Anchorage gave her a $1.6 million grant despite prior fraud allegations. Now she’s under investigation again.

This article was produced in partnership with ProPublica’s Local Reporting Network.

Two years ago, in May 2021, the Anchorage Assembly gave $1.6 million to a little-known charity that said it would help people find homes and addiction treatment during the COVID-19 pandemic.

At the time, local governments across the country were awash in money from a federal program known as the American Rescue Plan Act, or ARPA. Anchorage city leaders had $50 million to hand out to local applicants, and the money moved fast. The nonprofit House of Transformations received one of the largest awards.

Left unsaid in the appropriations talks was that the state of Alaska in 2015 permanently banned the founder of the nonprofit, Rosalina Mavaega, from serving as a Medicaid provider. The punishment resulted from a medical assistance fraud investigation and remains in effect. Mavaega’s husband, Esau Fualema, who is a co-founder of House of Transformations, separately pleaded no contest to criminally negligent homicide in 2008 and failed a background check to work at Mavaega’s prior company.

Mavaega is at least the second grant applicant with a public record of fraud allegations to receive COVID-19-related money from the city. In the other case, Revive Alaska Community Services received $750,000 from the Assembly, also in 2021, despite its president, Prince Nwankudu, pleading guilty in 2012 to conspiracy to commit mail fraud. (Nwankudu did not respond to interview requests and emailed questions; Revive Alaska has not been asked to return the funds.)

Mavaega is a political supporter of embattled Anchorage Mayor Dave Bronson, though the grant she received came before he took office. Bronson later appointed her to serve on the Anchorage Equal Rights Commission, which is tasked with investigating allegations of discrimination, and to serve as the business representative on the city housing and homelessness committee.

Bronson kept Mavaega on the city commissions even after the Anchorage Daily News and ProPublica first asked about her Medicaid ban in March. The newsrooms have subsequently learned that federal investigators are looking into the city commissioner and her businesses.

The IRS is seeking information about city grants awarded to Mavaega and her affiliated businesses since 2021. One Anchorage business owner contacted by investigators said officials representing the Department of Treasury and the Small Business Administration asked for information about House of Transformations, “their business dealings” and bitcoin investments.

When a reporter visited Mavaega’s office on May 18, an employee said she was not available but was scheduled to talk with investigators that afternoon. She did not respond to subsequent emails and phone calls seeking comment.

Fualema also did not respond to emails, phone messages or an interview request delivered to his home.

The mayor’s office confirmed the existence of the federal investigation on Thursday, in response to renewed questions from the news outlets.

Bronson spokesperson Corey Allen Young said investigators contacted the city in February and have requested information about Mavaega and at least six of her affiliated businesses and nonprofits. Young said the city could not provide a copy of any subpoenas under city and federal law. A spokesperson for the IRS said federal law forbids the agency from discussing any potential investigation.

Asked if the mayor has removed Mavaega from the two city commissions, Young said no. “The Mayor doesn’t have the unilateral ability to remove members from commissions,” he wrote in an email.

Bronson’s administration has been rocked by a slew of investigations and resignations since the former municipal manager he appointed wrote a letter in January saying she had been fired for “attempting to convince (Bronson) to cease unlawful and unethical activities using municipal resources.” Bronson has declined to talk about the accusations, citing potential litigation.

Since then, the acting city attorney, Bronson’s deputy chief of staff, the city’s human resources director, the mayor’s chief of staff, the Solid Waste Services director, the library’s deputy director, the city’s chief fiscal officer and the maintenance and operations director have all resigned.

One of the last of Bronson’s original team, Chief Equity Officer Uluao “Junior” Aumavae, is the brother of House of Transformations director Elizabeth Aumavae. Junior Aumavae and Elizabeth Aumavae did not respond to interview requests or emailed questions.

House of Transformations and various limited liability companies that use the same office address and same name, or similar names, are among a constellation of new nonprofits and businesses Mavaega created in recent years.

Some of the entities nest within a pyramid of holding companies. For example, Mavaega and Fualema created a business called 3XB Holdings Group LLC in August 2016. That business, in turn, owns at least 10 other businesses, including Signet Ring Bible College LLC. The Bible College LLC in turn owns Signet Ring Vocational Center, which in turn owns House of Transformation Beauty Center.

The news agencies found that Mavaega successfully applied for at least 29 separate business licenses since January 2020. According to business registration paperwork, the new entities are intended to provide services including temporary shelter, trade school classes, “community housing services,” beauty salons and substance abuse treatment.

At least 10 of the businesses are based in a Midtown Anchorage office building.

A woman there who identified herself as Lynda and said she is a member of the House of Transformations board of directors said witnesses had appeared before a grand jury on May 16.

“There’s an investigation going on; it’s just a matter of we don’t know what’s next,” she said.

The Alaska Medicaid Fraud Control Unit charged Mavaega and her business at the time, A Loving Care PCA, with two counts of medical assistance fraud in 2014. According to the state Law Department, prosecutors dropped the criminal charges and referred the case to the Alaska Health Department for “administrative enforcement action.”

The state Division of Senior and Disability Services subsequently moved to permanently bar Loving Care and Mavaega from being Medicaid providers based on the same allegations laid out in the criminal filing. The division gave four reasons for the ban: violating background check requirements, submitting billing claims without adequate documentation, offering a rebate for Medicaid referrals and submitting claims without supporting documentation.

