Former Chehalis tribal official sentenced for embezzling

A former Chehalis tribal official was sentenced Monday to one month in jail and two years of probation, plus he must pay $37,400 restitution to the tribe, as the result of pleading guilty to an embezzlement charge.

Hector Ray Canales Sr., 55, was chairman of the Board of the Chehalis Tribal Housing Authority when he lied about his assets to receive tribal housing assistance.

He was charged in U.S. District Court with one count of conversion from an Indian tribal organization, and pleaded guilty to the charge before Judge Ronald Leighton in May.

Canales already has paid about $24,000 in restitution to the tribe, according to a Department of Justice news release.

During his time on the Chehalis Tribal Housing Authority board, Canales oversaw the implementation of an affordable housing program that helps tribal members transition from rental housing to home ownership, according to a document filed by U.S. Attorney J. Tate London.

Under the program, the housing authority provides qualified people loans for a down payment on a home. The housing authority then forgives repayment of the loan for those who remain current on their mortgage payments and live in the home for five years, according to the document.

Canales submitted his own loan application in September 2009. At the time, he owned a home on Lacamus Lane on the Chehalis reservation. Owning a home would disqualify him from receiving the housing assistance.

He executed a quick-claim deed in July 2010, which purported to transfer ownership of the home to his wife’s relative, according to the document. However, the relative never lived at the home, received rental payments from anyone living in the home or paid any utility bills for the address.

In June 2011, Canales secured financing from Wells Fargo Bank for a home he was having built. On the application, he reported that he owned the Lacamus Lane home outright, according to the document. He said the home was valued at $125,000, and that he planned to sell it once the new home was completed.

The housing authority mailed Canales a $37,400 check to use as a downpayment for the new home, according to the document. In 2012, the housing authority reviewed Canales’s loan and learned that he wasn’t eligible for the $37,400 loan because he still owned the Lacamus Lane home.

Canales was then investigated by the Chehalis Tribal Police Department and the FBI.

This story was originally published September 1, 2016 at 5:23 PM with the headline "Former Chehalis tribal official sentenced for embezzling."