Honolulu has filed a lawsuit to claw back a $250,000 retirement package awarded to former Police Chief Louis Kealoha, who is awaiting sentencing for felony crimes of conspiracy, obstruction and fraud.

After federal prosecutors informed Kealoha in December 2016 that he was the target of a criminal probe, the Honolulu Police Commission let him retire in good standing. The agreement said the commission would pay Kealoha the severance if he retired before March 17, 2017 – but there was a catch.

If within six years he was found or pleaded guilty to any felonies related to his policing job, he would have to repay the full amount within 60 days of exhausting his appeal options. (Note: The city’s lawsuit says it was seven years, but officials have previously said that’s an error.)

In a plea agreement, the disgraced officer waived his appeal rights, so the city says it’s time for Kealoha to pay up.

At this point, the conditions have been met for him to have to pay us back,” said Loretta Sheehan, former chairwoman of the police commission. 

Louis Kealoha walks on Halekauwila approaching US District Court.

Louis Kealoha walked away from his police chief job with a quarter-million-dollar deal.

Cory Lum/Civil Beat

When the commission was considering Kealoha’s retirement deal, which was negotiated behind closed doors, Sheehan was the sole member of the body to vote against it. She wanted Kealoha fired.

Now, the city will have to spend time and money to try to get the money back, which may be futile, Sheehan said. The convicted former chief won’t be earning much, if any, income from behind bars. Under state law, the city cannot seize his pension payments, she said.

The best the city can hope for is a court judgment in its favor so it can garnish his wages from a future job, and even then, it may take some time, according to Sheehan.

“My rough understanding is that we’re last in line,” she said. “There are a lot of people ahead of us trying to collect money from him.” 

In October, the city demanded repayment of the severance payment, but Kealoha has not responded or returned the money, according to the lawsuit.

“The continued retention of the benefit of the $250,000 is unjust,” the lawsuit states.

Honolulu is asking for the $250,000 back plus interest, attorney’s fees and any other relief that may be legally available, the complaint states.

Honolulu Councilman Ron Menor, who chairs the executive matters and legal affairs committee, said he is hopeful the lawsuit will result in “a least a measure of justice” for the wrongdoing Kealoha committed. The lawsuit was supported by all council members.

“Former Chief Kealoha has a legal and moral obligation to the taxpayers of Oahu to fully repay the amounts he received because he violated the public’s trust by abusing his position of authority as chief law enforcement officer,” Menor said in a statement.

“Moreover, the filing of the lawsuit reflects the sentiments of our constituents who strongly objected to the severance payment to Kealoha.”

Even if the city is successful, the payback will be just a drop in the bucket compared to the amount Louis and his wife Katherine Kealoha, a former prosecutor, have cost taxpayers.

In addition to the cost of investigating, prosecuting and defending the criminal duo, the Kealohas also racked up legal bills through lawsuits filed against the city. The legal fees for one lawsuit against the Honolulu Ethics Commission break down to about 70 cents per Oahu resident.

“Anybody will tell you it’s in the millions,” he said last year. “And we’re not done.”

Three years after the commission voted to approve Kealoha’s deal, Sheehan said she can’t help but feel a sense of ‘I told you so.’ 

This is unfortunate,” she said. “It didn’t have to be like this. But it is like this, so let’s move forward and make the best of it.” 

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