California Actuary Settles Tribal Embezzlement Suit

(Law360)  A California actuary named in a massive racketeering suit involving the gambling operations of the Paskenta Band of Nomlaki Indians has settled the tribe’s allegations on undisclosed terms, according to a Wednesday filing in California federal court.

Robert Haness and his company Haness & Associates LLC said that they had reached a deal to be struck from the band’s lawsuit against its former leaders and numerous other defendants a month after they first told the court that a settlement was taking shape, court documents show. The tribe in March accused Haness of helping former tribal leaders sock away millions of dollars in inflated retirement benefits.

The Paskenta tribe, which operates the Rolling Hills Casino in Corning, California, filed a Racketeer Influenced and Corrupt Organizations Act suit on March 10 against former tribal officials and others, alleging a yearslong embezzlement scheme involving fraud, coercion, intimidation, extortion, and bribery that siphoned tens of millions of dollars from the tribe.

The suit is the latest move in a bitter, long-running dispute between two tribal factions over control of the Paskenta band’s casino revenue. In June 2014, a California federal judge issued a restraining order at the request of the state’s attorney general to stop the factions from moving forward into armed conflict and to keep them from shutting down the operation.

Former leaders Ines Crosby, John Crosby, Leslie Lohse, and Larry Lohse are accused, along with other tribal members, of fraud, extortion, vote-rigging, bribery, and embezzling tens of millions of dollars to support lavish lifestyles and seizing control of the tribe and its non-casino business entity, Paskenta Enterprises Corp.

But the Crosbys and the Lohses in November alleged that other tribe members, including tribal council Chairman Andrew Freeman, orchestrated a coup, kicked them out of the tribe, and stripped them and their family members of benefits to increase the share of casino revenues that would flow to other tribal members.

The Paskenta band accused Haness of breaching his fiduciary duty to the tribe and common law negligence. Over the summer, Haness’ company argued that it had no fiduciary duty to the tribe, as no statute creates a fiduciary duty between a third-party contractor and a plan sponsor.

Andrew Purdy of Joseph Saveri Law Firm Inc., an attorney for the tribe, said that the settlement terms were confidential. He added that it had yet to be finalized. Attorneys for Haness didn’t immediately reply to a request for comment on Wednesday.

The Paskenta Band of Nomlaki Indians and Paskenta Enterprises Corp. are represented by Stuart Gross and Daniel C. Goldberg of Gross Law PC, and Joseph R. Saveri, Andrew M. Purdy, and Kevin E. Rayhill of Joseph Saveri Law Firm, Inc.

Haness is represented by Meghan M. Baker and Avalon J. Fitzgerald of Downey Brand LLP.

The case is Paskenta Band of Nomlaki Indians et al. v. Crosby et al., case number 2:15-cv-00538, in the U.S. District Court for the Eastern District of California.

(Reporting by Jack Newsham. Additional reporting by Andrew Westney and Vidya Kauri. Editing by Stephen Berg.)