3 former city officials indicted on charges of defrauding the federal government

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HONOLULU (KHON2) — The corruption case surrounding former Honolulu Police Department Chief Louis Kealoha and his wife, former Deputy Prosecutor Katherine Kealoha, continues as three former city officials have turned themselves in to the FBI on Wednesday, Jan. 12, and are now facing federal charges.

Former City Managing Director, Roy Amemiya, former Corporate Counsel Donna Leong and former Honolulu Police Commission Chair, Max Sword turned themselves in to face charges that they defrauded the federal government.

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Leong and Amemiya previously confirmed they had received target letters into the investigation of the $250,000 payout to former police chief Louis Kealoha. Federal officials said Amemiya, Leong and Sword tried to divert federal funds to Louis for that payout.

Louis, his wife, Katherine and others, were convicted of conspiracy and other charges in 2019.

All three parties were arraigned at 11:30 a.m. on Wednesday. The judge ordered that the three could be released on a $50K unsecured bond after making their first court appearance and pleading not guilty. Jury selection is set to start on March 14.

“I’m bewildered because they’re pursuing a case against me in a matter I was never involved in. Secondly, I’m angry because the federal law enforcement is challenging my ethics and my integrity,” said Amemiya.

KHON2 asked Sword for a comment about everything going on.

“No no. We’re good, we’re good,” said Sword.

Leong left court without commenting. Court documents said that in 2017 when then police chief Louis Kealoha received a target letter, the three former city officials “did induce HPD to pay for Kealoha’s payout from salary funds allocated in HPD’s budget in order to circumvent City Council approval.”

Also, they gave “… misleading representations and omissions to the City Council in order to obtain the reallocation funds.”

The law requires anything over $100,000 to be approved by the City Council. Court records said the payout was divided into three amounts under that threshold. Records said: “Leong spoke in private with the Acting HPD Chief (Cary Okimoto) who suggested that they go to the City Council for approval.”

Additionally, records stated Leong declined and suggested that HPD avoid City Council review by falsely claiming that HPD had used the money to hire new employees.

Then, when Sword was asked why the money needed to be from HPD accounts, Sword said: “Oh the reason, it’s very simple. So, you don’t have to go to the seven bananas, I mean nine bananas up at the council.”

Other court records stated: “Amemiya called the HPD Chief to confirm that he would not raise the Kealoha payout to City Council.”

According to the indictment, Leong gave false statements to the FBI during an interview and said: “that the acting HPD Chief was not involved in any conversation about Kealoha’s payout.”

According to the indictment against three former top Honolulu City officials, a Jan. 12, 2017 request from the Honolulu City Council Chair to Honolulu Police Commission Chair Max Sword asking about the $250,000 settlement with former police chief Louis Kealoha was declined.

Ikaika Anderson was vice-chair of the city council at the time.

“I wasn’t comfortable with the settlement,” Anderson said. “And that’s why as council vice-chair, as a member of the Honolulu City Council leadership, I asked for and would have appreciated the opportunity to question the police commission and ask for the Commission’s rationale in offering that settlement.”

Anderson said they never got the chance to question Sword. The transfer of city funds exceeding $100,000 requires city council approval.

“We couldn’t get that explanation because the police commission was advised by their legal counsel not to come in front of the Honolulu City Council,” explained Anderson.

According to the indictment, it was Donna Leong who responded to the council. The indictment said: “Approval was not required because the payout was primarily based on Kealoha’s employment and retirement concerns, and did not solely or primarily concern the use of city funds.”

Anderson testified in the federal probe back in 2020.

“I was asked by the grand jury what the city council’s role in the settlement to Chief Kealoha was, and I told the grand jury that the city council had no role,” continued Anderson.

The new State of Hawaii Organization of Police Officers (SHOPO) President Robert Cavaco was a sergeant at the time of the settlement.

Cavaco said, “I just thought it was wrong to take money from our budget or department budget, money that’s obviously paid by the taxpayers to go and pay off a police chief so that he can go away.”