As a result, Maveaga’s business can no longer bill any federal health care program, including Medicare, Medicaid and Denali KidCare, for its services.

Mavaega requested an administrative hearing to challenge the suspension, but an administrative law judge upheld the ban Nov. 27, 2015. According to that decision, “These violations consisted of ongoing billing errors and allowing individuals to be involved/employed at Loving Care, who had either been barred from participation in the Medicaid program due to the results of the required criminal history background check, or who had not undergone the required criminal history background check.”

Mavaega appealed the ban in 2016, arguing the penalty was too severe and relied on hearsay evidence, but a state Superior Court judge upheld the punishment.

Mavaega and Fualema incorporated a nonprofit called House of Transformation in July 2019. In February 2020, they incorporated another nonprofit, House of Transformations, with an “s.”

Also in 2020, Mavaega started a business with Juan Carlos Reed, a former client of House of Transformations who had been sued the prior year by the state of Alaska for unfair trade practices. Reed had falsely claimed to be a licensed contractor and falsely claimed to be a military veteran, the state said. A judge in 2021 ordered him to pay the state $75,000 in civil penalties. (Reed has not paid the fine, according to the state Department of Law.)

On Tuesday, Reed said he did not lie about being a military veteran and said he was unaware of the judgment against him. Paperwork that the House of Transformations filed with the state in January 2021 listed Reed as secretary for the nonprofit. Reed said he was not involved in any grants received by House of Transformations and did not know he had been listed as an officer for the nonprofit. He said he was not in Alaska in 2021.

“The only thing I know about this situation is because I was subpoenaed to testify as a witness,” Reed said. He would not say when he received the subpoena or who sent it.

The business created by Mavaega and Reed, called Alaska Executive Independent Paralegals, is listed as “involuntarily dissolved” on the Alaska Division of Corporations, Business and Professional Licensing website. Reed said that the business never got off the ground, and he intentionally let the license lapse.

In 2021, Mavaega asked the city for more than $1.6 million under the name of the House of Transformations and another of her businesses, Signet Ring. The Assembly awarded the money in May 2021 to “provide housing, addiction treatment, vocational and apprenticeship training, and other wrap around services for persons experiencing homelessness.”

Mavaega said at the time that House of Transformations had 50 clients living in three locations.

The grant included $496,660 for House of Transformations “general operating expenses,” $454,260 for Signet Ring “general operating expenses,” $326,345 for employment and addiction treatment services and $345,900 for “Signet Ring vocational and apprenticeship funds for students.”

The money made Mavaega’s nonprofit one of the biggest recipients in the first round of ARPA grant awards from the city. House of Transformations received more than city agencies such as the fire and police departments, and it received the 13th overall largest grant out of the 64 awarded.

The chairperson of the Assembly at the time, Felix Rivera, said no one on the panel back then was aware of Mavaega’s ban by the state Health Department. He said the Assembly does not have the resources to investigate all grant applicants.

“They were relatively new, so we didn’t know too much about them,” he said. “We wanted to make sure that ARPA funds didn’t go to just established nonprofits.”

Bronson took office July 1, 2021.

When a second round of ARPA grants became available in 2022, Mavaega applied again. This time she requested an additional $1.4 million.

The Assembly did not approve the second round of funding. Rivera said the Assembly wanted to spread the funding among new recipients.

In September, Bronson also appointed Mavaega to represent business interests on the city’s Housing, Homeless and Neighborhood Development Commission.

Anchorage’s vulnerable and highly visible homeless population is a major concern among residents and policymakers. The city’s largest sports arena has served as a mass shelter for most of the past three years. Twenty-four people who were believed to be homeless died outdoors in the city in 2022, and an additional eight died outdoors in April of this year — the most ever recorded in a month since the Daily News began tracking outdoor deaths in 2017.

The Daily News and ProPublica found that one of the mayor’s top advisers in 2021 worked to prevent a city-owned hotel from being used to house the homeless. Bronson appointed the adviser’s business partner in a commercial real estate company to a city commission even though the partner was awaiting trial in a felony stalking case. The commissioner resigned after the newsrooms asked about the appointment.

Bronson named Mavaega to the Anchorage Equal Rights Commission in November. The newsrooms first asked Bronson in March why Mavaega was appointed to city commissions despite being banned from serving as a Medicaid provider. At the time, the newsrooms were reporting on the Equal Rights Commission, which has been hobbled by a backlog of open cases and investigator resignations.

A Bronson spokesperson did not answer the question directly; Young said the office was “reviewing this information.”

Bronson has referred to Mavaega as the pastor for Alaska Revival Center A.R.C. According to its Facebook page, the revival center is a church based in the same Tudor Road office as House of Transformations.

She also advertises her services as a real estate agent and lists one of the House of Transformations client housing locations among the properties she recently sold.

On Thursday, the mayor responded to questions asking about the federal investigation.

According to the mayor’s office, investigators are seeking information about Mavaega, House of Transformations, Signet Ring, a business called PIMHA that lists Mavaega as one of its officers, and limited liability companies known as HOT, HOT1, HOT2 and HOT3.

The city has not yet provided copies of public records, including House of Transformations grant applications and awarded grants requested by the Daily News.