UPDATE: 2:10 p.m.

Former Honolulu prosecutor Keith Kaneshiro, Hawaii businessman Dennis Mitsunaga and three other defendants all pleaded not guilty this afternoon in the initial appearance in federal court after being indicted on charges of bribery, fraud and conspiracy.

U.S. Magistrate Judge Wes Reber Porter released all five on $50,000 bond each and scheduled trial for Aug. 16.

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Former Honolulu Prosecuting Attorney Keith Kaneshiro and politically influential engineering executive Dennis Mitsunaga were arrested by federal agents this morning in connection with a long-running public corruption investigation by a special prosecutor from California, according to the FBI.

Kaneshiro surrendered to FBI agents this morning at his Waialae apartment, an FBI spokesperson confirmed, and Mitsunaga was arrested at his home. They will make their first appearances in federal court today before U.S. Magistrate Judge Wes Reber Porter.

Federal prosecutors from San Diego secured an indictment June 2 against Kaneshiro, 72; Mitsunaga, 78, the president and CEO of Mitsunaga & Associates (MAI) and a prolific Hawaii political donor; and Mitsunaga employees Terri Ann Otani, 66, Aaron Shunichi Fujii, 64, and Chad Michael McDonald, 50, on charges of conspiracy to commit honest services fraud, federal program bribery, and conspiracy to violate rights. The indictment was made public today.

“This indictment alleges a Honolulu businessman and others paid more than $45,000 in campaign contributions to Honolulu’s former Prosecuting Attorney to prosecute a former employee,” said U.S. Attorney Randy Grossman in the Southern District of California, in a news release. “Public officials must conduct their affairs honestly and with integrity. The Department of Justice will work to hold accountable anyone who betrays that duty through the influence of bribes.”

Grossman thanked the FBI’s Honolulu Division and the prosecution team lead by Assistant U.S. Attorney Michael Wheat, for their work.

“The citizens of Hawaii deserve a government free of corruption,” said Special Agent in Charge Steven Merrill, of the FBI’s Honolulu Division, in a news release. “Corruption erodes the public trust and the FBI is committed to ensuring that people cannot buy prosecutions in the State of Hawaii. Thanks to U.S. Attorney Grossman and the prosecution team for their teamwork and commitment to justice.”

The conspiracy to commit honest services fraud and federal program bribery charge carries a penalty of up to five years in prison, and the conspiracy to violate rights charge is punishable by up to 10 years in federal prison.

A former Mitsunaga employee, Laurel Mau, sued the company after she was let go in November 2011. Mitsunaga and his employees allegedly contested Mau’s attempts to secure unemployment benefits from the state. After a year, a circuit court judge ruled Mau was eligible to receive the benefits.

In the August 2012 lawsuit, Mau accused Mitsunaga & Associates of violating the Civil Rights Act of 1964 and Age Discrimination in Employment Act of 1967.

In October 2012, Mitsunaga met with Kaneshiro, who he supported politically, “to attempt to persuade Kaneshiro to investigate and prosecute,” Mau for allegedly working “side jobs” while on company time, according to the indictment.

Following the meeting, Mitsunaga, Otani, Fujii and McDonald and other Mitsunaga family members and employees donated about $45,000 to Kaneshiro’s campaign, federal prosecutors say.

“Prior to first contributions in October 2012, the MAI donors had no known contributions to Kaneshiro,” according to the indictment.

In July 2014, a federal judge overseeing Mau’s lawsuit and several counterclaims by Mitsunaga & Associates found no liability other than a “breach of loyalty” claim against Mau for which she awarded the firm $1.

Kaneshiro prosecuted Mau for four counts of theft at the firm’s request in December 2014, according to criminal justice sources and state court records.

In July 2017, those charges against the employee were dismissed with prejudice, meaning the charges could not be refiled.

In 2018 Kaneshiro received a target letter from the U.S. Department of Justice, informing him that he is under investigation in an ongoing corruption probe that already has resulted in the indictment and conviction of former Police Chief Louis Kealoha and his wife, former Deputy Prosecutor Katherine Kealoha; and the indictments of former city Managing Director Roy Amemiya, former city Corporation Counsel Donna Leong, and former Honolulu Police Commission chairperson Max Sword.

Kaneshiro was on paid leave for two years until leadership of his office turned over in the 2020 election.

Kaneshiro Indictment by Honolulu Star-Advertiser on Scribd