Police Chief Louis Kealoha was Honolulu's Rolex-wearing police chief and his wife Katherine was the Maserati-driving prosecutor in charge of a unit targeting career criminals. The couple funded their lavish lifestyle by defrauding banks, relatives and children.
Katherine Kealoha also used her position as a prosecutor to keep a prescription drug ring she and her brother were running, hidden from law enforcement.
The court heard how they bilked clients and relatives out of hundreds of thousands of dollars to fund their lavish and overextended lifestyle and then used their power to target anyone who threatened them.
Former police lieutenant Derek Wayne Hahn, 48, (left) was sentenced to three-and-a-half years in prison, and ex-officer Minh-Hung 'Bobby' Nguyen, 46, (right) got four-and-a-half years.
A judge has sentenced two former Honolulu cops to prison for helping a police chief and his prosecutor wife frame her uncle as part of a wide-ranging conspiracy aimed at preserving the couple's lavish lifestyle.
Former Police Chief Louis Kealoha's wife, former high-ranking Honolulu prosecutor Katherine Kealoha, was the mastermind behind the scheme to frame her uncle for the theft of the couple's home mailbox to silence him, a judge said.
On Monday, U.S. District Judge J. Michael Seabright sentenced the estranged husband and wife to seven and 13 years in federal prison, respectively.
At a separate hearing on Tuesday, former police lieutenant Derek Wayne Hahn, 48, was sentenced to three-and-a-half years in prison, and ex-police officer Minh-Hung 'Bobby' Nguyen, 46, got four-and-a-half years.
Seabright said that Nguyen was more culpable than Hahn in the bizarre frame-up, even though he had a lower rank. The plot would not have been possible without Louis Kealoha's underlings at the Honolulu Police Department, Seabright said, describing Hahn as a soldier carrying out the chief's requests.
Hahn was a lieutenant in an elite unit of officers hand-picked by Louis Kealoha. He was also Katherine Kealoha's partner in a solar business.
The peculiar case of a mailbox reported stolen in 2013 from the Kealohas' home in an upscale Honolulu neighborhood led to a two-year federal investigation and corruption-related charges.
Prosecutors say Katherine Kealoha's uncle and grandmother had threatened to expose them for fraud, so she devised a scheme to silence them.
She tried to have her grandmother declared incapacitated. She and her husband used members of a special, hand-picked police unit to frame the uncle, Gerard Puana, for stealing the Kealohas' mailbox, prosecutors say.
The underlying fraud involved dizzying schemes to falsify loan applications, swindle relatives, and an alleged drug-dealing plot, prosecutors said.
Prosecutors say Katherine Kealoha also stole money in a reverse mortgage scheme of her now-deceased 100-year-old grandmother's house and that she drained two children's trust accounts of $160,000.
She spent bilked money on her firefighter lover, a Maserati, Elton John concert tickets and a resort banquet when her husband became police chief, prosecutors said.
When her uncle threatened to expose the scheme, she and her husband used hand-picked members of his police department to hang the frame for stealing a mailbox from their $1.3 million home in upscale Mariner's Cove, the court heard.
Ex-officer Nguyen was married to Katherine Kealoha's niece and had lived in the Kealohas' pool house.
'It reached the highest levels of government,' leading to the public's distrust in the police department, the judge said of what's considered Hawaii's biggest corruption case.
While the Kealohas were motivated by greed and maintaining their lifestyle, it's not clear whether Hahn participated out of loyalty or because he thought it would be good for his career, Seabright said.
Nguyen's attorney, Randall Hironaka, tried to argue that his client played a smaller role because he was a footman who followed orders - and couldn't question the chief because of his status in the family.
Michael Wheat, a special federal prosecutor, said Nguyen was the only footman in the elite unit because of his family ties: 'He's not just a rank-and-file footman who's subservient to the chief. He's family.'
Hahn and Nguyen declined to speak at their separate sentencing hearings.
