A settlement has been reached in a civil lawsuit related to the theft of approximately $2.5 million dollars from the Whitecap Dakota First Nation.
Whitecap launched the suit in 2015 against RBC Royal Bank and the auditing firm KPMG after Hugo Gallegos, a former employee of the First Nation was sentenced to five years in prison. Gallegos served as a senior accountant for six years, and during a chunk of that time, he scammed the First Nation out of large sums of money, writing close to 1800 cheques to himself and ultimately defrauding Whitecap Dakota of millions of dollars.
Gallegos was ultimately charged in 2013 after irregularities were discovered in the books.
Gallegos pleaded guilty to two counts each of theft and fraud over $5000, as well as a charge of laundering the proceeds of crime and a charge of possession of the proceeds of crime. At one point in the duration of his crimes, he had jammed a cooler with $143,000 in $100 bills, owned a storage locker filled with shoes worth around $200,000, and once spent $700 just on socks.
During the trial, the defence said that while Gallegos didn’t dispute the amount that had been taken through the scam, he did dispute that he was the only person in the First Nation who had benefited from it. The suspect claimed that corruption was “widespread” at Whitecap Dakota First Nation. The defence said that Gallegos was shown by another employee in the organization how to perform the cheque-writing scam, and that the other employee went gambling with Gallegos with stolen money.
Regardless of his claims, Gallegos was sentenced to five years in a federal prison in 2015.
In the lawsuit, the Whitecap Dakota First Nation alleged that RBC and KPMG should have noticed the criminal activity taking place earlier as Gallegos cashed fraudulent cheques at the bank.
In the immediate aftermath of Gallegos’ sentencing, officials with RBC and KPMG stated that the leaders of the First Nation only had themselves to blame after Gallegos had defrauded them. Whitecap had a “contractual obligation to review account statements and report any inaccuracies within 45 days of receiving them”, RBC pointed out in its statement of defence in 2015.
It would appear that the two sides have come to an agreement in the nearly four years since Gallegos was sentenced to prison with the news of the settlement.
Terms of the settlement are being kept confidential.
