Two plead in Rocky Boy lending company case

Two more Rocky Boy’s Indian Reservation officials have pleaded guilty in an ever-widening investigation of fraud, corruption and embezzlement on the reservation under plea agreements that include the duo paying more than $2 million in restitution.

Neal Rosette Sr. and Billi Anne Raining Bird Morsette both pleaded guilty in federal District Court in Great Falls Tuesday to charges alleging they and others embezzled money in a complex scheme of fraud and kickbacks involving the Chippewa Cree Tribe’s online lending company, Plain Green.

Rosette pleaded guilty to a charge of conspiracy to embezzle tribal funds in one case, and to accepting bribes and income tax evasion in another.

Morsette also pleaded guilty to conspiracy to embezzle tribal funds and to accepting bribes and to one of four counts of failing to file a tax return.

Under the plea agreement, the government agreed to drop six other charges against Rosette and six against Morsette.

Under the plea agreements, Rosette must pay $1,255,792 in restitution to the tribe and pay $232,680 in restitution to the IRS. Morsette also must pay $1,255,792 in restitution to the tribe and $162,253 in restitution to the IRS.

The agreements make no specific recommendation as to sentencing. District Judge Brian Morris scheduled their sentencing hearings for March 3.

A history of online lending — and corruption

Plain Green — and its immediate predecessor, First American Capital Resources — were not Rosette’s first involvements in tribal online lending. He was the tribe’s executive administrative officer when the tribe started an online payday lending company, which operated under several names before becoming PDL Ventures.

Some speculated that PDL Ventures was a “rent-a-tribe” scheme where out-of-state companies were paying the Chippewa Cree to be able to list it as the owner of the company and use its tribal sovereignty to avoid state and federal lending regulations.

Rosette told the Havre Daily News in 2009 that complaints filed against the company — the Better Business Bureau assigned more than 110 complaints filed in five months to the Rocky Boy business — to be a case of mistaken identity, with complaints filed against other companies using similar names being assigned to Rocky Boy’s company.

Rosette and other officials never returned calls asking for comments on whether the company truly was owned by the Chippewa Cree.

In 2011, Rosette told the Havre Daily in an interview that PDL Ventures was in its last days as the tribe transitioned to its new venture, Plain Green, which he said would be a wholly owned operation of the tribe to bring revenue to the tribe.

Creating and coordinating new businesses and corruption

Offers of proof filed by the federal government, in which it detailed some of the proof it was prepared to bring up if Rosette and Morsette went to trial, tell a different story.

According to those documents, in May 2010, tribal officials created First American Capital Resources as a tribally owned company to partner with outside interests to provide online payday loans that would be exempt from state and federal lending regulation. Rosette was the company’s chief executive officer and Morsette was the chief operating officer.

The chairman of the company’s oversight board was then-tribal council Vice Chair John “Chance” Houle, who has since pleaded guilty to charges in other cases of fraud, corruption and embezzlement at Rocky Boy and been sentenced to 5 years and eight months in prison and ordered to pay $646,446 in restitution.

Sept. 15, 2010, the documents say, Houle, who was also president of the tribe’s rodeo association, signed a $27,949.33 check using tribal funds payable to the new loan company, which then issued $6,000 checks to Rosette — signed by Morsette — and to Morsette — signed by Rosette. A $15,000 check also was issued to the rodeo association.

Oct. 5, 2010, another payment, of $27,842.92, was made to the loan company and Morsette and Rosette again issued checks to each other, for $4,000 each, and another $15,000 was paid to the rodeo association.

Another entity entered the picture Oct. 22, 2010, when Encore Services Corp. of Nevada entered a management agreement with the tribe. Tribal Council Chairman Jake Parker — who pleaded guilty in 2011 to embezzling nearly $58,000 from the tribe — signed for the tribe.

The documents say that although the company did not make any loans before April 2011, Encore subsidized through bridge loans Rosette’s and Morsette’s salaries — Rosette was earning about $130,00 a year, and Morsette received more than $914,000 in gross income from 2010 through 2013, although she filed no federal tax returns — including through funds provided by Rocky Boy clinical psychologist James Howard Eastlick Jr. of Havre.

Eastlick also pleaded guilty to charges in a complex set of interrelated plea agreements and was sentenced to 108 months in prison and ordered to pay, along with other defendants, $484,800 in restitution.

More business and complications

In March 2011, the tribe, working with Think Finance of Fort Worth, Texas, created Plain Green as another online lending company. Rosette, Morsette and Houle had the same positions with Plain Green as they did with First American Capital Resources. The documents say Encore soon entered in an agreement to participate in its business as well.

Rosette and Morsette wired money from the tribe’s share of Plain Green distributions to Encore in July 2011, without any written agreement in place, the documents say. Houle later signed a fee agreement, even though he was not the tribal chair, backdating it to June 1, 2011.

Houle received almost $150,000 in payment for that action, the documents say.

Then, on Aug. 3, 2011, a new entity, Ideal Consulting, billed Encore for “consulting fees,” the documents say. Eastlick had opened a bank account for that company, and on Aug. 5, 2011, Encore wired more than $50,000 into that account.

The documents say this company was created to bring Encore back into the tribal revenue stream once Think Finance supplanted it. The arrangement paid Encore 10 percent of the tribes revenues, but the company would take 15 percent and pay a kickback of 5 percent to Morsette, Rosette and Eastlick, the document says.

In the next two years, Plain Green paid Encore $3.52 million and Encore paid Ideal $1.208 million, the document says.

In later civil proceedings — an arbitrator ordered Encore to pay back money it had paid to Rosette and Morsette, and Rosette, who had been severed from Plain Green and paid more than $200,000 in severance, had sued the tribe after it sued Encore — Rosette admitted the tribal council and tribal members were not aware of Ideal Consulting and payments he had received through the company.

He also also admitted, the documents say, that the joint venture agreement between the tribe, Encore an Ideal was signed in the fall of 2012 but was backdated to June 17, 2011, the document says.