Navajos Deciding How to Prosecute Vendor Who Took $1M; Must Do Due Diligence
Who are you going to dance with? This question is easy to answer in high school, but in business, the answer can be surprisingly tricky. As tribes generate more revenue through gaming and economic development, the eager partners are lining up. Unfortunately, some of these suitors have nothing but ill intentions and are looking for ways to abscond with cash. They know tribes have little or no recourse.
When my father was tribal chairman we had folks of all sorts stopping by our home to pitch business ventures. He simply referred to them as the hucksters and explained it was sometimes difficult to discern the “wheat from the chaff,” who and what was real.
The government of the Navajo Nation is trying to decide how to prosecute a Colorado vendor who bilked them for over a million dollars. The tribe invested in Shiprock-based Biochemical Decontamination Systems Manufacturing Inc. and the CEO used the tribe’s investment money for his personal use. The federal government is suing the vendor for nearly half that amount, because of the falsified tax returns that masked the theft. If there is anything left, then the Navajo Nation will try to recover the crumbs. Jurisdictional complexities may render that effort futile.
Another version of this sad story is when people deceive and steal from their own tribes, like former Mashpee Wampanoag tribal chairman Glenn Marshall. After eight years in office, Marshall turned out to have falsified his military record and covered up a rape conviction. Had his shady past been exposed, he would not have gained the position he used to steal from the tribe. Ultimately, he was convicted of violating campaign finance law, tax evasion, wire fraud and Social Security fraud, but the Wampanoags have not yet recovered the stolen funds.
This kind of deception hurts the whole tribe. Like the Navajo and the Wampanoag, tribal courts and lawyers can tie themselves in knots trying to get restitution, or steps can be taken to simply prevent it. Prevention requires a professional due diligence investigation before committing to a contract. Due diligence can raise warning flags and keep you from getting engaged in a dangerous relationship.
Due diligence is the preventative measure that tribal leaders or business owners need to take to know they're lessening their exposure to risk. Anyone considering investments, partnerships or other business arrangements should consider due diligence a critical first step. However, thorough and thoughtful due diligence requires more expertise than most people realize and turns up a much more vivid picture than your typical Google search. Are they who they say they are? Can they do what they say they can?
A due diligence investigation begins with a search of specialized databases, media accounts and public records. When investigating an individual, the investigation may continue with interviews with relevant individuals, and verification of all claims. If the individual consents, a criminal background check and credit check can also be revealing. Although it seems counterintuitive, requesting permission for these checks can often enhance the trust in your intent, it demonstrates you take a potential transaction seriously. Those on the up-and-up are more than willing to be scrutinized.
A good investigator examines the individual or corporation in question along several dimensions. When Lamar Associates conducts a due diligence investigation, we verify identities, look for evidence of criminal activity, involvement in litigation or bankruptcy and verification of academic achievement, licenses, credentials and employment history.
Warning flags might be subtle, like allegations of civil fraud, contractual disputes and disputes over marital assets. If there is evidence of criminal behavior, we review the appropriate court records, regardless of the conviction status. Native employment candidates or corporations, often require a “hand search” of tribal court documents due to limited online access.
Individuals may also need due diligence services. Entrepreneurs seeking investors frequently approach Native actor Adam Beach, famous for his film and television work. Beach's talents lie in portraying characters like Victor Joseph, Ben Yazzi, Jim Chee, and Ira Hayes, not in determining how upright a potential business partner may be. However, he does know that he has to protect his name and reputation by doing business with honest people, so he has turned to Lamar Associates for professional due diligence. We helped him investigate several potential investment opportunities and found that in two cases hucksters were looking to use Beach to initiate a scam.
Beach says, “It is important for me to be a 100 percent certain that anyone who intends on doing business with me is able to pass one of Walter’s investigations. A month or so ago there was a dude who approached me at a conference claiming to be from a wealthy Dubai family. He had a convincing story along with others to back his claims and appeared to fit the part, expensive clothes, car and all. I had his name, telephone number and approximate age, which I provided the investigation. In a matter of hours they got in touch with me, they determined who the guy really was and told me about his past history of deceit. I didn’t waste any time on this guy or worse, introduce him to my trusted contacts.”
Spending the money it takes for a professional due diligence investigation on the frontend can prevent damaged reputations and the potential loss of millions of dollars.
Walter Lamar, Blackfeet/Wichita, is a former FBI Special Agent, Deputy Director of BIA Law Enforcement and currently President of Lamar Associates. Lamar Associates Indian Country Training Division offers culturally appropriate training for Indian Country law enforcement and service professionals with both on-site and online courses.