June 16, 2007 in Idaho

Coeur d’Alenes drop lawsuit

By The Spokesman-Review
 

What’s next

By dropping the suit, the council won’t seek to recover $751,000 from David Matheson. The tribe has filed a claim for the money with its insurance carrier and is awaiting a resolution.

The Coeur d’Alene Tribe has dropped its lawsuit against David Matheson, the former chief executive officer of the Coeur d’Alene Casino Resort Hotel, who was fired last year and sued for breach of fiduciary duties.

“We want to move forward with the day-to-day business of the tribe,” said Chief Allan, chairman of the tribe’s governing council. “We can’t be a productive council if we’re at each other’s throats.”

The seven-member council voted Thursday afternoon to drop the suit. Matheson, who was elected to the council in May, did not participate in the vote.

Reached Friday, Matheson said, “It’s always good to have differences behind you, so that we as tribal council can work together to better the lives of the people we represent.”

The suit accused Matheson of paying an unauthorized severance of $684,000 to another casino executive who was forced to resign over $100,000 in undocumented credit card expenses.

Jerry Krieg, the casino’s former chief operating officer, “looted the tribe on his way out the door because Matheson allowed it to happen,” according to the suit, which was filed in tribal court. “The payment awarded to Krieg was so utterly inappropriate that it constituted a waste of corporate assets.”

According to the suit, Krieg’s resignation followed an independent audit indicating that casino employees failed to provide proper documentation for nearly $340,000 charged to the casino’s credit cards. Krieg, who was in charge of the casino’s daily operations, and Matheson were the biggest offenders, the audit said. The suit sought $751,000 from Matheson, plus punitive damages.

Matheson vigorously disputes the version of events outlined in the suit. He said he and Krieg were able to produce receipts for the credit card expenses; that Krieg’s severance package was based on a formula consistent with other severances paid out by the casino; and that his firing and the lawsuit were politically motivated.

An MBA who spent three years as the director of the Bureau of Indian Affairs during the first Bush administration, Matheson engineered the casino’s rapid growth from a small bingo hall to one of Kootenai County’s largest business enterprises, with more than 800 employees. This spring, he made a political comeback, emerging as the top vote-getter in tribal council elections.

Kenneth “Wade” Weems, an unsuccessful council candidate in the recent elections, said he was disappointed that council members decided to drop the lawsuit against Matheson.

“He did something wrong,” Weems said. “He still violated the tribal trust and the tribal code.”

But Matheson said the May election results demonstrate tribal members’ confidence in him and a desire for new direction on the council. He received more than 200 votes, while Weems had “seven or eight,” he said Friday.

Matheson, 55, remains a controversial figure. Shortly before he was fired last year, he sent a letter to the Coeur d’Alene Tribe’s 1,900 enrolled members, saying the casino was profitable enough to pay a $1,000 monthly stipend to each tribal member.

The council immediately sent out a retraction letter, saying that $1,000 monthly stipends would gut critical programs of the tribe.

Matheson said this week that he continues to support the idea of a $1,000 monthly stipend. Currently, tribal members each receive about $4,000 per year from gaming profits, which represents their interest as stakeholders in the casino.

The tribal council recently agreed to pay elders $1,000 per month out of non-gaming revenue, according to Allan. Details of the payments are still being worked out, he said.

Erv Schleufer, a member of the Coeur d’Alene Tribe who lives in Spokane, said the events of the past year have tainted the reputation of the tribe – “the credit card scandal, the firing, the dangling of money in front of people.” Yet he supports the council’s decision to end the lawsuit against Matheson, saying it was a responsible move.

“A lawsuit like this can drag on for years,” he said. “You look at all the fighting going on in the community and the divisiveness it’s caused; it’s not a healthy thing.”

Schleufer said he’s saddened by the political dissension and fighting over casino revenues. A Kaiser Steelworker, he sees parallels between the tribe’s infighting and the long and bitter union strike and lockout at Kaiser Aluminum.

“Who wouldn’t love $1,000 per month?” he said. “But I think if we wait and let growth take care of it, we can get there without cutting programs to the kids and elderly … We started with checks for $400, and now we’re up over $4,000.”


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