Government's Memorandum in Aid of Sentencing — United States v. Hanalei Aipoalani (Document 27)

Summary

Government's Memorandum in Aid of Sentencing for Hanalei Aipoalani, filed June 25, 2021 as Document 27 in No. 20-CR-286-RBW, for sentencing scheduled June 30, 2021. It states that Aipoalani embezzled more than $500,000 from AmeriCorps and agreed to take a bribe in connection with CARES Act funds, and that Aipoalani pleaded guilty on March 26, 2021 to one count of federal programs embezzlement and one count of federal programs bribery under 18 U.S.C. § 666. The plea agreement set offense level 27 and a range of 70 to 87 months; the Probation Office calculated offense level 25 and a range of 57 to 71 months. The government requests 66 months of imprisonment and three years of supervised release, with mandatory restitution and a forfeiture money judgment.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Cite this document

“Government's Memorandum in Aid of Sentencing — United States v. Hanalei Aipoalani (Document 27).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-d-d-c-no-1-20-cr-00286-dkt-27-d-d-c-62b70ef75d/, SHA-256 883b2069f5948e9cc738697ec752a2b3a04bbf08e759b4d5d49bb4537fb25161.

Full text

Case 1:20-cr-00286-RBW Document 27 Filed 06/25/21 Page 1 of 31

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA : CASE NO. 20-CR-286-RBW
:
v. :
:
HANALEI AIPOALANI, :
:
Defendant. :

GOVERNMENT’S MEMORANDUM IN AID OF SENTENCING

Defendant Hanalei Aipoalani is scheduled to be sentenced on June 30, 2021 for embezzling

more than $500,000 from AmeriCorps and for agreeing to take a bribe in connection with CARES

Act funds. To affect his frauds, the Defendant abused multiple positions of trust and treated public

funds ear-marked for the most vulnerable and desperate Americans as his own personal piggy

bank. The Defendant stole more than $532,000 from AmeriCorps by fraudulently enrolling

members, without their knowledge, and diverting living allowances issued in their name into bank

accounts that he controlled while serving as the HR Director of a Hawaiian non-profit. The

Defendant also agreed, while serving as the CARES Act Program Administrator for the City and

County of Honolulu, to accept a bribe in return for approving multiple fraudulent grant applications

made at the direction of Co-Conspirator 1, whose fraudulent grant applications Aipoalani assisted

in preparing. The Defendant pleaded guilty on March 26, 2021 to one count of federal programs

embezzlement in violation of 18 U.S.C. § 666(a)(1)(A) and one count of federal programs bribery

in violation of 18 U.S.C. § 666(a)(1)(B).

By plea agreement, the parties agreed that the applicable offense level is 27, resulting in a

guidelines range of 70 to 87 months’ imprisonment. The United States Probation Office disagreed

with the parties’ Guidelines’ calculations and calculated the offense level to be 25 and the advisory

guidelines range to be 57 to 71 months’ imprisonment. The government respectfully requests that
Case 1:20-cr-00286-RBW Document 27 Filed 06/25/21 Page 2 of 31

the Court sentence the defendant to 66 months of imprisonment and three years of supervised

release along with mandatory restitution and a forfeiture money judgment.

I. The Defendant’s Frauds

A. AmeriCorps Fraud

i. Background of AmeriCorps

AmeriCorps is a federally funded network of national service programs that are intended

to address critical community needs including increasing academic achievement, mentoring youth,

fighting poverty, sustaining national parks, preparing for disasters, and more. It is the nation’s

largest grant maker and the service provided by AmeriCorps’ members is critically important to

vulnerable communities across the nation. AmeriCorps’ national service members commit to

service for a set period of time, usually a year, in exchange for a living allowance, funding to be

used for college tuition, and other benefits. Full-time members who serve at least 1,700 hours per

year will receive approximately $12,5000 per annual term of service. An AmeriCorps member

who completes their service term is also eligible for an education award to be paid directly from

AmeriCorps to the school or qualified lender. To qualify for the education award, the AmeriCorps

grantee site where the member served their community had to certify that the member completed

the required service hours.

ii. The Scheme

Non-Profit 1 was an approved site location for AmeriCorps service, and it received

AmeriCorps funding through the Hawaii Commission for National and Community Service (the

Commission) on a cost-reimbursement basis to pay living allowances to the enrolled AmeriCorps

members. From December 2014 through June 2019, Non-Profit 1 received approximately

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$935,000 in AmeriCorps funds. More than half of this funding was based on fraudulent

submissions for reimbursement made by the Defendant, which he then siphoned into bank

accounts for his own benefit.

The Defendant served as Non-Profit 1’s Human Resources Director from 2010 through

May 2019. In 2013, the Defendant was officially debarred from any involvement in federal grant

programs after being caught attempting to divert federal grant funds from a different grantee to his

own personal bank account. The debarment was for a three-year period from April 2013 to April

2016. Nonetheless, starting in November 2014, the Defendant was permitted to administer Non-

Profit 1’s AmeriCorps program. In that capacity, the Defendant was responsible for tracking and

reporting AmeriCorps member enrollment to the Commission for reimbursement. The Defendant

was also responsible for certifying when members satisfactorily completed their service,

qualifying them for an education award. The Defendant never informed Non-Profit 1 that he had

been debarred from involvement in federal grant programs. When the Commission was notified of

the Defendant’s debarment, the Defendant created a document on Non-Profit 1’s letterhead,

purporting to be signed by the President of Non-Profit 1, claiming falsely that the Defendant had

been replaced as the AmeriCorps authorized representative. In fact, the Defendant continued to

run the AmeriCorps program, and the Finance Director of Non-Profit 1 was never apprised of the

Defendant’s debarment status.

From December 2014 to June 2019, the Defendant embezzled more than $527,000 in

AmeriCorps funds by submitting fraudulent claims for reimbursement to the Commission, and by

using his access as the HR Director of Non-Profit 1 to divert the stolen funds into bank accounts

that he controlled or benefitted from. He did this in several ways.

