In North Dakota, a Tale of Oil, Corruption and Death
Posted by Zig Zag
By DEBORAH SONTAG and BRENT McDONALD, New York Times, Dec 28, 2014
FORT BERTHOLD INDIAN RESERVATION, N.D. — Tex G. Hall, the three-term tribal chairman on this remote, once impoverished reservation, was the very picture of confidence as he strode to the lectern at his third Annual Bakken Oil and Gas Expo and gazed out over a stuffed, backlit mountain lion.
Tall and imposing beneath his black cowboy hat, he faced an audience of political and industry leaders lured from far and wide to the “Texpo,” as some here called it. It was late April at the 4 Bears Casino, and the outsiders endorsed his strong advocacy for oil development and the way he framed it as mutually beneficial for the industry and the reservation: “sovereignty by the barrel.”
But, in a hall decorated with rigs and tepees, a dice throw from the slot machines, Mr. Hall’s self-assurance belied the fact that his grip on power was slipping. After six years of dizzyingly rapid oil development, anxiety about the environmental and social costs of the boom, as well as about tribal mismanagement and oil-related corruption, had burst to the surface.
By that point, there were two murder cases — one person dead in Spokane, Wash., the other missing but presumed dead in North Dakota — tied to oil business on the reservation. And Mr. Hall, a once-seemingly untouchable leader, was under investigation by his tribal council because of his connections to an Oregon man who would later be charged with murder for hire in the two deaths.
In 2012, the man, James Henrikson, 35, who had five felony convictions in his past, operated a trucking company called Blackstone out of the tribal chairman’s garage. Blackstone worked primarily for the chairman’s own private oil field company, enjoying privileged access to business on the reservation as his subcontractor.
Blackstone also worked directly for the tribal government, earning $570,000 for a job watering road dust that was never put out to bid. Mr. Hall voted to approve the payment, but because he did not think he had any conflict of interest, he said, he never disclosed his business relationship to the company.
The relationship was personal, too: Mr. Henrikson and his wife vacationed in Hawaii with the tribal chairman and his family. Mr. Henrikson had an extramarital affair with, and impregnated, the now 21-year-old daughter of the chairman’s longtime girlfriend; Mr. Hall considers the baby his grandson.
In an interview last week, Mr. Hall said Mr. Henrikson was a “professional con” who had cemented their business deal when Mr. Hall was ill and distracted, bringing flowers and a contract to his hospital room to be signed. “I got ripped off and taken advantage of,” he said. “The people didn’t really know that when the news first broke.’’
In January, Mr. Hall’s link to Mr. Henrikson, Mr. Henrikson’s link to the murder case in Spokane, and the murder’s link to the reservation were revealed after the alleged hit man was arrested. The revelations jolted Fort Berthold into a tumultuous year of questioning and change.
“That murder was the last straw,” said Marilyn Hudson, 78, a tribal elder and historian. “Now you have a murder, a hit man, and a five-time convicted felon operating as an oil contractor working directly with the chairman. It’s like our reservation got hijacked by the plot of a bad movie.”
On the reservation, where identity is deeply connected to the land, conservationists have been more vocal than elsewhere in North Dakota, and they have denounced their leadership’s oversight of the oil industry for mirroring the state’s pro-business posture.
“The mentality comes from the state: less regulation, more profit,” said Joletta Birdbear, a former postmaster. “They’re only concerned about the immediate dollars and not about the long-term costs to our land and the future generations of our people.”
But if critics of North Dakota’s elected officials viewed them as too close to the oil industry, critics here had more pointed concerns. Their leader was part of the industry, seeking and getting contracts from oil companies that operated under his watch.
“I have no problem with the government making profit for the people, but when they make a profit for themselves and not the people, that’s another story, you know?” Ms. Hudson said.
Most of the 14,169 enrolled tribal members, about half of whom live on the reservation, do not receive significant oil royalties. The tribal government does, along with hundreds of millions in oil tax revenue, and many here appreciate the potential benefits for the reservation itself.
