United States v. Aubrey

Under 28 U.S.C. § 1168, funds paid to private contractors that are sufficiently maintained by and monitored by a tribal organization continue to be property of a tribal organization.

Under the Native American Housing Assistance and Self-Determination Act (Act), the Navajo tribal organization, through its Navajo Housing Authority (NHA), is allocated money from the U.S. Department of Housing and Urban Development (HUD) for housing development plans approved by HUD. The funds are delivered to the NHA after they submit documentation (e.g. bills) showing that eligible work was done under the plan, and funds must be used to pay for the work. The NHA delegated the disbursing of funds to the Fort Defiance Housing Corporation (“FDHC”). In 2003, the NHA submitted a plan for the development of ninty units in Chilchinbeto, Arizona, which was approved, and the NHA delegated project management to William Aubrey’s construction company, Lodgebuilder. During the course of the project, Aubrey deposited the funds he received, totaling over $9,000,000.00, into his joint bank account shared with his wife. Aubrey used this bank account to pay both personal and Lodgebuilder expenses, and often transferred money. Aubrey then failed to pay many of his workers as designated. After theses discrepancies were discovered, the agreement was cancelled, an audit conducted revealing that Aubrey should have had more than $4,000,000.00 left of funds to pay contractors. Aubrey was convicted of conversion and misapplication of funds from a tribal organization, violating 18 U.S.C. § 1163. Aubrey filed a timely appeal, arguing that the district court erred by denying his motion for acquittal, because his “payments for verified work, certified, and approved construction progress do not belong to an Indian tribal organization or are not held in trust after they are paid out. On appeal, the Ninth Circuit disagreed, holding that the NHA maintained sufficient control over the HUD funds and that a reasonable jury would find that the funds still belonged to a tribal organization. AFFIRMED.