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First, the Defendant did not to report when an AmeriCorps member voluntarily left the

program prior to the end of their term, and using his access as HR Director to Non-Profit 1’s

payment system, the Defendant changed the direct deposit information for the former members in

order to divert continuing member living allowances into different bank accounts for his own

benefit.

Second, the Defendant fraudulently re-registered at least nine former AmeriCorps

members, without their knowledge, for additional terms of service at Non-Profit 1. Here, too, the

Defendant used his access to the payment system to divert the additional living allowance

payments to his own use.

Third, in or around September 2015, the defendant terminated the AmeriCorps service of

an AmeriCorps member, B.M., early, falsely telling him that budget constraints required Non-

Profit 1 to terminate his term early. However, instead of un-enrolling B.M., the Defendant accessed

Non-Profit 1’s payment system to divert continuing living allowance payments intended for B.M.

to the Defendant’s own personal use. According to B.M., he lost living allowance payments

totaling $3,159 because of this unjust firing. See ECF 23 (Declaration of Loss).

Fourth, the Defendant created fraudulent invoices from a second non-profit, Non-Profit 2,

run by Co-Conspirator 1, which falsely claimed that Non-Profit 2 was entitled to reimbursement

of more than $97,000 for AmeriCorps living allowances allegedly paid by Non-Profit 2 to the

Defendant’s wife, Angelita Aipoalani, and an additional Non-Profit 2 employee. Using his

authority at Non-Profit 1, the Defendant approved these fraudulent invoices and then caused them

to be paid. As a result of this conduct, the Defendant and Angelita Aipoalani caused more than

$69,000 to be deposited into a bank account held jointly in their names. In order to execute this

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scheme, the Defendant transmitted fraudulent AmeriCorps registrations for 2015, 2016, and 2017,

enrolling Angelita Aipoalani as an AmeriCorps member, despite knowing that she held full-time

employment elsewhere and was not going to, nor did she, perform the required AmeriCorps

service. In order to execute this fraud, the Defendant used his position as a senior advisor at Non-

Profit 2 to add Angelita Aipoalani to Non-Profit 2’s payroll system in order to receive payment for

the supposed AmeriCorps service – for which Non-Profit 2 sought reimbursement from Non-Profit

1 – and which was never performed.

Fifth, the Defendant, using his authority at Non-Profit 1, diverted $9,000 in AmeriCorps

funds to a bank account held by Defendant’s friend. In exchange for the $9,000 payment,

ownership of a 2014 Ford Fusion Hybrid was transferred from Defendant’s friend to Defendant

and Angelita Aipoalani for their personal use.

In addition to more than $69,000 of AmeriCorps money fraudulently stolen based on

Angelita Aipoalani’s fraudulent registration as an AmeriCorps member, the Defendant and

Angelita Aipoalani applied for $11,505 in AmeriCorps education awards for Angelita Aipoalani.

To support those applications, the Defendant falsely certified to AmeriCorps that Angelita

Aipoalani had served at least 1,700 hours per year as an AmeriCorps member, which he full well

knew she did not. Based on these false certifications, AmeriCorps approved an award in November

2016 for $5,730 – which was paid directly to Angelita Aipoalani’s student loan holder – and

approved a second award in November 2017 for $5,775, which was not paid.

iii. Disposition of Proceeds

The FBI traced the approximately $429,000 of fraudulent proceeds from this scheme that

were diverted from Non-Profit 1. The Defendant withdrew $75,000 of the proceeds in cash, and

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their subsequent use is unknown. The remainder was spent on the Aipoalanis’ lifestyle, including

more than $117,000 on dining and entertainment, $56,000 on travel and hotel expenses, and more

than $87,000 on retail including more than $3,534 at Kay Jewelers, $1,700 at Sephora, $1,300 at

nail salons, $1,400 at Victoria’s Secret, $3,600 to Massage Envy, and 87 separate trips to Old Navy

totaling more than $9,400.

The Aipoalanis spent their stolen money on lavish vacations including $3,906 to the Ala

Moana hotel (https://www.alamoanahotelhonolulu.com/), $3,149 to Disney Resorts, $3,682 on a

timeshare at the Disney Aulani resort (www.disneyaulani.com), $1,412 at the Makahika restaurant

at the Disney Aulani resort, more than $22,385 at Marriott Ko’Olina Beach Club

(http://koolina.com/accommodations/marriotts-ko-olina-beach-club/).

The dining expenses, in particular, reveal how Aipoalanis used the stolen AmeriCorps

money to fund a luxurious lifestyle, including, for example, a $395 dinner at Ben & Jack’s

Steakhouse in New York City, a $319 dinner at Blue Fin Times Square, a $303 dinner at the Four

Seasons Fish House, a $390 dinner at MW restaurant, trips to California Pizza Kitchen totaling

$2,785, trips to the Cheesecake Factory totaling $4,085, trips to “Da Crawfish and Crab” totaling

$2,217, trips to DB Grill totaling $2,106, trips to Kapolei Karaoke costing $1,556, and trips to

Roy’s Ko’Olina costing $4,814. The Aipoalanis spent more than $3,287 of AmeriCorps money at

the water park, “Wet ‘N’ Wild Hawaii,” more than $500 on tickets to Disneyland, and more than

$1,000 on movie tickets. The Aipoalanis then leased a brand new 2020 BMW X3 and spent more

than $10,000 of the stolen money on lease payments.

The FBI also traced the approximately stolen funds diverted through the scheme with

Angelita Aipoalani to embezzle AmeriCorps funds through Non-Profit 2. The FBI identified 82

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cash withdrawals totaling $27,764.20, 352 transactions totaling $10,959.83 for dining and

entertainment and, 37 transactions totaling $9,922.03 in hotel expenses.

