Chief and Congress attempt to find fix for struggling business arm of the Nation

Principal Chief Geoffrey Standing Bear and the Fifth Osage Nation Congress are working to find a fix for the Osage Nation’s business arm of Tallgrass Economic Development LLC and Osage LLC.

It’s been a tumultuous year for both entities, with multiple board member resignations, firings, and questions of fraud from a former CFO. This is nothing new for the Osage LLC after Carol Leese and crew allegedly embezzled approximately $19 million from 2008 to 2014.

According to multiple sources, Tallgrass is completing and gaining contracts, expecting future business, applying for multiple grants. However, two board members, Kay Martin and Megan Cruz, resigned on April 3 after questions were raised of fraud from previous work done prior to their tenures. A third board member, Kay Bills, said during a Congressional committee meeting that she plans to resign at the end of the Hun-Kah Session. Not much is known about the allegations of fraud since any pertinent information related to the companies is discussed in executive session.

“Megan Cruz and Kay Martin are two of my best appointments. They are new and could not save Osage LLC and Tallgrass LLC from their current situation. The recent report from consultants is that a former Chief Financial Officer of the LLC’s filed false claims for payment on a construction project,” Standing Bear said. “Although not yet proven, this is enough to make prudent people take action. To this day I have received no 2017 financial audit or approved monthly financials for 2018 from these LLC’s. I will not support any Osage Nation money for these LLC’s.”

According to the Tallgrass and Osage LLC 2018 Annual Report, recently given to the Osage Congress, the companies have 13 Small Business Association (SBA) 8(a) projects at Tinker Air Force Base and three non-8(a) projects at Fort Leonard Wood, Mo. On the technology side, they have two non-8(a) projects to provide broadband in the Grayhorse area and Bowring, and the second project is to provide Audio/Video Installation and Integration for the new Osage Casino in Tulsa. They also have three 8(a) projects at Fort Leonard Wood and another at Fort Sill. 

“The Osage Nation appropriated millions of dollars since authorizing the first economic development holding company, Osage LLC, in April 2008. Tallgrass’ current financial problems result partially from inexperience in dealing with government contracting,” wrote Tallgrass LLC Chair Jim Parris in the annual report. “With the addition of a new management team and new members to the Board of Directors, Tallgrass is positioned to move forward to develop and implement a successful business model for the future.”

Tallgrass currently has three out of five board members left: Parris (chair), Kay Bills (vice chair), and Patsy Stuke. According to Parris in the report, the board and staff have saved the Nation from defaulting.

“Federal contracts that were committed to be finished by January 2018 were found to have not even been started by November 2017. Submittals of key reports had not been completed for construction projects,” wrote Parris. “A cure notice and a potential termination for default had been received by the construction company, however, no action had been taken to address either notice by the previous management. The bonding company had been notified that the bond for one of the projects would be called.”

Bills has been vocal in both Congressional meetings and Osage Facebook forums, that the current board and staff have done their utmost to ensure the survival of the Nation’s businesses. She said she was asked three times to be on the board before she finally accepted. She said the problems were so severe when she joined the board that they didn’t know if they could make payroll, if they could pay vendors, and there was a list of over $700,000 in bills that needed to be paid. Now, the company is getting good ratings on their contracts, completing contracts and has hopes for more. On April 3 in the Congressional Commerce committee meeting, she said she has lost the confidence of Standing Bear, and Parris, and has been told she was not going to be re-appointed.

“We took our only asset and liquidated it. So, ladies and gentlemen, my apologies. I just could not do it for you and it makes me very, very sad. I’ve had a long career and I’ve seen this happen before. I don’t want to be told that we failed. Because we didn’t fail, we were failed,” Bills said on April 3. “It’s been a pleasure, I have a lot of things to do ... make Mr. Parris’s life a lot easier. I will stay on till another board member is appointed in my place. This is a good company and they’ve been basically thrown under the bus.”

Board minutes – a timeline

The Osage News requested the meeting minutes for both Tallgrass and Osage LLC from September 2017 to present. In September 2017, Tim Tall Chief was still chairman of the board, Phillip Morrow, Jim Parris, Kay Bills and Ray Hankins made up the TED LLC board. Barber & Bartz was the legal counsel, Jill Jones (Osage) was the Interim CEO and they had just hired Tony Whitehorn (Osage), the younger brother of Osage Congresswoman Maria Whitehorn. He was hired to be the Operating General Manager of Osage Pinnacle Design Group, LLC, which was doing business as Tallgrass Construction Services. Sharon Bertram’s company Compass Consulting was the accounting firm tasked to handle accounting, technical support, and human resources support. Jim Holder, the former CEO, had resigned earlier in September.

In October, Parris became chairman, Bills became vice chair and Stuke became treasurer. By the end of September board relations had crumbled and Tall Chief resigned but not after telling Bills he thought she was unprofessional and that she should be removed. Phillip Morrow also resigned from the board.

