Virus Spread Concerns Postpone Hawaii Corruption Sentencing

Mar 16, 2020

The spread of the coronavirus has prompted a judge to postpone the sentencing of a former high-ranking Honolulu prosecutor in Hawaii's biggest corruption investigation that also took down her retired police chief husband.

Sentencing hearings were scheduled for Tuesday for Katherine and Louis Kealoha. A jury convicted them in June of conspiracy in a plot to frame a relative to keep him from revealing fraud that financed their lavish lifestyle.

Two former officers convicted with the Kealohas were scheduled to be sentenced Wednesday.

“Given the significant public interest in the criminal prosecution of Katherine P. Kealoha, Louis M. Kealoha, Derek Wayne Hahn, and Minh-Hung Nguyen, the court expects large crowds to appear for their individual sentencing hearings,” U.S. District Judge J. Michael Seabright said in an order Monday.

The judge also noted the U.S. Centers for Disease Control and Prevention has recommended the cancellation or postponement of in-person events that consist of 50 people or more and that President Donald Trump issued new guidelines to avoid gatherings of more than 10 people.

“The court has also carefully followed the spread of the COVID-19 virus, and the need to protect the health and safety of the public and court employees,” Seabright said.

A new date will be determined after lawyers consult with the judge.

“He accepts the court's caution in limiting crowds,” said Louis Kealoha's defense attorney, Rustam Barbee. Katherine Kealoha's attorney, Gary Singh, declined to comment.

Katherine Kealoha should go to prison for 14 years and her husband should be locked up for about half that time because they abused their positions of trust to commit corrupt acts at the highest levels of law enforcement, U.S. prosecutors said in sentencing recommendations.

The prosecutors said the corruption included stealing from vulnerable victims — Katherine Kealoaha's own grandmother and uncle — framing the uncle for a crime he didn't commit, and using members of a secret police unit. All these actions were taken to cover up fraud that enriched the Kealohas and to maintain their status of prestige, the prosecutors said.

The Kealohas, now estranged, were once a respected power couple before a curious case of a mailbox reported stolen from their home in a swanky neighborhood led to their downfall and cast a spotlight on alleged corruption in the city's police force and prosecutor's office.

Katherine Kealoha has been in a federal detention center since her conviction. Prosecutors want Louis Kealoha, who agreed to retire in 2017 after he became a target in the wide-ranging federal investigation, to be locked up as soon as he is sentenced.

To avoid a second trial, the Kealohas later pleaded guilty to bank fraud, saying they provided false information to obtain loans.

Katherine Kealoha also pleaded guilty to an identity theft charge, saying she got a police officer to forge a police report she used to explain negative information on a credit report. She also pleaded guilty to a charge involving protecting her brother from a drug-dealing investigation.

The Kealohas used officers from a secret police unit hand-picked by the chief to frame her uncle, Gerard Puana, for stealing their home mailbox to try to discredit him in a lawsuit he and her grandmother filed saying Katherine Kealoha stole money from them in a mortgage scheme, prosecutors said.

Prosecutors said Katherine Kealoha bilked relatives, banks and children whose trusts she controlled and spent the stolen money on Maserati car payments, her firefighter lover, a hotel breakfast banquet when her husband became police chief and other luxuries.

During the trial, jurors watched a recorded deposition of the grandmother, Florence Puana, because her failing health prevented her from testifying in person.

The Puanas said Katherine Kealoha came to them with an idea about taking out a reverse mortgage on her grandmother's home to help buy a condo her uncle wanted. Kealoha said she would consolidate her debts and promised her uncle and grandmother that she would pay off the loan.

She used the money to buy her uncle's condo, but instead of paying off the loan, she spent the leftover money, prosecutors said.

In October, Louis Kealoha filed for divorce.

Florence Puana, 100, died in February.