GREAT FALLS, Mont. (AP) — A Chippewa Cree tribal leader, a former state lawmaker and three others used a fake billing system and a shell company to pocket hundreds of thousands of dollars in federal stimulus aid meant for the Montana tribe, federal prosecutors said Tuesday.
The Chippewa Cree Tribe received $33 million in federal funding between 2009 and 2010 for construction of a $361 million pipeline to supply fresh drinking water for the Rocky Boy's Indian Reservation and surrounding counties in northern Montana. Most of that $33 million came from the 2009 American Recovery and Reinvestment act, also known as the stimulus.
The CEO of the tribal company that headed the pipeline project, Chippewa Cree Construction Corp., awarded contracts and authorized cash transfers in a complex web of transactions to embezzle and launder the money, according to the indictment unsealed Tuesday.
The cash ended up in the bank accounts of intermediaries and in a tribal rodeo account controlled by tribal council member John Chance Houle.
More than $100,000 was used to start a Billings pipe supply company owned by the construction company's CEO and contracting officer, former Rep. Tony Belcourt. His new company, MT Waterworks, was later awarded a $633,000 stimulus contract to supply the water pipeline project.
Another $62,000 was used to buy a house in Box Elder in the name of Belcourt's wife, Hailey Lee Belcourt.
It is unclear what happened to the rest of the money after it was parked in the rodeo account, the account of a consulting firm and in the personal account of the woman who ran the consulting firm.
Federal prosecutors are seeking the return of $311,000, the real estate that was purchased and ownership of MT Waterworks.
Houle, the Belcourts, Tammy Leischner, and her husband, Mark Leischner, were arraigned Tuesday in U.S. District Court in Great Falls on 17 charges of theft, fraud and money laundering. Each charge carries a maximum penalty upon conviction of between five and 20 years in prison and a $250,000 fine.
They pleaded not guilty and were released on their own recognizance.
Tammy Leischner's father, James Eastlick, will be arraigned at a later date.
"There is some truth to it, but it doesn't add up to a crime," Belcourt's attorney, Chuck Watson, said of the allegations in the indictment.
The indictment alleges Belcourt transferred $165,000 in federal funds to Tammy Leischner's newly created consulting firm in Laurel, T Leischner Consulting, in February 2010, then opened a bank account for his new company, MT Waterworks.
A little more than a week later, Leischner's father transferred $101,000 from the consulting firm's account to the MT Waterworks, according to the indictment.
Prosecutors say the consulting firm was simply a shell company used to embezzle stimulus money from the Chippewa Cree Construction Corp.'s account.
That March and April, Belcourt conducted a series of complex financial transactions involving the consulting firm and legitimate companies in Colorado and Missouri to pay for the shipment of water pipe from Denver to Montana, prosecutors said.
The result was that the transportation costs were overbilled by $311,000, money that ended up in Leichsner's consulting company's account, according to prosecutors.
In May 2010, Eastlick transferred $200,000 from the consulting firm's account to the Chippewa Cree Rodeo Association bank account. The next month, Houle issued two checks totaling $133,000 to M. Leischner, which were deposited into Mark and Tammy Leischner's personal bank account, the indictment says.
Using the money in that personal account, Tammy Leischner bought a cashier's check in the amount of $62,062 in July. The check was used to complete the purchase of a home on the Rocky Boy's reservation with the title in the name of Hailey Belcourt, according to the indictment.
The federal Bureau of Reclamation in March temporarily halted funding for the pipeline after learning that federal money was missing from the tribal construction company's bank account.
Former tribal chairman Ken Blatt St. Marks, who was ousted by Houle and the other council members earlier this year, has said he reported federal funds for the water pipeline project was missing and that he and the council replaced the money from other revenue.
The former chairman once tried to fire Belcourt as head of the construction company, but the other council members later rehired Belcourt while St. Marks was out of town, St. Marks said.
Tribal attorney Dan Belcourt, Tony Belcourt's cousin, has said the tribe is "actively working with BOR on the issues."