Former Hawaii Couple Indicted On Tax And Prostitution-Related Charges

HONOLULU – A federal grand jury indicted Michael Paul Ernst, age 43, and Khemwika Ernst, age 38, former residents of Oahu, on March 11, 2015, for one count of conspiring to use interstate commerce to distribute proceeds of prostitution, two counts of using interstate commerce to distribute proceeds of prostitution, one count of conspiracy to defraud the United States in the collection of income taxes, and two counts of filing a false tax return.

Florence T. Nakakuni, United States Attorney for the District of Hawaii, said the indictment alleges that Khemwika Ernst earned money as a prostitute working in Hawaii and deposited her earnings into an account which she jointly controlled with Michael Paul Ernst, her husband. He would then transfer the funds to a mainland bank he controlled. Khemwika Ernst also sent the money she earned via a package delivery service to New Jersey, where the funds were deposited into bank accounts Michael Paul Ernst controlled.

The indictment further alleges that in 2009, 2010, 2011, 2012, 2013, and 2014, Michael Paul Ernst and Khemwika Ernst filed joint federal income tax returns that did not disclose the income earned by Khemwika Ernst. They were specifically charged for filing false returns for substantially underreporting their income on federal tax returns for 2008 and 2009.

If convicted, Michael Paul Ernst and Khemwika Ernst, face up to five years imprisonment for each count of conspiracy and up to three years imprisonment for filing false returns. The charges and allegations contained in the indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.

The investigation of this case was jointly conducted by the Internal Revenue Service -- Criminal Investigation, Homeland Security Investigations, Naval Criminal Investigative Service, and the Defense Criminal Investigative Service. The prosecution is being handled by Assistant U.S. Attorneys Leslie E. Osborne, Jr. and Andrea W. Hattan.