Thursday Mar 22 2012
Details emerge in IRS lawsuit alleging fraud, kickback scheme that targeted Thunder Valley owners
By: Gus Thomson, Journal Staff Writer
United Auburn Indian Community administrator placed on leave; See complete affidavit below
AUBURN CA - Details in documents accompanying a U.S. District Court move by the Internal Revenue Service to seize 23 properties allege that the three people targeted formed a maze of bogus transactions to bilk the United Auburn Indian Community out of $18 million. In affidavits filed by IRS investigators this week in Sacramento’s U.S. District Court, two men involved with the construction of the Thunder Valley Casino owner’s headquarters compound in Auburn off Indian Hill Road were being linked in allegations of fraud and money-laundering with tribal administrator Gregory Baker. Baker, according to tribe spokesman Doug Elmets, was placed on leave Wednesday. Baker was described in the affidavit as a close friend for a decade of Darrell Hinz, who is also being targeted in seizure documents. The allegations revolve around construction of four buildings near the corner of Indian Hill Road and Auburn Folsom Road that now make up the United Auburn tribe’s headquarters, school and community center. The site was purchased in 2006, with two of the buildings already completed. The initial construction contract, according to the court documents, was $16.5 million. But the final cost ballooned to $42.7 million because of change orders and what the IRS asserts was a complex scheme of fraud and money-laundering. No criminal charges have been filed and Baker’s attorney, Tom Johnson denied wrongdoing. The affidavit filed by IRS special agent Daniel M. Norman said that Hinz and Baker bought seven repossessed houses in the time period that work was progressing on the tribal center in Auburn. In an interview with Baker, Norman reported in the affidavit that the purchases were made with cash because they had to buy them quickly because they were in foreclosure. According to Norman, while Baker claimed the two were in a 50-50 business partnership, Hinz provided $751,530 of the money required in the sales while Baker paid $19,500. Hinz was working as the headquarters project quality control contractor at the site. The civil forfeiture complaints allege that building contractor Bart Volen provided $7 million in kickbacks to Hinz from the alleged $18 million in inflated change orders and other fraudulently obtained funds. The IRS is alleging some of that money found its way to Baker. The investigation found that all the foreclosed properties purportedly purchased by Baker and Hinz had deeds in Baker’s name, Norman said, adding that the Hinz payments were “kickbacks” and “money laundering.” Baker approved inflated change orders, according to the affidavit. But Johnson said the tribe was happy with the amount of money it paid for the work and the result. William Portanova, Hinz’s attorney, also noted that no criminal charges had been filed against his client. Elmets reiterated Thursday that no criminal charges had been filed. “They’re simply allegations but quite serious allegations,” Elmets said. “Nevertheless, the tribe is expecting any assets that are recovered in the process will be used as restitution for the tribe. They expect to recover what was ultimately taken from them in the overbilling in the project.” The Associated Press contributed to this report.