When Louis and Katherine Kealoha were assigned publicly funded defense lawyers in November 2017 it was because a federal judge found they were too broke to afford their own attorneys.

At the time, U.S. District Court Judge J. Michael Seabright focused mostly on the mortgage for the Kealohas’ $1.3 million Hawaii Kai home.

7014 7014 Niumalu Loop Chief Kealoha house.
A buyer has offered to pay $1.3 million in cash for the Hawaii Kai home of former Honolulu police chief Louis Kealoha and his ex-prosecutor wife Katherine. Cory Lum/Civil Beat

Seabright said that after reviewing the Kealohas’ financial situation it appeared that the mortgage on the home ate up most of Louis Kealoha’s pension from the Honolulu Police Department, which is estimated to be around $150,000 a year plus benefits.

But now that the home is in foreclosure and a sale is pending to a new owner, federal prosecutors have asked if the Kealohas still deserve taxpayer-funded legal counsel.

The Kealohas are currently represented by Rustam Barbee and Cynthia Kagiwada.

In a motion filed Thursday, Assistant U.S. Attorney Colin McDonald pointed out that Seabright promised to revisit the matter in the event of a sale and end to the expensive mortgage payments.

McDonald also noted that the the home went into foreclosure in February 2018 because the Kealohas stopped paying their mortgage.

He now wants Seabright to consider whether the Kealohas can afford their own legal bills and if they should pay back some of the funds used to defend them.

The Kealohas are accused of framing Katherine’s uncle, Gerard Puana, for the theft of their mailbox as a means to cover up for their financial crimes, which included stealing from children, bilking Puana and his mother out of hundreds of thousands of dollars and bank fraud.

They were indicted in October 2017 along with four other Honolulu police officers with federal crimes for carrying out the mailbox scheme and lying to investigators while trying to cover it up. A fifth officer had already pleaded guilty in connection to the case.

Since then the federal investigation has expanded to include allegations that Katherine Kealoha and her younger brother, Rudolph Puana, were running a prescription drug trafficking ring.

Honolulu Prosecuting Attorney Keith Kaneshiro and city Corporation Counsel Donna Leong have also been named as targets of the ongoing federal investigation into public corruption and abuse of power.

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