Trickle of Documents Highlights National Park Service's Mistakes In Hubbell Trading Post Investigation

It took a lawsuit to pry investigative reports from the Interior Department's Office of Inspector General pertaining to a probe of the Hubbell Trading Post National Historic Site. And then those documents were heavily redacted, as these two pages show.

Editor's note: Six-and-a-half years ago an investigation into the operation of the trading post at Hubbell Trading Post National Historic Site was launched after the National Park Service's Intermountain Region received allegations that the Indian trader there was embezzling from the trading post. Those charges never were substantiated, and the U.S. Attorney's Office in Arizona declined to bring any charges in the case.

The Park Service's initial investigation, which cost upwards of $300,000, and possibly as much as $500,000 or more when you factor in salaries, led to a second investigation by the Interior Department's Office of Inspector General. That investigation raised many questions about how the Intermountain Region's investigation proceeded, as well as about the relationship of top regional officials and those from the Western National Parks Association that operates the trading post.

That OIG report, though completed in January 2008, has never officially been made public, for reasons the Park Service has not yet been able to explain. A heavily redacted version was obtained through a Freedom of Information Act request by Public Employees for Environmental Responsibility, which shared it with the Traveler, whose own FOIA request has languished with Interior for more than a year. The following story looks at that OIG investigation and its conclusions to bring more light on how the Park Service handled the matter.

As dawn crested over Ganado, Arizona, on June 9, 2004, a well-armed contingent of National Park Service law enforcement officers and special agents rapped on the door of Billy Gene Malone's home.

While armed with a search warrant specifying a hunt only for financial records, ledgers and receipts, once inside they spent the next 18 hours rooting through the low-slung stucco house and carting away hundreds of Navajo rugs, thousands of pieces of jewelry, and unspecified quantities of cash and checks as Mr. Malone, his wife, and mother-in-law sat quietly on a couch and watched. Nearby, an armed guard stood at the door.

The search was launched at the request of Western National Park Association officials who had accused Mr. Malone, an iconic if not downright historic "Indian Trader" who had spent 20 years working at Hubbell Trading Post National Historical Site, of embezzling from the trading post and forging checks.

After nearly $300,000 (not including salaries) had been spent on the investigation by the Park Service's Intermountain Region, and after the region's investigation was itself investigated by the Interior Department's Office of Inspector General, no charges were filed against Mr. Malone.

Nor were charges brought against the NPS special agent who, the OIG's investigation concluded, had "submitted false information on the search warrant affidavit and did not properly account for cash and evidence seized." (The U.S. Attorney's Office declined prosecution ... in lieu of administrative remedies," the OIG notes in its Closing Report on the matter.)

While roughly four years' of NPS and OIG investigations led to dead-ends involving the initial charges that launched the expensive probe, they have raised troubling questions pertaining to the Park Service's managerial oversight, investigative thoroughness, and an "inappropriate relationship" between the agency and a cooperating association.

The history of the investigation seems to point to cultural differences between the Navajo Nation and the white man when it came to conducting business that Park Service officials apparently didn't readily recognize or understand. Those close to the investigation say many mistakes could have been avoided early on, and the case might not even have been pursued, if those who brought the charges and those who investigated them understood how traditional Indian traders operated.

The outcome also begs the question of whether Park Service officials, in this case those within the Intermountain Region Office, truly understood both the culture that their sites are intended to preserve and the mission they were given as caretakers of Hubbell Trading Post.

The ongoing silence from the Interior Department and the Park Service over the matter raises more questions tied to transparency, responsibility, and accountability within both Interior and the Park Service.

What the Investigation Uncovered

Requesting the initial investigation into Mr. Malone and his oversight and operation of the trading post was LeeAnn Simpson, who was WNPA's executive director and chief executive officer in June 2004 when she "contacted the Intermountain Regional Office of the National Park Service with information concerning the theft and embezzlement of retail sales from WNPA and the NPS and the forgery of WNPA bank checks occurring at Hubbell Trading Post," states the search warrant (attached below) obtained by NPS Special Agent Clyde Yee.

It was this request, made just five days before Special Agent Yee executed the search warrant on Mr. Malone's rented government home with armed agents wearing bullet-proof vests, that led to a years' long investigation that failed to win any convictions let alone lead to any arrests and which painted a critical picture not only of the Intermountain Region but also of the Western National Parks Association.

The investigation by the Interior Department's Office of Inspector General produced a report that portrayed a dysfunctional investigation and a Park Service hierarchy in Denver that got too cozy with WNPA officials.

Parts of heavily redacted OIG reports obtained by Public Employees for Environmental Responsibility state that:

* "(T)he NPS failed to protect the confidentiality of the investigation."

