Tribes Discover The Two Sides Of Gambling Coin Corruption Following Prosperity’s Footstep Onto Reservations

THURSDAY, JAN. 4, 1996

In rural Minnesota, a Chippewa Indian official is indicted on charges of conspiracy, embezzlement, theft and money laundering.

In upper Michigan on the Keweenaw Bay Ojibwe reservation, brawling factions lead to the seizure of a tribal building and a standoff that’s been in play since August.

In Northern California on the Elem Colony of Pomo Indians, tribal power struggles result in a bloody shootout.

These incidents may seem like the norm to those in Indian Country familiar with the rifts that have pitted tribal members against one another for years. But they share more than just a historical perspective. They all involve casino gambling.

“I warned them three, four years ago that this was going to happen,” said Tim Giago, an outspoken Native American journalist who writes often about Indian gambling. “When you’ve got money coming in like that with no strings attached, it’s bound to happen, the theft, the cheating, the fighting … “

For the first time since Congress legalized high-stakes gambling on reservations seven years ago, some tribes are beginning to report cases of wrongdoing and discord related to their casinos.

A small, but growing number of tribes are currently at bitter odds over such issues as who should control the casinos, how profits should be spent, and what role outsiders should play in Indian gaming. According to Indian gaming watchdogs, two dozen or so tribes are nearing, or in the midst of, heated battles or corruption cases related to their gaming.

Some Indians insist that such episodes are isolated and no different than those experienced in non-Indian society. They say tribes are simply feeling the growing pains associated with the rapid rise of gaming.

“These are people who are just learning the ins and outs of their new operations,” said Herb Becker, director of the U.S. Justice Department’s tribal division, set up by Attorney General Janet Reno a year ago to give Indians a place to air their complaints. “For many of them the gaming is part of the bigger political picture, wherein lie the problems.”

Michael Haney, a Seminole Indian from Oklahoma, believes the problems began before the big casinos came along. “What we’re seeing is greedy people who have probably always been corrupt who got greedier when the profits started to roll in,” he said. “You have them in every culture.”

Other Indians maintain that the corruption and feuding are the start of a trend that could worsen unless tribal members come together on how best to make their gaming work for them.

“It’s an unfortunate fact,” said Vernon Bellecourt, president of the national American Indian Arbitration Institute, which helps tribes mediate conflicts, including those involving gaming. “But I think the more casinos there are, the more conflict we’re going to see.”

Since Congress passed the Indian Gaming Regulatory Act in 1988, tribal casinos have grown faster than any other segment of the gambling industry.

According to the National Indian Gaming Commission, the federal agency that oversees tribal gambling, there are now more than 75 major Indian casinos in 24 states. In seven years, revenues from those casinos jumped from $121 million to $3.4 billion in 1994 and the kitty is still growing.

Critics say Indian gambling has flourished because it is generally less regulated than the casinos in Atlantic City or Las Vegas. Under the Indian Gaming Act, tribes are not required to make public information about their casinos, nor must they adhere to the kinds of security measures that non-Indian casinos follow.

That lax environment, critics say, makes tribal casinos ripe for criminal activity.

But tribes say their own strict in-house checks and balances makes them more regulated than their counter-parts off reservations. Some tribes hire outside gaming firms; others manage their own operations.

Besides, Indian leaders say, most tribes have managed to keep their gaming honest, using their profits to build homes, schools, sewer systems and roads. On some reservations, casino gambling has significantly reduced high unemployment rates. Adult Indians who never worked before now have jobs with benefits and hope for the future.

“In many ways, the casinos have been like a miracle cure,” said Giago, who is publisher and editor of the newspaper Indian Country Today.

It’s also been a curse, not unlike that which threatened Western tribes during the oil boom of the late 1970s and early 1980s, when energy companies were paying Indians large bonuses for their natural resources.

Suddenly, poor Indians were rich. They were also burdened with the task of appropriating their wealth, which lead to divisions.

One of the hot spots currently is the Pomo Indian reservation outside San Francisco, where a rival faction accused the administration of mismanaging casino funds. After a shootout left several people wounded, the National Indian Gaming Commission shut the tribe’s two casinos and ordered an audit of the casinos’ funds.

Indians with concerns about gambling say that other than the federal government, which hesitates to interfere with tribal sovereignty, there are few avenues for them to air their complaints and settle their disputes.

States generally do not have jurisdiction over tribal matters. And tribal courts can be parochial and manipulative.

The Bureau of Indian Affairs, which has acted as an arbitrator in tribal and gaming disputes, has also been reluctant to intercede, saying tribes should exercise their self-determination and use their own resources to overcome their troubles.

That can be difficult when the subjects of the corruption and disputes still hold power, said Linda Bellanger, a member of the White Earth Indian Reservation in northwestern Minnesota near the North Dakota border, which currently has the most visible case of Indian gaming corruption.

In September, the White Earth tribal chairman, Darrell “Chip” Wadena, and five other top tribal officials were indicted by a grand jury. Among other things, federal prosecutors say the accused men cheated their tribal members by rigging bids on the construction of their Shooting Star Casino and by creating a phony fishing commission, then appointing themselves commissioners and giving themselves $65,000 to $75,000 annual tax-exempt salaries.

Wadena, who still holds his chairmanship despite calls for him to step down, would not comment on his case. But his lawyer, John Brink of Minneapolis, said Wadena denies the charges and is eager to go to trial so that “we can vindicate him.”

Brink added that while gaming has its down side, he believes his client’s case has more to do with the growing animosity toward Indian gaming.

“There are people out there who don’t like what the Indians have,” he said.

Minnesota U.S. Attorney David Lillehaug, who would not speak about the Wadena case, denied that there is any effort to go after Indian gambling. With 17 high-stakes casinos, Minnesota has more gambling than any other state in the country.

“With all due respect to tribes, gambling is a cash industry that has historically been subject to corruption,” Lillehaug said. “We’re not surprised to see more embezzlement and violence as the gambling increases.”

The conflicts demonstrate why some tribes, including the Navajo Nation, the largest Indian tribe in the country, have opted not to go into gambling. The Navajos, with 250,000 members, are centered in Arizona, New Mexico and Utah.

Last November the Navajos rejected a referendum asking them if they want gambling. Exit polls showed that although Navajos support the concept of gaming, they felt they weren’t ready to take on the games.

“They’ve seen the good, the economic benefits of the gambling,” said Valerie Taliman, spokeswoman for the Navajo chairman, Albert Hale. “But they’ve also seen the bad and the social problems it’s caused.”


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