Mashantucket — Former Mashantucket Pequot Tribal Chairman Michael Thomas, his brother, council Treasurer Steven Thomas, and a third tribal member are the targets of an FBI investigation, The Day has learned.

The probe, begun nearly two years ago, has focused on tribal finances and has yet to yield indictments or arrests.

Two sources with knowledge of tribal affairs said the Thomases and Stewart Sebastian, a brother of Kenny Reels, another former tribal council chairman, have received FBI "target letters" linking them to potential crimes. In many cases, individuals who receive target letters are eventually indicted.

A message left Monday with an FBI spokesman was not returned. "No comment from us," a spokesman for the U.S. attorney's office said in an email.

Michael Thomas, 43, was ousted as council chairman on Aug. 31, 2009 after it was revealed that the tribe was on the verge of defaulting on a loan payment. According to one of the sources, the FBI has alleged that Thomas used a corporate credit card for personal purchases and never reimbursed the tribe.

Both Steven Thomas, 37, and Stewart Sebastian, 55, have been targeted in the FBI's probe of "no-show" jobs, the source said. In such cases, individuals are alleged to have accepted payment for jobs they never performed.

The Mashantucket Pequots own and operate Foxwoods Resort Casino, including MGM Grand at Foxwoods.

Michael Thomas, who chaired the council from 2003 to 2009, was removed from office by a unanimous vote of the council's six other members. With the tribe then on the verge of defaulting, Thomas had pledged to put tribal payments to tribal members ahead of payments to creditors. Months later, he chose not to run for re-election to the council.

The tribe has yet to announce the outcome of its efforts to restructure more than $2 billion in debt.

In an interview last fall, Thomas, then seeking to return to the council, acknowledged that he had mishandled aspects of the tribe's financial crisis. He received little support in November's tribal council election.

In December, 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. The bank won a judgment against Thomas in 2010 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. Interest, late fees and attorneys' fees increased the amount of the judgment.

U.S. Bankruptcy Judge Albert Dabrowski granted Thomas a discharge of his debts in an April 19 order.

Filings in the bankruptcy case show Thomas, whose salary as tribal chairman once ran to seven figures, claimed a monthly income of $4,000 in "transition payments" from the tribe. The payments were made to adult tribal members from January 2011 through March of this year 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 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 last year to wire fraud and failure to pay taxes.

Steven Thomas, who was elected to the tribal council in November 2009, is serving the last year of his three-year term. He had previously worked at Foxwoods and in the tribe's natural resources department. Council members named him council treasurer in January.

Five months into his term, Steven Thomas filed for Chapter 7 bankruptcy in May 2010, claiming $20,500 in assets and $357,908 in liabilities. He listed his monthly income as $22,000. No discharge of debt was granted in the case, which was closed several months after it was filed.

Little information was available regarding Sebastian, the third tribal member targeted by the FBI, according to the sources. He was at one time the director of a tribal sand-and-gravel operation.

Messages seeking comment were left with both Thomases. No contact information was available for Sebastian.

News of the FBI investigation first surfaced publicly last October when The Day reported that FBI agents had subpoenaed documents held in tribal offices.

b.hallenbeck@theday.com