This may be a controversial opinion, but... in the great list of mortal sins, I don't find it ranks particularly high. Sure it's not a great look. But I think prostitution should be a woman's choice, and 16 is the age of sexual consent in 32 out of 50 US states. It's hard for me to get too worked up about something that would have had far less legal consequences one state over in Alabama.
So while it's a red flag, I'm not sure the conviction alone would stop me from accepting grant money. You might feel differently, that's fine. To me, money is pretty amoral.
These other things that have come out since - rapes, fourteen-year-olds - if true, are much more disturbing. But that wasn't part of the dialogue in 2013.