Chief Federal District Judge David Ezra has scheduled a hearing next week on whether to accept a controversial plea agreement reached by federal prosecutors with former Hawai'i labor leader Anthony "Tony" Rutledge Sr. and his son, Aaron.

Two legal protests have been filed with Ezra about the terms of the agreement and the government's decision to seal records that justify the prosecution's decision to settle for significantly reduced penalties for the Rutledges.

The terms of the plea agreement were outlined by prosecutors to Ezra in August. The agreement allows Tony Rutledge, who was facing up to 93 years in prison if convicted of fraud and conspiracy charges, to plead guilty to a single felony charge and be sentenced to five years of probation.

Aaron Rutledge would plead guilty to a single misdemeanor charge of witness intimidation and receive one year of probation. He had been charged with multiple felonies punishable by up to 53 years behind bars.

Ezra told prosecutors in August that he had "grave and serious reservations" about the deal and required the government to file legal papers justifying the plea agreements.

Last month, the U.S. Justice Department filed those papers, but they were sealed from public view after the prosecutors told Ezra that exposure of their contents would embarrass witnesses and damage the government's chances to win the case at trial if the judge rejects the plea agreement.

Attorneys for Local 5 of the Hotel Employees and Restaurant Employees Union and for the court-appointed official now running Unity House, a labor benefits organization that Tony Rutledge formerly ran, have opposed both the secrecy and terms of the pending plea agreement in motions filed before Ezra.

The nonprofit Unity House manages some $30 million for 20,000 past and present members of Local 5 and Hawai'i Teamsters Union Local 996. Both locals and Unity House were founded by Tony Rutledge's father, labor patriarch Arthur Rutledge.

Federal agents seized control of Unity House last December after a federal grand jury issued the last of three criminal indictments of the Rutledges that included charges the two men used Unity House assets for personal purposes and otherwise mismanaged the nonprofit's funds.

The plea agreement calls for reinstatement of the Rutledge-friendly board of directors of Unity House that was ousted after the federal takeover. While on probation, Tony and Aaron Rutledge would be blocked from returning to executive positions they previously held at the non-profit, but they could be hired as consultants, according to the plea deal.

In protesting the plea agreement, lawyers for Local 5 cited financial reports issued by the court-appointed receiver finding "a decline in the net worth of Unity House of tens of millions of dollars" while under the control of Tony Rutledge and the ousted directors.

"This was as a result, in large part, of idiotic, irrational or self-serving investments, sometimes undertaken contrary to the advice of experienced counselors ... or to fund crony ventures in which the Rutledges or their partisans stood to make commissions or profits," the Local 5 lawyers said.

"The prosecution has submitted a sealed statement to justify its plea bargain. Of course, we cannot see it, hence cannot rebut it."

The Rutledges in the past have referred questions about their legal cases to their attorneys. William McCorriston, attorney for Tony Rutledge, also could not be contacted for a response yesterday. In court in August, he said the plea agreement was reached only after hard bargaining between defense lawyers and the prosecution.

Aaron Rutledge's attorney, Brian DeLima, said the court receiver's reports criticizing management and investment decisions at Unity House were written without any input from the Rutledges or from ousted members of the board of directors.

Brook Hart, attorney for the receiver now running Unity House, filed a motion this week asking Ezra to unseal parts of the government's sealed papers that relate to Unity House.

Hart said the lead prosecutor in the case, Edmund Power, told him that "concessions" in the plea deal concerning Unity House "were simply included because otherwise a plea agreement could not be reached."

Power, who now works in the U.S. attorney's office in Alexandria, Va., did not respond to requests for comment.

No one representing Unity House was contacted "during the course of brokering the plea agreement," Hart said, arguing that at least some of the now-sealed records should be open to public view and discussion.

The 9th U.S. Circuit Court of Appeals "has repeatedly and unmistakably recognized that 'plea agreements and related documents' are materials to which the public and press presumptively have access," Hart argued.

Parties affected by the plea agreement were not given a chance to argue against closure of the records, and the government did not adequately justify the sealing of the documents, Hart's motion said.

Ezra will hold a hearing on the plea deal at 1:30 p.m. Wednesday.

Reach Jim Dooley at jdooley@honoluluadvertiser.com.