The Defendant flaunted his lifestyle on social media. The following was obtained from the

Defendant’s public Instagram account @drhanz79:

Ferrari rented for the Defendant’s birthday (January 2019)

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Defendant’s 40th birthday at the Ko’Olina Beach Resort (January 2019)

Angelita Aipoalani pictured flying First Class from Hawaii to San Francisco (Summer 2018)

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Family vacation to Disney’s Aulani resort (July 2018)

Trip to New York City and $395 dinner at Ben and Jack’s Steakhouse (December 2017)

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Vacation to Universal Studios (2015)

Vacation to Las Vegas (2015)

B. CARES Act Bribery Scheme

In August 2020, the Defendant was hired to serve as the “CARES Program Administrator”

for the Department of Community Services (DCS) of the City and County of Honolulu (“City and
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County”). City and County received approximately $387 million from the Coronavirus Relief Fund

(“CRF”) that was created under the Coronavirus Aid, Relief, and Economic Security (“CARES”)

Act, which was passed by Congress in March 2020 to provide financial relief to those suffering

economic effects from the COVID-19 pandemic. The CRF was distributed to states and localities

to help address losses incurred due to COVID-19. Government entities – such as City and County

– that received money from the CRF could use the funds to, among other things, make grants to

small businesses to reimburse costs incurred by those small businesses due to the pandemic. The

funds had to be used for costs incurred between March 1, 2020 and December 30, 2020.

City and County allotted approximately $166 million of the CRF funds to DCS to award

grants “targeted towards addressing social and human needs of residents of Hawaii due to impacts

of the pandemic.” As a result of the funding, DCS obtained approval to hire a “CARES Program

Administrator” to manage DCS’s CRF grant program. The position itself was funded by CRF

monies. The Defendant was hired to serve as the “CARES Program Administrator” and his

responsibilities included, among other things, developing and executing programs related to the

CRF, coordinating contracting, and coordinating public messaging.

From nearly the moment he was hired, the Defendant began coaching Co-Conspirator 1

about how to fashion grant applications through two different entities controlled by Co-

Conspirator 1 and operated on Hawaii Island. On August 25, 2020, the Defendant began advising

Co-Conspirator 1 as to how to modify the “scope and reach” of his company to qualify for the

funds. That same day, the Defendant sent Co-Conspirator 1 the grant application and began

suggesting the content of Co-Conspirator 1’s grant applications:

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Date From To Body of Text Message
8/25/2020 Hanalei Aipoalani Co-Conspirator 1 Check your email. I sent you the Grant
Application.
8/25/2020 Hanalei Aipoalani Co-Conspirator 1 My earlier text was an idea of what you
could propose.
8/25/2020 Co-Conspirator 1 Hanalei Aipoalani How many people vying for these or
this contracts.
8/25/2020 Hanalei Aipoalani Non Compete; based on need and plan
on delivering in a timely manner.
Basically, expenses must be incurred
by 12/30/20.
8/25/2020 Co-Conspirator 1 Hanalei Aipoalani Please tell me you the administrator
!!!???
8/25/2020 Hanalei Aipoalani Co-Conspirator 1 Yes. I am the CARES Program
Administrator for the City. I accepted
the offer on the Friday that we were in
Hilo; literally just before the training
with Management started.
8/25/2020 Hanalei Aipoalani Co-Conspirator 1 If [Employee 1] or another member of
[Non-Profit 2] could be named as
Executive Director, [Non-Profit 2]
Community Engagement; then it
would go over well.

The Defendant continued coaching Co-Conspirator 1 with respect to the contents of his

grant applications through the month of August, including drafting entire portions of the

application for Co-Conspirator 1. The Defendant then began forwarding Co-Conspirator 1’s grant

proposals to various agencies and recommending Co-Conspirator 1’s company to help another

non-profit with processing applications for funds for Hawaii Island. When Co-Conspirator 1

thanked him, the Defendant replied, “My pleasure, boss man. Let’s begin to rock and roll and make

$.” Throughout early September, the Defendant continued to direct the content of Co-Conspirator

1’s applications, including precise wording and budget items. When Co-Conspirator 1 raised a

concern that the it was “[p]robably not a good idea to use similar narrative for [Non-Profit 2] grant

because of [Company 1] application[,]”, the Defendant assured him, “You may; it will be two

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separate unlinked groups.” After receiving a proposed budget from Co-Conspirator 1 for Company

1, the Defendant directed him to increase the requested funds, texting, “[i]t could be a little more.

Closer to $650k[.]”

On September 15, 2020, the Defendant texted with Co-Conspirator 1 about how the funds

would be shared. Co-Conspirator 1 told the Defendant, “I can hide your employment FYI.” On

September 16, 2020, the Defendant and Co-Conspirator 1 had the following text exchange:

Date From To Body
9/16/2020 Hanalei Aipoalani Co-Conspirator 1 The goal is to fund both
applications—a little more than $1M;
of which about $600K will be gravy
money with the balance being tied to
some work/lift.
9/16/2020 Co-Conspirator 1 Hanalei Aipoalani No problem. My favorite saying.
Easy to give what I have versus to give
when no more !!!! We can make it
work !!!
9/16/2020 Co-Conspirator 1 Hanalei Aipoalani You and I will open a LLC on Oahu
!!!
9/16/2020 Hanalei Aipoalani Co-Conspirator 1 Yes, let’s do it ASAP.
9/16/2020 Hanalei Aipoalani Co-Conspirator 1 Our wives could be the principles.
9/16/2020 Co-Conspirator 1 Hanalei Aipoalani Do you have a LLC?
9/16/2020 Co-Conspirator 1 Hanalei Aipoalani I’ll teach you how to launder !! Lol
9/16/2020 Hanalei Aipoalani Co-Conspirator 1 Let’s do this.
9/16/2020 Co-Conspirator 1 Hanalei Aipoalani Create a LLC for Angie.
I already have my own.

I will show you how to do it once we
get funding and will contract your
company. Then you will contract my
company. Lol. Easiest way

We will make sure that we keep
enough for taxes. And we will make
enough expenses to break even or just
make a little.
9/16/2020 Hanalei Aipoalani Co-Conspirator 1 I’m all in.

