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MATTHEW G. WHITAKER
Acting Attorney General
ROBERT S. BREWER, JR.
United States Attorney
MICHAEL G. WHEAT, CBN 118598
ERIC J. BESTE, CBN 226089
JANAKI S. GANDHI, CBN 272246
COLIN M. MCDONALD, CBN 286561
Special Attorneys to the Attorney General
United States Attorney’s Office
880 Front Street, Room 6293
San Diego, CA 92101
Tel: 619-546-8437/6695/8817/9144
Email: michael.wheat@usdoj.gov

Attorneys for the United States

UNITED STATES DISTRICT COURT

DISTRICT OF HAWAII

Case No. 17-CR-00582-JMS

UNITED STATES OF AMERICA,
UNITED STATES’ MOTION IN
Plaintiff, LIMINE TO ADMIT EVIDENCE OF
v. MOTIVE TO FRAME GERARD
PUANA
KATHERINE KEALOHA, et al.,

Defendants.

I.

INTRODUCTION

The United States hereby moves in limine for an order admitting evidence of

a motive for framing Gerard Puana – namely, the Kealohas’ true (and dire) financial

situation and prior interrelated financial fraud. This evidence is relevant and critical
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for contextualizing the Kealohas’ actions in framing Gerard Puana for a crime he did

not commit. In short, Gerard and Florence Puana’s civil lawsuit posed a serious risk

of exposing the Kealohas’ interrelated financial misdeeds, which funded their make-

believe public image. The stakes were high: if the Puanas were not silenced, the

Kealohas’ entire house of cards could come crashing down.

Without the underlying evidence of financial distress and fraud, the United

States would be forced to tell a story missing its formative chapters. Indeed, that is

precisely what occurred at the prior civil trial involving Katherine Kealoha and

Gerard Puana. The civil jury knew nothing about the Kealohas’ true financial

situation. That allowed K. Kealoha to falsely portray herself as a gainfully employed

pillar of justice; a motiveless victim of a so-caricatured deadbeat criminal leech.1 As

explained below, that picture could not be further from the truth.

1
For example, here is a portion of K. Kealoha’s counsel’s opening statement:
She spent her entire life working for what she got. She worked two,
three jobs many times. When she was in high school she took the bus
at 4:30 every morning to go to Midpac. And, the only way she was able
to get up a little bit later was when she got a job and she was able to
buy a car. She paid her way through law school. . . . She now works as
a prosecutor basically in the division where she seeks justice for victims
of sex crimes. You’ll see that she’s helpful to her family and to her
friends to a fault. And that is what got her into trouble in this case.
On the other side of the equation is Gerard Puana, a man with a very
checkered past, a spotty work history, the youngest of nine children, . .
. for years receiving disability income, drug problem, living with his
mother 50 years old constantly borrowing from his mother[.]
Exhibit 1 at 4-5.
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Although this Court previously severed the charges associated with some of

these financial misdeeds, the evidence of the Kealohas’ true financial situation and

prior fraud is nonetheless admissible at this trial. This is because such evidence is

(1) in part, direct proof of the charged conspiracy that was designed to discredit

Gerard Puana; (2) inextricably intertwined with other evidence of that conspiracy;

and (3) evidence of the defendants’ motive, knowledge, and absence of mistake

under Federal Rule of Evidence 404(b).

II.

RELEVANT BACKGROUND

There are three primary segments of prior financial misfeasance: stealing from

Ransen Taito and his sister (A.T.); stealing from Gerard Puana and Florence Puana;

and defrauding multiple financial institutions. These segments all occurred

simultaneously. Beyond overlapping in time, each segment directly collides with the

others: K. Kealoha took money belonging to the Taitos and gave it to Gerard; she

took money from Florence and gave it to Ransen; the Kealohas used the Taitos’

money to consummate their bank fraud; and K. Kealoha wielded her fake persona,

“Alison Lee Wong,” to help deceive her way through all three schemes. The

Kealohas’ web of lies were inextricably linked. That is why they so viciously

targeted Gerard Puana and Florence Puana, two of the only people capable of

revealing the truth.

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1. K. Kealoha, as guardian, steals more than $140,000 from two

children
In 2003, a medical malpractice lawsuit settled for $1.25 million dollars. As

part of that settlement, the Hawaii state court appointed K. Kealoha as trustee for

two minor children (Ransen Taito and A.T., then ages 11 and 9). The state court

ordered that individual trust accounts be established for the children’s shares of the

settlement ($83,884 each). According to the court order, K. Kealoha and James

Bickerton—her co-counsel on the matter—were both required to authorize all

disbursements from the trust accounts. Instead, K. Kealoha omitted Bickerton and

his firm from the disbursement process entirely. She instead opened individual trust

accounts in her name alone as trustee, with the children named as beneficiaries.

