Feds Accuse Tribal Casino Execs of Stealing Millions

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SACRAMENTO (CN) — With an iron grip on a bustling tribal casino’s vault, a trio of Northern California casino officials spent millions of dollars on lavish shopping sprees, exorbitant home renovations and international vacations, under the nose of their tribal employer, according to a 69-count criminal indictment.

According to a the indictment handed down by a federal grand jury Thursday, three Rolling Hills Casino executives exploited the Paskenta Band of Nomlaki Indians for at least $6 million in a five-year scheme that included hacking and embezzlement.

The indictment accuses the tribe’s longtime economic development director and former FBI Agent John Crosby and his mother Ines Crosby of spending millions in tribal funds on their homes and vacations to New Zealand and the Caribbean from January 2009 to May 2014. John Crosby, 53, allegedly looted $838,000 in tribal money to buy a home. His mother is accused of buying $150,000 worth of gold coins and precious metals.

Federal investigators claim the Crosbys combined to spend more than $2.6 million in tribal assets to fuel their five-year spending spree.

Former tribal treasurer Leslie Lohse, 62, is charged with making payments for her personal credit cards with tribal funds and of lying to federal investigators that she received a $5 million line of credit from the tribe.

Investigators also say that Lohse failed to report the embezzled tribal money on her tax returns. Lohse is the mother of Major League Baseball pitcher Kyle Lohse.

Tribal Chairman Andrew Alejandre said in a statement that the defendants “terrorized” tribal members and stole money from tribal elders, leaving them “destitute.”

“The tribe hails the decision by the grand jury to issue this indictment, which represents a significant step towards vindication and justice for the tribe,” Alejandre said.

The indictment follows a civil lawsuit the tribe filed against the defendants and more than a dozen others, that has sputtered in Federal Court. U.S. District Judge Morrison England Jr. dismissed the tribe’s RICO claims against many of the defendants with prejudice in October.

The tribe’s attorney, Stuart Gross of Gross & Klein in San Francisco, said Friday that the RICO lawsuit contains 12 years of allegations and that he is eager to “push forward” and continue the case in Sacramento Federal Court.

The tribe accuses the casino executives and others of embezzling $20 million in tribal assets. The lawsuit claims that Lohse used tribal funds to buy a $17 million private jet to transport Kyle Lohse.

The 250-member Paskenta Band of Nomlaki Indians operate Rolling Hills Casino, 100 miles north of Sacramento near Corning. The casino opened in 2002 along Interstate 5 and is a major financial resource for the tribe.

The defendants allegedly got the money by writing checks from the tribe’s accounts to each other, often using the memoranda “travel” and “cash.” They also executed wire transfers to pay for chartered planes and home renovations, according to the indictment.

The Crosby’s home improvements included $83,000 koi ponds, a $324,000 swimming pool and spa and $73,000 for a covered patio.

Investigators say the casino officials were able to conceal their far-reaching scheme by hacking the casino’s computer database and destroying the tribe’s financial records.

After 15 years of financial control, the so-called ringleaders were voted out by the tribe in April 2014.

The defendants, from Shasta and Glenn counties, are charged with conspiracy to embezzle tribal funds, embezzlement of tribal funds and tax fraud and face a maximum of 20 years in prison.

Alejandre says the tribe is praying that the government convicts the former tribal executives and that it has remained resilient despite the defendants’ actions.

“This indictment is proof of the federal government’s ability and willingness to uphold justice on behalf of those members and others like them,” Alejandre said.

Meanwhile on Monday, a Ninth Circuit panel ruled in an unpublished memorandum that a federal judge must reconsider the tribe’s request to freeze the assets of the Crosbys and Lohses. The panel said the judge must specifically analyze whether the tribe had done enough to show the likelihood that each of the four will “dissipate the purportedly misappropriated assets.”