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Kashechewan has been plagued by problems related to poor socioeconomic conditions for many years.

HO/The Canadian Press

A man who was appointed to fix the financial problems of an impoverished First Nations community has been charged with fraudulently obtaining more than $1-million that federal officials believed was being used to feed the Ontario reserve's children and then pocketing nearly $700,000 for himself.

The RCMP announced Tuesday that they had arrested Guiseppe (Joe) Crupi, 50, of Thunder Bay on several counts related to the diversion of $1.2-million that the Indigenous and Northern Affairs Department allocated to pay for breakfasts for about 400 children at the elementary school on the Kashechewan First Nation.

Police allege that Mr. Crupi kept $700,000, but did not explain what they believe happened to the additional $500,000.

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"The co-manager, Crupi Consulting, made annual applications and reported on 400 children benefiting from a breakfast program at St. Andrews School on reserve between 2005 and 2011," Sergeant Penny Hermann said. "The RCMP investigation concluded that the service was not provided to the children as reported, and the co-manager, Crupi Consulting, personally profited from the contribution funds."

Sgt. Hermann said auditors from Indigenous Affairs, which was then called Aboriginal Affairs, alerted the RCMP in 2012 to the possible misappropriation of funds. The auditors, she said, told them that several council members had questioned invoices from the Crupi firm that had been paid by the First Nation but for which there was no supporting documentation.

Kashechewan, which is located about 150 kilometres north of Moosonee on the western side of James Bay, has been plagued by problems related to poor socioeconomic conditions for many years.

In March, dozens of children were affected by rashes and other skin diseases that doctors said were at least partly attributable to unsanitary living conditions in the community where a box of laundry soap costs nearly $40.

Carolyn Bennett, the Indigenous Affairs Minister, said at that time that the images of children with blisters covering their faces "exemplify problems with poverty and overcrowding."

The reserve has also endured high rates of suicide, as well as repeated evacuations to escape floods, and a crisis in 2005 over E. coli that was found in the water system.

When Kashechewan went into financial default, Mr. Crupi was appointed to act as the co-manager – someone from outside the community who would address the problems and prevent them from reoccurring.

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A woman who answered the phone at the firm late Tuesday afternoon said no one was available to talk to the media.

Mr. Crupi has been charged with three counts of fraud, three counts of uttering a forged document, laundering the proceeds of crime and possession of property obtained by crime.

Representatives of the First Nation said they have been warned not to discuss the case with the news media. "We will not provide any comments at this time," said Conredge Solomon, executive director of the First Nation. "But we were aware that the investigation was being held by the RCMP."

Advocates for Kashechwan and other First Nation communities in Northern Ontario said any fraudulent diversion of funds from a community that has weathered such problems would be a despicable act.

"That is a significant amount of money for any community to lose," said Alvin Fiddler, Grand Chief of the Nishnawbe Aski Nation, which represents 49 communities in Northern Ontario, including Kashechewan. "It is unconscionable for anyone to do this under any circumstance, and especially for a community like Kashechewan where resources for kids are so desperately needed."

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