3 former Paskenta Tribe of Nomlaki Indians officials plead guilty in $4.9 million embezzlement case

SACRAMENTO - Three former officials of an American Indian tribe that runs a Northern California casino pleaded guilty Thursday to conspiring to embezzle nearly $5 million from the tribe, using the money to fund luxurious lifestyles.

John Crosby, his mother Ines Crosby and her sister, Leslie Lohse, stole money over five years from the Paskenta Tribe of Nomlaki Indians, prosecutors said.

"The defendants used the tribe's accounts as their personal piggy banks," said Kareem Carter, special agent in charge of criminal investigations for the Internal Revenue Service.

The tribe, which has about 300 members, owns the Rolling Hills Casino north of Sacramento. The casino with its associated hotels, gold course and other amenities has been estimated to generate $100 million a year for the tribe, the Sacramento Bee reported .

The defendants "took more than $4.9 million of the tribe's money and intentionally failed to declare it as income to the IRS. This resulted in a tax loss of over $1.6 million," Carter said.

In addition to taking money, "the actions of these individuals corrupted the tribe's institutions of government and created distrust that has taken years to restore," Tribal Chairman Andrew Alejandre said in a statement

Crosby, 56, is a former FBI agent in Sacramento who was the tribe's economic development director. His 76-year-old mother was the tribe's administrator and Lohse, 64, was treasurer.

The three were indicted in 2017. The complaint alleged they spent the stolen funds on fancy homes, cars and other luxuries, including $243,000 for a swimming pool and spa at John Crosby's house; $84,000 for a koi pond for Ines Crosby; and $150,000 to buy gold coins and other precious metals. Thousands more went to pay off credit cards, buy jewelry, handbags and beauty products and to pay for a World Series trip, chartered jet flights and vacations to Hawaii, New Zealand and other places.

The three pleaded guilty to conspiracy to embezzle or steal from a tribal organization, which can carry a sentence of up to five years in prison and a $250,000 fine. John Crosby and Lohse also pleaded guilty to filing a false tax return and Ines Crosby pleaded guilty to failing to file a tax return.

They could face up to five years in prison and $250,000 in fines each on the conspiracy charge, and could be ordered to repay millions of dollars to the tribe and the IRS when they are sentenced in January.

"These individuals ran the tribe's government as a brutal kleptocracy, enriching themselves and their families while brutally punishing those who opposed them," said Stuart G. Gross, an attorney for the tribe. "These guilty pleas concede that."