Two tribes aren’t recognized federally. Yet members won $500 million in minority contracts

Companies set up by members of a self-described and state-recognized Creek Indian tribe in Alabama have received more than $240 million in federal minority-business contracts, despite a determination by the U.S. Bureau of Indian Affairs that there is no credible evidence the group has Native American ancestry, a Los Angeles Times investigation has found.

Federal contracts worth an additional $273 million have gone to two companies run by a member of a different Native American group in Alabama with no federal recognition as a tribe.

The ability of company owners with questionable Native American identity to obtain more than half a billion dollars in taxpayer funded minority-business contracts reflects a nationwide failure by agencies overseeing programs set up decades ago to help socially and economically disadvantaged minority groups.

Including the Alabama outlays, The Times has found more than $800 million in federal contracts awarded to companies whose owners made unsubstantiated claims to be Native American, although the total is almost certainly higher. The contracts were for construction, computing and other projects in 27 states, including California.

Federally recognized Native American tribes, and other racial and ethnic minorities are the losers.

A Times analysis of Small Business Administration contracts found Native American companies are often overrepresented compared with other minority groups. But the disparity is particularly stark in Alabama, where Native Americans comprise less than 1% of the state’s population but Native American businesses were awarded more than $2 billion through the SBA’s minority program since late 2007.

By comparison, while African Americans make up 26% of the state’s population, black businesses in Alabama received about $827 million in minority business contracts, the records show. Black business owners in Alabama say they struggle to compete against Native American companies, and suspect many are owned by whites.

California and five other states have moved to strip minority status from companies examined in The Times’ earlier reports on the contracting programs.

In addition, the U.S. Department of Transportation has called for a nationwide review of Native American contractors to ensure the owners are members of recognized tribes, and the Small Business Administration’s inspector general has begun an audit of SBA certifications of Native American contractors.

Each year, the federal government reserves 5% of its multibillion-dollar contracting budget for businesses owned by eligible minorities, including U.S. citizens who are Asian, black, Latino or Native American. But the program’s process for vetting applicants is seriously flawed, The Times’ investigation showed.

One major problem is that the SBA considers business owners to be legitimate Native Americans if they belong to a tribe recognized by either the federal government or a state. Many Native Americans have long opposed allowing states to recognize tribes, arguing that the federal government should make the decision because states often fail to properly screen groups.

Alabama has recognized nine tribes, but only one — the Poarch Band of Creek Indians — is recognized by the Bureau of Indian Affairs, which is part of the U.S. Interior Department.

Members of federally recognized tribes in other states have criticized the claims of the other eight, including the Ma-Chis Lower Creek Indian Tribe and the Echota Cherokee Tribe.

“They found a loophole,” Brenda Golden, an attorney and citizen of the Muscogee (Creek) Nation in Oklahoma, a federally recognized tribe, said of the Alabama groups. “They’re profiting off the misery of our ancestors.”

Among the beneficiaries of the SBA’s rule in Alabama are Aetos Systems Inc. and its joint venture, Aerie Aerospace. They won contracts worth a total of $273 million, The Times’ analysis found.

The owner of both companies, Donna Coleman, qualified for the federal minority business program by claiming membership in the Echota Cherokee Tribe, according to SBA records.

At the request of The Times, Gene Norris, the lead genealogist at the Oklahoma-based Cherokee Heritage Center, examined records for Coleman’s family and concluded she “has no documentable Cherokee ancestors.” The records showed her ancestors were white, he said.

Shortly after this article was published online, Coleman sent The Times an email saying she has “proper documentation that links my qualified percentage of Cherokee heritage to the Dawes Rolls,” which are the documents used to confirm Cherokee citizenship. She did not immediately provide further information or documents.

The Echota Cherokee Tribe says their ancestors fled to avoid the infamous “Trail of Tears” — the 19th century forced removal of American Indians to what is today Oklahoma — and then blended in with white communities, according to the Alabama Indian Affairs Commission’s website.

The tribal chief did not respond to requests for comment.

In the case of the Ma-Chis, the SBA began certifying the group’s companies in 2005 because Alabama had formally recognized it as a tribe in 1985. The companies have been awarded more than $240 million in contracts.

SBA officials would not say if they were aware that the Bureau of Indian Affairs had concluded in 1987 there was no credible evidence that the Ma-Chis’ ancestors were Native American. In a statement, the SBA said the Ma-Chis continue to qualify for minority contracts under its regulations because of its state recognition in Alabama.

Nancy Carnley, the vice chief of the Ma-Chis, said the group was unfairly denied federal recognition.

“You need to look how corrupt federal recognition is … how demonic it is,” Carnley said in a brief phone interview before hanging up. She didn’t respond to emailed questions from The Times.

Carnley serves on the Alabama Indian Affairs Commission, which decides which tribes receive state recognition.

Alabama has seen its Native American population surge, part of a cultural phenomenon that began in the 1960s as hundreds of groups across the country — some with legitimate Native American ancestry, some not — emerged to claim indigenous roots. In some cases, whites genuinely believe they have Native American heritage based on family lore.

From 1970 to 1980, the number of self-identified Native Americans in Alabama tripled from about 2,400 to nearly 7,600, according to U.S. census figures.

