Fight Over Tribal Funds Stays in Federal Court

     SACRAMENTO, Calif. (CN) – A Northern California tribe’s embezzlement lawsuit against its former officials is not an intra-tribal dispute and will continue in Federal Court, a judge ruled Friday.
     U.S. District Judge Garland Burrell Jr. denied a dismissal motion, ruling that the court has jurisdiction over the tribe’s Racketeer Influenced and Corrupt Organizations Act lawsuit against its former officials and banks. Defendants challenged the court’s jurisdiction, calling the plaintiffs’ allegations “internal issues” that should be handled and interpreted by the Paskenta Band of Nomlaki Indians’ tribal law.
     The tribe said Burrell’s decision was gratifying and expressed hope that its former officials, including economic development director and previous FBI agent John Crosby, will be held liable for embezzling millions of dollars from the tribe.
     “That stolen money, much of which the ringleaders used to pay for a lifestyle of private jet travel, sports cars and luxury homes, could and should have been used to improve the welfare of the tribe’s members,” the tribal council said in a statement. “The court’s decision today makes clear that these individuals and others who benefited from their scheme will be held responsible for the harms they caused.”
     In March, the tribe sued 18 defendants – 12 people and six businesses – focusing on four officials it calls the “RICO ringleaders.” The tribe claims the RICO ringleaders stole $20 million in retirement funds and that local banks were complicit in the fraudulent withdrawals.
     The Paskenta Band is located near Corning, 100 miles north of Sacramento, and the tribe operates Rolling Hills Casino. According to the complaint, the RICO ringleaders bought private jets, luxury cars and houses with the tribe’s funds during the 15 years they controlled tribal finances.
     While the case will continue in Federal Court, Burrell threw out several of the tribe’s claims against the defendants, also on Friday.
     The judge dismissed the tribe’s allegations that a local bank breached fiduciary duty by allowing the RICO ringleaders to withdrawal large amounts of the tribe’s cash on a regular basis.
     He ruled the 200-plus page complaint did not contain specific allegations to show the banks named in the complaint were aware of the RICO ringleaders’ conversion of tribal assets, and he also dismissed fiduciary claims against the tribe’s pension-plan managers.
     In the complaint, the tribe details former tribal council member Ines Crosby making withdrawals from nearby Umpqua Bank that were large enough to cause the bank to file reports with the Internal Revenue Service. The tribe also accuses Crosby of paying her personal credit card bills through the tribe’s business account at Umpqua Bank.
     On Monday, Burrell denied the tribe’s request for a preliminary injunction “imposing an immediate freeze” on the RICO ringleaders’ personal assets as too broad, and he also denied the defendants’ attempt to dismiss the tribe’s restitution claims.
     “The court’s decision allows the tribe to pursue claims against all of the 20-plus named defendants, including those alleged to have directly participated in the RICO conspiracy and those who assisted and benefited from it,” said the tribe’s co-counsel Andrew Purdy of the Joseph Saveri Law Firm.

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