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Justice News

Department of Justice
U.S. Attorney’s Office
District of Montana

FOR IMMEDIATE RELEASE
Thursday, March 26, 2015

Jury Convicts Former High-Ranking BLM Official

PACER Case Reference: 14-57

GREAT FALLS – The former State Director of the Bureau of Land Management’s Eastern States Region, which is responsible for the stewardship of the public lands and resources under the jurisdiction of the BLM in 31 States east of and bordering the Mississippi River, was convicted of fraud and theft by a federal jury in Great Falls Wednesday night.

John Grimson Lyon, 61, of Clifton, Virginia, faces a possible 35 years imprisonment, $750,000 in fines, and $112,000 in forfeitures.  Judge Brian Morris of Great Falls set sentencing for June 25, 2015.

As a State Director, Lyon was part of the Senior Executive Service, whose members serve in the key positions just below the top Presidential appointees. Lyon was convicted of approving time sheet information for one of his Deputy State Directors, Larry Ray Denny, 67, of Box Elder, even though Denny had left his position in Virginia in July 2012 to return to Montana and take a job with the Chippewa Cree Tribe on the Rocky Boy’s Indian Reservation. Federal prosecutors alleged that Lyon knew or should have known that his subordinate had abandoned his position and was performing no work on behalf of the federal government when he told BLM time keepers to continue to enter Denny’s hours as if he were earning a federal paycheck.

Lyon continued to present and certify as true work hours, sick leave hours, and annual leave hours to his staff, on Denny’s behalf, until Denny ultimately resigned in March of 2013.  After leaving Virginia, and as a result of Lyon’s actions, Denny received an additional $112,000 in federal wages and benefits, all while working as Energy Projects Manager for the tribe.  The scheme was discovered in February 2013 when a BLM employee in Montana sent an inquiry to that agency’s headquarters asking for clarification as to whether Denny was still a BLM employee.  Denny had been working on oil and gas issues for the Tribe and the agency was unsure whether he was interacting with federal agencies as a BLM employee or as a representative of the Chippewa Cree Tribe.

Eastern States Office employees testified that Lyon rebuffed any inquiry into Denny’s status, telling them that Denny’s absence was related to a private medical issue and would not be discussed.  An internal investigation revealed that Denny had over 3,000 unopened emails in his government email inbox.  Employees testified that once Denny left Virginia there was “radio silence” and he could not be reached.  One employee testified that she called Denny twice shortly after his departure; one the second call, Denny hung up on her once he determined who was calling. Lyon claimed Denny had been giving him valuable consultation on oil and gas matters which justified his work hours.  An investigator with the Department of Interior’s Office of Inspector General testified that she reviewed Lyon’s phone records and found less than three hours of conversation in the eight-month period between July 2012 and March 2013. Emails and phone records revealed that Lyon and Denny regularly used non-government email and phones to communicate, thereby creating no data trail in government servers or phone records.

In November 2012, three months after Denny left and ceased working for BLM, Lyon rated Denny’s performance “exceptional” and approved a $3,200 cash bonus.

Denny plead guilty to all counts and the forfeiture three days before Lyon’s trial.     

The guilty verdict is the latest in a series of prosecutions and convictions relating to public corruption, fraud, and theft in federal grants, contracts and programs brought by the investigators and prosecutors of the U.S. Attorney’s Guardians Project, an anti-corruption strike force created in 2011.  The Denny-Lyon case was investigated by an agent of the Department of Interior’s Office of Inspector General.

United States Attorney Michael Cotter said that “We prosecute people who steal and cheat the taxpayers every day.  Federal officials, regardless of their power or position, will be held to the same standard.  The jury’s verdict sends a message.  ‘It’s not your money.  You are trusted to protect it.  Do your duty or we will do ours.’”

Updated March 26, 2015