The board of directors for Na Leo ‘O Hawaii TV is putting Stacy Higa, its CEO and president, on leave after a former associate alleged in federal court he and Higa were involved in a scheme to fraudulently funnel federal coronavirus relief funds to the Big Island public-access cable TV nonprofit.
Hanalei Aipoalani, 42, of Waianae, Oahu, pleaded guilty Friday in U.S. District Court for the District of Columbia to embezzlement and bribery. He is scheduled to be sentenced June 24.
Both charges carry a maximum prison term of 10 years, but a statement from the U.S. District Attorney’s Office for the District of Columbia said the recommended sentence is “between 70 and 87 months in prison.”
Aipoalani’s plea agreement names a “co-conspirator 1” — described as “president and chief executive officer of nonprofit 2” … which provides “public, education, and government programming via public access television for the entire island of Hawaii.”
While not specifically named in the document, Higa — a 57-year-old former County Council chairman who placed fifth in the 2020 mayoral primary race — is president and CEO of Na Leo, the only public access TV outlet on Hawaii Island.
Na Leo’s Hilo studios and offices were raided by the FBI on Oct. 8, 2020.
Higa became president and CEO after the June 26, 2016, board meeting. Prior to that, he was the TV outlet’s general manager.
As of Monday afternoon, Higa hadn’t been charged with a crime in either federal or state court, according to records.
Neither Higa nor Claude Onizuka, Na Leo’s board chairman, returned phone calls in time for this story, but a written statement released by the board late Monday afternoon said Higa would be placed on leave Thursday to enable him “to address these allegations while limiting any interference or disruption to Na Leo ‘O Hawaii’s operations.”
“Na Leo ‘O Hawaii is continuing its normal day-to-day operations,” the statement said.
According to the plea deal, Aipoalani — former human services director of Olelo Community Media in Honolulu — embezzled more than half the nonprofit media center’s allotment of AmeriCorps funds between December 2014 and June 2019.
AmeriCorps is a national network of community service programs funded by the federal government. More than $935,000 in AmeriCorps funding was, according to the plea agreement, to provide “video production training and mentoring” to youth in the community.
According to the plea agreement, the embezzled funds were to pay stipends and awards to AmeriCorps members, but the money instead was diverted to Aipoalani, his wife, Angelita Aipoalani, and Na Leo through a series of fraudulent invoices.
The document states Na Leo was paid more than $97,000 it wasn’t entitled to, and more than $69,000 of that money ended up in a joint bank account held by the Aipoalanis.
All told, the loss of federal funding suffered by Olelo amounted to “at least $527,000,” the agreement states.
According to court records, Angelita Aipoalani also has an ongoing court case on a felony conspiracy charge filed in December.
Deborah Jeffrey, inspector general of AmeriCorps, said in Friday’s statement that Aipoalani “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 to their community.”
Jeffrey added the federal investigation into the embezzlement “also disrupted an ongoing scheme to steal much-needed pandemic relief funds.”
According to the agreement, Aipoalani — who had also served as a paid senior adviser to Higa from January 2015 to early 2017 — became the City and County of Honolulu Department of Community Services grant administrator for coronavirus relief funding on Aug. 3, 2020.
In that temporary position, which was funded by the federal coronavirus relief fund, he managed grant funding for DCS’s $166 million share of the $387 million in coronavirus relief funding received by the City and County of Honolulu.
The document states that around August 2020, Higa “agreed to provide (Aipoalani) with future financial benefits” if Aipoalani would influence the approval of applications for COVID-19 relief money administered by the City and County of Honolulu “to entities owned/and or controlled by (Higa) and his associates.”
Between Aug. 25 and mid-September, Aipoalani “repeatedly provided guidance” to Higa on the application process for two grants for Na Leo and another unnamed entity controlled by Higa, described as a company providing “business and leadership consulting services to nonprofit organizations,” the plea deal states.
The agreement said Aipoalani and Higa “discussed splitting the remaining funds” after completion of the work by Na Leo and Higa’s other company.
The document also states Aipoalani asked Higa to “carry” him as a part-time project manager, and Higa agreed to the arrangement if he had “additional funding,” allegedly telling Aipoalani he would be paid as a contractor so auditors wouldn’t ask questions.
Aipoalani expected the job would last at least a year and that he would be paid about $60,000 yearly.
According to the agreement, they discussed setting up limited liability companies on Oahu to launder money, listing their wives as the companies’ principals.
On or about Sept. 16, 2020, Aipoalani told Higa the plan was to “fund both applications” with just over $1 million, describing $600,000 as “gravy money,” the agreement stated.
According to the document, the two applications totaled about $845,000, and Aipoalani knew both applications “fraudulently claimed expenses that were not incurred” by either company, and that “in agreeing to accept a financial benefit, provided through future employment,” Aipoalani “intended to be influenced to approve the grant applications.”
The document doesn’t specify if either or both applications were approved, and Aipoalani — whose contract with the city ended about Nov. 30 — was charged by the feds in December.
Email John Burnett at jburnett@hawaiitribune-herald.com.