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BIA decision supports Mohawks' claim against Harrah's

AKWESASNE, N.Y. - The BIA has recognized the St. Regis Mohawk Tribe's existing governing body and its tribal court in a ruling that supports the tribe's $2.8 billion claim against Harrah's Entertainment Inc.

In an Oct. 31 decision, BIA Eastern Region Director Franklin Keel said the Indian agency affirmed the Mohawks' three-chief system as the tribe's representative body with which it will conduct government-to-government relations.

Additionally, Keel said that all of the agency's previous decisions invalidating the tribal court have been vacated by a federal court and ''as a matter of law are now no longer extant.''

This was the third time in 11 years that the BIA had ruled on the tribal governance issue.

The decision reiterates the authority of the tribal court's March 2001 default judgment against Harrah's for $1.8 billion in compensatory and punitive damages for unlawfully interfering in the tribe's efforts to establish a casino at Monticello Gaming and Raceway.

Last July, the tribal court affirmed its previous judgment and added $1 billion in interest charges because Harrah's representative had not showed up in court.

Former New York Attorney General Dennis Vacco, who is pursuing the tribe's lawsuit against Harrah's, said the BIA decision reaffirms a long-standing Justice Department decision that the tribal court exists independent of what government is in place.

''I think the [BIA] was very careful not to once again upset the apple cart concerning the tribal court, because they had confused the issue so many times,'' Vacco told Indian Country Today.

Vacco filed an enforcement action against Harrah's for the $2.8 billion in U.S. District Court for Northern New York in June. Harrah's inherited the lawsuit from its merger with Park Place Entertainment Corp., the company against which the tribe's original class action lawsuit was filed.

Since filing the enforcement action, Vacco said that Harrah's lawyers and lobbyists have ''once again attempted to influence and persuade the BIA to rule that the tribal court lacked validity. The BIA has now rejected these efforts by indicating in the ruling of Oct. 31 that submissions by third parties were to be sequestered and not considered by the BIA in arriving at its determination. Park Place attempted to influence the BIA in prior years, but ex parte decisions obtained by its lobbyists from the BIA have been invalidated by the courts and are now no longer recognized.''

By continuing to treat the lawsuit as a ''frivolous matter,'' Harrah's runs the risk of losing; and if it loses, ''the judgment is growing by $440,000 a day,'' Vacco said in an Associated Press article.

The tribe retained Vacco to conduct an investigation last spring into the historical record surrounding the creation of the tribal court and various attempts to undermine or abolish it, and other issues. His report is available at

Harrah's declined to comment on the pending litigation, but said in its earnings report that it believed the case is without merit and would ''vigorously contest'' any attempt to enforce the judgment, according to the AP.

The legal saga that now awaits a decision by the district court began in 2000, when tribal members issued a class action lawsuit against Park Place for unlawful interference in the tribe's efforts to open the Monticello casino.

The tribe's leaders at that time had entered into an agreement with Arthur Goldberg, then CEO of Park Place, granting the company exclusive rights to develop and manage any casinos the tribe established in New York state.

The tribe's current leaders now say that the deal was a fraudulent scam to divert, delay or scuttle the Monticello casino project in order to protect Park Place/Harrah's casinos in Atlantic City, N.J., from competition. A new casino just 90 minutes from New York would draw huge crowds away from the New Jersey market.

Part of Park Place's strategy was a promise to bail out the tribe's money-losing Akwesasne Mohawk Casino in Hogansburg, Vacco said in his report. Ivan Kaufman, the casino operator and a major player in the story, was in favor of the offer and entered into a relationship with Park Place.

''Park Place knew that because of Kaufman's fiscal control over the AMC, the tribe's largest employer, and Kaufman's fiduciary relationship with the tribe, that Kaufman was the ideal individual to aid Park Place in carrying out its sordid plan to defraud the tribe,'' Vacco said.

