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Louis Kealoha owes taxpayers $250,000 but a line of victims need to be paid first

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Updated: Dec. 2, 2020 at 5:59 PM HST
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HONOLULU, Hawaii (HawaiiNewsNow) - Ex-Police Chief Louis Kealoha, sentenced this week to seven years behind bars for his role in an elaborate corruption scandal, owes Honolulu taxpayers $250,000.

But they’ll have to get in line behind victims who are due to get paid first.

Kealoha was sentenced Monday in federal court following his conviction on conspiracy, obstruction and bank fraud charges.

Because he waived his right to appeal the trial, he is supposed to return the money.

In 2017, the Honolulu Police Commission paid him the $250,000 in order for him to retire from his post before his term ended.

He had already received a target letter from the Department of Justice and was on leave at the time.

Loretta Sheehan, a former federal prosecutor, was the only commissioner to vote against the payout. She said it’s unlikely the city will ever recoup the money.

“The city and county doesn’t fall in the line (of victims) at all. We’re behind the line, that’s where we are,” she said.

The payoff did have conditions. If Kealoha was convicted of a felony crime and exhausted his appeals, he would have to pay the money back.

”It is final, he cannot appeal and now it can be collected upon. The question is what’s there to collect,” said Alexander Silvert, who represented one of the Kealoha victims as a deputy federal public defender.

Silvert doesn’t believe the former police chief will pay it back on his own and there isn’t much the city can do about it.

In addition to the prison time, Chief Judge J. Michael Seabright ordered restitution be paid to the victims but not to Honolulu taxpayers.

“Judge Seabright did not include the city and county in the restitution order because we weren’t the victims of criminal activity,” Sheehan said.

“Appropriately the victims of criminal activity are in line and we’re somewhere after that line.”

Kealoha and his estranged wife, Katherine Kealoha, an ex-deputy city prosecutor, are on the hook for a combined $455,000 in restitution.

Of that, about $238,000 can be paid by either one of them ― likely Louis Kealoha, who banks almost $9,700 a month from his police pension.

The judge ordered $7,000 of that monthly income to be used for restitution while he is serving his sentence. A pension cannot be garnished but apparently once it’s deposited into a bank account it can be used to repay victims.

“You cannot touch a pension, but when the pension money is put into an account, it’s no longer pension money,” said Silvert.

Katherine Kealoha alone owes another $217,000 for the additional victims of crimes she committed without her husband’s knowledge.

The city has sent Louis Kealoha letters asking him to voluntarily pay the $250,000 back. It appears Kealoha has not responded.

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