A former Maui County official who was fired by Mayor Richard Bissen’s administration is suing the county for defamation, saying her reputation was tarnished by “inaccurate” claims that she used grant funding to benefit her family members.  

Luana Mahi, the former director of the county Office of Economic Development, is suing Bissen, the Maui County Board of Ethics and seven members individually, and county Department of Finance employee Marcy Sato, whom she claims initiated the Board of Ethics proceedings against her.

The accusations against Mahi over the past couple of years have caused “catastrophic and permanent damage to her professional reputation,” according to the lawsuit, which was filed Wednesday night in 2nd Circuit Court.

Mahi was fired on Jan. 6, 2025 after being placed on paid leave in August 2024 pending investigation. Maui County said at the time that Bissen had ordered in March 2024 an internal audit of grants administered by the Office of Economic Development “due to concerns brought to the attention of the administration.”

The move to place Mahi on leave came just days after Honolulu Civil Beat had reported that Mahi had overseen more than $1 million in county grants to Brilliant Minds Media, a nonprofit run by her son and connected to her husband, and the Maui Food Technology Center, of which she was the former president.

The article said Mahi’s husband Kalani Mahi was paid directly for a watershed project through a county grant to Maui Food Technology Center and that her son Keokoa Mahi’s company Imina LLC was hired to manage that grant. It also said her son’s nonprofit Brilliant Minds Media received a $44,000 county grant to build a “Maui Wall of Fame” at the Kahului Airport.

A Board of Ethics’ ruling in July 2024, which is heavily redacted for public review, deemed her oversight of those grants a conflict of interest. 

Mahi also came under fire in a lawsuit filed by former chief of staff Leo Caires, who sued the county in April, alleging he was fired in retaliation for reporting questionable financial activities that included grants issued by the Office of Economic Development. Caires claims that he discovered that Mahi “appeared to be inappropriately using her position” to benefit family members with grant funding.

On Friday, Bissen disputed the allegations in Mahi’s lawsuit. 

“The claims of the recently filed complaint are contradictory, inaccurate, and without merit,” the mayor said in a statement to the Hawai‘i Journalism Initiative. “The County is confident the facts and the law support its actions and is prepared to respond through the judicial process, where these matters belong.”

Bissen previously said he believes Caires’ lawsuit is politically motivated because it was filed during an election year over events that happened two years ago. He also believed the timing of Mahi’s lawsuit, “nearly two years after the underlying ethics matter and in the middle of an election season, speaks for itself.”

The lawsuit by Mahi says that she was appointed director of the county office on Jan. 2, 2023, and had resigned from all positions connected to the Maui Food Technology Center in 2022. She “proactively informed” Bissen and Caires of her prior affiliations to the center and Brilliant Minds Media “to ensure transparency and proper recusal protocols were established,” the lawsuit says.

Contrary to the allegations, Mahi says she was not the signatory for the primary grant agreements between the county and the two organizations. She says Caires had ultimate oversight and signed the grant contracts, and that she “repeatedly reminded” him of her recusal and asked his office to handle all matters involving the organizations.

Mahi said in the lawsuit that she did sign an amendment for one of the grants, but “this was a budget reallocation specifically authorized and directed by Defendant Caires to add $290,000 for Department of Land and Natural Resources projects, such as deer traps and helicopter flights, and was not the underlying grant contract.”

The lawsuit also claims that “the financial irregularities later used to stigmatize” Mahi “were the direct result of requests from County leadership to pay for projects not previously accounted for in the budget.” These included:

• A $50,000 invoice for cultural training provided by Kauahea Inc., which was specifically requested by Deputy Managing Director Erin Wade to train federal partners after the Aug. 8, 2023 wildfires. 
• A $4,526.25 expenditure for a small-scale Sister Cities luau for a delegation from Fukuyama, Japan, which Bissen specifically asked Mahi to organize and execute.
• Immediate website and social media updates by Linn Nishikawa & Associates to transform Maui Nui Strong into a 24-hour wildfire relief hub, a project approved by Bissen, Wade and then-Managing Director Keku Akana.

