Follow Up Letter - Apache Tribe of Oklahoma Use of Coronavirus Relief Fund Payment

Summary

Follow-up letter dated December 28, 2021 from Treasury Deputy Inspector General Richard K. Delmar to Apache Tribe of Oklahoma Chairman Durell Cooper III, reference OIG-CA-22-006, on the Tribe's use of Coronavirus Relief Fund (CRF) proceeds. The OIG states its position has not changed after the Tribe's August 10, 2021 written response and a September 22, 2021 meeting: using $500,000 of CRF proceeds to secure a loan at Liberty National Bank, with the loan proceeds then used to pay a delinquent Wells Fargo debt, was not an allowable use, and lost casino revenue does not make it one. The letter requires the $500,000 to be returned to the Tribe's CRF account for eligible obligations by December 31, 2021, failing which the OIG will seek recoupment under the CARES Act. The Tribe received $5.8 million of CRF proceeds from Treasury; the July 28, 2021 letter and the Tribe's response are attached.

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OFFICE OF
INSPECTOR GENERAL
DEPARTM ENT OF THE TREASURY
WASHINGTON, D.C.  20220

1

December 28, 2021

Mr. Durell Cooper III, Chairman
Apache Tribe of Oklahoma
511 E Colorado Drive
Anadarko, OK 73005
Re: Apache Tribe of Oklahoma’s Use of Coronavirus Relief Fund Payment
(OIG-CA-22-006)
Dear Mr. Cooper:
We would like to thank you and other representatives of the Apache Tribe of
Oklahoma (Apache Tribe) for meeting with our office on September 22, 2021 to
discuss our letter, dated July 28, 2021, regarding the use of Coronavirus Relief
Fund (CRF) proceeds received from the Department of the Treasury (Treasury).1
We issued that letter due to concerns that the Apache Tribe used $500,000 of
CRF proceeds to open a money market account at the Liberty National Bank in
Apache, Oklahoma, and used the funds to secure a loan
.
Loan proceeds were then used to make payments on a delinquent loan owed to
Wells Fargo Bank in the amount of
.2 The letter also communicated our
determination that using CRF proceeds to secure the
 loan to make
payments on a prior debt is not an allowable expenditure under the Coronavirus
Aid, Relief, and Economic Security Act3 (CARES Act) because payments on
delinquent debt prior to the start of the Coronavirus Disease 2019 (COVID-19)
pandemic was not a necessary expenditure to address the public health
emergency. Our July 28th letter is provided as attachment 1 to this letter.
This letter is to inform you that our position on the matter has not changed after
consideration of your written response, received August 10, 2021(included as
attachment 2 of this letter), and follow up discussions at our September 22nd
meeting. As described below, Apache Tribe’s explanation for using the
$500,000 of CRF proceeds as collateral for the loan in question does not comply

1 The Apache Tribe received $5.8 million of CRF proceeds from Treasury.
2  Apache Tribe’s original loan with Wells Fargo Bank, valued at
, was secured to
expand its Golden Eagle Casino. The Apache Tribe defaulted on that loan in 2012. In August
2020, the Apache Tribe reached a settlement with Wells Fargo Bank to satisfy the outstanding
debt for
.
3 P.L. 116-136 (March 27, 2020)

2

with the CARES Act and Treasury’s Coronavirus Relief Fund Guidance for State,
Territorial, Local, and Tribal Governments4 (Guidance).
Under the “Uses of Funds” requirements of Section 601(d) of the Social Security
Act, as amended by the CARES Act, payments from the Fund may only be used
to cover costs that—
• are necessary expenditures incurred due to the public health emergency
with respect to the Coronavirus Disease 2019 (COVID–19);
• were not accounted for in the budget most recently approved as of
March 27, 2020 (the date of enactment of the CARES Act) for the State or
government; and
• were incurred during the period that begins on March 1, 2020, and ends
on December 31, 2021.5
Treasury clarifies necessary expenditures and assessment of need in its
Guidance as follows:
Necessary expenditures incurred due to the public health emergency
The requirement that expenditures be incurred “due to” the public health
emergency means that expenditures must be used for actions taken to
respond to the public health emergency. These may include expenditures
incurred to allow the State, territorial, local, or Tribal government to
respond directly to the emergency, such as by addressing medical or
public health needs, as well as expenditures incurred to respond to
second-order effects of the emergency, such as by providing economic
support to those suffering from employment or business interruptions due
to COVID-19-related business closures. Funds may not be used to fill
shortfalls in government revenue to cover expenditures that would not
otherwise qualify under the statute. Although a broad range of uses is
allowed, revenue replacement is not a permissible use of Fund payments…
Your written response noted that the Business Committee6 reasonably
determined that it was necessary to open a money market account to secure a
loan, thus freeing up limited funds to continue paying the Apache Tribe’s bills

