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Man allegedly scams taxpayers for 14 years, FBI says

By   /   October 21, 2013  /   News  /   No Comments

MONEY FOR NOTHING: FBI agents are accusing a Hawaii man of scamming government welfare programs, among others.

By Malia Zimmerman | Watchdog.org

HONOLULU – The FBI is accusing a Hawaii man of making an art form of scamming local and federal taxpayers during the past 14 years, taking numerous government benefits he was not entitled to receive.

Vaughn G. Sherwood, 66, was arrested by FBI agents Oct. 18 in Honolulu.

Sherwood, who had inherited $360,000 from his parents, owned a sailboat, a Yamaha Jetboat, and drove a Mercedes-Benz S420, allegedly defrauded several government programs under his own identity and stolen identities, according to an affidavit filed with the U.S. District Court by FBI Special Agent Tom Simon.

The FBI affidavit alleges Sherwood received welfare cash and food stamps for nine years from the state Department of Human Services after claiming to be homeless. Using a fraudulent birth certificate, various Social Security cards and different names, the affidavit said Sherwood obtained $6,500 in welfare cash payments, $5,800 in food stamps and $24,000 in medical benefits.

Court records also allege Sherwood secured $109,000 in Section 8 housing assistance during a 14-year period from the City and County of Honolulu and obtained $22,000 in tuition assistance at Kapiolani Community College. Sherwood also allegedly enrolled at the Honolulu Community College and the University of Hawaii-Manoa using multiple false identities to register for online courses. He allegedly used federal student tuition assistance to pay undergraduate and master’s degree tuition at the three University of Hawaii campuses, court records show.

Using a false identity and claiming to have heart failure, Sherwood also applied with the Department of Human Services to be his own caregiver in 2009 and received $8,000 from Medicaid, the FBI’s Simon said in his affidavit

In all, the FBI said Sherwood took more than $200,000 in benefits he wasn’t entitled to receive.

FBI agents arrested Sherwood last week for “theft of government property.”

In the process of searching Sherwood’s Waikiki condominium, FBI agents recovered two rifles and four handguns agents said Sherwood was not allowed to have because of previous convictions including felony assault convictions and possession of narcotic equipment. The affidavit said Sherwood also had three DUI convictions and another for contempt of court.

Sherwood also is being charged with being a felon in possession of a firearm, court records show.

The State of Hawaii Department of Human Services, the agency that oversaw the distribution of some of these benefits to Sherwood, assisted the FBI with the investigation.

Simon said the FBI will continue to work with law enforcement partners to ensure that government program scammers are held accountable.

“In a week where government money is on everyone’s mind, this case serves as a reminder that theft of taxpayer dollars will not be tolerated,” Simon said.

Under federal law, Sherwood could face 10 years in federal prison for theft and another 10 years in federal prison for firearms violations. He will be detained at the Federal Detention Center at least until his hearing on Tuesday.

Hawaii taxpayers spend more on the State Department of Human Services than any other state agency including the Department of Education.

Kalbert Young, director of the state Department of Budget and Finance, said that during the next two fiscal years Hawaii is appropriating $2.75 billion and $2.83 billion —or about 20 percent of the state general fund budget — for operating expenses of “social services,” which includes funding for child protective services, community youth programs, adult community care services, general assistance payments, public housing, health care payments such as Medicaid and the Temporary Assistance for Needy Families program

A report published in August by Cato Institute, which examined the state-by-state value of welfare for a mother of two, said benefits in Hawaii average $49,175 — tops in the nation.

Contact Malia Zimmerman at [email protected]



Malia formerly served as staff reporter for Watchdog.org.