A federal civil rights lawsuit that included claims of malicious and retaliatory prosecution by Honolulu Prosecuting Attorney Keith Kaneshiro and Katherine Kealoha, who was one of his top deputies, settled in federal court last week, although the terms of how much the city will pay out remain confidential.

The case stems from a series of police raids conducted in 2012 and 2013 of suspected illegal game rooms around Oahu.

Nearly 200 arcade machines believed to be gambling devices were seized, and prosecutors, led by Kealoha, secured a 414-count indictment in 2014 against several defendants, including Hawaii businessman Tracy Yoshimura, the owner of PJY Enterprises, a company that used to distribute sweepstakes machines around Oahu.

Tracy Yoshimura holds documents to file at Court Clerk office.
Tracy Yoshimura has taken a series of legal actions against Honolulu Prosecuting Attorney Keith Kaneshiro in recent years, including an attempt to remove him from office. Cory Lum/Civil Beat

The case was fraught with problems, including allegations of prosecutorial misconduct, and was eventually dismissed. But in 2018 Yoshimura and several of his former co-defendants filed a civil lawsuit, saying they were the victims of overzealous prosecutors who were trying to settle a score.

Yoshimura, in particular, said he was targeted by Kaneshiro and Kealoha after he publicly criticized the prosecutor’s office and filed a lawsuit against the city and Kealoha’s husband, then Honolulu Police Chief Louis Kealoha, to get the devices back.

Yoshimura was firm about his innocence from the beginning, declaring in a TV interview in 2013 that Kaneshiro had nothing on him and was abusing the power of his office.

“I’d like to publicly challenge Keith, to charge us or leave us alone and release the equipment he is holding,” Yoshimura told Hawaii News Now. “I compare him to John Gotti where if John didn’t like somebody he would go in and shoot up the place and destroy everything in the business and walk away hoping that’s the end of you. In this case, Keith comes in, takes our equipment and claims he’s doing it in conjunction with an ongoing investigation.”

Keith Kiuchi, an attorney representing Yoshimura and the other plaintiffs in the recently settled lawsuit, said he could not comment at all about the agreement because of a confidentiality clause.

Nicolette Winter, an attorney from the Honolulu Corporation Counsel Department, similarly said she could not comment on the details of the case or how much it would cost taxpayers to settle.

Prosecutor Keith Kaneshiro announces a 3rd possible trial for Christopher Deedy.
Honolulu Prosecuting Attorney Keith Kaneshiro is under federal criminal investigation. Cory Lum/Civil Beat/2017

The legal settlement must be approved by the Honolulu City Council before it can be finalized. Once the matter is placed on a public agenda, the amount of the settlement should become public.

The settlement comes as prosecutors with the U.S. Justice Department continue their grand jury investigation into Kaneshiro and other city officials suspected of public corruption. Kaneshiro went on paid leave in March 2019 after he was named a target of the investigation, and has been collecting his $176,688 salary since.

Both Louis and Katherine Kealoha have already been found guilty of a series of federal crimes related to their attempts to frame a family member for the theft of their mailbox. The couple has also pleaded guilty to charges related to bank fraud. They are scheduled to be sentenced in November.

Yoshimura, meanwhile, is still pursuing the impeachment of Kaneshiro. The Hawaii Supreme Court is scheduled to hear oral arguments in the case on Sept. 18. The arguments will center on whether electronic signatures collected by Yoshimura to support his impeachment petition are valid.

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