Controller, OMB offices raided in misuse of funds investigation
By Noel Lyn Smith
Navajo Times
WINDOW ROCK, May 26, 2011
Window Rock District Court Judge Carol Perry signed a search and seizure warrant Tuesday morning authorizing Balaran to search the offices for documents relating to possible financial mismanagement by some tribal officials, and outright theft by others.
By 10:30 a.m. Balaran and at least two assistants were burrowing through documents in the offices of Controller Mark Grant and OMB Contracting Officer Cordell Shorty, who were referred to as the "suspect" in the warrant.
The warrant authorized the investigators to access computer hard drives, servers, laptops, portable storage devices and both paper and electronic documents.
Two Navajo Nation Police officers were present to make sure no one interfered with the execution of the search warrant, but no one hassled the investigators.
Balaran and his assistants continued working until about 5 p.m., confiscating 11 boxes of documents and copying the hard drive on Grant's computer.
The court granted Balaran permission to seize information about "internal regulations and resolutions governing the spending of tribal and federal funds including proof of breaches of fiduciary duty, misrepresentation, breach of contract, civil conspiracy, account and conversion."
It covered correspondence and documentation related to federal grants, indirect costs, commingling of grant money, compliance or violation of federal and tribal rules and regulations, budget information, as well as communication with the independent accountants who perform the annual audit of tribal finances, KPMG of Albuquerque.
The investigators were allowed to collect all stored mail, including electronic or otherwise, that was sent by Grant and Shorty from Jan. 11, 2005, to Jan. 11, 2011, to members of the 21st Navajo Nation Council, the attorney general's office, OMB, the president's office and other members of the controller's office.
Balaran requested the search warrant because he has been stonewalled by tribal officials when he tried to collect evidence through conventional methods, he told the court.
"Based on my knowledge, training and experience seeking relevant documents and electronic information from other branches of the Navajo Nation, I found that simply requesting information relevant to these violations cannot be accomplished via regular normal discovery channels and requires, instead, the need for a search warrant which introduces the element of surprise and prevent the last-minute dissipation, destruction and secretion of key information," Balaran wrote in his request for a search warrant.
Last November, for instance, former Chief Legislative Counsel Frank Seanez resisted Balaran's request for information until Window Rock District Court Judge T.J. Holgate approved a search warrant, which was executed by the tribe's White Collar Crime Unit working with Balaran.
"We have nothing to hide," Grant said Wednesday. "We're just trying to manage the finances for the tribe as best as we can."
Balaran was hired by the Council in January 2010 to look into allegations of misconduct in connection with then President Joe Shirley Jr. and the business contracts for OnSat and BCDS.
Both business deals failed and ending up costing the tribe millions.
Later on the scope of Balaran's authority was expanded to include an investigation into discretionary fund spending by the Council and the executive branch, and the Tribal Ranch Program.
The search warrant is part of Balaran's continued investigations into misuse of tribal funds, which began last October with the filing of criminal charges against 77 past and current members of the Council for misuse of tribal discretionary funds.
Since then, some defendants have settled their cases and Balaran has proposed dropping criminal charges against most of the others in favor of civil suits to recover the money they allegedly took. The criminal charges against those accused of the largest thefts would stand, he has said.
Balaran proposed the change of tactics recently to the Navajo Nation Supreme Court, which is supervising the court processing of the discretionary fund cases, and Chief Justice Herb Yazzie said the decision to file criminal or civil cases is up to Balaran.
In proposing the change, Balaran told the high court that during the course of his investigation he uncovered "a systemic pattern of financial improprieties on the part of the nation's most senior officials that resulted in the loss, theft or misuse of millions of dollars both in federal and tribal funds and more than $1.5 billion in federal grants."
Balaran focused on the controller, stating to the court, "Putting aside for the moment that Mr. Grant, by all accounts, displays a remarkable lack of knowledge concerning anything related to tribal finances, the controller was singularly responsible for the loss of billions of dollars in federal grants while simultaneously violating dozens of federal rules and regulations."
Grant was appointed Navajo Nation controller by former President Shirley in 2003.
After reading newspaper stories about Balaran's prosecution plan revision, Grant said he was not surprised by Tuesday's search.
Speaker Johnny Naize (Blue Gap-Tachee/Cottonwood-Tselani/Low Mountain/Many Farms/Nazlini) said Wednesday that he learned about the prosecutor's raid and said Balaran has full authority to obtain the information.
"I have no idea what's he doing," Naize added.
Naize was preparing for the Council's special session Wednesday and did not anticipate the Council would discuss the matter unless it was added to the agenda.
According to the agenda, Naize and Grant were expected to present an update on the processing of claims for compensation, which Grant said he still planned to do.