The federal criminal case against three former top city officials is a disagreement between the assistant U.S. attorney prosecuting the case and the city’s procedures for processing a $250,000 severance agreement for former Police Chief Louis Kealoha, according to defense attorneys.
A March 11 court filing by attorneys representing former Managing Director Roy Amemiya states that Amemiya is “not a lawyer,” a point prosecutors acknowledge. Amemiya “had absolutely no involvement in the decision to negotiate and consummate the January 18, 2017 severance agreement,” wrote defense attorney Lyle S. Hosoda.
“In bringing the conspiracy charge against Mr. Amemiya, the Government relies on the opinion of a non-lawyer who served as the Acting Chief of Police and objected to the use of HPD funds to pay for the severance,” Hosoda argued.
The indictment alleges that Amemiya conspired with former Corporation Counsel Donna Leong and former Honolulu Police Commission Chair Max Sword to “conceal the details of the Kealoha payout from the City Council” and “induce HPD to pay for
Kealoha’s payout from
salary funds allocated in HPD’s budget in order to circumvent City Council
approval.”
According to the indictment, acting Police Chief Cary Okimoto told Leong that City Council review would be required due to the amount of the payout. The Police Commission maintained that approval was not required because the “payout was based primarily on Kealoha’s employment and retirement concerns, and did not solely or primarily concern the use of City funds.”
Hosoda argues the City Charter leaves the hiring and firing of the police chief solely in the hands of Police Commission members. The law also states that City Council approval of Kealoha’s severance agreement was not required because the money used to pay for it came from HPD’s budget, which was previously approved by the Council.
Hosoda cited a U.S.
Supreme Court case, Kelly v. United States, that stated the criminal statutes Amemiya, Leong and Sword are accused of conspiring to violate are federal property fraud offenses. That requirement prevents the statutes from being used to criminalize every act of dishonesty by state and local officials and restricts federal prosecutors from
setting “standards of disclosure or good government,” according to the
filing.
“That is exactly what the prosecution is trying to do here: prosecute former City employees for following well-established procedures for the approval of a severance agreement, because the Government (and apparently the former acting Chief of Police) have a different opinion
of what the procedure should be.”
U.S. District Judge Leslie E. Kobayashi ruled Feb. 28 that former city Budget and Fiscal Services Director Nelson Koyanagi, who is battling cancer, could be deposed in the case. He is expected to confirm the 2017 Kealoha settlement was legal and followed a structure similar to separation payout agreements with other former city department heads.
Prior to moving forward with the Kealoha payout, the city administration also considered a legal and policy memo authored by a deputy corporation counsel that found the arrangement legal and appropriate. A 2019 review of the settlement conducted by a San Francisco law firm, Farella Braun &Martel, contracted by the city, also declared its structure legal and in line with separation payment practices at the time.
Hosoda wrote that the Supreme Court stated in the Kelly case that if “U.S. Attorneys could prosecute as property fraud every lie a state or local official tells in making such a decision, the result would be … a sweeping expansion of federal criminal jurisdiction.”
“The payment to Kealoha was made as part of a severance agreement legally entered into and properly approved by the HPC,” Hosoda argued in the court filing. “The Government may disagree with the agreement and the process used to achieve it, but as the Kelly case confirms, this is not a federal crime.”
Kelly Thornton, director of media relations for the U.S. Attorney’s Office of the Southern District of California, which is handling the case, did not immediately reply to a Honolulu Star-Advertiser request for comment on the filing.
