A federal judge on Thursday ordered two trials for former Honolulu Police Chief Louis Kealoha and his wife Katherine: one to address allegations of bank fraud, another to deal with a complicated conspiracy involving the Kealohas and members of an elite police unit.
U.S. District Court Judge J. Michael Seabright said the government had not adequately shown the two sets of allegations were related enough to be joined into one trial. The ruling was a victory for defendants who wanted the matters separated into two or more trials.
Seabright said joining the matters would be a “reversible error” likely to be overturned by the 9th U.S. Circuit Court of Appeals.
“The 9th Circuit in a flash would reverse what you’re asking me to do,” Seabright told the assistant U.S. attorneys.
The trial on conspiracy charges would also include as defendants four members of a Honolulu Police Department special unit who have been charged with taking part in an elaborate scheme to cover up misdeeds.
In addition to the Kealohas, the indictment names Derek Wayne Hahn, Minh-Hung “Bobby” Nguyen, Gordon Shiraishi and Daniel Sellers, who were members of HPD’s Criminal Intelligence Unit, which reported directly to the police chief.
The government’s allegations against the Kealohas fall into two general categories.
The first involves a series of financial crimes, including allegations that the couple committed bank fraud by lying on loan applications. Prosecutors also have accused Katherine Kealoha of stealing money from trust accounts belonging to Ransen and Ariana Taito, for whom she was supposed to be serving as a guardian.
The second category involves a scheme in which the Kealohas allegedly used officers from a special secret police unit to retaliate against Katherine Kealoha’s uncle, Gerard Puana, who had accused Katherine Kealoha of stealing money from him and Katherine Kealoha’s grandmother.
Specifically, the government argues the Kealohas and the officers framed Puana for stealing a mailbox from their home and fabricated evidence against him.
Compared to the mailbox conspiracy, the bank fraud and trust account allegations are generally viewed as more straighforward charges to prosecute that rest largely on documentary evidence like bank statements and loan applications.
Adding to the evidence, Ransen Taito has pleaded guilty to lying to the federal grand jury to cover up Katherine Kealoha’s theft of his trust money.
Rules of criminal procedure generally allow defendants to be tried together if the defendants all acted as part of the same act or series of related acts. Even if there’s risk that a jury might find a particular defendant guilty merely because of association with others, the idea is that judges can mitigate the risk with clear instructions to the jury on how to apply the facts of the case to the law.
Still, judges must balance the general desire for efficiency, which the law favors, with the constitutional right to a fair trial.
While the defendants wanted separate trials – generally to separate the mailbox count from the financial counts – prosecutors sought to keep all of the counts together.
The federal indictment framed all of the alleged offenses as part of an overarching scheme by the Kealohas to improperly use their authority to cover up their precarious finances and purported malfeasance involving Katherine Kealoha’s relatives and the Taitos’ trust accounts.
But Seabright didn’t buy the government’s argument.
He said that, according to the government’s overarching argument, the theory was merely that “the Kealohas were greedy.” That wasn’t enough to justify joining all of the counts, he said. His ruling means the court will hold a separate trial on the bank fraud charges and a separate trial on the conspiracy counts centered on the mailbox theft.
Which trial the trust fund theft allegations will end up in was not clear. The government’s amended indictment specifically links Hahn, Nguyen and Shiraishi to the counts involving Ransen Taito’s alleged misstatements to the grand jury, suggesting the officers were involved in a conspiracy causing Taito to lie. Seabright technically ordered the trust counts included in the conspiracy trial.
However, Seabright also expressed skepticism about the government’s decision to include Hahn, Nguyen and Shiraishi in the counts involving the alleged cover-up. He told the assistant U.S. attorneys, Michael Wheat and Eric Best, to “take a hard look” at those counts.
Despite the order for two trials, it wasn’t a complete victory for the defendants.
Sellers, for example, has been charged with only two counts — of lying to a grand jury and the FBI — and he had asked for a completely separate trial. Seabright denied that request.
Seabright also denied Katherine Kealoha’s request to remove from the indictment references to Alison Lee Wong, an alias Katherine Kealoha allegedly used. According to the government, Wong was a fictional assistant Kealoha created to send emails used to cover up Kealoha’s misdeeds.
Seabright said the indictment wouldn’t be given to the jury, so references to Wong in the indictment would not damage Kealoha.
Whether the jury would be able to hear about Kealoha’s alleged use of the fictional assistant, as part of the government’s case, is a separate issue that could be decided later, he ruled.
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