Mother and daughter plead not guilty in federal fraud case

08/19/2025 - A mother and daughter accused in a wide-ranging federal fraud scheme involving the Public School System pled not guilty during their initial appearance before U.S. District Court Chief Judge Ramona Manglona last Aug. 18.

Giselle Butalid and her mother, Clarissa Adlawan, appeared in custody wearing red prison overalls after being arrested last Friday, under an indictment returned by a grand jury the previous day.

Assistant U.S. attorney Eric O'Malley is prosecuting the case. Richard Miller appeared as counsel for Butalid, who is charged with Counts 1 through 7 of the indictment. Mark Scoggins represented Adlawan, who is accused of all 12 counts.

The indictment alleges conspiracy to defraud the United States in counts 1-7, theft of federal program funds; and money laundering conspiracy, illegal monetary transactions, and structuring transactions to evade reporting requirements, counts 8-12 (Adlawan only). A notice of forfeiture under Titles 18 and 31 was also included.

According to the indictment, Butalid used to work for PSS under the Office of Curriculum and Instruction, and as part of her duties then included keeping accurate records and data relevant to federal grant projects and reporting this information to the grant director.

This position, the indictment stated, provided Butalid with access to critical information and data, such as the electronic signatures of OCI managers, vendor invoices, and funding information of the OCI program, which in turn, enabled her to access and exploit PSS's procurement process.

“Butalid used her access to forge and falsify documents, resulting in PSS orders for educational material from legitimate third-party companies through One Legacy, while hiding from PSS that Butalid and Alawan owned One Legacy,” the indictment read.

Manglona confirmed they are entitled to a jury trial, currently set for Oct. 21, 2025, at 10am, with pretrial motions due Sept. 19.

O'Malley argued both are serious flight risks, citing substantial overseas travel, ties to the Philippines, and access to government contracts. He said roughly $260,000 was fraudulently diverted over the course of a year through transactions linked to One Legacy Corp., a private company controlled by Adlawan. 

According to the indictment, One Legacy received contracts worth "hundreds of thousands of dollars" from government entities. A search of the pair's Saipan apartment turned up 66 designer handbags and 160 pieces of jewelry.

But Miller countered that Butalid is not a flight risk, stressing that she is a U.S. citizen with deep ties to Saipan, no criminal record, and no history of violence or obstruction. He said she voluntarily cooperated with authorities, made no attempt to flee, and has no access to funds that would enable her to escape prosecution. 

He further argued that it doesn’t mean they travel that they’re a serious flight risk, adding that Butalid’s Philippine passport has expired, and the government has her U.S. passport.

As for allegations of witness tampering, Miller said he didn’t see that particular information on the affidavit provided by O’Malley.

Manglona also explained in court that should Adlawan remain in custody under immigration powers due to her status—being a citizen of the Republic of the Philippines—her time served under the immigration hold would not count toward any potential sentence.

Scoggins, appearing for Adlawan, waived a reading of the indictment and entered not guilty pleas to all counts.

A detention hearing was set for Aug. 21 at 1pm, with U.S. probation officer John San Nicolas tasked to submit a written report by Aug. 19. Until then, both defendants were remanded to the custody of U.S. Marshals.

Meanwhile, the CNMI Public School System released a statement in response to the case, saying, "The Public School System does not provide comments on matters that are before the courts or judicial authorities. We emphasize, however, that PSS has strict policies in place, consistent with applicable regulations, to safeguard against any misuse of both local and federal funds."

If convicted, Butalid and Adlawan face maximum penalties ranging from five years for conspiracy and obstruction, 10 years for theft of federal funds and illegal monetary transactions, and up to 20 years for money laundering.

Report by Mark Rabago