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July 26, 2014

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Men charged with embezzling money from Indian housing grants

Two men have been indicted by a federal grand jury in Las Vegas on conspiracy, bribery and embezzlement charges relating to an Indian housing grant program.

The defendants are 66-year-old William Aubrey of Mesquite, which is about 65 miles northeast of Las Vegas, and 52-year-old Chester Carl of Gallup, N.M., said U.S. Attorney Greg Brower of Nevada.

The indictment by the grand jury was returned May 19 and unsealed Wednesday.

Both are charged with conspiracy to commit bribery and bribery relating to a U.S. Housing and Urban Development grant program, which funded development of low-income housing on Navajo Nation Indian lands in Arizona and New Mexico, Brower said.

Aubrey is also charged with two counts of embezzlement and theft from Indian tribal organizations, Brower said.

If convicted of the allegations, they each face up to five years in prison and a $250,000 fine on the conspiracy charge, and up to 10 years in prison and a $250,000 fine on the bribery charge.

Aubrey also faces up to five years in prison and a $250,000 fine on each of the embezzlement and theft charges.

If the defendants are convicted, the government will also seek to reclaim any properties of the defendants from proceeds of the crimes of up to roughly $8.5 million.

Carl was CEO of the Navajo Indian Nation Housing Authority, the indictment alleged. HUD awarded federal grant funds to the Housing Authority for building and maintaining affordable housing in the Nevada Indian Nation. The Housing Authority awarded grant monies to Fort Defiance Housing Corp., a non-profit corporation, and Fort Defiance contracted with a private housing development company, Lodgebuilder, to develop the housing projects, the indictment said. Lodgebuilder is owned and operated by Aubrey.

The indictment alleges that from about June 2002 to November 2006, Carl and Aubrey engaged in a bribery scheme in which Aubrey bribed Carl with $194,950 in casino gaming chips in exchange for favorable treatment for Aubrey's company.

In 2002 and 2003, Lodgebuilder benefited from several contracts signed by Carl totaling more than $38 million for developing housing projects in Chilchinbeto, Ariz., Springstead, N.M., and Shiprock, N.M.

The indictment alleges that Carl wrongfully allowed Aubrey and Lodgebuilder to control and use the non-profit Fort Defiance as a "pass-through" to receive the federal HUD grant funds.

About $2.2 million of the funds, which were supposed to be used to pay vendors, subcontractors and expenses at the housing developments, were converted by Aubrey for his own personal use and for gambling, purchasing furs and jewelry and expenses related to thoroughbred racehorse training, the indictment said.

Carl also arranged for the Housing Authority to respond in favor of inadequate disbursement requests submitted by Fort Defiance and Lodgebuilder, to Aubrey's failures to pay vendors and subcontractors and to questions and concerns about Aubrey's business practices.

Aubrey and Carl appeared today before U.S. Magistrate Judge Lawrence Leavitt and pleaded not guilty to the charges. They were released on personal recognizance bonds, pending trial.

The case is being investigated by the Office of Inspector General for U.S. Housing and Urban Development and prosecuted by Assistant U.S. Attorneys Jeffrey T. Tao and Kathleen Bliss.

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