A former Honolulu grant administrator has pleaded guilty to embezzling more than $500,000 from a local nonprofit’s AmeriCorps program and conspiring with the CEO of Hawaii island’s public access TV station to fraudulently obtain CARES Act money from Honolulu.
Hanalei Aipoalani, a 42-year-old Waianae resident, former Aloha United Way vice president and former statehouse candidate, pleaded guilty in federal court on Friday to embezzlement and agreeing to take a bribe.
Both charges carry a statutory maximum prison sentence of 10 years and financial penalties, according to federal prosecutors. He is scheduled to be sentenced on June 24.
AmeriCorps is a federally funded network of national service programs.
“The defendant conspired to enrich himself with taxpayer dollars intended to support at-risk communities in Hawaii, he victimized legitimate volunteers and others by stealing their identities to perpetrate multiple fraud schemes, and he submitted falsified documentation and certifications to the government, all to the detriment of their community,” Deborah Jeffrey, Inspector General of AmeriCorps, said in a press release.
“Our investigation also disrupted an ongoing scheme to steal much-needed pandemic relief funds,” Jeffrey added.
In the plea agreement, Aipoalani admitted to the embezzlement at a nonprofit community media center that hosted an AmeriCorps program. The nonprofit wasn’t named, but Aipoalani’s employment history and the description make clear it was Olelo Community Media.
Aipoalani also admitted using his position as a Honolulu grant administrator to attempt to direct money to the CEO of Hawaii island’s public access television station who was not named. The Big Island has only one public access TV station: Na Leo TV. The station’s Hilo offices were raided by the FBI last year.
Stacy Higa, listed on its website as CEO, is a former County Council chairman and was a Hilo mayoral candidate last year. He has not been charged with a crime, according to a search of federal and state court records.
Aipoalani, Higa, Olelo and Na Leo did not respond to requests for comment.
In a statement on Monday afternoon, Olelo President and CEO Roger McKeague said that the organization detected “financial irregularities” involving AmeriCorps funds after Aipoalani left Olelo in May 2019.
“We conducted an internal investigation and promptly reported our findings to federal authorities,” he said.
“We have fully cooperated with those authorities throughout this process. At their request, we have kept and will continue to keep the particulars of our communications confidential.”
He said the community should be assured that the situation has not impacted the nonprofit’s ability to provide media services.
From December 2014 through June 2019, Olelo received over $935,000 in AmeriCorps funds, according to the plea agreement. AmeriCorps members were enrolled to serve one-year terms at Olelo and were supposed to receive stipends.
Ultimately, Aipoalani embezzled more than half of Olelo’s AmeriCorps allotment while he was the nonprofit’s human resources director, according to the plea agreement.
Aipoalani made false representations that money was needed to pay stipends and education awards to AmeriCorps members. But the plea agreement stated the money really went to himself, his wife, Angelita Aipoalani, and Na Leo, described as “non-profit 2” in the agreement.
Angelita Aipoalani also faces a felony conspiracy charge that was filed in December, court records show. Her case is ongoing.
From December 2014 through May 2019, Aipoalani used at least nine inactive or former AmeriCorps members’ names and/or signatures without their consent to obtain stipend payments and education awards that he diverted for his and his wife’s personal use, according to the agreement.
In one case, he informed an AmeriCorps member that budget constraints required the nonprofit to terminate their service term early. He then used his access to the nonprofit’s system to direct the money earmarked for that person to himself and his wife.
He also falsely represented to Olelo that it owed money to Na Leo for AmeriCorps services performed by his wife and another Na Leo employee – neither of whom were actually performing any services at Na Leo, according to the agreement. In total, Angelita Aipoalani was paid more than $69,000 for work she didn’t do, the agreement said.
Aipoalani’s wife was also fraudulently listed as an AmeriCorps member for Olelo from 2015 through 2018 even though she never worked there and had full-time employment elsewhere, the agreement said.
In addition, the couple schemed to defraud the Corporation for National and Community Service, the agency that administers AmeriCorps. In 2016 and 2017, Aipoalani submitted false certifications stating that his wife had served hundreds of AmeriCorps hours when in fact she had not. Based on those false representations, CNCS approved two education awards to Angelita Aipoalani amounting to over $11,000.
Aipoalani used some of the money to purchase a 2014 Ford Fusion Hybrid from an unnamed friend, the agreement said.
According to the plea agreement, Aipoalani never should have been in the position of controlling federal grant money in the first place.
Around April 2013, Hanalei Aipoalani was “debarred from involvement in any federal grant or contracting program” because of a previous attempt to divert federal grant funds to his personal bank account, according to the plea agreement, which provided no further details. Hanalei violated these terms through April 2016, when the debarment expired, the agreement says.
“AmeriCorps trusted Hanalei Aipoalani with its mission in the State of Hawaii and was ultimately betrayed,” FBI Special Agent in Charge Eli Miranda said in a statement. “Aipoalani exploited his position and intentionally stole funds meant for the betterment of the community for his own selfish entitlements.”
From January 2015 through early 2017, Aipoalani served as a paid senior adviser to the public station CEO, according to the plea agreement.
Around August 2020, the CEO agreed to provide Aipoalani with “future financial benefits” if he would influence the approval of his applications for COVID-19 relief money administered by Honolulu, the agreement said
At that point, Aipoalani had been hired by the city to be a temporary CARES Act program administrator to help disburse the city’s $387 million allotment.
Approximately $116 million of that was to be awarded by the Department of Community Services and targeted toward addressing “social and human needs” for residents during the pandemic.
From about Aug. 25 through mid-September, Aipoalani repeatedly provided guidance to the CEO on how to apply for two grants through two different entities Higa controlled – Na Leo and a “business and leadership consulting” business on Hawaii island that catered to nonprofits. The plea agreement did not identify that company’s name.
Around that time, Aipoalani and his co-conspirator “discussed splitting the remaining funds” after Na Leo and the other company completed the work required for the CARES Act money, the agreement said.
Aipoalani asked the CEO to “carry” him as a part-time project manager, which the CEO agreed to do if he had “additional funding,” the agreement said, adding that the co-conspirator told Aipoalani that he planned to pay him as a contractor so that auditors didn’t start asking questions.
Aipoalani expected to receive approximately $60,000 a year in that future job, which would continue for at least a year.
The two men also discussed opening limited liability companies on Oahu using their wives as principles in order to launder money, according to the agreement.
On or about Sept. 16, Aipoalani told the CEO that the plan was to fund both his grant applications that would total more than $1 million – $600,000 would be “gravy money,” the agreement said. Ultimately, the station leader applied for $845,000 on behalf of Na Leo and his other company, claiming expenses that were not actually incurred, according to the agreement.
The plea agreement does not state whether the CARES Act money was actually granted. Civil Beat was unable to identify any listings related to Higa it a city breakdown of approved CARES Act expenditures as of January.
Aipoalani’s contract with the city ended around Nov. 30, according to the plea agreement. He was charged by federal prosecutors in Washington, D.C. in December.
However, that didn’t stop him from getting a job with the Honolulu City Council. He began working in the Council Support Services office on Jan. 13, according to a spokesman for City Council Chair Tommy Waters. Within two weeks, the office became aware of the investigation against him and notified him that his contract would be terminated. His last day with the council was Feb. 11, according to Davin Aoyagi, Waters’ chief of staff.
In a statement, Waters said he was disappointed and appalled at Aipoalani’s actions.
“At a time when public trust in our government is needed now more than ever, he broke that sacred trust and harmed some of the most vulnerable members of our community,” he said.
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