Buffaloed: casino cowboys take Indians for a ride.
The tribal office is so sparsely furnished that it's hard to imagine the St. Croix have a dime. A pile of garbage decorates the main road, attended by a large dog that attacks passing cars. Taylor, chain-smoking, shows off a field of old Government-donated vehicles used for contract-construction jobs and touts a pitiful plan for economic development: a convenience store to "take advantage of" the tribe's partial exemption from the Federal cigarette tax.
"We're proud to no longer be dependent on handouts for survival," says Taylor, now chairman of the five-member council. Instead, the St. Croix--like dozens of other tribes that today run 220 Indian gaming operations (including an estimated eighty-eight casinos) in more than twenty states--are dependent on gambling, an activity that by its very nature promises more than it delivers. And, like many tribal players, the St. Croix are coming up short.
No one disputes that the Chippewa band has derived substantial benefit from casino operations; about half of its scattered 1,400 members (those with enough St. Croix blood) now receive $1,000 monthly distributions. But the biggest jackpot winners have been the St. Croix's partners, Roy C. Palmer and Ronald G. Brown, two white businessmen from Palatine, Illinois.
Palmer and Brown, as sole owners of the Indian-sounding Buffalo Brothers Management, Inc., have pocketed tens of millions of dollars from the St. Croix's two casinos in western Wisconsin, where they employ no staff and incur few expenses. In 1992, the pair raked in $13.8 million in profits, more than twice the $6.5 million that went to the tribe. Last year, they siphoned off at least another $13 million, and this spring they negotiated a buyout of their management contract for a reported $36 million. This is money for which Palmer and Brown need not do anything --not even go away. They continue to be involved with the St. Croix's casinos--operations known for their shoddy treatment of workers, Indian and non-Indian alike.
Worse, this unlucky alliance between the St. Croix (officially the Lake Superior Band of the St. Croix Chippewa) and the Buffalo Brothers, Palmer and Brown, has spurred corruption at the tribal, county, state, and Federal levels. Officials have been bribed, tribal elections have been influenced, critics have been threatened, harassed, and even shot at. All the while, regulators in Wisconsin and Washington, D.C., have, with one notable exception, stood by and winked. And the one regulator who spoke up was promptly fired.
"The Buffalo Brothers are a perfect example of what's going on in the country," says Clyde Bellecourt, the Minneapolis-based cofounder and national director of the American Indian Movement. "They're supposed to be working for the tribe, but that's not what's happening."
Bellecourt, who has participated in protests against the Buffalo Brothers (including, in late April, a brief occupation of the much larger casino at Turtle Lake), sees the St. Croix and other tribes as victims not just of exploitation but of circumstance: "Our people weren't prepared for this. One day we have tribal governments led by people with a sixth-grade education. The next day we wake up and boom--we've got a multi-million-dollar business in our backyard."
Most Native Americans, including St. Croix tribal members who have led the charge against the Buffalo Brothers, take a positive view of Indian gaming. This new frontier, opened by the court decisions and the 1988 Indian Gaming Regulatory Act (IGRA), has given tribes an unprecedented opportunity to stake a claim to economic independence.
Some have made the most of this opportunity. Wisconsin's Oneida tribe has used the proceeds from its self-managed Green Bay casino to set up a scholarship fund for tribal members. Connecticut's Mashantucket Pequot--whose Foxwoods casino, also managed by the tribe, now nets more than $1 million a day--are building a $130 million museum to preserve their heritage. The St. Croix's casinos have made a deep dent in local unemployment and welfare rates and helped band members to become self-sufficient, some for the first time in their lives.
But overall, Indian gaming--last year a $3 billion industry--has been a mixed blessing. Indians who receive gaming proceeds lose Federal assistance and see their subsidized rent shoot up. Bellecourt says he's heard stories that make him want to cry, of young Indians blowing "thousands of dollars" on limo rides. And while alcohol abuse is still the number-one problem facing Native Americans, they now also have access to cocaine and designer drugs.
"It's killing us. It's killing our people," says Bellecourt. "They never had money in their lives and they don't know what to do."