But so far, apart from a significant rise in jobs, which often go to transient workers, many see deterioration rather than improvement in their standard of living. They endure intense truck traffic, degraded roads, increased crime, strained services and the pollution from spills, flares and illegal dumping.
Deep-seated problems can be hard to fix — a life expectancy of 57, for instance, compared with 79 for North Dakotans as a whole. But its critics say the tribal government has invested little in social welfare, like desperately needed housing, and has distributed little of the $200 million set aside in the People’s Fund.
The government’s purchase of a 96-foot yacht named “Island Girl,” which mostly sits on blocks, became a symbol to many of their leaders’ misplaced priorities. All told, it cost about $2.5 million, a senior tribal official said.
“Our tribal council is so focused on money, money, money,” Edmund Baker, the reservation’s environmental director, said earlier this year. “And our tribal chairman is: ‘Edmund, don’t tell me about spills. I’m busy trying to do things for my people.’”
A Change of Fortune
The three affiliated tribes on Fort Berthold have seen their territorial lands shrivel over time to under a million acres. For decades, they struggled to recover from their forced relocation in the mid-20th century when their prime farmland was flooded to create the Lake Sakakawea reservoir for a new dam.
By the first decade of the 21st century, however, the tribal government, deep in debt, experienced a sudden change of fortune. Fort Berthold found itself atop a particularly sweet spot of the Bakken shale formation. At least 1,370 wells have been drilled and hydraulically fractured, or fracked, here so far. They are pumping over 386,000 barrels of oil a day, a third of North Dakota’s output.
In an interview at the expo last spring, Mr. Hall said that he saw fracking as the ticket to self-determination. “When oil was discovered, we were poor,” he said. “It’s hard to be sovereign on an empty stomach.”
Fifty-eight with a long, graying ponytail, Mr. Hall wore a beaded medallion with a red-tipped arrow, the Indian name he inherited from his father. Red-tipped, he said, “means you’re the first to draw blood.”
Steven A. Kelly, a former tribal lawyer under Mr. Hall and then his business competitor, said: “He’s an alpha male. If you had five male dogs on a line and you threw out six bones, Tex Hall’s going to try to get all six.”
Mr. Hall grew up on the reservation, on a cattle and buffalo ranch in Mandaree where he still lives. He said his parents told him when he was little that he would grow up to lead his tribe and that he bore “the weight of the people” on his shoulders. He left Fort Berthold for college, where he was a basketball star, and then graduate school, returning home to teach and eventually to lead the school district in Mandaree. Starting in 1998, he served two consecutive four-year terms as tribal chairman and rose to prominence as a national leader, too, twice elected president of the National Congress of American Indians.
He was “a very good advocate,” Mr. Kelly said. “I could never take that away from him.”
The boom arrived in Fort Berthold between Mr. Hall’s second and third terms. He started his company, Maheshu Energy, to broker leasing deals. Maheshu then morphed into a business offering services like well site construction, rig transport and trucking. Mr. Hall’s girlfriend, who has a retail clothing business called Sparkling Spur, became chief financial officer.
When Mr. Hall was re-elected tribal chairman in 2010, an ethics ordinance prohibited leaders from using their offices for private gain, but it did not explicitly bar them from owning oil-related companies. “It was entirely legal to have a business,” he said. “So I had a business.”
After the election, Maheshu began getting a greater share of contracts, said Damon Williams, the tribes’ supervising attorney. “It was good old boy stuff,” he said. “Obviously if you want to do business on a reservation, it’s best to deal with the chief.”
Mr. Kelly, in turn, found himself losing rig service contracts to the chairman. “My prices were better, we had the same mud engineers, so why do you think they used Tex instead of me?” he asked. “I wanted to make an issue of it, and I did.”
In spring 2011, Mr. Kelly addressed the seven-member tribal council. “I am here regretfully, on a matter that brings me against the chairman,” he said, explaining that he thought Mr. Hall was violating conflict-of-interest rules.
Mr. Hall responded, “We’re not the ethics board here, Steve.”
Mr. Kelly asked him if he felt bound by the ethics code.
“There is none,” the chairman said.
