Newcastle Man Pleads Guilty in Scheme to Defraud United Auburn Indian Community

SACRAMENTO, Calif. — Gregory Scott Baker, 48, of Newcastle, pleaded guilty today to conspiring commit mail and wire fraud, conspiring to launder monetary instruments, and filing a false tax return, United States Attorney Benjamin B. Wagner announced.

In August 2012, Baker, Bart Wayne Volen, 54, of San Diego and Haiku, Hawaii, and Darrell Patrick Hinz, 48, of Cameron Park, were charged with conspiring to commit mail and wire fraud and various money laundering charges as part of a scheme to defraud the United Auburn Indian Community (UAIC) of more than $17 million. In April, 2013, the government filed a superseding indictment which additionally charged Baker with filing false tax returns from 2006 through 2009 in connection with the fraud.

According to court documents, in October 2006, the UAIC hired Volen, a developer, to finish construction on four tribal buildings – a school, a community center, and administrative offices – on UAIC-owned property in Auburn. Volen submitted false and inflated invoices to the UAIC knowing that Baker and Hinz, both UAIC employees, would approve the fraudulent invoices based on an agreement the three men had reached earlier. Volen supported his invoices with inflated cost proposals from his general contractor’s company, Sequoia Pacific Builders (SPB), and, at times, inflated invoices from various subcontractors. At Volen’s direction, over 160 SPB cost proposals were fraudulently inflated.

Baker was the UAIC tribal administrator, and his duties included overseeing the Indian Hills Office Project. Hinz was a contract employee hired by the UAIC to manage the construction at the Indian Hills Office Project site. Both Baker and Hinz were required to approve all invoices before the UAIC tribal council would pay for work done on the Project. The indictment alleges that during the scheme to defraud the tribe, Baker engaged in conduct to insure that the tribal council would pay for the inflated and fraudulent invoices submitted by Volen. He was aware of what Volen was doing and was later paid by Volen for his participation in the scheme. According to court documents, a total of over $17 million was ultimately stolen from the UAIC, and Baker received over $1.4 million for his participation.

With regard to the tax offense, according to court documents, Baker filed tax returns contained a Schedule C in which Baker failed to report the income he derived from the scheme. As a result, the United States suffered a tax loss of between $250,000 and $550,000.

This case is the product of an investigation by the Internal Revenue Service, Criminal Investigation. Assistant United States Attorneys Michael M. Beckwith, John K. Vincent and Kevin C. Khasigian are prosecuting the case.

Hinz is scheduled for trial in Sacramento on February 29, 2016. The charges against him are only allegations; Hinz is presumed innocent until and unless proven guilty beyond a reasonable doubt.

Baker is scheduled to be sentenced by United States District Judge Troy L. Nunley on March 17, 2016. Volen previously pleaded guilty to similar charges in this case on June 12, 2014. Chris W. Eatough, the owner of Sequoia Pacific Builders, previously pleaded guilty to a felony related to this case on June 20, 2013, in case number 2:13-cr-214 TLN. Volen and Eatough are scheduled to be sentence by Judge Nunley on April 28, 2016 and March 17, 2016, respectively. Both Baker and Volen have agreed to pay at least $17 million in restitution to the United Auburn Indian Community.

Baker faces a maximum sentence of 20 years in prison and a $250,000 fine, or twice the value of the gross gain or loss for conspiring to commit mail and wire fraud. The maximum statutory penalty for conspiring to launder monetary instruments is 20 years in prison and a $500,000 fine or twice the value of the laundered money Any sentence imposed in this case, however, will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.