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First 1602 program case lands in federal court

The first federal case in the Section 1602 Program, which has been the subject of an ongoing Federal Bureau of Investigation probe, has landed in the federal court in Washington D.C., and the couple facing one count of “knowing conversion of government property” will be issued a summons to appear in court.

 

The one-page federal information complaint, released yesterday by the feds, identified John Emil Kruse and his wife Elaine Gurr Kruse as those facing the federal charge.

 

Samoa News should point out that “John Emil Kruse” is the territory’s Chief Procurement Officer. A phone call left at his office was not immediately returned.

 

According to the FBI, the defendants were not arrested and they will be summoned to appear at the federal court to answer to the charge. However, the date of the court appearance has not been determined and is currently being negotiated between the U.S. Justice Department and the defendants’ attorneys.

 

Samoa News wasn’t immediately able to confirm the name of the defendants’ attorneys in the federal court.

 

“The FBI regards this [case] as an ongoing investigation. Beyond that, the government will reserve all comments regarding these charges for the courtroom,” FBI special agent Tom Simon said yesterday from the Honolulu FBI office.

 

The federal complaint alleges that between 2010 and 2013, the defendants “did knowingly convert low-income housing grants administered by the U.S. Department of Treasury to their own personal and business use."

 

The government didn’t cite the amount of money given to the defendants, or how much money the defendants allegedly converted for their use. It only says that the value exceeds $1,000.

 

While the complaint didn’t identify the Section 1602 Program, Samoa News was able to confirm with a reliable source that this case does have to do with this federally funded program, which was administered locally by the Development Bank of American Samoa (DBAS).

 

Earlier  this year, DBAS filed a total of 15 civil litigation cases with the High Court of American Samoa against its customers who failed to comply with conditions of the section 1602 housing program contract, which called for them to complete their projects by Dec. 31, 2012.

 

DBAS is seeking to recover money that was awarded to the program recipients and one of the civil litigation cases is against John and Elaine Kruse. DBAS is seeking to collect $864,095.04 from the couple.

 

FBI agents were in the territory in July last year on a fact-finding mission, looking into the 1602 program. Another group of federal agents were in the territory earlier this year.

 

Simon told Samoa News in February this year, that the agents were in Pago Pago to ensure that alleged misuse of federal funds in American Samoa will be fully investigated.

 

“There are currently a few federal agents in American Samoa speaking to community members we view as potential witnesses in our cases, including our investigation of low-income housing grants commonly known as the 1602 Program. This is simply a fact-finding mission,” he said at the time. (See Samoa News edition Feb. 2, 2014 for more details)