Settlement talks set to begin in civil rights suit over huge gambling case that failed twice

HONOLULU (HawaiiNewsNow) - City attorneys are heading to the bargaining table to try and settle a civil lawsuit over a gambling case that failed twice in court and resulted in state judges scolding deputy prosecutors.

The 2014 case was once deemed the state's largest indictment ever.

City Prosecutor Keith Kaneshiro, with ex-Police Chief Louis Kealoha by his side, called a news conference touting the 414 counts against nine defendants: Charges of racketeering, gambling promotion and money laundering were all listed, but prosecutors could never make any of those charges stick.

And recently, eight of the nine former defendants filed a lawsuit in federal court claiming their rights were violated.

"They had lawyer fees, they had bail fees, they had all kinds of problems, they lost their businesses," said attorney Victor Bakke, who was involved in the case. He said taxpayers could end paying a landmark settlement as a result.

Settlement talks are set to begin on Monday.

What especially hurts the city: Two judges publicly criticized the Kaneshiro's office and deputy prosecutors on the case.

In November of 2014, Judge Randy Lee dismissed it without prejudice.  While making his ruling, he expressed concerns about the experience of Deputy Prosecutor Katherine Kealoha and co-counsel at the time, Jake Delaplane, who left the office a short time later.

The case was later refiled but didn't get far.

On August 9, 2016, Judge Rom Trader dismissed with prejudice, ending it permanently.  Trader also criticized the agency for repeating some of the mistakes, "The court cannot find the state has clean hands in this matter," he said in issuing his ruling, "A third opportunity would not be fair for these individual defendants."

Kealoha and Kaneshiro are now tied to a massive, separate, federal, public corruption investigation.

Keith Kaneshiro is the subject of an ongoing grand jury investigation.

And Katherine Kealoha is out on bond, facing two trials on a number of federal charges. Despite that, she remains a Honolulu deputy prosecutor on leave.

"None of us involved in that case could understand how it was that she wasn't at least disbarred," said Bakke. "Instead she was just allowed to disappear."

Bakke said it could be months before a settlement is reached, but says it appears the city is willing to make a deal.

Hawaii News Now did ask for comment from the city Prosecutor's Office, but did not get a response.

Copyright 2018 Hawaii News Now. All rights reserved.