Psychologist Sentenced to Six Years in Federal Prison and a $100,000 Fine for Role in Rocky Boy's Corruption Probe
GREAT FALLS – The former psychologist for the Rocky Boy Health Clinic in Box Elder has been sentenced to six years in prison for his leadership role in corruption ring that embezzled hundreds of thousands of dollars from federal programs on the reservation. Dr. James Howard Eastlick, 48, now of Coeur D’Alene, Idaho, was sentenced by U.S. District Judge Brian Morris to six years in prison despite the government’s recommendation for a more lenient sentence based upon what prosecutors termed “exceptional assistance” in the investigation and prosecution of others involved in the Rocky Boy’s corruption.
While the sentence represented a departure from the advisory guideline range, the sentence also reflected Eastlick’s central role in a myriad of corrupt deals with tribal officials that occurred over a three year period when the reservation saw a significant increase in federal funding.
In addition to the prison term, Judge Morris ordered Eastlick to pay a $100,000 fine, pay $424,800 in restitution and serve three years of supervised release when his term of imprisonment has ended.
Earlier in the day, Morris had sentenced Eastlick’s sister Tammy Kay Leischner, 43, and his brother-in-law, Mark Craig Leischner, 48, both of Laurel to two years in prison. Morris sentenced Eastlick’s father, James Howard Eastlick, Sr., 70, to a year in prison in September of 2014, and Eastlick’s nephew, Brenden Leischner, 24, to six months in custody and five years of probation for his role in a student financial aid fraud scheme at the University of Great Falls.
Bribery Relating to a Federally Funded Program
Dr. Eastlick plead guilty to providing Tony Belcourt, then the Chief Executive officer of the Chippewa Cree Construction Corporation, with a $100,000 payment as part of their on-going business relationship relating to the Tiber Reservoir water project which was funded in 2009 with $20 million in federal stimulus monies under the American Recovery and Reinvestment Act (ARRA) through the Bureau of Reclamation.
Prosecutors presented evidence that Hunter Burns Construction, LLC, was formed as a Native American / minority-owned preference business in June 2009 to do business on the Rocky Boy’s Indian Reservation, primarily on federally funded projects. The 51% majority owner of the company was Hunter Burns, and the other 49% of the company was owned by Dr. Eastlick, then a clinical psychologist with the Rocky Boy Health Board Clinic. Between June 2009 and October 2009, Tony Belcourt awarded four contracts to Hunter Burns Construction, totaling over $713,000, in connection of the expansion of the On-Reservation water district. These contracts were identified as the Box Elder Pipeline Project 1 ($361,300), the Box Elder Pipeline Project 2 ($143,440) the Middle Dry Fork Pipeline project ($155,108), and the Reseeding project to mitigate ground disturbance for these two pipelines ($54,000).
In December, 2011, Belcourt approached Eastlick for a large loan--$100,000—to keep the Bank from taking his ranching operation. Eastlick agreed to help Belcourt.
Belcourt approved and authorized a Chippewa Cree Construction Corporation payment to Hunter Burns Construction on November 21, 2009, in the amount of $148,972. Without the deposit from the Chippewa Cree Construction Corporation, there were insufficient funds in the Hunter Burns Construction account to get the money Belcourt needed to fix the problem with the auction company and Independence Bank caused by the illicit sale of secured cattle.
Two days later, on November 23, 2009, Hunter Burns Construction issued a $100,000 check to Hailey Belcourt.
Four months later, in March of 2010, Hunter Burns Construction was awarded a $1.7 million contract. Two weeks after the contract was entered into, Belcourt approved a $100,000 payment of federal ARRA funds to Hunter Burns Construction . The contract had called for a $15,000 payment for “mobilization”, but that payment was made weeks after the $100,000 payment; a payment that went unrecorded with the project engineers until many months later.
Bribery of Councilman John Houle
Eastlick also plead guilty to bribing Chippewa Cree Tribal Councilman John Chance Houle.
Prosecutors represented to the Court that between October 2007 and September 2012, the Chippewa Cree Tribe received $420,439,495.00 in federal funding. In addition to the over $420 million in federal funding, the Tribe also received a $25 million dollar insurance payment after the flooding of 2010, and an $8.4 million dollar award under the Cobell v. Salazar Settlement in July of 2012. The total money received by the Tribe during this five-year time period was over $450 million dollars.
