Loopholes R Us

It becomes increasingly clear that legislation affecting tribal gaming and casinos is some of the worst ever written. The story below is from the Boston Globe, and details how the tribal gaming lobby keeps these gaping holes wide open. (Click here to see Globe Graphic Distribution of Mohegan Sun Profits)

Casino jackpot went to investors
By Sean P. Murphy
Globe Staff / December 16, 2007

A coterie of casino executives who helped the Mohegan of Connecticut build one of the most successful tribal casinos in the world has been paid $369 million in resort and casino proceeds during the last six years - slightly more than has been received by the entire 1,700-member tribe.

It is the kind of bonanza that was supposed to be prohibited by the federal Indian Gaming Act when it was passed 20 years ago, say some US senators and federal regulators.

But the Mohegan Sun investors - led by Sol Kerzner and Len Wolman - found legal ways around provisions intended to make sure most casino benefits went primarily to tribes. And those loopholes remain open after a massive lobbying blitz by the $25 billion Indian gaming industry.

Since 2001, the industry and its lobbyists have repeatedly defeated efforts to tighten rules and increase transparency. In the industry's latest victory, it crushed an Indian Gaming Act amendment championed in 2006 by Senator John McCain, a Republican of Arizona. McCain's bill would have prevented huge payouts like those received by Kerzner and Wolman. McCain has said the defeat of his bill was a triumph for special interests.

"Their lobbyists are very powerful, and they're pretty hard to fight," McCain said in an interview last month. "I was very disappointed."

That lobbying success now is reverberating in Massachusetts, where Kerzner and Wolman have most recently set their sights on a tract of land in Middleborough. Just six months after McCain's bill was defeated, Kerzner and Wolman signed a deal with the Mashpee Wampanoag tribe to build a $1 billion casino on the rural site.

That contract is subject to the same rules that allowed Kerzner and Wolman to make more money than the Mohegan tribe in recent years. Even Governor Deval Patrick has been unable to find out - despite requests for information - how much Kerzner, Wolman, and other investors in the Middleborough casino negotiations would get in the deal.

"We believe strongly that the financial deal between the tribe and their backers should be made public," said Joseph Landolfi, a spokesman for Patrick, who is interested in courting the developers and tribe if he wins legislative approval of his plan for three state-licensed casinos.

Kerzner and Wolman declined to be interviewed. A lawyer for their partnership - known as Trading Cove - in response to written questions from the Globe, said that the developers took "significant risks" in its investments in the Mohegan casino that justified the returns Trading Cove received. The Mohegan tribe owns all the equity in the casino, said Philip C. Korologos, the lawyer, so the financial benefit to the tribe will "be multiples of any amounts that Trading Cove has received.

But some Mohegan tribal members are resentful of the Trading Cove deal.

"It was supposed to be for the tribe, not outsiders," Carlisle Fowler, the Mohegan former tribal treasurer, said of Mohegan Sun in an interview last week.

And some Mashpee Wampanoag tribal members say they are suspicious about the deal their leaders have struck with the same investors in Middleborough - a deal they have not been shown. Documents filed with the tribe's pending federal application for reservation status at the site do not disclose financial terms.

"They don't let us see anything," said Michelle Fernandes, a member of the tribe. "It's a big secret."

Frank Sinatra once described Kerzner as "the world's best saloon keeper." The occasion was the opening of Sun City, the casino and resort developed by Kerzner in South Africa. One of the world's most successful casino moguls, Kerzner also developed the Atlantis resort in The Bahamas.

He landed in Montville, Conn., in 1994, enticed there by Wolman, a fellow South African then managing a Days Inn hotel in nearby Mystic. Wolman had pieced together a deal that he hoped would rival the already up-and-running Foxwoods casino, owned by the Mashantucket Pequot Indians and an instant success when it opened in 1992.

At the time, investors in Indian casinos received compensation by managing the facilities until tribes gained enough experience to do so themselves. Under the Indian Gaming Regulatory Act, passed by Congress in 1988, the maximum pay the investors could receive was 30 percent of gambling profits annually for five years. After that, investors could get no further payments.

Mohegan Sun opened in 1996, the second casino in New England. In its first full year of operation, Mohegan Sun had $611 million in gross revenues. Its immediate success spurred a vast expansion, including development of a 1,200-room luxury hotel, overseen by Trading Cove and completed in 2002.

By then, Trading Cove had negotiated an expanded contract. The new agreement was based on gross revenue, rather than net revenue: It not only gave Trading Cove a nickel of every dollar spent at Mohegan Sun's multiple casinos, but also on all spending by patrons at the hotel, restaurants, shops, and auditorium. The contract spans 2000 to 2015.

