City sending demand letter to Louis Kealoha for $250,000 severance payback

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The city is demanding Louis Kealoha pay back a $250,000 severance, now that the former police chief has pled guilty to federal felony bank fraud, and earlier was found guilty of conspiracy. But as Always Investigating found out, asking for the money back is one thing; getting it may be far more complicated.

The Kealohas owe victims even more in restitution than Louis owes the city in the severance refund. Even if the severance is paid back, it’s a sliver of the bill taxpayers have footed in the Kealohas legal episodes.

When Louis Kealoha stepped down as police chief in 2017 while under federal investigation, he retired with a quarter-million-dollar severance that came with a payback clause: return the money if convicted of a felony. He’s now got two — a jury convicted him of conspiracy in June for his role in framing his wife’s uncle, and this week Kealoha pled guilty to bank fraud in a deal to resolve a separate financial crime case.

Always Investigating asked the mayor’s office, when is the $250,000 coming back? A city spokesperson told us: “The Department of the Corporation Counsel (COR) believes Kealoha’s guilty plea triggers his obligation to repay the severance pay that was agreed upon by the Police Commission. COR will be sending a formal demand letter to Kealoha, and if the letter is not acted upon, the city will be filing a lawsuit seeking the repayment of the severance pay.”

But the Kealohas have long said they’re broke. They got taxpayer funded attorneys by saying they couldn’t afford to pay. We continue to press the federal court to give us the total of taxpayer dollars spent on defendants’ court-appointed attorneys in the Kealoha cases so far; the figure has not yet been released.

“She has no pension, no nothing,” said Earle Partington, a private attorney funded by others to assist with Katherine’s defense, “so she’s going to get out of prison with nothing but the clothes on her back.”

KHON2 reached out to Louis Kealoha’s attorney asking if and when Kealoha will pay the city back for the severance. We have not yet received a response.

Louis will still get his six-figure pension. But the Employees’ Retirement System Executive Director Thom Williams tells KHON2: “ERS pension benefits to which members are entitled are unaffected by either criminal convictions or guilty pleas. They are not subject to garnishment except by the IRS or related to family court for child support.”

Recent bills have tried and failed to revoke pensions for convictions of crimes related to public jobs.

One change is coming next summer: “Coming next July there will be the ability for a court to order division of pension benefits in a divorce settlement,” Williams said.

Louis filed for divorce from Katherine last week.

Far more is owed than just the severance. Katherine owes $165,000 in restitution to the siblings whose trust fund she was accused of raiding. Katherine, Louis and the other conspiracy co-convicts have to repay her grandmother, Florence Puana, $243,000 for alleged reverse mortgage fraud. Katherine’s uncle, Gerard Puana, is supposed to get $46,000 for suffering the mailbox theft framing.

Always Investigating asked Partington, how will these victims get any kind of restitution?

“Well they’ll have to look to the others to pay it, Louis and the other two policemen,” Partington said. “A lot of people are financially ruined including the defendants. I mean, that’s what’s sad about this case. A lot of people are going to be left without anything in terms of what they owe, not merely the alleged victims in the case.”

The only property in the Kealohas’ name is a Kahala leasehold condo they bought for $135,000 soon after getting the city severance in 2017. They already lost their Hawaii Kai home to foreclosure.

“The home is gone, and the condo I think the city will come after it because I believe it was paid for with the money that Louis was given,” Partington said.

The Kealohas have an adult daughter in school on the mainland.

“She was a student, but now she doesn’t have the money to continue,” Partington said. “She was in university in New York, and I don’t know what’s going to happen to her since she can no longer afford to go to that university in New York. It’s a really sad story.”

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