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Corruption Chronicles

Tribe Known for Shady Bookkeeping Can’t Account for $14 Mil in FEMA Flood Grants

Though its accounting system is “unreliable” and in “disarray,” a Nebraska Indian tribe got nearly $14 million in flood-assistance grants from the federal government and, predictably, a chunk of the money can’t be accounted for. The taxpayer funds flowed to the Omaha Tribe despite a long history of poor record-keeping that resulted in sanctions by the Bureau of Indian Affairs, which operates under the Department of the Interior. Now a federal audit describes the tribe’s mishandling of the emergency money as “serious and pervasive.” The audit also blasts the tribe for “contracting with itself” to generate “artificial profits” to fabricate mandatory matching funds.

Despite the tribe’s shady accounting practices, the Federal Emergency Management Agency (FEMA) doled out the money after the 2011 flooding of the Missouri River. Parts of the Midwest were devastated by the catastrophic flooding, which caused billions of dollars in damages, including the destruction of highways and flooding of thousands of homes. The disaster occurred after torrential rains stressed the main stream dams. In a federal lawsuit against the government hundreds of landowners assert that the Army Corp of Engineers could have avoided the disaster if flood control had been a priority, according to a local news report about the case. In the flood’s aftermath, FEMA distributed nearly $22 billion in assistance grants, agency figures show, including $3.1 billion to individuals and households.

Situated in northeastern Nebraska and western Iowa, the Omaha reservation’s casino suffered flooding along with 11 homes and a gas station. The tribe has a population of 5,194, according to its website. Under a government formula, FEMA was scheduled to give the tribe 75% of the cost to conduct the repairs while requiring the tribe to contribute the other 25%. Tribal leaders asked the agency to waive its contribution and FEMA denied the request, but President Barack Obama agreed to increase the federal cost share from 75% to 90%, according to the audit, which was conducted by the Department of Homeland Security (DHS) Inspector General. “The Omaha Tribe used FEMA funds to pay for the tribe’s normal operating expenses, a bonus to its tribal-owned construction management company, and unauthorized repairs to its old casino building,” the DHS watchdog writes in its report.

The tribe could not provide adequate documentation for $13.9 million in costs and doesn’t have invoices, contracts or canceled checks that prove the work was done. For the new casino construction alone, the tribe could not furnish adequate invoices and canceled checks for $5.9 million in claims and made several payments to its own departments as if they were outside contractors. Tribal contracts did not specify a scope of work or did not include amendments, DHS auditors found. “We also could not determine whether the tribe properly charged contract rates,” the report states. “Invoices, especially from tribal departments or tribal-owned companies, had vague or no descriptions of work performed so we could not determine what work the tribe performed.” This seems to indicate fraud on the tribe’s part, especially considering its history of sloppy accounting. The DHS watchdog came short of accusing the tribe of fraud, writing that there is “little confidence the transactions recorded in the accounting system actually occurred or that the tribe completed its FEMA authorized projects.”

Tribal leaders seem to think they can do whatever they want with taxpayer dollars without accountability. For years the Omaha tribal council has blown off independent audits blasting the tribe’s use of government funds, the DHS IG reveals. Nothing will change if the cash keeps flowing into the derelict tribe’s coffers. In fact, the tribe’s emergency management director told officials investigating fraud associated with the flood emergency money that tribal sovereignty allowed the Omaha Tribe to manage federal funds according to its tribal laws. The audit determines that the Omaha Tribe is a “high-risk grantee” that shouldn’t be awarded future grants without special oversight. Maybe the Trump administration will finally put an end to the madness.


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