Authorities who investigated Kealoha corruption scandal now turn their attention to city

HONOLULU, Hawaii (HawaiiNewsNow) - The public corruption scandal that started with the Kealohas is far from over and now federal authorities have turned their attention to city officials.

High-ranking city officials are among the witnesses being called to testify before a federal grand jury.

It’s all linked to the same, years-long investigation headed up by assistant US Attorney Michael Wheat.

The probe led to the conviction of former law enforcement power couple Louis and Katherine Kealoha, who were sentenced Monday conspiracy, obstruction and bank fraud.

Now the focus appears to be city leaders who facilitated the $250,000 payoff for Louis Kealoha to retire in 2017, during his second term as Honolulu’s police chief.

Kealoha was already on paid leave after receiving a target letter from the US Department of Justice. He was indicted months after receiving the money.

The focus of the investigation appears to be Donna Leong, who was the city’s top civil attorney. The head of corporation counsel retired in January 2019, after she received her own target letter from the DOJ.

Roy Amemiya, the city’s managing director and the second in command under Mayor Kirk Caldwell, received a subject letter, but remains on regular duty.

Witnesses have been called to the grand jury investigating the case for several weeks, including Amemiya’s deputy, Georgette Deemer, who was subpoenaed to testify in October and November.

Manny Valbuena, director of Budget and Fiscal Services, was also called twice to provide information to the grand jury along with his chief accountant, Nancy Abilay.

And most notable, former City Council Chairman Ikaika Anderson has also gone before the grand jury.

Anderson told Hawaii News Now that he was asked about the policies and procedures of settlements. Anderson said he didn’t get a DOJ letter but offered assistance as it relates to council operations.

The council was mostly critical of Kealoha’s retirement payoff because it was done in secret between the police chief and the Honolulu Police Commission.

The head of the commission at the time, Max Sword, dismissed council members’ concerns.

Sword also went to the federal courthouse for grand jury proceedings, multiple times.

“There are a lot of questions as to how that money was paid out, who was involved and was it paid out legitimately,” said Alexander Silvert, former deputy federal public defender.

Silvert represented the Kealohas’ victims and is credited with convincing the FBI in 2015 that the couple framed his client for a crime he did not commit.

“The police commission took the position that the City Council had no right to be involved to approve the expense and the money because it came out ... of the police fund which had already been approved,” Silvert said, explaining why federal authorities may be involved.

“If that’s not true and it did not come out of that police fund and would have required City Council approval, then there’s something wrong.”

Silvert said there are a number of federal crimes that the special prosecutors could be looking at, including honest services fraud.

The federal team of special prosecutors appears to be juggling multiple investigations with the grand jury, including the problem into outgoing city Prosecutor Keith Kaneshiro.

Kaneshiro remains on paid leave two years after he received a D.O.J. target letter. His term expires at the end of this year. Witnesses connected to Kaneshiro’s office are still being called to testify.

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