UNIVERSITY OF HAWAII AGREES TO PAY NEARLY $500,000 TO RESOLVE AMERICORPS GRANT OVERSIGHT ALLEGATIONS

WASHINGTON — The University of Hawaii has agreed to pay $499,950 to resolve federal allegations that inadequate oversight allowed AmeriCorps grant and sub-grant funds to be misused while the University and the Hawaii Commission for National and Community Service certified that the money had been used for authorized purposes and in compliance with federal grant requirements.

The civil settlement was announced by the U.S. Attorney’s Office for the District of Columbia and resolves allegations under the False Claims Act involving the Hawaii Commission for National and Community Service, known as HCNCS, and the University of Hawaii.

The settlement agreement provides a broader picture of the financial structure involved.

According to the agreement, HCNCS administered Hawaii’s AmeriCorps state programs and operated within the University of Hawaii for administrative purposes. HCNCS maintained its own statutory board of directors, but its executive director and staff were University employees, and the University was responsible for monitoring and certifying that AmeriCorps funds were being used properly.

Between program years 2016 and 2020, HCNCS received approximately $2.35 million in AmeriCorps Commission Administration and Training and Technical Assistance grants and was responsible for distributing and overseeing approximately $19.15 million in AmeriCorps sub-grants.

The federal investigation grew out of earlier criminal prosecutions involving people connected to the AmeriCorps funding system.

Former HCNCS Executive Director Stacy Higa pleaded guilty in October 2021 to embezzling AmeriCorps grant funds. The settlement agreement states that during program years 2016 through 2020, Higa personally directed federal funds through HCNCS to companies he owned, oversaw, or directed the creation of. The United States contends that insufficient University oversight contributed to those activities continuing.

The federal investigation also involved Hanalei Aipoalani, who served as Program Director for Olelo Community Media, an AmeriCorps subgrantee. Aipoalani pleaded guilty to embezzling AmeriCorps program funds.

His wife, Angelita Aipoalani, pleaded guilty to conspiracy to embezzle. The settlement agreement states that she was fraudulently enrolled as a full-time AmeriCorps member at an organization where Higa served as full-time chief executive officer.

The agreement also identifies a separate subgrantee, FarmCorps, which received $385,456 in federal funds to operate its AmeriCorps program.

FarmCorps members received another $208,561.63 in Segal Education Awards, according to the settlement.

The settlement agreement alleges that some of those funds were improperly used to compensate individuals for claimed service hours that included tending personal gardens or home farms, performing non-AmeriCorps jobs, or tending school gardens while attending those schools as students.

That detail substantially broadens the case beyond the criminal conduct of the previously prosecuted individuals.

The federal government’s civil allegation centers on the University’s certification of the spending.

During the period when AmeriCorps funds were being misappropriated, HCNCS and the University submitted semi-annual Federal Financial Reports to AmeriCorps stating that grant and sub-grant funds had been used for authorized purposes and in compliance with applicable terms.

The United States contends those certifications were knowingly false because the University and HCNCS failed to provide adequate oversight and supervision.

The settlement agreement states that, had the University properly supervised Higa and HCNCS spending and acted on AmeriCorps audit findings, the misappropriation of federal funds would have been prevented or stopped more quickly.

U.S. Attorney Jeanine Ferris Pirro said AmeriCorps funds are intended to strengthen communities and improve lives, and that institutions receiving federal grant money have a responsibility to properly monitor the money and accurately report how it is used.

The $499,950 payment is designated entirely as restitution under the agreement and must be paid to the United States within 60 days of the agreement’s effective date.

The settlement does not constitute an admission of liability by the University or HCNCS.

The agreement expressly states that it represents a compromise of disputed claims and that the University and HCNCS deny engaging in conduct that created valid claims against them. The government likewise does not concede that its claims were unfounded.

That distinction is critical.

The earlier criminal cases resulted in guilty pleas by individuals who admitted to misappropriating AmeriCorps funds. The current settlement addresses separate civil allegations that the University and HCNCS failed to adequately supervise and monitor the federal money and then submitted certifications concerning its proper use.

The civil agreement also preserves several categories of potential liability that are not being released.

Among them are any criminal liability, certain administrative liability, tax-related liability, obligations created by the agreement itself, liabilities involving individuals, and matters outside the conduct specifically covered by the settlement.

The settlement further requires the University and HCNCS to bear their own legal and other costs associated with the matter.

Certain costs connected to the investigation, audits, corrective actions, negotiations, and settlement payments are classified as unallowable costs for government contracting purposes and cannot be charged back to the United States through federal contracts or related claims.

The agreement was executed by representatives of the University of Hawaii, HCNCS, and the federal government.

University President Wendy Hensel and Carrie K. S. Okinaga, Vice President for Legal Affairs and University General Counsel, signed on behalf of the University.

Keala Moncao, Executive Director, and John Price, Deputy Attorney General, signed on behalf of the Hawaii Commission for National and Community Service.

The underlying federal investigation also involved the AmeriCorps Office of Inspector General, the FBI Honolulu Field Office, and criminal prosecutors from the U.S. Attorney’s Office for the District of Columbia.

The civil resolution was handled by Assistant U.S. Attorney Sean M. Tepe and Auditor Timothy J. Hurley.

AmeriCorps administers and funds national service programs focused on education, youth mentoring, poverty reduction, disaster preparedness, environmental conservation, public service, and other community needs.

Federal grants flowing through those programs can move through multiple agencies, commissions, subgrantees, and local organizations before reaching their final use.

That layered structure makes oversight essential.

The University of Hawaii settlement shows the federal government’s position clearly: institutions responsible for supervising federal grant money are expected to know how that money is being spent, maintain controls capable of detecting misuse, and ensure that certifications submitted to federal agencies accurately reflect what is occurring underneath the administrative chain.

This case is not a finding that the University committed fraud.

It is a civil settlement resolving federal allegations that inadequate oversight contributed to false certifications concerning AmeriCorps funding, following criminal cases in which individuals admitted to embezzling program funds.

The distinction between those two legal outcomes must remain clear, but the underlying lesson is equally clear: federal grant oversight is not a paperwork exercise. It is part of the control system intended to keep public money from being diverted before the damage reaches millions of dollars.

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U.S. Department of Justice, U.S. Attorney’s Office for the District of Columbia — Fully Executed Settlement Agreement between the United States, the University of Hawaii, and the Hawaii Commission for National and Community Service. (Free Download)

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