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U.S. District Chief Judge J. Michael Seabright agreed Thursday to delay the sentencing of Katherine and Louis Kealoha for their conspiracy and obstruction convictions while settlement talks continue related to the couple’s upcoming trial on bank fraud charges and a later drug-related trial involving Katherine Kealoha and her brother.
Less than two hours before the delay came, a federal grand jury returned a superseding bank fraud indictment with new allegations that Kealoha told a credit union that she was dying in an effort to get a loan that would pay off a medical bill at her brother’s clinic and get treatment in New York.
Kealoha told the Hawaii Central Federal Credit Union that she was dying and that her last chance at surviving was to get a new line of credit to pay off the $7,940 balance at her brother’s Big Island clinic so her records could be released to a “doctor at the NYC Clinic,” according to the amended indictment.
The Kealohas are scheduled to go on trial Jan. 14 on charges of bank fraud and identity theft. Katherine Kealoha and her brother, Dr. Rudolph Puana, are scheduled to be tried May 5 on drug distribution charges.
All three prosecutions stem from an ongoing public corruption investigation that federal authorities began in 2015.
A federal jury found Kealoha, her husband and two former members of the Honolulu Police Department’s elite Criminal Intelligence Unit guilty in June on charges accusing them of conspiring to frame Kealoha’s uncle in the alleged theft of the Kealohas’ mailbox and of lying to investigators to cover up their actions.
Seabright agreed to push back the sentencing dates for the Kealohas, Derek Wayne Hahn and Minh-Hung “Bobby” Nguyen.
The new sentencing dates are Oct. 31 for the Kealohas and Nov. 4 for Hahn and Nguyen.
The delays were meant to give the Kealohas, their attorneys and prosecutors more time to discuss a possible settlement in the pending cases, which could affect the couple’s sentencing in the conspiracy case.
Gary Singh, Kealoha’s attorney for the two upcoming trials, declined to comment on the latest bank fraud allegations against his client. He said progress has been made in discussions with prosecutors but declined to elaborate.
An offer from the government is on the table, and Kealoha has until the end of the month to respond.
“There’s been movement,” Singh said of the talks.
Earle Partington, who represents Kealoha in the conspiracy case, was skeptical based on what the government is offering. “The question is whether they come back with something more reasonable,” he said.
Under the current offer, Kealoha would have to plead guilty to at least one count of each charge she faces in the remaining two cases, with the government not promising anything in return other than to essentially say, “‘Trust us, we’ll take care of you,’” Partington said. “It’s a weird plea agreement.”
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