City sues former Honolulu Police Chief Louis Kealoha for severance pay

City attorneys this week filed a lawsuit against former Police Chief Louis Kealoha seeking return of $250,000 in taxpayer money that he received as a severance payment when he retired from the Honolulu Police Department in March 2017.

One of the terms of the severance agreement requires Kealoha to repay the money to the city if he is convicted or pleads guilty or no contest to a state or federal felony within seven years of the deal’s execution.

Kealoha; his wife, former Deputy Prosecuting Attorney Katherine Kealoha; and two other former HPD colleagues were found guilty in June of conspiracy and obstruction of justice tied to an investigation by U.S. attorneys that centered on the onetime power couple. On Oct. 22 Kealoha entered into a plea agreement related to three other criminal indictments.

The lawsuit includes a recitation of the details of the October plea agreement, including that the chief admitted he and his wife stole money from her grandmother Florence Puana, stole funds belonging to two minors for whom she was a court-appointed guardian and defrauded multiple financial institutions.

The Honolulu Police Commission, through city attorneys, sent a letter to Kealoha at his Kahala home via certified mail on Oct. 23 demanding repayment of the severance citing the agreement’s terms.

”Kealoha has not responded nor has he returned the severance payment of $250,000, which is a breach of the Agreement,” according to the lawsuit filed by the city against Kealoha on Tuesday.

Deputy Corporation Counsel Duane Pang said he expects a process server to serve the lawsuit against Kealoha at the same Kahala residence where someone accepted the demand letter in October.

Neither Pang nor acting Corporation Counsel Paul Aoki offered additional comment about the lawsuit.

Police Commissioner Loretta Sheehan, the sole member of the commission to vote against the severance payment when it was approved 5-1 in January 2018, on Thursday said, “It was responsible of the city to file a lawsuit to attempt to collect a judgment against Chief Kealoha. Chief Kealoha owes us $250,000 and we would like our money.”

Sheehan, who became commission chairwoman a month later but was removed from her leadership role in a 5-2 vote last week, said it was “disappointing but not surprising” that the ex-chief chose not to respond to the city’s demand letter.

When opposing the severance payment two years ago, Sheehan called it “expensive, unnecessary and very likely undeserved.” Sheehan said the commission should instead have conducted a for-cause hearing “to examine the issues that have been raised regarding his leadership and management abilities,” and then decided whether to remove him.

Then-Commission Chairman Max Sword, in explaining the payout, said, “The department has been under a dark cloud for the last two years with all this federal investigation, and we believe that the Police Department needs to move on to get out from under that cloud. We also are responsible in my view, and the commission’s view, that the morale and welfare of the Police Department is incumbent on what we do because it affects how they act or how they cover or support the community.”

Councilman Ron Menor, who heads the City Council’s Executive Matters and Legal Affairs Committee and pushed for city attorneys to file the lawsuit, said Thursday that Kealoha has “a legal and moral obligation to the taxpayers of Oahu to fully repay the amounts he received because he violated the public’s trust by abusing his position of authority as chief law enforcement officer.”

Menor said he’s hopeful the lawsuit will “result in at least a measure of justice being done for the wrongdoing that Kealoha committed.”

At the time he retired, Kealoha was making $182,088 annually. He is scheduled to be sentenced in March.

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