Several days later the Defendant updated Co-Conspirator 1 that Company 1’s proposal had
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been added to EDAH (Economic Development Alliance of Hawaii) and Non-Profit 2’s application

was also coming up for approval. The Defendant assured Co-Conspirator 1 that the applications

would go through, explaining “I chair those meetings.” Co-Conspirator 1 assured the defendant

that he would “protect” him and that they would “make this work good for everyone”:

Date From To Body
9/18/2020 Hanalei Aipoalani Co-Conspirator 1 Update. [Company 1] has been added
to EDAH grant proposal; which will
be reviewed and approved next
Monday.
9/18/2020 Co-Conspirator 1 Hanalei Aipoalani Nice!!! Then let’s talk as soon as you
know how much and then we shall
figure some stuff out !! Thanks
9/18/2020 Hanalei Aipoalani Co-Conspirator 1 It’s the full amount—+$460K
9/18/2020 Hanalei Aipoalani Co-Conspirator 1 [Non-Profit 2] app is also on next
Monday’s agenda for approval.
9/18/2020 Co-Conspirator 1 Hanalei Aipoalani Seriously !! You think both will go
thru??
9/18/2020 Hanalei Aipoalani Co-Conspirator 1 Yes. I chair those meetings. Once
green lighted, HCF will take 2-3 days
to contract.
9/18/2020 Co-Conspirator 1 Hanalei Aipoalani Ok. I want to make sure we protect
you. We will make this work good
for everyone !!!
9/18/2020 Hanalei Aipoalani Co-Conspirator 1

Four days later, on September 18, 2020, the Defendant told Co-Conspirator 1 that

Company 1’s grant was being funded and that Non-Profit 2’s was on the upcoming agenda. The

next day, the Defendant and Co-Conspirator 1 discussed the bank accounts they would be using:

Date From To Body
9/23/2020 Co-Conspirator 1 Hanalei Aipoalani Go open up some credit union
accounts in you and Angie name.
Make sure get savings accounts.
Just FYI when you take money out of
savings account it is treated
differently then checking accounts.
Can’t tell you why but that is how you
funnel cash. FYI. Lol. So I will
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use multiple accounts to send you
checks and you deposit into savings
accounts.
9/23/2020 Hanalei Aipoalani Co-Conspirator 1 Between me and Angie, we have 4
savings accounts with Aloha Pacific
FCU.
9/23/2020 Co-Conspirator 1 Hanalei Aipoalani Perfect. We will be in touch. Thanks

The next day, the defendant told Co-Conspirator 1 that he was “pushing to advance [Non-

Profit 2’s] application[.]” On September 28 and 29, 2020, the Defendant informed Co-Conspirator

1 that Non-Profit 2’s application was approved at $350,000 and that the Defendant was able to

“bump up” the grant to “just under $420K.” The Defendant than directed Co-Conspirator 1 to

prepare backdated certifications claiming that nine Honolulu residents who had been adversely

impacted by COVID-19 had been certified through 24-hour online training. The Defendant told

Co-Conspirator 1 on September 29, 2020:

Date From To Body
9/29/2020 Hanalei Aipoalani Co-Conspirator 1 Like [Company 1], most of these
funds, if not all, will be gravy.

Based on the text messages above, the Defendant and Co-Conspirator 1 plainly

contemplated that $600,000 of the contracts would be “gravy” – meaning, profits – that they would

split between themselves. Indeed, the Defendant believed that “most of these funds, if not all, will

be gravy.” Therefore, the government submits, and the PSR agrees, that the value of the attempted

bribe is approximately $300,000. PSR ¶ 85.

Based on the assistance from the Defendant and the Defendant’s agreement to approve the

grant applications in return for the bribe, Co-Conspirator 1 submitted two fraudulent applications

for CARES Act funds which the Defendant knew fraudulently claimed expenses that had not

actually been yet incurred. See Statement of Offense ¶ 48.

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On October 8, 2020, federal agents from AmeriCorps OIG and the FBI executed search

warrants on the Defendant’s residence, the Defendant’s storage unit, Non-Profit 2, and the Hawaii

Commission. After the search warrants, Non-Profit 2 and Company 1’s CARES Act grant

applications were withdrawn, and no funds were disbursed. Had the search warrants occasioned

by the Defendant’s AmeriCorps scheme not disrupted this bribery scheme, $845,000 of the limited

funds allocated to Hawaii under the CARES Act for actual expenses incurred as a result of the

COVID-19 pandemic would have been paid out to Co-Conspirator 1’s companies for “expenses”

that had not yet even been incurred so that the Defendant and Co-Conspirator 1 could share the

“gravy” and personally enrich themselves.

II. Sentencing Guidelines

A. The Plea Agreement and PSR

By plea agreement, the parties agreed that the defendant’s total offense level was 30 and

that after application of a three-point reduction for acceptance of responsibility, the Estimated

Offense Level would be at least 27 resulting in an estimated Guidelines range of 70 to 87 months’

imprisonment. See Plea Agreement ¶ 5(A)-(C). This analysis was based on the agreement that the

two offenses of conviction group pursuant to U.S.S.G. § 3D1.2(d).

The PSR writer disagreed with the parties’ Guidelines analysis and found that the offenses

do not group. See PSR ¶ 76. Accordingly, the PSR found that the adjusted offense level for Count

One is 24, id. ¶¶ 77-83, and the adjusted offense level for Count Two is 26, id. ¶¶ 84-89. The PSR

calculated a two-level increase in offense level based on the multiple count adjustment pursuant

to U.S.S.G. §3D1.4 for a combined adjusted offense level of 28. After application of U.S.S.G.

§3E1.1, the PSR calculated a total offense level of 25. The PSR found that a three-level reduction,

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pursuant to U.S.S.G. § 3E1.1, is warranted because the defendant demonstrated acceptance of

responsibility by pleading guilty pre-Indictment and timely notifying the government of his

intention to plead guilty. PSR ¶¶ 95-96.

B. Abuse of Position of Trust

U.S.S.G. § 3B1.3 imposes a two-level enhancement for abuse of trust. Application note 1

explains that:

"Public or private trust" refers to a position of public or private trust characterized
by professional or managerial discretion (i.e., substantial discretionary judgment
that is ordinarily given considerable deference). Persons holding such positions
ordinarily are subject to significantly less supervision than employees whose
responsibilities are primarily non-discretionary in nature. For this adjustment to
apply, the position of public or private trust must have contributed in some
significant way to facilitating the commission or concealment of the offense (e.g.,
by making the detection of the offense or the defendant's responsibility for the
offense more difficult). This adjustment, for example, applies in the case of an
embezzlement of a client's funds by an attorney serving as a guardian, a bank
executive's fraudulent loan scheme, or the criminal sexual abuse of a patient by a
physician under the guise of an examination. This adjustment does not apply in
the case of an embezzlement or theft by an ordinary bank teller or hotel clerk
because such positions are not characterized by the above-described factors.

