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Kealoha indictments have roots in family fight over money

  • STAR-ADVERTISER FILE PHOTO

    Florence Puana, left, and Gerard Puana on Feb. 12, 2015, listened to the verdict in a suit against Katherine Kealoha. The civil suit pitted the Puanas and Kealoha over money derived from a reverse mortgage on Florence Puana’s home. The Puanas were found liable by the jury for more than $658,000 to be paid put to Kealoha.

Deputy Prosecutor Katherine Kealoha was embroiled in a bitter money dispute with her uncle Gerard Puana and grandmother Florence Puana when she reported to Honolulu police in June 2013 that her uncle had stolen the mailbox in front of her Kahala home.

The Puanas filed a state civil lawsuit against Kealoha in March 2013 over the proceeds of a reverse mortgage Kealoha had arranged on her grandmother’s Maunalani Heights home and $70,000 in cash her uncle claimed he gave his niece to invest and for safekeeping.

According to the lawsuit, Kealoha asked her then-90-year-old grandmother for power of attorney in 2009 so she could arrange the reverse mortgage. Florence Puana wanted the money from the reverse mortgage to help her son, Gerard Puana, purchase a Salt Lake condominium. The Puanas claimed that Kealoha told them the money left over from the purchase of the condominium would be used to refinance and pay off the reverse mortgage.

After closing costs and fees, the grandmother received $513,474 from the reverse mortgage in October 2009. The money went into a joint bank account of Kealoha and her grandmother. After a $360,514 withdrawal for the purchase of the condominium there should have been roughly $150,000 left in the account. But by April 2010 there was only $365 left in the account.

According bank records, Kealoha withdrew or spent the rest of the money on items listed in Thursday’s indictment including for a breakfast gathering for husband’s police chief induction in January 2010. He had been sworn in as chief in November 2009.

Gerard Puana claimed that he gave his niece $40,000 cash to be part of an investment hui and $30,000 cash for safekeeping. He said Kealoha gave him $600 every month starting November 2007 as a return on his investment, which later increased to $800 then stopped in October 2009.

At trial in February 2015, Kealoha said she spent the money left over from the reverse mortgage because she had fronted her own money for the purchase of the condominium. She also denied that her uncle handed her $70,000 in cash and said the money she gave him monthly from November 2007 to October 2009 was “courtesy money” for handyman jobs he did when she and her husband were renovating their Kahala home.

The jury sided with Kealoha, in large part over her uncle’s credibility, and ordered the Puanas to pay Kealoha $658,787 for her attorney fees, punitive damages and mental anguish. Kealoha’s lawyer had grilled Gerard Puana over several days for proof of his claims that he gave Kealoha $70,000 in cash. Puana said he trusted his niece and did not require her to give him a receipt for the money.

Puana’s trial in federal court for allegedly stealing the Kealoha’s mailbox ended in mistrial in December 2014 after less than a day of testimony when Louis Kealoha made an unsolicited statement about Puana’s criminal history in front of the jury.

The U.S. Attorney later dismissed the case after Puana’s lawyer First Assistant Federal Public Defender Alexander Silvert presented to prosecutors what he said was evidence that police had framed his client to discredit him in Puana’s civil dispute with Katherine Kealoha. Silvert said the FBI started investigating the case in January 2015.

Silvert said the conspiracy detailed in Thursday’s indictment might not have been uncovered if the alleged mailbox theft was prosecuted in state court as the Kealohas intended.

“But for the case coming into federal court and but for my office’s ability to actually spend the money and time and resources to investigate it, none of this would have been found, not even an inkling. And all we did was start the ball rolling,” he said.

According to Thursday’s indictment and prior court documents, the Honolulu Police Department’s elite Criminal Intelligence Unit investigated the case then handed it over to the department’s Criminal Investigation Division for it to be investigated by homicide detectives.

The case landed in the lap of Detective Dru Akagi, who took Katherine Kealoha’s statement identifying the person in the video who took the mailbox as her uncle. Akagi then turned the case over to the U.S. Postal Inspection Service, his lawyer Michael Green said.

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