Mr. Kelly waved a copy of the code.
“There is no ethics board,” the chairman said.
Indeed, the council had never created a board to enforce its code, and so members who sought to pursue complaints regularly confronted this Catch-22. Mr. Kelly urged the council to take up the issue itself.
“They wouldn’t,” he said, “and that’s one of the things that bothered me. Our council doesn’t hold one another accountable. And when you have that situation, basically you have a broken government.”
Forging a Link
By early 2011, James Henrikson had a string of marriages, failed businesses and arrests in several states behind him. In Oregon, he had been convicted on felony charges of theft, burglary, attempted assault and unlawful manufacture of marijuana. In Washington, he had filed for and been denied bankruptcy protection largely because he had tried to hide assets.
Newly released from jail, Mr. Henrikson set his sights on the booming Bakken, and specifically on the reservation. Still on probation, he registered Blackstone Building Group under the name of his girlfriend, Sarah Creveling, and persuaded investors to set them up with some trucks.
To gain priority access to oil contracts on Fort Berthold, Mr. Henrikson and Ms. Creveling, who are white, needed a native partner. Mr. Henrikson contacted Mr. Kelly, who agreed to a subcontracting deal.
Like others, Mr. Kelly was struck by the couple’s hustle, confidence and good looks. Rick Arey of Wyoming, who met them when they moved into his trailer park, described them as “Ken and Barbie, the prettiest people in North Dakota.”
“He was ripped and she was the object of every man’s desire,” said Mr. Arey, who was also impressed by Mr. Henrikson’s high-end pickup truck with its “six-inch lift and 37-inch tires.”
In late 2011, Mr. Arey was recruited to work as a truck dispatcher for Mr. Henrickson and Ms. Creveling, who had married. Beyond the $1,500-a-week salary promised, he saw it as a chance to get in on something big.
“I was like, ‘You want to win, you got to hang out with winners,’ ” he said. “No offense to any native contractors out there, because they do a good job, too, but when you take a hungry white boy, and you throw him on a reservation,” he is going to “go the extra mile.”
Before long, Mr. Kelly discovered that Mr. Henrikson and Ms. Creveling had found a Navajo woman to front for them so that Blackstone appeared to be Indian-owned. They were going behind his back, bidding for the same jobs. So he cut ties with them, and notes in retrospect that Mr. Henrikson was always asking: “Who’s the chief? Who’s the main guy? Who’s running the show here?”
Mr. Hall said he believed that Mr. Henrikson staged their first meeting by claiming he had run out of gas at a highway juncture abutting the chairman’s property. Mr. Hall said he gave him a couple of cans of gasoline and that when Mr. Henrikson returned the cans, he started insinuating himself into the chairman’s life.
“I guess I should have checked up on him with Steve Kelly, but I was sick,’’ he said.
In January 2012, Mr. Hall signed a contracting agreement with Mr. Henrikson, and Blackstone moved into his garage. Mr. Henrikson was quick to tout the connection.
“James was unstoppable,” Mr. Arey said. “He would throw Tex’s name around: ‘I’m working with Tex Hall and Maheshu.’ Other people were, ‘Oh, wow, how did you do that?’ It was like partnering up with the president.”
After several months, Mr. Arey and his colleague Kristopher Clarke, unhappy at Blackstone, quietly hatched a plan to join another company, taking some truckers with them. Mr. Clarke had known Mr. Henrikson through motorcycle racing in Washington and had followed him to North Dakota.
On Feb. 22, 2012, Mr. Clarke told Mr. Arey he was driving to drop off his company credit card at Blackstone.
And then Mr. Clarke, who was 29, vanished.
It was not unusual for young men to come and go from the oil fields or to keep in sporadic contact with their families. But Mr. Clarke’s relatives grew increasingly alarmed that they could not reach him, and his mother started a Facebook page devoted to her missing son and casting suspicion on Mr. Henrikson and Ms. Creveling. (They would later sue her for defamation, saying she had harmed their company, which nonetheless netted $2 million in profits in 2012, they estimated in depositions.)
