Second California Office of AIDS worker sentenced in $2 million fraud scheme
A former California Office of AIDS manager who created a phony public relations company as part of a scheme that bilked the state out of more than $2 million was sentenced Thursday in federal court to two years in prison and ordered to pay $481,200 in restitution.
Christine Iwamoto, 48, who pleaded guilty in October to charges of wire fraud and conspiracy to commit money laundering, is the second state worker sentenced in a fraud case that diverted money from the California Department of Public Health to fund lavish trips to Disneyland, athletic events and a boat rental for a child’s birthday party, court and state documents say.
“The defendant participated in diverting money that was supposed to be used for the benefit of AIDS patients and people at high risk of HIV infection,” prosecutors wrote in court documents. “Among other things, she received $450,000 in a bank account under her control, keeping a substantial portion for her own benefit and also passing along funds to an Office of AIDS employee who was participating in the scheme.”
U.S. District Judge Troy L. Nunley noted that Iwamoto’s attorney was seeking a sentnece of home confinement for her, but said “I don’t give out gifts here” and orderred her to report to prison June 2.
“You will think of this every single day of your life, I know you will,” Nunley told her. “Jail is absolutely appropriate for what you did.”
Iwamoto apologized to the government and to her family, and noted the stress her behavior had placed on her loved ones, including her teenage daughters and her 80-year-old mother, who had to be taken to a hospital emergency room after attending Iwamoto’s hearing last fall in which she pleaded guilty.
“I do feel very guilty with what’s going on in their lives,” she told the judge.
Prosecutors say the scheme ran between December 2017 and November 2018 and was orchestrated by Office of AIDS manager Schenelle Flores, who ingratiated herself with a Madera County company that had a contract to provide health products for the office to prevent the spread of AIDS.
Prosecutors say Iwamoto submitted phony invoices and obtained 312 gift cards valued at $100 each that the Office of AIDS distributed to people who took part in Office of AIDS projects to promote healthy practices.
Court papers filed by prosecutors have not identified the company, but state health documents obtained by The Sacramento Bee through a lawsuit against the state show it was MLB Distributors, a now-defunct firm that allowed Flores access to an MLB executive’s debit card that she ultimately used to rack up various charges for personal expenses.
Flores, 46, was sentenced last month to five years and 10 months in prison and was ordered to report to prison May 18.
Court and state health documents say Iwamoto created a fake consulting firm called PR Management Consultants with an address at a UPS mailbox store on Calvine Road. Using the phony identity “Patricia Roberts” and a Gmail account she made up, Iwamoto billed the Office of AIDS for $450,000 for work that was never done, documents say.
Prosecutors said in court documents that the loss of state funds attributed to Iwamoto was $481,200, and argued for a 31-month sentence.
Iwamoto’s attorney, Raoul Severo of Glendale, argued for a two-year sentence, writing that his client “finds herself at the absolute bottom and she is dedicated to separating herself entirely from the criminal misconduct in this case and to atone for her transgressions.”
“Ms. Iwamoto desires only a chance to one day return to society and live as a productive, law-abiding citizen,” he wrote, adding that she is a mother of two and has suffered from health problems and depression.
He wrote that one of Iwamoto’s children had health issues that were presenting her with increasing medical bills at the time the scheme began, and cited a pre-sentencing report that said “Iwamoto admits she lost her mind” trying to deal with the stress.
“She stated she was approached by Schenelle Flores who was a former colleague and friend,” the attorney wrote. “Flores knew the situation Iwamoto’s family was facing during that time.
“Flores told Iwamoto she knew a contractor (MLB) in Los Angeles, California, who needed someone to do human resource work for them, but Iwamoto had to open a business for her services to be billed. Therefore, Iwamoto opened PRMC at the urging of Flores. Iwamoto’s background was in human resources, and Flores told her she would work from home and still take care of her daughter.
“Iwamoto said she first received a $50,000.00 deposit in the bank account for PRMC and asked Flores what the payment was for since she had not yet done any work for MLB. Iwamoto said Flores ‘brushed off’ the question, and Iwamoto said she realized at that time that something was not right.”
He added that Iwamoto “was not flamboyant with the funds and spent money from the scheme to do work on their house and yard and put in an above-ground pool.”