The indictments returned by a federal grand jury in Hartford follow a lengthy FBI investigation at the tribe's tiny reservation in rural southeastern Connecticut, where it owns and operates Foxwoods Resort Casino.
The former chairman, Michael Thomas, 44, is accused of stealing more than $100,000 in tribal funds and federal grant money between 2007 and 2009 during his tenure as leader of the tribal council, a position he was ousted from over his handling of the tribe's finances.
His brother, treasurer Steven Thomas, 38, allegedly stole more than $700,000 between 2005 and 2008 when he was assistant director of the tribe's natural resources department.
A tribal spokesman, William Satti, released a statement in which the tribal council said the federal charges threaten tribal sovereignty.
"We are disappointed in the federal government's decision to move forward with this action, and feel that this has strong implications on self-governance throughout Indian Country," the statement said.
The council also said it is confident in Steven Thomas' dedication to his duties as a tribal council member but didn't mention Michael Thomas. A separate statement sent internally to tribal members offered assurances that the tribe itself is not the target of the FBI investigation.
The two men 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. They are each due to appear Monday in U.S. District Court in New Haven. Attorneys for the two defendants did not return messages seeking comment.
The indictment alleges that Michael Thomas "did embezzle, steal, obtain by fraud, intentionally misapply, and otherwise without authority knowingly covert to his own use" tribal funds and money that came from federal government grant programs.
The tribe has received federal grants through programs to help sovereign Indian tribes provide services for their members.
The Mashantucket Pequots, a tribe of roughly 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 gaming 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.
Steven Thomas was elected to the tribal council in November.