Billings contractor Kevin David McGovern and his company, CMG Construction, this week denied corruption charges alleging they defrauded the Chippewa Cree Tribe and bribed tribal officials to get $2.5 million in federally funded contracts without having to compete.

McGovern, 46, pleaded not guilty to a four-count indictment during an arraignment Tuesday in U.S. District Court in Great Falls. McGovern, president of CMG Construction, also pleaded not guilty on behalf of the company.

The indictment, filed on May 23, charges McGovern and CMG Construction with conspiracy to defraud the United States and the Chippewa Cree Tribe, scheme to defraud and two counts of bribery of a tribal government official.

The indictment is the latest in a string of corruption charges against McGovern for activity involving the tribe on the Rocky Boy's Reservation in north-central Montana. The prosecution also is part of a massive, ongoing corruption probe by the Department of Interior’s Office of Inspector General that has led to the convictions of numerous tribal and nontribal members.

Federal prosecutors also have charged McGovern and two of his other companies in two other indictments.

McGovern’s attorney, Mark Parker of Billings, on Wednesday called the indictment “a continuation largely of the same case.” Parker said his client has pleaded not guilty.

CMG Construction specializes in site preparation and construction. The company was a subcontractor on the $80 million James F. Battin Federal Courthouse in Billings, and earlier this year, Rocky Mountain College hired the firm as the general contractor for its $10.5 million initial phase capital project to build a science building and upgrades to Herb Klindt Field.

FEMA funding

The latest indictment accuses McGovern and CMG Construction of conspiring with former tribal officials, Tony James Belcourt and John Chance Houle, and with James Howard Eastlick Jr., a Belcourt associate and former clinical psychologist at the Rocky Boy Health Clinic, to get preferential treatment in construction contracts for projects funded by the Federal Emergency Management Agency.

Belcourt, Houle and Eastlick all have been sentenced to prison and ordered to pay hundreds of thousands in restitution for convictions in earlier corruption and bribery prosecutions.

Belcourt and Houle, the indictment said, awarded CMG Construction sole-source, noncompetitive and unadvertised contracts for projects.

In return for the preferential treatment, McGovern and CMG Construction paid kickbacks to Belcourt and Houle, the indictment said.

Belcourt, a former state legislator and central figure in the overall corruption schemes, was sentenced to seven years in prison and ordered to pay $667,000 restitution. He was the CEO and contracting agent of the Chippewa Cree Construction Corp., which is the tribe’s company in charge of work on the reservation’s portion of the North Central Montana Regional Water System Project and other projects.

Belcourt and McGovern, along with Kent Boos of Billings, also were partners in the Billings-based MT Waterworks LLC company, a water utility parts distributor.

MT Waterworks pleaded guilty in May to charges that it defrauded the tribe by falsely claiming an Indian preference to get contracts, including work on the federally funded water system project. A plea agreement calls for MT Waterworks to pay a $350,000 fine in lieu of restitution. Sentencing is set for Sept. 15 before U.S. District Judge Brian Morris in Great Falls.

Houle, who was vice chairman of the tribe’s Business Committee and vice chairman of the CCCC, was sentenced to five and a half years in prison and ordered to pay $121,219 restitution for his guilty pleas to embezzlement, tax evasion and other charges.

Eastlick, who had partial interest in MT Waterworks through Belcourt and was partners with Belcourt in another company, was sentenced to six years in prison, ordered to pay a $100,000 fine and $424,800 restitution for his conviction in a bribery scheme.

Flooding damage

The contract kickback conspiracy involving McGovern and CMG Construction began in about December 2010, six months after flooding destroyed the Rocky Boy’s Health Clinic, federal prosecutors allege.

FEMA, which negotiated with Belcourt, who had been designated by the tribe as its emergency incident commander, gave the tribe $11.6 million to help with recovery after the flooding. The tribe also received about $25 million in an insurance settlement from the Lexington and Crawford Insurance Companies for losses caused by the flooding, the indictment said.

In fall 2010, Eastlick approached Houle with a proposal to award a $3 million contract funded by FEMA money to CMG Construction without advertising or competitive bidding in exchange for promised kickbacks to Houle from McGovern and CMG Construction, the indictment said.

Belcourt then issued a $50,000 cashier’s check drawn on his wife’s bank account and payable to Houle’s ranching business account and another company.

In December 2010, Belcourt, on behalf of the CCCC and with Houle's approval, awarded McGovern and CMG Construction a $2.9 million contact for the demolition and removal of the health clinic.

Belcourt abandoned the December contract with CMG Construction, the indictment said.

In June 2011, Belcourt then awarded McGovern and CMG Construction three “sole-source, noncompetitive, and unadvertised contacts,” the indictment said.

In a separate case, McGovern and another of his companies, MC Equipment Holdings, LLC, pleaded not guilty in March to conspiracy and bribery charges. 

If convicted in the contract kickback case, McGovern faces a maximum 20 years in prison and a $250,000 fine on the scheme to defraud. CMG Construction faces a maximum $500,000 fine on each count if convicted.