'Huge loss of trust,' First Nation leader says about Kashechewan fraud charges

A First Nation leader who represents the northern Ontario community of Kashechewan is "shocked" to hear about fraud charges against a former co-manager of the reserve.

"To have something like this happen to the people in Kash is a blow to their whole community," Nishnawbe Aski Nation Deputy Grand Chief, Derek Fox, said.

"I'm sure that they feel betrayed and a huge loss of trust for this person."

Fox made the remarks after Giuseppe (Joe) Crupi, 50, was arrested by the RCMP for allegedly fraudulently obtaining more than $1.2 million in public funds from Kashechewan First Nation between 2007 and 2012.

The money was earmarked for a federal government program that was supposed to feed 400 children breakfast.

"The RCMP investigation concluded that the service was not provided to the 400 children, as reported," Sgt. Penny Hermann said.

Hermann alleges Crupi misappropriated close to $694,000 of this money for his personal use, but could not say where the remaining $500,000 went.

Crupi was the First Nation's co-manager at the time the fraud occurred, and was responsible for overseeing funds obtained by the federal government. 

RCMP started to investigate Crupi after several Kashechewan council members questioned his invoices from his consulting firm, according to Hermann.

The invoices were paid for by the First Nation, but they did not reportedly contain supporting documentation. 

Federal ministry takes allegations 'very seriously'

In December 2012, the Ministry of Indigenous and Northern Affairs Canada provided RCMP with a referral from an audit that reported a misappropriation of funds by Crupi, Hermann said. 

In a written statement, a representative of the ministry told CBC News that it takes the allegations of misuse of public funds very seriously.

"INAC conducted an investigation of the financial management of Kashechewan First Nation following allegations of financial irregularities and misappropriation of funds," media relations spokesperson Shawn Jackson wrote. 

"The department turned over the results of this investigation to the Royal Canadian Mounted Police, who in turn conducted their own investigation."

Crupi made a brief court appearance in Thunder Bay, Ont., on Wednesday. 

He was released on a recognizance with a $75,000 deposit, and is due back in court on Oct. 11.