In determining whether a person occupied a position of public trust, a court must consider

“[t]he extent to which the position provides the freedom to commit a difficult-to-detect wrong, and

whether an abuse could be simply or readily noticed; defendant’s duties as compared to those of

other employees; defendants’ level of specialized knowledge; defendant’s level of authority in the

position; and the level of public trust.” United States v. Robinson, 198 F.3d 973, 977 (D.C. Cir.

2000) (quoting United States v. Shyllon, 10 F.3d 1, 5 (D.C. Cir. 1993)).

The parties did not address the abuse of position enhancement by plea agreement because

the parties’ found the offenses grouped and therefore calculated the combined offense level solely

pursuant to U.S.S.G. § 2C1.1, to which § 3C1.1 is inapplicable. See U.S.S.G. § 2C1.1 n. 6 (“Do

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not apply § 3B1.3”). After finding the counts do not group, the PSR calculated the offense level

for Count One pursuant to § 2B1.1 and found the two-level enhancement for abuse of trust applies

to Count One. The government agrees.

There is clear evidence that the Defendant’s position provided him the freedom to commit

a difficult-to-detect wrong by dint of the fact that it was not noticed for period of multiple years.

The defendant’s duties, as compared to other employees, including his access to the HR payment

system and his unique role certifying the service of AmeriCorps members and the accordant public

trust that naturally inheres to that role is precisely the type of position contemplated by the abuse

of trust enhancement. It is also plainly the case that the Defendant’s position of public trust

facilitated the commission of the offense. See U.S.S.G. §3B1.3 n. 1. But for the Defendant’s role

as the HR director of Non-Profit 1, responsible both for the payment of employees as well as the

certification of AmeriCorps service, the Defendant would have been entirely unable to fraudulently

enroll AmeriCorps members or to divert the resulting living allowances for his own benefit.

Accordingly, although the parties did not address this enhancement in their plea agreement,

the government submits that the PSR is correct in applying this enhancement.1

C. Role Adjustment

By plea agreement, the parties agreed that a two-level enhancement pursuant to U.S.S.G.

§ 3B1.1(c) applies because the Defendant was an organizer, leader, manager, or supervisor in any

criminal activity other than that described in §3B1.1(a) or (b). The PSR found that a four-level

1
The parties also agreed, by plea agreement, that neither party would seek an offense-level calculation different
from the Estimated Offense Level calculated in paragraph 5(A). See Plea Agreement ¶ 5(C). In the Reservation of
Allocution, the parties “reserve[d] the right to address the correctness of any Sentencing Guidelines calculations
determined by the presentence report writer or the court, even if those calculations differ from the Estimated
Guidelines Range calculated herein[.]” Because the PSR’s calculations differed from the parties’ calculations it is
appropriate under the terms of the government’s plea agreement for the government to address the correctness of the
application of § 3B1.3.
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increase applies because the defendant was an organizer or leader in an otherwise extensive offense

pursuant to U.S.S.G. § 3B1.1(a). PSR ¶ 65. Application note 1 defines a “participant” as a person

who is criminally responsible for the commission of the offense, but who need not have been

convicted. With respect to Section 3B1.1(a)’s “otherwise extensive” prong, the Court of Appeals

for the D.C. Circuit has concurred with the Court of Appeals for the Second Circuit’s analysis in

United States v. Carrozzella, holding, “[w]e further agree with the Second Circuit that, at a

minimum, Section 3B1.1's ‘otherwise extensive’ prong demands a showing that an activity is the

functional equivalent of an activity involving five or more participants.” United States v. Wilson,

240 F.3d 39, 49 (D.C. Cir. 2001) (quotation omitted) (citing United States v. Carrozzella, 105 F.3d

796, 802 (2d Cir. 1997)). Based on Wilson’s adoption of Carrozella, the government submits that

the facts of this case support a two-level enhancement pursuant to § 3B1.1(c).2

D. Guidelines Calculations

Based on the foregoing, the United States submits that the Guidelines calculations is as

follows:

Count One
Base Offense Level (§ 2B1.1) 6
Specific Offense Characteristic (§2B1.1(b)(1)(G)) +12
Loss of more than $250,000 and less than $550,000
Adjustment for Role in the Offense (§3B1.1(a)) +2
Abuse of Trust (§3B1.3) +2
Adjusted Offense Level (Count One) 22

Count Two
Base Offense Level (§ 2C1.1) (public official) 14
Specific Offense Characteristic (§2B1.1(b)(1)(G)) +12
Bribe of approximately $300,000

2
The government notes that application of a two-level or four-level enhancement for role in the offense pursuant to
§ 3B1.1 results in the same adjusted offense level because Count Two has a higher adjusted offense level than Count
One and both the two-level and four-level role adjustment result in the same multiple unit offense level adjustment
pursuant to U.S.S.G. § 3D1.4.
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Adjusted Offense Level (Count One) 26

Multiple Count Adjustment (§ 3D1.4) +2

Combined Adjusted Offense Level 28

Acceptance of Responsibility (§ 3E1.1(a)) -2
Acceptance of Responsibility (§ 3E1.1(b)) -1

Total Offense Level 25

E. Criminal History and Guidelines Range

The defendant has zero criminal history points, placing him in Criminal History Category

I. With a total offense level of 25, as calculated by the PSR, and a Criminal History Category I,

the recommended imprisonment range is 57 months’ to 71 months’ imprisonment.

