The web of nefarious transactions that unlawfully drained $18 million out of the coffers of the Indian tribe that owns the Thunder Valley Casino Resort has now totally unraveled.
Following the path of his two co-conspirators, Darrell Patrick Hinz confessed Friday to his role in the rip-off that victimized the United Auburn Indian Community. The crime did not directly involve the casino near Lincoln.
Under the terms of all three plea agreements with the government, Hinz and his cohorts are to jointly pay restitution to the tribe of at least $17 million.
Hinz’s guilty plea before U.S. District Judge Troy L. Nunley comes 15 days after former tribal administrator Gregory Scott Baker, 48, of Newcastle, pleaded guilty to his part in looting the tribe’s treasury and agreed to cooperate with the government.
Baker’s plea agreement, unsealed last week at the insistence of The Sacramento Bee, shows that Baker detailed for the government Hinz’s participation in the fraud. Baker is scheduled for sentencing March 17.
Hinz’s change of mind about his earlier not-guilty plea also comes 15 months after Bart Wayne Volen, 56, of San Diego and Haiku, Hawaii, a general contractor and developer who worked on a building project for the Auburn Indians, pleaded guilty and agreed to cooperate with the government. Volen is next due in court for a status conference April 28.
Hinz, a 50-year-old businessman from Cameron Park who was hired by the tribe to oversee the building project, was thus facing a trial featuring his two partners in crime as the government’s star witnesses.
Under federal guidelines, by pleading guilty Hinz gets the benefit of a sentence reduction for his “acceptance of responsibility.” Assistant U.S. Attorney Michael Beckwith told Nunley at Friday’s hearing that he will be asking the judge at the Feb. 18 sentencing to send Hinz to prison for eight years.
If Nunley grants that request, and if good conduct in prison qualifies Hinz for the maximum sentence cut, he would be released in early 2023.
The terms of the plea agreement allow defense attorney Pat Hanly to argue for 6 1/2 years behind bars.
The youngish-appearing Hinz, dressed in a gray business suit with a gray and white shirt open at the neck, calmly admitted a key role in laundering the trio’s profits to hide where they came from, and he further acknowledged filing a false income tax return for the year 2007.
The agreement between Hinz and prosecutors is the type of deal that requires the judge’s approval. If Nunley rejects the bargain, Hinz will have the option of withdrawing his guilty plea. If he decides to continue, Nunley may, if he chooses, mete out punishment less favorable to Hinz than that agreed to by the U.S. attorney’s office.
The saga began in October 2006, when the Indians hired Volen to finish construction on four buildings – a school, a community center, and administrative offices – located on tribal land on Indian Hills Road in Auburn. Volen subbed out the project to Sequoia Pacific Builders Inc., a Roseville construction company.
According to an 188-page affidavit of IRS Special Agent Daniel Norman on file in Sacramento federal court, “From October 2006 to January 2008, Volen mailed, faxed, or otherwise submitted approximately one hundred and eighty SPB change orders to the UAIC for additional work on the Indian Hills Office Project. Approximately one hundred and sixty-nine of the SBP change order invoices (were altered by Volen and) were either inflated, fraudulent, or otherwise manipulated, allowing Volen to overcharge the UAIC for additional work on the Indian Hills Office Project.”
Before payments on project costs were authorized by the tribal council, Baker and Hinz knowingly approved the bogus invoices, according to an April 2013 grand jury indictment charging the three.
The tribe paid Volen approximately $42.7 million for work on the Indian Hills project, at least $18 million of which represented Volen’s fraudulent inflation of change order invoices, according to Norman’s affidavit. Volen paid Sequoia Pacific approximately $24 million, only approximately $6 million of which was for change orders submitted to Volen by Sequoia, Norman states in the affidavit.
Volen used the stolen money “to purchase real property, luxury cars, and vacations, as well as for kickback payments to his two UAIC insiders, Hinz and Baker,” the agent wrote in the affidavit.
Hinz, in turn, sent a number of fraudulent invoices to Volen, ostensibly for consulting work, and Volen sent Hinz 29 checks totaling approximately $7.5 million, court papers reflect. From this money, Hinz paid for a Baker trip to Hawaii, retired some of Baker’s financial obligations, bought him a $70,000 BMW and a mobile home, financed Baker property investments, bought him a vacation condominium at Lake Tahoe and a $54,000 swimming pool at his primary residence, all to the tune of more than $1.4 million, according to court papers.
Through a tangle of forfeiture litigation and a multistate sweep by the IRS, the government is moving to seize all the assets of the three defendants.
Denny Walsh: 916-321-1189