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March 2001

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PUBLIC NOTICE

Anadarko Daily News

March 24, 2001

 

Pursuant to Article XVI, Section 1, of the Constitution and By Laws of the Kiowa Indian Tribe the Kiowa Business Committee is announcing the meeting of the Kiowa Indian Council to be held at the Kiowa Tribal Complex, Red Buffalo Hall, Carnegie, Oklahoma to April 7, 2001 at 10:00 a.m.

 

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PUBLIC NOTICE

Anadarko Daily News

March 24, 2001

 

The Kiowa Business Committee, of the Kiowa Tribe of Oklahoma has scheduled a public hearing for Wednesday, April 4, 2001 at 10:00 a.m. in Red Buffalo Hall at the Kiowa Tribal Complex in Carnegie, Oklahoma to hear the recall petition on Mrs. Emily Satepauhoodle, Secretary.  This hearing has a Kiowa Constitutional foundation under, Article IV – recall and filling vacancies, Section 1, This notice is submitted under the Kiowa Constitution and By Laws, Article XII – Duties of Officers, Section 3, Secretary, Signed – Emily Satepauhoodle

 

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PUBLIC NOTICE

Anadarko Daily News

March 24, 2001

 

The Kiowa Business Committee, of the Kiowa Tribe of Oklahoma has scheduled a public hearing for Monday, April 2, 2001 at 10:00 a.m. in Red Buffalo Hall at the Kiowa Tribal Complex in Carnegie, Oklahoma to hear the recall petition on Mr. Billy Evans Horse, Chairman.  This hearing has a Kiowa Constitutional foundation under, Article IV – recall and filling vacancies, Section 1. This notice is submitted under the Kiowa Constitution and By laws, Article XII – Duties of Officers, Section 3. Secretary, Signed – Emily Satepauhoodle

 

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PUBLIC NOTICE

Anadarko Daily News

March 24, 2001

 

The Kiowa Business Committee, of the Kiowa Tribe of Oklahoma has scheduled a public hearing for Tuesday, March 27, 2001 at 10:00 a.m. in Red Buffalo Hall at the Kiowa Tribal Complex in Carnegie, Oklahoma to hear the recall petition on Mrs. Brenda Doyeto-Myers, Vice-Chairman.  This hearing has a Kiowa Constitutional foundation under, Article IV – recall and filling vacancies, Section 1. This notice is submitted under the Kiowa Constitution and By Laws.  Article XII – Duties of Officers, Section 3.  Secretary.  Signed – Emily Satepauhoodle

 

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FAMILY STYLE BINGO IS SET

The Anadarko Daily News

Thursday, March 22, 2001

 

Carnegie – Satethieday Khat-gombaugh Inc. will be having a family style bingo at 6:30 p.m. Friday, March 23 at the home of Billy Evans Horse, located three and one half miles east of Carnegie.  The proceeds will be going towards upcoming events to be held in April.

 

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KIOWA BOARD TO CONSIDER RECALL OF BRENDA D. MYERS

The Anadarko Daily News

Thursday, March 28, 2001

 

Carnegie, Okla. (AP) – A tribal hearing board will consider the recall of the Kiowa Tribe’s vice chairwoman, who says the ouster attempt has to do with a deal to operate a tribal casino.  A public meeting on Tuesday ended with the Kiowa business Committee voting 3-0 to send Brenda Doyeto Myers’ recall issue to the hearing board.  Myers stormed out of Tuesday’s meeting, calling the proceeding unconstitutional and accusing her detractors of illegally accepting promise money from a Florida casino group.  Myers alleges that Kiowa Chairman Billy Evans horse and his closest associates have taken more than $150,000 from Multimedia Entertainment Games of Palm Beach in exchange for the exclusive rights to operate the next casino venture.  “Billy and his cronies are truing to ram this $30 million deal through with Multimedia. “Myers said. “That’s’ why they want me out.  I’m standing in their way.”  The hearing board may decide Myers’ fate.  Two committee members abstained.  Tribal member Gene Quoetone led the recall against Myers.  He accused Myers of voting on various tribal matters last year when five business committee members were not present as required by the Kiowa Constitution.  Horse, an advocate of a new casino, said the Kiowa Gaming Commission has accepted at least $50,000 from Multimedia to apply for a gaming license with the Nation Indian Gaming Commission.  But Horse said the tribe isn’t obligated to any deal because of the money.  Horse said Myers isn’t making sense with her allegations.  “Multimedia already withdrew from the deal,” Horse said.  “So I don’t know what Brenda is talking about.”  Horse will face his won recall hearing at 10 a.m. Monday.  House’s administration entered negotiations with Multimedia in July to build a $27 million, 95,000-square-foot casino on tribal trust land in Cotton County.  Architectural sketches of the facility included four restaurants, a bingo theater, a main gaming floor, a bus driver’s lounge, a children’s entertainment center and administrative offices.  Talks with Multimedia began about a month after the National Indian Gaming Commission shut the Kiowa Gaming Center in Carnegie and after the FBI launched an investigation into more than $2 million unaccounted for from casino coffers.  Federal authorities cited the use of illegal machines for the gaming center’s closure.  “Are we going to mortgage the tribe’s future with this casino deal?”  Myers asked Tuesday.  “That’s what they’re trying to do.  And we have no business going into a deal like that at this time given our current problems.  We can’t even manage ourselves.”