The National Indian Gaming Commission called the amount of money the Mohegan tribe was promising to pay Trading Cove "egregious," and clearly above the legal limit, but concluded in 1998 it lacked the authority to stop the new contract.

That's because, under a loophole in the Indian Gaming Regulatory Act, investors could avoid caps on their returns by calling their deals anything other than a management contract, usually a consulting contract.

Currently, the annual payment to Trading Cove from the Mohegan Sun is about $75 million. Over the last six fiscal years, Trading Cove received $368.9 million, compared with $367.5 million in casino profits distributed to the tribe.


By the time the agreement expires in 2015, total receipts for Trading Cove may exceed $1 billion, according to financial projections.

Mohegan tribal chairman Bruce "Two Dogs" Bozsum last week said he was not familiar with the deal made by his predecessors, one in which - according to public documents - Trading Cove put about $10 million into the original venture and provided a guarantee for about $90 million in bonds sold on Wall Street. Bozsum did, however, say that Trading Cove took a risk in backing the tribe in the 1990s.

In the late 1990s, there were 297 Indian tribes in the casino or bingo business nationally, taking in $8.4 billion a year. But the industry exploded, fueled in part by investors growing confidence they could outflank federal regulators to reap big profits. Today there are 419 tribes, doing more $26 billion a year in business.

And the vast majority of deals between investors and tribe are now made as something other than management contracts and therefore outside of regulatory review, according to the US Department of Interior's Inspector General.

As the industry grew, so have the sums that it spends on lobbyists in Washington, especially lobbyists who are former staffers for key regulatory agencies, and, in the case of Trading Cove, at least one lobbyist connected to Massachusetts politicians.

The Indian casino industry has spent $100 million for lobbying since 2001, according to the Center for Responsible Politics, a public interest group that compiles lobbying and campaign contribution data.

Trading Cove has spent almost $1 million since 2002 for lobbyists, including $495,000 since 2003 for lobbyist A. Bradford Card, managing partner of Dutko Worldwide. Card is the brother of Andrew Card, the former Bush administration White House chief of staff who in the 1980s served in the Massachusetts Legislature before running unsuccessfully for governor. When asked about his role, Card asked for written questions, but never responded to them.

Trading Cove is also represented by lobbyist Virginia Boylan, a former counsel to the Senate Indian Affairs Committee and now a partner at Drinker Biddle, another powerful firm. Trading Cove fees to Boylan's firm have totaled $460,000 since 2002.

In the last three years, the Mashpee Wampanoag tribe spent $520,000 for Washington lobbyists. Among them is Steven C. Schwadron, former chief of staff to US Representative William D. Delahunt, Democrat of Massachusetts. Most of the lobbying was connected to winning federal recognition for the tribe, but now includes "legislation and policies relevant to newly recognized tribes," Senate records say.

Trading Cove, through its lawyer, Korologos, said its goal is to "continue to oppose in lawful and legitimate ways any legislation in Congress" that interfere with tribal rights.

Len Wolman and and his brother Mark receive about $10 million a year from Mohegan Sun, according to publicly available records.

By 2015, the Wolman brothers' receipts are projected to exceed $100 million each from the Mohegan deal, out of the projected $1 billion. Kerzner's company is expected to receive about $500 million.

Meanwhile, divided among its 1,700 members, the Mohegan tribe's current share of profits works out to about $38,000 a year each. The tribe declined to say how it distributes its earnings.

When the details of the Trading Cove's 15-year contract first emerged in 2001 in the Globe, McCain vowed changes.

A bill he introduced in 2005 would have made sure that outside investors be firmly subject to the 30 percent cap.

Dennis J. Whittlesey, a longtime Indian casino lawyer based in Washington, said McCain's bill was not well-received by casino executives.

"A number of major developers were extremely concerned and made substantial moves to oppose it," he said.

The McCain bill was voted out of the Senate Indian Affairs Committee in March 2006 with a unanimous recommendation for passage by the full Senate.

But it died two months later, with no further discussion.

Roll Call, the Capitol Hill newspaper, reported that seven senators had put anonymous holds on the bill, meaning a vote of 60 senators was required to release it.

Some federal regulators continue to press for reforms. Earl E. Devaney, the US Department of Interior's inspector general, said in an interview in Washington that an overhaul of the Indian Gaming Act is still needed.

Without reforms, he said, "investors are going to have the leverage to demand and get higher and higher amounts of casino profits.

"The return they get on their investment now is huge."

Lakotaland! Coming to a state near you...

