HONOLULU — Soon after a Honolulu prosecutor and her police chief husband were indicted and accused of a fraud scheme that funded their lavish lifestyle, they told a judge they couldn’t pay for lawyers to represent them.
The public servant couple, who lived in the swanky part of town, used money bilked from her grandmother’s reverse mortgage on items such as Maserati car payments, according to the 2017 indictment. A judge who reviewed their finances appointed them taxpayer-funded attorneys, and their expensive home later went into foreclosure.
The trial, highlighting their downfall, was in its 13th day Monday when a new attorney stepped in to help represent Katherine Kealoha. The attorney is not being paid by the government, but by her family, said Earle Partington, the new addition to her legal team.
Considered the largest corruption scandal in Hawaii, Katherine and Louis Kealoha are on trial along with current and former officers accused of abusing police resources to conspire to frame Katherine Kealoha’s uncle for the theft of their home mailbox to silence and discredit him.
The defendants began presenting their cases Monday. The now-retired chief rested without testifying after his lawyer called one witness. It’s not clear if his wife, who resigned from the prosecutor’s office, plans to testify.
The ongoing trial focuses on the mailbox framing conspiracy. The Kealohas face a second trial for identity theft and bank fraud. Katherine Kealoha is accused of bilking relatives, banks and children whose trusts she controlled. She also faces a third trial with her pain physician brother on charges of dealing opioids.
Partington said Kealoha contacted him a few days ago asking him for help, while the trial was on a weeklong break. He said he joined her defense team on Saturday.
Joining mid-trial has been “extremely difficult” and “mind-numbing,” he said. His role will be more of an adviser, he said, and he will be handling legal issues such as helping with jury instructions and a possible appeal.
Prosecutors say they staged a 2013 mailbox theft to discredit Gerard Puana in a lawsuit he and his mother filed against Katherine Kealoha. Puana and Kealoha’s grandmother alleged she stole money from them in a reverse mortgage scheme. Puana testified that his niece came up with the idea to get a reverse mortgage on his mother’s home to help him buy a condo. Kealoha purchased the condo but never paid off the reverse mortgage as promised, he said. Prosecutors say the couple planned to use the money to consolidate their massive debt and then pay off the reverse mortgage.
Instead, they spent the money on personal items such as Maserati and Mercedes Benz car payments, more than $2,000 for Elton John concert tickets and more than $23,000 to a Waikiki resort for a banquet when Louis Kealoha became police chief, Laurice Otsuka, an FBI forensic accountant testified Monday.
It took six months to drain about $150,000 from Kealoha’s grandmother’s reverse mortgage funds, Otsuka said.