 

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KIOWA BOARD TO CONSIDER RECALL OF BRENDA D. MYERS

The Anadarko, Oklahoma, Daily News

Thursday, March 28, 2001

 

Carnegie, Okla. (AP) – A tribal hearing board will consider the recall of the Kiowa Tribe’s vice chairwoman, who says the ouster attempt has to do with a deal to operate a tribal casino.  A public meeting on Tuesday ended with the Kiowa business Committee voting 3-0 to send Brenda Doyeto Myers’ recall issue to the hearing board.  Myers stormed out of Tuesday’s meeting, calling the proceeding unconstitutional and accusing her detractors of illegally accepting promise money from a Florida casino group.  Myers alleges that Kiowa Chairman Billy Evans horse and his closest associates have taken more than $150,000 from Multimedia Entertainment Games of Palm Beach in exchange for the exclusive rights to operate the next casino venture.  “Billy and his cronies are truing to ram this $30 million deal through with Multimedia. “Myers said. “That’s’ why they want me out.  I’m standing in their way.”  The hearing board may decide Myers’ fate.  Two committee members abstained.  Tribal member Gene Quoetone led the recall against Myers.  He accused Myers of voting on various tribal matters last year when five business committee members were not present as required by the Kiowa Constitution.  Horse, an advocate of a new casino, said the Kiowa Gaming Commission has accepted at least $50,000 from Multimedia to apply for a gaming license with the Nation Indian Gaming Commission.  But Horse said the tribe isn’t obligated to any deal because of the money.  Horse said Myers isn’t making sense with her allegations.  “Multimedia already withdrew from the deal,” Horse said.  “So I don’t know what Brenda is talking about.”  Horse will face his won recall hearing at 10 a.m. Monday.  House’s administration entered negotiations with Multimedia in July to build a $27 million, 95,000-square-foot casino on tribal trust land in Cotton County.  Architectural sketches of the facility included four restaurants, a bingo theater, a main gaming floor, a bus driver’s lounge, a children’s entertainment center and administrative offices.  Talks with Multimedia began about a month after the National Indian Gaming Commission shut the Kiowa Gaming Center in Carnegie and after the FBI launched an investigation into more than $2 million unaccounted for from casino coffers.  Federal authorities cited the use of illegal machines for the gaming center’s closure.  “Are we going to mortgage the tribe’s future with this casino deal?”  Myers asked Tuesday.  “That’s what they’re trying to do.  And we have no business going into a deal like that at this time given our current problems.  We can’t even manage ourselves.”

 

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SPARKS FLY AT KIOWA MEETING

Hearing board to consider ouster vote for vice chair

The Lawton Constitution

Wednesday March 28, 2001

By Rose Fischer

STAFF WRITER

[email protected]

 

Carnegie – The Kiowa Business Committee voted Tuesday to refer a recall of Vice Chairman Brenda Doyeto-Myers to the Kiowa Hearing Board to determine the need for a tribal vote.  At the second hearing scheduled to recall the vice chairman, Chairman Billy Evans Horse used secret ballots to determine the committee’s action.  Three business committee members voted that enough evidence existed to refer Myers’ recall to the hearing board: two members abstained.  Committee members present during the vote were Joycetta Elliott, Randlett Hall, Richard Tartsah Jr., William Tartsah and Secretary Emily Satepauhoodle.  Chairman Billy Evans Horse postponed a March 15 hearing after Myers insisted that Gene Quoetone, originator of the recall charges, had not served papers to her.  The Kiowa Constitution requires the serving of papers 10 days before the hearing.  Myers opened the meeting Tuesday by declaring the hearing illegal.  “I have not been served; the meeting can go no farther,” Myers said, demanding her rights for another postponement. “I am going to speak my mind; nobody’s going to shut me up. Gene Quoetone. You brought these chargers on me; I will take you to federal court.”

