An attorney for the Twenty-Nine Palms Band of Mission Indians is among four people who have been indicted on federal bribery and money laundering charges for allegedly participating in scheme in which associates of the lawyer hired to provide assistance to the tribe paid kickbacks to the attorney.

The 48-count grand jury indictment returned Wednesday afternoon names Gary Edward Kovall, 66, of Ely, Minnesota, a licensed California attorney who acted as legal counsel for the tribe; David Alan Heslop, 74, of Templeton, who, on Kovall’s recommendation, was hired by the tribe to oversee some tribal business; Paul Phillip Bardos, 57, of Rancho Cucamonga, a general contractor; and Peggy Anne Shambaugh, 56, of Ely, Minnesota, who is Kovall’s wife.

Arraignments are set for today in the United States District Court in Los Angeles. The indictment has not been posted publicly as of yet.

According to the press release, Kovall advised the tribe to create a limited liability company to purchase real estate, and the attorney allegedly convinced the tribe to hire Heslop as the company’s manager. Kovall and Heslop then recommended that the tribe hire Bardos to act as the tribe’s “owner’s representative” in several construction projects at the Spotlight 29 Casino. Allegedly, when additional construction or construction oversight became necessary in relation to casino projects, Bardos submitted proposals to perform the work, and Kovall persuaded the tribe to give Bardos the contracts. After being paid by the tribe, Bardos allegedly paid kickbacks to Heslop who, in turn, paid kickbacks to Kovall through Shambaugh.

As far as the financial aspect of the alleged scheme, the press release only cites to one instance in 2007, when Bardos allegedly paid Heslop more than $186,577 which was then funneled to Shambaugh.

Although the indictment has not been made public yet, it is interesting to note that Twenty-Nine Palms Enterprises has been involved in two civil suits in the past, and Twenty-Nine Palms Band of Mission Indians has been involved in five civil suits. One of the civil lawsuits was apparently between Twenty-Nine Palms Enterprises and Cadmus Construction, Inc., which is owned by Bardos. Cadmus Construction brought the suit against Twenty-Nine Palms Enterprises in 2010 to recover payment for construction work that Twenty-Nine Palms was refusing to pay.

Without access to the indictment, there is no telling how or why the federal government began to investigate the relationship between Twenty-Nine Palms and the four individuals who have been criminally indicted. Perhaps the earlier civil lawsuit between Bardos and Twenty-Nine Palms led to the federal investigation after issues regarding payment was brought up. Regardless, the four individuals now face serious federal criminal charges and if convicted, might face federal prison and significant fines.

All four individuals have been indicted with conspiracy. Additionally, Kovall, Bardos, and Shambaugh are charged with eight counts of bribery, while Heslop is charged with 16 counts of bribery. In addition to the conspiracy and bribery charges based on the kickback scheme, Bardos is charged with eight counts of money laundering, Heslop is charged with seven counts of money laundering, and Shambaugh is charged with two counts money laundering.

The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.

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