PAUL S. AOKI, 1286 Acting Corporation Counsel DUANE W. H. PANG, 4176 Deputy Corporation Counsel City and County of Honolulu 530 South King Street, Room 110 Honolulu, Hawaii 96813 Telephone No.: (808) 768-5230 Email: dpang1@honolulu.gov Electronically Filed FIRST CIRCUIT 1CCV-20-0000073 15-JAN-2020 11:24 AM Attorneys for Plaintiff IN THE CIRCUIT COURT OF THE FIRST CIRCUIT STATE OF HAWAII CITY AND COUNTY OF HONOLULU, CIVIL NO. _______________ (Breach of Contract) Plaintiff, COMPLAINT; DEMAND FOR JURY TRIAL; SUMMONS vs. LOUIS M. KEALOHA, Defendant. COMPLAINT 1. Plaintiff City and County of Honolulu (“City”) is political subdivision of the State of Hawaii with the authority to sue and be sued on its own behalf. DEFENDANT 2. Defendant LOUIS M. KEALOHA (“Kealoha” or “Defendant”) is a resident of the City and County of Honolulu, and the former Chief of the Honolulu Police Department, City and County of Honolulu. JURISDICATION AND VENUE 3. This court has jurisdiction over this action to enforce an agreement between the parties pursuant to Haw. Rev. Stat. § 603-21.5(a)(3). 4. Venue is proper in the court pursuant to Haw. Rev. Stat. § 603-36(5) as the claim for relief arose in this circuit and Defendant is domiciled in this circuit. FACTUAL BACKGROUND 5. Haw. Rev. Stat. § 52D-1 creates a police commission for each county, with the powers, duties and functions of each police commission to be prescribed by the charter for each county. 6. The Honolulu Police Commission (“Commission”) is established under the authority of the Revised Charter of the City and County of Honolulu 1973 (2017 Edition) (“RCH”) § 6-1605. 7. The Commission has the authority to appoint the Chief of Police of the Honolulu Police Department (“Chief of Police”). 8. RCH § 6-1603 provides that the Commission shall appoint the Chief of Police to a five-year term. 9. Under RCH § 6-1603, the Commission has the authority to remove or suspend the Chief of Police at any time prior to the expiration of the five-year appointment. 10. The Commission initially appointed Kealoha to a five-year term beginning on November 28, 2009. 11. The Commission reappointed Kealoha to a second five-year term beginning on November 28, 2014. 12. On or about December 19, 2016, Kealoha informed the Commission that he received a letter from the United States Department of Justice that informed him that he was the target of a criminal investigation. 13. On December 19, 2016, the Commission administratively removed Kealoha from the duties of the Chief of Police by placing Kealoha on leave. -2- 14. On or about January 18, 2017, in lieu of taking action to remove Kealoha from the position of the Chief of Police, the Commission approved a retirement agreement (“Agreement”) between Kealoha and the Commission to allow Kealoha to voluntarily retire as the Chief of Police. 15. The Agreement provided that the Commission would pay Kealoha a severance payment in the amount of $250,000 in exchange for the Chief retiring as the Chief of Police on or before March 17, 2017. 16. The Agreement further provides that “in the event that, within seven (7) years following execution of the Agreement, you are convicted of, plead guilty to, or plead nolo contendere to any felony under State or Federal law, which conviction or plea relates to or arises from or in connection with, your employment with HPD, or arises from an event or events that occurred during the time you were employed with HPD, you must repay to HPD the entire amount you received under Paragraph 2(a) [$250,000] of this Agreement within sixty (60) calendar days of the date on which such conviction is affirmed by the last court of appeal and/or you have exhausted your rights to appeal such conviction.” 