Katherine Kealoha and doctor brother plead not guilty to drug charges

HONOLULU (HawaiiNewsNow) - Former deputy city Prosecutor Katherine Kealoha and her brother, a Big Island physician, pleaded not guilty to dozens of drug charges in federal court on Wednesday.

The new allegations represent the latest twist in a sprawling federal investigation that’s rocked Hawaii’s law enforcement community. Kealoha and her husband Louis, Honolulu’s former chief of police, are already facing a host of other federal charges as part of broad public corruption and financial fraud cases.

The Kealohas walked into the federal courthouse holding hands, on Wednesday afternoon, and did not speak to the press. Puana, who was already being held in federal custody, was transported to the court hours earlier.

Ahead of court proceedings, federal prosecutors filed a motion seeking new conditions for Katherine Kealoha’s release. While not all of the conditions were approved, Kealoha is now subject to drug testing.

The judge also ruled that Puana should be released on $50,000 bond, though prosecutors had sought to keep him behind bars ― pointing to his gun collection and a drug abuse problem.

After the judge decided both Puana and Kealoha should be let out on bond, the two siblings briefly embraced before leaving the courtroom.

A trial in the case has been set for April.

It’s the third of three separate federal trials Kealoha will face.

In the newest indictment ― unsealed Tuesday ― federal authorities alleged that Kealoha and Puana illegally distributed powerful prescription opioids as part of a large, multi-island conspiracy that started in 2012 and continued through 2018.

Puana, an anesthesiologist and pain doctor, was arrested at his Big Island home early Tuesday.

In the indictment, Puana, Kealoha, and four co-conspirators are accused of knowingly and intentionally conspiring to distribute prescription opioids oxycodone, alprazolam, and fentanyl ― sometimes to sell or barter for cocaine.

[Read more: Scandal that’s ensnarled police, prosecutor’s office takes another turn]

[Read more: Years in the making: How prosecutors built their case against the Kealohas]

The documents also refer to a Honolulu police raid that HNN first reported on in August 2015.

In that raid, defendant Tiffany Masunaga was arrested for allegedly dealing drugs. Her ex-boyfriend, then-HPD Officer Alan Ahn, was also arrested — and more than 100 patches of fentanyl were recovered.

Kealoha, the head of the career criminal unit at the time, allegedly organized a “favorable” plea deal for Ahn that would only charge him with cocaine ― not the opioids that were traced back to her brother.

In doing so, authorities said, she kept her brother’s involvement in the case a secret from police and was able to “steer law enforcement scrutiny away from her brother’s felonious conduct in that drug conspiracy."

Attorney Bill Harrison represents Masunaga and says he’ll now move to have her case dismissed.

“We moved in court to actually have the case conflicted (and) taken from the prosecuting attorney’s office ... so that the conflict wouldn’t raise its ugly head in that case and affect my client, which it has," he said.

The new counts against Kealoha are in addition to the dozens of charges of public corruption and financial crimes that she has previously been indicted on. In fact, Kealoha is now connected to 77 counts across three indictments.

[Read more: In page-turner of a court filing, prosecutors detail the Kealohas’ fragile ‘house of cards’]

The latest indictment was released on the same day that state Attorney General Clare Connors petitioned the state Supreme Court to immediately suspend Kealoha’s former boss ― city Prosecutor Keith Kaneshiro ― who is also the target of the public corruption case.

Kaneshiro has refused to step down, a decision that Connors says could put every case the city Prosecutor’s Office is handling at risk of legal challenges.

This story will be updated.

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