Instead of jail time, as argued by the U.S. Justice Department, the federal court in Washington D.C. has sentenced John Emil Kruse and his wife Elaine to home confinement and probation for using nearly $400,000 in federal money from the Section 1602 program for their personal and business use.

Defense attorneys are calling the sentence “fair and just” saying that the “Kruses are good people” who are remorseful of their actions.

The Kruses were the first recipients of the U.S. Treasury Department Section 1602 program funds to be charged and sentenced in this case, which was investigated by the Federal Bureau of Investigation and the US Treasury- Office of Inspector General. The Honolulu FBI led the probe, with agents traveling to the territory over the last two years as part of their investigation.

John Kruse is also the Chief Procurement Officer for ASG, and his crime occurred prior to taking over the cabinet-post in early 2013.

The defendants appeared yesterday before U.S. District Court Judge Beryl A. Howell to enter their pleas for the sentencing hearing (which was 9:30a.m. D.C. time and 3:30a.m. American Samoa time.) Before 8a.m. local time, sentencing was already completed.

Responding to Samoa News inquiries, U.S. Justice Department spokesman Peter Carr said the defendants “pleaded guilty and each defendant was sentenced to 48 months of probation with eight months home confinement.”

“They were ordered to pay $399,936.48 in restitution,” Carr said yesterday morning via email from Washington D.C. He offered no other comments on the case.

Informed of the court’s sentence for the Chief Procurement officer, who pled guilty to a federal felony, Gov. Lolo Matalasi Moliga told Samoa News that it was too early to comment at this time until he receives an “official notification” from either the FBI, the federal court, or a federal grand jury on the plea and court sentence.

“An official court decision or an official document from the FBI will be reviewed by legal counsel,” Lolo said yesterday afternoon in a brief phone interview. “I have to understand his situation and his case before making any official statement.”

Provisions of local law states that a person convicted of a crime involving stealing, embezzlement, or misappropriation of property, which is classified as a felony in American Samoa, shall be ineligible for employment as a contract employee with the government.

And a contract employee convicted of such felony crimes, “shall be terminated immediately upon the judgment and sentence of conviction becoming final”.

Another provision, which deals with career service employees, states that the government “shall not hire nor continue to employ anyone convicted of a crime involving stealing, embezzlement, or misappropriation of property, which is classified as a felony in American Samoa and or any other country.”

OTHER REACTIONS AND DETAILS

Honolulu FBI spokesman Special Agent Thomas Simon said this case underscores the Honolulu FBI's commitment to investigating the misuse of federal funds in American Samoa and the Pacific.

"We want to ensure that federal grant money goes to the people of American Samoa who need it and is not squandered in fraud schemes,” he said yesterday via email from Honolulu responding to Samoa News queries.

Washington D.C. based defense attorney George Allen Dale confirmed the probation and restitution for his client Elaine Kruse, who has “accepted responsibility for what she did and expressed her sincere remorse.”

“Mrs. Kruse received a four year term of probation. It was a fair and just sentence from a judge who understood the true nature of the crime and the true character of Mrs. Kruse,” Dale said yesterday morning via email, in response to Samoa News questions.

Asked when his client is returning back to American Samoa, the defense attorney said it’s unclear because of the limited number of flights to Pago Pago.

John Kruse’s defense attorney, George S. Smith — who is also based in Washington D.C.- said via email, “We believe the court appropriately tempered justice with mercy here, and entered a balanced sentence that properly took into account the Kruses' larger life story, not just the charges filed in this case.”

“The Kruses are good people, as anyone who knows them well realizes. They made a mistake, but we are all more than the worst thing we have ever done,” he said, adding that it's unclear when the defendants will return to the territory.

In seeking probative or home-detention sentence, Dale argued in his sentencing memo that Elaine Kruse “will forever be branded a felon and bear the consequences that label carries. Moreover, the court can consider the fact that Mrs. Kruse has been punished greatly already.”

“Her public reputation has been permanently tarnished by this criminal case. She has had to admit to her parents and siblings — all of whom have looked up to her as the moral support of the family, and her community that she has pled guilty to being a thief,” Dale argued. “For this woman, that disclosure is punishment of the highest order.”

Court records states that knowingly converting government property is a Class C felony and the defense had sought probation which would allow them to operate their businesses and repay any restitution ordered by the court. The couple has sought to pay at least $200,000 in restitution.

In arguing for probation, or home confinement, Smith said the Kruse's actions were clearly wrongful, but  it is also apparent that this was not his goal from the outset. “The Kruses crossed the line, and their actions have now resulted in felony convictions,” he said in the sentencing memo, adding that the Kruses are law-abiding citizens and respected members of society.

The defendants had requested $1.2 million for their 1602 low income housing, but received just over $864,000 for the 8-unit low income complex, but by February of last year, the project was not close to being completed.

Prosecutors said the defendants used nearly $400,000 for their personal and business use not related to the Section 1602 project. They argued that the defendants used these federal dollars to pay off credit cards, buy products for their beverage importing and retail company, subsidize a condominium in Hawai’i, and a range of “other illicit purposes”.

The Kruses "shamelessly stole hundreds of thousands of federal dollars, converting them to their own personal and business use (and) diverted hundreds of thousands of dollars, intended for materials and labor, and used them to support their personal lifestyle as well as their beverage importing business," federal prosecutors said in sentencing memo.

The defense admitted in their sentencing memo that the Kruses were “faced with growing financial pressures” including debts owed for another business operated by the couple, which caused them to use the federal funds as a “short-term loan".