17. On or October 19, 2017, a criminal indictment entitled United States of America v. Katherine P. Kealoha (1), aka Katherine E. Kealoha, aka Kathy Kealoha, aka Kat, aka Alison Lee Wong, Louis M. Kealoha (2), Derek Wayne Hahn (3), Minh-Hun Nguyen (4), aka Bobby Nguyen, Gordon Shiraishi (5), and Daniel Sellers (6), Case No. 17CR0582 JMS-RLP, was filed in the United States District Court, District of Hawaii. The indictment contained 20 separate criminal counts including Conspiracy (18 U.S.C. § 371); Counts 2-6, Obstruction of Official Proceeding (18 U.S.C. § 1512(c)(2)); Counts 7-8, False Statements to Federal Officer (18 U.S.C. § 1001); Count 9-16, Bank Fraud (18 U.S.C. § 1344); and Counts 17-20, Aggravated Identity Theft (18 U.S.C. § 1028A). -3- 18. On March 22, 2018, a First Superseding Indictment was filed (“First Superseding Indictment”). The First Superseding Indictment identified the same named Defendants with 23 separate Counts to include Count 1, Conspiracy (18 U.S.C. § 371); Counts 2-8, Obstruction of Official Proceeding (18 U.S.C. § 1512(c)(2)); Counts 9-11, False Statements to Federal Officer (18 U.S.C. § 1001); Count 12 - 19, Bank Fraud (18 U.S.C. § 1344); and Counts 20-23, Aggravated Identity Theft (18 U.S.C. § 1028A). 19. On March 24, 2018, a federal grand jury then returned a Second Superseding Indictment (“Second Superseding Indictment”) against Katherine P. Kealoha and Louis M. Kealoha only. The Second Superseding Indictment included only Counts 12-23 of the First Superseding Indictment and was given a new case number, CR. No. 18-00068 JMS-RLP. The Second Superseding Indictment includes the following Counts: Counts 1- 8, Bank Fraud (18 U.S.C. § 1344); Counts 9-12, Aggravated Identity Theft (18 U.S.C. § 028A); and Counts 13-14, Obstructing of Official Proceedings (18 U.S.C. § 1512(c)(2)). 20. On or about October 29, 2018, the United States District Court issued an order clarifying the various indictment, granted various motions to sever the various counts in the Indictment and ordered separate trials. 21. On or about June 27, 2019, after a lengthy criminal trial, the jury found Kealoha guilty of conspiracy to obstruct justice, and of three counts of attempt to obstruct an official proceeding. 22. On or about September 19, 2019, a Third Superseding Indictment was filed against Kealoha, which included the following Counts: Count 1-8 Bank Fraud (18 U.S.C. § 1344); Counts 9-12 Aggravated Identity Theft (18 U.S.C. § 1028A) and Counts 13-14 Obstruction of Official Proceedings (18 U.S.C. § 1512(c)(2)). -4- 23. On or about October 22, 2019, Kealoha entered a Plea Agreement relating to all three criminal indictments. 24. The Plea Agreement provides the following admissions by Kealoha: a. That from January 1, 2009 through December 31, 2014, Defendant and his wife Katherine P. Kealoha (“K. Kealoha”) spent more than $591,000 on their extravagant lifestyle, which was derived from: (1) stolen proceeds from a reverse mortgage obtained by Florence Puana; (2) stolen funds belonging to Ransen Taito and Ariana Taito; and (3) loan proceeds obtained through banks and credit unions based upon the fraudulent scheme derived below. b. That between 2007 and 2016, Defendant and K. Kealoha knowingly devised, with intent to defraud, schemes to defraud multiple financial institutions and obtain funds by means of materially false pretenses, representations and promises. c. Their schemes included falsely claiming assets that belong to others, falsely inflating their monthly income, and falsely denying derogatory credit in order to convince financial institutions to grant the loans requested by Defendant and K. Kealoha. 25. By entering into the Plea Agreement, Kealoha further agreed to plead guilty to Count Four of the Third Superseding Indictment, charging Kealoha with Bank Fraud, in violation of 18 U.S.C. § 1344. 26. The Plea Agreement further provides that Kealoha knowingly waives all rights to appeal his criminal conviction as stated in paragraph 21. 27. On or about October 23, 2019, the Commission, through its attorneys, the Department of the Corporation Counsel, demanded repayment of the severance amount of $250,000 pursuant to the terms of the Agreement. 28. Kealoha has not responded nor has he returned the severance payment of $250,000, which is a breach of the Agreement. -5- CLAIM FOR RELIEF: BREACH OF CONTRACT 29. Plaintiff re-alleges the allegations set forth in Paragraphs 1-28 above and incorporates same herein by reference. 