Businessman accused of fleecing $190,000 from radio project

By Bill Donovan
Special to the Times

WINDOW ROCK, April 12, 2012

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T he federal government has filed suit in Prescott, Ariz., to recover more than $130,000 from a Flagstaff businessman who allegedly hoodwinked the IHS and a Navajo nonprofit into believing he was going to help establish a radio station on the Navajo Reservation.

The businessman, John Pegram Bittner, is also facing 18 criminal charges in the U.S. District Court in Prescott for wire fraud and theft of public money.

The suit and indictment allege that he used over $300,000 in federal grant money for personal expenses including child support, trips to Las Vegas, and a new car.

Efforts to contact Bittner for this story were unsuccessful.

According to the complaint filed Dec. 8, 2011, the case started in 2007 when Alfreda Beartrack, an IHS coordinator in Shiprock, learned the FCC was giving people an opportunity to apply for a radio license.

She thought "this would be a good opportunity to establish a radio station that could provide educational information to members of the community," the federal complaint states.

She approached Diné Agriculture Inc., a nonprofit corporation, with the idea and got their approval to look into it, although both parties realized they had no idea how to go about it.

A little later, according to the documents, Beartrack and Bittner got in contact with each other and Bittner convinced Beartrack that "he was an FCC engineer who came with high recommendations."

That was good enough for the Diné Agriculture Board of Directors, which hired him to draw up the engineering specifications for an FCC license application.

Beartrack and officials for Diné Agriculture have so far has refused to comment publicly on the case.

The FCC granted the organization permission to open a new radio station to serve the Shiprock area, and Beartrack looked for funding to build it.

With Bittner's help, she and the nonprofit applied for $437,058 in federal grant funds. Diné Agriculture agreed to provide $145,687 in matching funds.

The money, according to the grant application, would all be used to purchase equipment for the radio station.

But the application ran into problems when federal officials learned in reviewing it that Bittner's claim to be certified by the Society of Broadcast Engineers was not correct. The feds checked with the professional group and learned his membership had lapsed in 2004.

Beartrack and Diné Agriculture revised the application and this time they only asked for $322,364, and agreed to provide matching funds of $107,455.

The grant was approved and on Oct. 9, 2009, Beartrack signed the acceptance paperwork. Work on the project stalled for more than six months, however, because Bittner said he was involved with other projects.

Finally, on May 27, 2010, Bittner and Beartrack went before the Navajo Telecommunications Regulatory Commission to seek its approval for a radio station in Roof Butte, Ariz., with the call letters KFDC.

The commission approved the request in August 2010 and the following month, Bittner set up a company, Media Innovation Collective Inc., to run the project.

Then another red flag went up: In September Bittner failed to return a car he'd rented from Avis, according to the complaint. A month later, Avis reported it as stolen.

Bittner was arrested Oct. 7, 2010, and told police officers he was experiencing "numerous bank problems."

The car-theft charges were later dropped when Bittner paid Avis most of the money he owed.

Just before he paid Avis, his company Media Innovation began receiving money from Diné Agriculture to start building the radio station. Bittner was supposed to provide $50,000 in free consulting services to the project and the Navajo organization began turning over grant money to him to buy equipment for the station.

Bittner was not supposed to receive compensation from grant funds, according to the court documents. The grant stipulated that the money would go to Diné Agriculture, which would disburse it to him as he provided proper documentation for the expenditures.

"Ms. Beartrack said they trusted Bittner completely because of his expertise in radio stations," the court documents stated.

But Bittner went around the Diné nonprofit and contacted officials supervising the grant and informed them that he was the "point of contact" and the chief financial official. The grant authorities began sending funds to a bank account in Flagstaff that he alone controlled.

Officials for Diné Agriculture would later say that Bittner didn't have their authorization to do this.

Not only did Bittner tell grant officials that they should send money directly to his control, he repeatedly urged them to expedite delivery when the funds weren't released right away, saying it was now October and winter could start at any time, delaying construction until spring.

On Oct. 15, 2010, the grant administrators told Bittner he could start drawing down on the $322,364 grant.

By this time, Beartrack and Diné Agriculture were starting to spend their matching funds on radio equipment. In November 2010, they began trying to contact Bittner to tell him about the arrival of the new equipment, but could not reach him.

He remained out of contact until March 2011, when he called Beartrack and said he was "actively working" on the radio project, and had turned down other work to stay on it.

"In fact, at that time," says the complaint, "Bittner had not purchased any radio equipment and was not involved in the installation of any equipment."

Between October 2010 and April 7, 2011, he had depleted the federal account, leaving only $2.50 in the bank account he set up for the radio project, it alleges.

The court document said Beartrack and members of Diné Agriculture had no idea Bittner was spending the grant money until the feds notified them of it in April 2011.

To make matters worse, federal agents who began investigating the situation soon learned that Diné Agriculture had violated the rules too. The money it used for matching funds came from a federal diabetes grant, while the terms of the radio station grant required that the matching funds come from non-federal sources.

As investigators tracked where the federal grant had gone, they found that Bittner had purchased a $33,714 car and spent $18,841 for trips to places like Las Vegas, Nev. Another $15,976 was spent at Best Buy, Home Depot and Walmart, and he used $2,058 to pay his child support.

A larger chunk of the grant, $55,830, was untraceable, the complaint states.

By December 2011, only about $131,000 of the grant was left and this money was in two accounts. The federal government froze those accounts and filed suit against Bittner seeking a forfeiture order from the court.

The suit is still underway, and took a new twist March 26 when Bittner's attorney, Reid Charles Pixler, was given permission by the federal court to withdraw from the case.

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