In 2011, once Ransen turned 18, the Bickerton firm, unaware of the deception,

contacted K. Kealoha about closing the guardianship. For the next nine months or

so, K. Kealoha concealed from Bickerton the truth about the children’s trust

accounts. In one email from September 2011, Bickerton wrote, “It has been a while

since I asked for the authorizations to allow me to get info from the bank for both

the Ransen acct and the [A.T.] account. What is the hold up? You are making me

nervous.” Four weeks later, K. Kealoha responded, “I’m not sure how much exactly

you were told but I have been out on medical leave.” K. Kealoha further stated she

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“plan[ned] on meeting with Alison [Lee Wong]2 on Thursday morning to go over

the documents that Ransen dropped off[.]”

Bickerton responded less than an hour later, again indicating he “need[ed]

authorization for the bank to show me all records on the account that I was supposed

to be a signatory on. . . . Can you help me expedite that.” After receiving no response,

on September 30, 2011, Bickerton sent a followup message:

If I don’t get a signed authorization by October 4, I will have to

conclude that there is a real problem there and bring it to the attention
of the Court. I was supposed to be a signatory on that account with full
access to the information. That is what the court order required. You
opened it without me, contrary to the court order. Now that I know that
and further that I am not being told simple info about the account, I
have no choice but to advise the court. I do not want to be [i]n violation
of the court order and must protect the record even if Ransen now has
the funds. And of course, if he does not have the funds I need to find
out whether he ever got them and if not why not.
In May 2012, after still not receiving the required information from K.

Kealoha, Bickerton advised her: “I need to hear from the two children directly that

2
As alleged in the indictment, Alison Lee Wong is not a real person; that is one
of K. Kealoha’s aliases. During K. Kealoha’s back and forth with Bickerton,
“Wong,” masquerading as a legal assistant—but really K. Kealoha in disguise—e-
mailed Bickerton to seek to assure him that the guardianship accounts were being
taken care of.
Notably, in 2008, when K. Kealoha was being considered for appointment to
the Director of Hawaii’s Office of Environmental Quality Control, “Alison L.Y.F.
Wong” submitted an e-mail in support of K. Kealoha to the Senate’s Committee on
Energy and Environment (stating she had known K. Kealoha “for over nine years”).
This fraudulent letter was similar in content, style, and form to other conspicuous
recommendation letters allegedly submitted by Gerard Puana, Maile Simpson (K.
Kealoha’s niece), and Co-defendant Minh-Hung “Bobby” Nguyen (Maile’s then
husband).
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they have been paid in full and the amounts they received. Please follow up on this

promptly. If I don’t hear back from you this week, I will assume the worst (that the

children did not get their money) and proceed accordingly.” (parenthesis in original).

Bickerton’s fears of the “worst” were true. Based on available records (from

2009 onwards), K. Kealoha made numerous withdrawals from the trust accounts and

ultimately depleted both accounts (in total, stealing more than $140,000):

Once the federal grand jury in this case began investigating the Taito facts, K.

Kealoha manipulated the Taitos into providing false testimony before the grand jury,

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Superseding Indictment (“SSI”) ¶¶ 37(aaa), (bbb), (ccc), and directed them to sign

false and misleading documents to support their false testimony, id. ¶ 37(ddd).3

2. During this same time period, K. Kealoha steals from Gerard

Puana and Florence Puana

Between 2007 and 2009, Gerard Puana entrusted K. Kealoha with $70,000

cash, which was to be placed in an investment hui. K. Kealoha instead maintained

control of those funds. She withdrew Puana’s cash monthly from her account, which

she then paid to Puana and fraudulently characterized as his “return on investment.”

K. Kealoha later gave Puana a debit card on the account, and instructed him he could

withdraw certain amounts from the account each month. Ultimately, Puana was able

to withdraw around $23,000 of his $70,000; the Kealohas spent his remaining funds.

The Kealohas’ defrauding of the Puanas did not end there. In 2009, Florence

Puana—K. Kealoha’s grandmother, now 99 years old—desired additional funds in

order to help Gerard purchase a condominium. K. Kealoha suggested that Florence

3
Bickerton’s attempts to discover the truth about the Taitos was stymied. In
June 2012, Bickerton sent a letter to the Hawaii State Bar Association’s Office of
the Disciplinary Counsel (ODC), asking for assistance in discharging his duties to
the minor children. He explained to ODC that he wanted to communicate directly
with the minors to determine whether they received the money. Bickerton also left
messages for Ransen, but he did not receive a response and began to believe that
Ransen had been told not to talk to Bickerton.
Bickerton further explained in his letter to ODC that he was “not making a
complaint yet, as there would be no malfeasance, i.e., if they got the money,” then
the complaint was unnecessary. However, Bickerton thought ODC should look into
the matter. A representative of ODC responded by saying, “[w]e are filing this
material with no further action on our part at this time. ODC cannot practice law,
offer legal advice, or assist members of the bar with legal issues.”
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obtain a reverse mortgage on Florence’s home. That mortgage funded in October

2009, totaling approximately $513,000. K. Kealoha steered those funds into a newly-

formed bank account held by K. Kealoha and Florence Puana at the Bank of Hawaii

(“BOH 1502”). Thereafter, $360,439 of the reverse mortgage proceeds went towards

the condominium purchase. K. Kealoha had otherwise promised to make the

necessary payments on the reverse mortgage. That did not happen. Instead, the

Kealohas used the funds in the joint account to pay for various personal expenses,

including:

Example of Payments from BOH 15024 Amount

Sheraton Waikiki – Police Chief Induction Brunch for L. Kealoha (26,394.80)
5

Car Payments for Mercedes Benz and Maserati (10,663.58)

HVAC Installation at Kealoha home (7,800.00)
6
Payment to realtor (7,000.00)
Insurance Payments (5,846.00)
Travel Expenses (3,596.12)
Elton John Concert Tickets (2,161.70)
Cashier’s check payable to Jesse Ebersole 7
(1,387.12)

4
A more detailed list of purchases is contained in the Superseding Indictment,
ECF No. 164 at 13-14.
5
L. Kealoha was sworn in as HPD Chief of Police on November 25, 2009.
6
Following the condominium purchase, the realtor initially gave K. Kealoha
the bulk of the realtor’s commission. But, according to the realtor, K. Kealoha later
returned the commission, insisting that she did not want one penny of her
grandmother’s money. That seemed like a kind thing for a granddaughter to do. It
was not: bank records show that the money K. Kealoha sent back to the realtor was
in fact the grandmother’s money from the joint reverse mortgage account. And the
money from the realtor went directly into K. Kealoha’s personal account.
7
Ebersole has admitted K. Kealoha conspired with him to lie to the federal
grand jury. See, e.g., CR No. 18CR0094-JMS.
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Paper Roses (Stationary) (1,292.83)

Hawaiian Airlines (1,157.48)

Additionally, as part of the condominium purchase, K. Kealoha created—

without Gerard’s knowledge—a living trust document in Gerard’s name and made

herself trustee. At the close of escrow, the condominium was transferred to this trust

controlled by K. Kealoha. The first time Gerard saw this (alleged) trust document

was when K. Kealoha produced copies of it during the ensuing civil lawsuit (see

infra). Even beyond that conspicuous history, there is great reason to mistrust this

document: the alleged notary was Alison Lee Wong.8

3. The overlap between the Taitos and Puanas

There is direct overlap—both in time and activity—in K. Kealoha’s

mishandling and comingling of the Taito and Puana money. For instance:

 To fund Puana’s monthly “investment” withdrawals, on August 5, 2009, K.

Kealoha deposited $800 from Ransen Taito’s trust account into K. Kealoha’s
bank account, bringing the total balance of that account to $924.35; two days
later, Puana withdrew $800 from that account, believing this to be a “return
on investment.”
 In K. Kealoha’s effort to periodically placate the Taitos, on February 17, 2010,
using Florence Puana’s reverse mortgage funds in BOH 1502, K. Kealoha
obtained a cashier’s check (with a memo of “advance”) in the amount of
$2,600 addressed to Ransen Taito.
 Due to delays in funding the reverse mortgage, Puana had to agree to pay rent
to the seller to keep the escrow on the condominium alive (otherwise, the sale
could have fallen through, along with the reverse mortgage). So on March 20,
2009, K. Kealoha wrongfully pledged A.T.’s trust account as collateral to
obtain a savings secured loan in the amount of $20,000. That same day, K.

8
The State of Hawaii has no record of a notary by that name.
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Kealoha opened a new bank account into which she deposited $12,000 of the
loan proceeds. Thereafter, K. Kealoha used that money to pay some of the rent
required by escrow. The Kealohas then used the remaining money obtained
through the loan to pay their personal expenses.
 K. Kealoha pretended to have an assistant, or notary, named “Alison Lee
Wong” when attempting to deceive the Bickerton firm, and when fraudulently
creating Gerard’s alleged trust.
4. Supplemental income still required

Even while stealing hundreds of thousands of dollars from the Taitos and

Puanas, the Kealohas still required supplements to fund their lavish lifestyle.

Between 2004 and 2017, the Kealohas opened and controlled over thirty separate

financial accounts with various institutions. See SSI, ECF No. 164 at ¶ 12. Bad credit

followed. Thus, in order to continue securing loans, the Kealohas turned to fraud.

Between 2008 and 2016, they engaged in many fraudulent acts to convince lenders

to approve various financial applications.

As an example, the Kealohas: (1) falsely pledged as collateral, or claimed as

personal assets, the trust accounts owned by Ransen Taito and A.T. to secure three

separate loans, see SSI ¶¶ 45-68; (2) submitted a forged “Residential Lease

Agreement” in several loan applications to falsely inflate their monthly income, see

SSI ¶¶ 72-73, 78; (3) called upon Alison Lee Wong to intervene (via e-mail,

naturally) with a mortgage broker regarding derogatory credit associated with K.

Kealoha, see SSI ¶ 67; and (4) submitted a forged police report to secure four

separate loans, see SSI ¶¶ 80, 85, 90, 95. The bulk of these fraudulent acts occurred

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within the timeframe as the Taito/Puana facts (e.g., January 2008, March 2009, July

2010, July 2012, March 2013, etc.).

