Leech Lake Band of Ojibwe: Investigation into Moondance Jam loan prompts petition for removal of Bongo
CASS LAKE - An investigation into a loan of tribal funds to the late Bill Bieloh of Walker led to a Monday morning Leech Lake Band of Ojibwe Tribal Council vote to prosecute Secretary/Treasurer Mike Bongo and former tribal Legal Director Eric Lochen and Executive Director Robert Aitken.
Aitken and Lochen had already been terminated, and a petition for removal or recall of Bongo is in circulation.
The vote to prosecute for misappropriation of tribal funds jeopardizing the health, welfare and safety of the band was taken in an impromptu special session hastily called to order by Chairman Arthur "Archie" LaRose at the request of Elizabeth Sherman, the band member who circulated the Bongo recall petition. Band members packed the Palace Bingo Hall for the hearing. Emotions ran high requiring LaRose to repeatedly call for order and civility, and two members to be physically separated by security officers.
In favor of the action to prosecute were LaRose, District 1 Representative Robbie Howe and District 3 Representative Eugene "Ribs" Whitebird. Bongo voted against the motion and District 2 Representative Steve White declined to cast a vote.
At issue is a $2.4 million loan from the tribal treasury that Bongo made to Bill and Kathy Bieloh and Moondance Jam Inc. on Bongo's lone signature. The money was part of the $3.5 million the Band received from Enbridge Energy for the pipeline right of way. The Band was in the process of exploring ways to invest the Enbridge funds, but meanwhile, it was in a bank earning less than 1 percent interest.
The Leech Lake constitution requires that both the secretary/treasurer and chairman sign official documents with Tribal Council approval. But the loan agreement signed Sept. 14 by the Bielohs contains only Bongo's signature. The Bielohs backed the loan with land as collateral and agreed to pay 8 percent interest with annual installments of $460,973 per year for seven years.
Bieloh was also supposed to buy $1 million worth of life insurance to protect the loan, but he had only bought $500,000 worth of insurance when the deal was signed and the money was transferred. Bieloh died Sept. 24.
"This is the biggest, most blatant violation I've ever heard of on the RBC," said LaRose. "I'm going to push and pursue criminal charges against Mike Bongo. He's given us a black eye in Indian Country."
LaRose said he and other members of the Tribal Council, also known as the Reservation Business Committee, were in Washington, D.C., Sept. 22 when they were notified of the loan to the Bielohs. They hired Minneapolis attorney David Lillehaug to investigate the situation.
After interviewing Bongo, Aitken and Lochen and other tribal staff members, Lillehaug concluded: "The loan represents a complete failure and circumvention of the Band's representative governance process. ... Bongo knowingly and intentionally violated these provisions of Ordinance No. 1 by orchestrating, authorizing and executing the loan without the approval of the Tribal Council and without the signature of the chairman. From the beginning, Bongo instructed Aitken to 'work quietly' on the loan and said the 'he would take care of the politics.'"
The report continued that "Bongo knowingly - not just negligently - violated Band law and policies."
The investigation also noted that the appraisal for the property the Bielohs used as collateral was conducted by Bill Bieloh's brother-in-law and that the value was inflated. However, the investigation didn't determine that Bongo or any others involved in the loan received personal benefit from the deal.
Bongo, who sat silently throughout the accusations, defended his action as an opportunity for the greater good of the Band by making better interest than the bank was paying for use of the funds.
"If anybody's going to make money off Leech Lake's money, it should be Leech Lake," he said. "Was the money stolen? No. It was invested at an interest rate of 8 percent."
He acknowledged "there were some mistakes made" but maintained that he thought the loan was a good business decision.
For the fee the Band paid Lillehaug, "he had to come out and point the finger of blame at somebody," Bongo continued, as some members of the audience shouted for him to resign.
The report states that Bill Bieloh told Bongo he was a year in arrears in a bank payment and was being squeezed for payment. A response by Bemidji attorney Ryan Kieson to an inquiry by Aitken indicated the loan to someone in Bieloh's financial situation was questionable.
According to the report from the Drahos Kieson and Christopher law firm, the Bielohs used about $1.76 million of the loan to pay off debts at First National Bank of Walker, $14,327 for debt service fees and pocketed $619,118 cash.
Bongo protested that the charges against him are "nothing more than political witching by Archie."
LaRose countered by reading letters showing he had warned Bongo and Bill Bieloh that any business had to be conducted with the approval of the Tribal Council.
"This whole thing was unauthorized and illegal," LaRose said. "These guys should be paying restitution. The report clearly states Mike Bongo was responsible for this loan."
LaRose also read a letter addressed to FBI Special Agent Ralph Boelter concerning Bongo's activity. The Tribal Council has also hired attorney Zenas Baer, an expert in American Indian law, to try to recover the money.
Howe and Whitebird echoed the frustration expressed by LaRose and members of the audience. Whitebird added that he was pessimistic about the chances of recouping the $2.4 million.