The indictment said the money used in Kealoha’s settlement came from a Honolulu Police Department fund meant for new hires or for overtime. Former HPD Acting Chief Cary Okimoto opposed the use of the department’s funds for the settlement.

Watch Amemiya, Leong and Sword leaving court on Jan. 12

“The City is troubled and saddened to learn of the indictment unsealed today charging former city officials Leong, Amemiya and Sword. The Administration recognizes the indictment contains allegations, not facts, and will monitor the matter closely. We are committed to ending public corruption and restoring faith in government.”

Honolulu Mayor Rick Blangiardi

In addition to Mayor Blangiardi, several others also included statements regarding the indictment and investigation:

Honolulu Councilmember Brandon Elefante

“Anytime matters of this nature arise in connection with City government, it’s a sobering and difficult thing. I don’t have substantive comments on the case or allegations,” said Honolulu Councilmember Brandon Elefante in a statement on Jan. 12.

Lynn Panagakos, Attorney for Donna Leong

In a statement from Lynn Panagakos, Attorney for Donna Leong:

In addition to being entirely legal, the severance payment to former Chief Kealoha was in the best interest of Honolulu as it quickly ended his tenure after his receipt of a DOJ target letter.  It is beyond ironic that the same attorneys that prosecuted the Kealohas for corruption, are now accusing Donna Leong for legal actions she took in relation to the Honolulu Police Commission’s decision to expeditiously separate former chief Kealoha from HPD, for the benefit of HPD and the community.  To suggest that a legal severance payment that accomplished this goal was somehow a crime is absurd. Ms. Leong is an attorney of great integrity, and is completely innocent.  After being informed last night that an arrest warrant had issued, Ms. Leong made arrangements to voluntarily turn herself in this morning. Upon arrival to the FBI’s office, we let them know she was waiting outside.  There was absolutely no reason for the theatrics which followed.  Whoever tipped off the media so that Ms. Leong could be filmed while being handcuffed should be ashamed of themselves.”  

William McCorriston of McCorriston Miller Mukai MacKinnon LLP

William McCorriston of McCorriston Miller Mukai MacKinnon LLP also released a statement regarding Max Sword. In the statement, he said Sword is “shocked” and “disappointed” by the indictment on Jan. 12. The statement also noted that Sword has cooperated with the government in this investigation:

His only alleged “misconduct” was following the legal advice given to him by the Corporation Counsel’s office and the recommendations of the Administration, including the Department of Budget and Fiscal Services, which recommended the structure of the settlement.

Interested parties, including City Council Members, the Honolulu Police Department, and the public were allowed to give their input in a public hearing on this matter. The Corporation Counsel’s advice to the Honolulu Police Commission, including Mr. Sword, confirmed its recommendation for the settlement structure and its appropriateness for this case after hearing objections from the Honolulu Police Department and others. The vote of the Commission, not just Mr. Sword, was overwhelmingly to approve the settlement structure proposed by Corporation Counsel.

Mr. Sword served as a volunteer on the Honolulu Police Commission for 10 years and has served on numerous boards and in other volunteer positions over the years and built a solid reputation for honesty, integrity, and service to the community.

We will vigorously defend Mr. Sword from this unjust charge.

Robert “Bobby” Cavaco, president of the State of Hawaii Organization of Police Officers

Robert “Bobby” Cavaco, president of the State of Hawaii Organization of Police Officers (SHOPO), also issued a statement regarding the indictments:

“These federal indictments demonstrate no one is above the law and that Honolulu taxpayers deserve justice for being defrauded by these so-called leaders. Our police department is incredibly understaffed and there are not enough patrol officers now to try and keep our neighborhoods safe. For these accused felons to have taken money budgeted to hire more police officers and use it to pay off a failed former police chief is sickening.”

Robert “Bobby” Cavaco, president of the State of Hawaii Organization of Police Officers

Amemiya’s attorney said: “The Indictment itself shows that Mr. Amemiya was not involved in the decision regarding Chief Kealoha’s disassociation and severance from HPD.”

Honolulu City Councilmember Carol Fukunaga stated that it would be “inappropriate” for her to comment due to this issue being a “pending federal matter.”

Below is the full indictment document:

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