An FBI probe begun in 2010 yielded indictments Friday of Steven Thomas, the Mashantucket Pequots' treasurer, and his brother, Michael, a former tribal chairman, who were charged with stealing more than $800,000 from the tribe that owns Foxwoods Resort Casino.

The brothers were named in separate indictments charging each with one count of theft from an Indian tribal organization and two counts of theft from an Indian tribal government receiving federal funds.

The indictments were returned by a grand jury convened in Hartford.

Hours before the U.S. Attorney's Office announced the indictments, Steven Thomas, 38, was sworn in to his second three-year term as a member of the Mashantucket Pequot Tribal Council. He took an oath of office along with other tribal officials elected in November, including fellow councilors Rodney Butler and Crystal Whipple.

The state's lieutenant governor, Nancy Wyman, attended the swearing-in ceremony, which was held at the Mashantucket Pequot Museum and Research Center.

In a statement issued early Friday night, the tribal council questioned the federal government's prosecution of Steven Thomas, who became the council's treasurer a year ago.

"As a Tribal Council we have recently learned that one of the Tribal Members under investigation, Steven Thomas, has been named in an indictment for matters unrelated to his time on Tribal Council," the statement reads. "We have served with him and are confident in his dedication to his duties for the Tribal Nation while serving as a Tribal Councilor.

"We are disappointed in the federal government's decision to move forward with this action, and feel that this has strong implications on self-governance throughout Indian Country. … We remain confident in the judicial system and will continue to cooperate with the U.S. Attorney's Office on a government-to-government basis."

The Thomases are scheduled to appear Monday in federal court in New Haven before U.S. Magistrate Judge Joan G. Margolis.

The indictment against Steven Thomas alleges that he stole tribal funds from January 2005 through June 2008 while employed as assistant director of the tribe's Department of Natural Resources Protection. Michael Thomas, 44, is accused of stealing tribal funds from October 2007 through April 2009; he served as chairman of the tribal council from 2003 until August 2009.

If convicted of stealing from an Indian tribal organization, each faces maximum prison terms of five years and fines of up to $250,000. If convicted of stealing from an Indian tribal government receiving federal funds, they face maximum prison terms of 10 years and a fine of up to $250,000 on each count.

Under forfeiture allegations contained in the indictments, Steven Thomas, if convicted, faces forfeiture of $739,744, while Michael Thomas, if convicted, must forfeit $102,393 and two personal computers.

According to the tribe's website, Steven Thomas worked for the tribe for more than 15 years before being elected to the council in 2009. He worked briefly in the Parks and Recreation Department and then in Environmental Services and Natural Resources Protection. He served as associate director of the Natural Resources Department in 1995 and as assistant director of the department from 1996 to 2008.

Michael Thomas was ousted as chairman in August 2009 after pledging to put funding for tribal government and distributions to tribal members ahead of the tribe's obligations to lenders. At the time, the tribe — highly leveraged and with its casino reeling from the recession — was on the verge of defaulting on $2.3 billion in debt. The default occurred in 2010.

Thomas, who was up for re-election that November, accepted his removal from the council and abandoned plans to seek another council term. He then ran for election to the council in 2011, garnering little support.

In December 2011, Thomas filed for Chapter 7 bankruptcy, listing $346,474 in assets and $10,262,800 in liabilities, including a claim for $8.4 million by Sovereign Bank, which won a judgment against him after arguing in New London Superior Court that he had failed to repay a $5.2 million line of credit. Interest, late fees and attorneys' fees increased the amount of the judgment.

Filings in the bankruptcy case showed Thomas, whose salary as tribal chairman once ran to seven figures, claimed a monthly income of $4,000 in tribal "transition payments." The payments were made to adult tribal members from January 2011 through March 2012 and were substantially less than the per-capita distributions of Foxwoods gaming revenues that members received prior to that. The previous distributions, known as stipends or "incentive" payments, stopped at the end of 2010.

Thomas indicated in U.S. Bankruptcy Court papers that F. Robert LaSaracina handled his finances from 2000 to 2009. LaSaracina, a former Norwich accountant, is serving a 63-month sentence in federal prison after pleading guilty in 2011 to wire fraud and failure to pay over taxes.

LaSaracina, testifying in the Sovereign Bank case in July 2010, said Thomas regularly overspent his tribal credit card by tens of thousands of dollars and often could not cover the expenses.

Five months into his first term on the tribal council, Steven Thomas also filed for Chapter 7 bankruptcy, claiming $20,500 in assets and $357,908 in liabilities. He listed his monthly income as $22,000. The case was closed several months after it was filed.

The FBI probe of tribal finances began in 2010, and involved a review of federal grants awarded the tribe, sources said at the time. In October 2011, FBI agents subpoenaed tribal documents dating back as far as 2004.

The Day reported in May that the Thomases, as well as a third tribal member, had been informed they were "targets" of the FBI investigation. The FBI reportedly had been looking into Michael Thomas' use of a corporate credit card and Steven Thomas' tribal employment in a so-called "no-show" job, allegedly accepting payment for work he never performed.

During the investigation, several past and current tribal employees were called to testify before the grand jury, some as recently as last month, sources said.

The case is being prosecuted by Assistant U.S. Attorney Christopher Mattei.

b.hallenbeck@theday.com

Michael Thomas timeline

2002: Michael Thomas is elected chairman of the tribal council.

August 2009: In a letter to tribal members, Michael Thomas reveals the “dire financial times” facing the tribe. He vows to protect from further cuts tribal government and the monthly stipends paid to members.

Aug. 31, 2009: Michael Thomas is ousted as chairman by a vote of the tribal council after it was revealed that the tribe was on the verge of defaulting on a loan payment.

2010: Sovereign Bank wins a judgment against Michael Thomas after arguing in New London Superior Court that he had failed to repay a $5.2 million line of credit the bank extended for real estate purchases. The judge set the total amount owed by Thomas, including interest, late fees and attorneys' fees, at nearly $7.2 million.

Nov. 6, 2011: Michael Thomas fails to get elected to the tribal council.

December 2011: Michael Thomas files for Chapter 7 bankruptcy, listing $346,474 in assets and $10,262,800 in liabilities, including a claim for $8.4 million by Sovereign Bank.

April 2012: The Day reports that Michael Thomas, his brother, council Treasurer Steven Thomas, and a third tribal member are the targets of an FBI investigation.

Jan. 4, 2013: Michael Thomas and Steven Thomas are indicted on charges of theft from an Indian tribal organization.