5. The Truth Starts Coming to Light

Eventually, Gerard Puana and Florence Puana started to uncover K. Kealoha’s

fraud. For instance, Gerard tried to get money back from her to purchase a car, but

K. Kealoha told him his money was “tied up in an investment.” Also, K. Kealoha

reneged on her promise to pay down the reverse mortgage, and, due to lack of

payment, the principle balance of the mortgage grew substantially.

Accordingly, on September 10, 2012, Florence wrote a letter to K. Kealoha,

stating, “As you know, I’ve tried again and again to talk to you by phone, offered to

meet with you at any time or place . . . . You have not been truthful and have turned

your back on me.” Florence wrote that she was “brokenhearted” to learn of the

ballooning balance on her home mortgage, and the fact that K. Kealoha had not

repaid money owed to her. Florence further wrote, “with a heavy heart . . . effective

immediately you are no longer my attorney and I don’t want you to represent me in

any matters, legal or otherwise concerning my property or my possessions[.]”

Florence also instructed K. Kealoha to return to her all of the documents pertaining

to the reverse mortgage and the purchase of the condominium, within a week. She

informed K. Kealoha that if she did not hear from her, Florence would need “to take

whatever steps necessary to legally correct this mess.”

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Five days later, K. Kealoha responded—harshly. She denied avoiding contact

with Florence and said she had always been available to talk about the situation. K.

Kealoha wrote the following (capitalizations included):

I HAVE NEVER, WILL NEVER OR WOULD NEVER BORROW,

TAKE OR EVEN REQUEST to BORROW ANY MONEY FROM
FLORENCE PUANA!
She continued,
I WILL seek the highest form of legal retribution against ANYONE
and EVERYONE who has written or verbally uttered those LIES about
me! They will rue the day that they decided to state these TWISTED
LIES!

Sadly, K. Kealoha kept this promise of retribution.

In early 2013, Florence and Gerard hired an attorney to assist in recovering

their stolen money. After a demand letter fell on deaf ears, on March 7, 2013,

Florence and Gerard filed a civil complaint alleging they had been defrauded by K.

Kealoha. They requested damages and relief ordering K. Kealoha to pay the full

amount of the reverse mortgage and the $70,000 entrusted to K. Kealoha by Gerard.

On April 29, 2013, K. Kealoha filed a counterclaim against Florence and

Gerard. She alleged that they misrepresented their need for a reverse mortgage and

Gerard’s ability to make monthly mortgage payments to K. Kealoha. She further

claimed their lawsuit against her was an “abuse of process,” designed to willfully

defraud and “publicly embarrass” her.

//

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6. The Solution: Silence the Truth-Teller

Public embarrassment was not something the Kealohas could afford. They

needed to maintain their carefully crafted public image. See, e.g., Ka Wai Ola, The

Chief and The Attorney (May 2010), available at https://www.law.hawaii.edu

/sites/www.law.hawaii.edu/files/downloads/KWO1005.pdf. But their image (and

future) was being seriously threatened by someone who knew the truth and was

capable of making it known: Gerard Puana.9 Moreover, as outlined above, the sliver

of truth Gerard knew about the Kealohas’ fraud was intertwined with it all: the

Taitos, Alison Lee Wong, Bickerton, and the bank fraud. Thus, if Gerard succeeded

in proving his saga, the Kealohas’ entire house of cards could quickly tumble.

So, true to K. Kealoha’s word, within nine months of her scathing letter, the

Kealohas settled on the “highest form of legal retribution” available for Gerard:

being locked away for a crime he did not commit. 10 Their desperate need to silence

9
The Taitos were children and oblivious to what had been done to them. And
Florence was over 95 years old. Still, K. Kealoha tried to employ legal means of
silencing her. In December 2014, K. Kealoha filed a petition for conservatorship for
Florence. See In the Matter of the Protective Arrangement of Florence Puana, An
Incapacitated Person, Conservatorship No. 14-1-0135 (Prob. Court, Haw., Jan. 22,
2015). The petition alleged that Florence was unable to manage her finances,
impliedly because of her age, and that Gerard had “manipulated” and “co-opted”
her. The petition was denied.
10
Notably, the alleged mailbox “theft” occurred just two days after K. Kealoha
was deposed in the civil lawsuit. Then, after Gerard had been wrongfully arrested
and federally charged with the mailbox theft, K. Kealoha used his false arrest to
discredit him in the civil lawsuit. For instance, in a motion in limine response in the
civil case, K. Kealoha pressed to admit the mailbox theft into evidence, stating
“evidence regarding the mailbox itself and its removal by Gerard Puana is directly
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Gerard was palpable; indeed, the same week the Kealohas falsely identified Gerard

as the mailbox “thief,” K. Kealoha falsely accused him of elder abuse, fraud, and

burglary. Those allegations went nowhere, because—like the mailbox “theft”—they

were not true.

III.

ARGUMENT

The financial evidence discussed throughout is admissible under the pertinent

rules of evidence. We will discuss each in turn.