On Nov. 1, Bills motions for the immediate termination of Jill Jones for insubordination, according to the Tallgrass Nov. 1 minutes. Stuke seconds her motion and it unanimously passes with “yes” votes from Bills, Stuke and Parris. The board contracts former Office of Fiscal Performance Review director Kelly Corbin as Interim CFO and Interim CEO. The OFPR is an entity of the Osage Congress. His contract is for $11,000 a month. It passes unanimously.

At a Nov. 21 Tallgrass meeting, Kay Martin has joined both the TED and Osage LLC boards. Sharon Bertram’s company Compass Consulting is no longer the accounting firm for TED or Osage LLC. They have hired Jade Johnson and the accounting for Osage LLC has been transitioned in-house. Corbin expresses the difficulty in getting records from Sharon Bertram. Members of Congress and the Chief’s office regularly attend the meetings.

In December, Susan Elliott, CPA is hired as Controller for Tallgrass. Elaine Hight, a former auditor for OFPR, is hired as an Executive Assistant and Facility Security officer. Dustin Alphin is hired as Operating General Manager of Tallgrass Construction Services. Amendments were discussed to the Tallgrass Articles of incorporation, an update on the transfer of SBA approved subsidiary companies from Osage LLC to Tallgrass is “heading in the right direction,” according to Corbin. Bills wants office space in Osage County, Parris requests an update on the Audit RFP, Stuke brings up the need to look for another law firm for legal advice in place of Barber & Bartz and wants to utilize the ON Attorney General’s Office.

In January, Megan Cruz has joined the board to complete the five-member board of Parris, Bills, Stuke and Martin for Tallgrass. Corbin is still having trouble with Sharon Bertram’s company Compass Consulting in returning documents, software, hardware, passwords, software licenses and wants to indemnify the company for the cost. In new business, the board is asked for comments regarding documents provided by Standing Bear regarding a proposed merger of the Osage LLC and the TED LLC.

On Jan. 25, Corbin said he will prepare a report highlighting the amount of revenue needed to break even and that the company needs someone with experience in 8(a) contracting to be successful. Moss Adams LLP is selected to complete an annual audit of the Osage LLC, Tallgrass LLC and Bluestem companies. An update on Sharon Bertram’s agreement is given and ON Attorney General Holli Wells has been assisting in an agreement to pay for outstanding invoices, with the caveat that signed documents and materials are returned before payment is released. Corbin declines a contract extension for Interim CEO/CFO. Martin makes a motion to extend an offer to Janice Dearman (Cherokee), for Interim CEO for 90 days.

On Feb. 23, Dearman gives a report that employee files are audited, standardized and E-Verify checks are current. Financials are approved from July, August, and September and sent to the Clerk of the Congress.

On March 15, Resolution 18-07 to approve the Tallgrass Business Plan passes with one “no” vote from board member Megan Cruz. Resolution 18-09, to review and approve the CEO to submit a Business Loan Application fails, with Parris, Martin, and Cruz voting “no.” Resolution 18-04 to approve manager for Subsidiary Entity, it passes unanimously. Resolution 18-05, to open a new account at Bank of Oklahoma for Tallgrass Support Services, passes unanimously. Whitehorn is now Operating General Manager of Tallgrass Support Services.

On March 29, at the meeting of the Osage LLC, board members Jim Parris, Kay Martin, Patsy Stuke and Megan Cruz are present. They go into executive session for two hours. They come out of executive session and Stuke moves to approve the TED and Osage LLC business plans with the exception of the financials. The motion fails with Parris, Martin and Cruz voting “no.” Martin made a motion to approve Resolution 18-06, to authorize a bank account for the Bowring Broadband project. It passes unanimously.

Construction Overview

The following was taken from the 2018 Annual Update to the Osage Nation from Tallgrass LLC.

Non 8(a) Projects

-       Ft. Leonard Wood – Confined Space Structure at Training Area

-       Ft. Leonard Wood – Construct Urban Search & Rescue Towers at Training Area

-       Osage Casinos Fire Alarm Installation and Integration 

SBA 8(a) Projects

-       Single Award Task Order Contract Projects – Tinker Air Force Base, OKC, OK

-       Performance Oriented Contract Action Projects – Tinker Air Force Base, OKC, OK

Technology Overview

The following was taken from the 2018 Annual Update to the Osage Nation from Tallgrass LLC. 

Non 8(a) Projects

-       Broadband – Grayhorse & Bowring Projects

-       Osage Casino Audio/Video Installation and Integration

SBA 8(a) Projects

-       Fort Leonard Wood, MO – A/V Technology for Commanding General’s Conference Room

-       Fort Leonard Wood, MO – Maneuver Support Center of Excellence IT & AV Support (G-6)

-       Fort Leonard Wood, MO – CDID MSBL IT & Simulation Support (MSBL, Battle Lab)

Ft. Sill, OK – Security CCTV AV Blanket Purchase Agreement