In June 2012, Mr. Clarke’s abandoned truck was found on a street in Williston, the hub of the oil patch. Neighbors said it had been parked there for months.
Lissa Yellowbird-Chase, a tribal member who used to work in the reservation’s criminal justice system, reached out to Mr. Clarke’s mother. She thought that the “non-Indian mom of a non-Indian male” could use some help, she said, and undertook an investigation of her own.
“We started approaching Tex and other tribal leaders saying there’s a boy missing here, and he was last seen on Tex’s property,” Ms. Yellowbird-Chase said. “Doors were shut. Phones were hung up on us. People were saying maybe we shouldn’t be involved. I was like, ‘Whoa.’ We’re a very spiritual people. Part of our culture is we look out for all the Creator’s people.”
She enlisted “warriors,” she said, to help plaster the reservation with thousands of “Missing” and “Find K.C.” fliers.
Mr. Hall said he repeatedly questioned Mr. Henrikson about expenses he considered improper but that it took him until late 2012 to “kick him out,” saying “I don’t want nobody stealing from me around this place.” The 15-month business relationship with Blackstone did not end until March 2013, however.
By that point, Blackstone’s reputation with its drivers, its clients and its investors was souring. (Ms. Creveling would later tell investigators that she and her husband had siphoned money to ancillary businesses and generated false profit-loss statements for Blackstone.)
In a cordial email, Mr. Hall informed Ms. Creveling that “all expenses, reimbursements and split of proceeds” would occur by the end of the month.
“It has been good working with you,” he wrote.
In the summer of 2013, The Williston Herald announced that on July 20 a volunteers’ search party would comb Williston and Mandaree, where Mr. Clarke had last been seen on Mr. Hall’s property.
The day before the search, Mr. Hall texted Mr. Baker, the environmental director, and directed him to remove “a few frack socks” from his yard. Mr. Baker said he thought that Mr. Hall did not want the searchers, who did not find Mr. Clarke, to stumble on a dumpsite.
The frack, or oil filter, socks often contain radioactivity that exceeds the legal limit for disposal in North Dakota. They sometimes are illegally discarded because of the expense of trucking them out of state. And, indeed, Mr. Baker and his crew found some 200 socks strewn through Mr. Hall’s field.
The socks were “kind of sun-baked,” like they had been there for a while, Mr. Baker said, which greatly concerned him because “frack socks are a highly sensitive environmental hazard.”
Mr. Hall said he had done nothing wrong in calling the tribes’ environmental director. But Mr. Baker believed that the chairman had crossed an ethical line summoning public employees to take care of an environmental violation on his private property. Mr. Baker described it as: “Call your regulator, and think he’ll do a favor for you and be quiet about it.”
And indeed Mr. Baker, while he filled out an incident report for his own files, kept his mouth shut, fearful of retribution. “There have been other instances where individuals have spoken up and they have been kicked out of their homes,” he said. “They have been denied continued employment. Basically their legs are taken out from underneath them.”
Even though he did not make this episode public, Mr. Baker saw it not only as an abuse of power but also as a confirmation of what he considered the chairman’s cavalier approach to oil-related environmental problems.
Mr. Hall portrays himself as a staunch defender of the reservation’s “land, air and waters.” Though he advocated autonomy from the Environmental Protection Agency’s “regulatory scheme,” he wrote an environmental code for the tribes, he said, so that they could protect the environment “our way,” without depending on “the Great White Father in Washington, D.C.”
Spills are routine on the reservation, though, and generally go unpunished. By The New York Times’s calculation, there were 850 oil-related environmental incidents on Fort Berthold reported by companies from 2007 through mid-October 2014.
When Mr. Baker started his job in early 2013, straight out of law school in Montana, he quickly got the message that, “Environmental is kind of like the redheaded stepchild,” he said.
The community of White Shield was in an uproar over an oil waste landfill under preliminary construction. Examining the file, he found no permit application had ever been filed. He halted construction, and convened what turned into a packed community hearing featured in the Bismarck newspaper.
Tribal leaders communicated their displeasure and then effectively excommunicated him.
