Report: Lower Brule tribal leaders mishandled millions of dollars of federal funds

Associated Press

Leaders on the Lower Brule Indian Reservation misdirected millions of dollars in federal funding intended to help impoverished tribal members, a nonprofit group alleges in a report released Monday.

Human Rights Watch outlines numerous allegations against longtime Lower Brule Sioux Tribe Chairman Michael Jandreau and others, accusing them of diverting money and concealing financial activity by withholding government documents from the public.

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Jandreau did not respond to phone messages seeking comment.

Human Rights Watch started its two-year probe after learning of allegations of wrongdoing while doing other work on the reservation, said Arvind Ganesan, the group's director of business and human rights.

Ganesan wrote that the Bureau of Indian Affairs told him in September that the U.S. Commerce Department's Office of Inspector General was looking into some of the allegations, but that it declined to go into detail. Neither the BIA nor the Office of Inspector General responded to phone messages Monday seeking comment, and the U.S. attorney's office said it could not comment on the matter.

According to the report, an estimated $25 million in federal money that the tribe received between 2007 and 2013 for specific projects was redirected into its general fund and went toward "unexplained expenditures."

"We found millions of dollars in federal funds for education, for assistance to the poor, for water that had been diverted and spent without explanation," Ganesan said.

For example, an outside audit found that $2.6 million in federal funding intended for schools was diverted to the tribe's general budget, the report said. The result was the tribe didn't invest that money in schools, which have shown a sharp decline in quality since 2007-2008 when allegations of wrongdoing first surfaced, prompting some parents to send their children to other districts, the report found.

Also, annual audits found that since at least 2006, the tribal council has bought more than $1 million in land from anonymous sellers without listing the purpose or reason for the purchases, the report found.

Human Rights Watch said the "most blatant example" of wrongdoing stems from the tribe's purchase of a New York-based brokerage firm, Westrock Advisors.

The report accuses tribal leaders and their business partners of setting up several shell companies and then securing a $22.5 million federal loan guarantee from the Bureau of Indian Affairs. Rather than putting the money toward its stated purpose of economic development, the money was used to buy Westrock, which went bankrupt two years later, the report said. The guarantee was ultimately sold for about $20 million to another company, though the tribe hasn't disclosed the status of the loan, the report found.

Besides tribal members, the report said people who invested in Westrock were also taken advantage of because it "sold questionable notes in the company in an attempt to raise cash."

Human Rights Watch said Westrock creditors who lost their life savings and the son of an investor who lost more than $100,000 "were asked to reinvest for a greater return by tribal or Westrock representatives, but refused," the report states.

Ganesan said he hopes the report helps ensure that all tribal governments fulfill their responsibility to care for their people by being open and accountable, that the federal and Lower Brule governments will disclose what happened to the missing money, and that there's an investigation.

Kevin Wright, one of three newly elected council members who want to overhaul the council, said a tribal court hearing scheduled for Monday over a restraining order against the three council members was delayed because the judge was sick.

"What they're trying to do is remove us to stop us from removing them, so they can stay in there and keep mishandling funds," Wright said.



The Human Rights Watch report is available at .