Former tribal leaders indicted on charges they looted $6 million from Corning’s Rolling Hills Casino

Three former officials of the tribe that owns the Rolling Hills Casino in Corning were indicted Thursday on charges they embezzled at least $6 million from the tribal coffers and used the money to purchase cars, international junkets, gold coins and landscaping for their homes with such features as koi ponds and a putting green.

The 69-count indictment by a federal grand jury in Sacramento alleges that John Crosby, the tribe’s onetime economic development director; Ines Crosby, his mother and the former tribal administrator; and Leslie Lohse, Ines Crosby’s sister and the former tribal treasurer, engaged in a sweeping conspiracy to loot the tribal bank accounts, then lied to FBI agents investigating the matter.

The indictment follows years of controversy involving the tribal government and the casino. Warring factions in the tribe at various times engaged in an armed standoff outside the casino, went to court over control of the casino and endured a cyberattack that destroyed computer records – one that the indictment blames on the three defendants.

The dispute also included a lawsuit claiming wrongdoing under the federal Racketeer Influenced and Corrupt Organization Act that named the defendants and more than a dozen others.

None of the three defendants could be reached for comment Thursday, although John Crosby, a onetime FBI agent in Sacramento, told The Sacramento Bee previously that allegations of overspending were overblown.

A woman who answered the phone at the Corning headquarters for the Paskenta Band of Nomlaki Indians on Thursday afternoon said officials had no comment on the indictment, although a law firm for the tribe indicated a statement would be issued later Thursday.

The allegations in the indictment are similar to those leveled in the RICO lawsuit filed in 2015 that claimed tribal leaders engaged in a “12-year looting spree” of money spent on chartered jets, tickets to World Series, Final Four and Sacramento Kings games, and investments.

The casino, which opened in 2002 along Interstate 5 approximately 110 miles north of Sacramento, has been estimated to generate $100 million a year and provides $54,000 annually for each member of the band, which has roughly 300 adult members.

According to the indictment, the conspiracy ran from January 2009 through May 2014. Defendants allegedly diverted funds from tribal accounts by writing various notations on checks such as “travel” or “cash.”

The defendants allegedly used the money to pay off personal credit card bills, buy vehicles, clothes, electronics and home improvements, and to travel the world.

John Crosby, 53, of Redding, is charged with taking $838,434 to buy a home and $7,927 for homeowners insurance and carpet. He also is alleged to have used tribal funds to install swimming pools, spas, a covered patio and a fountain at his home, as well as a putting green. Crosby also allegedly used tribal money for a $105,000 chartered flight to and from Hawaii, a $65,000 trip to Honduras, and $150,000 for gold coins and precious metals.

His mother, Ines Crosby, 73, of Orland, allegedly used tribal money to install koi ponds and water features at her home. She also spent $55,000 for a trip to New Zealand, $2,000 on personal beauty products, more than $11,000 on jewelry, more than $55,000 on a watch and $1,155 for a handbag, the indictment alleges.

Lohse, 62, of Glenn County, is charged with using funds to make payments on personal credit cards and to have herself paid by check for what she claimed as “travel,” the indictment states.

The three also were charged with creating false documents to cover up the embezzlement and of remotely accessing casino computers in May 2014 to erase information. The three also are charged with making false statements to federal agents. Each faces up to 20 years in prison if convicted.

Sam Stanton: 916-321-1091, @StantonSam

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