Rocky Boy Health Clinic Pharmacist Pleads Guilty to False Income Tax Returns and Is Remanded Into Custody

GREAT FALLS –The United States Attorney’s Office announced that DARIN LEE MILLER, 43, of Havre, Montana, pleaded guilty during a federal court hearing in Great Falls, Montana, on October 13, 2015, before U.S. District Judge Brian M. Morris, to filing false federal income tax returns in which he did not report the interest he received from extensive tribal loans. In a plea agreement with the United States, Miller will serve a sentence of nine months in jail, pay a $90,000 fine, and pay the Internal Revenue Service $73,125.50 in taxes, penalties and interest within 18 months of his sentence.  Although the government presented the plea agreement as conditioned upon Miller receiving that sentence, Judge Morris ordered a presentence investigation and set sentencing for January 21, 2016.  Judge Morris may at that time reject the plea agreement and allow Miller to proceed to trial on felony charges of tax evasion.

During the period of the Superseding Information, Darin Miller was a pharmacist at the Rocky Boy Health Clinic (RBHC or the Clinic).  The psychologist at the Clinic was Dr. James Eastlick.

Eastlick 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.  After a couple of years running the loan program, Eastlick brought in Miller as a partner with the intention of turning the business over to Miller. The loans Eastlick made for the Tribe generally included interest rates of 10%, and were paid back within 10 weeks of Eastlick loaning the money.  On an annualized percentage rate (APR) basis, loans from the JE Loan program would constitute a 70% to 80% return.

With regard to the loans to the tribal employees, Eastlick and Miller had an arrangement with the Tribe that they would provide loans to tribal employees, and to guarantee the repayment of 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 and Miller representing both interest and principal.  The JE Loan Program had a similar working relationship with the Finance Offices of the Tribe’s various subsidiary enterprises, such as the Rocky Boy Health Clinic and the Rocky Boy’s School District, which handle their payroll internally and not through the Tribe’s main finance office.  These loans were also short-term loans that carried an interest rate of between 10% and 15%; with an annualized rate being significantly higher—75% to 100% return if the loans were calculated over the full year.

Both Eastlick and Miller were responsible for their own tax liability for the interest income they earned.  Miller claimed $10,000 of interest income on his 2010 tax return, but did not claim interest income from the tribal loan program on any other years.  Once under investigation, Miller sought the services of a Great Falls accountant to amend his returns to include interest from the lending business.  Miller told the accountant, at the time he originally filed his returns, he did not think he had to claim the interest income until he used it.  However, Miller had claimed interest income from other sources and had claimed interest income on his prior years’ tax returns and even the returns filed for the tax years under investigation—2009, 2010, and 2011.

The amounts of unreported interest income were significant.  Miller earned $17,148.68, $76,373.37, and $23,378.17 in interest income from tribal loans in 2009, 2010, and 2011 respectively.  According to the accountant, Miller had not kept track of the interest in the tax years in which it was realized and Miller and his accountant had to retrieve records from the Tribe to have his tax returns amended.  Even when amended, Miller’s returns failed to account for significant interest received.

According to the accountant, Miller did not reveal that at some point during these years he increased the interest rate he charged for individual loans from 10% to 12.5% until after the amended returns had been prepared.  It would have been important for a tax preparer to know that interest rate had been increased to 12.5% in order to accurately amend Miller’s tax returns.  Eastlick also knew Miller had increased the interest rate he charged to 12.5% when he took over the loan program with the CCT.  Some employees of the RBHC and loan recipients also verified Miller raised his interest rate to 12.5%.

Miller had a bank account with Wells Fargo Bank.  From 2009, when Miller first became involved with Eastlick’s loan program, and 2011, Miller deposited $635,818.48 in tribal loan checks into his Wells Fargo Bank account.  This figure does not include any checks Miller transacted into cash at Wells Fargo.  In addition to the bank account with Wells Fargo, during the same time period, Miller cashed $71,109.53 in checks at Leon’s Buy & Sell and another $142,042.87 at Leon’s Finance, businesses operated by Havre businessman, Shad Huston.   

Miller’s conviction on tax charges is the latest in a series of prosecutions brought and convictions obtained by the investigators and prosecutors of the U.S. Attorney’s Guardians Project, an anti-corruption strike force created in 2011.

Once Miller plead guilty to the tax charges, the Court remanded him into custody to begin serving the sentence outlined in the agreement.