Feds allege bail bondsman accepted sex in lieu of loan repayments

Cherokee’s only bail bondsman is facing federal charges for allegedly having sex with female clients in lieu of loan repayment, and for allegedly sexually abusing a teenager younger than 16.

Phillip Armachain, 50, is charged with forced labor and sexual abuse of a minor in Indian Country, crimes that could land him in prison for decades if he is convicted. 

The investigation, conducted by the FBI and the Cherokee Indian Police Department, stemmed from information that Armachain had been receiving per capita checks — semiannual payments tribal members receive from casino profits — in the mail as collateral for loans he’d issued to tribal members doing business with him. During 2015, more than 150 enrolled members listed Armachain’s address as the delivery address for their per capita check, according to the affidavit from FBI Special Agent Andrew Romagnuolo on which the criminal complaint is based. 

While Armachain was known to charge a 100 percent interest rate on loans, the affidavit said, three women came forward to say they had paid their bond fees or loan repayments by having sex with Armachain. 

The woman who the affidavit names Victim Number One, or V1, told investigators that in 2016 Armachain had bonded her out of the Swain County Jail in Bryson City in a deal that would require her to pay back double what she owed. Armachain gave V1 a ride back to Cherokee, the affidavit said, during which he talked about paying him for the bond sexually. The two went to Armachain’s cabin but didn’t have sex there, because Armachain discovered that V1 was pregnant. Instead, Armachain waited for sex until V1 was no longer pregnant. 

Armachain bonded V1 out of jail once more, in December 2016, and issued a cash bond for $200 on the same day. Armachain received oral sex in lieu of cash, the affidavit said. 

Two more women came forward with similar stories. One, referred to in the affidavit as V2, said that Armachain bonded her out of the Cherokee Indian Jail this spring and said that “they would work something out” when V2 told him she didn’t have money to pay the bond. Armachain took V2 to his residence, where they had sex, the affidavit said. 

The woman referred to as V3 said she had taken out both loans and bonds from Armachain and had sex with him multiple times so she wouldn’t have to repay him. 

“V3 would try to avoid having sexual intercourse with Armachain but told investigators ‘He made me do it,’” the affidavit said. 

The affidavit also identified a fourth victim, V4, and she was a minor under 16. V4’s mother had taken out loans from Armachain, but Armachain “would not loan money to the mother unless she brought V4 to pick up the money,” the affidavit said. The mother would wait outside while V4 went in alone to get the money, which Armachain lent at a 100 percent interest rate. While the girl was inside, Armachain would sexually abuse her. 

V4’s mother would still have to pay the money back. She had her per capita check sent directly to Armachain, who would hold it as collateral. Then he would meet the mother at his business on U.S. 441 and walk to the bank to cash the check, at which point he would get the loan back, plus interest. 

“The mother of V4 stated that Armachain would revoke bail bonds if people did not pay him back for loans,” the affidavit said. “Armachain would also take people’s cars for non-repayment. The mother of V4 was told by other women that Armachain would bail women out of jail in return for sex.”

According to the affidavit, the Cherokee Police Department identified more than 10 additional women who Armachain had flirted with after bonding them out of jail. 

“The interviews are consistent,” the affidavit said, “describing Armachain telling them that they are pretty and touching their leg during the conversation.”

“Armachain has a reputation as a ‘pervert’ and ‘creepy,’” the affidavit continued. “Many of the females interviewed expressed fear of being alone with Armachain and displayed emotional pain regarding the extortion of sexual acts to get out of jail or to pay off loans.”

In addition to the interviews, investigators have audio recordings of a summer 2016 encounter between Armachain and a woman called Cooperating Witness Number One, or CW1. CW1 wanted a $200 loan from Armachain, but he wouldn’t give it to her because she owed him payments from previous bonds and/or loans. In the recording, he tells her he’s been wanting to have sex with her for a long time and “asked how they were going to work this out.” She didn’t have to have sex with him, he said, but otherwise she would have to pay what she owed him. The conversation took place while Armachain attempted to take CW1 to a small cabin at the end of a dead-end road. 

While the charges against Armachain are new, discussions of the issues posed by loan sharks and belief that Armachain had been enriching himself off other tribal members aren’t new. In November, Tribal Council narrowly passed legislation that Principal Chief Patrick Lambert proposed to institute a zero-interest per capita loan program in tribal government. Applicants pay a $35 fee for each six-month distribution period but beyond that pay nothing to receive up to $500 per month against the upcoming payment. 

“This would be an opportunity for someone to be able to get a loan where there’s not overburdened interest or having to go through a loan shark situation,” Lambert told Tribal Council during its November 2016 meeting. “This is already happening. It’s just enriching certain individuals in this community.”

Lambert was likely talking about Armachain when he followed his comments with information about one of those “certain individuals,” though he did not name the person. 

“Last per cap we had 120 checks that went to one person,” Lambert said. “$600,000 went to one person last per cap.”

Armachain is in jail pending the outcome of a May 17 detention hearing.

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