Man who defrauded teachers to gamble $1.2M gets 57 months

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A 48-year-old Kona man will spend nearly five years in federal prison and must pay back more than $1.2 million he conned 42 teachers and friends into investing in a fake online lei business to feed his lavish Las .

Newton Kaleo Okamoana Deleon, 48, a former teacher

in Southern California who holds a master's degree, was sentenced to 57 months in prison Wednesday by

Senior U.S. District Judge Helen Gillmor.

After he gets out of federal prison, Deleon will be on supervised release for three years, must pay a $200 special assessment and $1,246,850 in restitution. During supervised release, Deleon is banned from gambling and going to Las Vegas unless a federal judge approves the trip.

From at least 2017 and continuing through December 2020, Deleon duped teachers in Hawaii and California and friends to invest between $4,000 and $7,500 at a time.

Deleon fabricated business documents, promissory notes, loan documents, purchase orders for the business and other fraudulent documentation to further his confidence scheme.

He promised to repay a return of profit, ranging from approximately 10% to 40% and additional fees ranging from approximately $100 to $500 per day if the principal and return were not repaid by the agreement's designated approximate one-month period.

"There is no excuse for my actions," Deleon told Gillmor, while listing U.S. Bureau of Prison programs that he will enroll in to earn graduate degrees, treat addiction and earn 60 cents

an hour toward restitution working in the prison kitchen. "I intend to pay back every cent that I owe, to everyone, for however long it takes."

Gail Murakami, a teacher, convinced her sister and others to invest in Deleon's scheme, leiorders.com. Murakami fought through tears to tell the court she feels "guilt" for inviting them to Deleon's plan.

"We know how hard it is to live in Hawaii ... every dollar counts. The money has impacted everyone. I didn't retire on time. And to read what he did ... the amount of money that was involved. It is hard for me to understand. At some point, he knew, addiction or not, it's the ego. It starts to crave this," Murakami said. "I object to the minimum or below minimum sentencing that they are asking for ... the damage that he has done warrants more ... the highest possible sentencing. And I feel so dumb to buy into that because I love leis and I thought how wonderful, he's perpetuating the Hawaiian culture, something that is meaningful to our family, and I wanted to support that."

On behalf of the victims she appeared in court Wednesday to represent, Murakami asked Gillmor to consider sending Deleon to federal prison for as long as she could.

"He harmed ordinary people. Good people. I'm a teacher too. As a teacher and an educator we know our actions, our thoughts and words matter. When we cross that line of honor and character we know better. We should know better," Murakami said.

Assistant U.S. Attorney Rebecca A. Perlmutter noted that the "impact of preying on this victim population (teachers) cannot be understated."

"The impact on the individuals' lives has been significant," said Perlmutter, who noted Deleon made $7,000 a month between 2020 and 2023 before he was jailed and didn't pay victims back one dime. "He preyed on his close friends, he preyed on other teachers."

Gillmor heeded Murakami's plea and surpassed the sentencing recommendation of the U.S. Department of Justice.

The federal judge told Deleon that she didn't believe he understood the gravity of his actions and that his plans for federal prison sounded self-serving and lacked focus on making his victims whole.

Gillmor acknowledged that Deleon is a degenerate gambler, but emphasized that a "gambling addiction is not a free pass for his very serious behavior."

"By Mr. Deleon's own

estimate, he received

$1 to $2 million in fraudulent investments during

the scheme. The scheme started sometime in 2017, that is being charged here, but I'm not sure that is

the actual point. ... By his own admission it was a Ponzi scheme. ..." the judge said.

Gillmor reviewed the

victim impact statements in the pre-sentence report and noted that Deleon would be required to pay 10% of his earnings after release toward restitution. While that was "better than nothing" it would do little to bring immediate relief to his victims.

"This idea that 60 cents an hour is going to make a big difference to these people over time, particularly when he did not take the opportunity while he was working and this matter was being investigated after he was stopped ... it is not an impressive outlook in terms of how long it is going to take these people to get paid back," Gillmor said.

The law requires that Deleon pay back just the amount that he took from his victims, not the interest that would have accrued or the benefits that they would have been able to have.

"Some (victims) say they were unable to continue to help their children with college tuition. People had to work longer and not retire as early because of losses," Gillmor said. "While there are some losses, there is also the loss of over $400,000. And there are some people whose losses are $40,000, $26,000, $75,000, I mean, some people had an even bigger impact but all of these losses are money that people had and could have used and we're talking about repaying it ... $1.2 million."

Deleon was free on supervised release following his arraignment but was arrested Jan. 22 in Santa Ana, Calif., for what he described in a letter to Gillmor as a "loud verbal argument."

Gillmor discussed in court what she found were "very severe allegations" by Deleon's girlfriend that he beat her up at least 30 times over a two-year period.