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Progress 2015 WinnaVegas Casino

Seven former Winnebago Tribal Council members pleaded not guilty Monday to federal charges of theft of tribal funds, conspiracy and wire fraud. As a result of the defendants' actions, the loss to the tribe's WinneVegas Casino Resort totaled $327,500, according to a federal indictment.

Jim Lee, Sioux City Journal file

WINNEBAGO, Neb. | A federal grand jury has returned an 11-count indictment against nine former members of the Winnebago Tribal Council for alleged corruption and theft of tribal funds.

Former tribal chairman John Blackhawk, 61, and former tribal Council members Darwin Snyder, 49, Thomas Snowball, Jr., 55, Louis Houghton, 69, Lawrence Payer, 70, Travis Mallory, 38, Charles Aldrich, 48, Morgan Earth, 70, and Ramona Wolfe, 76, were each charged with conspiracy, theft and misapplication of funds belonging to an Indian gaming establishment, and wire fraud.

As a result of the defendants' actions, the loss to the tribe's WinnaVegas Casino Resort totaled $327,500, according to a news release Wednesday from Deborah Gilg, U.S. Attorney for Nebraska.

An arraignment date for each of the defendants in U.S. District Court is anticipated to be in early August, according to the news release.

The case, which was investigated by the FBI, stemmed from a tribal investigative report early last year that showed the nine council members had given themselves large raises and bonuses.

“These individuals used their elected official positions to enrich themselves and in the process betrayed the trust of their peers and those they were elected to serve," FBI supervisory agent in charge Randy Thysse said in a statement. "The FBI Omaha division will remain steadfast in aggressively investigating those responsible for perpetrating schemes like this and will continue to pursue all allegations of public corruption.”

According to the indictment, each defendant received a salary in excess of $80,000 in 2013, and a salary in excess of $87,000 in 2014. The tribal council had raised their salaries by approximately 35 percent in February 2013, retroactive to Oct. 1, 2012. Because of the retroactive nature of the increase, on Feb. 22, 2013, lump sum distributions were given to the defendants in the following amounts: general members of the tribal council $8,288.56; vice-chairman, secretary, and treasurer $9,945.74 each; and chairman $11,602.92.

Additionally, each of the defendants received five separate bonuses totaling $5,955.62 in 2013, and six separate bonuses totaling $11,019.23 in 2014. The defendants also received additional paychecks for unused vacation time.

Aldrich, Blackhawk, Houghton, Payer, and Snyder also received longevity pay for continuous employment ranging from $3,200 to $5,000 per person per year, according to the indictment.

Despite the fact that the defendants had received such large salary and bonus payments, the indictment alleges the defendants "devised, executed, and aided and abetted" the execution of a plan to receive additional funds directly from WinnaVegas without accounting for same through the payroll department of the tribe and without approving the distribution of such funds at a regular Tribal Council meeting. The indictment further alleges these distributions were contrary to policies of the tribe and casino and that the disbursements were not approved by the Winnebago Gaming Commission, which oversees WinnaVegas, located on tribal land west of Sloan, Iowa.

"This has been a devastating event to our community, our focus has been on improving communications and transparency within our government, as well as implementing internal policies to ensure that questionable activity does not occur again. Our membership expects and deserves nothing less," Winnebago Tribe Chairwoman Darla LaPointe said in a statement shortly after the indictments were announced. 

Distributions to the defendants were in the form of gift certificates issued by the casino and multiple loads to pre-paid debit cards paid for by the casino, according to the indictment. No monies were paid for the issuance of the gift certificates, but the defendants were able to cash them at the casino or otherwise redeem them for merchandise. Gift certificates issued to the defendants in 2013 and 2014 totaled $87,000. The total amount loaded to the debit cards of the defendants in 2013 and 2014 was $240,500. These distributions were recorded on the books of the casino as miscellaneous administrative expenses, according to the indictment.

After the bonuses and gifts became known to members of the tribe, the defendants attempted to justify the distribution by claiming the funds paid were additional salary or stipends to compensate Tribal Council members for additional oversight duties they were allegedly required to perform regarding the operation of the casino in 2014. The indictment, however, alleges:

-- Oversight of the casino was already a part of the duties of all the Tribal Council members for which they received a salary from the tribe

-- Not all defendants performed additional duties relating to the business of the casino

-- Stipends paid to Tribal Council members for work performed relating to sitting on boards of directors of other economic entities of the tribe were considerably lower and were typically just $200 per meeting

-- Tribal Council members were not licensed vendors authorized to receive payments directly from the casino

-- Winnebago Gaming Commission had not approved such disbursements to the defendants

-- Disbursement of such funds was contrary to the bylaws of the tribe because the description of the alleged work to be performed, the justification for same and the amount of compensation therefore were not approved by the tribal Council at any regular meeting nor was the disbursement of said funds over and above the tribal budget for fiscal years 2013 and 2014 approved at any regular meeting of the Tribal Council.

In the wake of last year's tribal investigative report, the nine former Tribal Council members resigned or were ousted from office by newly elected council members. A group of tribal residents called on federal law enforcement authorities to indict the former members for theft and corruption.

A conspiracy conviction is punishable by up to five years of imprisonment and/or a $250,000 fine. A conviction for theft or misapplication of funds belonging to an Indian gaming establishment is punishable by up to 10 years of imprisonment and/or a $250,000 fine. A wire fraud conviction is punishable by up to 20 years of imprisonment and/or a fine of $250,000.



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