A financial scam revealed in December that took government funds from the Ute Mountain Ute tribe has jumped from $17,599 stolen to $793,000, according to the U.S. attorney’s office.
This week, eight people, including tribal members, pleaded guilty in U.S. District Court in Durango to various embezzlement and money laundering charges, said Jeff Dorschner, a spokesman for the U.S. attorney.
“It is substantial,” he said of the amount embezzled, “and is part of the continuing investigation.” The current convictions represent “a small subset” of those under federal investigation, he said.
Restitution amounts are pending until sentencing. Those who entered guilty pleas include:
Oraleigh Jaramillo, aka Oraleigh Hammond, who pleaded guilty to unlawfully obtaining tribal funds and was ordered to pay $309,537 in restitution.Darrel Jonah Lee, who pleaded guilty to unlawfully obtaining tribal funds and was ordered to pay $142,411 in restitution. Jennifer Ann Pioche, who pleaded guilty to unlawfully obtaining tribal funds and was ordered to pay $106,497 in restitution.Kevin Ryan Lee, who pleaded guilty to unlawfully obtaining tribal funds and was ordered to pay $89,132 in restitution.Classia Rose Hammond, who pleaded guilty to unlawfully receiving tribal funds and was ordered to pay $65,508.Ladelda Lopez, aka Ladelda Box, who pleaded guilty to unlawfully receiving tribal funds and was ordered to pay $34,823 in restitution.Myreon Lehi, who pleaded guilty to unlawfully receiving tribal funds and was ordered to pay $23,280 in restitution.Loia K. House, who pleaded guilty to unlawfully receiving tribal funds and was ordered to pay $22,190 in restitution.Additionally, Gloria Lee, aka Gloria Rouillard and Gloria Lopez, made her initial appearance on an one count of embezzlement and one count of money laundering.
Dorschner said the amount in restitution owed by each of those convicted is approximately the amount they unlawfully obtained.
“It is important to note that this investigation is active and ongoing, and more charges are likely,” he said. Sentencing is pending for those convicted.
Penalties for unlawfully receiving funds from a tribal government is up to 10 years in prison and a fine of up to $250,000. Money laundering carries a penalty of up to 20 years in prison and a fine of up to $500,000. Willfully misapplying funds from a tribal organization carries a penalty of up to five years in prison and a fine up to $250,000.
The elaborate fraud scheme involved employees of the tribe’s Financial Services Department who illegally dispersed checks written to individuals they selected, including non-tribal members and people in prison, according to court documents.
Those who received the checks cashed them, then usually shared the cash with the financial services employee who provided the check, according to case records.
Between 2011 and 2015, finance employees took advantage of tribal programs intended to help community members.
One program allowed tribal members to draw $1,200 to $1,500 per year to help pay for utilities.
Another program set up family accounts for tribal members from the time they were children. At age 18, tribal members can begin spending the funds, which with interest typically reached $10,000. The funds could be used to purchase things such as vehicles, home furnishings and computers.
In each program, tribal members were required to submit bills and invoices to receive payment for utilities or from the family plan account.
Initially, the fraudulent checks were falsely attributed to the utility benefits or family plan accounts of tribal members who did not request or receive the fraudulent checks. Later, the fraudulent checks were generated without being attributed to any tribal member. Several of the people who received the fraudulent checks were not tribal members and were not entitled to any tribal benefits.
In other instances, the Financial Service Department employees caused embezzled tribal funds to be sent via Western Union to recipients who would then provide a portion of the money to the employee who sent the wire. In some instances, embezzled tribal funds were wired to inmates with the Federal Bureau of Prisons who were not Ute Mountain Ute tribal members or entitled to any tribal funds.
Court documents said more than one financial department employee was involved in the scheme, including Oraleigh Jaramillo.
The criminal investigation began in 2016 after a financial audit of the tribe.
In federal financial fraud cases, an asset forfeiture division seizes items purchased with the stolen money. The recovered equity is then used to reimburse the victim.
In December, the U.S. attorney’s office announced that seven people from Towaoc had been charged in a check cashing and wire transfer case that withdrew $17,599 from the Ute Mountain Ute tribal fund. Most were tribal members.
In January, six of the seven were charged with additional money laundering and embezzlement crimes along with two other individuals. Those eight people pleaded guilty this week.
This case was investigated by the FBI and IRS. The case is being prosecuted by Pegeen D. Rhyne, assistant U.S. attorney.
In December, Peter Ortego, general counsel for the Ute Mountain Ute tribe, said that any staff member believed to be involved in the fraud scheme was fired, and safeguards were being implemented, he said.
Tribe members have suspected foul play for more than two years.
On Oct. 2, 2015, The Journal reported that the U.S. Department of Justice was investigating a case on the Ute Mountain Ute reservation in Towaoc, but the agency provided no additional details.
Two days earlier, a Ute Mountain Ute tribal member told a Journal reporter on the condition of anonymity that several finance department employees were escorted from their offices in the afternoon by “security.” The tribal member said the investigation centered on “misuse of funds.”
In March 2016, Ute Mountain Ute tribal members told The Journal that a petition was being circulated for a referendum calling for an independent investigation about whether there has been “misuse of funds at the tribal finance department.”
The referendum reviewed by The Journal also called for “tribal members and officials involved in financial corruption be removed from office.” It demanded that “a complete accountability and report of the tribal financial expenditure be subject to public inspection and review.”
The petition began circulating in October 2015 after witnesses reported that security officials had escorted several finance department staff out of the tribal government complex. Two-thirds of the required number of signatures had been obtained, but had not been verified by election officials, according to a tribal member who spoke on condition of anonymity. The referendum was soon dropped.