“I’m guessing they view me as E.P.A., the guy who’s going to stop their money bags,” he said.
On Dec. 15, 2013, after returning from church with his wife of 42 years, Douglas Carlile was accosted in his Spokane kitchen by a masked man dressed in black. Elberta Carlile fled upstairs, heard gunshots ring out and hid in a closet to call 911. Her husband died almost immediately, the day after he had painstakingly tied gold stars on their Christmas tree.
Fleeing the scene, the gunman dropped a leather glove and left a footprint in the mud. His getaway van, tracked down by the police, contained a black balaclava and a to-do list including “practice with pistol” and “wheel man.”
A month later, the police arrested Timothy Suckow, 51, whose phone contacts included a listing for “James ND” with Mr. Henrikson’s number. In the arrest report, the police said the murder victim had been involved in a $2 million oil development deal with Mr. Henrikson, that he had lined up an investor to buy out Mr. Henrikson and that Mr. Henrikson — “not happy” with this — had issued threats.
On Fort Berthold, Calvin Grinnell, curator of the Three Tribes Museum, was horrified to learn of the murder. It was his elderly mother’s land, in part, that the two men had fought over. He had last spoken with Mr. Carlile on Dec. 6, 2013. During that call, Mr. Carlile referred to a financing problem he hoped would be resolved by Dec. 15, allowing drilling to begin.
“Then on Dec. 15, he was shot,” Mr. Grinnell said. “Six hundred and forty acres — that’s what he got killed for.”
On the same day Mr. Suckow was arrested, federal authorities, who had been investigating Blackstone for financial fraud, searched the house in Watford City, N.D., where Mr. Henrikson and Ms. Creveling lived. She had recently bought the place for $450,000; she had also purchased a Bentley Continental.
In addition to financial records, the authorities were looking for and found firearms — seven, as well as 1,188 rounds of ammunition and “his and hers ear protection.”
On Jan. 18, Mr. Henrikson, charged as a felon prohibited from possessing firearms, was taken into federal custody.
Reading the charging documents for the two arrests, Mr. Williams, the tribal attorney, began researching Blackstone’s ties to Fort Berthold.
“I’ll be deadly honest,” Mr. Williams said. “If that gentleman hadn’t gotten murdered in his kitchen in Washington, we might never have discovered what was going on here.”
In a statement at the time, Mr. Hall maintained that he was cooperating with the authorities “to expose Henrikson’s dealings and the extreme danger he posed to tribal members.”
But the tide began to turn against him. At the end of January, the tribal council approved an emergency amendment to its ethics ordinance explicitly forbidding its members to do business with oil companies on the reservation.
A resolution to suspend Mr. Hall failed. But the council did hire Stephen L. Hill Jr., a former United States attorney in Missouri with experience in public corruption cases, to investigate him.
A few months later, in the interview at the expo, Mr. Hall reluctantly answered a question about his relationship to Mr. Henrikson by first saying, “No relationship.” When a reporter suggested that photographs of them together in Waikiki suggested a close relationship, Mr. Hall said: “In 2012. He had a subcontract in 2012. We’re talking, what, two years ago?”
In terms of his business dealings, Mr. Hall said that he had done everything by the book. He said he had transferred ownership of Maheshu to his girlfriend after the ethics rules tightened in January. Before that, he said, Maheshu competed for business like any other tribal-member-owned company. A conflict of interest would have occurred only if he had used his position to get a tribal contract, which he never did, he said.
Mr. Hill’s investigation, however, found that the chairman had participated in a virtual joint venture with Blackstone, with proceeds shared and Ms. Creveling serving as manager of his company, too, for a while. And Mr. Hall’s government did hire Blackstone, albeit without issuing a contract.
The deal involved watering the dust kicked up by oil traffic. Mr. Henrikson had offered to do it at a discounted rate when a tribal official stopped by Mr. Hall’s garage to see if he could buy a truck for the job. The transaction had nothing to do with him, Mr. Hall said, so he was under no obligation to disclose his relationship with Blackstone when he voted for and urged his fellow council members to approve what came to $570,000 in payment.