 

Questions over Gaming

She attributed the recall initiative to the proposed Multi Media gaming and entertainment center along the Red River and called the venture “a$30 million hole that this tribe is going into.  We can’t handle our own business; we have bad credit.  This gaming operation is going to mortgage the tribe; we’ll never recover.  I’m not against gaming with the right people, but right now it’s not happening folks.”  Myers said Multi Media wants a business committee decision by March 30 (A unanimous decision is required). “If they render me mute, it’s going to happen,” she said.  Numerous supporters spoke in Myers’ behalf and others pleaded for unity among the divided tribe.  Evans Horse then gave Quoetone the floor.  Quoetone said the charges against Myers were his own effort and he received only public information while forming the charges.  Quoetone said he resented not having a chance to answer Myers’ accusations at the first scheduled hearing.

 

Allegations of trespassing

Quoetone said he talked to Myers on a cellular phone and told her he placed the envelope of charges in her mailbox in Oklahoma City; he watched from a distance in his car while she retrieved the envelope.  Myers then filed trespassing charges against Quoetone.  The county sheriff wanted $200 to serve the papers, but Quoetone did not have the funds.  Walking across the room on Tuesday, Quoetone handed recall papers to the vice chairman; Myers said she had now been officially served and had 10 days to prepare her defense.  Myers quickly left the meeting, accompanied by many of her supporters.  One returned to the hall momentarily to say, “All the ones that’s in here are crooks.”  Next, Quoetone read his charges against Myers, which included: acting in apparent disregard of the Kiowa Constitution in adopting resolutions without a quorum, improperly removing an election board member and clerk and violating the duties of the vice chairman’s office.  Quoetone submitted an exhibit, an appeal filed by Myers’s attorney with the Secretary of the Interior.  The appeal included a copy of Quoetone’s charges.  “The attorney filed this on Feb. 27, a day after I served her.  You tell me she wasn’t charged. He used my charges as an exhibit,” he said.  Defending his position in allowing the out-of-order meeting, the chairman said he was giving Myers respect.  After Myers left and Quoetone spoke, Evans Horse proceeded with motions to approve the agenda, which included holding the hearing.  He called for the vote after determining that Tuesday’s hearing was legal.  The chairman based his decision on Quoetone’s exhibit showing Myers’ legal counsel prepared appeal papers the day after Quoetone left recall papers in Myers’s mailbox.  When asked after the meeting about the Multi Media project, the chairman said, “We have all kinds of proposals; what she (Myers) talked about was already history; there’s nothing to it.”  Evans Horse said the nation Gaming Commission proposed a $100,000 fine and two other charges in the Kiowa Grand problem, a closed tribal-run gaming center in Carnegie.  “We’re trying to get that resolved; I’m trying to clean up the whole mess and I’m having a difficult time,” he said.  “Hopefully, two or three weeks from now, the Gaming Commission, will allow us to play bingo.  We’re asking not to even pay a fine.  We don’t have that kind of money.

 

 

 

 

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February 2001

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U.S SUPREME COURT REFUSES TO REVIEW CASE

Tuesday, February 6, 2001-  The Anadarko Daily News

“The United States Supreme Court has refused to review an Oklahoma Supreme Court decision that established Oklahoma state court jurisdiction over the Kiowa Housing Authority.”  Said Billy Evans Horse, Chairman of the Kiowa Business Committee.  The Kiowa Business Committee and Kiowa Tribal Housing Programs had asked the United States Supreme Court to rule that the Kiowa Tribe of Oklahoma had jurisdiction over the Kiowa Housing Authority.  The United States Supreme Court’s refusal to review the case leaves the Kiowa Housing Authority under the control of the Oklahoma courts.  The Kiowa Tribal Housing Programs, the tribe’s federally recognized housing entity, is not covered by the Oklahoma court decision.  It remains under jurisdiction of the tribes and tribal courts.

