Hawaii welfare cheat gets 57 months in federal prison

By Malia Zimmerman | Watchdog.org

HONOLULU — Vaughn G. Sherwood apologized in U.S. District Court on Wednesday, admitting to a 14-year crime spree in which he stole some $200,000 from city, state and federal taxpayers.

Using eight names, nine Social Security numbers and six dates of birth to create a variety of identities, Sherwood told U.S. District Judge Leslie Kobayashi he took welfare cash, food stamps, student tuition assistance, public housing subsidies and Medicaid.

Though Sherwood claimed he was eager to get out of prison so he could get a job and repay the government, Kobayashi sentenced him to 57 months, three years’ supervised release and restitution totaling $213,46.56.

Of the money he must repay, $46,264 is owed to the U.S. Department of Education, $52,663 to the state of Hawaii, $106,163 to the city and county of Honolulu and $8,056.56 to United Health Care.

“He was a prolific identity thief, and the taxpayers were footing the bill for his lifestyle,” said Special Agent Tom Simon, who investigated the case. Court records show Sherwood used the names of Kevin Patrick Halverson, Vaughn Sherwood and Kevin Halverson to perpetuate his theft.

Assistant U.S. Attorney Ron Johnson said Sherwood wasn’t impoverished; he inherited $360,000 from his parents and owned a sailboat, a jet boat and an expensive car.

But instead of using the money to support himself, or finding work, Sherwood filed fraudulent paperwork with the state claiming to be homeless, and for nine years he got welfare cash and food stamps from the state Department of Human Services. Sherwood obtained $6,500 in welfare cash payments, $5,800 in food stamps and $24,000 in medical benefits. He got $109,000 in Section 8 housing assistance over a 14-year period from the city and county of Honolulu.

Sherwood decided to further his education, but that, too, came courtesy of the taxpayers. Federal student tuition assistance funded Sherwood’s under graduate and master’s degrees at the the University of Hawaii.

The fraud didn’t stop there. Getting even more creative, Sherwood used a false identity and claimed heart problems. He simultaneously applied in 2009 with the state Department of Human Services to be his own caregiver and used a false name and received $8,000 from Medicaid.

“Keeping a dozen identities alive is a staggering amount of work. One has to wonder why he didn’t just put that energy into a legitimate job,” Simon said.

Sherwood was caught only after Human Services investigators found welfare fraud dating to 1999. The agency subsequently teamed up with Simon to investigate the full scope of his crimes, leading to Sherwood’s arrest Oct. 18, on “theft of government property” charges.

In the process of searching his Waikiki condominium, FBI agents found two rifles and four handguns, which, as a convicted felon — assault and possession of narcotic equipment — Sherwood was not allowed to have. Court records show Sherwood has three DUI convictions and another for contempt of court.

Under federal law, Sherwood could have faced 10 years in federal prison for theft and another 10 years in federal prison for firearms violations.

Though the crime spree is over, Sherwood remains on taxpayers’ dime. He will spend 57 months in federal prison, where he’ll receive medical care for his failing heart.

Reach Malia Zimmerman at Malia@hawaiireporter.com