1. Relevance

Relevant evidence is that “having any tendency to make the existence of any

fact that is of consequence to the determination of the action more probable or less

probable than it would be without the evidence.” Fed. R. Evid. 401. This is a “low

bar.” United States v. Lloyd, 807 F.3d 1128, 1152 n.6 (9th Cir. 2015) (quoting United

States v. Cloud, 680 F.3d 396, 402 (4th Cir. 2012)). “To be ‘relevant,’ evidence need

not be conclusive proof of a fact sought to be proved, or even strong evidence of the

same.” United States v. Curtin, 489 F.3d 935, 943 (9th Cir. 2007) (en banc). All that

is required is a “tendency” to establish the fact at issue. Id.

relevant in this case, and provides an example of ‘unclean hands’ directly related to
the issues for which the plaintiffs now sue.” Exhibit 3 at 2. Moreover, K. Kealoha
claimed that the “evidence of the mailbox incident is critical to assist in refuting the
plaintiffs’ claim that the defendant is ‘hiding’ evidence.” Id. at 3.
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The Kealohas’ true financial situation and prior fraudulent conduct is centrally

relevant for making sense of why (and so viciously) they targeted Gerard Puana.

Their reputations, careers, and livelihood were seriously threatened by what the

Puanas’ lawsuit could bring to light. So they moved to silence and imprison him.

This is classic motive evidence, which is “always relevant in a criminal case, even

if it is not an element of the crime.” United States v. Hill, 643 F.3d 807 (11th Cir.

2011); see United States v. Bradshaw, 690 F.2d 704, 708 (9th Cir. 1982) (“Although

it is true that motive need not be proved under 18 U.S.C. § 1201, it is far from

irrelevant. Motive is evidence of the commission of any crime.”); United States v.

Daly, 974 F.2d 1215, 1217 (9th Cir. 1992) (“A jury is entitled to know the

circumstances and background of a criminal charge. It cannot be expected to make

its decision in a void—without knowledge of the time, place, and circumstances of

the acts which form the basis of the charge.”); United States v. Saniti, 604 F.2d 603,

604 (9th Cir. 1979) (“Evidence that he had a $250-a-day heroin and morphine habit

was properly admitted to show his motive for robbing the bank. Evidence that tends

to show that a defendant is living beyond his means is of probative value in a case

involving a crime resulting in financial gain.”).11

11
See also United States v. Love, No. 10CR2418-MMM, 2011 WL 1897677, at
*2 (S.D. Cal. May 17, 2011) (J. McKeown, sitting by designation) (“The evidence
and statements related to Love’s mortgage default satisfy the requirements laid out
by the Ninth Circuit and Rule 403 of the Federal Rules of Evidence. The evidence
illustrates that Love was, in fact, ‘living beyond his means.’ Both the notice of
default and Love’s statement that he would lose his house on May 11, 2008
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The relevance of this evidence extends to the Taito and bank fraud facts. As

set forth above, K. Kealoha’s theft of the Taito funds and bank fraud was largely

occurring simultaneous to her theft (and cover-up of the theft) of the Puana funds.

Moreover, as also outlined previously, K. Kealoha’s lies and fraud all ran together—

inserting Alison Lee Wong into all three running schemes (Bickerton and the Taitos,

Gerard and his “trust,” and her bank loan application); giving Florence Puana’s

money to Ransen Taito; falsely using the Taito trust accounts to obtain loans

(including to obtain money to ensure Florence’s reverse mortgage funded); taking

Ransen Taito’s money and giving it to Gerard as his “return on investment.” These

facts are all interrelated. And they establish why silencing Gerard was paramount:

he possessed the key to unlocking the full scope of their interconnected crimes; and

he was beginning to turn the key. This evidence is relevant. It is therefore admissible

absent operation of some rule of exclusion. Fed. R. Evid. 402.

2. Rule 404(b)

Rule 404(b) does not exclude this evidence. On the contrary, it confirms the

admissibility of this evidence.

First, Rule 404(b) “applies solely to evidence of ‘other acts,’ not to evidence

of the very acts charged as crimes in the indictment.” United States v. Loftis, 843 F.

3d. 1173, 1176 (9th Cir. 2016); see also id. (“As a leading treatise explains, ‘[o]ne

demonstrate that Love also had ‘a specific and immediate financial need’ to save his
home.”) (citations omitted).
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of the key words in determining the scope of Rule 404(b) is ‘other’; only crimes,

wrongs, or acts ‘other’ than those at issue under the pleadings are made inadmissible

under the general rule.’” (quoting 22B Kenneth W. Graham, Jr., Fed. Prac. and Proc.

§ 5239 (1st ed. 2016)).

Second, “[e]vidence of ‘other acts’ is not subject to Rule 404(b) analysis if it

is ‘inextricably intertwined’ with the charged offense.” United States v. Wells, 879

F.3d 900, 928 (9th Cir. 2018). “This exception applies when (1) particular acts of

the defendant are part of a single criminal transaction, or when (2) other act evidence

is necessary to admit in order to permit the prosecutor to offer a coherent and

comprehensible story regarding the commission of the crime.” Id. (citations,

quotations, and alterations omitted). See United States v. Lillard, 354 F.3d 850, 854

(9th Cir. 2003) (Rule 404(b) is “inapplicable . . . where the evidence the government

seeks to introduce is directly related to, or inextricably intertwined with, the crime

charged in the indictment”).

