The State of Aloha

Here’s how it all unraveled for Louis Kealoha, the chief of police for the Honolulu Police Department, and his wife, Katherine, a city deputy prosecutor. On a summer’s night in 2013, Katherine called the police to report that their mailbox fronting their home in Kahala was missing. The HPD showed up and after reviewing surveillance footage centered its investigation around Katherine’s uncle, Gerard Puana.

Uncle Gerard was prosecuted in federal court (the theft of a mailbox is a federal offense). The defense was something straight out of one of those old gangster movies: Uncle Gerard was framed by the Kealohas, who abused their power and authority as law enforcement officers, to bend the rules and sink him.

Katherine at the time publicly denied all of this. She said that her uncle’s “claim that he gave me large sums of cash is absurd. Gerard is now under criminal prosecution in federal court for stealing a mailbox, and is being defended by a public defender.”

Nothing came of it because, in the middle of the trial, Chief Kealoha told the jury that Uncle Gerard was a felon and had been convicted of completely unrelated offenses. The judge declared a mistrial.

Uncle Gerard’s lawyer met with the federal officials and convinced them to drop the charges against him. They also started to investigate the Kealohas to see if the defense at trial had any merit after all. The investigation picked up so much steam that the U.S. Department of Justice sent out a special prosecutor from San Diego.

In the meantime, Chief Kealoha yielded to public pressure and stepped down from his position. (Even that was mired in controversy. The chief negotiated with the police commission to receive a severance payment of $250,000. If convicted of a felony, however, he has to pay it back.)

The missing mailbox appears to be the tip of the iceberg. After nearly three years of investigation, the federal government unsealed an explosive indictment against the Kealohas and top-ranking police officers.

The indictment’s claims go back to 2004, when Katherine was appointed as a guardian for two minor children while she was in private practice. (Her legal career has included jumping around from the prosecutor’s office, to private practice, to a post in Gov. Linda Lingle’s administration, then back to the prosecutor.) After deeming herself the sole trustee and authorized signatory of the trusts, the feds claim that she used up to $150,000 for her personal use.

On top of that, when lawyers inquired about the status of the trust, the feds allege that she made up an alias of Alison Lee Wong to show that she had been working on an accounting of the trust.

Then came Gerard. According to the indictment, he gave the Kealohas up to $70,000 to invest and the Kealohas used more than half of it to pay for personal expenses instead. Gerard’s 98-year-old mother got sucked into this too. The indictment alleges that the Kealohas convinced her to get a reverse mortgage on her property and hand over the proceeds to oversee and make sure there would be enough to purchase a condominium for Gerard. That never happened.

Instead, the feds allege that the Kealohas spent the money on themselves. The indictment outlines detailed expenditures to places like the Sheraton Waikiki, the Halekulani hotel, Elton John tickets, a charity donation to the Honolulu Police Relief and, of course, Long’s.

Now at this point, this stuff — even if it does turn out to be true — is not the kind of case that should make statewide headlines. Things are escalated when, according to the indictment, the Kealohas brought in officers from the Criminal Intelligence Unit, a secretive division on the force that apparently has no supervisor other than the chief of police.

The allegations allege that the Kealohas worked hand in glove with CIU officers to steal their own mailbox, stage a theft, doctor the surveillance footage and pin it on Gerard. In other words, the indictment’s claims echo Gerard’s defense that never was presented at this trial.

The Kealohas have pleaded not guilty. Many speculate that the federal investigation will continue. The lawyers from San Diego aren’t leaving the islands anytime soon.

Even if they do prevail (and the former chief gets to keep his severance pay), morale at the Police Department has already taken a hit. The new chief, Susan Ballard, has been praised for her integrity and her commitment to clean up the department — the same kind of praise Kealoha himself received when he was appointed to the job in 2009.

* Ben Lowenthal is a trial and appellate lawyer who grew up on Maui. His email is “The State of Aloha” alternates Fridays with Sarah Ruppenthal’s “Neighbors.”