WASHINGTON — For more than two years, tribal officials and myriad associates of the Three Affiliated Tribes, also known as the Mandan, Hidatsa and Arikara Nation, have been under a federal investigation. On Thursday, the first charges were announced. More people are expected to be indicted, according to sources aware of the investigation.
One current Three Affiliated Tribes Councilman and his employee, and a former TAT Councilman were charged by criminal complaint unsealed July 30. All alleged criminal activity occurred on the Fort Berthold Reservation in Western North Dakota.
They were charged for their alleged acceptance of bribes and kickbacks from a contractor providing construction services on the Fort Berthold Indian Reservation. In the court filings, it is noted that more facts in the complaints will be released at a later date.
Randall Jude Phelan, 55, of Mandaree, North Dakota, and Delvin Reeves, 52, of Watford City, North Dakota, were charged in complaints supported by one affidavit, while Frank Charles Grady, 52, of Hardin, Montana, was charged in a complaint supported by a second affidavit. All three defendants were charged in the District of North Dakota with one count of conspiracy and one count of federal programs bribery.
Phelan and Reeves made their initial appearances in the District of North Dakota before U.S. Magistrate Judge Alice R. Senechal today. Grady made his initial appearance in the District of Montana before U.S. Magistrate Judge Timothy J. Cavan on July 30.
Phelan has been a representative of the MHA Nation’s Tribal Business Council since November 2012. Reeves is a paid employee of the West Segment in Mandaree, North Dakota. Grady was a Tribal Business Council representative from approximately November 2014 until November 2018.
The complaints were made public July 30 in an announcement brought forward by Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney Drew H. Wrigley for the District of North Dakota, and Acting Special Agent in Charge Aubree M. Schwartz of the FBI’s Minneapolis Field Office.
According to the affidavit in support of the complaints against them, Phelan and Reeves solicited and accepted bribes and kickbacks from the contractor in connection with his business’s operation on the FBIR beginning in approximately 2013 and continuing through 2020.
“Expenditures from a segment’s allocations are not subject to TBC (Tribal Business Council) oversight, and the TBC representative has significant discretion as to the spending of the segment’s allocation.”
FBI Agent Jacob O’Connell
The Phelan complaint alleges that, in exchange for the payments, Phelan and Reeves used their official positions to help the contractor’s business, including by awarding contracts, fabricating bids during purportedly competitive bidding processes, advocating for the contractor with other tribal officials, and facilitating the submission and payment of fraudulent invoices.
The construction business received more than $17.25 million from the Three Affiliated Tribes to do business on the Fort Berthold Reservation. The business paid more than $1 million in cash to Phelan and Reeves. Phelan had intended to tell Reeves in 2019 to take cash because checks would “get you in trouble.” During a six-year period, the construction company paid Reeves on 67 separate occasions. Reeves accepted checks 57 times, according to the complaint.
The complaints allege that the defendants each accepted hundreds of thousands of dollars in bribes and kickbacks.
The Grady complaint alleges that he solicited and accepted bribes and kickbacks beginning in approximately January 2016 and continuing through September 2017. The affidavit in support of the complaint alleges Grady used his official position to help the contractor’s business, including the award of contracts, and pressuring other construction companies to award subcontracting work.
In addition, Grady advocated for the contractor with other tribal officials and facilitated the submission and payment of fraudulent invoices. A number of alleged kickbacks were associated with the Four Bears Economic Development Corporation that operated in the Four Bears Segment.
In the complaints, FBI Agent Jacob O’Connell described how Three Affiliated Tribes elected councilmen could set themselves up for bribery payments. To begin, each segment — there are six segments with elected leaders on Fort Berthold — receives annual, multi-million dollar allocations from the tribe’s general fund. The money is typically deposited into a segment economic development corporation, which is often overseen or directly influenced by an elected councilman.
“Expenditures from a segment’s allocations are not subject to TBC oversight, and the TBC representative has significant discretion as to the spending of the segment’s allocation,” said O’Connell in the complaint.
A criminal complaint is merely an accusation, and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The FBI investigated the case. Trial Attorney Jessee Alexander-Hoeppner of the Criminal Division’s Fraud Section is prosecuting the case with the assistance of the U.S. Attorney’s Office for the District of North Dakota.