4 Federal Register Vol. 86 No. 10 on January 15, 2021.
(https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf.)
5 The period of performance of the CRF was extended through December 31, 2021 by the
Consolidated Appropriations Act, 2021 Division N, “Additional Coronavirus Response and
Relief,” Title X, (P. L. 116-260 (December 27, 2020).
6 The Apache Business Committee is a branch of the Apache tribal Government comprised of six
members including the Chairman, Vice-Chairman, Treasurer, Committee Members (2), and
Tribal Administrator.

3

and providing services during the pandemic. The response also noted that the
Apache Tribe was forced to close its Golden Eagle Casino for nearly 4 months
resulting in the Apache Tribe not being able to provide some of the services that
were budgeted in the most recently approved budget as of March 27, 2020.
Without casino revenue, there were additional stressors and limitations on the
ability to provide services that were needed, yet not allowable, using CRF
proceeds. You reiterated this in our follow up meeting on September 22nd when
you informed us that using CRF proceeds to secure the loan with Liberty
National Bank was necessary because the casino was closed in response to the
pandemic and not generating revenue to continue with tribal operations.
Furthermore, you also informed us that the loan terms were extended through
June 2022,7 and the loan balance was
 as of September 2021. In
addition, you told us that the Apache Tribe expected to receive an outside
investment of
 by December 10, 2021 that would be used to pay the
balance of the collateralized loan freeing up the CRF proceeds currently in the
money market account. All that said, using CRF proceeds as collateral for the
loan with Liberty National Bank due to the lack of casino revenue was not an
allowable use of funds.
To reiterate Treasury’s Guidance’s noted above, Funds may not be used to fill
shortfalls in government revenue to cover expenditures that would not otherwise
qualify under the statute. Although a broad range of uses is allowed, revenue
replacement is not a permissible use of Fund payments.
Furthermore, we do not agree that the Apache Tribe complied with the CARES
Act statutory requirements and was consistent with Treasury’s Guidance and
Frequently Asked Questions in effect at the time the money market account was
approved and opened. The response noted that the money market account was
intended to assist the Tribe in preparing, preventing, and responding to the on-
going COVID-19 pandemic. However, we determined that the subsequent use of
loan proceeds to make payments on a delinquent debt did not meet the Apache
Tribe’s intended uses, and as such, did not comply with the CARES Act and
Treasury’s Guidance in effect at the time the loan was secured in June 2020.
We require that the $500,000 of CRF proceeds used to secure the loan with
Liberty National Bank be returned to the Apache Tribe’s CRF account to be used
for eligible obligations by December 31, 2021. If the funds are not returned for
this purpose, our office will seek recoupment of those funds from the Apache
Tribe in accordance with the CARES Act.

7 The loan with Liberty National Bank executed in June 5, 2020 was for one year.

4

All work completed for this letter complies with the Council of the Inspectors
General on Integrity and Efficiency’s Quality Standards for Federal Offices of
Inspectors General, which require that the work adheres to the professional
standards of independence, due professional care, and quality assurance to
ensure the accuracy of the information presented.8 We appreciate your prompt
response to the concerns expressed in this letter and the courtesies shown to
our staff.

Sincerely,

Richard K. Delmar
Deputy Inspector General
Department of the Treasury

cc:
Jacob Leibenluft, Chief Recovery Officer, Department of the Treasury
Katharine Richards, Senior Advisor, Department of the Treasury
Stephen T. Milligan, Deputy Assistant General Counsel, Department of the
Treasury

Katherine C. Smith, Attorney Advisor, Department of the Treasury

8 https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-
12r.pdf

Richard K.
Delmar
Digitally signed by
Richard K. Delmar
Date: 2022.01.05
07:44:19 -05'00'

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