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Fort Belknap company, council members sue ex-attorney over alleged financial conspiracy – Daily Montanan [1]

['Blair Miller', 'More From Author', '- September']

Date: 2023-09-12  

A longtime lawyer for a Fort Belknap Indian Community company that generates most of the reservation’s revenue faces accusations in a newly filed lawsuit that she was behind alleged financial mismanagement of the company that has caused deep divides, and potentially put hundreds of jobs and hundreds of millions of dollars at risk in northern Montana.

Colorado-based attorney Jennifer Weddle and the firm at which she works, Greenberg Traurig LLP, were sued in federal court in Great Falls on Monday by Island Mountain Development Group and five Fort Belknap tribal council members who claim Weddle and the firm committed civil conspiracy and professional negligence; breached their fiduciary duties; and inflicted emotional distress against the five council members.

The lawsuit is the latest in a series of events that include legal action across the U.S., and a tribal council take-over of the development corporation that is the only economic engine on an otherwise impoverished and remote Indigenous nation. The Fort Belknap Indian Community is composed of Aaniiih (Gros Ventre) and Nakoda (Assiniboine) members.

The core of the allegations against Weddle and her law firm date back to a highly contentious Jan. 19 Fort Belknap tribal council meeting at which five members of the council, including the president, voted to remove the IMDG board of directors and to place sitting council members on the interim board over concerns about the company’s management, finances, and lack of communication with the council.

IMDG is the economic development company for Fort Belknap whose revenue accounts for about three-quarters of the reservation’s non-federal budget, and is a parent company for the tribe’s short-term lending, construction and real estate ventures.

Joey Kaiser of Greenberg Traurig said in a statement Monday evening the firm had just received a copy of the complaint and that it would be “premature to comment.”

Council replaces IMDG board after financial, transparency concerns

Tribal council leaders, who are tied to IMDG because the tribe owns the company and former councils approved its creation, said at the start of the year they were mostly unaware of the company’s daily operations, according to court documents and meetings. But in late January, council members assumed control of the company’s board in a sudden move after becoming suspicious of financial and legal troubles brewing.

In the days after replacing the former board on Jan. 19, new Board Chairperson Geno LeValdo assured the nearly 400 IMDG employees their jobs and paychecks were “safe” and that the company’s operations were “in good hands” amid talk at the meeting of a default that would put the entire company’s finances at risk. The new board leadership also initiated, then expanded, an investigation into the company’s finances and operations.

In March, the new board said its preliminary investigation into “unexplained debts” and “potentially serious financial improprieties.”

In April, IMDG’s new CEO said the investigation had expanded after evidence was discovered involving an alleged plan hatched by two ousted IMDG board members – Tracy King and Christopher Guardipee – the day after the Jan. 19 council meeting to illegally transfer the company, which is tribal property, out of Montana to the Rosebud Sioux tribe in South Dakota. The CEO said such an action “would have devastated this community.”

King and Guardipee claimed in a letter released publicly by the new CEO that the creditor for IMDG’s three lending companies – which generate 90% of IMDG’s total revenue, according to court filings – had seized all control of the lending bank accounts and that the company needed to shore up its finances for a possible transfer to the tribal company in South Dakota.

IMDG’s lending companies are already facing scrutiny in at least three other states, and the tribal council impeached King on Aug. 23 based upon the January letter and the results of the investigation by the new board.

But the lawsuit, filed by Cut Bank attorney Terryl Matt and Great Falls attorney Jeffrey Winter, alleges that Weddle made phone calls to IMDG’s third-party lenders in the hours after the Jan. 19 council meeting urging them to come to the opinion that the replacement of the board constituted an event of default under their agreements.

The default declared by the lenders put the livelihoods of people living on the Fort Belknap reservation, and the reservation’s finances as a whole, at grave risk, according to the filing.

“Because the third-party lenders have declared an event of default, IMDG and its subsidiaries are unable to obtain outside financing to fund existing and new projects,” the lawsuit says. “As a result, IMDG and its subsidiaries are suffering negative reputational impact, and have lost and will continue to lose revenue. IMDG’s Chief Financial Officer has estimated losses incurred at hundreds of millions of dollars over the next three to five years.”

The suit alleges that the investigation uncovered text messages, letters, emails and other documents in which Weddle encouraged former board members to convert all of IMDG’s tribal lending businesses, assets and jobs, to the Rosebud Sioux Tribe, which operates a company similar to IMDG, a day after the council put the interim board in place. At the time, Weddle was still IMDG’s attorney, a position she had held for 13 years.

The lawsuit says the consequences of the alleged scheme would have left hundreds of tribal members currently employed by IMDG without paychecks and “set FBIC’s financial wellbeing back decades.”