A 1976 letter from a Creek Indian in Oklahoma to the Montgomery Advertiser newspaper condemned Alabama’s newly self-discovered Creeks as “plastic, show-and-tell whites who attire themselves in outlandish costumes and parade before the public .… It is truly sad that Alabamians are being fooled by these imitation Indians.”

By the early-1980s, self-described tribes were clamoring for state recognition.

At the time, Eddie Tullis — then chairman of the Poarch Band of Creek Indians — called for a strict vetting of the new groups and expressed doubts about their claims.

Nevertheless, state legislators relaxed the rules regarding which tribes were eligible for state recognition, Tullis said in an interview with The Times.

He said his fears had come to pass in Alabama “more than any other state that I know.”

In 1985, state lawmakers approved a bill formally recognizing the Ma-Chis as a tribe and giving them a seat on the Alabama Indian Affairs Commission, legislative archives show. It’s unclear what vetting, if any, was conducted by the Legislature.

Patricia Davis, the lawmaker who introduced the bill, was later convicted of selling votes for cash in an unrelated matter. She did not return calls for comment.

Since the 1980s, seven of the nine groups recognized as tribes by Alabama have filed paperwork saying they intend to seek federal recognition. The Bureau of Indian Affairs has made determinations for three, approving one and denying two, including the Ma-Chis. It has not ruled on the Echota Cherokee Tribe.

Applications submitted to the Interior Department’s Office of Federal Acknowledgment are vetted by researchers with expertise on tribal history, genealogy and anthropology. To earn recognition, a tribe must have documented Native American ancestry and show it has continually existed as a distinct community of American Indians.

Although they were previously unknown, the Ma-Chis insisted they were genuine — but had concealed their tribal heritage for generations because of fear of persecution.

In the 1830s, the Ma-Chis fled white mobs and found refuge in a cold, damp cave, the group’s leaders claimed, citing oral tradition. As the tale goes, the Ma-Chis eventually emerged from their hiding place and blended into the backcountry towns by pretending to be white, keeping their identities secret.

But the federal researchers who studied the Ma-Chis’ application found numerous problems with their Creek Indian origin claims, according to the Bureau of Indian Affairs’ final report published in 1987.

The cave story was dubious, rooted in local folklore about Indians and outlaws, the report said. Many of the Ma-Chis’ ancestors, including those of the current chief, were living in other parts of Alabama and neighboring Georgia around the time the tribe allegedly was hiding in the cave.

Two records that documented Ma-Chis ancestors as “Indian” had been altered, the federal researchers concluded. The documents originally said they were white. The report doesn’t say when the records were changed.

There was no evidence that Ma-Chis, the tribe’s legendary patriarch, ever existed, the researchers concluded. The group’s traditional songs were not Native American but white Southern hymns, the report said.

At best, the federal experts said, about a fourth of the group’s members might have a 1900-era ancestor who was possibly the great-great-granddaughter of a woman “said to be” the sister of a half-Creek man. But more research would be necessary.

The Bureau of Indian Affairs denied the Ma-Chis’ petition for federal recognition.

Testifying to Congress in 2007, the group’s current chief, Carnley’s brother James Wright, complained that the Ma-Chis were penalized because their ancestors had to deny their heritage and hide in “forested lands, swamps” and “caves.”

Despite the federal-level denial, the SBA approved Ma-Chis Lower Creek Indian Tribe Enterprises Inc. as a tribally owned company in 2005 based on its recognition by the state, and Wright was appointed as president and chief executive, federal and state records show. Since then, the SBA has also certified at least two other Ma-Chis companies as tribally owned, according to the records.

Tribally owned businesses enjoy a special status that exempts them from contract limits imposed on other companies in the program. The designation is meant to help tribes reap a financial windfall that would benefit their members.

The contracts awarded to the Ma-Chis’ firms include $6.6 million to construct offices in Pensacola, Fla., for the U.S. Public Building Service, $4.7 million for computer system development for the Department of Defense and $4.1 million for construction of an operations complex for the U.S. Army in Tuscaloosa, Ala., federal contracting records show.

Nadine Schloemer, an official with the Ma-Chis companies, said the tribe uses the money to help members with a food bank, air conditioning installations and computers for college students who can’t afford them, among other things.

She said she grew up looking at old photos of great-great-grandparents who were said to be Creek. She wasn’t sure if her family’s hunting and farming traditions came from Native American or white ancestors.

“At this point, we really don’t know, do we?” she said.

U.S. Rep. Judy Chu (D-Monterey Park), who led a House Small Business subcommittee oversight hearing in October that addressed earlier findings by The Times, has asked the Government Accountability Office, the investigative arm of Congress, to audit how the SBA vets contractors whose owners claim to be Native American.

The Ma-Chis, she said, represent “the most egregious” example yet of the SBA’s failure to bar businesses with dubious claims to being Native American-owned.

“That is not right, and we have to determine what has been going wrong with the process,” she said.

Times staff writer Anthony Pesce and special correspondent Chip Brownlee contributed to this report.

THE FULL SERIES

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Two tribes aren’t recognized federally. Yet members won $500 million in minority contracts