Feds oppose deposition of former Honolulu budget director

The U.S. Department of Justice opposes the deposition of Honolulu’s former budget director in connection with the allegedly illegal $250,000 settlement with former Police Chief Louis Kea­loha because it does not believe he is willing and able to testify, according to a response filed Wednesday in federal court.

Former corporation counsel Donna Leong’s attorney, Lynn Panagakos, filed a “motion to take deposition of a critical witness” on Jan. 27 to secure the testimony of the former director of the Department of Budget and Fiscal Services, Nelson Ko­ya­nagi, who is fighting cancer. Former Police Commission Chairman Max Sword joined Leong’s motion through his attorney, William McCorriston.

Panagakos does not think Koyanagi will be available to testify at Leong’s trial.

In response to Panagakos’ motion filed in federal court Wednesday, Assistant U.S. Attorney Michael Wheat wrote that Leong has not established that Koyanagi’s testimony would be “favorable” to the defense, according to DOJ’s response.

“On the contrary, Koya­nagi’s involvement — including attempting alongside Leong to convince HPD to misuse funds to pay for Louis Kealoha’s retirement — and anticipated testimony — including that he was taking instructions from Leong — would only serve to confirm Leong’s guilt,” wrote Wheat. “Given the inculpatory nature of Koya­nagi’s expected testimony, the United States would overlook the inability of Leong to establish ‘favorability’ and welcome the opportunity to depose Koya­nagi under oath. However, the situation described by Koyanagi’s counsel in their filing raises significant concerns about Koyanagi’s fitness, competency, and overall availability to serve as a witness.”

Wheat said in the filing that based on the documents submitted by Koyanagi’s attorneys under seal Wednesday, it appears that he is incapable of testifying. He also highlighted a pair of interviews Koyanagi sat for with federal investigators.

“Koyanagi stated that he followed COR’s guidance — e.g., Leong’s department — as his attorney at BFS (Budget and Fiscal Serv­ices). COR (Corporation Counsel) had advised him that Kealoha’s payout did not require City Council approval and the provisional account was a means to fund the payout,” wrote Wheat. “Koyanagi stated that normally a department worked with Human Resources and COR to negotiate a severance package, and BFS would make all respective payments once the agreement was finalized.”

A hearing on Panagakos’ motion is scheduled for today. Koyanagi’s attorney, Howard Luke, did not respond to a Honolulu Star-Advertiser request for comment. Panagakos also did not reply to a Star- Advertiser request for comment.

Also Wednesday, six subpoenas were confirmed served to the city Department of Budget and Fiscal Services, the city’s Administrative Services Officer, Corporation Counsel’s office, Department of Information Technology, Department of Human Resources and the Managing Director’s office seeking documents previously requested by former Managing Director Roy Amemiya.

Upon learning he was a target of the DOJ investigation in June, Amemiya requested files related to the 2017 retirement settlement with Kealoha.

The city did not turn over those records, and Amemiya’s attorney. Lyle Hosoda, is suing the city in state court for allegedly violating the Uniform Information Practices Act and subpoenaing the records to introduce them into the federal court case.

Leong, Sword and Ame­miya are accused of conspiring to pay Kealoha with federal funds and city money from the Honolulu Police Department’s payroll account while evading City Council review and approval.

The three former county officials were indicted Dec. 16 and taken into custody by the FBI on Jan. 12, the latest arrests in an ongoing public corruption investigation by a special prosecutor with the DOJ targeting the dealings between elected officials, private businesses and government operations in Honolulu.

Amemiya, Leong and Sword each entered a plea of not guilty and are free on $50,000 bonds. Their trial is scheduled for June 13 at 9 a.m. before Judge Leslie Kobayashi, after their attorneys successfully moved to push back the trial date, originally set for March 14.

The motion to depose Koyanagi was filed after Panagakos reviewed the first round of discovery documents turned over by Wheat’s team.

Wheat has served as a special attorney for the U.S. attorney general prosecuting interdistrict conflict cases in Hawaii since 2012.

The DOJ team of prosecutors from the Southern District of California who are running the ongoing investigation — Wheat, Joseph Orabona, Janaki Chopra, Colin McDonald and Andrew Chiang — did not respond to a request for comment sent to Wheat and a spokeswoman.