According to OIG investigations, Park Service special agents had representatives from WNPA's accounting firm join them in searching Mr. Malone's home; the same accounting firm was retained to perform a forensic audit at the trading post despite the apparent conflict of interest that existed from its role as WNPA's accounting firm of record; early on during the course of investigation Intermountain Regional Director Steve Martin and Deputy Director Mike Snyder were in regular contact with WNPA officials over how to proceed.

"It is a problem for both of us," Mr. Martin was quoted as telling WNPA officials during one meeting held to discuss how to fund the audit.

In a note in their report, OIG agents said it was unclear whether Mr. Martin violated agency regulations by asking the WNPA to provide $75,000 for the forensic audit. While regional directors have the authority to approve donations from cooperating associations for research projects, land acquisitions, interpretive projects and historic preservation and restoration work, "WNPA funding of the criminal investigation does not appear to fall under any of the authorized categories," the agents noted.

* "(W)e found that an improper relationship existed between NPS and WNPA."

"Our investigation revealed that NPS law enforcement and NPS Intermountain Region management allowed an almost open-door policy in regard to including WNPA in the investigation at the trading post," one section of OIG's Closing Report stated. At one point of the investigation a Park Service official said they received "six to telephone calls a week" from WNPA officials regarding the case status, and "also spoke with WNPA Chairman Jim Babbitt about the investigation on at least one occasion."

According to (redacted) interview report, (redacted) recalled a conversation (redacted) had with NPS Intermountain Region Director Mike Snyder, where (redacted) pressured Snyder to accelerate the investigation and provide (redacted) and the WNPA Board of Directors with more information. (Redacted) admitted to (redacted) that when Snyder said (redacted) did not think (redacted) had the influence to do so, (redacted) told Snyder to determine who did have the influence and to get them to speed things up, as well as obtain more information for (redacted) and the Board.

* The Park Service's law enforcement branch in this investigation failed to conduct a "thorough investigation" and maintain proper "management oversight of the case."

For example, the OIG investigation determined that Park Service special agents initially handed the case failed to interview former WNPA officials familiar with the Hubbell Trading Post operations and Mr. Malone's running of the trading post.

When OIG agents interviewed those individuals, they were provided with information "that revealed WNPA had been aware of some of (redacted) unorthodox business practices and had allowed them to occur. (Redacted) stated that former WNPA management had allowed (redacted) to run the Hubbell Trading Post and conduct (redacted) own trading and collecting, using (redacted) residence as an extension of the trading post to work and selling trading post items."

For instance, the documents outline, WNPA had a long track record of poor record-keeping at the trading post, one that some of those interviewed thought made it questionable to support allegations of embezzlement. Indeed, one representative of the Devries and Associates accounting firm that had worked for WNPA told OIG investigators that "their audits of HTP did not reveal a huge decline in revenues as alleged by WNPA and subsequently related to the NPS as a basis for criminal investigation."

The reports did craft a picture of curious bookkeeping at the trading post, one in which some paychecks went uncashed, accounting of inventory and sales was irregular, gross profits were not accurately tracked, and odd ways in which WNPA allocated its costs.

But, again, these were practices that seeming had been in place for years, according to those interviewed by OIG agents. And interviews neglected by the initial Park Service special agents but pursued by the OIG agents showed that it wasn't unusual for an Indian trader to endorse a check made out to a weaver or artisan. Often these individuals didn't read, speak, or write English and so could do little more than make their "mark" on a check, which the trader in turn would routinely endorse for them so they could be cashed, one interview noted.

Mr. Malone also had permission to routinely keep many trading post items in his home -- both consignment articles and those belonging to the trading post, the investigation found. Indeed, although the search warrant specifically sought permission to obtain only financial records, ledgers, and receipts, the NPS agents by the end of their nearly 18-hour-long day in Mr. Malone's house hauled away "557 Navajo rugs, 7,000 pieces of jewelry, and an indeterminate amount of cash and checks."

As to how much cash and checks were taken, OIG investigators said that couldn't be ascertained because "(redacted) did not document the seizure or use appropriate chain-of-custody procedures."

Not only was the chain of custody apparently broken during the search and subsequent seizure and storage of ornate rugs, jewelry and cash, but the NPS search team seemed to show no regard for what they took from Mr. Malone's house. OIG agents pointed out in their Closing Report that "(N)either the search warrant nor the search warrant affidavit properly identified the items that were ultimately seized by the search team. In addition, our review of the seized rugs revealed less than 30 percent bore markings or tags from Hubbell Trading Post or WNPA."

While a forensic audit eventually was performed by an Interior Department-OIG selected auditor, that review was unable to discern "whether (redacted) or anyone had embezzled or stolen from the Hubbell Trading Post or WNPA due to inadequate source documents and numerous accounting problems that existed at WNPA."

Later in their Closing Report the OIA agents noted that "we could not locate an official case file documenting investigative activity or periodic case reviews by NPS law enforcement management. NPS could not provide essential documents during our investigation, including chain-of-custody records, interview reports, copies of subpoenas served, and search-warrant inventory records."

