Encore, ex-partner in Rocky Boy lending company, is indicted
Ex-tribal partner charged in online lending kickback scheme
Last updated 4/12/2016 at 10:01pm
HELENA (AP) — A grand jury has charged a former business partner of Montana's Chippewa Cree Tribe with conspiring with tribal officials to skim millions of dollars from the Rocky Boy Indian Reservation's successful online payday lending company.
Encore Services of Henderson, Nevada, and its president, Zachary Roberts, are accused of taking $3.5 million from the tribe through a fraudulent contract, and kicking back $1.2 million of that money to the officials who made the corrupt deal, federal prosecutors said.
Encore and Roberts have been charged with conspiracy to defraud the tribe, wire fraud and bribery. Roberts and the company, through an attorney, pleaded not guilty to the charges during a hearing Tuesday in U.S. District Court in Great Falls.
The attorney, Eric Henkel, did not immediately return a call for comment.
Encore was the tribe's partner in its first attempt to start an online payday loan company in 2010. The loan company, First American Capital Resources, failed to get off the ground, and in 2011 the tribe tried again with a new partner and left Encore out of the operation.
The new company, Plain Green, became successful and allowed the tribe and its new Texas-based partner, Think Finance Inc., to offer short-term loans that charged annualized interest rates of up to 379 percent. The company claimed tribal sovereign immunity to avoid complying with a Montana law that caps interest rates at 36 percent.
Encore officials, after being shut out of Plain Green operations, signed a fraudulent and corrupt agreement with at least two tribal officials in 2011 that gave the Nevada company 15 percent of Plain Green's revenues, prosecutors said. In return, tribal councilman John "Chance" Houle, who oversaw the tribe's lending programs, received a payment of $145,874 from Plain Green, according to the indictment.
Two Plain Green executives, Neal Rosette and Billi Anne Morsette, created a consulting company with a tribal health official named James Eastlick, Jr. to receive ongoing payments from Encore in the kickback scheme, prosecutors said.
Rosette and Morsette sent payments from Plain Green to Encore from 2011 to 2013, followed by Eastlick sending Encore invoices for work never done that amounted to a third of the Plain Green money, according to the indictment.
The details of the payment scheme to Encore were first revealed following a 2014 arbitration dispute that Encore filed when the tribe canceled the 15 percent revenue agreement. A mediator ruled that the hidden payments to Rosette, Morsette and Eastlick nullified the contract.
Rosette previously acknowledged to The Associated Press that he received the payments, but he said Plain Green's board of directors offered to make them because the board feared he and Morsette would help other tribes open their own lending companies.
The tribe last month settled a lawsuit that had sought $13 million from Encore. The terms of the settlement were not disclosed.
Rosette and Morsette were sentenced to more than three years each in prison and ordered to pay $1.4 million in restitution after they pleaded guilty in December to stealing money from the tribe and taking bribes from Encore.
Eastlick was previously sentenced to six years in prison after pleading guilty to charges in multiple cases in a wide-ranging federal investigation into corruption on the Rocky Boy's Indian Reservation.
Houle was sentenced last year to 5 ½ years in prison in a separate case in the corruption investigation.
Neither Houle nor Eastlick were charged in the tribal lending case because their earlier plea agreements shield them from additional prosecution.