III. The 18 U.S.C. § 3553(a) Factors

The Court must impose a sentence that is sufficient but not greater than necessary to reflect

the seriousness of the offense, to promote respect for the law, to provide just punishment, to afford

adequate deterrence, to protect the public from further crimes of the defendant, and to provide the

defendant with needed educational or vocational treatment. 18 U.S.C. § 3553(a)(2). The Court also

must consider the nature and circumstances of the offense, the history and characteristics of the

defendant, the kinds of sentences available, the sentencing range under the guidelines, any relevant

policy statements, the need to avoid unwarranted sentencing disparities, and the need to provide

restitution to the victims. 18 U.S.C. § 3553(a)(1)-(7).

A. The Nature and Circumstances of the Offense and the Need for the
Sentence to Reflect the Seriousness of the Offense

The Defendant’s offenses are egregious. He abused his position of trust at Non-Profit 1 to

steal more than $500,000 from a taxpayer-funded federal program that is designed to address the

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needs of some of the country’s most vulnerable residents. In addition to fraudulently enrolling his

wife and re-enrolling former members without their knowledge, the Defendant was so motivated

to rob this program that he went so far as to fire an AmeriCorps member mid-term in order to

divert a portion of the member’s living allowance for the Defendant’s own benefit.

This was not an isolated incident but rather a systematic pattern of robbing the federal

programs that the Defendant was tasked with administering and safeguarding. The systemic theft

from AmeriCorps occurred over a five-year period and began when the Defendant was already

debarred from involvement with federal grants for a prior attempt to divert grant funds. It was then

followed immediately with an attempt to personally profit from his role in disbursing CARES Act

funds. The COVID-19 pandemic devasted communities nationwide. Untold numbers of employees

lost their jobs and many entire industries were decimated. The Coronavirus Relief Fund was

established by the CARES Act to cover necessary expenditures that were incurred as a result of

the COVID-19 pandemic. The funds allocated to City and County’s DCS were to be “targeted

towards addressing social and human needs of residents of Hawaii due to impacts of the

pandemic.” The Defendant’s role was the CARES Act Program Administrator was a very special

position of trust. He served as a gatekeeper to ensure that the limited amount of money that was

allocated to help ameliorate some of the devastating economic consequences of the COVID-19

pandemic would be directed towards those in the most need. Instead, just like the AmeriCorps

program that he was entrusted to direct, he treated the CRF as his own personal piggy bank, and

planned to divert much-needed funds towards Co-Conspirator 1’s fraudulent grant applications

rather than the programs and people who truly needed the money, so that he could financially

benefit from the transaction.

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In his sentencing memorandum, the Defendant asks the Court to consider the fact that his

incarceration will leave his family without an income and that he will owe restitution to

AmeriCorps and that he has already surrendered his family vehicle. The government notes that

although he did surrender the 2014 Ford Fusion that was purchased with fraud proceeds, as of the

date of the required financial disclosures, the Defendant was still paying $840 a month to lease a

2020 BMW X3. Further, restitution to AmeriCorps is not a punishment or imposed lieu of

punishment but is, instead, required under the MVRA to make the victim whole and to ensure that

perpetrators do not financially profit from their crimes.

The Defendant also asks this Court to impose a below Guidelines sentence because his

crimes were “entirely monetary[,]” and because he did not pollute air or water or physically assault

or injure someone. Defendant’s Sentencing Memorandum at p. 8. The government respectfully

disagrees with this assessment of the Defendant’s crime. This was not a victim-less monetary

crime. AmeriCorps does not have an unlimited budget – instead they have a fixed budget, funded

by taxpayer money, which is allocated to pay living stipends for volunteers who work in the most

vulnerable and marginalized communities, including on the life and health-threatening issues of

pollution, and including programs to assist people who have been victims of crimes.3 By stealing

more than $500,000 from AmeriCorps to fund his own luxurious lifestyle, the Defendant precluded

those limited funds from being used for their purpose – to help the most vulnerable members of

our society.

3
By way of example, AmeriCorps funds the AmeriCorps Victim Assistance Program. https://serviceyear.org/avap/.
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B. The Need to Promote Respect for the Law and to Deter the Defendant
and Others from This Type of Criminal Conduct

Although the Defendant requests a significant variance from the Guidelines, a sentence of

imprisonment here is necessary for both specific deterrence and general deterrence. Stealing from

public funds earmarked for vulnerable Americans is a serious offense that warrants a significant

period of incarceration. Although there is no question that the Defendant is well-liked in his family

and community, he is being sentenced today for fraud on federal programs that spanned many

years and multiple programs and his course of conduct demonstrates a genuine need for specific

deterrence. Indeed, had the Defendant not been caught by the diligent efforts of the AmeriCorps

Office of Inspector General and the FBI, there is little doubt that he would be defrauding both

programs to this day.

AmeriCorps funds are distributed through a de-centralized process that relies upon the

grantees and the subgrantees to honestly account for the service of AmeriCorps members. It is

critical that the Defendant’s sentence serve as a deterrent to others who would take advantage of

this system to line their own pockets rather than administer programs that are desperately need by

vulnerable Americans.

Similarly, the CARES Act funded a $150 billion Coronavirus Relief Fund, which is being

administered by state and local governments throughout the country. It is critically important at

this moment in our nation’s history that the funds allocated to help those suffering from the effects

from the COVID-19 pandemic are protected by deterring those who would divert those funds for

their own financial gain. There is a significant amount of money now available to struggling

communities through both the CARES Act and the American Rescue Plan, which poses unique

and widespread risk for taxpayer money ear-marked for the most vulnerable Americans to be stolen

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by unscrupulous people who are tasked with safe-guarding it. The Defendant’s sentence for

agreeing to take a bribe with respect to the administration of grants under the CARES Act must

send a clear message that there are serious criminal consequences for this type of conduct in order

to deter others who may be tempted to personally benefit from the COVID-19 pandemic and to

deprive vulnerable Americans from help that is desperately needed.