That was supposedly for five months of road watering, but Mr. Hill’s investigation found that three months of work was never authorized by any tribal official or confirmed.
Asked if he had shared in the proceeds, Mr. Hall said: “Absolutely not. Don’t you think I’d be in jail or indicted if I had?’’
Mr. Hill’s investigation also found what is portrayed as an effort by Mr. Hall to extort $1.5 million from a Virginia-based group of investors who sought to drill for oil on tens of thousands of acres of reservation land. As part of that, Mr. Hall also misled the Bureau of Indian Affairs, the investigators found. But protracted negotiations with the investors broke down, and Mr. Hall never got paid.
Mr. Williams, the tribal attorney, said, “Tex’s defense was, ‘Because I didn’t get money, it was not a crime.’ ”
In mid-August, Mr. Hill presented his findings to the tribal council in a closed session, and the chairman denounced them as a “smear campaign” by his opponents, particularly Mr. Williams.
Mr. Hall, by that point, had filed the paperwork to run for an unprecedented fourth term as tribal chairman. So, too, had Mr. Williams, two of Mr. Hall’s relatives and six others.
The day before the September primary, tribal members massed outside tribal headquarters to demand the release of the investigation report. They cheered when the doors were opened and marched past a phalanx of security into the council chambers. Judy Brugh, a council member, held up the report and told them, to much applause, “It is your right to receive this.”
“You guys, when this all started, nobody really knew it was going to get this big,” she said. “Ever since we read this, we’ve had to carry it around on our shoulders because we knew what we had to do with it” — turn it over to the F.B.I.
Jared Baker, a tribal member, urged her and other council members to do more than that: “Be honest, guys, the feds ain’t going to do” anything unless “you guys push it, push it, push it. So we ask that you do that, so we have some kind of transparency in our government.”
Asked whether he had opened an investigation into Mr. Hall, the United States attorney in North Dakota said he could not confirm or deny the existence of any investigation. Mr. Hall said there was none, to his knowledge.
On Primary Day, he was resoundingly defeated as tribal chairman.
Also on Primary Day, coincidentally, Mr. Henrikson, with five co-defendants, was charged with the murders of Mr. Carlile and, though his body was never found, Mr. Clarke. He was federally indicted on two counts of murder for hire, four counts each of conspiracy and of solicitation to commit murder for hire, and one count of conspiracy to distribute heroin.
Three other potential victims, including the original investor in Blackstone, were targeted but not killed, the indictment said.
Mr. Henrikson pleaded not guilty. His trial is scheduled for July 2015. The murder charges carry a maximum penalty of life imprisonment or death.
In Washington, Mrs. Carlile, still mourning the loss of the “honorable man” with whom she had six children and 20 grandchildren, said they had been destined to become “one of those old couples that still held hands.”
But she was thankful for one thing, she said:
“His killing did open up the whole can of worms in that area and begin to expose the corruption.”
Underscoring the change afoot, the candidates for tribal chairman in the general election — Mr. Williams and Mark N. Fox, the tribal tax director — ran on platforms emphasizing good governance and greater oversight of the oil industry.
Mr. Fox, 52, a lawyer and Marine veteran, won. At his recent inauguration, Mr. Fox, whose Indian name is Sage Man, announced that tribal members would receive a $1,000 check from the People’s Fund for Christmas. In an interview afterward, he said that he would seek to create a three-branch system of government, to install an ethics board and to “resolve the conflicts amongst our own people.”
“Until now, the boom has brought more negative than positive,” he said. “But if we change our mentality, we can turn things around. We can remind the oil companies our land is sacred and they need to respect it. We can deal with revenue responsibly and keep it out of our councilmen’s back pockets. We can put the people first.”
Posted on December 29, 2014, in Indian Act Indians, Oil & Gas and tagged Arikara, Fort Berthold Indian Reservation, Hidatsa, James Henrikson, Mandan, North Dakota, Tex G. Hall, Tribal Council corruption. Bookmark the permalink. 2 Comments.