It is precisely this lack of money that made the tribes vulnerable in the first place. In the mid-1980s, when Indian gaming evolved beyond bingo halls into video poker and other electronic games, few had the funds to purchase this equipment. Borrowing from banks was out of the question, since the legality of these early operations was in doubt. But some folks were still willing to help the poor Indians out.
Glenn Hall, a Wisconsin Lac Courte Oreilles band member, recalls that ninety-ten profit splits were once common throughout Wisconsin and Minnesota. The Indians got a 10 per cent share for making space for the machines; the owners got 90 per cent for providing them. "These guys pretended to be the tribes' friends," says Hall, "but in fact they were stealing from them."
It was in this capacity--as leasers of gaming machines--that Roy Palmer and Ron Brown in 1988 began their lucrative involvement with the St. Croix. Brown, a former high-school track coach, got into the business through a video rental chain he ran with his brother. Palmer, a lawyer who in 1974 was a key figure in a major Illinois scandal (described by that state's Better Business Association as "a scheme . . . to control the regulation of the Illinois savings-and-loan industry"), gave up private practice to go into Indian gambling.
"We got into the game early and took some risks," Palmer told the St. Paul Pioneer Press. "It worked out very well."
Like other early arrivals, Palmer and Brown stayed on board as the gravy train headed for its next stop: full-scale casinos. In January 1991 the pair, then operating as the sole proprietors of an outfit called Interstate Gaming Services, Inc., signed a five-year contract to lease gaming machines to the St. Croix. In August 1991, Palmer and Brown's other company, Buffalo Brothers, Inc., entered a seven-year pact giving it the exclusive right to develop, manage, and operate the band's casino at Turtle Lake. In September, it entered a similar agreement for the smaller casino at Danbury.
The management contract granting Buffalo Brothers 30 per cent of the net revenues from Danbury and 40 per cent (the highest allowed under IGRA) from Turtle Lake was approved by Earl Barlow, then area director in Minneapolis for the Bureau of Indian Affairs. These high percentages and long terms--as opposed to two-year pacts for 2 per cent to 5 per cent cuts said to be the norm in Las Vegas--are typical of the contracts approved by Barlow and other BIA officials. (Barlow was suspended last fall and was later forced to retire after it emerged that he and an assistant accepted free meals and gambled at casinos he regulated, winning more than $20,000 in jackpots while billing the government $31,000 for travel costs.) Besides their huge slice of the overall profits, Palmer and Brown were collecting 30 per cent of the leased gaming machines' gross profits through a concurrent contract with Interstate, which was not reported to the BIA. And any capital secured by Palmer and Brown for casino construction was paid back as a loan by the band.
Paul DeMain, managing editor of News from Indian Country, a twice-monthly newspaper published in northern Wisconsin, says such arrangements have "caused some tribes to generate debt while having million-dollar cash flows." The bulk of the profits are going to the white business-people with whom they enter gaming-related contracts. DeMain cites the experience of Minnesota's Mille Lacs tribe, which owns two casinos managed by Grand Casinos, Inc. The firm's founders, who began their relationship with the tribe on a shoestring, today preside over a publicly traded gaming empire worth more than $300 million. One of these founders last year gave each of his two children stock valued at $30 million; the Mille Lacs' take for 1993, meanwhile, was $24 million.
The Buffalo Brothers have also fared well. In 1992, Brown reported total adjusted gross income of $11.9 million, up from $53,267 two years before. Palmer's 1992 income weighed in at $12.3 million, virtually all from Indian gaming. Last year, the two men listed total assets of more than $70 million.
In 1993, the Office of the Inspector General for the U.S. Department of the Interior found excessive fees totaling $62 million in eighteen of the twenty-seven tribal management contracts it reviewed. Its November 1993 report noted that in almost every case where a contractor secured financing for an operation, the tribe was paying it back, with interest, in addition to the management fee. The office also reviewed thirteen leasing agreements and found that the tribes paid $40.3 million for gaming equipment they could have bought for $3.2 million. Additional losses were attributed to theft and embezzlement. And the report identified thirty-seven gaming operations that lacked approved compacts, which means they're illegal.
