A former police chief and his former prosecutor wife allegedlycarried out a $4 million fraudulent mortgage, refinancing andline of credit scheme victimized two creditunions and three banks.

Federal prosecutors indicted former Honolulu Police Chief LouisKealoha and his wife, Katherine Kealoha, a former supervisorattorney for the Honolulu prosecutor’s office, last week with 20counts of bank fraud, criminal conspiracy, obstruction of justice,making false statements to a federal officer and aggravated ID theft.

The Kealohas were indicted along with five other Honolulu policeofficers following a federal grand jury’s two-year investigationinto public corruption and abuse of power within the Hawaiian lawenforcement agency. The accused couple and one of the policeofficers pleaded not guilty Friday in U.S. District Court inHonolulu.