Third, as for actual “other act” evidence reliant on Rule 404(b) for

admissibility, that is no high hurdle. Indeed, Rule 404(b) is “an inclusionary rule,”

rendering “other act” evidence inadmissible “only when it proves nothing but the

defendant’s criminal propensities.” United States v. Sneezer, 983 F.2d 920, 924 (9th

Cir. 1992) (emphasis added); see United States v. Cruz-Garcia, 344 F.3d 951, 954

(9th Cir. 2003) (“Rule 404(b) is one of inclusion, and if evidence of prior crimes

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bears on other relevant issues, 404(b) will not exclude it.”) (quotations and citations

omitted). The inclusionary intent behind Rule 404(b) has been accentuated by the

Supreme Court. See Huddleston v. United States, 485 U.S. 681, 688–89 (1988)

(“Congress was not nearly so concerned with the potential prejudicial effect of Rule

404(b) evidence as it was with ensuring that restrictions would not be placed on the

admission of such evidence.”). Admissible non-propensity purposes include

establishing motive, knowledge, and absence of mistake. See Fed. R. Evid.

404(b)(2).

The Ninth Circuit has established a four-part test to determine whether “other

acts” evidence is admissible under Rule 404(b). The evidence is admissible if it: “(1)

tends to prove a material point in issue; (2) is not too remote in time; (3) is proven

with evidence sufficient to show that the act was committed; and (4) if admitted to

prove intent, is similar to the offense charged.” United States v. Beckman, 298 F.3d

788, 794 (9th Cir. 2002) (citing United States v. Murillo, 255 F.3d 1169, 1175 (9th

Cir. 2001), overruled on other grounds by Muehler v. Mena, 544 U.S. 93, 101

(2005)). In addition, a court “must then assess the evidence under Fed. R. Evid. 403”

to determine whether its probative value is substantially outweighed by unfair

prejudice. Id.

//

//

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a. Direct Proof of Conspiracy

First, the Kealohas’ true financial situation and financial fraud—particularly

as it relates to the Puana/Taito financial misdeeds—constitutes direct proof of the

crimes charged. Indeed, the conspiracy charge directly invokes these facts. For

instance:

 “It was part of the conspiracy that L. KEALOHA and K. KEALOHA would
improperly use their authority to prevent the discovery and disclosure of their
precarious financial condition and prior malfeasance involving the [Taito]
Trust Accounts, G.K.P. and F.P. [Gerard and Florence].” SSI ¶ 28.

 “It was further part of the conspiracy that the conspirators would target
members of the community who threatened the power and financial
condition of L. KEALOHA and K. KEALOHA, including [Gerard and
Florence].” SSI ¶ 29.

 “It was further part of the conspiracy that the conspirators would seek to
discredit and intimidate such persons, including [Gerard and Florence], by
falsely alleging that such persons had engaged in criminal activity or were
incompetent.” SSI ¶ 30.
Rule 404(b) is “inapplicable” “where the evidence the government seeks to

introduce is directly related to . . . the crime charged in the indictment”). United

States v. Lillard, 354 F.3d 850, 854 (9th Cir. 2003).

b. Inextricably Intertwined

Second, the Kealohas’ true financial situation and financial fraud—including

the bank fraud—is inextricably intertwined with the charged offense. Those

underlying facts are necessary “in order to permit the prosecutor to offer a coherent

and comprehensible story regarding the commission of the crime.” Wells, 879 F.3d
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at 928. The coherent and comprehensible story is spelled out above: namely, the

Kealohas’ interconnected fraud explains why they targeted Gerard Puana. Without

knowledge of that underlying fraud, the story does not make sense: why would two

public servants—a Chief of Police and a supervisory Deputy Prosecuting Attorney—

risk it all by fabricating a criminal case against a poor uncle? The story begs for a

motive,12 and the web of fraud propping up the Kealohas’ make-believe public image

supplies it.13 Moreover, the Kealohas’ bank fraud—i.e., their inability to legitimately

obtain loans—explains why K. Kealoha crafted the intricate reverse mortgage plan

for Florence Puana: it gave the Kealohas ready access to money they could not,

absent fraud, acquire for themselves.14

12
As described previously, the lack of motive was the primary pitch by K.
Kealoha during her civil trial against Gerard Puana. As another example, her
attorney’s closing argument included the following: “I just want to leave you with
this thought. Again, if you step back and look at everything, who had the most to
gain from this? Who had anything to gain from this? And that was Gerard. At the
end of the day, what did Kathy get out of this? Nothing.” Exhibit 2 at 3 (lines 3-7).
13
The fact that “motive” is a permissible basis for admissibility under Rule
404(b) does not mean such evidence necessarily cannot be considered inextricably
intertwined. See, e.g., United States v. McNair, 605 F.3d 1152, 1203–04 (11th Cir.
2010) (“We conclude the contested evidence was admissible for three reasons. First,
the evidence was inextricably intertwined with evidence of the charged bribery
offenses. Second, even if not inextricably intertwined, this evidence was relevant to
show corrupt intent and admissible under 404(b). Defendant-appellants expressly
argued they lacked corrupt intent and gave gifts to McNair and Swann out of
friendship and good will. . . . Third, the evidence was admissible under 404(b) to
show the contractor-defendants’ common plan and motive.”).
14
The reverse mortgage funded in October 2009; the Kealohas’ bank fraud was
rampant in this time period. See SSI ¶ 51 (January 4, 2008; falsely certifying to
American Savings Bank that K. Kealoha owned the funds in Ransen Taito’s trust
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Circuit caselaw supports application of the “inextricably intertwined” doctrine