 

 

KIOWA CASE DENIED

Monday, February 22, 2001 - The Anadarko Daily News

The United States Supreme court has denied a petition brought by members of the Kiowa Tribe of Oklahoma against the Kiowa housing Authority of the tribe.  The petitioners — Randall Ware, Richard Kauahquo, Carol Frame, William Tartsah and Wendell Autaubo — requested the Supreme Court to review the unanimous decision of the Oklahoma Supreme Court which confirmed the Kiowa Indian Council as the governing body of the Kiowa tribe.  The high court further said the exclusive method for appointing commissioners to the Housing Authority Board is by election of the tribal council.  The Housing Authority of the Kiowa Tribe of Oklahoma file the case in 1998 in response to wrongful appointment of the individuals to the Housing Authority Board by the Chairman of the Kiowa Business Committee.

 

 

KIOWA CONSTITUTION WILL BE REVIEWED TONIGHT

Friday, February 23, 2001 - The Anadarko Daily News

The Kiowa Nation Economic Development Team will be reviewing and revising the Kiowa Tribal Constitution Friday, Feb. 23 beginning at 7 p.m.  The session will be held in the conference room of the Kiowa Tribal Housing Programs, located at 1302 E. Central in the Warrior Valley Plaza.  For more information contact Kimberly Toyekoyah or Kimberly Johanntoberns at 405-247-3464.

 

 

KIOWAS TO HAVE MEETING

Friday, February 23, 2001-  The Anadarko Daily News

CARNEGIE — The Kiowa Tribe of Oklahoma’s.  Kiowa Business Committee will hold a regular monthly meeting at 10 a.m.  Saturday.  March 3 in the conference room at the Kiowa Tribal Complex in Carnegie.

 

 

 

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January 2001

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KIOWAS TO HAVE MEETING

Wednesday, January 3, 2001 - The Anadarko Daily News

CARNEGIE — The Kiowa Tribe of Oklahoma.  Kiowa Business Committee will have a regular business meeting at 10 a.m.  Saturday, Jan. 6, 2001 at the Kiowa Tribal Complex conference room in Carnegie.

 

 

 

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2000

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LAKOTA NATION JOURNAL

Vol. 1 Issue 38 October 23, 2000

 

Oklahoma City (AP) – A Federal grand jury now has the financial records from a Kiowa-run casino the panel is investigating.  The tribe’s chairman, Billy Evans Horse, recently surrendered the records to the grand jury, said R. Brown Wallace, a lawyer for the tribe.  The FBI began an investigation into the Kiowa Grand Amusement Center in Carnegie in February after an independent audit showed more than $2 million was unaccounted for from an estimated $5 million annual operation.  Casino records voluntarily submitted by Shan Gachot who had become casino manager weeks earlier, also indicated thousands of dollars went to selected tribal members in a petty-cash scheme under the guise of “emergency funds.”  Money made by the casino was earmarked for tribal programs such as social services, education and economic development.  Wallace said the tribe has nothing to hide.  “Days and days and days ago –week ago – we told the U.S. attorney’s office and the FBI that we had a group of documents that had to do with the tribe’s gaming operation, “Wallace said.  “Their response was, “We’ll get to it when we get to it.’ The fact is the FBI now has, to our knowledge, all the tribe’s documents concerning gaming.”  The grand jury subpoena ordered Horse to produce all bank receipts, monthly account statements, checks, deposit slips, records of transfer of funds by wire or collection, credit and debit memos, and customer correspondence.  A list of all employees, files of all employees, account records and casino tax returns were also ordered in the subpoena.  Wallace added the tribe also is conduction an investigation into the casino operation.  “We made it very plain to the FBI that the tribe needed access to those documents for its own investigation.  “Wallace said.  “The FBI said it was willing to cooperate, but also make it very plain that their investigation would take precedence over their cooperation.”  Despite the investigation, Horse has been leading negotiations with a Florida-based gaming management group about building a major casino near Devol.  Horse has said such a facility could mean hundreds of jobs to the Kiowa people.  Some tribal members have questioned the timing of such a venture, given the FBI’s investigation.

 

 

Below are copies of some letters recently given to the Roadrunner, and obtained, to the best of the Roadrunner's knowledge, from public record, as allowed  through the Freedom of Information Act.  These letters provide a more detailed history on some of the Kiowa Tribe's business.

Some formatting may be lost in the transfer to electronic medium, content remains unchanged.

