Corruption claims, mailbox send Hawaii power couple to trial

He was Honolulu's Rolex-wearing police chief, an avid surfer who chatted with beat cops in Pidgin, Hawaii's creole language. She was his deputy city prosecutor wife, who drove a Maserati and led an elite unit targeting career criminals while showering lunches on colleagues, friends and even the workers renovating her home.

For years, Louis and Katherine Kealoha were the city's law enforcement power couple, enjoying widespread respect as Native Hawaiian role models who hailed from humble, blue-collar roots and rose to the top thanks to decades of hard work. They lived in a swanky house near an exclusive country club in the city's Kahala neighbourhood, sometimes called Honolulu's Beverly Hills.

Then the white mailbox perched on a pedestal in front of their house disappeared, triggering a drawn-out disintegration of the couple's reputation amid a twisted tale of allegations involving fraud, illegal drugs and an attempt to frame Katherine Kealoha's uncle for stealing the mailbox. Federal authorities started investigating the two in 2015, and both stepped down from their jobs as the probe deepened. Now the Kealohas are heading to trial next month on federal charges of conspiracy, obstruction and false statements to a federal officer involving the mailbox case. The obstruction charge carries the heftiest sentence — up to 20 years in prison.

Katherine Kealoha, 48, and her physician brother, Rudolph Puana, are also expected to be tried later on separate allegations that the siblings bartered opioids for cocaine. The Kealohas and Puana have denied all of the charges. The case has morphed into a scandal characterized as the largest corruption prosecution in Hawaii history — and prosecutors say greed was the couple's motive.

They allege the Kealohas were so desperate to fund the lavish lifestyle that they swindled more than a half-million dollars from banks, relatives and children whose trust funds Katherine Kealoha controlled when she was a lawyer in private practice. Prosecutors say Katherine Kealoha's uncle and her now-99-year-old grandmother threatened to expose the fraud, so she devised a scheme to silence them by attempting to have her grandmother declared incapacitated and conspiring with her 58-year-old husband and members of a special police unit hand-picked by him to frame the uncle, Gerard Puana, for stealing the Kealohas' mailbox.

Honolulu police arrested the uncle on a felony charge of mailbox theft in 2013. Puana's lawyer, federal public defender Alexander Silvert, was initially sceptical about his client's claim that he was being set up in an attempt to discredit him over a lawsuit he had filed claiming Katherine Kealoha used a reverse mortgage scheme to steal money from him and his mother, Florence Puana. The Kealohas reported the mailbox as a Gaines model valued at $380 — but Silvert said he and his investigators learned it was actually made by a different manufacturer and cost only $180. The difference in value allowed Puana to be charged with a felony instead of a misdemeanour.

"When I realized they were lying about the make and model of the mailbox, then I was 'OK, there's something going on,'" Silvert said. Federal prosecutors said in court documents filed in the upcoming case against the Kealohas that the couple concocted the mailbox scheme to silence her uncle.

"Their reputations, careers and livelihood were seriously threatened by what the Puanas' lawsuit could bring to light. So they moved to silence and imprison him," prosecutors said. "Public embarrassment was not something the Kealohas could afford. They needed to maintain their carefully crafted public image." Puana's mailbox theft case ended in a mistrial in 2014.

In 2015, a jury sided with Katherine Kealoha in the civil lawsuit her grandmother and uncle lodged against her. Federal investigators stepped in — eventually revealing allegations against Katherine Kealoha, including stealing trust funds from children, showering money she bilked on a firefighter lover and the alleged drug-dealing with her brother. They allege she even invented an alias — Alison Lee Wong — "to dodge scrutiny, forge documents, secure state Senate confirmation, and more."

In 2017, she and her husband were indicted on the federal criminal charges. They have since lost their expensive home to foreclosure proceedings and have taxpayer-funded, court-appointed defence attorneys. 

(With inputs from agencies.)