HONOLULU — The first question a special federal prosecutor asked a witness Wednesday in an ongoing Hawaii corruption trial: Did you take the mailbox at the home of a now-retired police chief and his wife?
“Absolutely not,” answered Gerard Puana.
U.S. prosecutors say framing Puana was key to a conspiracy by ex-Honolulu chief Louis Kealoha and his wife Katherine Kealoha, a former deputy city prosecutor. They’re on trial, along with current and former officers, accused of framing Puana to keep him from revealing a financial scheme that supported the couple’s lavish lifestyle.
The Kealohas have pleaded not guilty to charges including obstruction and conspiracy. They also face a bank fraud and identity theft trial, including allegations Katherine Kealoha bilked banks, relatives and children whose trusts she controlled. Kealoha and her pain doctor brother face a third trial for allegations they dealt opioids.
Puana said he trusted his niece, Katherine Kealoha, who is the daughter of his brother. He gave her money to invest and they were close: “It was like we were the best of friends,” he said, recalling his pet name for her was “Katster,” and that she called him “Uncle Gersters.”
He said he helped her father renovate the Kealohas’ home in Kahala, an upscale Honolulu neighborhood.
The condo Puana owned previously when his son was born was for sale, so he told his niece he wanted to buy it for sentimental reasons. He testified he couldn’t afford to do it on his own, so Kealoha proposed getting a reverse mortgage on his mother’s home to buy him the condo and consolidate the Kealohas’ debt, which federal prosecutors have described as massive.
Puana’s mother — Kealoha’s grandmother — initially didn’t go for the plan and was concerned it wouldn’t be fair to her eight other children, he recalled. But she agreed when Kealoha promised to pay off the mortgage and that it would be a secret between the three of them.
“We really respected her,” Puana said of his niece. “We trusted her wholeheartedly.”
Kealoha used the reverse mortgage funds to buy Puana his condo but never paid off her grandmother’s reverse mortgage, prosecutors said, and instead used the remaining money on personal expenses such as a banquet for her husband’s police chief induction ceremony, Maserati car payments and Elton John concert tickets.
Puana paid monthly mortgage and maintenance payments for the condo to Kealoha, he said.
Jurors on Tuesday watched a deposition of Kealoha’s grandmother, Florence Puana, 99, describing the reverse mortgage scheme that forced her to sell the family home her husband built. She wasn’t able to testify in person because of her failing health.
