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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of California

FOR IMMEDIATE RELEASE
Friday, February 25, 2022

Former Members of Tribal Leadership Sentenced for Multimillion Dollar Embezzlement Scheme

SACRAMENTO, Calif. — Three former leaders of the Paskenta Tribe of Nomlaki Indians were sentenced today for a conspiracy to embezzle or steal from a tribal organization, as well as tax fraud and tax evasion offenses, U.S. Attorney Phillip A. Talbert announced.

U.S. District Judge John A. Mendez sentenced John A. Crosby, 56, of Redding, to four years and nine months in prison and to pay a $10,000 fine; Ines S. Crosby, 76, of Orland, to four years and nine months years in prison; and Leslie A. Lohse, 67, of Glenn, to three years and five months in prison. Lohse has paid $902,208 in restitution prior to today’s sentencing hearing. A hearing will be held on April 19, 2022, to determine the amount of restitution John Crosby and Ines Crosby will pay.

According to court documents, from approximately January 2009 through May 2014, the defendants took millions of dollars from the Paskenta Tribe of Nomlaki Indians without tribal or legal authority, taking advantage of their positions on the Tribal Counsel and in prominent leadership positions in the tribe. The defendants used this embezzled money to: buy homes; build swimming pools, decks and koi ponds at their personal residences; purchase vehicles; go on luxury vacations (including trips to Africa, South America, and Hawaii, as well as private and chartered jet travel); buy high-value entertainment; pay familial expenses; and purchase precious metals. John Crosby and Leslie Lohse did not declare these embezzled amounts on their respective tax returns as income, while Ines Crosby intentionally failed to file tax returns between 2010 and 2014. All three individuals then took a series of steps to attempt to conceal their actions: they created a written employment agreement in 2014 that appeared to be from 2001 and purported to authorize their use of Tribal funds, and then told federal investigators that the document was from 2001, knowing at the time that that was not true.

“The defendants lived a lavish lifestyle at the expense of the Paskenta Tribe of Nomlaki Indians and were undeterred by the damage their conduct would bring to the Tribe, whose members trusted them with most of their crucial operational positions,” said U.S. Attorney Talbert. “The defendants’ criminal conduct occurred on a regular basis over a period of many years. Today’s sentences should send a strong message to other would-be criminals of the consequences for serious white-collar crime.”

“The emotional and financial damage these defendants have caused to the Tribe cannot be undone. Not only did the defendants steal millions of dollars to line their pockets and failed to report their ill-gotten gains, but their actions also eroded Tribe members’ faith in their government, causing fear and distrust,” stated IRS-Criminal Investigation Special Agent in Charge Mark H. Pearson. “IRS-Criminal Investigation will not standby and tolerate this type of criminal conduct. We remain committed to ensuring those in positions of power are held accountable when that position is exploited for personal gain.”

“These defendants abused the trust of their own tribe and community, diverting millions of dollars from tribal accounts to fund lavish, unauthorized personal expenditures rather than help tribe members,” said Special Agent in Charge Sean Ragan of the FBI Sacramento Field Office. “This case exemplifies our commitment to conducting thorough investigations and working with our law enforcement partners to ensure justice for crime victims. We thank IRS Criminal Investigation for their strong, continued partnership and commitment to collaborating with us to seek justice for victims of white collar crime.”

This case was the product of an investigation by the IRS-Criminal Investigation and the Federal Bureau of Investigation. Assistant U.S. Attorney Christina McCall prosecuted the case.

Topic(s): 
Financial Fraud
Tax
Updated February 25, 2022