Wednesday, April 14, 2021

Hawaii ex-police chief and wife jailed in theft conspiracy scheme

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Katherine and Louis Kealoha, once seen as pillars of Hawaii’s law enforcement community, will spend the next several years in federal prison.

On Monday morning, U.S. District Court Judge J. Michael Seabright sentenced Katherine Kealoha, a former deputy prosecutor for the City and County of Honolulu, to 13 years behind bars for trying to frame her uncle for stealing her mailbox in 2013.

Later that afternoon Seabright ordered her husband, Louis Kealoha, who took part in that scheme as Honolulu’s police chief, to serve a seven-year prison term.

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The couple, now estranged, will be forced to pay nearly $700,000 in restitution to their victims, which includes the estate of Katherine Kealoha’s deceased grandmother, Florence Puana.

At least some of that money will come from Louis Kealoha’s Honolulu Police Department pension, which pays him about $9,700 a month.

Seabright described the case as a “grotesque deprivation of civil rights” that harmed an entire community and caused lasting damage to the integrity of the HPD and the Honolulu Prosecuting Attorney’s Office.

“The events underlying this case have had a real and measurable impact on our community,” Seabright said. “The conduct of the defendants — all of the defendants — have truly shaken confidence in our governing institutions, most notably HPD.”

The motive behind the frame job was simple — money.

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Gerard Puana and his mother, Florence, had filed a lawsuit against Katherine Kealoha in March 2013, alleging that she had bilked them out of hundreds of thousands of dollars years before through a shady reverse mortgage deal and sham investment scheme.

That lawsuit began to uncover a series of financial crimes that the Kealohas had committed, not the least of which was Katherine stealing from her uncle and grandmother to fuel a lavish lifestyle.

The Kealohas used the stolen money for trips to Disneyland, Elton John concert tickets and Maserati car payments.

They also used the funds to pay for Louis Kealoha’s inaugural celebration at the Sheraton Waikiki after he was named Honolulu’s police chief. The bill for the soiree was nearly $25,000.

“They unabashedly used the power given to them to feed their greed,” Seabright said.

A jury convicted the Kealohas and two Honolulu police officers, Derek Hahn and Minh-Hung “Bobby” Nguyen, in June 2019 for trying to execute the Puana frame job and cover-up.

The Kealohas were charged separately for their financial misdeeds, which included accusations that Katherine Kealoha had stolen nearly $160,000 from two children while she was their court-appointed guardian.

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Katherine Kealoha was also charged with a series of crimes stemming from allegations she and her brother were running a prescription drug ring and that she used her position as a prosecutor to keep their criminal activity hidden from law enforcement.

Everyone Was Culpable

Monday’s sentencing hearing, which included all three cases, was delayed numerous times due in large part to the ongoing coronavirus pandemic.

In a handwritten letter to Seabright, Kealoha pleaded for leniency, saying that her addiction to painkillers had clouded her judgment and that she was sorry for the pain she had caused.

The Kealohas and their co-defendants are the first to be prosecuted and sentenced as part of a years-long U.S. Justice Department investigation into public corruption and abuse of power in Hawaii government.

Several other high-profile officials, including Honolulu Prosecuting Attorney Keith Kaneshiro and former Corporation Counsel Donna Leong have been notified that they are targets of the ongoing criminal probe.

Two Honolulu police officers and others involved in the FBI investigation have been convicted for less serious offenses. Hahn and Nguyen are scheduled for sentencing Tuesday.

On Monday, when Kealoha appeared in court she was wearing a prison jumpsuit, which was issued to her after her bail was revoked last year and she was forced to remain in custody at the Federal Detention Center near the Honolulu airport.

Several members of the Puana family were present, including Gerard, when Kealoha again apologized for trying to frame him.

“My actions are my own and I truly am sorry for them,” Kealoha said. “I ask for forgiveness from my family and from my uncle for all the destruction and devastation that I caused.”

Seabright didn’t give Kealoha the sympathy she was looking for. Instead, he imposed a harsher sentence because she had “perverted justice over and over and over and over again.”

He spent much of Monday’s hearing recounting the evidence against Kealoha and her co-conspirators.

