Montana Woman, Five Others Sentenced in Fort Peck Tribal Credit Scam

caughtPatronage and corruption at the U.S. Interior Department’s Bureau of Indian Affairs (BIA) is not exactly a well-kept secret. A widespread scam in a BIA loan program in Montana has brought home this reality with full force. And fully six persons have been sentenced as a result. On October 21, one of those persons, Dolly Diane Crowe, a former employee of the credit office at Fort Peck Indian Reservation, was sentenced in U.S. District Court for the District of Montana to two years in prison and three years of probation for theft and conspiracy to obstruct a federal audit. She also will have to make $143,120 in restitution, though the grand total of the scam was much higher. The details of the case underscore the necessity of better oversight at the BIA and indeed call into question why the agency should exist at all.

The focus of scrutiny is the agency’s Tribal Credit Program, a “re-lending” fund that enables Indian governments to make loans to their members. Repayments are structured on favorable terms, enabling a tribe not only to pay back the government but also to underwrite additional loans. Program sponsors received a $1.5 million startup loan from the BIA’s Direct Loan Program, which they paid back in 1996. Funds since have been in tribal hands.

There are about 11,000 Fort Peck Indians – members of the Assiniboine and Sioux tribes. About half of them live on the tribal reservation, located in northeastern Montana. That proved enough of a critical mass to run a local re-lending program maintaining three separate accounts: Short Term Loan; Revolving Credit Fund; and Entrepreneurial Loan. Eligibility was restricted to tribal members. Each loan had a $2,000 ceiling. Unfortunately, certain individuals used the program as their personal and family slush funds. Dolly Diane Crowe, a former employee of the Fort Peck Tribal Credit Department, was one of them.

Federal prosecutors had alleged that Crowe, now 45, was one of six office employees – two federal and four tribal – who embezzled program monies and diverted the funds to themselves, family members or other tribal members. Crowe, a Poplar, Mont. resident, began her employment in October 1995 as a clerk-typist; she eventually assumed authority for preparing and evaluating short-term loan applications. From August 12, 1999 until May 29, 2009, noted the indictment, she and other program employees, plus three members of the tribal credit committee, wrote hundreds of fraudulent checks. Typically, those checks exceeded the $2,000 maximum under the guise of disbursing legitimate loans, overtime payments and miscellaneous funds. In many instances, employees falsely recorded disbursement approvals that never were made, splitting the proceeds among themselves or with spouses, siblings and children.

The Bureau of Indian Affairs, belatedly, began a review of the Fort Peck reservation credit program in September 2007. Two federal employees – the BIA regional credit officer and another agency staff member – investigated the program following complaints from the tribal chairman that agency officials had refused to share certain loan information with the tribal executive board. The review team met with three staffers, who provided the pair with evidence the latter altered records in order to conceal unauthorized short- and long-term loans. The short- and long-term loans amounted to a respective $550,000 and $112,659. The culpable employees admitted in interviews that they had changed the names of original applicants to those of deceased tribal members so as to prevent discovery of excessive disbursements.

The BIA audit led to an internal tribal audit. During late 2008 and early 2009, Fort Peck officials retained a certified public accountant to conduct a review. The CPA in short order identified the excessive loans and how they came to be underwritten. During that time, the Interior Department’s Office of Inspector General conducted its own full-scale audit, which concluded that there had been a breakdown in accountability in the Fort Peck credit program. Collections on defaulted loans, the IG found, were almost nonexistent. In some instances, loan files contained no supporting documentation as to whether an individual application had been approved, and if so, what the terms of repayment were. Eventually, in July 2009, four tribal employees with check-signing authority were interviewed by the tribal chief financial officer. All admitted to stealing funds. The tribal authority then referred the matter to federal law enforcement, whose probe in turn led to indictments.

How much overall was taken? The U.S. Attorney’s Office for the District of Montana put it this way with reference to short-term loans:

As of June 2009, the total amount of outstanding short-term loans was $1,675,088. Approximately 48% of this amount (over $800,000) were loans to Credit Program employees and their families. An investigation by the Department of the Interior’s Office of Inspector General determined that almost half of all loans were fraudulent.

It’s fair to say, then, that program employees made about $400,000 worth of phony short-term “loans” to themselves and family. But federal prosecutors noted as well that the grand total of fraudulent loans — short- and long-term loans made to all tribal members, not just to employees or their family members — exceeded $1 million. To be exact, $166,820 of the missing money was attributable to Dolly Diane Crowe. One of the investigations identified 148 disbursements from Credit Program checking accounts payable to Crowe between May 2005 and May 2009 totaling $138,588. Of these payments, 128 had been recorded as short-term loans totaling $133,673 and 20 had been recorded as miscellaneous expenses, though without an accompanying W-2 statement. Crowe obtained the remaining $28,232 by fraudulently recording disbursements as “short-term loans” to her mother and sister. She pleaded guilty in federal court in June of this year. Two other defendants, Shelly Devonne Pipe and Paul James Bemer, pleaded guilty to embezzlement charges the following month and eventually were sentenced. Three other Fort Peck employees — Evadna M. Running Bear, Angelita Headdress and Connie Jean Smith — also pleaded guilty in the case and received sentences. The sentences for all six defendants ranged from two to four years and carried restitution orders. 

The Bureau of Indian Affairs long has been beset with corruption. Back in 2006, for example, the Senate Indian Affairs Committee, at the time chaired by John McCain, R-Ariz., discovered in the course of its investigation of lobbyist Jack Abramoff that Abramoff, who had pleaded guilty to various charges earlier that year, was in good company when it came to using the tribal gaming license approval process as an opportunity to line one’s pockets. To some extent, theft and influence-peddling have resulted from inadequate federal oversight. But they also are products of the very idea of designated Indian tribes with sovereign territorial rights. Let’s be blunt: There is no more of a need for the Bureau of Indian Affairs than there is for a Bureau of Italian-American Affairs. Moreover, setting aside large stretches of land for sovereign ethnic governance runs contrary to the principle that America is a nation rather than a loose amalgam of subsidized mini-nations. It is a virtual invitation to corruption. The political interests that keep the BIA well-funded, regrettably, apparently are too entrenched for even the bolder members of Congress to recommend the agency’s repeal. That’s another way of saying Fort Peck likely isn’t the only Indian reservation where credit program scams have been occurring.

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