3 people indicted in funds scheme
Former HUD employees accused of taking $42,000

By Kathy Helms
Diné Bureau

WINDOW ROCK — Three former employees of a Lukachukai veterans group have been indicted by a federal grand jury in Phoenix for allegedly embezzling around $42,000 in federal housing grant funds.

The jury returned a four-count indictment against Anslem Thompson, 63, Karen Thompson, 36, and Rachelle Thompson, 29, all of Lukachukai, on charges of embezzlement and theft from an Indian tribal organization, conspiracy, and aiding and abetting, according to the U.S. Attorney’s Office.

Though they share the same last name, the defendants are not directly related.

The indictment alleges that the three former employees of the nonprofit Lukachukai Chapter Veterans Organization Service Development Incorporation conspired to embezzle approximately $42,000 in U.S. Department of Housing and Urban Development housing grant funds, received by the veterans organization.

The organization received the grant funds from Navajo Housing Authority to construct and administer eight housing units in the Lukachukai area.

Anslem Thompson turned himself in to authorities on Aug. 31 after a warrant was issued for his arrest. Karen Thompson and Rachelle Thompson have been summoned to federal court to face the pending charges.

An investigation leading to the indictment was conducted by HUD, the Office of Inspector General, and the White Collar Crime Unit of the Navajo Nation Prosecutor’s Office.

Frank Brown of the White Collar Crime Unit said Wednesday that he could not confirm or deny any investigation, but stated that the Office of the Prosecutor was involved with the HUD investigation, as was the U.S. Attorney’s Office in Phoenix.

However, sources close to the investigation said a significant amount of money was appropriated from Washington for Navajo veterans through the Navajo Veterans Office. The funds remained unspent for a period of time and were about to revert to the federal government when the services of NHA were enlisted.

NHA set up a subgrant in the Lukachukai veterans organization. The subgrantee organization was to submit a request for monthly drawdowns, and then NHA would write a check for the drawdown.

Once the funds left the hands of NHA, it was basically up to the organization how the money would be handled. Sources said each monthly drawdown was around $60,000.

Bank accounts were set up and ATM or debit cards were used to withdraw funds. Members of the organization allegedly used the cards to withdraw funds and also wrote checks to themselves, including bonus checks.

To compensate for the disappearing construction funds, the square footage of the homes to be built for veterans reportedly was drastically reduced and lesser-quality materials were used in the construction.

Housing construction materials, heavy equipment, and even office furniture, computers and fax equipment “started walking off,” sources said.

When the program basically ran out of money and the organization was unable to pay suppliers and construction workers, NHA stepped in and tried to rectify the situation. NHA reportedly hired a private investigation firm out of Albuquerque and contacted the Office of the Prosecutor for assistance.

HUD was contacted and joined in the investigation due to the amount of federal funds involved.

If convicted of the charges, the three defendants could face five years in prison and fines of $250,000, or both.

The case is before U.S. District Court Judge Earl H. Carroll in Phoenix and is being prosecuted by Assistant U.S. Attorney Robert Long.