The volumes of reports also noted that Mr. Malone's operation of the trading post seemed to run counter to what WNPA officials on board in the early 2000s envisioned. Whereas the Indian trader offered consignment rugs and jewelry from Navajo weavers and artists along with merchandise purchased by WNPA from its vendors, WNPA officials wanted to do away with consignment goods, according to some of those interviewed.

"WNPA was 'not real nice' to the Navajo community adjacent to HTP and actually did things to hurt the community," one OIG investigative report, made Feb. 8, 2007, said. "The weavers and artisans were pushed out. WNPA ended up changing a long-standing tradition between the Navajo and HTP. (Redacted) opined that consignments could have continued and the whole thing was a knee-jerk reaction by WNPA."

Silence from Washington

All those issues were highlighted on January 16, 2008, in the OIG's final report on the Hubbell Trading Post investigation. Since then, though, no official report has been released by the Interior Department. Park Service officials in Washington could not say last Friday what the status of the matter was.

The Park Service did respond, privately, to the OIG's final report. In that response the agency acknowledges that those initial investigators and managers who looked into the business operations at Hubbell Trading Post exhibited "poor case management" and "poor judgment and performance. That June 2009 letter to OIG -- sent 18 months after OIG filed its final report -- noted that the Park Service "took significant actions to address the agent's performance issues..." but did not mention whether those who supervised the special agent were disciplined, nor whether any of the top managers in the Intermountain office were reprimanded by the Washington office.

Mike Snyder, who was deputy director of the regional office when the Hubbell Trading Post probe was first initiated and later became regional director, retired in February 2010 rather than agreeing to a reassignment.

Steve Martin, who was regional director at the time the investigation was launched and went on to serve as deputy director of the Park Service in Washington before transferring to Grand Canyon National Park to serve as superintendent, retired earlier this month.

Neither Mr. Martin nor Mr. Snyder have been willing to discuss the Hubbell investigation.

The Indian trader, Mr. Malone, brought a civil lawsuit against a number of Intermountain Region staff, including Mr. Martin and Mr. Snyder. In it he accused the Park Service personnel of misconduct and wrongful seizure of his personal property, and also alleged that Park Service officials collaborated with officials from the Western National Park Association in trying to build a case against him.

However, a judge removed the Park Service officials from the matter last February, saying he didn’t think a case could be built to show a conspiracy against Mr. Malone existed between the NPS and WNPA, according to William Hobson, Mr. Malone’s attorney. The lawsuit remains pending against WNPA officials.

PEER officials, meanwhile, can't understand the reticence of either the Park Service or the Interior Department.

"The botched Hubbell Trading Post investigation was a perfect opportunity for the Interior Inspector General to bring a measure of accountability to a dysfunctional Park Service law enforcement program that has gone off the rails," says Jeff Ruch, the executive director of Public Employees for Environmental Responsibility. "Rather than do its job, the Inspector General has made a bad problem worse by deep-sixing its own investigative report. This report is seeing the light of day only because PEER had to file a federal lawsuit to pry it out of deep freeze.

"We still don’t know why this investigation went from high priority to back burner to off the stove entirely, in that the final report was never officially issued."

Hubbell Trading Post's Significance

More than just a historic site intended to capture a moment in Western history, when Hubbell Trading Post Historic Site was justified to Congress it was done so with the clear intent that the days of Indian traders would not merely be preserved behind glass but maintained on a daily trading business.

In 1966 when he appeared before a congressional committee to answer questions about Hubbell Trading Post, then-Park Service Director George Hartzog told the congressmen that he envisioned a traditional operation, not one governed by present-day business methods. Indeed, at one point in a meeting with Bob Utley, the Park Service's regional historian at the time, Mr. Hartzog made it abundantly clear that he didn't want the trading post turned into a museum, according to the Park Service's administrative history of the site, written in 1993.

"Hartzog erupted vehemently that he would not countenance another god-damned dead embalmed historic site, that it must be a living trading post," Mr. Utley recalled to the history's authors, Albert and Ann Manchester.

The administrative history of Hubbell Trading Post makes this intention quite clear.

The mission of the Park Service at the historic site is of course the protection and preservation of the site, but, and this is unique in the Park System, the site is also intended to perpetuate, for as long as possible, the trading post business as an example of that kind of business. This is the only trading post owned by the American people. It is important to note that although this historic site has museum-like aspects, it is not a museum, and for the most part is not a site intended to be "frozen in time." This may be our only historic site that is intended to go on evolving, a real business that will change as the Navajo themselves change.

With roots in the 1870s, the trading post at the time of its addition to the National Park System was the "oldest trading post still in operation on the Navajo Reservation, and it was the oldest business still operating in northern Arizona," reads a portion of the administrative history.