...if you live in Nebraska, The Dakota, Wyoming or Montana. Apparently a break-away group of Lakotas have decided they are no longer a part of the United States. The story from Fox News.

Hat tip: Hawgamon

Lakota Indians Withdraw Treaties Signed With U.S. 150 Years Ago
Thursday, December 20, 2007

WASHINGTON — The Lakota Indians, who gave the world legendary warriors Sitting Bull and Crazy Horse, have withdrawn from treaties with the United States.

"We are no longer citizens of the United States of America and all those who live in the five-state area that encompasses our country are free to join us,'' long-time Indian rights activist Russell Means said.

A delegation of Lakota leaders has delivered a message to the State Department, and said they were unilaterally withdrawing from treaties they signed with the federal government of the U.S., some of them more than 150 years old.

The group also visited the Bolivian, Chilean, South African and Venezuelan embassies, and would continue on their diplomatic mission and take it overseas in the coming weeks and months.

Lakota country includes parts of the states of Nebraska, South Dakota, North Dakota, Montana and Wyoming.

The new country would issue its own passports and driving licences, and living there would be tax-free - provided residents renounce their U.S. citizenship, Mr Means said.

The treaties signed with the U.S. were merely "worthless words on worthless paper," the Lakota freedom activists said.

Withdrawing from the treaties was entirely legal, Means said.

"This is according to the laws of the United States, specifically article six of the constitution,'' which states that treaties are the supreme law of the land, he said.

"It is also within the laws on treaties passed at the Vienna Convention and put into effect by the US and the rest of the international community in 1980. We are legally within our rights to be free and independent,'' said Means.

The Lakota relaunched their journey to freedom in 1974, when they drafted a declaration of continuing independence — an overt play on the title of the United States' Declaration of Independence from England.

Thirty-three years have elapsed since then because "it takes critical mass to combat colonialism and we wanted to make sure that all our ducks were in a row,'' Means said.

One duck moved into place in September, when the United Nations adopted a non-binding declaration on the rights of indigenous peoples — despite opposition from the United States, which said it clashed with its own laws. (ed - the US out of the UN and the UN out of the US... NOW.)

"We have 33 treaties with the United States that they have not lived by. They continue to take our land, our water, our children,'' Phyllis Young, who helped organize the first international conference on indigenous rights in Geneva in 1977, told the news conference.

The U.S. "annexation'' of native American land has resulted in once proud tribes such as the Lakota becoming mere "facsimiles of white people,'' said Means.

Oppression at the hands of the U.S. government has taken its toll on the Lakota, whose men have one of the shortest life expectancies - less than 44 years - in the world.

Lakota teen suicides are 150 per cent above the norm for the U.S.; infant mortality is five times higher than the U.S. average; and unemployment is rife, according to the Lakota freedom movement's website.

This time it was the "wine" not the "whine"..

...for Mr. Sammy Sockpuppet, Sam Cohen. Maybe he just wanted to join the club and acquire a criminal record? Maybe it's a status thing on the reservation? After all, how many people can say they have an attorney that beat his wife out in front of the Chumash Casino. There was also ex-Chumash Chairman - Gilbert Cash, who tried to strangle his wife, so maybe it is the water? What a great group of role models these folks are for youngsters in the Santa Ynez Valley eh? These are the people the governor of California chooses to do business with. And Sam Cohen is the guy that shook his finger and lectured James Lynch about the Chumash, and attempted to lampoon Lynch's credentials. From the Santa Ynez Valley Journal:

Chumash attorney arrested for domestic violence
Archive » December 14, 2007

The Santa Ynez Band of Chumash Indians’ attorney, Sam Cohen, and his wife were arrested at the Chumash Casino Dec. 12 after police responded to a domestic disturbance call. According to the county Sheriff’s department, Trina Cohen was arrested for being drunk in public, while Sam was arrested for domestic violence. Trina was taken to the Santa Barbara County Jail and Sam to an alternate holding facility. The couple was believed to have been attending an anniversary party for Chumash Magazine when they clashed over a social issue. Witnesses said they believed at least one of the Cohens was taken to a hospital for examination before being transported to jail.

(ed. - Bet you don't see THAT little tidbit of news in the Santa Barbara News Press)

Arnold Schwarzenegger? More like Benedict Arnold..

Two letters to the editor in Capitol Weekly, seem to summarize public sentiment (and frustration) about the state of affairs in government, from the local level to the governor himself.

Schwarzenegger’s statement in the letter to the editor below:

“the voters do not have jurisdiction over the agreement, because it was not legislation but a deal between two sovereign governments"

So because they are two sovereign governments - I guess the Governor is not in violation of the Brown Act. There is a word for what he is doing though. Treason.