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Anadarko Agency

P.O. box 309

Anadarko, Oklahoma 73005

 

                                                                                                                        June 06,1997

 

Billy E. Horse, Chairman

Kiowa Tribe of Oklahoma

P.O. Box 369

Carnegie, Oklahoma  73015

 

 

Dear Chairman Horse:

 

This letter is to notify you that the Kiowa tribe of Oklahoma is hereby being designated as “high risk contractor/ grantee” pursuant to the provision of the Office of Management and Budget (OMB) circular a-102,  the common rule, (implemented within the Department of Interior at 43 CFR part  12.52).

 

This determination is based on the following:

 

1.         The single audit for 1995 is delinquent as of February 1, 1997.

 

2.         No time and attendance or equivalent records for approximately $8,000.00 paid to the chairman from indirect cost pool.

 

3.         A number of current and former employees and KBC members have not cleared out FY- 1996 outstanding travel.

 

4.         Travel policies are not being followed and supporting documentation is not available to support expenditures and reimbursements for a number of KBC members and employees.

 

5.         The tribal corporate credit cards have been abused and misused by current and former employees and KBC members.

 

6.         There were 11 instances where the KBC received meeting fees from P.L. 93-638 contracts.  The contracts do not allow for these fees.

 

7.         General ledgers indicate non-638 programs were paid from P.L. 93-638 funds.

 

8.         P.L. 93-638 contract funds have been garnished due to a bad debt incurred by the tribe. 

 

9.         The personnel policies and procedures are not being utilized in filling positions and administering personal records.

 

10.       The tribe has no written policies in place that restricts who has access to the finance office.

 

11.       Time and attendance records are not available to support salary payments to some employees paid from direct and contract support  funds.

 

12.       No security plan for finance records.

 

13.       Tribal records management system not being followed by finance office.

 

The following special conditions are imposed on all Bureau P.L. 93-638 contracts/grants:

 

1.         All draw down(s) that are requested under the P-638 system must submit the following documentation (i.e., vouchers, purchase orders, vendor invoices, payroll documentation, etc.) to the Anadarko Agency superintendent to fully substantiate the amount of payment requested before the payment request is approved.

 

2.         All program and financial reports will be submitted to the Anadarko Agency within the time period as required by the contract.

 

3.         The tribe will work with the bureau to ensure the annual audits are performed timely and in accordance with the timeframe as established by the single audit act of 1984.

 

4.         Management systems policies and procedures are to be adhered to as required by the terms and conditions of all P.L. 93-638 contracts and grants.

 

5.         Work with the bureau in closing out expired contracts.

 

6.         Terms and conditions of all P.L. 93-638 contracts and grants must be adhered to by tribal contractor.

 

7.         Obtain technical assistance and training in the administration of P.L. 93-638 contracts and grants.

 

8.         Appoint a staff member to work with the Anadarko Agency contracts office to ensure compliance with terms and conditions of P.l0 93-638 contracts and grants.

 

9.         Provide training on travel policies and procedures to all KBC members and employees.

 

10.       Establish a security plan for the safeguard of finance records and cash on hand.

 

11.       The Anadarko Area Office, Supervisory Contracting Specialist, Anadarko Agency Contract Specialist and Superintendent (COR) shall perform periodic monitoring and reviews of the contractor / grantee financial management system, programs and provide technical assistance as needed or required.

 

note:  additional “special conditions” may be implemented, depending on the  progress of corrective actions resolve by the tribal contractor. 

 

The following corrective actions must be taken before the special conditions or “high risk” status will be removed:

 

1.         Establish written internal controls for the accounting of P.L. 93-638 funds that are converted to cashier checks.

 

2.         Provide supporting time and attendance records for a number of employees paid out of contract support funds and programs.  Require that all time and attendance records be approved before advance of payment can be process. 

                        .

3.         Close all contracts that have expired.

 

4.         Resolve all outstanding travel advances to former and current business committee members and employees.

 

5.         Repay P.L. 93-638 programs in the amount of $594.00 for meeting fees to KBC members.  The contracts do not allow meeting fees to be paid to anyone.

           

6.         Complete FY-95 audit as required by single audit act of 1984.

 

7.         Cease the utilization of P.L. 93-638 funds for non- P.L. 93-638 programs.

 

8.         Require all obligating and expense documents to be signed and approved by all authorized officials.

 

9.         Cease the use of a mechanical signature on documents that requires original signatures of approving officials.

 

10.              Require all KBC members and employees to comply with the travel       policies and procedures adopted by the Kiowa tribe of Oklahoma.                          

