2nd former California AIDS office employee sentenced to prison in $2-million fraud scheme

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A former state employee was sentenced Thursday to two years in prison for her role in defrauding the California Office of AIDS out of more than $2 million from 2017 to 2018.

Christine Iwamoto is the second former Office of AIDS employee to be sentenced in the scheme after Schenelle Flores, 46, was given a prison term of nearly six years on March 3. Iwamoto was ordered to pay nearly $500,000 in restitution, and Flores was ordered to pay more than $2 million.

The scheme diverted funds from the Office of AIDS, part of the California Department of Public Health, which the pair used for lavish trips to theme parks, sporting events and hotel rooms.


Iwamoto pleaded guilty to wire fraud and conspiracy to commit money laundering last fall, and Flores pleaded guilty to wire fraud in February, according to court documents.

The scheme began in 2017 when Flores worked at the Office of AIDS and was in charge of the HIV Prevention Branch’s fiscal operations, according to the Sacramento Bee, which unearthed various documents regarding the scheme through public records requests. Iwamoto worked at the Office of AIDS until March 2018.

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According to court documents, Flores, Iwamoto and other unnamed parties incurred expenses on behalf of an unidentified corporation that had a contract with the Office of AIDS to provide services such as distributing condoms and other supplies.

The Bee identified the corporation as MLB Distributors Inc., which reportedly held a contract with the state worth $7.4 million.

The expenses, “including but not limited to season tickets to sports games, concert tickets, personal travel, events hosted by restaurants and other venues, gift cards, and payments to family and friends,” were then charged to the state, prosecutors said.

Flores also directed others to purchase batches of gift cards through the corporation that she said were for “patient incentives” but were instead used by herself, Iwamoto and family and friends.


Additionally, Flores directed the corporation to pay invoices of two other companies that had allegedly done work for the Office of AIDS.

The two companies, one of which was operated by Iwamoto and purported to offer consulting services, offered and performed no services. Instead, the companies were paid through the corporation after Flores submitted the invoices.

Iwamoto had opened a bank account in the name of her company and used the money to pay herself and others.

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According to the Bee, the scheme was discovered when a Deloitte investigation of the Office of AIDS’ finances, initiated by the Department of Public Health, turned up a shredded Disneyland itinerary that listed Flores and her family members as participants.

Flores had reportedly posted about the trip on social media.

“Bank records released by CDPH show about $185,000 in expenses at Disneyland and Disney shops that were run through MLB’s bank account,” the Bee reported.

U.S. District Judge Troy L. Nunley ordered Iwamoto to begin her sentence June 2.

Nunley told Iwamoto that she would “think of this every single day of your life,” the Bee reported.


“Jail is absolutely appropriate for what you did,” Nunley said.