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Denny, BLM supervisor sentenced for fraud


Staff and wire report

A Rocky Boy man and the U.S. Bureau of Land Management official who supervised his work in Virginia have been sentenced to time in prison and ordered to pay back tens of thousands of dollars they defrauded from the federal government.

Larry Ray Denny of Rocky Boy’s Indian Reservation, former deputy state director of BLM’s Eastern States Region, pleaded guilty in March to wire fraud, making false claims and theft of government property. Wednesday, U.S. District Judge Brian Morris sentenced Denny to one year and one day followed by two years supervised release, and ordered him to pay $74,385.99 in restitution and to forfeit an additional $74,385.99 for a total of $148,771.98.

A federal jury convicted his supervisor in Virginia, BLM State Director John Lyon, March 25 after a three-day trial in Great Falls. Morris sentenced Lyon July 7 to six months in prison followed by six months of home confinement as part of two years supervised release and ordered him to share the $74,385.99 in restitution with Denny.

“There are many hardworking men and women who dedicate their lives to serving the American people,” Assistant U.S. Attorney Ryan Weldon said at the sentencing. “They work long hours, late into the night, and even on weekends. They do this because they believe in their role, and they have an overwhelming sense of duty to the American people. But there are those who will always blur lines, push the limits, and who feel as if they are owed something merely because they occupy a federal government job.”

Weldon added that imposing prison sentences on Denny and Lyon would “ensure that the hardworking men and women do not become embittered by seeing corrupt colleagues skate from adequate punishment,” and it will “deter others from contemplating whether the path that Denny and Lyon took is a risk worth taking.”

As state director, Lyon was part of a senior executive service whose members serve in positions just below top presidential employees. The jury convicted him of charges that he approved time sheet information for Denny as if Denny still were working in Virginia even though he had left his position in July 2012 and returned to work for the Chippewa Cree Tribe at Rocky Boy.

Lyon continued to present and certify as true work hours, sick leave hours and annual leave hours to his staff, on Denny’s behalf, until Denny ultimately resigned in March of 2013.

The fraud was discovered in February 2013 when a BLM employee in Montana sent an inquiry to that agency’s headquarters asking for clarification as to whether Denny was still a BLM employee. Denny had been working on oil and gas issues for the tribe and the agency was unsure whether he was interacting with federal agencies as a BLM employee or as a representative of the Chippewa Cree Tribe.

Lyon rebuffed any inquiry into Denny’s status, telling them that Denny’s absence was related to a private medical issue and it would not be discussed. Some employees were threatened when they attempted to address the matter with Lyon.

At Lyon’s trial, BLM employees testified that once Denny left Virginia there was “radio silence” and he could not be reached. One employee testified that she called Denny twice shortly after his departure; on the second call, Denny hung up on her once he determined who was calling.

Lyon told an internal BLM investigation and the criminal investigators that Denny had performed numerous job duties while in Montana, providing documents he claimed would support Denny’s work while in Montana. Investigators took those documents and leads, and found no work product that Denny produced.

In November 2012, three months after Denny left and ceased working for BLM, Lyon rated Denny’s performance “exceptional” and approved a $3,200 cash bonus despite Denny no longer providing any work for the BLM.

Denny’s bank records even showed that, in addition to working for the Chippewa Cree Tribe, Denny was travelling across the United States and visiting various golf courses, all while receiving compensation from the BLM.

The convictions in the Denny-Lyon case are the latest in a series of prosecutions and convictions relating to public corruption, fraud, and theft in federal grants, contracts, and programs brought by the investigators and prosecutors of the U.S. Attorney’s Guardians Project, an anti-corruption strike force created in 2011 to investigate Montana’s Indian Country.

The strike force investigations have led to numerous indictments, convictions and sentences across the state, with the bulk coming from Rocky Boy’s Indian Reservation.


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