C. The History and Circumstances of the Defendant

The Defendant’s convictions here are a culmination of a long pattern of attempting to

enrich himself by fleecing programs designed for the most vulnerable Americans. While employed

at Non-Profit 1, he was already debarred from any involvement in a federal grant program after

being caught attempting to divert federal grant funds from a different grantee to his own personal

bank account. He nonetheless proceeded to run Non-Profit 1’s AmeriCorps program and to

systematically steal more than $500,000 over the course of five years. After obtaining the position

of CARES Act Administrator he immediately attempted to find a way to turn it to his own financial

gain – above and beyond his salary that was already being paid by public funds. His text messages

with Co-Conspirator 1 reveal that he was persistent in his attempts to find a way to turn his position

of trust to his own financial advantage in concert with Co-Conspirator 1, who was a ready and

willing partner in crime.

The Defendant reports that he comes from a close-knit family that was very involved with

serving the community. His persistent greed and theft from public programs are indefensible and

were motivated by greed. While AmeriCorps members were serving their communities and

subsisting on only $12,500 a year, the Defendant was spending hundreds of thousands of stolen

public funds on lavish vacations, restaurants, shopping, massages, and a new BMW X3. He was

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motivated by personal gain and his actions came at a very real cost to both the AmeriCorps

members who were deprived of the opportunity to participate in a year of service and the countless

community members that those AmeriCorps members would have helped and supported. But for

the withdrawal of Co-Conspirator 1’s grant applications after the execution of search warrants, his

willingness to be bribed in return for approving Co-Conspirator 1’s applications would have

deprived people and organizations that actually suffered harm from the COVID-19 pandemic from

the funds that the Defendant was willing to divert to Co-Conspirator 1 based on Co-Conspirator

1’s fraudulent grant applications.

The Defendant asks this Court to vary dramatically downward from the Guidelines because

he accepted responsibility and entered into a pre-Indictment plea. The Government agrees that the

Defendant should be lauded for accepting responsibility for his conduct and the government agrees

that his pre-Indictment plea has saved the government both time and resources. However, that

acceptance is incorporated into the Guidelines range through the three-level reduction in offense

level pursuant to 3E1.1 Further, the Defendant obtained significant benefits in return for his pre-

Indictment plea. In particular, the Defendant was not subject to aggravated identity theft charges

for the use of at least nine individuals’ names in connection with the fraudulent AmeriCorps

enrollments; a charge that carries with it a mandatory consecutive two-year prison term.

The Defendant argues that he should be sentenced below the Guidelines because

imprisonment will prohibit him from working and paying restitution. Respectfully, the government

submits that it is not appropriate to impose disparate sentences based on a defendant’s ability to

earn money and thus pay restitution. Such an approach would create two classes of defendants –

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those with significant earning potential and those without – and would result in a class-based

system of punishment that is antithetical to our system of justice.

Finally, the Defendant argues that he should be sentenced below the Guidelines because

he has endured the loss of face in his community. While the government acknowledges that the

loss of reputation and respect is a painful and real consequence of being caught committing a

crime, this was a consequence entirely of the Defendant’s own making. His reputation in the

community – one of public service and generosity – was a house of cards built on many years of

systematically defrauding the very community that he purported to serve. As with the ability to

earn a salary for restitution, the government submits that there is no place in this justice system for

a stratified system of punishments where prominent members of the community receive

significantly lesser sentences because they have endured the loss of their reputation whereas lower

profile defendants are sentenced to longer prison terms because they perhaps had no reputation to

lose.

D. Unwarranted Sentencing Disparities

The District of Columbia Circuit has recognized that there will “inevitably . . . [be]

sentencing disparities and inequities that can be explained by little more than the identities of the

sentencing judges.” United States v. Gardellini, 545 F.3d 1089, 1096 (D.C. Cir. 2008); see also

United States v. Saez, 444 F.3d 15, 19 (1st Cir. 2006) (“[W]ith different judges sentencing two

defendants quite differently, there is no more reason to think that the first one was right than the

second.”). The Guidelines “reduce unwarranted federal sentencing disparities,” Freeman v. United

States, 564 U.S. 522, 525 (2011), by “creat[ing] a comprehensive sentencing scheme in which

those who commit crimes of similar severity under similar conditions receive similar sentences.”

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Id. at 533. A sentencing court “necessarily g[ives] significant weight and consideration to the need

to avoid unwarranted disparities” by “correctly calculat[ing] and carefully review[ing] the

Guidelines range.” Gall v. United States, 552 U.S. 38, 54 (2007). “[I]mposing a within-guidelines

sentence is the surest way to avoid unwarranted disparities.” United States v. White, 737 F.3d 1121,

1145 (7th Cir. 2013).

Courts in this District have imposed sentences that reflect the serious nature of embezzling

from federal programs and corrupting those programs through bribery.

In 2019, James King pleaded guilty to violations of 18 U.S.C. §§ 1343 and 1346, 18 U.S.C.

§ 201(b)(2), and 18 U.S.C. § 1519. In his role as an official at the Department of Veterans Affairs

(VA), King took bribes to enroll disabled military veterans in three for-profit schools and facilitate

over $2 million in payments from the VA’s Vocational Rehabilitation & Employment program to

those schools based on information he knew to be false. He also falsified a site report to obstruct

a VA investigation into the quality of education at one of the three schools. King was sentenced to

132 months in prison followed by three years of supervised release, and to pay $155,000 in

restitution to the VA. See United States v. King, 18-cr-318-JDB (D.D.C.).

In 2019, Ronnie Simpkins pleaded guilty to violating 18 U.S.C. § 201(b)(2) by accepting

bribes from government contractors. As a government contract officer at the General Services

Administration (GSA), Simpkins accepted over $12,000 in cash and goods from a company’s

officials to help that company maintain a government contract despite not meeting program

requirements. Based on Simpkins’ offense level of 15, the advisory Guidelines recommended a

sentence of 18-24 months. Simpkins was sentenced to 21 months in prison followed by one year

of supervised release, a $10,000 fine, and a money judgment of $12,000. See United States v.

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Simpkins, 19-cr-403-TNM (D.D.C).