When the Manchesters first visited the site in 1981, they quickly realized the significance of Hubbell Trading Post and the living history it preserved.

Hubbell Trading Post is not just an old trading post; it is a window to a very rich world. A world of traders and trading posts, of military campaigns against Indians, the campaigns and marauding of those Indians against the people history brought upon them. Hubbell Trading Post was one of the focal points during a collision of conflicting cultures. And the site has been occupied by man probably since man first walked into the area thousands of years ago and found water here; he has left dwellings, artifacts and burials here. The place is rich in the lore of arts and crafts. Significant people lived here, worked here, passed by here. Although small in area, Hubbell Trading Post is undoubtedly one of the richest cultural resources owned by the American people.

And even back around 1980, Billy Malone was a living, walking, and trading part of that history, they noted.

When you do business with Bill Malone you are taking part in a tradition that goes back, now, 115 years; Bill is the most recent link in an unbroken chain that you can follow right back to the mid-1870s. In the West, that spells Tradition.

Here the Park Service had an opportunity not to simply preserve history, but to keep it alive through an active trading post, and an Indian trader who in the old ways took in rugs and jewelry from Navajo artisans and offered them, and history, for sale.

Was Tradition And History Waylaid?

But that tradition seemingly was overlooked or lost in the early 2000s when there was a change of leadership at the Western National Parks Association. Reading through the OIG interviews and reports and talking with those familiar with the matter, it seems that Ms. Simpson's predecessors had no troubles with Mr. Malone's "quirky ways" and appreciated him for what he brought to the trading post, according to those reports.

In interviews with special agents Ms. Simpson's predecessor commented that the association's board was thrilled to hire Mr. Malone, as he had "an incredible knowledge of life on the rez and of the weavers."

When asked specifically of Mr. Malone's trustworthiness, this executive replied, "We never had any reason to suspect (redacted) honesty."

Additional material from that interview established that the Indian trader's habits of doing work on the side with Navajo weavers and jewelry makers was commonly accepted and not a concern. It was also well-known and accepted that Mr. Malone kept goods in his private residence, the interviews show.

Having Mr. Malone run the trading post and accepting his methods was "viewed as an acceptable trade-off for having one of the last real (redacted) there to run Hubbell Trading Post and to maintain a genuine historical atmosphere," the former executive was quoted as saying.

It sounded like just the atmosphere that the late Mr. Hartzog hoped Hubbell Trading Post would exude.

So what now? Those close to the matter say Hubbell Trading Post's reputation with the Navajo weavers and artisans has been tarnished to the point that many are unwilling to trade with it, that the trading post is closer now than ever to becoming that museum Mr. Hartzog wanted so desperately to avoid.

Park Service officials at the trading post hope to avoid that and have scheduled meetings in the coming weeks with both a select few to discuss ways to return the trading post to the way it was and then with a larger community of stakeholders, including weavers and jewelry makers.

Among those invited?

Billy Malone.

Comments

I found the reply by BJ Malone quite creditable. As I was briefly acquainted with Mr. Paul Berkowitz, I knew his book on this case was also worth the read. One of the most troubling issues involving this incident is the NPS stonewalling of any meaningful resolution to Mr. Malone's complaints. The NPS is an excellent organization, but from long experience, I know that occasionaly a mind set of "we must protect the organization at all costs" becomes the driving consideration. This is extremely unfortunate, the best way to protect any organization is to be forthright when and if mistakes are made. Many years ago, I was involved in a prescribed fire that got out of control. The top management of the park let it be known immediately that a mistake was made and that the Park Superintendent would take full responsibility. That person, after these many years, is still remembered and respected by citizens of all walks of life. The NPS Washington Office needs to step into the "Malone" controversy and make things right, no more redacting and stonewalling, six and half years is enough.

Well Mr. Mackie, you have cemented my opinion of you and I agree totally with bringing things out of the darkness. "We must protect the organization at all costs," conjoined with we must protect ourselves is what eventually becomes the theme (recent past IMR). These situations are always hard on morall of those that are compelled to sink into that career path. Nobody mentions the public's loss in many ways with the prime concern by the supposed servents to the public and protectors of the resource, goes astray. There are so many awesome servents and protectors in NPS it is dissapointing when some with obvious personal issues but with political accumen/cronyism leave their stamp of darkness on the whole agency. I remain hopeful knowing the strong character in many inside NPS is there, many times dorment, waiting for the right kind of leadership to embrace.

Anonymous, yes, I think you are correct, "we must protect the organization at all costs" unfortunately can be equated to protecting the self interest of those involved. I hesitated to say that, as I am not sure its true in all cases, but your courageous comment can often be the case. I also agree and share your thought that the majority of the NPS employees are of "strong character" and I might add goodwill, at least that has been my experience. Thank you for the post and thank you to "Traveler" for conducting this discussion.