The federal indictment of Honolulu’s former Prosecuting Attorney Keith Kaneshiro and prominent businessman Dennis Mitsunaga on conspiracy charges is a strong signal to candidates and donors to follow the law and not cut deals in exchange for support, according to criminal and political analysts.

Kaneshiro, who served as city prosecutor from 1988 to 1996 and again from 2010 to 2018 before he went on paid leave, was arrested by FBI agents Friday morning at his Waialae apartment. Mitsunaga was also arrested Friday at his home.

Federal prosecutors from San Diego secured an indictment June 2 against Kaneshiro, 72, and Mitsunaga, 78, president and CEO of Mitsunaga & Associates, or MAI, and a prolific Hawaii political donor. Also indicted on charges of conspiracy to commit honest services fraud, federal program bribery and conspiracy to violate rights were Terri Ann Otani, 66, MAI corporate secretary and office manager; Aaron Shunichi Fujii, 64, MAI’s executive vice president and chief operating officer; and Chad Michael McDonald, 50, MAI senior vice president.

Otani was arrested Thursday evening, and the others were arrested by FBI agents Friday. Mitsunaga, Kaneshiro, Otani, Fujii and McDonald all entered pleas of not guilty Friday afternoon before U.S. Magistrate Judge Wes Reber Porter. Attorneys for each defendant, the defendants and assistant U.S. Attorney Michael Wheat, who is prosecuting the case for the government, declined comment Friday.

The indictment was made public Friday.

They were each released on $50,000 bond and their trial is scheduled for Aug. 16.

In 2018, Kaneshiro received a target letter from the U.S. Department of Justice, informing him that he was under investigation in an ongoing corruption probe that already has resulted in the indictment and conviction of former Police Chief Louis Kealoha and his wife, former Deputy Prosecutor Katherine Kealoha; and the indictments of former city Managing Director Roy Amemiya, former city Corporation Counsel Donna Leong and former Honolulu Police Commission Chair Max Sword.

Kaneshiro was on paid leave for two years until leadership of his office turned over in the 2020 election.

“This indictment alleges a Honolulu businessman and others paid $45,000 in campaign contributions to Honolulu’s former Prosecuting Attorney to prosecute a former employee,” said U.S. Attorney Randy Grossman of the Southern District of California, in a news release. “Public officials must conduct their affairs honestly and with integrity. The Department of Justice will work to hold accountable anyone who betrays that duty through the influence of bribes.”

Grossman thanked the FBI’s Honolulu Division and the prosecution team, led by Assistant U.S. Attorney Michael Wheat, for their work.

“The citizens of Hawaii deserve a government free of corruption,” said Special Agent in Charge Steven Merrill, of the FBI’s Honolulu Division, in a news release. “Corruption erodes the public trust and the FBI is committed to ensuring that people cannot buy prosecutions in the State of Hawaii. Thanks to U.S. Attorney Grossman and the prosecution team for their teamwork and commitment to justice.”

In addition to Kaneshiro, Mitsunaga and his family, friends, employees and subcontractors have been longtime political bundlers in Hawaii, pouring hundreds of thousands of dollars into the campaign coffers of candidates for County Council, mayor, the state Legislature, lieutenant governor and governor over the past 16 years, according to state campaign contribution records.

In political bundling, small individual campaign contributions, often from employees or associates, are funneled to a particular candidate.

Mitsunaga’s hui has been a significant fundraiser for state and county leaders, including former Gov. Ben Cayetano, former Gov. Neil Abercrombie, former Honolulu Mayor Jeremy Harris, former Mayor Kirk Caldwell, Mayor Rick Blangiardi and Gov. David Ige.

Mitsunaga famously took a private polygraph test in 2004 to help clear his name after a city prosecutor suggested he was a target in a campaign finance probe of Harris. He was never charged with a crime.

Since 1980, Mitsunaga & Associates Inc. has operated as a “full service architecture and engineering firm that provides planning, project Management, architectural, civil engineering, structural engineering, mechanical and electrical engineering, and construction management services,” according to the company’s website. The company has done hundreds of millions of dollars’ worth of work for state and county governments.

The firm’s website lists public-sector clients that include every county government in Hawaii, the University of Hawaii, the U.S. Air Force and nine state departments. Among the state entities that Mitsunaga has executed contracts for are the departments of Transportation, Education, Hawaiian Home Lands and Defense; the Hawaii Public Housing Authority; and the Hawaii Community Development Authority.

Colin Moore, chair of the School of Communications at the University of Hawaii at Manoa, told the Honolulu Star-Advertiser the allegations against Kaneshiro and Mitsunaga outlined in the indictment are “going to make many donors and candidates far more cautious.”

“Bundling is common and legal, but the ultimate purpose of this practice is to circumvent individual campaign contribution limits. It’s a way for well-connected people to deliver large contributions to candidates, often with the hope that they will receive priority access or special consideration if the candidate is elected,” said Moore. “The quid pro quo arrangement that is alleged in the indictment obviously goes well beyond that, but the line between developing a favorable relationship with a candidate and a straight bribe can get fuzzy. This is particularly true if the donor frequently interacts with the candidate in his or her official capacity. Yet it’s very hard to prove that there is a quid pro quo arrangement, so the risk of getting caught has generally been very low.”

