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Seven accused of defrauding Oglala Sioux Tribe in bond scheme

Thursday, May 12, 2016

Dancers at the Wakpamni Lake Veterans Pow Wow. Photo from Wakpamni Lake Community

Federal authorities announced charges against seven people who are accused of defrauding the Oglala Sioux Tribe and investors of millions of dollars.

According to the U.S. Attorney's Office, the defendants "induced" the Wakpamni Lake Community Corporation to issue "tens of millions of dollars in municipal bonds." But the bonds were never invested despite promises to improve economic development conditions on the Pine Ridge Reservation in South Dakota, authorities said.

Instead, the bonds were sold to investors who weren't aware of the fraudulent nature of the scheme, according to authorities. The defendants used those proceeds for their own lavish expenses, U.S. Attorney Preet Bharara from New York City said.

"As alleged, the defendants induced an Oglala Sioux Native American tribal entity to issue bonds through lies about how the bond proceeds would be invested," Bharara said in a press release. "Instead of investing the proceeds in a way that would provide capital for development and help cover the interest payments, the defendants allegedly pocketed most of it to pay for their own personal expenses, homes, cars, travel, and jewelry."

The Wakpamni Lake Community Corporation is an entity that was created in the Wakpamni Lake Community, one of the districts of the Oglala Sioux Tribe. The entity has faced questions for the types of businesses it has pursued and the consultants who have been associated with those efforts.

The Lakota Country Times and the Native Sun News, both Native-owned newspapers in South Dakota, have written extensively about the district. According to Al Jazeera America, the corporation never had the official endorsement of the tribal district when it started a payday loan operation.

The 45-page indictment doesn't identify by name anyone from the corporation or the district who was involved in the issuance of the tribal bonds. It only states that "employees and advisers" from Wakpamni met with one of the defendants at a "Native American economic development conference in Las Vegas, Nevada," back in March 2014.

According to the indictment, the defendants should have invested at least $15 million on behalf of the Wakpamni corporation. Overall, authorities said the entity and the investors of the bonds were duped out of more than $60 million.

"The most egregious fallout from this scheme is that the bondholders now hold worthless securities, and the tribe can’t make the interest payments due," said FBI Assistant Director-in-Charge Diego Rodriguez.

According to the indictment, the scheme started around March 2014 and continued as late as April 2016. It ended with the arrests of the seven defendants in California, Florida, Nevada and New Jersey. All appear to be non-Indian and are being prosecuted in the Southern District of New York.

Get the Story:
Man once dubbed ‘Porn’s New King’ is charged in tribal fraud (AP 5/11)
U.S. charges 'Porn's New King' with tribal bond fraud (Reuters 5/11)
‘Porn’s New King’ busted for ripping off tribe in $60M scam (The New York Post 5/12)
Seven accused of selling fake bonds (The Wall Street Journal 5/12)