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Full text of "Implementation of Indian Gaming Regulatory Act : oversight hearing before the Subcommittee on Native American Affairs, Committee on Natural Resources, House of Representatives, One Hundred Third Congress, first session, on implementation of Public Law 100-497, the Indian Gaming Regulatory Act of 1988"

^ IMPLEMENTATION OF INDIAN 
^^ GAMING REG ULATORY ACT 

/ 4,R 31/3:103-17/PT.5 

Inplenentation of Indijn Siniiig Reg.- HEAKIJNG- 

BEFORE THE 

SUBCOMMITTEE ON 
NATIVE AMERICAN AFFAIRS 

OF THE 

COMMITTEE ON 

NATURAL RESOURCES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRD CONGRESS 

FIRST SESSION 

ON 

IMPLEMENTATION OF PUBLIC LAW 100-497, THE INDIAN GAMING 
REGULATORY ACT OF 1988, AND RELATED LAW ENFORCEMENT ISSUES 



HEARING HELD IN WASHINGTON, DC 
OCTOBER 5, 1993 



Serial No. 103-17, Part V 



Printed for the use of the Committee on Natural Resources 




IMPLEMENTATION OF INDIAN 
GAMING REGULATORY ACT 

OVERSIGHT HEARING 

BEFORE THE 

SUBCOMMITTEE ON 
NATIVE AMERICAN AFFAIRS 

OF THE 

COMMITTEE ON 

NATURAL RESOURCES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRD CONGRESS 

FIRST SESSION 
ON 

IMPLEMENTATION OF PUBLIC LAW 100-497, THE INDIAN GAMING 
REGULATORY ACT OF 1988, AND RELATED LAW ENFORCEMENT ISSUES 



HEARING HELD IN WASHINGTON, DC 
OCTOBER 5, 1993 



Serial No. 103-17, Part V 



Printed for the use of the Committee on Natural Resources 




U.S. GOVERNMENT PRINTING OFFICE 
84-760 WASHINGTON : 1994 

For sale by the U.S. Government Printing Office 
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 
ISBN 0-16-046382-3 



COMMITTEE ON NATTJRAL RESOURCES 
GEORGE MILLER, California, Chairman 



PHILIP R. SHARP, Indiana 
EDWARD J. MARKEY, Massachusetts 
AUSTIN J. MURPHY, Pennsylvania 
NICK JOE RAHALL II, West Virginia 
BRUCE F. VENTO, Minnesota 
PAT WILLIAMS, Montana 
RON DE LUGO, Virgin Islands 
SAM GEJDENSON, Connecticut 
RICHARD H. LEHMAN, California 
BILL RICHARDSON, New Mexico 
PETER A. DeFAZIO, Oregon 
ENI F.H. FALEOMAVAEGA, American 

Samoa 
TIM JOHNSON, South Dakota 
LARRY 1,aR0CC0, Idaho 
NEIL ABERCROMBIE, Hawaii 
CALVIN M. DOOLEY, CaUfornia 
CARLOS ROMERO-BARCELO, Puerto Rico 
KARAN ENGLISH, Arizona 
KAREN SHEPHERD, Utah 
NATHAN DEAL, Georgia 
MAURICE D. HINCHEY, New York 
ROBERT A. UNDERWOOD, Guam 
HOWARD L. BERMAN, California 
LANE EVANS, lUinois 
PATSY T. MINK, Hawaii 
THOMAS J. BARLOW III, Kentucky 
THOMAS M. BARRETT, Wisconsin 



DON YOUNG, Alaska, Ranking Republican 

Member 
JAMES V. HANSEN, Utah 
BARBARA F. VUCANOVICH, Nevada 
ELTON GALLEGLY, CaUfornia 
ROBERT F. SMITH, Oregon 
CRAIG THOMAS, Wyoming 
JOHN J. DUNCAN, Jr., Tennessee 
JOEL HEFLEY, Colorado 
JOHN T. DOOLITTLE, Cahfomia 
WAYNE ALLARD, Colorado 
RICHARD H. BAKER, Louisiana 
KEN CALVERT, California 
SCOTT McINNIS, Colorado 
RICHARD W. POMBO, California 
JAY DICKEY, Arkansas 



