The defense attorneys gave it everything they had. 

On Wednesday, lawyers for three former Honolulu officials tried to convince the judge the federal conspiracy charges against their clients should be dismissed. 

Former Honolulu attorney Donna Leong, former Honolulu Police Commission chair Max Sword and former managing director Roy Amemiya are accused of setting up ex-police chief Louis Kealoha’s $250,000 severance agreement without Honolulu City Council approval and trying to keep the deal quiet. 

Their attorneys argued to U.S. District Court Judge Leslie Kobayashi that no crime had occurred, that the prosecutor should be dismissed from the case because the defense wants to call him as a witness and that the government had committed misconduct by securing the indictment using privileged information. 

A particular point of contention was how the prosecutor could bring charges against the officials for dodging the City Council when they believed council approval wasn’t required. It had been the city’s practice for years, over multiple administrations, to unilaterally approve severance payments, according to one of Leong’s attorneys, Tommy Otake.

“That cannot be the basis of a criminal prosecution. It just can’t be,” Otake said. “We cannot criminalize it just because the government disagrees with that.” 

Kobayashi did not make any rulings on Wednesday, but she appeared unswayed. 

“You’re asking me to make a finding of fact,” she told Otake. “I can’t do that.” 

The money for Kealoha’s payoff came from the Honolulu Police Department’s payroll budget, according to Otake, and that budget is approved annually by the City Council. The money was used as intended: to pay “employment-related” expenses – in this case, to remove a “problematic” chief, Otake said. 

Kealoha was under federal investigation at the time he parted ways with the city, but police commissioners were concerned that without a conviction in hand, they wouldn’t be able to fire him for cause. Instead, the severance agreement stated that if Kealoha was found guilty of a crime in the next few years, he would have to pay the money back.

Kealoha was convicted of multiple felonies but has not yet returned the funds. 

Judge Pushes Back On Dismissal Arguments

Throughout the more than two-hour motion hearing, Kobayashi expressed skepticism about the defense’s arguments. 

“It’s the legislative branch that holds the purse,” she noted. 

Otake said the prosecution was a violation of the 10th Amendment, which bars the federal government from intruding in certain local matters. The city, in good faith, interpreted the law to mean severance agreements didn’t require council approval, he said.

“Reasonable minds might be able to differ on this,” he said. 

Prosecutor Janaki Gandhi Chopra said there was no 10th Amendment violation and questions of legality should be addressed at trial.

Kobayashi agreed.

“The practice could be illegal all these years,” she said. 

The judge also pointed out that the payment to Kealoha was divided into smaller increments: $99,999, $99,999 and $50,002. Monetary transfers of more than $100,000 require City Council approval, according to city law. 

But defense attorneys argued since payroll funds were being used for their intended purpose, there was no transfer. And the transaction was coded that way because security protocols block larger transactions, Otake said. 

“The system couldn’t pay more than that at once,” he said. 

Kobayashi said attorneys had not presented evidence to her to prove the money had come from the payroll account.

“I’m not going to hunt through the entire docket,” she said. “You guys are all over the place in regard to that issue.” 

Otake said he would submit documentation to the court.

In addition, Otake said Special Attorney Michael Wheat, the San Diego-based prosecutor who sent the former Honolulu police chief and his wife to prison for corruption, should be removed from the case since his actions set the current indictment into motion and he arranged the meeting during which Leong is accused of lying to the FBI.

“How can his credibility be at issue when he’s trying the case?” Otake asked.

The government said circumstances must meet a high bar to remove a prosecutor from a case. 

“It’s not even in the ballpark of compelling,” Assistant U.S. Attorney Andrew Chiang said. “Federal prosecutors don’t make themselves potential witnesses by sending target letters.” 

Otake added that jurors may appreciate Wheat for nabbing the Kealohas. He was right then, Otake said, so jurors may think he’s right again. 

Kobayashi said that kind of bias can be rooted out in jury selection. 

Leong’s other attorney, Lynn Panagakos, took issue with the government securing the indictment using evidence the city deemed protected by attorney-client privilege. 

Chief Judge Derrick Watson had given the prosecutors the OK to use the material, but the defense challenged it. Before another judge could rule on that challenge, prosecutors agreed not to use the evidence and destroyed it – a total of 450,000 documents, Panagakos said Wednesday. 

But the damage was done, in the defense’s view. The government had already used the material to further its investigation. Panagakos called it “outrageous government misconduct.” 

“That’s how they got this indictment,” Panagakos said. “Knowing the city was asserting privilege over it.”

In response, Kobayashi repeatedly stated “Watson’s ruling stands.” In other words, prosecutors are free to use the information they learned.

Panagakos also faulted prosecutors for dragging out the case so long that a key witness for the defense, former Honolulu budget director Nelson Koyanagi, died of cancer before it could go to trial. 

“They knew of his diagnosis,” she said. 

Chopra countered that the defense deposed Koyanagi before he died, and other people can testify to what Koyanagi would have shared. 

The trial was scheduled to begin June 26 but the court has granted a joint request to delay it. Scheduling conflicts could push the trial as far as June 2024.