Charlotte Malott spoke on behalf of her brother, Gerard Puana - Katherine Kealoha's uncle - and mother Florence Puana - Kealoha´s grandmother - who died in February at 100 years old.
'You helped the Kealohas carry out their evil scheme of revenge,' Malott told Hahn in court.
Seabright called Nguyen a willing participant in the scheme who arrogantly thought he could get away with it.
A jury previously convicted the Kealohas, Hahn and Nguyen of conspiracy.
Katherine and Louis Kealoha, now estranged, were once a respected power couple. Louis Kealoha agreed to retire amid a wide-ranging federal investigation. She later gave up her law license.
'This case has staggered the community in many ways,' U.S. District Judge J. Michael Seabright said.
The judge described how Katherine Kealoha orchestrated a reverse mortgage scheme that forced her grandmother to sell her home, framed her uncle for stealing the Kealohas' home mailbox, stole money from children whose trusts she controlled as a lawyer, cheated her uncle out of his life savings, convinced her firefighter lover to lie about their affair and used her position as a prosecutor to turn a drug investigation away from her doctor brother.
'Truth can be stranger than fiction,' the judge said at Katherine Kealoha's sentencing.
Later, he told Louis Kealoha that while his wife was the mastermind, 'you did master the frame job that followed,' and the scheme couldn't have succeeded without the Honolulu Police Department.
The case is especially shocking, Seabright said, because of the role a police chief of a 'major American city,' played.
'Think about that, the chief of police of one of the largest police departments in the country ... swears to tell the truth, the whole truth and nothing but the truth,' and lies, the judge said of Louis Kealoha's false testimony at the trial of his wife's uncle for stealing the couple's mailbox. The trial ended in a mistrial that prosecutors say the then-chief caused on purpose to thwart the investigation.
The Kealohas later pleaded guilty to bank fraud, saying they provided false information to obtain loans.
They went to great lengths to maintain a lifestyle they couldn't afford on public servant salaries, the judge said.
Katherine Kealoha, 51, also pleaded guilty to an identity theft charge, saying she got an officer to forge a police report she used to explain negative information on a credit report. She also pleaded guilty to a charge that involved protecting her brother from the drug investigation.
In a letter to the judge, she blamed a prescription drug addiction for clouding her judgment.
'My client was on drugs, her mind was not clear and she did a lot of bad things,' her lawyer, Gary Singh, said in court.
Kealoha apologized to her family in court and asked for forgiveness. 'To my uncle, especially,' she said. 'I know that he has been through so much pain and so much hurt.'
Kealoha came to Puana and her son Gerard Puana 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 on luxuries, including $26,000 for an induction banquet when her husband became police chief and $10,000 on Mercedes-Benz and Maserati car payments, the judge said.
'She perverted justice. And she did so for her own personal reasons,' said Michael Wheat, a special federal prosecutor. 'To facilitate a lifestyle and a facade and an image in this community.'
Framing her uncle for stealing the Kealohas' mailbox was to make him less credible in the family financial dispute, the judge said.
'We still don't know sitting here today, who stole the mailbox,' Seabright said, adding that it clearly wasn't Gerard Puana.
He told Katherine Kealoha that she used the police 'to do your dirty work.'
Louis Kealoha, 60, filed for divorce after they were convicted.
He said at his sentencing that he's deeply sorry, ashamed and failed to live up to the standards of a police chief. 'This is the last place in my life I thought I'd be and I vow never to be here again,' he said.
Partly because of the COVID-19 pandemic, Seabright agreed to allow Kealoha to remain free on bond until he self-surrenders in April. His wife has been in the Honolulu Federal Detention Center since they were convicted.
Monday's sentencings come after several postponements. Concern about the spread of the coronavirus caused a delay in March, then a November 3 date was changed after officials realized it was Election Day.
'COVID has kept us from this date for quite a while,' the judge said.
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