The Ute Mountain Ute fraud case that involved $1.1 million in embezzled and stolen funds has entered the sentencing phase.
So far, 13 people, many of them tribal members, have pleaded guilty to charges involving stolen funds from the tribal government over multiple years.
The U.S. Attorney’s office released six sentences issued in June and August, and more will be announced soon.
Sentences were handed down by the U.S. District Court in Durango.
Darrell Lee was sentenced to 15 months of prison, three years of supervised release and restitution in the amount of $142,411.Jennifer Pioche received four months in custody, followed by four months of home detention during the three years of supervised release. She was ordered to pay $106,497 in restitution.Kevin Ryan Lee received five months in custody, followed by three years of supervised release. He was ordered to pay $89,132.Colindra House received three months in custody, followed by home detention during the three years of supervised release. She was ordered to pay $52,401 in restitution.Ladelda Lopez, aka Ladelda Box, was sentenced to three years of probation and ordered to pay restitution of $34,823.Myreon Lehi was sentenced to three years of probation and ordered to pay $23,280 in restitution.Loia House received three years of probation and was ordered to pay $22,190 in restitution.Court documents reveal scamMany of those involved in the scam worked in the tribe’s finance department and have been fired, according to Peter Ortego, general counsel for the Ute Mountain Ute tribe.
The case was investigated by the FBI and the Internal Revenue Service since 2015 and was prosecuted by Assistant U.S. Attorney Pegeen D. Rhyne.
The elaborate scheme involved employees of the tribe’s Financial Services Department who fraudulently dispersed checks written to people they selected, including nontribal members and prison inmates, according to court documents.
People 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 could begin spending the funds, which with interest typically reached $10,000.
The funds could be used to purchase items 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 tribal benefits.
In other instances, the Financial Services 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 tribal funds.
Computer software misused in scamCourt documents said more than one Financial Services Department employee was involved in the scheme. Gloria Lee, also known as Gloria Rouillard and Gloria Lopez, was described as a key player.
In April, she pleaded guilty to one count of embezzlement from tribal funds, and one count of money laundering. Lee was ordered to pay $1.14 million in restitution. Her sentence has not been announced.
Lee and others manipulated computer software in the tribe’s Financial Services Department to steal from tribal government coffers, according to an investigation revealed in court records.
When a tribal member requests and receives funds from his or her family plan account, the census number of the tribal member and the account from which the payment was made would be noted in the “Description 4” field of accounting software.
This enabled the financial department to keep track of payments made toward each member’s benefits and how much remained. Tribal members were sent statements regarding their balances.
Lee was employed in the Financial Services Department from at least 2004 to 2015, and held the position of director of Utilities Account program. Starting in at least 2011, Lee used her position to generate fraudulent checks for the benefit of herself and others while falsely attributing, in the “Description 4” field, the payments to other tribal members who had not requested the payments. Lee intentionally selected tribal members who were not actively using the benefits. Tribal members began to complain that their family accounts were being drawn on without their permission.
Defendant Lee taught at least one other person in the finance department how to create unauthorized checks by entering false information in the “Description 4” field, according to the investigation.
Case records show that in 2014, Lee began to bypass the “Description 4” field so that unauthorized checks could be generated without being attributed to any tribal member’s benefits. The money would simply come from Ute Mountain Ute tribal government’s common fund.
In a plea agreement, Lee admitted that she organized and managed more than 30 people who received and cashed unauthorized checks drawn on the Ute Mountain Ute common fund bank account that were made payable to those individuals and who then shared the cash with Lee.
“From January 2011 through March 2015, Lee embezzled, knowingly converted and intentionally misapplied $1,139,996 belonging to the UMU tribal government to her own use and the use of others who were not the rightful owners of that money,” states the plea agreement’s stipulation of facts. Lee agreed she was accountable and owes restitution of $1.14 million.
The large restitution combines the amount of funds she and other defendants who pleaded guilty obtained, court officials said. The guilty defendants are liable for their own restitution, but if not all of it is paid, Lee is also liable because of her pivotal role in the scam, according to the plea agreement.
To prevent future financial crimes, Ortego said tribal officials have “instituted a more robust monitoring system and are working with a consultant to put in place more advanced systems.”
According to court records, those who have pleaded guilty in the case have been denied tribal benefits.