Saturday, March 1, 2014

Ex-Little League boss admits embezzlement

A former president of Hilo Little League has pleaded guilty in federal court to embezzling tens of thousands of dollars in league funds, plus money from two youth soccer teams, a pageant organization and a car repair and alignment shop.

According to the plea agreement, Cheryl L. Octavio, a former Bank of Hawaii business banking officer, “willfully stole, embezzled, and misapplied funds entrusted to Bank of Hawaii’s custody and care.”

The plea agreement states that Octavio, who has no prior criminal record, could be sentenced to up to 30 years in prison, fined up to $1 million and receive up to five years of supervised release, the federal equivalent of probation, for “theft, embezzlement, or misapplication by a bank officer or employee.”

The 43-year-old Octavio, who is free on $25,000 bond, is scheduled to be sentenced April 28 at 3 p.m. by U.S. District Judge Susan Oki Mollway in Honolulu. Terms of her plea deal allow her to appeal her sentence.

“All you can do in federal cases is build the factors you believe favor your client into the plea agreement,” Marcus Sierra, Octavio’s Honolulu-based attorney, said last week. “So you’ll see factors in there like the government’s agreeing that she took responsibility early. The government’s agreeing on the amount that’s lost in the case. … So there’s now more flexibility for the defense to present a good argument … for less incarceration time.”

The document states that between about Dec. 17, 2009, and Nov. 7, 2012, Octavio stole at least $22,627.09 from Hilo Little League accounts, at least $13,969.43 from Big Island Futbol Club, dba Haaheo Soccer Club, accounts, at least $4,873 from Na Hoa O Puna soccer club’s account, at least $4,491.38 from Lehua Hawaii Productions account, and $10,000 from East Hawaii Auto Center’s account.

Octavio, who was indicted on Aug. 7, 2013, pleaded guilty on Nov. 21. She is to make restitution to the bank under terms of her deal.

In November 2010, Octavio received a silver award from the U.S. Small Business Association for her work for Bank of Hawaii.

Naomi Campbell, Little League district administrator for Hawaii and Maui counties, said she suspected something was awry with Hilo Little League’s books starting in 2011.

“I would ask for documents and the numbers didn’t make sense. I wouldn’t get the numbers on time; there was procrastination,” she said. “So I asked (former Hilo Little League information officer) Marcie Greenwell if she would be courageous enough to step up to the plate and ask for an internal audit, which at the district level I’m not immediately allowed to do. … And I thank her for that.”

Campbell said that she then took over the investigation.

“I came up with $30 thousand, but that more or less includes things that I knew were not appropriate disbursements. The FBI’s Greg Tomonaga, who was excellent to work with, went with strictly what could be proven. That amount was $22 thousand,” Campbell said.

The embezzled funds are covered by the Federal Deposit Insurance Corp., and Campbell said the bank, “who was really good to us,” reimbursed the league $30,000.

“They paid us in advance. I asked them to do so because the league did not have any funds to start up the 2014 season. That’s how bad it was,” she said adding that over the past two years, HLL has “struggled with funds to meet certain requirements and/or purchasing uniforms, equipment, etc.”

Campbell said that Hilo Little League is “slowly rebuilding.”

“As far as the rest of the island, it’s blossomed,” she said. “We have West Hawaii Little League coming back under another name. We have Ka‘u Little League being developed. All in all, we have seven leagues on the island, and the rest are all doing well.”

Haaheo Soccer Club President David Dinkle said his club no longer uses the name Big Island Futbol Club and none of the current officers were on board when the theft occurred.

“We sat with Bank of Hawaii, the president of the club at the time (Reginald Arceo) and me. I was VP at the time and had only been there for a few months,” he said. “… We didn’t know any of this stuff going into it, we just wanted the kids to play soccer and said, ‘Hey, we’ll step up and do this.’ We got a board of directors going and then we found out about this. So we met with the Bank of Hawaii because we noticed on our bank account that we had 70 bucks at one point. Then at one point, boom, we got about $10,000 and we were like, wait, I don’t understand this. We were brushed up on the situation, that there was some embezzlement, but we don’t know how much.”

Dinkle said that Arceo, who has moved to Texas, was also not on the board when the misappropriation took place.

“We’re really tried to distance ourselves from this,” he said. “We want everybody to know that Haaheo Soccer Club is functioning extremely well now. We’ve got a really strong board and great people. And ultimately, we function for kids. We meet once a month and our board members go over the expenses.” Dinkle added that the board also goes over bank statements monthly.

Stephens Media Hawaii was unable to make contact with Na Hoa O Puna or Lehua Hawaii Productions officials, and a phone number for Octavio had been assigned to someone else. She also didn’t respond to a Thursday email requesting an interview or answers to questions in the email.

Sierra described Octavio as “highly educated in terms of her position” and “not your typical criminal or mastermind.”

“People fall into debt and sometimes they can’t climb out. And that could be this case,” he said. According to state court records, on Aug. 29, 2012, Hilo District Judge Barbara Takase entered a judgment of $6,987.19 in favor of Midland Funding LLC, a company that buys unpaid debt, against Octavio. Octavio, who had been served with a summons nine days earlier, didn’t show up in court. The judge issued a garnishee order on her wages on Jan. 16, 2013, records state.

Sierra said that Octavio was still seeking employment “as of about a month ago” and that federal supervised release requires probationers to work.

“There are things you can do in the community that may not be paid jobs,” he said. “… I think what she wants to do is to rebuild the trust that she’s lost and undo the harm that she’s done, if that can be undone, a little bit. She’s gonna try. We’re geared up to do things such as restitution and to do community programs that will help others avoid this situation. And she’s gonna use whatever skills she has for good now.”

Campbell said she hasn’t spoken to Octavio since the indictment.

“Cheryl’s a really good lady, but she got caught up in all her activities, trying to be a good mother, that she just fell from one thing to another, from the way I see it. But, of course, that matters not. It’s a lot of money that the kids were deprived of. It’s a very sad situation,” she said. She added that Hilo Little League “depended too much on Cheryl.”

“It’s a big disappointment, what can I say. … There should be a double-check situation in every league as far as youth sports is concerned. There’s a lot of loose money. … Leagues should not allow their organizations to bank where an employee is is employed at. There are so many things that we learn by this, but by the changing of hands on the boards yearly, it’s difficult.”

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