New charges for 5 accused in Rocky Boy scandal

HELENA — Five people who are accused of embezzling federal stimulus aid from Montana's Chippewa Cree tribe are to appear in court Thursday on a new indictment after a tribal leader was dismissed as a defendant.

Former state Rep. Tony Belcourt, his wife Hailey and three others are still accused of diverting some of the $33 million in federal funding the tribe received in 2009 and 2010 for construction of a water pipeline to the Rocky Boy's Indian Reservation. Tony Belcourt is CEO of the Chippewa Cree Construction Corp., which is leading the water pipeline project.

Their original indictment in May on 17 criminal counts that included conspiracy, wire fraud and theft charges has been replaced with a new one containing just four charges: conspiracy to embezzle federal grant and contract funds, theft from an Indian tribal government receiving federal funding and two bribery counts.

The dropped charges include conspiracy to defraud the U.S., wire fraud, money laundering, theft of federal monies and receipt of stolen money from interstate commerce.

Last month, federal prosecutors dropped all charges against Chippewa Cree Business Committee member John Chance Houle without explanation.

The remaining five defendants are to be arraigned on the new charges Thursday in Great Falls before U.S. Magistrate Judge Keith Strong. They previously pleaded not guilty.

U.S. Attorney Mike Cotter declined to speak about the case Wednesday or say why a new indictment was necessary.

Chuck Watson, Tony Belcourt's attorney, said he was expecting the new indictment and it is not a "game changer" in the case.

"As far as we can tell, they're just cleaning up their case a little bit, and we're confident we can prevail on the merits," he said.

Belcourt still intends to take the case to a jury trial, Watson said.

The new indictment lays out the same basic allegations that Belcourt, his wife, Tammy Leischner, James Eastlick and Mark Leischner used a fake billing system and shell company headed by Tammy Leischner to funnel stimulus aid into their pockets.

More than $100,000 was used to start a Billings pipe supply company owned by Belcourt. Another $62,000 was used to buy a house in Box Elder in the name of Hailey Belcourt, according to the indictment.

Prosecutors also allege the cost of transporting pipe to the project from Colorado was overbilled by $311,000 by Leischner's company through a series of complex transactions approved by Tony Belcourt.

Federal prosecutors are seeking the return of that money, the real estate and ownership of MT Waterworks.