"It's clear that the Indian gaming industry is a tempting target for criminal activity and exploitation," says Representative Robert Torricelli, the New Jersey Democrat who is author of a bill to tighten regulation of Indian gaming. The response from BIA Secretary Ada Deer, whose agency had approved many of the contracts under review, was to "agree with the report that some tribes may have entered into unconscionable contracts and leases" but "disagree that the Bureau of Indian Affairs could have done more to prevent this situation."
Deer and National Indian Gaming Commission Chairman Anthony Hope took issue with most of the report's recommendations, stopping them dead in their tracks. Hope, the congenial son of comedian Bob Hope, says he thinks most of the problems highlighted in the report are being corrected through tighter regulation (his commission first became active in February 1993) and by the machinations of the market (some tribes are now smoothly running their own operations and entering management-consulting agreements with other tribes). Hope admits there are "plenty of cases where things are going on that shouldn't be," but says the Government's response is limited by its commitment to tribal self-determination: "The basic notion is that the only way they're going to learn to stand on their feet is to fall down once in a while."
That doesn't sit well with Indians like Hall, who with two other Lac Courte Oreilles band members has fifty-four lawsuits pending against eighteen firms (including Interstate) that entered into allegedly illegal agreements with tribes. The trio's lawyer, Lance Riley, says the defendants in these cases run the gamut from "pure criminals" to the merely "unethical." Dismissed en masse by lower courts, the suits, which seek repayment to tribes of millions of dollars, are now before two Federal appellate courts. Oral arguments were heard in May; decisions are expected soon.
Hall was prompted to sue by a sour personal experience with Indian gaming. After successfully managing a Minnesota tribe's casino operations, he started his own management firm. He raised about $7 million, contacted more than thirty tribes, and engaged in negotiations with a dozen. Hall says his Indian-run outfit offered three- to five-year contracts (as opposed to the seven-year norm), for cuts as low as 10 per cent (rather than 30 per cent or 40 per cent) on involvement that included capital investment (not just a loan). But after thirteen months of trying, he threw in the towel.
Why? Hall says some tribal councils demanded illegal payments up front as a condition of agreement. He didn't go along. ("I figured if I did business that way, somebody would have been busted and it would have made headlines: 'Indian people cheating Indian people.'") In four cases, Hall says, contracts were submitted to Barlow's BIA office, where they languished for months. No contract involving his or any of three other Indian-run management companies was ever approved.
Like other outsiders who secured management contracts during this time, the Buffalo Brothers knew little about casino management. Their hastily assembled management team included such casino veterans as Barbara Tidd as chief financial officer. After the rush to prepare the Turtle Lake casino for its May 1992 opening, Tidd reviewed the financial arrangements and was appalled to discover how much of the profit was going to Palmer and Brown.
In June 1992, a meeting of the St. Croix tribal chairman and casino brass, including Palmer, was held at Tidd's behest. As she recalls, it didn't last long: "Roy started screaming, 'You fucking bitch.'" Fired shortly thereafter, Tidd gave tribal council member Mary Washington documents regarding casino finances that provided the basis for a Federal lawsuit filed "on behalf of the St. Croix tribe" by Washington, fellow council member Kenny Mosay, and his father, Chief Archie Mosay, the band's spiritual leader. Named as defendants were Buffalo Brothers, Interstate, Palmer, and Brown.
The suit, which argued that the Interstate lease pushed the Buffalo Brothers' take well beyond the 40 per cent maximum set for management companies under IGRA, was shot down at the district and appellate levels. But the publicity generated by its December 1992 filing prompted the St. Croix and Interstate to terminate their contract. Still, acquiring ownership of the machines cost the band at least another $2 million--on top of the more than $9 million in lease fees it paid in 1992. This for machines the tribe could have bought, on credit, for $4 million.
In justifying their sweetheart lease, Palmer and Brown told the tribe that each gaming machine would earn about $40 a day. But, in securing a loan for these machines, the pair prepared a prospectus confidently (and correctly) predicting earnings of between $150 and $225 a day.