John Lawrence, Staff Director 

Daniel Weiss, Professional Staff Member 

Richard Meltzer, General Counsel 

Daniel Val Kish, Republican Staff Director 



Subcommittee on Native American Affairs 

BILL RICHARDSON, New Mexico, Chairman 
PAT WILLIAMS, Montana CRAIG THOMAS, Wyoming, Ranking 

SAM GEJDENSON, Connecticut Republican Member 

ENI F H. FALEOMAVAEGA, American DON YOUNG, Alaska 

Samoa RICHARD H. BAKER, Louisiana 

TIM JOHNSON, South Dakota KEN CALVERT, California 

NEIL ABERCROMBIE, Hawaii 
KARAN ENGUSH, Arizona 

Tadd Johnson, Staff Director 
Marie Howard, Professional Staff Member 

Steven J.W. Heeley, Counsel 

June Lorenzo, Professional Staff Member 

Barbara Robles, Clerk 

William Johansen, Staff Assistant 

Richard Houghton, Republican Counsel on Native American Affairs 



(II) 



CONTENTS 



Page 

Hearing held: October 5, 1993 1 

Charts submitted by Mr. Richardson: 

1. Share of Gaming HANDLE for Major Types of Gaming, 1991 and 
J9g2 2 

2. National Gaming ^\^N for Ms^^^^^^ 1992 4 

3. Share of Gaming WIN for Major Types of Gaming, 1991 and 1992 5 

Summary of Indian Gaming Regulatory Act 9 

"Estimated Financial Trends in National and Indian Gaming: Tables and 

Charts for a Briefing Book," compiled by Roger Walke, Analyst in American 

Indian Policy, Government Division, Congressional Research Service 13 

Member statements: 

Hon. BiU Richardson 1 

Hon. Craig Thomas 32 

Hon. Neil Abercrombie 38 

Hon. Ken Calvert 38 

Hon. Tim Johnson 38 

Hon. George Miller 88 

Witness statements: 

Hon. Daniel K. Inoviye, a U.S. Senator from the State of Hawaii, and 

Chairman, Senate Committee on Indian Affairs 39 

Prepared statement of Senator Inouye 43 

Hon. John McCain, a U.S. Senator from the State of Arizona, and Vice 

Chairman, Senate Committee on Indian Affairs 51 

Prepared statement of Paul L. Maloney, Senior Counsel for Policy, 
Criminal Division, Department of Justice, before Select Committee 

on Indian Affairs, U.S. Senate, on March 18, 1992 53 

Prepared statement of Senator McCain 62 

Hon. WilUam J. Hughes, a Representative in Congress from the State 

of New Jersey 66 

Prepared statement of Representative Hughes 70 

Hon. Marge Roukema, a Representative in Congress from the State of 

New Jersey 77 

"Was Mob Behind Tribe's Casino," New Jersey Law Journal, Septem- 
ber 13, 1993 79 

Prepared statement of Representative Roukema 84 

Panel consisting of: 

Jim E. Moody, Section Chief, Organized Crime/Drug Operations, 
Criminal Investigative Division, Federal Bureau of Investigation .... 101 

F*repared statement of Mr. Moody 103 

Laurence A. Urgenson, Acting Deputy Assistant Attorney General, 

Criminal Division, U.S. Department of Justice 113 

Prepared statement of Mr. Urgenson 116 

David B. Palmer, Deputy Assistant Commissioner for Criminal Inves- 
tigation, Internal Revenue Service, accompanied by Peter G. Djinis, 
Director, Office of Financial Management, Department of the 

Treasury 126 

Prepared statement of Mr. Palmer 129 

Hon. Robert G. Torricelli, a Representative in Congress from the State 

of New Jersey 162 

Prepared statement of Mr. TorriceUi 165 

Donald Trump, Chairman and President, Trump Organization, New 

York, New York 175 

Prepared statement of Mr. Trump 178 

(III) 



IV 

Page 

Witness statements — Continued 

Donald Trump, Chairman and President, Trump Organization, New 
York, New York— Continued 
Information submitted to Chairman Richardson from Mr. Trump by 

letter dated October 25, 1993 189 

Transcript of Imus broadcast 243 

'Torricelli gambUng bill a prize-winning insult" article 248 

'The wrong way to fight competition" article 249 

Affidavit of Richard M. Milanovich, Chairman, Agua Cahente Band 

of CahuiUa Indians, and additional documentation 253 

Panel consisting of: 

