Kealoha foreclosure moves to federal court

Federal prosecutors say the lender cannot foreclose on the Hawaii Kai home of former Honolulu Police Chief Louis Kealoha and his deputy prosecutor wife, Katherine Kealoha, without their say-so because the home has been identified for forfeiture to the government.

Hawaii Central Federal Credit Union sued for foreclosure in state court last month claiming that the Kealohas are in default and owe more than $1 million in principal, accumulated late fees and interest.

Prosecutors filed legal papers Tuesday to move the foreclosure to federal court.

The Kealohas’ civil lawyer, Kevin Sumida, is asking the court to lift a block the government placed on the home so the Kealohas can sell it and pay him the money they owe him. A hearing on the request is scheduled for later this month.

The government put a block on the home after a federal grand jury returned an indictment in October accusing the Kealohas of defrauding financial institutions by knowingly submitting false documents and loan applications, including ones involving the home.

The indictment also charges the Kealohas and four former members of the Honolulu Police Department’s elite Criminal Intelligence Unit with framing Katherine Kealoha’s uncle with stealing the Kealohas’ mailbox and lying to cover up their actions.