What’s described as the biggest corruption case in Hawaii’s history started with a stolen mailbox and unspooled into a seven-year legal saga that concluded Monday with a once-esteemed Honolulu power couple sentenced to prison on conspiracy, bank fraud and other charges.
For now-retired federal public defender Alexander Silvert, it began in 2013 with a low-level crime and a familiar plea. Gerard Puana, accused of stealing his niece’s mailbox, said he was being framed. Silvert was appointed to the case, which he quickly sized up as a loser: Puana’s accusers were his popular and powerful niece, Katherine Kealoha, the third-ranking boss in the Honolulu prosecutor’s office, and her husband, Louis, the Honolulu police chief.
They claimed to have Puana on video committing the crime.
“I took the case assuming he was guilty but that I could help him avoid being over-sentenced,” Silvert told The Washington Post. Still, he said, he found the case unusual from the start: “In my entire career, I’ve never heard of a charge of a mailbox theft going to federal court.”
Silvert, and later federal investigators, would reveal how the Kealohas leveraged their powerful roles in law enforcement to frame Puana and cover up an array of schemes that fueled a lavish lifestyle at the expense of those who trusted them most.
Among the victims was Katherine’s 100-year-old grandmother: Florence Puana lost her home of 58 years after Katherine pocketed the money from a reverse mortgage. Before Florence Puana died in February, she wrote a letter to Katherine that was read Monday in court during sentencing.
“I trusted you,” she had written. “Yet you betrayed me.”
Katherine oversaw investments for those in her orbit, including her uncle and grandmother. She was in charge of trust funds for the surviving 10- and 12-year-old children of a family friend who died. But under her control, the money never grew – it disappeared.
Court records show the Kealohas’ expenses included Maserati and Mercedes car payments, a trip to Disneyland and $2,000 concert tickets to see Elton John. In 2009, Katherine racked up a $23,976 brunch tab at the Sheraton Waikiki to fete Louis after he was appointed police chief.
To conceal the fraud, Katherine invented a notary and faked witness signatures on financial documents; she filed bogus identity-theft claims to deflect negative questions about the couple’s credit history; she had statements for the reverse mortgage diverted to a P.O. box that only she could access.
The Puanas learned of the fraud only because of an administrative error: When the mortgage debt was sold to a new company several years later, the new statements were mistakenly sent to the property address instead of the P.O. box.
Florence Puana, by then in her 90s, realized that Katherine hadn’t paid off any of the outstanding balance as promised and that she was about to lose her home. Alleging elder and financial abuse, the Puanas filed a civil suit against Katherine.
Initially, the lawsuit against the Kealohas didn’t raise eyebrows in the community, where there was little appetite for seeing a prominent native Hawaiian couple disgraced.
“The community adored them, and they were very powerful people,” said Lynn Kawano, a reporter and anchor for KGMB/KHNL Hawaii News Now. “Not just because of their titles, but because of their family. Your family name goes a long way here.”
Kawano, a Hawaii native, told The Post that she faced criticism in the early days of covering the case. Some encouraged her to drop the story altogether and told her and her husband to “watch their backs.”
By 2016, two years after the mailbox arrest, the corruption allegations were gaining traction but the community still clung to doubts.
“People told me, ‘No way is this about a mailbox,’ ” Kawano said. The couple’s supporters found ways to rationalize how even top-ranking public employees could afford luxury cars, Rolex watches and a home in the tony suburb of Kahala, considered the “Beverly Hills of Honolulu.”
A local lawyer who estimated his income as being three times that of the Kealohas encouraged Kawano to keep digging, she recalled. “He told me, ‘I can’t even afford to live in that neighborhood.’ “
Facing pressure from the civil suit, the Kealohas devised a countermeasure to intimidate and discredit Katherine’s uncle, Silvert said.
The couple told police that Gerard Puana stole their mailbox, worth $380 – a value that would bump petty theft to a felony charge. Tying in the U.S. mail would make it a federal case, while their surveillance video (later revealed as doctored) would easily lock a conviction against him.
A felony conviction might silence Puana, or at least provide ammunition to weaken and discredit him as a witness in the civil trial, Silvert said.
But the plan started to fall apart under basic fact-checking. The suspect in the grainy surveillance footage looked younger and smaller than Puana. Appraisers and investigators found the Kealohas had lied about the type of mailbox they owned and falsely claimed one of higher value in an apparent effort to crack the $300 threshold for felony theft charges.
Silvert combed through old photos from Google Maps to prove that the mailbox that was actually stolen in the setup was a different brand entirely, and cost less than $200. Plus, he couldn’t understand why that crime would attract so much attention from Honolulu police.
“There was a homicide detective assigned to investigate a petty mailbox theft,” Silvert said. Eventually, he was able to prove that every police report – from the Kealohas’ initial 911 call to logs the assigned officers kept – had been falsified.
At Puana’s theft trial in 2014, the U.S. attorneys in Honolulu planned to cast him as an embittered schemer in contrast to the Kealohas’ status as pillars of the community. To undercut that narrative, Silvert opened with what he calls the “Rue-the-day letter.”
“HOW DARE ANYONE make such MALICIOUS and FALSE STATEMENTS against me!” read a letter Katherine wrote in response to her grandmother’s civil suit. “They will rue the day that they decided to state these TWISTED LIES!”
“We were well-prepared for trial thinking we could convince the jury,” Silvert said. But in the second hour of the trial, the unthinkable happened.
On the stand, Louis introduced prohibited testimony, which caused a mistrial. Silvert and other observers say they believe he did so purposely.
“The chief has a master’s degree in criminal justice and years of experience. He trains rookie cops on how to testify,” Silvert said.
Kawano, the reporter, was sitting behind Silvert in the courtroom and recalled how the federal public defender “threw his arms up and slammed both fists on the table.”
Silvert remembers it the same way. Furious, he soon made the unusual move to reach out to the opposition, the FBI, in hopes that if Puana’s case didn’t get retried, federal investigators could still expose the Kealohas.
“When you meet with the FBI, who I cross-examine and call liars all the time, you can imagine it was a very difficult meeting,” Silvert said. But the investigation eventually gained traction.
Honolulu’s U.S. attorney’s office recused itself, having prosecuted Puana’s case. Federal prosecutors from the Southern District of California stepped in and spent five years investigating before securing convictions and guilty pleas from the Kealohas last year, along with conspiracy and obstruction convictions against two former police officers in the Honolulu Police Department’s Criminal Intelligence Unit acting at Louis’ behest.
The Kealohas’ unraveling has been met with sadness and anger. Kawano said it was a blow to Honolulu’s Hawaiian community but also a hit to the taxpayers, who will shoulder the “millions” in city and county settlements to the couple’s victims.
“There’s a lot of anger now – how could this have happened? Why was there no oversight?” she said.
Michael Wheat, the special prosecutor from the California U.S. attorney’s office, said the Kealohas’ situation was unique.
“I don’t think you’d see again where the police department and the prosecutor’s office is literally the same family,” he told The Post.
The Kealohas are no longer the family they once were, with some members now estranged – including Katherine and Louis. After their 2019 convictions, Louis filed for divorce.