11.       Train appropriate finance staff on the finance software in use in order to upgrade or reprogram as needed.

 

12.       Comply with tribal records administration system in the utilization, storage, and safeguard of all finance records.

 

When the contractor / grantee has accomplished the above corrective actions, a request for removal of the “high risk” may be submitted for consideration.

 

We are requesting your presence, business committee and appropriate staff members at a meeting schedule for June 13, 1997, 10 a.m. in the conference room, Anadarko Agency.  The purpose of the meeting is to answer any questions on the “high risk” designation, provided instructions on special conditions and restrictions and corrective actions that must be taken on all Bureau of Indian Affairs P.L. 93-638 contracts that have been awarded to the tribes.                                                                                                                                      

Sincerely,

 

                                                                       

Sallie Allen

Superintendent

 

 

Cc:       Alva D. Tsoodle, V-Chairman, Kiowa Tribe of Ok.

            Irene Y. Spottedhorse, Secretary, Kiowa Tribe of Ok.

            Joyce G. Willis, Treasure, Kiowa Tribe of Ok.

            Denis Kopepassah, KBC

            Gene Geionety, KBC

            George E. Daingkau, KBC

            Sharon K. Horse, KBC

            Executive Director, Kiowa Tribe of Ok.

            Finance Officer, Kiowa Tribe of Ok.

            Area Director, AOA

            Contracting Specialist, Anadarko Agency

            Area Contracting Officer, AOA

            Joy Martin, Oklahoma Education Office

            Hilda Manuel, Deputy Commissioner for Indian Affairs

            Tony Howard, Chief, Division of Contracting and Grant Administration

            Deborah Maddox, Director, Office of Tribal Services

            James McDevitt, Acting Director, Office of Management and Administration

            Office of the Secretary, Office of Audit and Evaluation

Attention: Fed Allgaier, Box 25007

D-119, Denver, Co    80225-0007

            File  / Chrony/ Superintendent’s Reading File

 

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TO:                  BILLY EVANS HORSE

 

FROM:                            JOYCE WILLIS

 

DATE:             JANUARY 15, 1997

 

SUBJECT:       FINANCE DEPARTMENT

 

 

Sometime between December 26-31  someone entered the finance office and took records from files.  They also attempted to delete files from the computers in the office and damaged Tony’s computer to the point of having to have it repaired.

 

In checking with security , there seems to be no explanation.  However, the fact remains that it happened.  The only persons with keys to the finance office are Security , Tony, Josie and Sandra.

 

The only noticeable file in which records are missing is the file containing travel vouchers on Sharon Horse.  However, it is impossible to determine at this point what other records may be missing.

 

Would you please order a deadbolt attached to the door between Enrollment and the Finance department.  Also, this needs to be discussed and I would appreciate being included in the meetings with persons in which you meet.    

 

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                                                                                                            02-14-97

 

 

To:       Chairman, Billy E. Horse

From:   KBC Members

Re:       Financial Records

 

 

Today, we entered the finance office to review our financial records.  We found that our files are incomplete.  It appears that our individual financial records consisting of the finance back up copies of checks and vouchers are missing not only out of our files but out of this office.  We felt that legal action should be taken.  These records are the source documents for our record keeping and financial reporting requirements.  We do have resolutions and policies and procedures stating how, who, and where these files can be viewed.  Our resolution states that legal action is appropriate when documents are taken from the complex.  We are requesting that you instigate charges Tuesday morning.  Thank you.

 

Sharon Horse               KBC Member                  

Dennis Kopepassah      KBC Member

Gene Geionety              KBC Member

Irene Spotted Horse     KBC Member

Al Tsoodle                   Vice-C

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PHILADELPHIA INQUIRER

COPYRIGHT PHILADELPHIA NEWSPAPERS INC. 1993

 

DATE: TUESDAY      MARCH 16,1993

PAGE: BO1                                                                                         EDITION:        FINAL

SECTION:       LOCAL                                                                       LENGTH:        LONG

 

SOURCE:        BY MARK FAZLOLLAH,  INQUIRER STAFF WRITER

 

Former small-town chief faces big-time securities probe.  He left West Grove for the much riskier world of banking.  Now James R. Paisley, Jr. is charged with federal fraud.

 

As police chief of little West Grove in Chester County in the early 1980s, James Robert Paisley, Jr. worked in an Andy of Mayberry setting.

 

But the television show he favored was Dallas, and the character he yearns to emulate was J.R. Ewing.

