Edward Orvel Smith Pleads Guilty in U.S. Federal Cour
The United States Attorney's Office announced that during a federal court session in Great Falls on September 14, 2010, before U.S. Magistrate Judge Keith Strong, EDWARD ORVEL SMITH, a 60-year-old resident of Wolf Point, pled guilty to theft from an Indian tribal organization. Sentencing has been set for December 20, 2010. He is currently released on special conditions.
In an Offer of Proof filed by Assistant U.S. Attorney Carl E. Rostad, the government stated it would have proved at trial the following:
In the later part of 2008 and the early part of 2009, Fort Peck Tribal officials retained the services of a Certified Public Accountant to conduct a review of the Credit Program's finances in anticipation of a year-end audit. The accountant quickly identified excessive loans and discovered that the Credit Program employees and some of their relatives had excessive outstanding short term loans, suggesting that tribal monies had been embezzled, misapplied, or converted to the use of tribal and federal employees of the loan program, and their families.
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 Interior's Office of Inspector General determined that almost half of all loans were fraudulent.
The Bureau of Indian Affair's (BIA) Branch of Credit maintained oversight of the Fort Peck Credit Program until June 2008, when this Branch was transferred to the Office of Indian Energy and Economic Development (OIEED), Division of Capital Investment, Office of the Assistant Secretary for Indian Affairs. The OIEED transferred administrative oversight of the Fort Peck Credit Program to the Fort Peck Tribes in December 2008 and as of that date the Credit Program was strictly a tribal function. The Fort Peck Credit Program maintains three separate bank accounts with Independence Bank, Poplar, Montana. These bank accounts are dedicated to the Short Term Loan account, the Revolving Credit Fund account and the Entrepreneurial Loan account.
Prior to the transition of oversight authority in December 2008, the Fort Peck Credit Program was staffed with six employees consisting of two federal employees and four subordinate tribal employees. Loan applications were reviewed by a three member Credit Committee who had authority to approve or deny the application pursuant to the Plan of Operations.
From August 12, 1999, to May 29, 2009, hundreds of fraudulent checks exceeding $1 million were issued from the checking accounts of the Fort Peck Tribal Credit Department to a maximum of $2,000, to qualifying tribal members. The checks were the consequence of a fraudulent scheme whereby all six of the Credit Program employees conspired to steal money from the Tribal Credit Department by securing unauthorized loans and direct payments for themselves. These disbursements purport to represent legitimate loans, overtime payments, and miscellaneous reimbursements to the employees when, in fact, the employees had far exceeded the maximum loan amount threshold of $2,000 and their salary was paid separately through the Tribe's Payroll account. In many cases, the employees circumvented the approval authority of the oversight board - the Credit Committee - by falsely representing that approval for the disbursement had been obtained. To further solidify their conspiracy, the employees often split the proceeds of the checks with each other.
The Tribal Credit Program initially operated with $1.5 million provided to them by the Department of the Interior through the U.S. Direct Loan Fund. The Direct Loan Fund was created to promote access to capital and increase economic opportunity of American Indians. The Direct Loan created and funded the tribal re-lending program, whereby loans repaid by tribal members would be used to repay the Direct Loan and ultimately create a reserve sufficient to make the Credit Program a viable operation. The Credit Program repaid their U.S. Direct Loan in 1996, and the funds in their account since that time are tribal monies.
Four employees had check signing authority on the Credit Program bank accounts - Toni Greybull (former Supervisory Credit Manager who passed away in March 2008), Shelly Pipe, Paul Bemer and Evadna Running Bear, as did the three members of the Credit Committee.
During the period of the Indictment, SMITH was employed by the Fort Peck Tribes as a heavy equipment operator. His wife, Connie Jean Smith, was an employee of the Fort Peck Tribal Credit Department, including service as the Accounts Maintenance Clerk.
The investigation identified 41 disbursements from the Credit Program checking accounts payable directly to SMITH between December 2003 and May 2009, totaling $37,338. Most of these payments were recorded as short term loans purportedly issued in his name (38 short term loans / $36,788). Three other disbursements ($550) were recorded as miscellaneous expenses. A review of the related loan documents reflect that only four of SMITH's short term loan applications were submitted to the Credit Committee for their approval.
The investigation further confirmed that EDWARD SMITH and Connie Smith obtained a long term loan from the Credit Program in the amount of $52,294. Repayment records reflect an outstanding balance of $17,657. SMITH admitted that he routinely split the proceeds of these loan checks with Toni Greybull as payment to her for her assistance in securing the loan check. SMITH further admitted that after Greybull died in 2008, he routinely split the proceeds of loan checks with Evadna Running Bear as payment to her for her assistance in securing the loan check.
SMITH faces possible penalties of 5 years in prison, a $250,000 fine and at least 3 years supervised release for each charge.
The investigation was conducted by the U.S. Department of the Interior - Inspector General's Office.
A copy of the Offer of Proof can be obtained by contacting Sally Frank at (406) 247-4638.