"In law, treason is the crime that covers some of the more serious acts of disloyalty to one's sovereign or nation."

Letters to the editor (of Capitol Weekly)
By Capitol Readers (published Thursday, November 29, 2007)

Dear Editor,

It is high time for elected officials to brush up on their oaths of office, take a U.S. Constitution refresher course and be reminded who they work for. Special interests seem to be garnering all the attention these days, but what about the People of California?

Governor Schwarzenegger’s recent filing in federal court, as reported in Capitol Weekly on Nov. 22, supporting the Agua Caliente Band of Cahuilla Indians’ claims that “the voters do not have jurisdiction over the agreement, because it was not legislation but a deal between two sovereign governments,” is a stunning example of the arrogance of our governor.

Why would our governor subvert a vote by the people?

The backroom nature of these deals might have something to do with it. Agua Caliente Chairman Richard Milanovich finalized his compact with our governor at a Napa resort and had this to say about cutting his deal: “Governor Schwarzenegger, number one, is a businessman, and what we did was a business deal. He was smoking a cigar when we reached an agreement.”

Local and state governments are increasingly using government-to-government “privilege” to elude public involvement. This practice is an outright abuse of the intent of a federal directive that was given to federal branch agencies only, and growing legal opinion would argue that it violates the 14th Amendment securing equal protection of the law. Gambling compacts are not treaties. They are contracts between casino tribes and the People of California.

Here’s the refresher course for our elected officials. The first three words of the Constitution are “We the People.” There is no royalty claimed here. More concretely, the basic principle of government is that it derives its power from the consent of the governed. Don’t you need our vote to have our consent?

The governor’s attempt to keep these referendums from the voters only further erodes the ability to enforce our Constitutional contract with our government — the ultimate in political accountability.

Kathryn Bowen,
Santa Ynez

AND

Dear Editor,

On Nov. 22, James Lynch wrote a commentary challenging the legitimacy of the Santa Ynez Band of Mission Indians as a “federally recognized tribe” and its “reservation” as a properly recognized “federal reservation” (Capitol Weekly, Commentary).

Lynch’s article discusses one “tribe,” but in all probability many, if not most, of the casino “tribes” fall into this same category. They have been fabricated and engineered by greedy politicians and crafty attorneys. These politicians, our representative government, ignore the tremendous negative impact and prostitute the casino-hosting community for favors by the casino “tribes.”

In Santa Barbara County, they grovel. Just look at the recent resolutions by Assemblyman Pay-dro Nava and Third District Supervisor Crooks Firestone, passed without any opportunity for public comment, to get a taste for the backroom deals going on to cleverly market the Chumash Casino.

As our Legislature sells out its constituents for gambling dollars, it is also empowering these fabricated casino “tribes” to become more and more brazen in their demands to be treated as “sovereign nations” and “sovereign governments.” Politicians are loving this government-to-government deal-making with these tribal governments, as it is a means to circumvent public knowledge and participation.

This is happening all over the country. The few non-politicians in the public who believe there should be some accountability by our representative government watch this scam with dumbfounded amazement and fight with private lawsuits, petition signings and fund-raisers to protect the Constitution and the communities that they love so much.

And what do they get for their efforts? They are called racists for not agreeing with the expansion of these fabricated tribal governments functioning outside the U.S. Constitution and destroying their communities with their self-regulated gambling operations and unenforceable tribal-state gaming compacts.

Will the real representative please stand up and do something?

Kathy Cleary,
Los Olivos

How bout a little cheese with that whine... Mr. Cohen Sock-Puppet?

When an attorney publishes a statement like...

"Let’s get one thing straight: The Santa Ynez Band of Chumash Indians is a federally recognized tribe that is listed in the Federal Register of the U.S. Department of the Interior. There’s no arguing that fact, and that should have been the end of it"

... I scratch my head. Anything can be argued and I thought attorneys do (and know) that best. Besides, there's this little thing called the First Amendment. Unlike Indian aristocracies, we here in the United States value our free speech, and our right to question anything we damn well please.

Hmmm.. then i read a little further. Is "Mr. Cohen" REALLY a member of the tribe?:

"we were surprised by Lynch’s ridiculous accusations regarding the validity of our tribe"

Sounds to me like Vincent Armenta has a little Sammy Sockpuppet.

The "author" also claims Mr. Lynch was paid. I would like to see the receipt for that. Again I doubt a real attorney would say this kind of thing without proof.

The "author" makes a big deal out of Mr. Lynch having worked with heating equipment and attempts to quip:

"Is their next step hiring Larry the Cable Guy to provide his insights on the economic impact of Indian gaming? "

Well, if thats silly, how about hiring a welder to run a Las Vegas style casino Mr. Arementa? errr... Mr. Sammy Sockpuppet?

