HELENA, Mont. (AP) — A federal criminal investigation into the former leaders of the Chippewa Cree Tribe's online lending operations now includes a Nevada company the tribe partnered with in its first attempt to offer payday loans.
Zachary Roberts, Richard Lee Broome and Martin Mazzara confirmed with Montana's U.S. Attorney's Office that they are the subjects, and the likely targets, of a criminal probe into their dealings with the tribe, the three men said in court documents filed this week.
They are the leaders of Henderson, Nevada-based Encore Services LLC, which partnered with the Montana tribe in 2010 to form First American Capital Resources. The company was set up as a short-term online lender charging high interest rates to people in need of emergency cash.
The company never succeeded and was overtaken by a second lending company called Plain Green that was started by the tribe with financial and technological backing by Fort Worth, Texas-based Think Finance Inc.
Assistant U.S. Attorney Carl Rostad said he could neither confirm nor deny the investigation includes Encore and its leaders. The U.S. Attorney's investigation was revealed earlier this week when federal prosecutors filed embezzlement charges against two former leaders of First American and Plain Green, Neal Rosette and Billi Anne Morsette.
Morsette and Rosette have pleaded not guilty to accusations of stealing more than $55,000 in tribal money by funneling the money through a First American account.
Morsette and Rosette also had a hidden cash agreement with Encore that led to the demise of the Nevada company's relationship with the Chippewa Cree and is the apparent subject of the expanded criminal investigation.
Encore had a signed fee agreement that gave the company 15 percent of the gross revenues the tribe received from the lucrative Plain Green venture. Encore secretly paid Morsette and Rosette a third of that money, according to court documents and confirmed last year by Rosette.
Tribal leaders said they did not know about the fee agreement, leading to a dispute that went to arbitration last year. The arbitrator agreed that the hidden payments to Morsette and Rosette nullified the agreement as false and intended to deceive. He ordered Encore to pay the tribe $1.18 million it had passed on to Rosette and Morsette.
The tribe was not satisfied and filed a civil lawsuit in U.S. District Court in Montana seeking $13 million in total it claims Encore and its leaders siphoned from First American and Plain Green.
Encore has denied the tribe's allegations. On Wednesday, the company and its leaders asked a judge to halt the tribe's civil lawsuit until the criminal investigation is completed. Any information the Encore leaders give in the civil lawsuit could be used against them in the criminal matter, their attorneys said.
"The criminal investigation mirrors the civil action and is substantially similar if not identical to the subject matter of the civil action," the attorneys said in the court filing.
Shelby DeMars, a spokeswoman for the tribe and Plain Green, said Encore violated the tribe's trust.
"Although Encore is asking for the case to be postponed, we are not willing to allow them to try to escape accountability for how they have wronged the Tribe and intend to continue working to ensure they are held accountable," she said in a statement.