Former NHA head, contractor indicted

The former CEO of the Navajo Housing Authority and the head of a now-bankrupt construction company that built hundreds of houses on the Navajo Nation both pleaded not guilty Wednesday to conspiring to defraud the U.S. government out of at least $8.5 million in federal housing funds.

A federal grand jury indictment handed down in Las Vegas, Nev., accuses Lodgebuilder Inc. co-owner Bill Aubrey of bribing then-NHA head Chester Carl to look the other way while Aubrey pocketed millions of dollars that were supposed to pay his subcontractors and other expenses for housing projects on the Navajo Nation.

Aubrey's business partner in the Lodgebuilder ventures, Brenda Todd, is not named in the indictment.

A trial on the charges is scheduled for Aug. 3.

Both Aubrey, 66, of Mesquite, Nev., and Carl, 52, of Gallup, N.M., are charged with bribery and conspiracy to commit bribery related to federal program funds. Aubrey faces an additional two counts of embezzlement and theft from Indian tribal organizations.

If convicted on all counts, Carl could face up to 15 years in prison and $500,000 in fines, while Aubrey could face up to 25 years in prison and $1 million in fines.

The indictment alleges that between 2002 and 2006, Aubrey bribed Carl with $194,950 in casino gaming chips in exchange for permitting Aubrey to use the non-profit Fort Defiance Housing Corp. and later South Shiprock Houses to funnel some $38 million in federal housing contracts to his company - even after a 2003 audit found Aubrey was commingling funds.

The money was supposed to be used to construct low-income housing developments in Chilchinbeto, Ariz., Springstead, N.M. and Shiprock, but the developments in Chilchinbeto and Shiprock were never completed and the one at Springstead was never even started.

Instead, the indictment states, more than $8 million went into Aubrey's personal account. More than $2 million was spent on gambling, furs, jewelry and training thoroughbred racehorses, according to the document.

Both Lodgebuilder and Fort Defiance Housing Corp. declared bankruptcy in 2005. FDHC has since reorganized under different management and is currently doing business as Sandstone Housing.

With help from the NHA, Sandstone has completed the Chilchinbeto project and is currently seeking funding to subsidize rent payments for tenants who can't afford to pay the full amount, according to Sandstone CEO Dana Denney.

Carl resigned from the NHA in October of 2007 after admitting to accepting gifts from Aubrey.

The $8.5 million figure mentioned in the indictment is considerably less than the $17.5 million in compensatory damages awarded by a federal bankruptcy court judge in Phoenix to the trustee for the account that is being held to pay off FDHC's many creditors, including Lodgebuilder's subcontractors. Aubrey has appealed that decision. He also faces a bankruptcy action in Nevada.

"The amounts indicated in the indictment may not represent the whole amount" taken by Aubrey, noted Natalie Collins, public affairs specialist for the U.S. Attorney for the District of Nevada. "This case is in the very preliminary stages and more information will come out at trial."

Collins also said the government will go after any property Aubrey and Carl received as "proceeds of the crime," up to $8.5 million.

Aubrey did not return an e-mail requesting comment. At a probable cause hearing for the bankruptcy case in 2007, he testified that he did occasionally loan Carl gaming chips when the men were gambling together, but said Carl always paid him back.

From amounts cited in the indictment, both men appear to have gambled heavily, with Carl once allegedly accepting more than $91,000 in tokens from Aubrey in a single night in 2004.

Aubrey was acquitted of similar charges in 1998 after money went missing during the construction of a housing project on the Blackfeet reservation, where he is a tribal member. He successfully sued the government for his attorney fees.

Carl is currently a representative of Foresight Wind Energy, which has proposed a $5 billion wind farm on the Navajo Nation's Big Boquillas Ranch west of Flagstaff. He could not be reached at the company's Flagstaff office Friday.

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