A convicted embezzler who was the ringleader of a group that stole more than $2.6 million from a college in the poorest county in the nation and who later changed his name and was hired as the finance director for the Passamaquoddy Tribe at Pleasant Point has been let go this week after tribal officials found out about his past. An investigation of possible fraud is ongoing, but so far there is no evidence that funds were taken from the tribe.
Charles Four Cloud, 57, was hired by the Sipayik tribal government in May of this year as the finance director. In that position he was in charge of payroll, accounting, grants and purchase orders for the tribal government, which has a budget in the tens of millions, much of it federal money. While he was still on a 90-day probationary period, Four Cloud convinced the tribal council to purchase a new software program for approximately $240,000, although that figure also included installation, training and converting over to the new program, according to tribal councillors. Reportedly, a later independent investigation showed the program by itself is available for $100,000; that could not be confirmed, though. Four Cloud also brought in a person to train the finance department on the new software and help with the conversion.
     According to Pleasant Point Police Chief Pos Bassett, the police department had found out about Four Cloud's record of embezzlement from the 1990s and also that he was driving without a license. The police then stopped his vehicle on Route 190 on the morning of Monday, September 23, and arrested him for operating after suspension. His California license had been suspended and he had not obtained a Maine license, which he was required to do since he had been living in the state since May. The police also wanted to speak with him about his identity, since he previously was known as Arlynn Knudsen. He also has used the name Arlyn Eaglestar. Bassett says Four Cloud was misrepresenting who he is, but he's not sure if any monetary fraud is involved. He says that Four Cloud legally changed his name from Knudsen and that, as far as he knows, he is not wanted by any other agency.
     The police department is collaborating with the U.S. Attorney's Office, the FBI, the Bureau of Indian Affairs' Division of Law Enforcement and the Washington County District Attorney's Office to investigate the issue of fraud, including the possibility of fraud while he was the finance director. The investigators are learning more from different places where Four Cloud previously worked.
     The Sipayik Tribal Council was informed about the investigation later on September 23. "Based upon the investigation conducted by the Pleasant Point Police Department, we found that the information contained in Charles Four Cloud's job application for finance director was false and misleading to the tribal government," says Passamaquoddy Chief Clayton Cleaves. The tribal chief then terminated him from the position on September 24, after consulting with the tribal council. After being released on bail from the Washington County Jail on September 24, Four Cloud was escorted off the reservation that evening, with the tribal government banishing him. He will be charged with criminal trespass if he returns, says Bassett.
     "He never revealed anything to us" about his previous convictions, says Cleaves. "When we interviewed him, we were led to believe he was an honorable person." His hiring had been approved by the tribal council. However, although references were checked, background checks and fingerprinting were not done. Tribal councillor Mary Creighton says those steps should have been taken "with a position such as that, especially for someone we knew nothing about." Creighton, though, acknowledges that he was "very pleasant" and had "a glowing resumé." She believes background checks will be conducted in the future and that it's been a lesson well-learned for the tribal government.
     Tribal councillor Ed Bassett agrees that the tribal government needs to have a policy requiring both background checks and fingerprinting for such positions. "We have to safeguard our resources," he says. "We need to make sure it doesn't happen again." Echoing Ronald Reagan, he adds that the tribal government needs to "trust but verify."
     "Overall, I feel we've been duped," Bassett says. "We have to learn from this. Hopefully we caught it early. I think we have caught it early enough that not anything's missing."

Past embezzlement outlined
     According to court and news reports, Arlynn Knudsen, along with four others -- Jerry and Marjorie Godfrey and John Bad Wound and his wife Margaret Minko-Bad Wound -- was indicted in 1997 for stealing more than $2.6 million from the Oglala Lakota College in South Dakota. The five were indicted on 125 counts that included theft from federal and tribal programs and money laundering. Under a scheme hatched by Knudsen, the five had formed eight bogus office-supply companies, billing the college for supplies it never received, according to the indictment. Knudsen was the manager of the college's accounting department and vice president of business affairs from 1991 to 1994.
     The loss amounted to about 10% of the college's operating budget for three years, from 1991 to 1994. The college is on the Pine Ridge Reservation, which had the lowest per capita income and the highest percentage of families living below the poverty level of any county in the U.S. at that time. Meanwhile, Knudsen was living high, accused of spending hundreds of thousands of dollars at investment brokerages and a casino and for chartering private aircraft, including once to fly a nanny to Las Vegas to watch his children.
     One certified public accountant who became involved in the scheme testified that the bogus companies were Knudsen's idea and that he was "very manipulative and convincing." Even after he left his position at the college, Knudsen proposed other crimes and threatened the CPA's family if he did not participate, the CPA testified.
     As part of a plea agreement, Knudsen was sentenced to 10 years in prison, serving seven years before being released. He also was ordered to pay over $2 million in restitution to the college, with reports showing that the college received at least one check for $118,000.
     Knudsen also was convicted in 1989 for fraud on a financial aid form and ordered to pay $18,000 in restitution, according to Pos Bassett.