An audacious fraud scheme that targeted the owners of the Thunder Valley Casino may have garnered three men more than $18.6 million, the federal government claims as it moves to seize dozens of properties from the trio.
Court documents filed late Tuesday in federal court in Sacramento describe a two-year overbilling and money-laundering spree by the men who oversaw construction of the headquarters complex for the United Auburn Indian Community.
No criminal charges have been filed, and lawyers for two of the men say the government is mistaking compensation of the casino world for evidence of wrongdoing.
"It really reads like a novel," said Sacramento attorney Tom Johnson, who represents tribal administrator Greg Baker. "It's not a criminal indictment by a long stretch and if they had enough to criminally indict, they would have done it."
A 189-page affidavit from an Internal Revenue Service agent says money from the alleged scheme was plowed into dozens of luxury properties stretching from Sacramento to Hawaii to the suburbs of San Diego, which the government now is trying to seize.
Proceeds were funneled into commercial properties, vacation homes, top-of-the-line remodels and high-end vehicles, including a $140,965 Lamborghini Gallardo, and two Bentleys, one of them a convertible, the court documents allege.
At the center of the probe is Bart Volen, a Sacramento developer who was hired by the tribe in October 2006 to manage construction of four buildings known as the Indian Hills Office Project, or IHOP, in Auburn.
The 52-year-old Volen, who moved his offices to San Diego last year, is accused in the documents of masterminding a scheme that at times relied on techniques as simple as adding a digit to an invoice amount. Hence, a $768 waterproofing bill submitted to Volen by a contractor was transformed into an invoice for $3,768 when it was passed on to the tribe for payment, the affidavit alleges.
Volen is alleged to have conspired with the tribal administrator, Baker, and a former tribal consultant, Darrell Hinz, who acted as project manager. Baker, 44, has been placed on paid leave. Hinz's role ended when the project was completed.
William Portanova, the attorney for Hinz, 48, said he sees no hard evidence to back up any of the claims against his client, citing the affidavit: "Although it is unknown exactly what (Baker's and Hinz's) direct involvement and duties were in the scheme, it can be inferred that both were involved in the conspiracy based on the payments (kickbacks) they received that can be traced to the scheme."
"In the world of casinos," Portanova said, "the money is mind-boggling, and the money people are paid on a daily basis is mind-boggling. The net profit for this casino is $1 million on a single day.
"What people are paid may seem extraordinary to you and I, but in the world of casinos the numbers are not unusual. It appears that the government is proceeding on the theory that the numbers are so big, it must be criminal. The Indians are not complaining, and the place is making a bazillion dollars."
Tribal spokesman Doug Elmets noted that no criminal charges have been filed in the case.
"No wrongdoing has been proven," Elmets said. "If the United Auburn Indian Community has been the victim of fraud, we expect any assets seized to be used as full restitution."
The IRS said Volen hired Sequoia Pacific Builders as the general contractor and routinely inflated Sequoia invoices before he turned them over to Baker for approval and payment.
"Volen used several methods to inflate the (Sequoia) invoice," the affidavit states. "The most common method he used was to simply change, alter or add to the numbers on SPB's invoice."
In one instance, a July 2007 invoice for asphalt was submitted by Sequoia totaling $40,027.12. Volen allegedly submitted essentially the same bill to the tribe, but sought payment in the amount of $1,906,828.48.
"Other methods used by Volen to fraudulently obtain money from the (tribe) included entirely-fabricated, un-numbered invoices passed along to the (tribe) for payment," the affidavit of IRS Special Agent Daniel M. Norman states.
Norman adds that, after taking his cut, "Volen paid his fellow conspirators Baker and Hinz their share."
Volen could not be reached and his attorney, Matthew Jacobs, declined to comment, saying he had not seen the affidavit.
The reputed conspirators appear to have been doing quite well, legally or illegally.
Volen owned two condominiums in Hawaii, including one so highly prized that a lottery system was established to decide who could buy it. Volen was so eager to get the condo he had an employee enter the lottery to double his chances, the affidavit states.
The developer also paid $1.1 million for a home on Outrigger Drive in El Dorado Hills, and then spent $801,000 more to do extensive remodeling, the affidavit states.
Volen is no stranger to public controversy.
In 2007, he purchased a building at Folsom Boulevard and Watt Avenue that housed the Sacramento chapter of the American Red Cross. He was accused of trying to force the tenant out by such actions as tearing the Red Cross signs off the doors and yelling at the chapter's employees. Volen said at the time the claims were exaggerations.
He also had a beef with Roseville officials in 2001 after being accused of knocking down 10 oak trees on his own property and facing a $30,000 fine. He said he could find nothing in the U.S. Constitution that prohibits cutting down oak trees.
Volen's development and property management operations were based in Fair Oaks before the move to San Diego. "Volen Properties has no known officers," a Dun and Bradstreet company profile states.