(MTN News-GREAT FALLS) The Montana U.S. Attorney’s Office announced on Tuesday that the former CEOs of Plain Green, the Chippewa Cree Tribe’s internet lending business, were both sentenced to several years in prison by U.S. District Judge Brian Morris in Great Falls.
Neal Paul Rosette of Box Elder, 54 years old, who served as the lending corporation’s CEO from its origination until January of 2012, was sentenced to 38 months in prison and ordered to pay restitution in the amount of $1,488,472.
His colleague, Billi Anne Morsette, was sentenced to 41 months in prison, and ordered to pay $1,421,045 in restitution.
The U.S. Attorney’s Office provided the following information in a press release:
In December of last year, Rosette and Morsette pleaded guilty to accepting bribes from Encores Services, a Las Vegas business, in exchange for facilitating the award and payment on fraudulent tribal contracts.
In another indictment, the two pleaded guilty to helping Chippewa Cree Tribal Vice-Chairman John Chance Houle siphon off over $55,000 in tribal monies, laundering them through First American Capital Resources, the predecessor company to Plain Green, and then diverting the money to the Chippewa Cree Rodeo Association accounts which Houle had used as a slush fund. Included in their pleas was a plea by Rosette to income tax evasion and by Morsette to willful failure to file tax returns.
In court records filed at the time of the plea, the Unites States Attorney’s office advised the Court that in May of 2010, the Chippewa Cree Tribe created First American Capital Resources, LLC (FACR) to be a partner with outside interests to provide a pay-day, on-line lending platform which, using tribal sovereignty, could be exempt from state laws and regulations regarding usury and predatory lending practices. The FACR CEO was Neal Rosette, the FACR COO was Billi Anne Morsette, and the Chairman of the oversight board created by the tribal council to administer the internet lending program was tribal Vice-Chairman, John Chance Houle.
THE RODEO ASSOCIATION EMBEZZLEMENT: On September 15, 2010, Houle authorized and signed a $27,949.33 check to FACR from the Chippewa Cree Tribe Tribal Grants and Contracts account. Once the Grants and Contracts money was in the FACR account, a check for $6,000 was made payable to Rosette (signed by Morsette) and another check for $6,000 was made payable to Morsette (signed by Rosette). Also on that same date, a check for $15,000 was written to the Chippewa Cree Tribe Rodeo Association and signed by Rosette and Morsette. Chance Houle was the President of the Chippewa Cree Rodeo Association with exclusive control over its bank account.
The second payment from the Grants and Contracts account to FACR was made on October 5, 2010, for $27,842.94. On that same date, a FACR check for $4,000 was made payable to Rosette (signed by Morsette) and another check for $4,000 was made payable to Morsette (signed by Rosette). Also on that same date, a check for $15,000 was written to the Indian National Finals Rodeo (INFR), and signed by Rosette and Morsette.
THE IDEAL CONSULTING KICK-BACK SCHEME: On October 22, 2010, FACR, the Tribe, and Encore Services Corporation, of Henderson, Nevada, entered into a Management Agreement making Encore the tribe’s partner in the on-line lending business. FACR and Encore did not make any online loans prior to April 2011. The salaries of Rosette and Morsette were subsidized by Encore and its affiliates, along with James Eastlick, Jr., Clinical Psychologist at the Tribe, through bridge loans. One specific loan from Eastlick to cover the salaries of Rosette and Morsette was in December 2010 for $60,000, and the note on the loan was between Eastlick and Encore.
In March of 2011, after Rosette had entered into negotiations with Think Finance of Fort Worth, Texas, the Tribe created another online lending company, Plain Green. Plain Green was created for online installment loan lending and, as with FACR, Plain Green would utilize the Tribe’s sovereignty to shield the business from state usury and predatory lending laws. Rosette, Morsette, and Houle all remained in the same positions for Plain Green as they had for FACR. After Rosette’s departure in January 2012, Morsette took over both the CEO and the COO roles for FACR and Plain Green.
After a deal was reached between the Tribe, Plain Green, and Think Finance, Encore was no longer a relevant participant. On May 4, 2011, and at the request of Encore, a revised management agreement between FACR and Encore was signed. Under this agreement, Section 2.9 now stated the “Enterprise” shall include FACR “and any other entity formed by the Tribe to undertake business of the type conducted by FACR.” This is after Plain Green and Think Finance have already started making loans in April. The amended agreement was designed to provide “exclusive” rights to Encore with regard to all of the Tribe’s online lending ventures, including Plain Green. Rosette forged Houle’s signature on the revised management agreement.
On July 11, 2015, without any written agreement as to fees, Rosette and/or Morsette wired $38,242 of the Tribe’s share of the Plain Green distribution, to Encore. In late July 2011, a Fee Agreement was executed providing Encore Services, LLC, a newly formed company owned by the same individuals of Encore Service Corporation, 15% of all profits from the Plain Green – Think Finance venture. This agreement was backdated to June 1, 2011, one day before Plain Green received its first payment of $199,141.
On August 3, 2011, an entity called Ideal Consulting, LLC, invoiced Encore for “5% consulting fees” for the months of May, June and July 2011. The total billed was $50,652.40. That same day, Plain Green wired $93,800.42 to Encore Services. Ideal Consulting had registered with the Montana Secretary of State’s Office on August 2, 2011. Eastlick opened a bank account using the articles of incorporation for Ideal Consulting at Wells Fargo Bank in Havre, and on August 5, 2011, an Encore affiliate wired $50,652.40 to the new account.
At its essence, the scheme that began with the second agreement was designed to put Encore back into the tribal stream of revenue from the on-line lending operation once Think had come in to supplant Encore. In exchange for giving Encore 10% of the tribe’s revenues, Encore agreed to take 15% and kick 5% back to Rosette, Morsette, and Eastlick as a reward for keeping money flowing to Encore, even though it had not been able to establish a viable lending operation.
The relationship with Encore, and the resulting payments to Ideal, continued for the next two years, until July 31, 2013. In that time, Plain Green paid Encore $3,523,471, and Encore paid Ideal $1,208,395. The profits from the scheme were split evenly between Rosette, Morsette and Eastlick—each taking over $400,000.
During this period Morsette received over $800,000 in income from her salary and the payments from Ideal. She never filed a tax return. As part of her plea agreement she agreed to pay $165,253 in tax liability to the IRS. Rosette filed for 2009 but did not file any returns after that. Based upon his unreported income, Rosette agreed to pay $232,680 in tax liability to the IRS.
Rosette was allowed to surrender himself to the institution once the Bureau of Prisons designates where he will serve his sentence. Morsette was immediately remanded into the custody of the U.S. Marshal.
The case was brought by the federal agents of the Guardians Project and was investigated by the agents of the Offices of Inspector General of the Departments of Interior and Health and Human Services, as well as by the Internal Revenue Service Criminal Investigation Division.