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A day after the tribal government at Rocky Boy's Indian Reservation issued a press release denouncing allegations of misuse of federal money, the federal government unsealed indictments on six people including two prominent tribal officials.
The indictments allege embezzlement of hundreds of thousands of dollars of federal stimulus money for a regional water project.
Chippewa Cree Business Committee member and former chair John "Chance" Houle, 47, who is also vice chairman of the Chippewa Cree Construction Corp. and president of the Chippewa Cree Tribal Rodeo Association, and Tony Belcourt, 41, who is Chippewa Cree Construction Corp. CEO, former state representative and former Business Committee member, pleaded not guilty in federal court in Great Falls Tuesday, along with three other defendants, to 17 counts of conspiracy, wire fraud, theft from an Indian tribal government receiving government funding, receipt of stolen money in interstate commerce and money laundering.
Belcourt's wife, Hailey Lee Belcourt, 35, and Mark T. Leischner, 46, and Tammy Kay Leischner, 42, both of Laurel, also pleaded not guilty to the charges.
The defendants were released on special conditions.
The court Monday granted James Howard Eastlick a motion to continue his arraignment on the charges. He is scheduled to enter his plea of not guilty or guilty May 14.
A pretrial conference for the other defendants is scheduled May 22 with U.S. District Court Judge Dana Christensen of Missoula, who has jurisdiction on the case.
The indictment says if they are convicted of any of the charges, the Belcourts will forfeit at least $311,000, a house the indictment alleges Hailey Belcourt bought with embezzled money and a retail sale pipe company the indictment says Tony Belcourt formed using, and profiting through, embezzled funds.
The arraignment came one day after the Chippewa Cree government issued a release denouncing a March 21 Associated Press article that reported the Bureau of Reclamation had frozen funding on the Rocky Boy's/North Central Montana Regional Water System due to missing money and conflicts of interest by owners of businesses subcontracting on the project.
It also comes just more than a month after the tribal council — including Houle — voted to remove Ken Blatt St. Marks from his position as chair for "neglect of duty and gross misconduct."
St. Marks — who has filed as a candidate in the May 21 special election to fill the chair position — has said his removal was for investigating, and cooperating with federal investigators in their investigations, on misdeeds by tribal government officials and misuse of federal funds, including on the water project.
St. Marks removed Belcourt from his position at Chippewa Cree Construction, but the other council members later reinstated him.
The Business Committee issued a release Tuesday saying it was suspending everyone named in the indictment without pay, noting that they must all be presumed innocent until proven guilty.
"We ask for the support of the public, our tribal members and other government officials as we work through this difficult time in our Tribe's history," the release says.
BOR spokesman Tyler Johnson said Tuesday morning that the problems the bureau was investigating with the water project were irregularities in accounting, and the bureau didn't say it was freezing funds. The freeze on funding was a standard 90-day review not related to the investigation, he said.
After the arraignment, Johnson said the bureau was aware of the indictments, but could not comment on ongoing cases or investigations.
He said BOR was continuing to work on the project and was committed to working with the Chippewa Cree government to better the lives of the members of the tribe.
The water project grew out of the water compact the tribe negotiated with the Montana and U.S. governments in the 1990s. It will provide water from Lake Elwell treated in a plant operated by the tribe at Tiber Dam to people on and off the reservation.
The off-reservation areas that have joined the project stretch from Loma to northern Hill County and from Dutton through Sweetgrass on the western edge, including Havre and rural water systems in Hill, Chouteau, Liberty, Pondera, Teton, Glacier and Toole counties. The system would serve nearly 30,000 people on and off the reservation.
Johnson said part of the investigation included potential conflicts of interest due to companies owned by Belcourt and St. Marks subcontracting on the project.
According to the indictment, the defendants conspired to embezzle the American Reinvestment and Recovery Act funds from the water project, using a complex scheme of fraudulent transactions to conceal their acts.
Part of that included creating MT Waterworks, a Billings pipe company, that was formed using embezzled funds and gave Tony Belcourt, who owned a controlling interest in the business, the opportunity to profit from his position as CEO and contracting officer of Chippewa Cree Construction, the indictment alleges.
The embezzlement also placed money into a Chippewa Cree Rodeo account controlled by Houle, the indictment says.
Belcourt entered into a contract Jan. 28, 2010, with Tammy Leischner doing business as a consulting firm she then created in Laurel Feb. 9, 2010.
Feb. 19, Belcourt and two associates formed MT Waterworks, the indictment says.
Feb. 22, Leischner made the first major deposit into her consulting firm, T Consulting, $165,000 in ARRA funds from Chippewa Cree Construction, the indictment says.
March 1, James Eastlick transferred $101,000 from that account to the MT Waterworks account, the first major deposit to the pipe company's account, the indictment says.
The group then began purchasing pipe for the water project, using out-of-state vendors to convert ARRA funds and using the rodeo account to launder the money, the indictment says.
July 7, 2010, Hailey Belcourt used laundered ARRA money, issued in a $62,062 cashier's check, to purchase a house in Box Elder, the indictment says.
St. Marks has said he has found evidence of problems with use of federal money in other tribal departments as well.
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