Man behind failed BCDS deal faces tax evasion charges

By Bill Donovan
Special to the Times

WINDOW ROCK, May 17, 2012

Text size: A A A

A lthough he hasn't received a slap on the wrist by the Navajo Nation for fleecing the tribe out of more than $1 million, Hak Ghun is now facing major prison time for his attempt to cheat the IRS. Ghun, 63, who now lives in Durango, Colo., was the man behind the Biochemical Decontamination Systems Manufacturing, or BCDS, scandal in 2007 and 2008 when he received a $2.2 million loan for the tribe and used more than half of it on personal expenses instead of expanding the BCDS facility in Shiprock as he promised.

Ghun now faces 15 years in prison and a fine of $100,000 if found guilty of tax evasion charges.

Ghun had convinced the Navajo Nation Council to let him borrow $2.2 million from the Navajo Dam Escrow Account in 2005. After all, the funds were supposed to be used for economic development in Shiprock and surrounding areas and the expansion was supposed to bring more than 100 jobs to the area.

The tribe had first gotten involved with Ghun in 2003, purchasing a 51 percent share of his company for $300,000, and because of this association agreed to provide him with the funds to expand.

The problem was that there was no expansion and Ghun, according to tribal investigators, used more than $1.1 million of the loan to create a life of luxury for himself.

The Navajo Nation never prosecuted him nor did the tribe ever sue him because by then he reportedly blew through the money.

But while he wasn't prosecuted, the fallout from this and another scandal involving OnSat, a company that provided Internet service, was enough for the Council to put then-President Joe Shirley Jr. on leave and to call for a special prosecutor to look into the failed business ventures.

But the U.S. government was conducting its own investigation of Ghun the past year. The IRS came to the conclusion that much of the money that was loaned to him by the Navajo Nation went into his own pocket. And he failed to pay any income tax on it.

The federal investigation claims that between the years of 2005 and 2007, Ghun should have paid $367,809 in taxes but he filed false business returns saying that the money he received paid for business expenses.

According to the indictment, Ghun never took a salary from BCDS and instead spent $1,978,170 of the money from the Navajo Nation to pay for his personal living expenses.

Shirley has said he had nothing to do with the approval of funding for BCDS but the Council in 2010 called for the appointment of a special prosecutor to look into the venture as well as allegations that Shirley may have violated tribal laws in his dealings with OnSat.

But those investigations were put on the back burner, by both the former special prosecutor Alan Balaran and his replacement, as probes into the misuse of millions of dollars in discretionary funds by members of the Council took center stage.

Back to top ^