Further, the lawsuit claims that Weddle bought IMDG board members tickets to Denver Broncos and Nuggets games “to influence their votes regarding IMDG business matters.” And it says that she “instigated” a large group of IMDG employees to threaten the council members who ousted the former board – including by telling IMDG employees and tribal council members some employees were threatening suicide over the decision and rumored default. The threats, according to the suit, caused the board members to fear for their safety, not sleep and struggle to go out publicly.

One of the council members who was appointed to the interim board said two of his horses were shot and killed and a third went missing two days after the Jan. 19 meeting, and the suit says at least two tribal council members could not sleep at night and kept loaded guns on their nightstands.

The lawsuit says the five tribal council members – President Jeff Stiffarm, Geno LeValdo, Derek Azure, Brian Wing and Curtis Horn – believe Weddle “is still interfering with and causing harm to IMDG and the Council.” It cites a Zoom meeting of the interim board, at which Weddle and a lenders’ representative appeared along with former board members. The suit says the lenders’ representative “stated he would come to Fort Belknap and take all the collateral, including buildings, equipment, vehicles, and (former CEO Terry) Brockie’s house and cars.”

IMDG and the five tribal council members have asked for a trial in the federal case, compensatory and punitive damages, an order requiring Weddle and her law firm to give up any profits they made through the alleged wrongful conduct, and for attorneys’ fees and costs.

According to the lawsuit and months of prior reporting, Stiffarm had been trying to get information from IMDG’s then-CEO Terry Brockie for months in 2022 about IMDG’s finances and its board member’s terms, but Brockie did not provide all the answers to the questions last August.

The lawsuit says tribal council continued to push the former board and Weddle to get full access to IMDG’s detailed financial records but were still being rebuffed.

But after the Jan. 19 meeting, according to the lawsuit, Weddle told the third-party lenders it was her opinion that the council’s replacement of the IMDG board constituted a default, and the lenders told IMDG that they “intended immediately to exercise control of the deposit accounts of IMDG that had been pledged as collateral for the loans.”

The lawsuit says the lenders would later clarify that it was Weddle’s phone call to them about the replacement of the board that led to their default notice to the company.

The lenders asked in early February that the interim IMDG board sign certifications saying they would reverse their decision that led to the default, not change legal counsel without prior approval, and ask for a new legal opinion from Weddle “certifying that the appointment of the Interim Board was accomplished in compliance with Tribal law and IMDG organizational demands,” according to the lawsuit.

The board declined to comply and kicked off its investigation into the company’s finances, which led to the March 28 discovery of the communications from Weddle and King about the transfer of the company’s assets and assertions that people would be losing their jobs, the lawsuit says.

IMDG plays large role in Fort Belknap economy

The reservation had seen unemployment rates historically near 70% at times, leaving it with little in terms of a tax base, few natural resources that could supplement its economy, and an inability to leverage trust land property taxes to support schools and education. Much of the tax base comes only from fuel and tobacco taxes.

The tribes started IMDG in 2006, according to federal court filings, to coordinate planning and development and boost the economy on the remote reservation. The council approved the initial short-term lending companies, which include businesses that typically offer “payday loans” at extremely high interest rates and other consumer loan products, in 2011 under the umbrella of IMDG and a holding company, GVA Holdings. During the next decade, IMDG would expand its portfolio into ventures in housing, construction, contracting and information technology through new companies or acquisitions.

But the lending companies have by far been the biggest boon to the reservation in terms of both revenue and job creation. In recent court filings in a separate lawsuit, Stiffarm and now-CEO Evan Azure said that 90% of IMDG’s revenue comes from its short-term lending companies, and that IMDG’s revenue accounts for 75% of Fort Belknap’s non-federal budget.

By 2020, IMDG had grown its full business to 227 employees and an operating revenue of $125.8 million – a 72% average annual revenue growth rate from 2013.

A 2020 economic report by the company called IMDG’s growth between 2018 and 2020 “stunning” – citing a University of Montana Bureau of Business and Economic Research analysis that said its economic footprint “increased twofold” during the course of 24 months.

“To accomplish this scale of growth during a global pandemic is herculean,” the report said.

A recent court filing says that IMDG has 394 employees, 243 of whom are enrolled Fort Belknap members and 89 of whom are enrolled in other tribes. Many of the employees work at call centers for the lending companies in Hays and Havre.

Court filings say that IMDG distributes 20% of its net income from its business ventures directly to the tribe, uses some of the profits to fund programs and centers that benefit tribal members, invests in economic development, and at times directly distributes cash to tribal members.

Earlier this spring, after the council replaced the board over questions about the company’s money, the company distributed $400 checks to every tribal member aged 18 and up. The 2020 economic report said IMDG provided around $4.8 million total in profit sharing back to the tribe from 2013 to 2020.