In 2013, Mark Adams pleaded guilty to violating 18 U.S.C. §§ 1341, 1343, and 1349

after embezzling more than $1 million from the U.S. Agency for International Development

(USAID)’s global health program. In his role as the deputy director of a private USAID

contractor, Adams submitted and approved a total of 35 fraudulent invoices, ultimately paid for

by USAID, for services supposedly rendered by Adams’ wife and friends. These fraudulent

invoices generated more than $1.084 million between 2006-2010, most of which was received by

Adams and his wife. Adams was sentenced to 51 months in prison followed three years of

supervised release, five years of probation (first six months under home confinement), and

restitution of $1,084,499. See United States v. Adams et al., 12-cr-93-BAH (D.D.C.).

The Defendant submits that the Court should avoid unwarranted sentencing disparities by

sentencing him to the average fraud sentence in the D.C. Circuit in 2020. Defendant’s

Sentencing Memorandum at 5-6. The Court should not adopt this approach. First, nearly all

Defendants who were sentenced during 2020 were sentenced during a once-in-a-century

pandemic. Second, the average of all fraud sentences is not a valid methodology to determine

how similarly situated defendants have been sentenced. The average sentence encompasses all

fraud cases, from zero loss cooperator pre-indictment pleas to multi-million-dollar fraud cases

sentenced after trial. The annual average is also a result of the types of cases brought each year,

which can vary dramatically. The variability of this approach is best demonstrated by its

significant variation year by year. For example, in 2019, the average fraud sentence in the D.C.

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Circuit was 13 months.4 In 2018, the average fraud sentence in the D.C. Circuit was 25 months.5

And, in 2017 the average fraud sentence in the D.C. Circuit was 27 months.6 Certainly, the

defendant’s sentence should not be a product of what year he is sentenced in. Because the

Guidelines were crafted to incorporate loss amounts and aggravating and mitigating factors and

to apply equally nationwide, it is the best framework with which to avoid unwarranted

sentencing disparities. This is particularly appropriate, here, where most of the conduct at issue

occurred in the state of Hawaii, and not in Washington, D.C. The government respectfully

submits that this Court should disregard the Defendant’s request to be sentenced to the average

2020 fraud sentence in the D.C. Circuit and should instead consider the advisory Guidelines’

range, the defendant’s conduct and characteristics, and similar cases involving both

embezzlement and bribery from federal programs when fashioning a sentence that avoids

unwarranted sentencing disparities.

IV. Restitution and Forfeiture

A. Restitution to AmeriCorps

Restitution is mandatory under 18 U.S.C. § 3663A. In his plea agreement, the Defendant

agreed to pay restitution in the amount of $527,000. ECF 14 ¶ 11. This amount erroneously omitted

the $5,730 paid by AmeriCorps in response to Angelita Aipoalani’s fraudulent application for an

educational grant. Restitution for the $5,730 education award is also mandatory under the MVRA.

Accordingly, the Court should order the Defendant to pay a total of $532,370 in restitution to

4
See https://www.ussc.gov/sites/default/files/pdf/research-and-publications/federal-sentencing-statistics/state-
district-circuit/2019/dcc19.pdf at p. 11.
5
See https://www.ussc.gov/sites/default/files/pdf/research-and-publications/federal-sentencing-statistics/state-
district-circuit/2018/dcc18.pdf at p. 11.
6
https://www.ussc.gov/sites/default/files/pdf/research-and-publications/federal-sentencing-statistics/state-district-
circuit/2017/dcc17.pdf at p. 11.
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AmeriCorps, of which $74,730 is owed jointly and severally with co-defendant Angelita

Aipoalani, 20-cr-290-RBW.

B. Restitution to B.M.

As part of his scheme to defraud AmeriCorps, Hanalei Aipoalani fired AmeriCorps

member B.M. in the middle of his AmeriCorps term in order to divert the living allowances in

B.M.’s name into his own bank accounts. B.M. has submitted a Victim Impact Statement and

stated that he lost $3,159 in AmeriCorps member living allowances as a result of the Defendant’s

conduct. See ECF 23. Pursuant to 18 U.S.C. § 3553A(a)(2), a “victim” for purposes of restitution,

“a person directly and proximately harmed as a result of the commission of an offense for which

restitution may be ordered including, in the case of an offense that involves as an element a scheme,

conspiracy, or pattern of criminal activity, any person directly harmed by the defendant’s criminal

conduct in the course of the scheme, conspiracy, or pattern.” B.M. was directly harmed by

Aipoalani’s conduct in furtherance of the embezzlement scheme and the Court should order the

Defendant to pay $3,159 in restitution to B.M.

C. Forfeiture

As part of his plea agreement, the Defendant has agreed to a forfeiture money judgment of

$527,000 and the forfeiture of a 2014 Ford Fusion Hybrid, purchased with proceeds of the fraud.

The 2014 Ford Fusion Hybrid has been surrendered to the FBI. See ECF 15 (Consent Order of

Forfeiture).

V. Conclusion

The government respectfully submits that a sentence of 66 months’ imprisonment, in the

middle of the advisory Guidelines range, three years supervised release, and restitution and

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forfeiture as described herein is an appropriate and fair sentence in light of the offense conduct,

the need for specific and general deterrence, and the history and characteristics of the Defendant.

The Defendant’s convictions are a result of many years of systematically abusing a position of

trust to steal more than $500,000 of taxpayer money intended for the most vulnerable communities.

His embezzlement not only deprived the community of the services provided by AmeriCorps

programs but also deprived volunteers from the opportunity to serve in this important program.

But for the diligence of the investigators in this case, an additional $845,000 of CARES Act funds

would have been stolen, rendering them unavailable to companies and people who had endured

true hardship as a result of the COVID-19 pandemic. A sentence of 66 months’ imprisonment will

appropriately punish the Defendant for his conduct, provide specific deterrence from future fraud,

and send a clear message that there are significant consequences for robbing public programs

earmarked for vulnerable Americans by abusing positions of trust.

Respectfully submitted,

CHANNING D. PHILLIPS
Acting United States Attorney
for the District of Columbia
D.C. Bar No. 415793

By:
LESLIE A. GOEMAAT
MA Bar No. 676695
Assistant United States Attorney
Fraud Section
U.S. Attorney’s Office
555 4th Street, N.W., Room 5840
Washington, D.C. 20530
Office: 202-803-1608
Leslie.Goemaat@usdoj.gov

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