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BRYAN SCHRODER

United States Attorney

ANDREA T. STEWARD
Assistant U.S. Attorney
Federal Building & U.S. Courthouse
222 West Seventh Avenue, #9, Room 253
Anchorage, Alaska 99513-7567
Phone: (907) 271-5071
Fax: (907) 271-1500
Email: Aunnie.Steward@usdoj.gov

Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ALASKA

UNITED STATES OF AMERICA, ) No.


)
Plaintiff, ) COUNTS 1-3:
) MISAPPLICATION FROM AN
vs. ) ORGANIZATION RECEIVING
) FEDERAL FUNDS
DAVID MICHAEL MCGRAW, ) Vio. 18 U.S.C. ' 666(a)(1)
)
Defendant. ) COUNT 4:
) MONEY LAUNDERING
) Vio. 18 U.S.C. ' 1957(a) and 2(a)
) and (b)
)
) COUNT 5-7:
) MAKING AND SUBSCRIBING A
) FALSE RETURN; FAILURE TO
) DISCLOSE A BUSINESS
) Vio. 26 U.S.C. ' 7206(1)

INDICTMENT

The Grand Jury charges that:

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GENERAL ALLEGATIONS

At all times material to this Indictment:

1. The Yukon River Inter-Tribal Watershed Council (YRITWC) was a

nonprofit corporation formed by indigenous tribes from the headwaters to the mouth of

the Yukon River to improve and preserve the water quality of the Yukon River.

2. In each fiscal year 2010 through 2014, YRITWC received federal grant

money in excess of one million dollars. The following agencies provided YRITWC

federal grant money for the following purposes:

a. The Environmental Protection Agency (EPA) provided YRITWC

with federal grant funds to address contaminated sites along the Yukon River and provide

training for the handling and disposal of hazardous waste, as well as to organize summits

to share training and information amongst the tribes, among other things.

b. The Department of Energy (DOE) provided YRITWC with federal

grant funds for an energy efficiency project at Anatuvuk Pass.

c. The National Science Foundation (NSF) provided YRITWC with

federal grant funds to combine traditional ecological knowledge of the Arctic with

western science, including researching how climate change affects people living in the

Arctic and sub-Arctic, among other things.

3. The defendant, David Michael McGraw, worked for the YRITWC from

2009 to 2014. McGraw was initially employed as an accountant but at least by 2010, and

continuing through 2014, McGraw was the Finance Director for YRITWC. McGraw’s

duties as Finance Director included responsibility for maintaining YRITWC’s books and

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records of account to include preparing checks, entering expense information into the

accounting system, assigning expenses to respective program grants, providing financial

information to YRITWC’s Executive Director and its Board of Directors, preparing grant

reports and providing financial information to outside auditors and accountants.

McGraw’s annual salary as the Financial Director was $65,000 plus benefits. While an

employee of YRITWC, McGraw was an agent of that organization as that term is defined

in 18 U.S.C. § 666(d)(1).

4. In or about December 2011, A.M. registered Clear Skies Aviation LLC

(hereafter “Clear Skies”) with the State of Alaska for the purpose of leasing and renting

commercial air equipment. A.M. created Clear Skies at the direction of the defendant

David Michael McGraw. A.M. was the only shareholder for Clear Skies.

5. In or about January 2014, A.M. registered Interior Rentals LLC (hereafter

“Interior Rentals”) with the State of Alaska for the purpose of leasing and renting

residential housing and storage. A.M. created Interior Rentals at the direction of the

defendant David Michael McGraw. A.M. was the only shareholder of Interior Rentals.

6. From 2010 to September, 2014, McGraw misapplied approximately

$315,000 from YRITWC for his personal benefit including, among other things, the

purchase of an airplane, maintenance on the airplane, flight school for himself, the

purchase of real estate, more than a dozen firearms, and online pornography fees.