If the "author" really wanted to prove their point why not dispense with this pithy rebuttal and just link to scans of the 'proof' documents themselves?

Here it is from Capitol Weekly:

Historical record confirms legitimacy of Santa Ynez Chumash
By Sam Cohen (published Thursday, November 29, 2007)

To read James Lynch’s op-ed (“The Santa Ynez Chumash: A Question of Legitimacy”) in last week’s Capitol Weekly, one would think that there are questions surrounding the Santa Ynez Chumash tribe. There aren’t.

Let’s get one thing straight: The Santa Ynez Band of Chumash Indians is a federally recognized tribe that is listed in the Federal Register of the U.S. Department of the Interior. There’s no arguing that fact, and that should have been the end of it. But for the tribal opponents in the Santa Ynez Valley, facts have never gotten in the way of creating their own version of the truth.

Lynch’s op-ed represents only the latest in a long history of attacks against the Santa Ynez Band of Chumash Indians by a small group of tribal opponents in the Santa Ynez Valley.

Unfortunately, it has become commonplace to pick up a newspaper and read ludicrous claims from our tribal opponents. The vast majority of their ridiculous assertions are not even worthy of a response, including Lynch’s op-ed. It was riddled with so many factual inaccuracies that we wondered if we were reading an excerpt from a fictional novel.

While our first inclination was to ignore Lynch’s op-ed, we were bothered by the fact that an individual could make such outlandish claims and pass them off as the truth. We wondered how such preposterous allegations would make it past Capitol Weekly’s editorial standards.

Lynch mentions an 1899 court case (which was actually first filed in 1897), but he apparently failed to read the decision and order of the Court from March 31, 1906 (The Roman Catholic Bishop of Monterey vs. Salamon Cota, et al), both recognizing the Santa Ynez Indians and finding that the tribe’s existence predates the acquisition of the California territory by the United States in 1846. It also identifies the Zanja De Cota Creek reservation of the tribe.

Because there is such a wealth of well-researched historical documentation about the Santa Ynez Band of Chumash Indians and about the Santa Ynez Reservation, we were surprised by Lynch’s ridiculous accusations regarding the validity of our tribe.

In addition, his personal attacks on Chairman Armenta and his family were completely unnecessary. Frankly, we questioned the decision of Capitol Weekly’s editors to allow such statements to remain in Lynch’s op-ed.

Unfortunately, what Capitol Weekly editors may not know is that an entirely new cottage industry has surfaced within the tribal gaming industry. It’s an industry in which tribal opponents create their own experts and make up their own facts. Want to question a tribe’s very existence? Contact an individual who will make whatever disparaging comments you want against a tribe — for a fee.

Many of the so-called experts who travel the circuit are not recognized as legitimate in the real world. Take Lynch, for example. He has worked on a handful of fee-for-service projects that have consistently resulted in anti-tribal opinions. In a court document under sworn testimony, Lynch admitted that he has never concluded that any Indian tribe he investigated met the standards for federal acknowledgement.

With his anti-tribal track record and hired gun status, he was engaged by POLO/POSY, a tribal opposition group in Santa Ynez Valley that has fought everything from the tribe’s liquor license application (in the middle of wine country where more than 60 wineries reside) to the tribe’s plans to build a Chumash cultural museum.

For us, Lynch’s credibility is at the core of this latest attack from these tribal opponents. Under sworn testimony in 2006 (pages 481 and 483 of State of New York vs. Shinnecock Indian Nation), Lynch admits that he has no training in land titles or surveying and has spent the majority of his career as a heating equipment salesperson.

We certainly have no beef with heating equipment salespeople. But it’s highly doubtful that they possess the historical background and formal training required to research a topic as complex as colonial history. We have reviewed court documents in which Lynch provided so-called expert testimony, and he withered under cross-examination on questions pertaining to his credibility.

In his op-ed, Lynch claims that all POLO/POSY are asking for are accurate and honest answers to fair, legitimate questions. If that’s the case, why did they feel the need to employ a hired gun to spew out information that is not based on reality?

We have, in fact, answered any number of questions from POLO/POSY over the years, but they continue to search for answers that only fit their own distorted illusions. Truth, apparently, is not a requirement for them.

After all the shenanigans that these tribal opponents have been involved with lately, we have to wonder what’s next on their agenda. They hired a heating equipment salesperson to research the tribe’s history. Is their next step hiring Larry the Cable Guy to provide his insights on the economic impact of Indian gaming?