Experts: City unlikely to recoup Louis Kealoha’s $250,000 payout

As former police chief pleads guilty, can city recoup $250,000 payout?

HONOLULU, Hawaii (HawaiiNewsNow) - In the wake of his convictions, former Honolulu Police Chief Louis Kealoha owes city taxpayers a quarter of a million dollars, but is unlikely to pay up, experts say.

Kealoha was found guilty by a jury in the so-called “Mailbox Trial” and pleaded guilty to bank fraud on Tuesday. His statements in court promise that he will not appeal.

Based on all that, Honolulu Police Commission Chair Loretta Sheehan said that Kealoha must now pay back the $250,000 payoff he was given in 2017 to retire.

The city is sending him a letter demanding payment.

Sheehan was the only one on the commission to vote against the deal, saying there was “cause” to outright fire him.

But the rest of the police commission feared a lawsuit and instead opted for the payout.

“It was a bad deal from the get go,” Sheehan said.

Kealoha publicly apologized for the first time Tuesday after admitting to his crimes.

“All I know is, I’m going to do my best to redeem myself and I’m sorry.”

Sheehan referred to that statement, wondering aloud whether redemption would begin by honoring the deal he made.

“If he refuses to live up to his word, the city and county can look at his assets," she said.

Legal expert Victor Bakke agrees that a lawsuit will have to follow if Kealoha doesn’t comply.

“The city will get a judgement for it and it’ll be a default breach of contract," he said. But Bakke added it’s still unlikely any of the money will be repaid.

Louis and Katherine Kealoha have since declared they’re broke. They owe restitution to the people they ripped off, a total of more than $460,000 to multiple victims.

“The city and county would have to stand in line with its hand out,” Sheehan said, adding that state law also prohibits garnishing his pension, estimated to be more than $150,000 a year.

“We can’t touch that."

Sheehan said she tried to convince the city’s top civil attorney, Donna Leong, to have a backup plan in 2017. But the head of corporation counsel refused to listen.

“I remember talking to Donna Leong and saying, ‘Look, I don’t like this deal but if you’re going to do it why don’t you buy an annuity for a quarter of a million dollars and you make it payable to Chief Kealoha in monthly installments?’" Sheehan said.

“But upon conviction, the beneficiary reverts back to the city and county. So that way, we wouldn’t have to go through all of this."

Sheehan said Leong’s response to her suggestion wasL "I’m not here to negotiate, it’s a take it or leave it deal.”

Sheehan opted to “leave it."

Because of the payoff, Leong is also a target of the federal public corruption investigation. Leong has been on paid leave since January after the Department of Justice sent her a target letter.

Hawaii News Now reached out to Kealoha’s attorney to see if the former chief would honor the agreement and return the money, but did not get an answer.

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