30. On June 22, 2019, Kealoha was found guilty by a jury of Federal felony criminal violations and on October 22, 2019, Kealoha pled guilty to additional felony criminal violations, which relate to or arise from or in connection with, Kealoha’s employment with HPD or arise from events or events that occurred during the time he was employed by HPD. 31. Pursuant to the Agreement, if Kealoha is convicted or pleads guilty to Federal felony criminal violation as described in paragraph 17 of the Agreement, Kealoha is required to repay the amount of $250,000 to the Honolulu Police Department. 32. As of the filing of this complaint, Kealoha has not made repayment of the $250,000 severance payment to the Honolulu Police Department. CLAIM FOR RELIEF: UNJUST ENRICHMENT 33. Plaintiff re-alleges the allegations set forth in Paragraphs 1-32. 34. The City conferred a benefit upon Kealoha in the form of the severance payment of $250,000 with repayment of the amount required upon the occurrence of certain conditions. 35. The conditions of repayment of the $250,000 have occurred. 36. The continued retention of the benefit of the $250,000 is unjust. 37. The City is entitled to the repayment of the $250,000 made to Kealoha. PRAYER FOR RELIEF WHEREFORE, the City and County of Honolulu prays for judgment against Louis M. Kealoha as follows: A. Entry of judgment in favor of the City and County of Honolulu and against Louis M. Kealoha in the amount of $250,000. -6- B. Prejudgment interest at the statuary rate from the time payment was due. C. Reasonable attorney’s fees and costs. D. Any and all other legal and equitable relieve that may be available under the law. DATED: Honolulu, Hawaii, January 15, 2020. PAUL S. AOKI Acting Corporation Counsel By:_/s/ Duane W. H. Pang DUANE W. H. PANG Deputy Corporation Counsel Attorney for Plaintiff -7- IN THE CIRCUIT COURT OF THE FIRST CIRCUIT STATE OF HAWAII CITY AND COUNTY OF HONOLULU, CIVIL NO. _______________ (Breach of Contract) Plaintiff, DEMAND FOR JURY TRIAL vs. LOUIS M. KEALOHA, Defendant. DEMAND FOR JURY TRIAL Pursuant to HRCP Rule 38, Plaintiff by and through its attorney, hereby demand a jury trial on all issues so triable. DATED: Honolulu, Hawaii, January 15, 2020. PAUL S. AOKI Acting Corporation Counsel By:_ /s/ Duane W. H. Pang DUANE W. H. PANG Deputy Corporation Counsel Attorney for Plaintiff STATE OF HAWAI’I CIRCUITCOURTOFTHE FIRST CIRCUIT I I I PLAINTIFF SUMMONS CASE NUMBER TO ANSWER CIVIL COMPLAINT VS. DEFENDANT(S) CITY AND COUNTY OF HONOLULU LOUIS M. KEALOHA PLAINTIFF S NAME & ADDRESS, TEL. NO. Department of the Corporation Counsel City and County of Honolulu 530 South King Street, Room 110 Honolulu, HawaN 96813 Telephone No.: 768-5230 TO THE ABOVE-NAMED DEFENDANT(S) You are hereby summoned and required to file with the court and serve upon Duane W. H. Pang, Deputy Corporation Counsel 530 South King Street, Room 110, Honolulu, Hawaii 96813 plaintiff’s attorney, whose address is stated above, an answer to the complaint which is herewith served upon you, within 20 days after service of this summons upon you, exclusive of the date of service. If you fail to do so, judgment by default will be taken against you for the relief demanded in the complaint. THIS SUMMONS SHALL NOT BE PERSONALLY DELIVERED BETWEEN 10:00 P.M. AND 6:00 A.M. ON PREMISES NOT OPEN TO THE GENERAL PUBLIC, UNLESS A JUDGE OF THE ABOVE-ENTITLED COURT PERMITS, IN WRITING ON THIS SUMMONS, PERSONAL DELIVERY DURING THOSE HOURS. A FAILURE TO OBEY THIS SUMMONS MAY RESULT IN AN ENTRY OF DEFAULT AND DEFAULT JUDGMENT AGAINST THE DISOBEYING PERSON OR PARTY. The original document is filed in the Judiciary’s electronic case management system which is accessible via eCourt Kokua at: httpiwww.courts.state.hi.us J Effective Date of 28-Oct-2019 Signed by: Isi Patsy Nakamoto Clerk, 1st Circuit, State of Hawaii reasonable accommodation for a disabilty please contact the ADA Coordinator at the Circuit Court Administration Office on OAHU- Phone No. 808-539-4400 TTY 808-539-4853, FAX 5394402 at least ten (10) work ng days prior to your heanng or appointment In accordancedate. with the Americans with Disabilities Act, and other applicable state and federal laws, if you require a rorm 1CP.787 (1Cc) (10 19) Summons to Complaint RG-AC.S08 (10/19)