A 69-year-old man has been sentenced to 78 months in prison for his role in a fraud scheme that led to a federally recognized American Indian tribe in Michigan losing more than $1 million, authorities announced Monday.
Chester Randall Dunican, most recently of Fort Pierce, Florida, was first indicted in 2021 and reached a plea agreement last year on conspiracy to commit wire fraud, U.S. District Court records show.
Between December 2015 and December 2016, he served as CEO of an entity focused on developing economic opportunities to benefit the Grand Traverse Band of Ottawa and Chippewa Indians, according to the filings.
Dunican "represented to the tribe that he obtained exclusive distributorship rights with a proprietary water filtration company, R.O. Distributors, and that the tribe would benefit by investing in R.O. Distributors and leasing water coolers that used this proprietary technology to various businesses in Michigan and Florida," federal officials said in a statement Monday.
However, it was a shell company created and controlled by him and a co-defendant, attorney Britan Douglas Groom, according to the release.
The tribe invested nearly $1 million dollars and Dunican ordered others to send most of the investment to another shell company, Evergreen Distributors LLC, before that entity transferred more than $700,000 to his personal bank account and Groom's, investigators said.
"Every member of the Grand Traverse Band of Ottawa and Chippewa Indians was impacted by this fraudulent scheme," said Mark Totten, U.S. attorney for the Western District of Michigan. "... Mr. Dunican's conduct is particularly egregious given that he served in a fiduciary capacity as the chief executive officer of the Tribe's economic development corporation. My office is committed to holding fraudsters fully accountable for their crimes, especially those that exploit a position of public trust."
When tribal members resisted his requests for more funding, Dunican told them a company named High Sierra Distributors, LLC, acquired R.O. Distributors and was a multi-billion-dollar business that could expand the water filtration outfit nationwide, according to the release.
Dunican asked Groom to recruit someone to pose as a corporate representative of High Sierra at a meeting with the tribe to pitch an additional $2 million in funding; the attorney's friend from Illinois did so, but members learned he was a teacher, uncovered the scheme and fired Dunican.
"Mr. Dunican and his co-defendant stole money earmarked for investment opportunities, the income from which is designed to provide various forms of assistance to members of the Grand Traverse Band of Ottawa and Chippewa Indians," said Devin J. Kowalski, acting special agent in charge of the FBI in Michigan. "His behavior was an affront to those who trusted him to act in the Tribe's best interest and is precisely why the FBI works with our partners to investigate those who knowingly defraud organizations and bring them to justice."
Groom earlier was sentenced to 30 months in prison, federal court records show.
U.S. District Judge Robert J. Jonker ordered Dunican to spend three years on supervised release, pay restitution of $1,124,290, and to forfeit $430,350, representing proceeds he received through the scheme.
"Today's sentencing is a reminder that there are detrimental consequences for this type of criminal behavior," said Charles Miller, special agent in charge of IRS-Criminal Investigation, Detroit Field Office.
Dunican's sentencing was delayed after a February incident in Virginia that led to multiple charges, records show.
An investigation determined he "shot himself and tried to make it appear as though an attempted robbery had occurred," the Arlington County Police Department said in a statement.
