A federal grand jury has handed down an indictment against three former officials of the Rolling Hills Casino, operated near Corning, California, by the Paskenta Band of Nomlaki Indians, the victims of an alleged million embezzlement scheme that stretched out for 15 years, including some time before the casino opened.
The Roman saying, “Who watches the watchmen?” was never more appropriately applied than in the case of a tribe where the people tasked with safeguarding the tribe’s assets were the ones who were looting it.
The Northern California casino has operated since 2002 along the state’s well-traveled Interstate 5, 100 miles from Sacramento. The casino opened a few years after the federal government restored recognition to the tribe. For much of that time a cabal of tribal officials were allegedly milking the casino for all it was worth.
Tribal Chairman Andrew Alejandre says that the former officials “terrorized” members of the 250-member tribe and impoverished tribal elders by stealing from them. He greeted the indictments with enthusiasm. He told Courthouse News: “This indictment is proof of the federal government’s ability and willingness to uphold justice on behalf of those members and others like them.”
He described the alleged crimes: “They and their co-conspirators used vicious and callous methods of intimidation and coercion to maintain access to the Tribe’s money, millions of which they stole in order to live a life of obscene luxury, while services to Tribal members went unfunded and Tribe members lived in fear of economic retaliation.”
According to the indictment, the three officials, who included a former FBI agent, over a period of five years spent millions of the Northern California tribe’s money on shopping sprees, renovations of their personal homes and vacations all over the world, including New Zealand and the Caribbean.
All of this certainly didn’t happen without tribal members suspecting something. In fact the tribe became infamous for a decade of intertribal battling that occasionally degenerated into an armed standoff using military grade weapons.
The accused includes former FBI agent John Crosby, who was the tribe’s economic development director and his mother, Ines Crosby. The 53-year-old former agent is accused of taking $838,000 from the tribe to buy a home while his 73-year-old mother bought gold coins and other precious metals worth $150,000. But that was only the beginning. Before they were done the price tag was $2.6 million.
The third official, former tribal treasurer Leslie Lohse, 62, Crosby’s aunt and Ines Crosby’s sister, is accused of making payments to her credit card using tribal funds and lying to federal officials over the line of credit she received from the tribe. She also allegedly didn’t list the money on her tax returns.
Before the grand jury indictment there was a civil lawsuit the tribe filed against the three and about a dozen others alleging a total of $20 million in embezzlement. That trial hasn’t gone anywhere yet and the judge in the case dismissed the tribe’s RICO (Racketeer Influenced and Corrupt Organization Act) claims against some of them in October. The judge also declined to freeze the assets of the accused.
The tribe appealed and the 9th Circuit Court of Appeals sent the case back to the original judge, ruling that he failed to give a reason for not freezing the accuseds’ assets.
The tribe’s attorney, Stuart Gross, commented, “We are pleased with the Ninth Circuit’s decision to vacate the district court’s order and look forward to this action helping to protect tribal assets that were wrongfully appropriated by these individuals.”
This ruling came just days before the federal indictment.
The defendants are accused of writing checks back and forth to each other, pretending to pay casino bills. Apparently, the embezzlement went on for many years, until the leaders were voted out of office in April 2014. If convicted, the three face a maximum of 20 years in prison.
The situation came to a head in April 2014 after Tribal Chairman Andy Freeman led the disenrollment of 76 members of the tribe who were part of the Henthorne/Pata family and accused several members of the tribal council who belonged to that family of, among other things misappropriation of funds.
Roughly the same time the tribal gaming commission suspended the license of one of its members, Jon Pata, of misappropriating $2 million. Ines Crosby is Pata’s sister, who, according to one accusation, once walked into the casino, cashed a check for $200,000 and walked out with bags full of cash.
