Former chairman Michael Thomas and his brother Steven appeared Monday in U.S. District Court in New Haven. They were released on $100,000 bond.
The tribe owns and operates the Foxwoods Resort Casino on its reservation in Ledyard, Conn.
Michael Thomas is accused of stealing more than $100,000 in tribal funds during his tenure as leader of the tribal council. Treasurer Steven Thomas allegedly stole more than $700,000 when he was assistant director of the tribe's natural resources department.
The brothers are each charged with one count of theft from an Indian tribal organization and two counts of theft from an Indian tribal government receiving federal funds.
Richard Reeve, an attorney for Steven Thomas, said the case is about whether his client was entitled to wages he received for a job.
"This is not a case about the theft of federal funds," Reeve said in court. "This is a case about wages."
Reeve said after the hearing the issue involved allegations Thomas did not work the hours to get the compensation he received.
Paul Thomas, a public defender representing Michael Thomas, declined comment.
Prosecutor Christopher Mattei said Thomas was charged with stealing from the tribe.
A tribal spokesman, William Satti, released a statement Friday in which the tribal council said the federal charges threaten tribal sovereignty.
The Mashantucket Pequots, a tribe of about 900 people whose Foxwoods casino opened in 1992, once enjoyed annual stipends exceeding $100,000 for each adult member. But the tribe racked up huge debts as the casino struggled with increased gambling competition and Foxwoods completed a costly expansion with the MGM Grand hotel and casino at the height of the recession in 2008.
Michael Thomas, who had been chairman since 2003, was forced out by the council in 2009 after pledging to put distributions to tribal members ahead of the tribe's debt even as the tribe was looking to restructure more than $2 billion in debt.
The tribe defaulted on its debt in 2010. It eliminated the revenue-sharing payments last year and succeeded in striking a deal to restructure its debt.