LOS ANGELES—An attorney for the
Twenty-Nine Palms Band of Mission Indians is among four people who have been
indicted on federal bribery and money laundering charges for allegedly
participating in scheme in which associates of the lawyer hired to provide
assistance to the tribe paid kickbacks to the attorney.
The 48-count grand jury indictment returned
yesterday afternoon names:
■Gary Edward Kovall, 66, of Ely,
Minnesota, a licensed California attorney who acted as legal counsel for the
tribe;
■David Alan Heslop, 74, of Templeton,
who, on Kovall’s recommendation, was hired by the tribe to oversee some tribal
business;
■Paul Phillip Bardos, 57, of Rancho
Cucamonga, a general contractor; and
■Peggy Anne Shambaugh, 56, of Ely,
Minnesota, who is Kovall’s wife.
All four defendants have agreed to
appear for arraignments tomorrow in United States District Court in Los
Angeles.
According to the indictment, Kovall
advised the tribe to create a limited liability company to purchase real
estate, and the attorney convinced the tribe to hire Heslop as the company’s
manager. Kovall and Heslop then recommended that the tribe hire Bardos to act
as the tribe’s “owner’s representative” in several construction projects at the
Spotlight 29 Casino. When additional construction or construction oversight
became necessary in relation to casino projects, Bardos submitted proposals to
perform the work, and Kovall persuaded the tribe to give Bardos the contracts.
After being paid by the tribe, Bardos paid kickbacks to Heslop who, in turn,
paid kickbacks to Kovall though Shambaugh.
The indictment alleges that in 2007
Bardos paid Heslop more than $186,577, most of which was then funneled to
Shambaugh.
“The United States Attorney’s Office is
committed to the prosecution of corruption and fraud in all of their guises,”
said United States Attorney AndrĂ© Birotte, Jr. ‘This case demonstrates that our
commitment extends to vigorously pursuing cases against unscrupulous
individuals who abuse their positions to take advantage of Native American
tribes.”
The indictment charges all four
defendants with conspiracy. Additionally, Kovall, Bardos, and Shambaugh are
charged with eight counts of bribery, while Heslop is charged with 16 counts of
bribery. In addition to the conspiracy and bribery charges based on the
kickback scheme, Bardos is charged with eight counts of money laundering, Heslop
is charged with seven counts of money laundering, and Shambaugh is charged with
two counts money laundering.
“IRS-Criminal Investigation is committed
to aggressively investigating those individuals who conspire to commit bribery
and launder those illicit funds to hide their criminal activities,” said Leslie
P. Demarco, IRS-Criminal Investigation Special Agent in Charge for the Los
Angeles Field Office. “IRS-CI will continue to partner with other law
enforcement agencies to ensure that all who secure lucrative contracts play by
the same rules.”
Steven Martinez, Assistant Director of
the FBI’s Los Angeles Field Office, stated, “The charges allege the defendants
in this case deprived the victims—the Twenty-Nine Palms Band of Mission
Indians—of honest leadership and took advantage of their positions of trust by
lining their own pockets with the tribe’s money, including government funding
designated for necessary services. The FBI will continue to work with our
partners at the IRS and the United States Attorney’s Office to protect groups
targeted through corrupt practices and investigate those responsible.”
An indictment contains allegations that
a defendant has committed a crime. Every defendant is presumed to be innocent
until proven guilty in court.
If they are convicted of all counts in
the indictment:
■Kovall would face a maximum statutory
sentence of 75 years in feeral prison and a fine of $2 million;
■Heslop would face a statutory maximum
sentence of 225 years in federal prison and a fine of $5.75 million;
■Bardos would face a statutory maximum
sentence of 155 years in federal prison and a fine of $4 million; and
■Shambaugh would face a statutory
maximum sentence of 105 years in federal prison and a fine of $2.75 million.
The case was investigated by
IRS-Criminal Investigation and the Federal Bureau of Investigation.
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