Target letter raises question on the source of money for police chief’s payout

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Where did the money come from? That’s the question Honolulu police commissioners asked when then police Chief Louis Kealoha was paid $250,000 to retire.

City Corporation Counsel Donna Leong was in charge of negotiating that deal and has received a target letter from federal investigators.

KHON2 spoke with two police commissioners who say they asked Leong when the deal was made two years ago about where the money was coming from. But they say they never got an answer.

The police commission voted 6-1 in favor of paying then chief Kealoha $250,000 and keeping all his benefits if he agreed to retire in 2017. He was under federal investigation at the time. Loretta Sheehan was the sole commissioner who voted against it.
     
Commission members say Leong was in charge of negotiating that deal with Kealoha’s attorney. And when the deal was presented to commissioners for a vote, they asked her where the $250,000 would come from.  

“My memory is that the answer we got was vague. So that it really wasn’t clear as to where the money was coming from,” said police commissioner Steven Levinson.

 “I really hadn’t gotten any answers and I had gone on record as against the whole deal. So I threw up my hands and said there’s nothing more I can do and walked away from it,” said police commissioner Loretta Sheehan.

Sheehan and Levinson say months after the vote, the commission chairman at the time, Max Sword, told commissioners that he and his attorney met with the FBI. Commissioners say Sword was with Leong during the negotiations.

“Max told us that he had a very forthright friendly conversation with the FBI, explaining what he knew about the severance package to Chief Kealoha. We were all pretty surprised by that,” said Sheehan.

It’s still not clear though what if any issue the feds would have with the payment.
     
Leong’s attorney, Lynn Panagakos, has sent a statement:

“The Department of Justice issued a target letter to Corporation Counsel Donna
Leong, who has been a leader in our legal community for decades. She is an
attorney of great integrity, who gave up a very successful career in the private
sector to accept Mayor Kirk Caldwell’s call to return to public service as
Corporation Counsel. As Corporation Counsel, she serves as the Chief Legal
Adviser not only to the Mayor, but also to the City Council and all City agencies,
boards, commissions, officers, and employees.
It is my understanding that the Department of Justice’s investigation relates to
$250,000 paid to former Honolulu Police Chief Louis Kealoha under the terms of
his agreement to retire from the Honolulu Police Department, City and County of
Honolulu, through its Honolulu Police Commission. I believe the evidence will
show that this payment was properly authorized and processed. Ms. Leong’s
involvement in this matter was within the course and scope of her duties as
Corporation Counsel, and she performed her duties, as she always does, lawfully,
conscientiously, and to the best of her ability. I look forward to Ms. Leong being
exonerated.”

We reached out to Max Sword but he did not call back. We asked HPD if the money came from their budget and a spokeswoman told us to ask the mayor’s office. We’re still waiting for a response from the mayor’s spokesman.

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