Federal prosecutors have offered to reduce their recommendation for the length of Katherine Kealoha’s imprisonment by a few years and will dismiss multiple charges against her if she agrees to plead guilty to two felony counts in a bank fraud prosecution and a misdemeanor charge in a separate drug-related case, according to one of her attorneys.
Kealoha, a former deputy prosecutor, also would have to agree to cooperate with federal authorities in their continuing public corruption probe and to pay restitution of nearly $290,000 to her grandmother, Florence Puana, and her uncle , Gerard Puana, attorney Earle Partington said Wednesday.
The cooperation provision suggests federal investigators “are going higher up the food chain,” but the government gave no hint about who is being targeted, Partington said.
He panned the overall offer, which was negotiated over the past several weeks and finalized Wednesday. “This is a terrible deal,” Partington said.
A federal jury in June found Kealoha, her husband, retired police Chief Louis Kealoha guilty of conspiracy and obstruction of justice.
The Kealohas used their law enforcement positions to conspire to frame Gerard Puana for the 2013 theft of the couple’s Kahala mailbox, a federal crime, and then lied to federal investigators about their actions, the jury found.
Katherine and Louis Kealoha are
facing a second trial on bank fraud charges in January, and Katherine Kealoha is scheduled to go on trial a third time in May on drug-related charges.
Katherine Kealoha has asked for a new trial in the conspiracy and obstruction case. If she wins her motion, the government under the proposed deal could use any information it obtains from Katherine
Kealoha against her in the new retrial, Partington said.
The deal also would mean that Katherine Kealoha effectively would have to admit that she perjured herself in a 2015 civil trial against the Puanas that resulted in a judgment for Katherine Kealoha of more than $650,000, and that admission would torpedo the judgment, Partington added.
Katherine Kealoha has until today to decide whether to accept the government’s offer, Partington said.
Partington represents Katherine Kealoha in the conspiracy case and is seeking a new trial on grounds that she received ineffective counsel. Partington did not join her defense team until the latter part of the trial.
As part of the federal government’s wide-reaching public
corruption investigation, the Kealohas also were charged with eight counts of bank fraud for allegedly providing false information to financial institutions in a scheme to misappropriate money to fund their lavish lifestyle, according to court records.
Katherine Kealoha also was charged with four counts of aggravated identity theft and two counts of obstruction. She was accused of providing false and misleading information to an attorney and the state court to siphon nearly $150,000 from the trust accounts she oversaw for two minors.
The Kealohas have pleaded not guilty in that case.
Federal prosecutors also charged Katherine Kealoha and her brother, Dr. Rudolph Puana, with conspiracy and drug-related charges for allegedly distributing powerful pain killers and an anti-anxiety drug.
They have pleaded not guilty.
If Katherine agrees to the plea deal, it would resolve those cases for her, with all but the three charges against her dismissed, according to Partington, and she would be sentenced for all three cases together.
Rather than the 11 to 14 years incarceration recommended in a pre-sentencing report for just the June convictions, prosecutors would recommend a sentence of eight to 11 years for all three cases, Partington said.
The actual sentence would be up to U.S. District Chief Judge J. Michael Seabright, who has presided over the cases.
“In terms of getting out of prison (earlier), it’s a good agreement,” but that benefit is far outweighed by the downsides of the proposed deal,
Gary Singh, Katherine’s court-appointed attorney for the two upcoming criminal cases, declined comment, citing instructions from his client not to speak to the media.
The federal government also has been negotiating a plea deal with Louis Kealoha, but those talks have been conducted separately, Partington said. Louis Kealoha’s attorney could not be reached for comment Wednesday.
Just a day before Katherine Kealoha was presented with the government’s proposed deal, Louis Kealoha filed for divorce in state court. He cited a marriage that was irretrievably broken.
The Kealohas are scheduled to be sentenced in the conspiracy case on Oct. 31.
A plea deal typically helps at sentencing because the defendants would get credit for taking responsibility for their actions.