State Indigenous Affairs Director Jorge Servin says bank cameras recorded Ruben Quesnel withdrawing the money.
Paraguay was ordered by the Inter-American Court of Human Rights in 2006 to buy about 12,000 acres for two impoverished communities of Enxet Indians in the arid Chaco Boreal region.
Their legal adviser, Oscar Ayala, says their ancestral lands were occupied by wealthy ranchers, forcing them to live alongside a road for 20 years.
Sixty percent of Paraguay's 20 indigenous groups live in extreme poverty.
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