Judge calls Katherine Kealoha a ‘corrupting influence,’ orders her jailed

Updated: Jun. 29, 2019 at 5:18 PM HST
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HONOLULU, Hawaii (HawaiiNewsNow) - A federal judge called Katherine Kealoha a “corrupting influence” Friday before ordering that she be detained pending her sentencing in October and two upcoming federal trials. The decision came a day after she was found guilty in one of Hawaii’s biggest public corruption trials.

In the court hearing, Judge Michael Seabright said Kealoha has shown she’s willing to tamper with witnesses in an effort to hide her schemes.

Trying to obstruct justice, he said, is Kealoha’s “bread and butter.”

Following the judge’s order, U.S. Marshals flanked Kealoha, who did not show any emotion as she was escorted out of the courtroom.

She’ll be held at the Honolulu federal detention center, where initially she’ll be placed in isolation ― standard procedure given that she’s a former law enforcement official.

After emerging from the hearing, Earle Partington ― one of Katherine Kealoha’s defense attorneys ― said he did not believe detaining his client was necessary.

But when asked if he thought Kealoha expected to be jailed, he replied, “I think so.”

On the conviction, he added, “I only have three words: Appeal, appeal, appeal.”

Partington said an appeal to the conviction would be filed once Kealoha is sentenced. but declined to elaborate on what the appeals argument would be.

Following Kealoha’s bond being revoked, the special prosecutor who led the case against the Kealohas for four years spoke to reporters for the first time.

“The victims in this case are going to have some degree of satisfaction,” from the verdict he said.

He added that the Kealoha’s victims include the Honolulu Police Department, who were "tarnished by this unfairly. There were a small group of people who were involved in this and they’ve been held accountable by the verdict in this case.”

Kealoha is the only one of the four convicted Thursday to have their bond revoked.

Prosecutors moved to have Kealoha detained in a motion filed Thursday night, saying that she obstructs and lies “as easily as she draws breath," and so should be held as she awaits two other potential federal trials and sentencing for the public corruption charges in October.

“For over a decade, Katherine Kealoha has repeatedly flaunted the law, leaving countless victims in her wake," the government wrote, in a brief to the court late Thursday.

“She cannot now — as she must — establish by ‘clear and convincing’ evidence that she is not likely to flee or pose a danger to the safety of any other person or the community.”

For the first time since being indicted, Katherine Kealoha walked into the federal courthouse Friday morning without her husband, former Honolulu Police Chief Louis Kealoha, by her side.

As prosecutors argued that she should be held behind bars in the wake of the conviction, Kealoha had her elbows on on the defense team table with her chin resting on her hands.

On Thursday afternoon, after deliberating for about eight hours, a jury of seven men and five women found Kealoha and her husband guilty of conspiracy and other counts in one of Hawaii’s most closely-watched public corruption trials.

After leaving the courtroom, Louis Kealoha appeared stunned by his turn of fortunes.

He told reporters: “There’s still a lot to take in. I just wanted to thank the community for their continued help and support.”

The verdict came in about 4:40 p.m. Thursday — a lightning fast decision in a case federal authorities took years to build. Prosecutors, the five co-defendants and members of the defense team rushed to the federal courthouse to hear the verdict read out.

And when they did, Louis Kealoha hung his head; his wife stared straight ahead.

The jury found both of the Kealohas guilty of five of the six counts against them: Conspiracy and four counts of attempted obstruction. They were found not guilty of making false statements.

Katherine Kealoha, a former deputy city prosecutor, was found guilty for a leading role in the scheme to frame her uncle, Gerard Puana, with the theft of her mailbox in a bid to discredit him in an ongoing financial dispute.

Ex-Police Chief Louis Kealoha’s major role was lying at Puana’s federal trial for the mailbox theft, and forming the elite criminal intelligence unit in which several officers were involved in the mailbox conspiracy.

Two Honolulu police officers were also found guilty in the case.

Officers Derek Hahn and Bobby Nguyen, who were found guilty of conspiracy and attempted obstruction of an official proceeding, left the courtroom without say a word.

Retired Maj. Gordon Shiraishi was the lone defendant found not guilty in the case.

It’s not clear how much time the Kealohas face behind bars, but the obstruction charge alone carries a 20-year maximum sentence.

The sentences will most likely run concurrently, but in the federal system there is no parole.

Ali Silvert — the federal defense attorney for Gerard Puana — called the verdict “fair and just.”

Puana was making it known that Katherine was stealing from his mother, 99-year-old Florence Puana.

“An innocent man was framed and went to jail for doing nothing more than trying to speak up,” Silvert said. “We’re all very surprised the jury reached a verdict this quickly. This really sends a strong message to law enforcement.”

In a statement Thursday, Police Chief Susan Ballard agreed. She said those involved in the conspiracy “hurt both the community and the department.”

“But the men and women of the HPD have been working hard this past year and a half to restore HPD’s reputation and the public’s trust. We are moving forward and are committed to making sure that Honolulu continues to be one of the safest cities in the nation,” she said.

Honolulu Mayor Kirk Caldwell also spoke on the verdicts Friday, saying that he’s grateful it’s over as it has been a “long, drawn-out process and many people are frustrated by the length of it.”