Hon. Ada E. Deer, Assistant Secretary of Indian Affairs, Bureau 
of Indian Affairs, U.S. Department of the Interior, accompanied 
by Hilda A. Manuel, Director, Indian Gaming Management Staff, 

and Theodore R. Quasula, Chief, Division of Law Enforcement 270 

Prepared statement of Ms. Deer 272 

Hon. Anthony J. Hope, Chairman, National Indian Gaming Commis- 
sion 281 

Prepared statement of Mr. Hope 283 

Hon. Joel Frank, Commissioner, National Indian Gaming Commis- 
sion '. 302 

Michael D. Cox, General Counsel, National Indian Gaming Commis- 
sion, accompanied by Hon. Jana McKeag, Commissioner 304 

Panel consisting of: 

Timothy Wapato, Executive Director, National Indian Gaming Asso- 
ciation 308 

Information regarding alleged incident of organized crime on 

Cabazon Reservation submitted by Mr. Wapato 311 

Prepared statement of Mr. Wapato 315 

Richard James Elroy, Retired Special Agent, Federal Bureau of In- 
vestigation 348 

Prepared statement of Mr. Elroy 351 

G. Michael Brown, President and CEO, Mashantucket Pequot Na- 
tion's Foxwoods Casino and High Stakes Bingo, Ledyard, CT, ac- 
companied by Lt. Col. Robert Root, Connecticut State Police 354 

Prepared statement of Mr. Brown 357 

"The Economic Impacts of the Foxwoods High Stakes Bingo & 
Casino on New London County and Siurounding Areas" and 

additional attachments to Mr. Brown's testimony 367 

F. William Johnson, CEO, Mystic Lake Casino, Shakopee Sioux 
Tribe, Prior Lake, MN, accompanied by PoUce Chief Dick Powell, 

City of Prior Lake Police Department 444 

Prepared statement of Mr. Johnson 448 

APPENDIX 

October 5, 1993 

Additional material submitted for the hearing record fi-om: 

Hon. Donald M. Payne, a Representative in Congress from the State 
of New Jersey: Statement of support for the Ramapough Mountain 
Indian Tribe 459 

Hon. Benjamin A. Gilman, a Representative in Congress from the State 
of New York: Statement of support for the Ramapough Mountain In- 
dian Tribe 460 

Seminole Tribe of Florida: Letter to Chairman Richardson from Hon. 
James E. BilUe, Chairman, dated October 13, 1993 462 

Chief Ronald "Redbone" Van Dunk, Chief of the Ramapough Mountain 
Indians: Prepared statement and attachments 464 

George L. Schneider, Counsel to the Ramapough Mountain Indian Tribe: 
Prepared statement 474 

O'Connor & Hannan, Attorneys at Law: Letters regarding Indian gaming 
and Federal taxation ;■• 478 

National Governors' Association: Letter to Senators Inouye and McCain 
dated August 17, 1993 485 



IMPLEMENTATION OF PUBLIC LAW 100-497, 
THE INDIAN GAMING REGULATORY ACT OF 
1988, AND RELATED LAW ENFORCEMENT IS- 
SUES 



TUESDAY, OCTOBER 5, 1993 

House of Representatives, 
Subcommittee on Native American Affairs, 

Committee on Natural Resources, 

Washington, DC. 
The subcommittee met, pursuant to call, at 9:35 a.m., in room 
1324, Longworth House Office Building, Hon. Bill Richardson 
(chairman of the subcommittee), presiding. 

STATEMENT OF HON. BILL RICHARDSON 

Mr. Richardson. The committee will come to order. 

Today we are taking testimony on the implementation of the In- 
dian Gaming Regulatory Act of 1988. This is the fifth in a series 
of oversight hearings the subcommittee has conducted on this sub- 
ject. 

I have asked that several charts be prepared for the committee 
by the Congressional Research Service which indicate where Indian 
gaming stands in relation to other types of legalized gaming na- 
tionally. 