 

So, in 1986, he left police work to sell insurance and securities.

 

He got busy quickly.

 

He founded an insurance company, James R. Paisley & Associates, and a securities brokerage, Delaware Capital Corp., In Exton.  Then he opened an outfit called Settlers Trust Savings Bank in Chester County.  Finally, Paisley became Chief Executive Officer of Capital International Bank, based on an Indian reservation in Oklahoma.

 

And he began living like a TV tycoon, often traveling to island hideaways with women on his arm.

 

Last May, during career day at his alma mater,  Avon Grove High School, Paisley told students that they didn’t need college, that they could quickly make their fortunes as international banks like him.

 

All that was before September, when Paisley was indicted on federal bank fraud charges, accused of luring banks and credit unions to invest in worthless securities that he printed at the local Sir Speedy.

 

Now former employees say Settlers Trust was bogus, nothing more than an extra phone  line installed at a strip mall office.  State and Federal investigators in Oklahoma say Capital International appears to be little than a phone in a trailer parked on “Kiowa” Indian land.

 

And Paisley’s efforts to sell Capital International letters of credit to executives of an unlicensed bank in Canada have prompted a separate investigation by the Mounties.

 

In an interview, Paisley denied wrongdoing and blamed his problem on his co-defendant in the Philadelphia indictment, David L. Maddox,  who was convicted of bank fraud in a separate case and is a fugitive believed to be in Europe.

 

Paisley said he had been unfairly blamed for the bond failures for which he said the owners of the firm were responsible.

 

Gary Wilhelm of Wilmington said he invested $20,000.00 because he believed Paisley’s honesty- especially, he said because Paisley told him he had been a Delaware State Police trooper.

 

“it sounded real good, 16 percent. “Wilhelm said.  “I knew he was a trooper at one time, so I figured he was up with me.”

 

The  Delaware State Police said Paisley never worked for the agency.

 

Wilhelm said Paisley has not repaid the $20,000.00 although he has been paying some interest.

 

The bankruptcy filing was the first time Settlers Trust’s name appeared in court records  -  with Settlers claiming the investment firm owed it $16,760.00.

 

Two former Delaware Capital employees said an extra telephone was installed at the Exton office in 1990, and Paisley told workers to answer it, “Settlers Trust.”

 

According to the indictment, by February 1991 Paisley was promoting Settlers Trust investments.

 

Paisley had the local Sir Speedy print copies of Settlers trust certificates of deposit, one Chester County police investigator said.

 

The federal indictment said that by working with Maddox, Paisley was able to peddle his phony c.d.'s to 10 unsuspecting banks and credit unions from El Paso to Minneapolis.

 

Credit unions and small banks often buy certificates of deposit and other investments if they have excess cash.

 

            Cynthia A. Price, who worked with Paisley for two years, said Paisley got those deals started simply by opening a $100.00 savings account at the Peoples Bank of Oxford in the name of Settlers Trust. The out-of-town financial institutions were persuaded to send investments to the People's account, explaining that Settlers was just opening its doors, said Price and bank regulators.

 

“Settlers wasn’t a bank, it was just a phone.” Price said in an interview.

 

In April 1991, money started pouring into the Settlers account- which so held nearly $1 million, the indictment said.

 

The state officials said that if the account had been in a major center city bank, the transfers might have gone unnoticed.  But at tiny Peoples Bank of Oxford, $1 million in transfers set off alarm bells.

 

“This guy (Maddox) has created a lot of problems for us.  Now he takes off and across the pond,” Paisley said in an interview, referring to the Atlantic Ocean.  “I will on the record say he set me up.”

 

He declined to give details of Maddox's role, saying that because of the indictment he could provide only limited information.

 

Paisley , now 40, became West Grove’s police chief in 1979.

 

Police work in West Grove is not the stuff of a TV series.  The only disorder in the town of 2,200 seems to be the bicycles sprawling over its carefully manicured lawns.  In 1987. Then-mayor Scott Staule gave a seminar lecture titled “The Small Town Still Survives.”

 

Paisley was not content with the Andy- of - Mayberry life.

 

While still police chief, he passed the state insurance agents’ test and started working for West Grove’s A.L. Williams insurance.

 

Two months after he left the police in 1986, he passed the Pennsylvania Securities Commission Broker‘s test.

 

Gerry Simpson, who succeeded Paisley as West Grove‘s Police Chief, said Paisley took full advantage of the trust he had built as West Grove’s Police Chief.

