NEWS RELEASE

FOR IMMEDIATE RELEASE October 22, 2004

CONTACT:

William W. Mercer United States Attorney for the District of Montana (406) 247-4639

 

 

 

GREGORY MORRIS POWDERFACE PLEADS GUILTY IN U.S. FEDERAL COURT

       Bill Mercer, United States Attorney for the District of Montana, announced today that during a federal court session in Great Falls, on October 20, 2004, before U.S. District Judge Sam E. Haddon, GREGORY MORRIS POWDERFACE pled guilty to theft from an Indian tribal organization and filing a false tax return. Sentencing is set for February 7, 2005. POWDERFACE is currently released.

       In an Offer of Proof filed by the United States, the government stated it would prove at trial that a federal investigation was initiated based on information received from the Assiniboine and Gros Ventre Tribes of the Fort Belknap Indian Reservation regarding suspected embezzlement by employees of the Fort Belknap Insurance Company (FBIC).

       In a May 2000 audit report, accountants questioned "dubious expenses" incurred by POWDERFACE through his use of an unauthorized Visa debit card issued in his own name against the Main Account. These transactions involved the purchase of airfare, car rentals, hotel lodging, meals, telephone charges, airport parking and other miscellaneous costs, totaling $85,514 between 1998 and April 2000. Agents of the Department of Interior’s Office of Inspector General expanded the investigation to include would, in their investigation, expand the time period to include the year 1997 and determined that the total loss from the illegal use of the debit card was in excess of $97,000.

       POWDERFACE is a member of the Assiniboine and Gros Ventres Tribes of the Fort Belknap Tribes. He attended college, receiving both an undergraduate business degree and a Masters in Business Administration from Stanford University.

       In the mid 1990’s, POWDERFACE returned to the reservation and began working for the tribal government. POWDERFACE was first employed as the Tribal Comptroller in the Tribal Finance Office and then, in 1996, as the Chief Executive Officer for the Fort Belknap Community Council (FBCC). He terminated his employment in June of 1998 and began a career as a financial consultant using the business name, Financial Native Network.

       In October of 1998, the FBCC awarded POWDERFACE, d.b.a. Financial Native Network, a consulting contract to provide technical assistance and oversee the investment funds of the Fort Belknap Insurance Company (FBIC).

       In January of 2000, the FBCC renewed its relationship with POWDERFACE using a different contract agreement. FBCC awarded POWDERFACE, d.b.a. Financial Native Network, a Consulting Contract to provide technical assistance and oversee the investment funds of the FBIC. The contract limited billable hours to no more than 40 hours per month at $45 per hour. The contract made no provision for the reimbursement of any expenses. The contract was valid from January 4, 2000 through January 3, 2002, but was suspended on May 15, 2000, and subsequently canceled by the FBCC effective June 15, 2000.

       In July of 1996, POWDERFACE established, on behalf of the FBIC, investment accounts with Merrill Lynch. Merrill Lynch documents revealed that POWDERFACE authorized the issuance of a Visa debit card in his own name from the FBIC Main Account. A separate document confirms that Visa debit cards were also issued against the Main Account in the names of two other FBIC employees.

       All of the statements which showed the use of the card came to POWDERFACE’s grandmother, an employee of the FBIC office.

       During the time period of the contracts, POWDERFACE was also submitting invoices for reimbursement to the Tribe separate and apart from his use of the debit card. Known payments from the FBI to POWDERFACE / Financial Native Network totaled over $106,000 and were remitted from April 1997 through May 2000. No tribal official involved at the time had any knowledge of the debit cards.

       On his 1998 tax return, POWDERFACE failed to disclose $12,000 in debit card embezzlement, income he had received in commissions from sources other than the Fort Belknap Tribe, $36,000 in income from consulting fees, and income from insurance commissions. For the tax year 1998, POWDERFACE had in excess of $57,000 in unreported income, resulting in an underpayment of income tax in the amount of $15,000.

       POWDERFACE disputes the amount of the loss, claiming that some of the expenditures were for the benefit of the Tribe.

       POWDERFACE faces possible penalties of 5 years in prison, a $250,000 fine and 3 years supervised release for theft from an Indian tribal organization. For filing a false tax return, POWDERFACE faces possible penalties of 3 years in prison, a $100,000 fine and 1 year supervised release.

       Assistant U.S. Attorney Carl Rostad prosecuted the case for the United States.

       The investigation was a cooperative effort between the United States Department of Interior Office of the Inspector General and the Internal Revenue Service Criminal Investigations.

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       A copy of the Offer of Proof can be obtained by contacting Beth Binstock at (406) 247-4653.