He said it was clear that the former prosecutor had built her wealth — or at least the perception of if — on the back of her elderly grandmother and that she was willing to do anything to protect herself from being caught, even if it meant locking up her own uncle.

Louis Kealoha and the Honolulu Police Department’s Criminal Intelligence Unit, where both Hahn and Nguyen worked, were just as culpable, he said, because there was no way Katherine Kealoha would have been able to do her “dirty work” without them.

“You framed your uncle for a crime that he didn’t commit,” Seabright said. “Let me say that again. You framed your uncle for a crime he never committed. And given that your husband was the chief of police, the task wasn’t difficult. That’s the shock of all this.”

‘He Was Not The Mastermind’

Louis Kealoha, who filed for divorce from Katherine after their guilty verdicts last year, arrived at court wearing an aloha shirt underneath his blue suit.

During his sentencing proceedings, he talked proudly of his 30 year career in law enforcement and said he never expected to find himself facing judgment for a crime he himself had committed.

“In an ordered society trust in public officials is paramount,” Kealoha said. “I have betrayed that trust and for that I am sorry.”

Kealoha and his defense lawyer, Rustam Barbee, also did their best to distance the former police chief from his estranged wife. Barbee read a letter from Kealoha’s mother, Beatrice, in which she said his “only weakness was being truly dedicated to his marriage vows” and that he put too much faith in his wife.

“He was not the mastermind behind these offenses,” Barbee said. “Katherine Kealoha did much of these misdeeds and crimes unknown to him.”

Seabright, a former prosecutor who specialized in white collar crime and public corruption, didn’t buy it. He spent much of his time scolding Kealoha while pointing out the many ways in which he was a necessary part of the conspiracy to frame Puana.

The Criminal Intelligence Unit that conducted 24-hour surveillance on Puana in the lead up to his arrest reported directly to Kealoha, and many of its members, if not all, were handpicked by him.

Seabright also pointed out the fact that Kealoha lied in federal court when he was on the witness stand and asked to identify who he saw in a security video stealing his mailbox. Kealoha said it was Puana despite the fact the man in the video clearly was not Gerard Puana.

“I agree that Katherine was the mastermind behind this,” Seabright said. “But you were right there by her side, right there by her side cheering her on in your position as chief to aid the criminal enterprise that you helped establish.”

Kealoha will not have to report to prison until April 21. Outside of the courthouse, he addressed the media to thank his supporters and said he respected the court’s decision.

A Final Say

Florence Puana died in February at the age of 100, but she still had an opportunity to address the court.

Her daughter Charlotte Mallot, who is Gerard Puana’s sister, spoke at the hearing and read a letter that Florence wrote to Kealoha, her granddaughter, before she died.

Florence Puana said she trusted Kealoha and that she felt betrayed when she was forced to sell her home after Kealoha had tricked her into securing a reverse mortgage and stole much of the money. After filing the lawsuit, she said, the situation worsened and the acrimony ramped up.

“I was humiliated, frustrated and depressed when in retaliation you initiated conservatorship proceedings falsely challenging my mental stability and ability to care for myself,” Florence Puana wrote.

“Throughout the civil trial you manipulated and deceived the court and jury. The combined stress and unthinkable outcome of that trial left me stunned and totally shattered.”

Florence Puana told Kealoha that her actions divided a once close family, and that over the course of nearly a decade she had yet to receive an apology.

“It is now time to own up and ask forgiveness from your God for your offenses and for the anguish, pain and chaos you created in so many, many lives,” she said.

Gerard Puana also addressed the court through a letter read aloud by his attorney Eric Seitz, who has filed a civil rights lawsuit against the Kealohas and the city on his behalf. Seitz said his client suffers from severe depression and anxiety after what happened to him, which is one of the reasons he did not want to speak on his own.

“To this day I flinch whenever I see a police car or notice a nearby car or truck and wonder if I’m being followed all over again,” Gerard Puana wrote.

Assistant U.S. Attorney Michael Wheat, who was assigned to investigate the Kealohas out of his office in San Diego, gave brief remarks to the media after the couple was sentenced.

Wheat said the fact that the Kealohas are headed to prison closes just one chapter in the ongoing criminal saga, and that for him and his team, “Our work continues.”

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