A former Honolulu police chief, his ex-prosecutor wife and current and former police officers abused their positions by "planning and scheming" to frame her uncle for a crime he did not commit, a federal prosecutor said Wednesday in a trial for what has been described as the biggest corruption case in Hawaiʻi history.
What started as a curious case of a mailbox reported stolen from the home of ex-Police Chief Louis Kealoha and former deputy city prosecutor Katherine Kealoha has turned into a scandal involving allegations she stole money from banks, relatives and children whose trusts she controlled to fund the couple's lavish lifestyle.
The Kealohas were indicted in 2017 on charges including conspiracy and obstruction. Federal authorities began investigating the two in 2015 and both stepped down from their jobs as the inquiry deepened.
The indictment was later separated into two trials. This first one focuses on the mailbox conspiracy allegations. A second trial will focus on bank fraud and identity theft. Katherine Kealoha also faces a third trial for a separate indictment that accuses her and her pain physician brother of dealing opioids.
Katherine Kealoha's uncle Gerard Puana and her grandmother had sued her, alleging she stole money from them in a reverse mortgage scheme. She then conspired to frame Puana for stealing the Kealohas' home mailbox so a jury in the civil case would not believe him, prosecutors said.
"This case neither begins, nor ends, with a mailbox," Assistant U.S. Attorney Michael Wheat said in his opening statement.
He said the case was about greed and abuse of power by the Kealohas and "the men closest to them, all members of a secret police force called the Criminal Intelligence unit." Wheat is a special prosecutor from San Diego because the U.S attorney's office in Hawaiʻi recused itself from the case.
Defense attorneys were giving their opening statement later Wednesday.
Members of the unit hand-picked by the chief are on trial with the Kealohas: Officer Minh Hung "Bobby" Nguyen, Lt. Derek Hahn and retired Maj. Gordon Shiraishi.
Nguyen was married to Katherine Kealoha's niece and lived in the couple's pool house, Wheat said, while Hahn was Katherine Kealoha's partner in a solar business and Shiraishi was one of her husband's oldest friends.
The couple's "financial stress and concomitant desire to present themselves as the power couple of Honolulu paved the path to their fraudulent financial dealings and, ultimately, to frame ... Gerard Puana for the staged theft of their mailbox," prosecutors have said in court documents.
Puana is expected to testify along with the federal defender who represented him in the mailbox case that ended in a mistrial. The federal defender, Alexander Silvert, got the investigation into the couple started by providing federal prosecutors with evidence he planned to reveal at Puana's trial about how the Kealohas used officers in an elite unit to frame Puana and discredit him in the family financial dispute.
Jurors also are expected to hear from Katherine Kealoha's 99-year-old grandmother, Florence Puana, who gave a video deposition last month because she is in poor health.
The jury of 12 with five alternates was selected from a jury pool that started with 413 people called because the case has generated intense publicity.
Some prospective jurors said they had never heard of the case, while others said they had heard about it and that it started with a stolen mailbox.
Updated: May 22, 3:44 p.m.