Former Passamaquoddy governor indicted for federal funds fraud
Community needs to ;move forward'
INDIAN TOWNSHIP, Maine - After a three-year federal investigation initiated by complaints from tribal members, a grand jury has indicted a former Passamaquoddy governor and former finance director on fraud charges involving $1.7 million in federal funds.
Robert Newell, 64, who was governor of the tribe's Indian Township community from 2002 to 2006, faces a 30-count indictment, including intentionally misapplying federal funds, conspiracy, making false statements and submitting false claims to the federal government.
James Parisi, 45, of Portland, who is not a tribal member, was charged as a co-conspirator and co-defendant in 21 of the 30 counts. Parisi was finance director of the Indian Township community from 2003 to 2006.
According to the 29-page indictment, the tribe received $7 million in program funds from the federal departments of Health and Human Services, Housing and Urban Development, Justice, Interior, and the Environmental Protection Agency from September 2003 through September 2006, and Newell and Parisi misapplied approximately $1.7 million for uses not permitted by federal law. The indictment also alleges that the two men diverted funds from the tribal employees' retirement fund.
Among the allegations is that Newell and Parisi paid ''honoraria'' to the governor, lieutenant governor, tribal council members and ''certain senior tribal employees'' without withholding federal and state taxes and the payments were not reported to the Internal Revenue Service.
According to the indictment, Newell directed Parisi and others to charge the salaries of certain tribal government employees and Newell's family members to the payroll of the tribe's health center and environmental department, creating ''phantom'' or ''ghost'' employees.
The indictment details dozens of instances in which money was diverted from the federal programs into tribal government bank accounts to pay tribal government expenses, ultimately leaving the tribe stripped of funds.
By Sept. 30, 2006, the tribe had only cash and cash equivalents of approximately $89,000, all of which was collateral for a loan, while tribal government owed the tribal programs more than $1 million, the indictment says. Additionally, tribal programs owed more than $1.2 million for goods and services provided to those tribal programs, the indictment says.
Assistant U.S. Attorney James W. Chapman, who was assigned to the case, said the investigation began three years ago and was based on complaints received from tribal members. The investigation is ongoing.
Chapman said he could not comment on whether charges may be brought against those who received funds. The various charges carry a maximum of five and 10 years' imprisonment plus a $250,000 fine, Chapman said.
Newell and Parisi were scheduled to appear in U.S. District Court in Bangor April 1.
Newell's indictment has left a sense of hurt in the community, Gov. William Nicholas told Indian Country Today. Nicholas was voted into office with a supermajority when Newell was voted out in September 2006.
''I think there's also a sense of disbelief, not in the majority, but on the minority side that it's really hard for them to understand the repercussions of this and what the long-term impact might be for the community,'' Nicholas said.
He said the tribe could be held responsible for Newell's actions and repayment of the misapplied funds.
''I'm not sure it's going to go that way or what the end result will be; but when I came into office, we started with nothing. Today, it's a totally different story. We still don't have a lot of finances or money within the administration, but the federal programs are up and running 100 percent. We've made good progress in the last 18 months, but it's just hard for people to grasp when something drastic like this happens in a small community.''
Complaints - and outright accusations - about Newell's handling of financial matters had continued throughout his tenure as governor. Nicholas and others were aware of Newell's improprieties.
''I was on council, and my career for 19 years was with law enforcement as well as drug enforcement for the tribe and the state, so I kind of knew. I saw what was being done a little bit quicker because you recognize things when something is not right. There were only a couple of us that would stand up in meetings and try to put a stop to things, but we'd get overruled by people or our own council so it was a tough situation,'' Nicholas said.
The tribal administration reorganized the finance department and procurement processes when Nicholas took office, and the changes have been recognized and accepted by each of the federal agencies.
The tribe, which lives in the poorest county in Maine and has a high unemployment rate, depends on federal funds for its programs.
''We're not a gaming tribe. We don't have a lot of resources. But we are moving forward to lift the darkness off the community and to be able to bring some different light and get some accountability with our elected officials as well as our tribal programs and provide for our youth and our elders. We have to move forward. We can't sit and dwell on this for a long time. We need to have an open-door policy. When you're accepting federal funds, you're accepting the conditions that come with that. Someday, maybe we won't have to rely upon federal funds, but at this point that's all we have,'' Nicholas said.
The financial loss at Indian Township does not affect the other Passamaquoddy community at Sipayik, Chief Rick Doyle said, adding that ''the only common funds we have are Joint Council assets; otherwise they are totally separate.''
But Newell's indictment has aroused Maine's anti-Indian element, he said.
''Unfortunately, this negative news about a tribal member has brought out the racists who want to associate this event as the standard operating procedure of the tribe.''