here. For instance, in United States v. DeGeorge, 380 F.3d 1203 (9th Cir. 2003), the

defendant was charged with several offenses related to a fraudulent scheme whereby

the defendant would purchase a yacht, inflate its value through a series of sham

transactions, scuttle the yacht, then attempt to collect insurance proceeds based on

the inflated value. Id. at 1207. In addition to allowing DeGeorge to inflate the value

of his yacht, the sham transactions he entered also enabled him to obtain insurance

for the yacht in the name of a different legal owner. Id. at 1208. Insuring the boat in

a name other than his own was necessary because DeGeorge had at least three prior

boat losses – one alleged theft and two alleged sinkings – for which he was fully

compensated by insurance companies. Id. At trial, DeGeorge objected to the

admissibility of evidence concerning those prior losses, but the district court

admitted evidence that “three prior vessels owned by DeGeorge were insured; that

he claimed the vessels were lost at sea; and that the vessels were not recovered.” Id.

The Ninth Circuit affirmed, finding the “prior loss” evidence was inextricably

intertwined with the charged offenses. Specifically, “[t]he concealment of

DeGeorge’s prior losses had an important factual connection to several counts

account); id. ¶ 59 (March 19, 2009; falsely certifying to American Savings Bank that
K. Kealoha owned the funds in A.T.’s trust account); id. ¶¶ 67-68 (July 6 and 9,
2010; using the alias “Alison Lee Wong” to make it appear to mortgage broker that
“Wong” was working to correct errors in K. Kealoha’s credit report; falsely
certifying ownership over assets in a Taito trust account).
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contained in the indictment. The government specifically alleged that DeGeorge’s

scheme included sham transactions to hide his ownership of the boat and

concealment of his loss history on the insurance application.” Id. at 1220. “The jury

would not have understood the relevance of the transactions and concealment

without hearing at least some explanation for why DeGeorge could not obtain

insurance in his own name.” Id. Accordingly, the prior losses was necessary to

“permit the prosecutor to offer a coherent and comprehensible story regarding the

commission of the crime.” Id. The Court concluded its analysis by stating, “Because

we conclude that the evidence of prior losses is ‘inextricably intertwined’ with the

charges in the indictment, we need not consider its admissibility under Rule 404(b).”

Id. at 1220.15

15
See also United States v. Moore, 729 F. App’x 787, 790 (11th Cir. 2018)
(unpublished) (“Evidence that Moore planned to harm Roland is ‘inextricably
intertwined’ with the five carjackings. Each carjacking, though an independent
crime, was part of Moore’s larger plan to get to Roland’s workplace, shoot her, and
then get away. Evidence that Moore had been found in Roland’s bed two nights
before and that he shot Roland during the spree explains why Moore committed the
carjackings and was ‘necessary to complete the story of the crime.’”) (citing United
States v. McLean, 138 F.3d 1398, 1403 (11th Cir. 1998) (“Evidence, not part of the
crime charged but pertaining to the chain of events[,] explaining the context,
motive[,] and set-up of the crime, is properly admitted if . . . [it] forms an integral
and natural part of an account of the crime, or is necessary to complete the story of
the crime for the jury.”) (formatting in original)).
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Likewise, the Kealohas’ financial situation and fraud is necessary to permit

the United States here to present coherent and comprehensible—and accurate—facts

regarding the conspiracy against Gerard.

c. Rule 404(b)

Finally, and independently, the underlying financial evidence and fraud is

admissible under Rule 404(b). The proffered evidence is not being offered for any

propensity purpose. On the contrary, as outlined throughout, the evidence principally

establishes the motive for the conspiracy against Gerard. And “motive” is one of the

delineated evidentiary purposes in Rule 404(b). See United States v. Saniti, 604 F.2d

603, 604 (9th Cir. 1979) (“Evidence that he had a $250-a-day heroin and morphine

habit was properly admitted to show his motive for robbing the bank.”). Other 404(b)

purposes also apply, namely, knowledge that Gerard was not the person pictured in

the surveillance video “stealing” their mailbox; and absence of mistake in

identifying Gerard in the surveillance video as the mailbox “thief.”16

The test for admissibility of the financial evidence is satisfied. See generally

United States v. Wells, 879 F.3d 900, 930 (9th Cir. 2018).17 First, the evidence “tends

16
For example, the underlying fraud makes it clear why—of all the people on
Oahu—they misidentified Gerard as the culprit depicted in the surveillance video.
That was not a mistake.
17
“Applying this four-part test to evidence surrounding the 2012 letter of
caution, Wells’ tree collaring instances, and our catch-all category of Wells’
disagreements with co-workers, we are satisfied that the district court properly
admitted this evidence under Rule 404(b)(2). This evidence, as a whole, was relevant
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to prove a material point in issue,” as described throughout. Second, the evidence

