780 AM | 96.1 FM | “Yours for Western Alaska”

Former Finance Director for Watershed Council Sentenced to 18 Months for Embezzlement

The Yukon River

A former finance director for a nonprofit, Native-led corporation was sentenced to serve 18 months in prison on March 1 (Friday).

According to the U.S. Attorney’s District of Alaska, David McGraw of Fairbanks pled guilty to misapplying roughly $315,000 from an organization receiving federal funds and one count of making a false return in October 2018. From 2010 to 2014, McGraw was the Finance Director for the Yukon River Inter-Tribal Watershed Council (YRITWC), which received more than $3.5 million to address various issues in Yukon River communities.

Kelly Donnelly is the Alaska Executive Director for the YRITWC, and she says McGraw’s impact goes beyond misappropriated funds of $315,000.

“So the impact that I calculated and shared with the court was more than $2.2 million. That has meant our backhaul program — which provided support and assistance to tribes to remove hazardous solid waste from their communities — in 2014, that essentially stopped.”

In addition, Donnelly says other consequences of losing those funds include YRITWC closing two of its three offices. The water quality monitoring program was scaled back, the renewable energy program is gone, and most of the activities and programs in the Yukon ended.

According to Donnelly, McGraw had access to a signature stamp and very little oversight on what he was doing during the time of his embezzlement. Court documents say McGraw purchased an airplane, real estate, and firearms by creating two fake corporations to hide his money trail.

Donnelly says the YRITWC hired new administrative staff, received training for the executive committee, and has made several changes in policy to help bolster internal control and prevent more funds from being misappropriated in the future.

“We have quarterly meetings where we provide updates on the programs and clear financial reports. We make sure that those meetings are face to face, so that it’s possible for members of our organization, which are spread from the Canadian border to the Bering Sea Coast, have the opportunity to dig in as far as they need to, to understand our financial situation.”

Hooper Bay, Nunam Iqua, Unalakleet, St. Michael, Stebbins, and others are included in the organization’s 74 First Nations and member tribes. The YRITWC features programs to improve drinking water and help communities with solid waste management, among other benefits.

As Donnelly puts it, all members of the Yukon River Inter-Tribal Watershed Council were negatively affected by the hundreds of thousands of dollars of misappropriated funds.

Ultimately, she has mixed feelings about the case, but in Donnelly’s opinion, the sentence McGraw received for embezzling funds is not tough enough to deter others from trying to misappropriate money from nonprofit or native organizations.

“Because we do have that history of particularly white employees, non-Native staff, stealing from Native organizations or tribal councils and people who are in positions of trust who betray that trust. I asked the judge to really consider sentencing to the maximum that he was able under the sentencing guidelines, to send a clear message.”

The more eyes on the money, Donnelly says, the less likely something like this will happen again.

In addition to his prison sentence, McGraw was ordered to pay full restitution to the YRITWC and more than $40,000 to the Internal Revenue Service (IRS).

Image at top: The Yukon River. Photo: David Dodman, KNOM file.