On May 26,1993, Michael Liethen, then director of the Wisconsin Gaming Commission's Office of Indian Gaming, recommended in a draft report that Buffalo Brothers, Inc., be sent packing for having "abused the trust placed in it . . . to unjustly enrich its owners at the expense of the tribe." That same day, Liethen was suspended by Commission Chair John Tries. When Liethen later released the report in response to a Federal court subpoena from the plaintiffs in the lawsuit against Palmer and Brown, he was fired.
Tries, formerly Governor Tommy Thompson's personal chauffeur, insists the commission had good cause for its actions. But Liethen calls the commission's stated reasons "a pretext for improper political considerations or a cover-up of other improper activities within the commission." He believes the action taken against him--which came on the heels of a meeting between Tries and Buffalo Brothers attorney Ray Taffora, formerly the Governor's chief legal counsel--"was an effort to interdict my recommendation regarding the Buffalo Brothers."
Gaming officials deny this, but in fact have since mothballed Liethen's report and tolerated the Buffalo Brothers' continued looting of the St. Croix. Explains Gaming Commission spokesman Bill Clausius, "It's paternalistic to suggest we should be stepping in and blocking bad business deals."
The St. Croix, like other tribes, consider their business enterprises exempt from basic labor laws. That means casino employees do not receive workers' compensation or unemployment compensation, and they are not covered by laws governing minimum wage, discrimination, and sexual harassment.
Jerry Sondreal, managing editor of the weekly Amery Free Press, says he's spoken to "100 to 150 people who have what I consider to be legitimate complaints" regarding the casino's labor practices. "It's a total reign of terror," he says. "Employees are absolutely petrified of losing their jobs."
Last December, the Wisconsin Legislature's Special Committee on Gambling Oversight heard testimony from nineteen former St. Croix casino workers. It was one horror story after another. Laurie Kirwan, a cocktail waitress, said her supervisor would routinely run his fingers through her hair and once tried to bite her breasts (she quit; he didn't have to). Karen Nerison, a waitress, was fired after she became pregnant (her supervisor said she was going to the bathroom too often; normally, casino waitresses get just one five-minute break per eight- or nine-hour shift). Gretchen Cottingham, the head of house-cleaning at the adjacent hotel, testified in tears that she was never given a reason for her termination: "I called the hotel and they said, 'You no longer work here.'"
At one point during the hearing, the committee chair, Representative Marlin Schneider, angrily asked tribal attorney Howard Bichler whether the U.S. Constitution was suspended on Indian lands. Replied Bichler, "In some respects it is." Tries agrees, saying Federal law governing compacts between states and tribes "would not allow us" to include language regarding workers' rights. (Compact language requiring compliance with state building codes evidently presents no such problem.)
In an interview in March, casino marketing director Joseph Hunt derided the former workers' complaints: "This is a good operation. We do not condone sexual harassment. We do not condone mismanagement. To even insinuate that the Buffalo Brothers are not sensitive to these issues is really an insult." In April, Hunt himself was fired, part of a spate of high-level cannings that also include the casino's chief financial officer and its director of security, Louis Merrill, who subsequently helped Bellecourt and about sixty others take over the casino early on the morning of April 24.
The dissidents closed off the casino for several hours and occupied the casino boardroom until later that day, when they met with Chairman Taylor and other tribal council members to air their grievances, mostly regarding the Buffalo Brothers. Afterwards, Bellecourt, Merrill, and newspaperman Sondreal, who covered the occupation, were served restraining orders barring them from the casino and its environs, (The orders were later lifted.)
On April 29, State Representative Harvey Stower, who has been on the warpath against the Buffalo Brothers for months, hand-delivered a letter signed by Chief Archie Mosay to the office of U.S. Attorney General Janet Reno. The letter alleges that "our current tribal council is being bribed and bought by the Buffalo Brothers" and urges the Justice Department to investigate.
The Justice Department forwarded the letter to the Bureau of Indian Affairs and the US. Attorney for the Western District of Wisconsin, which won't confirm whether an investigation is under way. Sources say Federal investigators are unlikely to get involved, especially now that the Buffalo Brothers are professedly on their way out.
Why has the St. Croix's leadership continued to affiliate with the Buffalo Brothers despite overwhelming evidence that the tribe is being ripped off? "There's no doubt in my mind," says Bellecourt, "that they have been bought off." This would hardly be unprecedented.
