Caldwell believes former city officials are innocent

Former Mayor Kirk Caldwell believes his one-time corporation counsel, managing director and chair of the police commission did not break the law while arranging a $250,000 retirement settlement for former police Chief Louis Kealoha that bypassed City Council review.

The three past city officials, Donna Leong, Roy Amemiya, and Max Sword, were indicted Dec. 16 and accused of conspiring to defraud the government in 2017 by diverting federal funds and money from the Honolulu Police Department’s payroll account to fund the Kealoha payout. They were arrested by the FBI Jan. 12, entered pleas of not guilty, and are free on $50,000 bond ahead of their trial June 13.

The accusations outlined by the U.S. Department of Justice are the latest charges to come from a long-running investigation into Honolulu government operations, elected officials and the private business people who support them through campaign donations.

Caldwell has not received a target letter in connection with the probe, nor has he been contacted by investigators since Leong, Amemiya and Sword were indicted.

The press, and “others,” asked Caldwell to comment on the Kealoha severance matter, according to a statement released by his attorney, Lex R. Smith.

“I have great confidence in the integrity of Ms. Leong, Mr. Amemiya and Mr. Sword. I am confident they did not commit a crime and they will be acquitted when they get their day in court,” said Caldwell. “As I understand it, this somehow involves the process that was used for the Kealoha severance agreement. I am confident that Donna Leong used and would always use the process she believed was right and legal. These are people of impeccable integrity and honor. I cannot fathom the hurt they and their families must feel. I can only say that I am confident of their innocence and ask that everyone consider the facts and not rush to judgement.”

Caldwell did not respond to questions about what, if any, impact the accusations have on his campaign to be Hawaii’s next governor. In his statement, Caldwell said he will not comment further, citing ongoing litigation.

Lynn Panagakos, Leong’s attorney, Lyle S. Hosoda, Amemiya’s counsel, and William C. McCorriston, Sword’s attorney, did not immediately reply to a request for comment on Caldwell’s statement of support for their clients.

The DOJ team of prosecutors who are running the ongoing investigation and prosecuting the case — Michael Wheat, Joseph Orabona, Janaki Chopra, Colin McDonald and Andrew Chiang — did not immediately respond to a request for comment sent to Wheat and a spokesperson.

The defense is attempting to depose Nelson Koyanagi, the former director of the city Department of Budget and Fiscal Services, who is fighting cancer and may be unable to testify.

Panagakos filed a motion in federal court Jan. 27 asking a judge to compel Koyanagi to review evidence turned over during discovery and take questions. Koyanagi knows that the 2017 Kealoha settlement did not require City Council approval and was structured like settlements paid to other city department heads, the motion asserts.

Panagakos, Hosoda and McCorriston all wished Koyanagi and his family well during a hearing Friday. Judge Leslie E. Kobayashi gave the defense and DOJ until Monday to establish a process for sharing evidence and questions with Koyanagi’s attorneys, Howard Luke and Richard Sing, who will try to determine if he is willing to answer them.

Doctors treating Koyanagi must confirm he is physically able to handle questioning by attorneys, Kobayashi told the attorneys Friday.

DOJ’s probe, that stretches to at least 2016, resulted in the 2019 conviction of Kealoha and his estranged wife, former Deputy Prosecuting Attorney Katherine Kealoha.

Kealoha was sentenced to seven years in prison, and Katherine Kealoha received 13 years in December 2020, after being convicted of conspiracy, fraud and obstruction of justice in a probe that started with a report that the Kealohas’ mailbox was stolen.

In 2018, former city Prosecutor Keith Kaneshiro and two of his deputies received letters notifying them they were the target of Wheat’s investigation. None of them have been charged.

On January 20, at least five people, including two former elected officials, testified as witnesses before a federal grand jury about donations from Honolulu engineering executive Dennis Mitsunaga, his employees and family members between 2008 and 2020.