the defendants
in their personal and official capacities, the city is on the hook for their misconduct committed on the job, and what the lawsuit alleges basically tracks what federal prosecutors cited in the June trial, according to Seitz.
“There is really no defense as far as we’re concerned,” he added. “The city is on the hook” for potentially tens of millions of dollars in damages.
Pereira said the city had no comment on pending
Earle Partington, who was hired by Katherine Kealoha’s family during the latter part of the conspiracy trial, said his client has no means to pay the restitution cited in Tuesday’s agreements.
“She has no retirement, no pension, no nothing,” Partington said.
Louis Kealoha’s attorney could not be reached for comment Wednesday.
Gerald Kurashima, who represents the Puanas in a civil lawsuit against Katherine Kealoha in state court, said the city could file suit against Louis Kealoha to go after any assets in his name and seek foreclosure action.
Katherine Kealoha won
a judgment against the
Puanas in the lawsuit, but Kurashima is seeking a new trial based on what federal prosecutors uncovered in the conspiracy and obstruction case.
“The question will always be what’s available,” Kurashima said of the city’s demand plan. “Does he have any assets?”