Corning casino focus of lawsuit claiming millions embezzled from tribe

First, there was an armed standoff outside the Rolling Hills Casino near Corning. Then a fight in federal court over control of a Northern California Indian tribe and its casino, followed by a mysterious cyberattack that destroyed some of the casino’s records.

Now, a lawsuit filed in federal court in Sacramento on Tuesday alleges that a faction that once controlled the tribe engaged in a “12-year looting spree” that cost members of the Paskenta Band of Nomlaki Indians tens of millions of dollars that went to pay for “absurdly luxurious lifestyles of private jet travel, luxury homes, high-end vacations, custom sports cars and high-profile sporting events.”

The complaint, which includes claims under the federal Racketeer Influenced and Corrupt Organization Act (RICO) names 19 defendants, including four former tribal officials: John Crosby of Redding, a former tribal economic development director and one-time FBI special agent in Sacramento; his mother, Ines Crosby of Orland, who is the former tribal administrator; Leslie Lohse, a Glenn resident who is Ines Crosby’s sister and the former tribal treasurer; and her husband, Larry, the former tribal environmental director.

None of those four could be reached for comment Tuesday, although John Crosby told The Bee in the fall that such claims were not objective and that complaints about high travel expenses did not take into account the need for frequent trips to perform economic development efforts.

The 171-page lawsuit refers to the four as “RICO Ringleaders” who maintained a tight-fisted control over the tribe and its lucrative finances from 1998 until last year, when they were ousted during a power struggle.

“From approximately 1998 until their removal from power in April 2014, the four RICO Ringleaders held all political and financial power within the tribe,” according to the lawsuit, which alleges that tribal elections were rigged, information about tribal finances was closely held and tribal bank accounts were looted.

The lawsuit follows an audit released in the fall that tallied $17 million in private jet travel; $450,000 spent on tickets to World Series, Final Four and other sporting events; as well as more than $1 million spent on floor-level Sacramento Kings tickets. The audit also leveled complaints about $93 million in investments in companies, gold and real estate that were made with “unproven, high-risk startup companies.”

The engine driving the tribe’s finances is the casino, which opened in August 2002 off Interstate 5 near Corning and has been profitable ever since. The $100 million-a-year casino provides about $54,000 annually for each member of the band, which had fewer than 300 adult members last year.

“The casino is the primary source of the tribe’s income,” the lawsuit states. “The income the tribe has derived from the casino over the last 12 years has made a dramatic difference in the lives’ of the tribes members and has continued to improve their standard of living.”

Tensions within the tribe over control of the casino came to a head last spring, when the defendants were ousted from power.

“In April 2014, in an impressive and inspiring expression of self-determination and democracy, the tribe came together and removed the RICO Ringleaders from power,” the lawsuit states. “The Rico Ringleaders did not, however, go quietly.

“In an effort to both retake control of the tribe and prevent discovery of their criminal enterprise and the illegal benefits that they derived from it, the RICO defendants launched an armed assault on the tribe’s Rolling Hills Casino in coordination with a destructive cyberattack on the casino and tribe’s computer systems. The RICO defendants intended these attacks to shut down the casino – far and away the most significant source of income for the tribe and its members – to force the tribe to allow them back in control, essentially using the economic welfare of every other tribe member as a hostage.

“They further intended to, and did, destroy electronically stored information that could be used as evidence of their years of criminal activity.”

Call The Bee’s Sam Stanton, (916) 321-1091.

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