COUNTS 1-3:
MISAPPLICATION FROM AN ORGANIZATION
RECEIVING FEDERAL FUNDS

7. Paragraphs 1-6 are re-alleged here.

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8. From at least 2010, to on or about November, 2014, in the District of

Alaska and elsewhere, the defendant, David Michael McGraw, being an agent of the

Yukon River Inter-Tribal Watershed Council (YRITWC), an organization that received

federal program benefits in excess of $10,000 in each of the one-year fiscal periods

alleged below, did embezzle, steal, obtain by fraud, and intentionally misapply funds

owned by, and under the custody and control of the YRITWC, with the unlawful

misapplication of funds by McGraw exceeding $5,000 for each of the years listed below

as separate and distinct counts:

Count Fiscal year Approximate amount unlawfully


misapplied by fiscal year
1 2012 $ 96,000
2 2013 $ 87,000
3 2014 $ 130,000

All of which is in violation of 18 U.S.C. § 666(a)(1).


COUNT 4:
MONEY LAUNDERING

9. Paragraphs 1-6 are realleged herein.

10. Between on or about January 21, 2014, and May 27, 2014, in the District of

Alaska, the defendant, David Michael McGraw counseled, commanded, induced or

procured and willfully caused another to engage in a monetary transaction which

McGraw knew involved criminally derived property of a value greater than $10,000, with

said monetary transaction involving the proceeds of a specified unlawful activity, to wit;

that is theft, fraud and misapplication from a program receiving federal funds in violation

of 18 U.S.C. § 666.

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11. Specifically, on or about January 21, 2014, A.M. opened Alaska USA

Federal Credit Union (FCU) account ending 9985 in the name of Interior Rentals LLC.

That same day, and continuing to at least May 23, 2014, both days being approximate and

inclusive, the defendant, David Michael McGraw, without authority, wrote checks and

wired funds from YRITWC Wells Fargo account ending 6875 to the Interior Rentals

LLC account at Alaska USA FCU ending in 9985. The amount McGraw misapplied

from YRITWC in this manner totaled approximately $47,585, such property having been

derived from theft, fraud and misapplication of funds from YRITWC, a program

receiving federal funds.

12. Then on May 27, 2014, the defendant, David Michael McGraw, counseled,

commanded, induced or procured and willfully caused A.M. to purchase a $42,001.38

cashier’s check payable to Yukon Title to make a down payment on real estate property

for the personal benefit of McGraw and A.M. The funds used to purchase the cashier’s

check were from Alaska USA Federal Credit Union checking account ending 9985,

All of which is in violation of Title 18, United States Code, Sections 1957(a) and

2(a) and (b).

COUNTS 5-7:
MAKING AND SUBSCRIBING A FALSE RETURN;
FAILURE TO DISCLOSE A BUSINESS

13. Paragraphs 1-6 are realleged herein.

14. On or about the dates specified in the table below, within the District of

Alaska the defendant, David Michael McGraw, did willfully make and subscribe Form

1040, U.S. Individual Income Tax Returns, for the calendar years listed in the table

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below, which was verified by a written declaration that they were made under the

penalties of perjury. McGraw did not believe the returns, which were filed with the

Internal Revenue Service, to be true and correct as to every material matter in that the

returns failed to disclose that he was engaged in operation of a business activity from

which he derived gross receipts or sales and received income, to wit; Clear Skies

Aviation LLC. McGraw then and there well knew that he was required by law and

regulation to disclose the operation of this business activity, the gross receipts or sales he

derived therefrom, and the income from the business activity.

Count Date Filed Calendar Year


5 February 20, 2012 2011
6 March 11, 2013 2012
7 January 12, 2015 2013

All of which is in violation of 26 U.S.C. § 7206(1).

A TRUE BILL.

s/ Grand Jury Foreperson


GRAND JURY FOREPERSON

s/ Andrea T. Steward
ANDREA T. STEWARD
Assistant U.S. Attorney
United States of America

s/ Bryan Schroder
BRYAN SCHRODER
United States Attorney
United States of America

DATE: 3/21/18

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