“Because these emergency or special projects lacked dedicated budget lines, Grants Manager, Tina Silva, specifically instructed Plaintiff to funnel these invoices through the existing Kahikolu Plan grant (G5914) via budget reallocations,” the lawsuit says. 

The Kahikolu Project is an initiative of the Maui Food Technology Center to control invasive axis deer in Maui Nui’s critical watersheds. 

The lawsuit claims that in mid-2023 and early 2024, Bissen “personally directed and approved certain emergency expenditures and administrative workarounds to address urgent needs arising from the wildfires.” 

In addition to asking Mahi to organize the luau, the mayor also instructed her to facilitate “immediate relief-related communications and vendor payments,” even though there were no appropriations for those items, the lawsuit says. 

In February 2024, Bissen texted Mahi and executive assistant Ezekiela Kalua about payments for vendor Hanalei Colleado, who operates Ho‘omana Farms. Colleado thought he was going to get reimbursed for months of food deliveries to county-run hubs. Mahi said she “coordinated grantee” for the Kahikolu grant to help obtain and deliver a cashier’s check to the mayor’s office, where Kalua, Bissen and Mahi presented the check to Ho‘omana Farms. 

The lawsuit claims that Sato initiated an ethics complaint against Mahi “based on a flawed and incomplete review of these invoices.”

Sato and the Finance Department alleged there was a conflict of interest because payments were made to Mahi’s family members. However, the lawsuit says they failed to account for the fact that Mahi’s son, Keokoa Mahi, was a principal of the management firm ‘Imina LLC, which was hired by the Maui Food Technology Center — not the county — to manage the grant, and that her husband Kalani Mahi had performed work for the center dating back to around 2014, long before she was appointed to the county. 

Nishikawa also had been a county vendor since approximately 2005 and only became an officer of the center around August 2021, the lawsuit added. 

The lawsuit also says Sato and the county “provided inaccurate information to the Board of Ethics,” who then failed to provide Mahi with the mandatory 15-day period to respond before an informal hearing. The board’s advisory opinion issued in July 2024 “prosecuted” Mahi “and reached conclusions of ethical violations before she was ever permitted to present evidence, call witnesses, or ‘clear her name’.”

“Despite internal rules requiring that all ethics records and proceedings be held in confidence unless presented at a public hearing, Defendants leaked the existence of the complaint and the preliminary findings to the media,” leading to Civil Beat’s report on Aug. 15, 2024 that Mahi’s lawsuit called “a highly disparaging article containing stigmatizing charges of criminal ethics violations and fraud.”

This all happened before Mahi could have a formal hearing or a chance to defend herself. She blames the “public stigmatization and the Board’s negligent ‘investigation’” for her eventual dismissal. 

Bissen said: “What concerns me most is the personal targeting of volunteer members of our Board of Ethics and County employees who acted in good faith and followed the very ethics process this County established. As Mayor, I will always stand behind the people who faithfully serve this community with professionalism and integrity.”

Mahi filed the lawsuit against the individual Board of Ethics members, including then-Chairperson Steve Sturdevant, then-Vice Chair Michael Alexander Lilly, then-Secretary Scott K. Parker and members Kathryn R. Shroder, Carol Swann, Noel Ching-Johnson and Randol Leach. Sturdevant and Parker are no longer on the board. Lilly is now the chair and Shroder is the vice chair.

“Public trust depends on people having the courage to raise concerns, seek ethical guidance, and do the right thing without fear of becoming personal targets,” Bissen said. “That is the culture we have built, that is the culture we will protect, and that is the commitment I made when I took the oath of office.”

Mahi is seeking damages in an amount to be proven at trial. She asked the court to find that the board’s procedures and advisory opinion were unlawful and that the defendants violated the Maui County Charter and Mahi’s due process rights. She also asked the court to prevent defendants from “publishing, relying upon, or enforcing the Board’s advisory opinion” and to order a correction of the public record and a formal apology. 

Hawaiʻi political analyst Colin Moore said the two lawsuits by Caires and Mahi are tough timing as Bissen heads into a competitive election to defend his seat.

“If you have disgruntled former employees in the news … criticizing the mayor, that doesn’t help,” Moore said. “Is it going to be decisive? Probably not. But there’s not a lot of room for error in this race for him.”