The Honolulu City Council is poised to approve a $1.4 million payment to settle a federal civil rights lawsuit involving a botched gambling case charged by Honolulu Prosecuting Attorney Keith Kaneshiro and one of his top former deputies, Katherine Kealoha.

A council committee approved the settlement last month after a closed door meeting with city attorneys.

Prosecutor Keith Kaneshiro office interview.
Honolulu Prosecuting Attorney Keith Kaneshiro has stepped away from his office while he is under federal criminal investigation. Cory Lum/Civil Beat

The case involves a series of raids conducted by the Honolulu Police Department in 2012 and 2013 to seize hundreds of arcade machines from suspected illegal game rooms around Oahu.

The lead plaintiff in the case is Hawaii businessman Tracy Yoshimura, owner of PJY Enterprises, who had argued that the devices were not being used as illegal gambling devices.

When he publicly challenged Kaneshiro to release the machines or charge him with a crime, he was indicted along with several others with 414 counts related to gambling.

Yoshimura argued that the indictment was malicious prosecution for his public criticism of Kaneshiro and his office, which had included likening the elected prosecutor to a famous mobster.

“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,” Yoshimura told Hawaii News Now at the time. “In this case, Keith comes in, takes our equipment and claims he’s doing it in conjunction with an ongoing investigation.”

The lawsuit argued, among other things, that deputies and investigators in Kaneshiro’s office, including Kealoha, had repeatedly presented false information to a state grand jury to secure the indictment.

Kaneshiro and Kealoha have since become the targets of a U.S. Justice Department investigation into public corruption.

Kealoha and her husband, former Honolulu Police Chief, have already been convicted of a series of crimes stemming from their attempt to frame a family member of the theft of their mailbox. Kaneshiro took a leave of absence after he was named a suspect in the Justice Department’s ongoing investigation.

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