Cloud of corruption looms with more indictments in Kealoha saga

Always Investigating

HONOLULU (KHON2) — Indictments of three former high-ranking city officials represent just the latest chapter in the Kealoha saga, which has loomed over the city in a cloud of corruption for years. Always Investigating examined the implications and fallout.

The first sign of trouble with the Kealohas was a family dispute over money. But as a mailbox setup unraveled, far more suspects and victims were ensnared. The feds have spent years rooting out alleged crimes and corruption.

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Katherine and Louis Kealoha falsely accused her uncle, Gerard Puana, of stealing their mailbox in 2013 during a fight over where her grandmother’s reverse mortgage money had gone. Puana was acquitted, but it was the tip of an iceberg the depths of which is still being figured out.

“It has been the feds that have had to come in and straighten out Hawaii’s mess,” said John Hart, a political analyst with Hawaii Pacific University. “And that’s a sad statement about our city and state government.”

Retired Honolulu Police Department officer Niall Silva pleaded guilty in 2016 to felony conspiracy for his role in the mailbox set-up. Hawaii firefighter Jesse Ebersole pleaded guilty in 2018 to lying to the grand jury. He claimed he had an affair with Katherine Kealoha and she told him to lie.

Former officers Derek Hahn and Minh-Hung “Bobby” Nguyen were convicted of conspiracy alongside the Kealohas in 2019.

Sgt. Daniel Sellers pleaded guilty in 2019 to a misdemeanor for disclosing personal information to Katherine Kealoha.

Another case is still pending involving Katherine’s brother Dr. Rudolph Puana and what the feds said is a painkiller drug distribution conspiracy.

Looming since 2019 is the fate of former prosecutor Keith Kaneshiro — Katherine’s old boss — who went on leave when he got a letter from the feds telling him he was the target of an investigation. Two deputies had gotten subject letters.

The latest allegations in the indictment about severance pay touched three people within the upper echelons of city government: Former City Managing Director Roy Amemiya, former Corporation Counsel Donna Leong and former police commission chairman Max Sword.

“All eyes now look towards former Mayor Kirk Caldwell, and the question will be since this has happened under his watch, what did he know and when did he know it?” Hart said. “A lot of people are going to present a frame that he was either complicit and/or incompetent. All scenarios aren’t good for someone who’s trying to run for governor.”

Caldwell referred us for comment to Lex Smith, an attorney who has worked on his campaigns.

Smith said in a statement: “Ms. Leong, Mr. Sword and Mr. Amemiya have significant experience in public service and the private sector. The city hired them based on that experience. It is important to remember Ms. Leong, Mr. Sword and Mr. Amemiya are innocent unless and until proven guilty, and I will be interested in the coming days and weeks to understand the charges that have been brought against them.”

Eric Seitz, an attorney who has represented victims of the Kealohas, said the indictments were not a surprise since it was widely known the three officials had been under investigation. But he said the details in the charging document are shocking.

“We did not have any idea of the degree to which these three people manipulated or are alleged to have manipulated funds in order to cover up what they were doing to pay off the chief to have him go away quietly,” Seitz said. “And it also raises some very serious questions as to why and at whose behest were they doing that?”

Victims in the schemes so far include Gerard Puana and Katherine’s grandmother Florence Puana, who was bilked out of her home. The Kealohas also were convicted for bank fraud in connection with raiding the trust fund of children whose father had died and Katherine was appointed to watch over the money.

Taxpayers got fleeced, too. One year ago, this month, a judge ordered Louis Kealoha to pay back the quarter-million-dollar settlement. Victims are still waiting to get their share of this and other restitution.

“Louis promised to pay it back if he were convicted,” Seitz said. “I don’t think they’re going to ever see any of that money.”

“The City obtained a default judgment on the case and subsequently filed a lien on his personal property in order to collect on the judgment,” city spokesperson Tim Sakahara told KHON2.

As to whether and when the last threads of this scandal will be tied up and if adequate safeguards are in place to prevent such conspiracies again:

“(Prosecutor Steve Alm) and (Mayor Rick) Blangiardi were elected as a result of dissatisfaction with the status quo, as a result of things like the Kealoha case,” Hart said. “But I think it’s a very reasonable question to ask the mayor: What are you doing to make sure this does not happen again?”

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Blangiardi said in a statement: “The City is troubled and saddened to learn of the indictment unsealed today charging former city officials Leong, Amemiya and Sword. The Administration recognizes the indictment contains allegations, not facts, and will monitor the matter closely. We are committed to ending public corruption and restoring faith in government.”

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