“is not too remote in time”; the charged conspiracy dates back to June 2011, see SSI

¶ 37, which is squarely in the midst of the financial fraud perpetrated on the Taitos,

the Puanas, and financial institutions. Third, the Kealohas’ true financial situation

and fraud will be proven with substantial evidence, including bank records, witness

testimony from those defrauded, and the fabricated trust document notarized by

“Alison Lee Wong.”18

3. Rule 403

Under Rule 403, a “court may exclude relevant evidence if its probative value

is substantially outweighed by a danger of . . . unfair prejudice, confusing the issues,

misleading the jury, undue delay, wasting time, or needlessly presenting cumulative

evidence.” Fed. R. Evid. 403 (emphasis added). This rule is “an extraordinary

remedy to be used sparingly because it permits the trial court to exclude otherwise

to Wells’ work environment, including his relationships with relevant co-workers

and supervisors; was not too remote in time and fits within a reasonably tailored
version of the Government’s motive theory; and was proven through both the
admission, without objection, of Wells’ personnel file, as well as the testimony of
the co-workers and supervisors involved in the underlying acts. On balance, the
probative value of this evidence is unique in a workplace homicide trial, and we do
not find that it is substantially outweighed by any danger of unfair prejudice.”
18
Evidence of Alison Lee Wong is further admissible under Rule 404(b) as K.
Kealoha’s modus operandi – she repeatedly calls upon this fake persona to cover-up
her misdeeds. See United States v. Gonzalez, 533 F.3d 1057, 1063 (9th Cir. 2008)
(modus operandi evidence is admissible under Rule 404(b)).
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relevant evidence.” United States v. Mende, 43 F.3d 1298, 1302 (9th Cir. 1995)

(quotation omitted).

With regard to motive evidence, the Ninth Circuit has explicitly stated that

“evidence relevant to a defendant’s motive is not rendered inadmissible because it

is of a highly prejudicial nature. . . . The best evidence often is.” United States v.

Parker, 549 F.2d 1217, 1222 (9th Cir. 1977) (citation omitted; ellipsis in original).

Instead, the function of Rule 403 is “limited to excluding matter of scant or

cumulative probative force, dragged in by the heels for the sake of its prejudicial

effect.” United States v. Hankey, 203 F.3d 1160, 1172 (9th Cir. 2000). Put another

way, evidence is not “unfairly prejudicial” because it tends to prove guilt, but

because it tends to encourage the jury to convict based on improper reasoning.

United States v. Dhingra, 371 F.3d 557, 565-66 (9th Cir. 2004).

The probative value of the proffered evidence is not “substantially

outweighed” by any Rule 403 concern. The financial evidence, as outlined above, is

highly probative evidence of the conspiracy to frame Gerard Puana. See, e.g.,

Coleman v. Home Depot, Inc., 306 F.3d 1333, 1344 (3d Cir. 2002) (highly probative

evidence “is exceptionally difficult to exclude”). And there is no risk of “unfair”

prejudice – the Kealohas’ motive for framing Gerard Puana is an entirely proper

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basis for the jury to base its reasoning. Nor can this evidence—critical to

understanding the conspiracy—constitute undue delay or a waste of time.19

In the event any evidence is admitted solely under Rule 404(b), or to the extent

the evidence above is admissible only as to certain parties, the Court can effectively

limit any risk of unfair prejudice by giving appropriate limiting instructions. See Fed.

R. Evid. 105; Huddleston, 485 U.S. at 691-92.

IV

CONCLUSION

For the reasons stated throughout, the United States’ motion to admit evidence

of the motive for framing Gerard Puana should be granted.

Respectfully submitted,

Dated: February 11, 2019. MATTHEW G. WHITAKER

Acting Attorney General

ROBERT S. BREWER, JR.

United States Attorney

/s/ Colin M. McDonald

MICHAEL G. WHEAT
ERIC J. BESTE
JANAKI S. GANDHI
COLIN M. MCDONALD
Special Attorneys to the Attorney General

19
The United States believes it can put on this evidence efficiently and within
the trial length estimate previously provided to the Court.
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UNITED STATES DISTRICT COURT

DISTRICT OF HAWAII
UNITED STATES OF AMERICA, Case No. 17-CR-00582-JMS
Plaintiff, CERTIFICATE OF SERVICE
v.
KATHERINE KEALOHA, et al.,
Defendants.

IT IS HEREBY CERTIFIED that:

I, Colin M. McDonald, am a citizen of the United States and am at least

eighteen years of age. My business address is 880 Front Street, Room 6293,

San Diego, CA 92101-8893.

I am not a party to the above-entitled action. I have caused service of the

foregoing on all parties in this case by electronically filing the foregoing with the

Clerk of the District Court using its ECF System, which electronically notifies them.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on February 11, 2019.

/s/ Colin M. McDonald

COLIN M. MCDONALD

27