The indictment unsealed Friday focuses on the plight of a former MAI employee, Laurel Mau, who sued the company after she was let go in November 2011. Mitsunaga and his employees allegedly contested Mau’s attempts to secure unemployment benefits from the state. After a year a Circuit Court judge ruled Mau was eligible to receive the benefits.

In the August 2012 lawsuit, Mau accused MAI of violating the Civil Rights Act of 1964 and Age Discrimination in Employment Act of 1967. In October 2012, Mitsunaga met with Kaneshiro, whom he supported politically, “to attempt to persuade Kaneshiro to investigate and prosecute” Mau for allegedly working “side jobs” while on company time, according to the indictment.

Following the meeting, Mitsunaga, Otani, Fujii and McDonald and other Mitsu­naga family members and employees donated about $45,000 to Kaneshiro’s campaign, federal prosecutors say. “Prior to first contributions in October 2012, the MAI donors had no known contributions to Kaneshiro,” according to the indictment.

In July 2014 a federal judge overseeing Mau’s lawsuit and several counterclaims by Mitsunaga & Associates found no liability other than a “breach of loyalty” claim against Mau for which she awarded the firm $1.

Kaneshiro prosecuted Mau for four counts of theft at the firm’s request in December 2014, according to criminal justice sources and state court records. When one deputy prosecutor suggested to Kaneshiro that there was not enough evidence to prosecute Mau, Kaneshiro allegedly reassigned the case to another prosecutor, who moved forward with charging Mau, according to the indictment.

In July 2017 those charges against the employee were dismissed with prejudice, meaning the charges could not be refiled. Kaneshiro indicated he wanted to appeal the ruling but ultimately did not, according to the indictment.

On Oct. 4, 2012, Mitsunaga’s attorney, listed in the indictment as an “unindicted co-conspirator” met with Kaneshiro and his executive assistant for “the purpose of attempting to persuade Kaneshiro to investigate and prosecute” Mau.

On Oct. 18. 2012, Mitsu­naga’s attorney emailed Kaneshiro’s executive assistant a message that read, in part, “I am currently working on assembling all of the information requested by Mr. Kaneshiro at our meeting, including but not limited to evidence in support of the complaint filed with police” alleging that Mau stole from MAI, according to the indictment.

A week later Kaneshiro’s campaign received $4,000 each in contributions from Mitsunaga; his wife, Chan; and a business partner of Mitsunaga’s identified in the indictment “G.O.” Fujii gave $1,000 and Mitsunaga’s attorney donated $250, according to the indictment. On Oct. 29, 2012, Kaneshiro’s executive assistant emailed Otani, writing, “Keith would like to speak to Dennis. … How can we arrange this?”

Otani told the assistant to have Kaneshiro call Mitsunaga’s mobile phone, which he did, in a call that lasted one minute and eight seconds, according to federal court documents. On Jan. 22, 2013, Mitsunaga’s lawyer sent a letter to Kaneshiro titled “L.J.M. Criminal charges.”

Two days later Kaneshiro and Mitsunaga allegedly met for lunch to “further discuss the investigation and prosecution” of Mau.

On Jan. 28, 2013, Mitsunaga’s lawyer sent an email to Kaneshiro’s assistant that read, in part, “We are so glad you and Mr. Kaneshiro could join us for lunch. … I completely agree … it is amazing how Mr. Kaneshiro and Mr. Mitsunaga are so much alike. They are both incredible individuals with so many accomplishments and are such an inspiration to those around them.”

That same day, Mitsunaga and his wife each gave Kaneshiro’s campaign $4,000, and Otani, who is related to Mi­tsunaga, gave $2,000.

In October 2014, Otani and McDonald allegedly submitted sworn declarations to city prosecutors in connection with Mau’s prosecution that included “material omissions of fact” and “material misstatements and omissions.”

Ken Lawson, a faculty specialist at the William S. Richardson School of Law and co-director of the Hawaii Innocence Project, said the indictment sends a message that “nobody is above the law.” He said the allegations suggest that Mitsunaga and Kaneshiro operated with “no fear.”

“‘We’re going to meet for lunch,’ and then everybody is donating to the campaign fund. No one cared about a paper trail. This was done in plain sight. ‘If you pay enough (to support me) as prosecutor, I will file charges that I know are not real and jeopardize someone’s liberty,’” said Lawson. “If you look at it (the allegations in the indictment), it’s eerily similar to what Katherine Kealoha and Louis Kealoha did. This lady (Mau) was suing the firm for civil rights violations, and in retaliation they trumped up charges against her. To me it’s similar to what the Kealohas did when the uncle sued Katherine and Louis. The lengths that these individuals are willing to go in exchange for political payoff and political payback … it’s scary.”

Kaneshiro Indictment by Honolulu Star-Advertiser