''Kaufman, being driven by Park Place's empty promises of financial reward, saw no problem with agreeing to breach the unquestionable fiduciary duty he owed the tribe as its agent. From that point on, Kaufman began manipulating the finances at the AMC and actively 'squeezing' the tribe's finances by withholding payroll and failing to pay bills in order to create the impression that AMC was in peril.''

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The New York Times on March 18, 2003, detailed a telephone conversation between Kaufman and Park Place general counsel Clive Cummis in which Kaufman bragged about how his actions would drive the tribe into the arms of Goldberg and Park Place.

The tribe had entered contracts back in 1996 with a group of financers known as the Monticello Group to develop the Monticello casino. Part of the Park Place signing deal on April 14, 2000, was a ''loan'' of ''$3 million for use by the tribe in its discretion,'' and a promise to indemnify the tribe from litigation losses arising from breaking its earlier contracts with the Monticello group, Vacco said.

Hilda Smoke, a former chief, denied the $3 million was a bribe, according to the AP. She said the money was used to pay debts and keep the AMC going, according to the AP.

''The casino was almost going under. We did the right thing. We never did anything against the tribe's best interest,'' Smoke told the AP.

Just days before the tribal leaders entered into the exclusive agreement with Park Place, the tribe received word that the Interior Department had approved its application for an off-reservation casino at Monticello.

In its efforts to protect the New Jersey casinos from competition, Park Place persuaded tribal leaders to abandon the already-approved Monticello site and suggested a new site at Kutsher's Country Club, an old-style ''Borscht Belt'' resort, Vacco said. Park Place executives told the tribe that the Monticello approvals could be transferred to the new site - but a new application would need to be filed with Interior and would likely take another four years to go through the process.

''The tribe was actually on the very brink of gaining the trust application approval for the Monticello site when Harrah's intervened and exerted a lot of influence over the tribe's then attorney and the three chiefs,'' said Leslie Logan, a tribal spokesman.

''Harrah's actually got them to jump ship from the Monticello site to Kutsher's with the new developer and financer. If Harrah's had not intervened, the tribe states that we would have had the Monticello Casino up and running for the past seven years, and therefore we have missed out on all these earnings.''

The tribe returned to its original investors, the Monticello Group, which reformed as Empire Resorts. In 2004, Empire established the Catskills Litigation Trust to pursue the claims against Park Place/Harrah's on behalf of the shareholders and investors who had the original contracts with the tribe to develop the Monticello casino. The trust is funded through its unit holders, some of whom are investors, and through access to capital markets, Vacco said.

The tribe assigned its default judgment case to the trust last June after public notice to the 12,000-plus class action tribal members and with the approval of the tribal court.

Vacco, who heads the trust, said the tribal court's judgment was taken to the federal district court because Harrah's has no property or assets on tribal land that the tribe could collect on.

The tribe is waiting for a ruling from U.S. District Court Senior Judge Thomas J. McAvoy on Harrah's motion to dismiss the case.

Expectations are high that the lawsuit will go forward and that the tribe will succeed, Chief Lorraine White said.

''I'm very optimistic that the court will reject Harrah's motion to dismiss and the tribe will be able to proceed with litigating the case. And I'm truly optimistic that the federal court will rule that there was wrongdoing committed here and that the tribe is owed the revenues that we should have been receiving year after year that certainly had been detracted from Akwesasne, and resulted in the benefit of the world's largest gaming company in Atlantic City,'' White said.

''But now our time has come, and we want what's owed to us.''

If the federal court rules that the tribal court's $2.8 billion judgment is enforceable, ''obviously, we're going to make the demand for immediate satisfaction for that judgment,'' Vacco said.

But even if the district court rules against the tribe, the tribal court decision would not be extinguished, he said.

Whatever the district court decision is, either party can appeal to the 2nd Circuit Court of Appeals in New York City.

Vacco agreed that the prospect of an appeal indicates that a speedy resolution to the case is not likely.

''Our legal strategy and our financial commitment to that legal strategy presuppose a lengthy fight.''