Updated: 11/30/2020, 3:25 p.m. A federal judge today sentenced former Honolulu deputy prosecutor Katherine Kealoha to 13 years in prison for masterminding an elaborate scheme that defrauded her grandmother, led to her uncle's false arrest and plundered the trust funds for two children. Her husband, ex-Police Chief Louis Kealoha, received 7 years in prison for his part in the scheme.
Judge Michael Seabright used strong language in describing the "destruction and chaos" that he said Katherine Kealoha wrought on her family, her victims and the community's trust in government, especially the police.
He ordered Katherine Kealoha to serve 156 months followed by supervised release for counts stemming from cases involving the theft of a mailbox designed to frame her uncle, bank fraud and drugs.
Seabright also ordered restitution amounting to $454,984, but noted she may be unable to pay it unless she receives a portion of the pension due her husband, former Police Chief Louis Kealoha.
For Louis Kealoha's sentencing is scheduled for this afternoon
The corruption case of Katherine Kealoha, a high-ranking deputy prosecutor, and her ex-police chief husband, riveted Hawaii for months as one bizarre revelation after another became known.
The Kealohas pleaded guilty in October 2019 to federal conspiracy and fraud charges that began with the theft of a mailbox. Prosecutors say Katherine Kealoha orchestrated a scheme to steal from her late grandmother and to frame her uncle for the mailbox theft to marginalize him, drawing into the conspiracy her husband and members of the Honolulu Police Department that he headed.
According to prosecutors, the Kealohas actions were aimed at enriching themselves to maintain their lavish lifestyle.
As the case unfolded, Louis Kealoha struck a deal with the city to leave his police chief's post for $250,000 in severance paid by taxpayers. The payout was contingent on Louis Kealoha returning the money if convicted of federal charges.
Prosecutors had recommended that Katherine Kealoha receive 14 years in prison for her part in the case and her husband half that sentence. Her attorney had asked for a lesser sentence.
Katherine Kealoha said in a recent letter to the judge that her addiction to prescription drugs clouded her judgment. She also alluded to a diagnosis of a rare form of cancer but did not elaborate.
Speaking in court, Katherine Kealoha also asked for forgiveness from her family, saying that while prescription drugs affected her judgment, her actions were her own.
The court also heard from Charlotte Malott, the daughter of Katherine Kealoha's grandmother, Florence Puana. Mallot read a letter from Puana written before her death in February, in which she detailed how Katherine Kealoha proposed she take out a reverse mortgage on her house to buy a condo for her son, Kealoha's uncle Gerard Puana.
But the mortgage loan also paid for Katherine Kealoha's personal expenses, and when the loan wasn't paid, Puana lost her house. When she and her son filed a civil suit to seek restitution, Katherine Kealoha filed a counterclaim and the Puanas lost.
The grandmother said she felt humiliated, frustrated and depressed and said Katherine Kealoha's deception shattered her life.
Gerard Puana also submitted a statement to the court, saying the family was once proud of his niece and trusted her completely. But he said she cheated him out of his life savings and caused his false arrest that has had lingering effects on his life.
In handing down his sentence, the judge said he took Katherine Kealoha's letter and medical condition into account, but pointed out the aggravating circumstances that led to the harsher sentence sought by prosecutors.
Seabright expressed astonishment at how the scheme carried on by Katherine and Louis Kealoha could have continued for so long. He also called it shocking that Katherine Kealoha had the Honolulu Police Department at her disposal in carrying out her crimes.
"People say the system worked, but it went undetected for a long time," he said. The community should be asking why that occurred, he said.
After the couple's convictions, Louis Kealoha filed for divorce. Two police officers also face sentencing in the case.
Still unresolved are the fates of former city Prosecutor Keith Kaneshiro, Katherine Kealoha's ex-boss, and one-time city Corporation Counsel Donna Leong, who arranged for the police chief's payout.
Both were notified they were targets of the corruption case investigation.