Reverse Mortgages Play Role in Hawaii Police Scandal

A reverse mortgage played a central role in a bizarre Hawaii case involving a police chief, his wife, and a stolen mailbox.

Federal prosecutors accused former Honolulu top cop Louis Kealoha of assembling a personal team of police officers to help conceal the financial fraud he was committing with his wife, Katherine, according to an Associated Press report.

The malfeasance included a reverse mortgage taken out on Katherine’s grandmother’s home, with the proceeds spent on a $92,000 brunch at a Waikiki resort, loan payments on a Mercedes Benz and a Maserati, a trip to Disneyland, and tickets to an Elton John concert, according to the government.

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The Kealohas also stole money from an older uncle with disabilities and two children over whom Katherine had legal guardianship, the government said.

“The 20-count indictment describes a complex web of fraud, deception, and obstruction by a husband-and-wife team so desperate to fund their lifestyles and maintain their self-professed status as Honolulu’s power couple that they swindled hundreds of thousands of dollars from banks, credit unions, and some of the most vulnerable members of the community,” acting U.S. attorney for California’s southern district Alana Robinson said, according to the AP.

The case gained steam when the 2013 theft of the Kealohas’ mailbox turned out to be a staged attempt by the chief and other police officers to frame a relative.

The pair pleaded not guilty to federal charges of conspiracy, bank fraud, identity theft, and obstruction, and were released on $100,000 bond, the AP reported. 

The Kealoha case joins another offbeat fraud story involving reverse mortgages to make headlines this year: Back in July, the United States Postal Service revealed how it used a phony reverse mortgage scam to catch a Massachusetts man who had been bilking an elderly Texas woman for years. 

Written by Alex Spanko

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