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http://flash.oregonlive.com/cgi-bin/or_nview.pl?/home1/wire/AP/Stream-Parsed
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Nooksack Tribe investigated for HUD fraud

The Associated Press
02/20/00 12:26 AM Eastern

BELLINGHAM, Wash. (AP) -- The Nooksack Tribe is under investigation over use
of more than $300,000 in federal housing money.

Tribal officials and staff members used the money in 1998 and last year to
pay bonuses to Tribal Council members, hire relatives of tribal officials on
contracts and buy a manufactured home for use as a casino prize, a federal
Housing and Urban Development department investigator said in an affidavit
filed in U.S. District Court.

Noel Tognazzini, a special agent in charge for HUD in Seattle, detailed the
allegations in an affidavit filed Feb. 9 to get a warrant to search the
Nooksack tribal offices and housing offices.

Many of the allegations originate from a regular HUD review of the tribe's
housing programs in December, the affidavit says.

A warrant -- sealed during and immediately after the search and released
Friday -- was obtained authorizing investigators to search for files,
checks, letters, calendar entries, contracts, ledgers, meeting minutes and
other records. The inspection was done Feb. 10.

No arrests have been made.

The tribe received a total of $685,925 in housing money in fiscal year 1998
and $880,994 in 1999.

Tognazzini and U.S. Attorney Harold Malkin declined comment on the
investigation Friday.

The tribe's lawyer, Ray Brown, said the tribe was cooperating fully with the
FBI.

The affidavit includes these allegations arising from the December review
and subsequent investigation:

--The tribe used $33,000 in HUD funds to buy a manufactured home, which it
then displayed outside the Nooksack River Casino with a sign saying: "Win
me." It used another $45,000 to pay expenses of Stuart Scotsman, a
manufactured housing business in which the tribe bought controlling interest
in May 1999.

--The Tribal Council paid each of its nine members a $3,000 bonus on Nov.
24, 1999.

--The number of Nooksack Housing Board meetings significantly increased
after the board raised its meeting stipend from $50 a day to $100 for a
weekday and $200 during the weekend. The increase cost the Housing Authority
more than $30,000 from February through December of 1999.

--The tribe had no evidence that proper procurement procedures had been
followed or that conflict of interest requirements had been met for some
work done using federal funds. For example, inadequate documentation was
found in the signing of a contract in October 1998 by director of the
Nooksack Housing Authority Lane Warbus and Tribal Chairman Art George hiring
American Painting to paint houses. Between February and October of 1999, the
tribe paid $144,200 in housing money to American Painting, which is owned by
Alisa and Jeff Lee, George's daughter and son-in-law. American Painting and
the Lees had filed for bankruptcy in June 1998.

In another contract, the affidavit said, there was inadequate documentation
for a payment of more than $50,000 authorized last year by Tribal Controller
Abbey Smith for her husband to cut down trees in housing areas.

Brown said he could not comment on many of the allegations because he had
not seen the affidavit. But he said the manufactured home used as a casino
prize had nothing to do with the tribe.

"That's a casino promotion, which is a completely different entity," Brown
said. "It's there on display as a potential prize."

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