Former Na Leo TV executive Stacy Higa took a plea deal, admitting guilt to federal programs embezzlement and federal programs bribery, and to using much of his ill-gotten gains for aesthetic dental care and a small portion for his failed 2020 Hawaii County mayoral campaign.
The former Hawaii County councilman pleaded guilty Wednesday via teleconferencing before Judge Reggie Walton of the U.S. District Court for the District of Columbia, who will sentence him at 2 p.m. EST on Jan. 13.
Higa could face up to 10 years in prison for each of the two charges, with a likely range of 46 to 57 months’ imprisonment and a maximum $200,000 fine, according to the U.S. Attorney’s Office for the District of Columbia.
Higa admitted to embezzling $38,642 from AmeriCorps, a federally funded network of national service programs, and agreed to paying that amount in restitution and the same amount in a forfeiture money judgment.
The 58-year-old Hilo man admitted to bribing Hanalei Aipoalani, who served in 2020 as CARES Act administrator for the city’s Department of Community Services, and oversaw $166 million in Coronavirus Relief Fund money.
The government did not ask to detain Higa, but he was ordered to immediately surrender his passport.
His lawyer, William Harrison, told the judge detention is not appropriate because it is a white-collar crime and not a drug case, and that Higa has no criminal history and is not a flight risk.
“You’re not suggesting a white-collar crime is not a serious crime, are you?” Walton asked.
“No I’m not,” Harrison responded.
Addressing Higa, Walton said: “I consider this to be very serious conduct,” Walton said. “I don’t understand the mentality of somebody who, when we appropriate money to try and help people, in reference to one of the most devastating things this country has ever experienced, that people are so low that they will steal that money for their own purpose and therefore void that money being used to help people who need it.”
“You need to find an explanation for me as to why you did that because you’re looking at some serious punishment,” the judge said.
Aipoalani, a former Olelo TV executive, guided Higa from August 2020 to September 2020 in applying for two grants totaling $845,000 for two entities controlled by Higa — nonprofit Na Leo Hawaii and a for-profit company described by the government as Company 1, which he and his wife formed.
From August 2020 to October 2020, Higa offered financial benefits to Aipoalani, including hiring him as a project manager and as a contractor to avoid detection. The two discussed opening limited liability corporations and using their wives as principles to launder the money, and Higa directed Aipoalani to open credit union savings accounts when one of the grants was approved, Assistant U.S. Attorney Leslie Goemaat told the judge.
Higa expected Aipoalani to assist in approving the applications and to pay him back by funneling the money through Na Leo Hawaii, she said.
“Ultimately, Aipoalani submitted Company 2’s application under the umbrella of a separate grantee in order to obscure Company 2’s receipt of the CARES Act funds,” Goemaat said.
Higa expected to receive at least $250,000 in profit from the CARES Act funds, while Aipoalani admitted to expecting $60,000 a year in return.
In the AmeriCorps embezzlement scheme, Higa used his position as executive director for the Hawaii Commission for National and Community Service, which disburses funds for AmeriCorps programs in the state. He served in that position from June 2011 until May 2020, when he resigned to run for mayor.
Higa embezzled $38,642 from AmeriCorps, which he authorized from February 2018 until his resignation. He did this by signing and authorizing contracts and purchase orders between the commission and two companies under his control, without disclosing his control of the companies.
That included Company 1, which he formed with his wife, and Company 2, a consulting company on Hawaii island controlled by Higa, but owned by three Na Leo employees, called Employees 1, 2 and 3. They were hired and supervised by Higa at Na Leo.
Most of the work performed under those contracts was done by the Na Leo employees, who were being paid by Na Leo, while Higa benefited from the money transmitted to the two companies.
Goemaat told the judge that Higa used the CARES Act funds for his own benefit, much of it for elective aesthetic dental care, amounting to $20,000.
Some $4,000 of the embezzled money was consideration a donation to Higa’s mayoral campaign, Goemaat said.
It’s unclear whether any further charges stemming from this case will be forthcoming against the Na Leo Hawaii employees or anyone else.
“Our communities place great trust and responsibility in our public figures,” said FBI Special Agent in Charge Steven Merrill. “Stacy Higa ultimately betrayed this trust when he abused his power to embezzle federal funds and participate in bribery.”
On Oct. 8, 2020, federal agents from AmeriCorps and the FBI raided Na Leo TV’s executive offices, but Higa was not charged until Sept. 2, 2021, after convictions were secured against Aipoalani and his wife, Angelita.
Aipoalani, who pleaded guilty to embezzlement from AmeriCorps and accepting a bribe under the CARES Act, was sentenced June 30 to three years and 10 months and ordered to pay more than $532,730 in restitution to AmeriCorps.
In May, the attorney general established the COVID-19 Fraud Enforcement Task Force to enhance efforts to combat and prevent pandemic-related fraud, the U.S. Attorney’s Office said, adding it “bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud.”
To report allegations of attempted fraud involving COVID-19, call the National Center for Disaster Fraud Hotline at 866-720-5721 or submit a complaint form at bit.ly/3vaVKC2.
Anyone aware of fraud, waste or abuse affecting AmeriCorps can contact its Office of Inspector General Hotline at 1-800-452-8210 or go to hotline@AmeriCorps OIG.gov