“More Than an Insult”

Embezzlement charges rock state agency on aging


State and federal officials are investigating the suspected embezzlement of approximately $300,000 that had been allocated for elder programs on Montana’s Indian reservations. Montana Department of Public Health and Human Services officials say the money was apparently siphoned from the Billings-based Area 7 Agency on Aging between 1993 and 1999. The office was closed by the state this spring after auditors found discrepancies in various records, says Charles Rehbein, chief of the department’s Aging Services Bureau.

According to Rehbein and Mike Hanshew, administrator of the department’s Senior and Long Term Care Division, a total of about $560,000 of Area 7 expenditures is in question, but officials believe no more than $300,000 was actually taken. “That’s our preliminary figure,” Rehbein says. “But until we get all the way through it, that’s our best guess. It may be less than that. It’s a pretty complicated deal. We’ve got boxes of stuff to go through.”

Before the Area 7 office was disbanded, Montana had 11 regional aging offices across the state. The offices, set up as nonprofit organizations, oversee a wide range of programs and services for senior citizens, including home healthcare, respite care, transportation, meals, recreational activities and community drop-in centers. Each agency is run by its own board of directors.

Rehbein says the Area 7 office was specifically created in the 1970s to serve reservation elder programs. Until its closure, the office received about $275,000 a year to assist about 2,000 tribal elders across the state.

Under the program, tribes developed and managed various elder services and were reimbursed for their costs through the Area 7 office, which also managed various grants. Hanshew says state auditors did an initial review in mid-1997. Despite some accounting problems, no major red flags were raised.

“We were trying to basically get them caught up,” he says. “We tried to be patient and help an organization that had slipped a little. In hindsight, we probably should have moved more quickly.”

In late 1998, he says, the state withheld payments to the agency after more discrepancies were uncovered. At the time, he says, office administrators also failed to turn over requested records. The records were eventually relinquished, and state payments began flowing again in the spring of 1999.

But auditors then discovered more bookkeeping problems, Hanshew says, and the agency’s contract was pulled last December. The office was officially shut down and taken over by DPHHS in April. In the process, all remaining records and funding were seized, and the office’s director, Darrell Lamere, was left without a job.

Despite repeated attempts, Lamere, who now serves as the tribal elections coordinator for the Montana Democratic Party, could not be reached for comment. Former Area 7 administrative assistant Vonda Brewster, who says she left the office last November because of health problems, says Lamere was the last person left at the agency when it closed. Attempts to contact other former employees were unsuccessful.

According to Hanshew, $106,000 in unspent funds was recovered from Area 7 accounts. The program also had $138,000 in unallocated funds left in DPHHS coffers.

Tribal leaders say the money problems have caused disruption of elder programs on some reservations because tribes have been left holding the bag for various expenditures that were supposed to be reimbursed. This spring, Hanshew says, the state and tribes all signed temporary contracts for the $138,000 in previously unallocated funds, and that money has been sent out to reservations. Still pending, however, is an agreement over the $106,000 in seized Area 7 assets, as well as how money will be allocated for the current fiscal year.

“We’ve certainly taken the hits, especially with the delivery of services,” says Roxannes Gourneau, a member of the Fort Peck Tribal Executive Board. “It’s more than an insult. It’s terrible.” Gourneau says she thinks the state should have provided more technical assistance for the Area 7 office. If the state had been doing its job, she contends, the financial problems probably could have been avoided.

The Confederated Salish and Kootenai Tribes have been luckier than most because they didn’t join the Area 7 office until last year, says Chuck Tellier, who runs six senior nutrition sites on the Flathead Reservation. But problems could develop, he says, if new agreements aren’t reached soon for this year’s allocations.

Jonathan Windy Boy, chairman of the Montana-Wyoming Tribal Leaders Council, says tribes are upset that the state didn’t consult them before closing the office. He says Montana tribes would like future aging services funding to be distributed directly to them in the future, but a few snags need to be worked out before that can happen. “We know for a fact that the present situation isn’t working,” Windy Boy observes.

Hanshew confirms that the Area 7 employees weren’t required to be bonded under the state’s contract. Because the apparent losses were not covered by insurance, it remains unclear how tribes will be repaid for funds that were apparently stolen. “Obviously, what we hope now is to recover further money,” Hanshew says, adding that the U.S. Attorney’s office and the Montana Department of Justice have received details about the case.

“Presently, it’s still under investigation to see if there’s going to be any charges against some of the staff,” adds Rehbein, who says up to five people worked in the office during the time money is believed to have disappeared.

“We’ve got some ways to go,” before all the financial questions are resolved, he says. “It just takes time.”


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