Stiffarm said at the January meeting that Fort Belknap had received about $4.4 million for 2022 in profit shares from the company, most of which went toward general and emergency assistance for the community.

But at that meeting, he and the other plaintiffs in the new lawsuit, along with some community members, asked Brockie and IMDG’s board questions about the company’s perceived lack of transparency despite the council having nominal oversight over the company.

Brockie and others warned of the default if the council replaced the board.

“There are certain financial documents that our tribe has engaged in that put us at direct risk,” he told the council.

Stiffarm said he was concerned that the tribe might be “standing there holding the bag of this huge debt” if the default happened.

On a 5-4 vote, the council appointed new board members, three Gros Ventre and three Assiniboine, on advice from its attorney that to preserve the tribe’s sovereignty, it was best if council members were also IMDG’s board members.

As the council voted to adjourn, Brockie could be heard giving another warning to the body: “You’re unraveling everything we tried to build. What we’re building was moving forward; now it’s moving backward.”

Suit alleges council members threatened after replacing board

The new lawsuit says that angry IMDG employees worried about a default. Concerned about their jobs, they threatened the council before, during, and after the meeting, and the lawsuit claims Weddle leaned on them to put pressure on the board members to stop the overhaul and investigation.

“Plaintiff Horn later learned that Defendant Weddle had directed Mr. Brockie and the other IMDG employees to gather outside the Council’s Chambers,” the lawsuit says. “Plaintiff Horn further learned Defendant Weddle had stoked fear in the IMDG employees by saying some employees were threatening to kill themselves as a result of the Council’s decision not to reinstate the prior board.”

That night, Derek Azure found threatening handwritten notes on his vehicle, and both he and Stiffarm got in bed with handguns on their nightstands, though they struggled to sleep, according to the lawsuit.

On Jan. 20, King and Gaurdipee, allegedly urged by Weddle, signed the documents as members of an ad hoc IMDG committee authorizing a new bank account be set up in order to transfer IMDG’s money, according to the suit. But the lenders already had control of the company’s accounts, according to the lawsuit, which further alleges that King ordered all computer servers and personnel information be removed from IMDG’s premises.

On Jan. 21, the suit says, Azure went to check on his three horses and eventually found two of them dead with bullet holes in their chest. He could not find the other, according to the filing.

“Plaintiff Azure believes his sorel horses were shot and the bay horse stolen by angry IMDG employees in retaliation for the council refusing to reinstate the prior board, anger and retaliation which was instigated and encouraged by defendant Weddle,” the lawsuit says.

In March, LeValdo said in a statement that IMDG jobs, paychecks and operations were safe and in good hands, and he chastised Brockie for his claims that replacing the board would result in an immediate loss of the company’s jobs.

“This reckless deception needlessly terrified and agitated many of those who depend on IMDG for their livelihoods,” he said in a statement at the time. “We know that to earn and keep the community’s trust going forward, we must commit to complete transparency.”

Brockie, who resigned as CEO in the days after the council replaced the board, did not respond to questions sent to him in early August regarding his involvement in the company and the allegations made earlier this year by the new CEO, Evan Azure. King did not respond to messages and a list of questions sent to him during the past few months regarding his involvement.

Evan Azure in August declined to comment when he was sent a list of questions about the company’s finances and his allegations against Brockie and former board members. Stiffarm and other council members last month referred questions to an attorney who has consulted on the newly filed lawsuit.

The U.S. Attorney’s Office for the District of Montana declined to comment on whether it was investigating any of the allegations. And tribal council members for the Rosebud Sioux tribe did not immediately respond to an email asking questions as to whether the council was aware of a potential transfer of IMDG to one of its companies.

The interim board asked in late January for copies of the tribal lending agreements with third-party companies after it received the default notice, but Weddle and Traurig “refused” to hand them over, according to the suit, despite the firm’s ongoing representation of the company at the time.

In response, on Feb. 10, the board terminated its engagement with both Waddle and the law firm – which had been representing the lending companies in ongoing federal lawsuits in other states.

In one of those cases, which allege IMDG’s lending companies are violating state usury laws and claim non-tribal entities are involved in the companies, court filings from August show that Evan Azure filed a sworn declaration saying one of the third-party lenders indeed issued an event of default notice but said the IMDG tribal lending company had contested the notice and that current operations and management of the company were not in jeopardy.

“The notice has not affected the management or operations of (the tribal lending company) under the new Board’s leadership,” the filing says. “The FBIC Council and IMDG’s actions in and since January underscore the existence and exercise of the Tribe’s control over its subsidiary economic development instrumentalities.”

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