Manitoba First Nation loses health funding after directors allegedly misappropriated federal money, lawsuit claims

The Manitoba Law Courts building is pictured in Winnipeg, Man., in this undated image. (CTV News Winnipeg)

A Manitoba First Nation has been cut off from federal health funding, according to a lawsuit that accuses directors of its own health corporation of stealing and concealing public money in what it describes as an “unlawful scheme.”

Dakota Plains First Nation filed a statement of claim Friday in the Court of King’s Bench of Manitoba, naming Dakota Plains Health Authority Corp. and eight of its directors as defendants. The First Nation is seeking damages of no less than $500,000, as well as a court order requiring an accounting and tracing of funds it says were illegally withdrawn from the corporation’s bank accounts for personal use.

According to the filing, Dakota Plains Health Authority Corp. was incorporated as a nonprofit in August 2021 to oversee health-care services for the First Nation, which is located southwest of Portage la Prairie, Man. It was also tasked with receiving and managing federal funding provided for that purpose.

The lawsuit says the federal government and the Canada Revenue Agency (CRA) notified the First Nation in March 2026 that the directors had failed to account for funds received on its behalf and failed to document how that money was spent. The claim further alleges the directors submitted $12,562 in ineligible expenses and failed to remit approximately $122,000 in source deductions.

The First Nation then retained third-party consultants to conduct a review. That review found, among other things, the eight directors had allegedly withdrawn funds from the corporation’s bank accounts and “conspired together to cover up the misappropriation of the funds,” the lawsuit claims.

“The director defendants used their position, and the oversight responsibilities entrusted to them, to exploit [Dakota Plains First Nation] as a result of their vulnerability to people in their position,” the lawsuit states, describing the conduct as “reprehensible, malicious, surreptitious and [requiring] judicial condemnation.”

The consultants also found that the directors failed to provide the CRA with an adequate audit or accounting of funds received and refused to grant access to the corporation’s bank accounts.

The federal government has since advised the First Nation that it is “not eligible to receive additional funding for health care services” until the directors’ alleged actions and omissions are rectified, according to the filing. To restore that eligibility, it says the First Nation has been required to retain consultants at a cost exceeding $100,000.

CTV News was unable to reach a representative of the corporation for comment, which is listed as inactive on the Manitoba Companies Office public registry.

None of the allegations have been tested in court, and no statement of defence has been filed. CTV News has reached out to Indigenous Services Canada and the Manitoba First Nations Police Service for comment.

In a statement, Dakota Plains First Nation Chief Donald Smoke said the lawsuit was brought forward for transparency and to address concerns over a “significant amount” of money that he claims was spent before he became chief.

“We need the documents and tax fillings to show the expenses. We are currently being pressed by the Canada Revenue Agency for the financial records,” he said in a statement obtained through the First Nation’s lawyer. “We hope the courts will ensure the directors and former directors are held accountable.”

According to Crown-Indigenous Relations and Northern Affairs Canada, the First Nation has an on-reserve registered population of more than 160 people, with a total registered population of 282 as of March 2026.