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Press Release

Former State Employee Sentenced to Two Years in Prison for Role in $2 Million Scheme to Defraud the Office of AIDS

For Immediate Release
U.S. Attorney's Office, Eastern District of California

SACRAMENTO, Calif. — Christine M. Iwamoto, 48, of Sacramento, was sentenced today to two years in prison and ordered to pay $481,200 in restitution for wire fraud and conspiracy to commit money laundering in relation to a scheme to divert funds from the California Department of Public Health, U.S. Attorney Phillip A. Talbert announced.

According to court documents, Iwamoto was employed by the Office of AIDS within the California Department of Public Health until March 2018. The Office of AIDS is responsible for working on behalf of the State of California to combat the HIV and AIDS epidemic.

Between December 2017 and November 2018, Iwamoto participated in a scheme that was coordinated by Schenelle Flores, also employed at the Office of AIDS, to defraud the Office of AIDS. Flores, Iwamoto, other participants in the scheme, and their families and friends obtained at least $2 million in personal benefits, including cash and purchased items.

According to court documents, as part of the scheme, Flores directed a state contractor to make payments allegedly on behalf of the Office of AIDS and caused the contractor to charge those payments to the state. Flores caused the contractor to pay for personal expenses on its debit cards, order gift cards for personal use, and pay false invoices to shell companies for services allegedly provided to the Office of AIDS.

According to court documents, Iwamoto set up a shell company and coordinated with Flores to submit invoices to the state contractor. Those invoices falsely claimed that Iwamoto’s company had provided various consulting and meeting facilitation services to the Office of AIDS. Iwamoto received $450,000 in payments as a result of the invoices. Iwamoto then gave thousands of dollars in cash and blank checks to another employee of the Office of AIDS who was participating in the scheme. Iwamoto also participated in obtaining the gift cards from the state contractor and received hundreds of the gift cards for her personal use.

This case is the product of an investigation by the Federal Bureau of Investigation with assistance from the California Department of Public Health and the California Highway Patrol. Assistant U.S. Attorneys Miriam R. Hinman and Christopher S. Hales are prosecuting the case.

On March 3, 2022, Flores was sentenced to 70 months in prison and ordered to pay over $2 million in restitution in a related case, United States v. Flores, 2:21-cr-025 TLN.

Updated April 7, 2022

Public Corruption