Former tribal leaders plead guilty in $6 million casino embezzlement case

Sam Stanton

The allegations in the indictment were breathtaking: three former officials of the tribe that runs the Rolling Hills Casino had embezzled $6 million and used the money to buy lavish homes, cars and gold coins and for travel overseas.

The allegations laid out in 2017 in a 69-count indictment and an earlier federal civil suit claimed the three had gone on a “12-year looting spree” and used the money to buy tickets to World Series, Final Four and NBA games and charter private jets and then lied to federal agents investigating the conspiracy.

All three defendants – including one who was a former FBI agent in Sacramento – denied the charges and were headed for trial next month in federal court in Sacramento.

That all changed Thursday morning, when John Crosby, the former FBI agent and the tribe’s one-time economic development director; his mother, Ines Crosby, the former tribal administrator; and Leslie Lohse, Ines Crosby’s sister, entered guilty pleas in the case.

All three pleaded guilty to conspiracy to embezzle from a tribal organization. John Crosby, 56, also pleaded guilty to filing a false tax return; Ines Crosby, 76, pleaded guilty to not filing a tax return in 2010; and Lohse, 64, pleaded guilty to filing a false tax return.

U.S. District Judge Morrison C. England Jr. set sentencing for Jan. 30, when they each could receive up to five years on the conspiracy to embezzle count.

“The defendants used the tribe’s accounts as their personal piggy banks,” Kareem Carter, the special agent in charge of criminal investigation for the Internal Revenue Service, said in a statement following the guilty pleas. “For at least five years the defendants took more than $4.9 million of the tribe’s money and intentionally failed to declare it as income to the IRS. This resulted in a tax loss of over $1.6 million.”

The guilty pleas are the latest in a years-long drama involving the casino, which sits along Interstate 5 about 110 miles north of Sacramento near Corning.

The casino, which boasts a golf course, hotels, RV park, equestrian center and concert amphitheater, has been estimated to generate $100 million a year for the Paskenta Band of Nomlaki Indians.

In 2014, estimates indicated the casino generated $54,000 annually for each of the 300 adult members of the tribe.

But the flood of gamblers’ cash created a split among tribal members, leading to a 2014 audit that found $17 million had been spent on private jet travel, up to $93 million had been spent investments considered “high-risk, start-up companies,” and $61 million was spent on excessive overhead and compensation.

The 2017 indictment of the trio spelled out a number of allegations about where the money went, including at least $84,000 spent on a koi pond at Ines Crosby’s home, $243,000 for a swimming pool and zero edge spa at John Crosby’s house and another $16,000 for a putting green there, and $9,600 to pay off credit card debt for Lohse.

The dispute led to a fight for control of the casino that at one point involved an armed standoff outside the gambling hall and a cyberattack that destroyed some casino computer records.

The tribe sued the three former officials in federal court in Sacramento alleging racketeering violations. That lawsuit is pending.