Of that amount, between April 2009 and December 2011, the Rocky Boy's Health Clinic received over $40 million from HHS and EPA, mostly to operate the Health Clinic and rebuild sewage lagoons damaged by the floods of 2010. The Chippewa Cree Construction Corporation received over $40 million from the BOR as part of the Rocky Boy's/North Central Montana Regional Water System project (the Tiber project).
John Chance Houle, was a tribal councilman during this time and Vice-Chairman of the Rocky Boy Tribe Business Committee. In that capacity, Houle served on the Chippewa Cree Construction Corporation Board and on the Rocky Boy's Health Care Board. Houle had arranged for the Eastlick-Bums partnership with the understanding that if he lost his position on the Council, he would replace Eastlick and continue to use the construction company as a vehicle to obtain tribal funds. A long-time member of the tribal council who had also served as the Tribal Chairman, Houle exerted significant political control over the two boards as well as over the affairs of the Tribe as a whole.
During the period of the indictment-from July 28, 2009 through November 30, 2011, Houle engaged in a series of “business transactions” with Hunter Burns Construction including the rental of property to the company, the sale or lease of equipment to the company, and the performance of personal services to the company. The investigation revealed that many of the transactions were not legitimate but were merely labeled as such to provide cover to the participants. For example, equipment purportedly sold to Hunter Bums Construction would continue to appear on Houle's inventory of equipment for bank loans and credit long after it was allegedly sold. One transaction was for the potential and prospective lease of property over ten years paid in full up front-when the land was never used for any purpose by the construction company. Another payment was related to the disposal of hazardous waste which could not have been a legitimate transaction due to the regulatory requirements for the disposal of such material that Houle could not legally perform. Eastlick, Houle, and Hunter Burns all confirmed that the scheme was merely a device to funnel federal and tribal monies back to Councilman Houle in exchange for his continuing patronage in the giving of contracts to Hunter Burns Construction.
From July 28, 2009, through November 30,2011, Hunter Burns Construction made a total of $258,487 in l7 payments to Houle, his ranching business, or his children from the health clinic and water project contracts funded by EPA, BOR, and HHS.
Federal Income Tax Fraud
Eastlick was also sentenced on his guilty plea to income tax fraud.
According to prosecutors, Eastlick, in addition to his employment as a psychologist for the Health Clinic, operated a loan program-called the JE Loan Program-with the Chippewa Cree Tribe wherein he loaned money both to the Tribe in large amounts and to individual tribal employees in smaller amounts. Loans to the Tribe generally carried interest rates of l0 per cent, and were paid back within l0 weeks of Eastlick loaning the money. The annualized percentage rate (APR) for loans from the JE Loan program would constitute an 80% return.
With regard to the loans to the tribal employees, Eastlick had an arrangement with the Tribe that to repay those debts, money would be taken from the employee's paycheck, consolidated with other debtors of the JE Loan program, and then tribal checks would be regularly issued to Eastlick representing both interest and principal. These loans were also short-term loans that carried an interest rate of between l0 and 15 per cent with an annualized rate being significantly higher. Eastlick's accountant, who handled the tax affairs of Eastlick's other business interests, had no knowledge of the JE Loan program and did not include taxable income from that source on any of Eastlick's returns including during the years 2008-2011.
Returned principal on the loans made by Eastlick through the JE Loan Program would not be income subject to the Internal Revenue Service's reporting requirements, but interest on those loans is considered income and must be reported. Eastlick did not claim any interest income from his tribal loan program on his federal tax returns for 2008, 2010, or 2011, and only minimal interest in 2009.
Eastlick’s prison sentence on the tax conviction runs concurrently to the 72 months imposed on the other counts of conviction, but he was ordered to pay, of the total restitution amount, $66,313 to the IRS in taxes due and owing from his failure to disclose the interest income from the loan program.
Because there is no parole in the federal system, the “truth in sentencing” guidelines mandate that Eastlick will likely serve all of the time imposed by the court. In the federal system, defendants do have the opportunity to earn a limited reduction in time served for “good behavior,” a reduction for good conduct while incarcerated will not exceed 15% of the overall sentence.