“I think it’s shown a lot of hard work on behalf of the judge and the jury,” Caldwell said. “The verdict is in. We have to see what happens next.”

Caldwell said he’s hoping to move forward with a new and improved police department.

“We got a verdict in and we also have a strong commission, a very strong chief, one of the few women chiefs in the country of large police departments," he said.

"I’m looking forward and hopefully this is behind us and we can get back to the business of keeping our city the safest big city in terms of violent crime.”

The “mailbox trial” got underway in late May and lasted 18 days.

The case revolved around the reported theft six years ago of the Kealohas’ mailbox at their former Kahala home. The Kealohas pointed the finger for the federal crime at Puana.

Prosecutors said Katherine Kealoha sought to frame her uncle with the theft in a bid to discredit him amid a family dispute over money she drained from from their bank accounts.

[CONTINUING COVERAGE: The Case Against the Kealohas]

At the time of the conspiracy, Kealoha was a high-ranking deputy city prosecutor and Louis Kealoha headed up the Honolulu Police Department.

The three former or current officers in the case were part of a secretive police unit.

Prosecutors say the Kealohas used those “secret police” to enforce their personal agenda and send the heavy hand of the law raining down on those who challenged them and their lavish lifestyle.

While the mailbox theft happened in 2014, the roots of the federal public corruption case actually go back more than a decade.

Those were years that the Kealohas lived well beyond their means. They lived in a $2 million Kahala home, drove flashy cars and threw lavish parties.

Around the same time, in 2007, Katherine Kealoha became trustee for Gerard and Florence Puana ― her uncle and her grandmother. The trusteeship gave Kealoha access to about $200,000.

[Read more: She was identified as a victim in the case against the Kealohas, but was forced to pay legal fees]

Six years later, the Puanas sued her, alleging she’d drained the bank account dry. That civil lawsuit would set off a chain of events at the heart of the corruption trial.

Kealoha was desperate to destroy her relatives’ credibility before the suit went to trial.

And then, on June 21, 2013, the Kealohas’ mailbox was taken. Surveillance cameras captured the grainy, black-and-white images of a man stealing the mailbox.

The Kealohas identified the thief as Gerard Puana, Katherine Kealoha’s uncle.

“The evidence will show that to discredit Gerard Puana they would frame him with a federal offense. He’s a thief. He stole our mailbox,” special Prosecutor Michael Wheat told the jury, in his opening statements.

“The goal was to discredit Gerard Puana ... to make him a felon so that his testimony (in the civil suit) would be suspect.”

Remarkably, this is only the first of three potential trials for Katherine Kealoha and the first of two for her husband.

They are both also charged with financial fraud for lying to banks to get mortgages and other loans. Katherine Kealoha is also charged with her physician brother ― Rudy Puana ― in a drug conspiracy case.

Those trials are scheduled for later this year.

In closing statements in the “mailbox trial," prosecutors said the case was never really about a mailbox but about why the five co-defendants would try to frame Gerard Puana with its theft.

They argued that the facts of the case showed how the Kealohas used their positions to exact retribution against their enemies, and how the three officers participated in the conspiracy.

“The motives in this case are greed, to maintain prestige and power. The chief of police and a prosecutor," said Prosecutor Joseph Orabona, in closing arguments.

Defense attorneys, meanwhile, argued that the government’s case was based on supposition and circumstantial evidence.

Rustam Barbee, who represents ex-Police Chief Louis Kealoha, sought to convince jurors in his closing arguments that the government hadn’t proven the allegations beyond a reasonable doubt,

“This theory about a frame job has no evidence," he said. "It’s a far-fetched conspiracy theory that’s very strange, bizarre, complicated, doesn’t make any sense.”

The FBI investigation in the case began in early 2015.

A year later, the Justice Department brought in Wheat, a deputy U.S. attorney and an expert in civil rights and corruption cases, to begin the grand jury investigation.

Even without charges, the slowly-evolving scandal forced the police commission to pay off Louis Kealoha, giving him $250,000 to retire early.

One stipulation of that payout: Kealoha was told he’d have to return the money if he was convicted of a felony.

Katherine Kealoha went on leave when they were indicted in October 2017.

Meanwhile, two other officers implicated in the case ― Niall Silva and Danny Sellers ― pleaded guilty and became witnesses.

In all, 70 people took the stand in the Kealoha “mailbox trial.” The breakdown: 58 for the government, 12 for the defense, with three testifying more than once.

In the wake of the guilty verdicts for the Kealohas, there’s likely to be continuing fallout on everything from cases that Katherine Kealoha prosecuted to related federal investigations, including one whose focus is embattled city Prosecutor Keith Kaneshiro.

Kaneshiro is on leave after receiving a federal target letter.

Related coverage:

Defense calls government’s allegations in Kealoha mailbox trial ‘imagination’

Unsealed records: Kealoha was prosecuting cases despite ‘serious’ medical condition

Testimony that conflicts with surveillance video gets Kealoha civil attorney in hot water

Legal expert: One witness stands out of the 70 in the Kealoha mailbox trial

This story will be updated.

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