Glenn Corrie, the owner of a management company that ran gaming operations for the Wisconsin Winnebago, received an eighteen-month prison term after he confessed to paying hundreds of thousands of dollars in bribes to members of the tribe's business committee. Corrie's company was kicked out by a Federal judge in January 1992--but not before controversy over the arrangement drove the Winnebago to the brink of civil war, culminating in an arson attempt and shootout at one of the tribe's casinos.
Palmer and Brown's relationship with the St. Croix has been just as fractious. After Washington and Mosay filed suit against the Buffalo Brothers in December 1992, their $30,000 annual salaries--up from about $8,000 in the days before gaming--were terminated. ("It's fair," asserts Taylor. "If they're not satisfied, cut them out. I learned that from the white man.")
Last summer, Mosay and Washington were ousted from the council in elections held one day after tribal members received an unauthorized $1,000 per-capita payment drawn from casino profits--along with a letter scurrilously attacking Mosay, who lost by two votes. A building owned by the Buffalo Brothers was used for an election-eve rally, catered by the casino. A casino van was dispatched to Minneapolis to transport select tribal members--those who supported pro-buffalo Brothers candidates--to the polls. The BIA was asked to nullify this election result; it refused.
Critics of the casino have allegedly been followed, threatened, and had their phones tapped. Bob Reynolds, a former casino head of security, last August had five bullets fired into his truck from another vehicle.
Other threats have been directed against the tribe as a whole. Last December, the council claimed in a letter to tribal members that protests against the Buffalo Brothers had caused a decline in casino profits, which might force it to "decrease or eliminate . . . per-capita payments, [the tribe's] loan program, daily work programs, housing projects, benefits for elders and children, education programs, and tribal pow-wows."
Bellecourt sees such discord as an ominous portent for the St. Croix and other tribes. "I believe that gaming is a major conspiracy against Indian people," he says. "I think it's a form of termination." Once tribal corruption reaches critical mass, he fears, "the Federal Government will step in and put us in receivership."
National Indian Gaming Commission chair Hope offers a divergent, though equally dismal, prognosis. Gambling, he observes, is an inherently wasteful endeavor: "It's not a product, provides no product, does nothing. It's a net drain on any economy." In ten or twenty years, he predicts, the current gambling boom will reach a saturation point and communities will no longer stand for it. "Gambling died out in the 1840s and 1890s," he says. "It's going to die out again."
At the moment, however, gambling is in ascendance and Indian tribes--whose gambling share, says Hope, is 5 per cent to 8 per cent of the national total--are along for the ride. And while management companies are on the way out, the determination of white outsiders to cash in on Indian gaming appears as strong as ever. Michael Liethen, now general counsel for the Wisconsin Winnebago, notes that Golden Nickel Corporation, one of the management companies the tribe turned to after being burned by Corrie, has bought up all the land around the Winnebagos' flagship casino near Wisconsin Dells. "We're absolutely landlocked," he says. "It's obvious they're exploiting us rather than working with us."
As of late June, more than a month after Taylor notified the state that the buyout was complete, Palmer and Brown were still at the casino, taking care of business. They could keep drawing money from the operation for some time to come. The terms of the buyout have still not been disclosed to state gaming officials or band members, some of whom are now trying to force a tribal referendum on the deal. The tribal council has responded by sending a "red alert" to band members, urging them to resist "this small faction and their dissident supporters who want to destroy the economic base of the tribe." State authorities and the FBI continue to investigate.
No matter what happens, the imprint of the Buffalo Brothers on the St. Croix will be long and deep. Perhaps the best emblem of this can be found inside the casino, in the etched glass panels that adorn the Buffalo Brothers Saloon. There, among the exquisite renderings of Indian scenes--wolves, soaring eagles, Indians on horseback--is the graven image of Roy Palmer and Ron Brown. The two men are dressed in frontier garb, rifles in hand.
Bill Lueders is News Editor of Isthmus, a weekly newspaper in Madison, Wisconsin. Research for this article was supported in part by a grant from Essential Information, Inc.
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|Date:||Aug 1, 1994|
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