Wachovia Sued by Hopi Tribe for Investment Fraud

In a June 4, 2013, article from the Navajo-Hopi Observer, it was reported that the Hopi Tribe is suing Wachovia Bank Companies and two of its financial advisors for nearly $190 million in losses and penalties for what the tribe claims is investment fraud.

The tribe claims that Wachovia Bank financial advisors, David Boling and James Roy, invested the tribe's money in high-risk investments contrary to the tribe's policies and procedures. The allegations continue that they concealed significant losses from those investments, lied about how the money was invested when reporting to the tribe, and overcharged the tribe for fees. Wells Fargo acquired Wachovia in 2008.

"The Tribal Council and I have an obligation to protect the Tribe's funds and we take that responsibility very seriously," Tribal Chairman LeRoy Shingoitewa said. "The severe nature of the misconduct that has now been uncovered requires us to act on this matter and that is exactly what we are doing."

These policies were put into place in 2005 to make sure that low-risk investments would provide income to the Hopi Tribe for improvements on tribal land and to help the Hopi people. The tribe claims that Wachovia transferred money from one bank to another bank without proper authorization and without council approval and that the transactions conflicted with the resolution the tribe had passed.

The Navajo-Hopi Observer goes on to report that the tribe also claims that at the same time the Hopi Tribe lost money, those same investments earned Wachovia Bank millions of dollars of profit. It was reported that one of the investments was structured in a way that locked in losses for the tribe no matter how the financial markets behaved. The tribe said that when Wachovia was caught investing in high-risk investments the bank would then send false information to the tribe about the value of those assets.

According to the Hopi Tribe, Wachovia's quarterly performance reviews only highlighted investments that were doing well while not disclosing to the tribe investments that weren't doing well. The tribe claims Wachovia gave them false information about how much an investment was worth and that presentations to the tribe gave them false information about the risk of the investments. They also contend that monthly statements were inaccurate.

Hopi officials said Wachovia's investment advisors lost millions of dollars invested by the Hopi Tribe and must be held accountable for their actions and don't believe the Hopi Tribal treasurer or anyone on the tribal council was involved. The Hopis passed a resolution to move the funds to a different bank and different advisors.

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