 

He said Paisley recruited police officers from around the county to work under him at A.L. Williams, which paid Paisley a fee for the sales of each agent he brought in.

 

“You can always give that ‘I'm the ex-chief of police’ line,” Simpson said.  “that goes a long way.”

 

Simpson said there was another thing about Paisley.  He never stopped talking about Dallas.

 

“That was the show he watched religiously every Friday night,” Simpson said.

 

Becoming a tycoon required more that selling securities and insurance with A.L. Williams insurance.

 

In 1988, Paisley struck out on his own.  He started selling insurance through James R. Paisley & Associates, and then opened Delaware Capital Co. At Exton's colonial 100 shopping center.  Delaware Capital arranged mortgages, sold securities, and made small- business loans.

 

The same year, he represented a now-bankrupt Montgomery county investment firm, persuading a group of Delaware and Pennsylvania residents to invest debentures - bonds not backed by any collateral.

 

 The bonds were supposed to pay 10 percent to 16 percent annual interest be repaid within five years.

 

Instead, the firm went bankrupt in 1989, and the investors were paid about 10 cents on the dollar.

 

People's contacted the State Banking Department, which called in the State Attorney General. Banking officials said that if the deposits had not been detected, Paisley could have withdrawn the money from the peoples account and disappeared.

 

“We immediately saw this as a scam” said one banking department official, who asked not to be identified.  “They didn’t have the FDIC (federal deposit insurance corp.) Insurance.  They had absolutely no legal existence”.

 

To be licensed in Pennsylvania, a bank must be chartered and fulfill requirements for capital and banking experience. “Obviously, Paisley didn’t go through any of this, said banking department spokeswoman Stephanie c. Maurer.

 

 

On April 8, 1991, state agents raided Paisley’s office in West Grove and Exton.

 

Within 72 hours, Paisley reached an agreement with the state that Settlers Trust would stop.  By late April, the $1 million had been returned the 10 institutions.

 

After that, Paisley said, he believed the case was “settled and gone away.”

 

He stressed, “ I never took any money.  No money came that I had any control.

 

The State Attorney General’s office told the U.S. Attorney’s office in Philadelphia that federal banking laws apparently had been violated. The FBI was called in.

 

Sir Speedy cooperated with the investigation and provided stacks of what were supposed to be Settlers Trust certificates of deposit, one Chester county police official said.

 

Despite the Settlers setback, Paisley has continued banking activities. Each month he travels to Oklahoma, where he is Chief Executive Officer of Capital International Bank, according to capital board chairman Joseph T. Goombi. 

 

Goombi, who until October was chairman of the “Kiowa nation of Oklahoma” and Paisley  said Capital was not a typical bank.

 

“It’s not an FDIC bank.   It’s not a state bank.  It’s a sovereign bank” said Paisley, explaining that Capital operates out of a trailer parked on “Kiowa” Indian land - thereby free of state and federal regulations.

 

Oklahoma’s Deputy Banking Commissioner, Charles Griffith, said potential investors from as far away as New Jersey have made inquires about Capital.  He said the U.S. Comptroller of currency issued a warning two years ago that Capital had no legal standing with the United States as a bank.

 

“When they (u.s. Banking officials) don’t have jurisdiction, when they can’t control you, “he said, “They think that everything is crooked.”

 

Goombi said the bank had been largely inactive for two years  because of the comptroller’s warning.

 

But he said Paisley regularly visits the trailer in Anadarko to discuss business - including a potential deal with the National Indian Bank in Hull, Quebec.

 

Jean-Louis Dumont, contacted in Hull, said he was the Vice Chairman of the Indian bank.  He said he and his boss, Carroll Tinnier, had a deal with Paisley to buy letters of credit .

 

In banking, a letter of credit often serves as a form of collateral, bona fide for a person seeking loans.

 

 Paisley said Tinnier agreed to buy Capital’s letters of credit, but the deal eventually fell through.

 

Even though Paisley said the Canadian deal never materialized, officials in Ottawa want more details.

 

“We’re very interested,” said bank regulator Robert Mitchell, who works for Canada's equivalent of the U.S. Comptroller of the Currency.  He said letters of credit from foreign banks must be backed by real assets.

 

U.S. law enforcement officials say they considered Paisley’s activities unusual, particularly the mass with which he was able to operate.

 

“I wouldn’t buy a used car from him said Oklahoma FBI agent.

 

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