[The charts follow:] 



(1) 



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11 

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Mr. Richardson. Chart one, illustrated as a pie, indicates the 
percentage of "handle." "Handle" means the total of all wagers 
made. This is the money which is bet and rebet or churned. Each 
bet, whether the house wins or loses, is added to the "handle." Note 
that Indian gaming, in blue, is only 4.6 percent of the "handle" in 
the country while Nevada and Atlantic City-type casinos were at 
76 percent in 1992. 

Chart 2 shows the amount of "handle" in dollars. In 1992, non- 
Indian casinos went over $250 billion in "handle" while Indian 
gaming establishments were around $6 billion. 

Charts 3 and 4 show the concept of "win." The "win" in gambling 
means the revenues which go to the gaming facility after the cus- 
tomer winnings are paid out. This is the equivalent to a non-gam- 
ing business's gross revenues. 

Chart 3 shows that lotteries and casinos combined made in ex- 
cess of $20 billion in the "win" category while Indian gaming estab- 
lishments won slightly over $1 billion in 1992. Again, as chart 4 
shows, the Indian percentage of the "win" is only around 5 percent. 

Indian gaming is governmental gaming. All of the revenues go 
back into the reservations. Many other types of gaming on these 
charts are for profit. 

We have almost 100,000 Indians homeless or underhoused. Na- 
tive Americans have the shortest lifespan and the highest rates of 
suicide, tuberculosis, and diabetes. We have an unusual interest in 
this hearing, and in the efforts of speeding up the proceedings, I 
am going to insert into the record my statement and background 
information and urge that our opening statements be relatively of 
short duration. 

[The prepared statement of Mr. Richardson and additional infor- 
mation follow:] 



OPENING STATEMENT OF CHAIRMAN RICHARDSON 
October 5, 1993 



The Committee will come to order. 

Today we are taking testimony on the implementation of the Indian Gaming 
Regulatory Act of 1988. This is the 5th in the series of oversight hearings the Subcommittee 
has conducted on this subject. 

I have asked that several charu have been prepared for the Committee by the 
Congressional Research Service which indicate where Indian Gaming stands in relation to 
other types of legalized gaming nationally. 

Chart One, illustrated as a pie, indicates the percentage of "handle". "Handle" means 
the total of all wagers made. This is the money which is bet and rebet or "churned". Each 
bet, whether the house wins or loses, is added to the "handle". Note that Indian gaming, in 
blue, is only 4.6% of the handle in the country whOe Nevada and Atlantic Qty type casinos 
were at 76% in 1992. Chart Two shows the anaount o( "handle" in dollars. In 1992 non- 
Indian casinos went over $250 billion in handle while Indian gaming establishments were 
around $6 billion. 

Charts three and four show the ccmcept oi "win". The "win" in gambling m^an^ the 
revenues which go to the gaming facility after the custraner winnings are pa id out This is 
the equivalent to a non-gaming businesses "gross revenues". Chart Three shows that k}tteries 
and casinos ctmbined made in excess of $20 btSion in the "win" categoiy while Indian 
gaming establishments "won" less slightly over $1 biOicn in 1992. Again, as Chart Four 
shows, the Indian percentage of the win is only around S%. 

Indian gaming is governmental gaming. AH of the revenues go back into the 
reservations. Many of the other types of gaming on uiese charts are fcM' profit 

Indian gaming is a desperate remedy f(v a desperate situation. Abnost 100,000 
Indians are homeless or underboused. Indians have the shortest life span and the highest 
rates of suicide, tubercukxis and diabetes. Over half (rf the pec^le on reservations are 
unempkiyed. 

On maiy tcservatioas, Indian gaming has been a way out of the w(»st poverty in our 
nation. The guniaf revenues are mandated to go back into governmental programs to 
benefit the Indiu people. On the MiUe Lacs Reservation m Minnesota last week, a new 
school was opened. The school was buih with gaming dollars and not ckk penny of federal 
govenmient awi s tance. This is what the Act was meant to da Tnrfian tribes are 
experiencing a new hope for the future, and a new hope ttriiicfa they have not felt in decades 
or even centuries. 



Many voices speak out vehemently against Indian gaming, but as a tribal leader told 
me recently, "no one ever objected to the Indians being poor". 

Today we will discuss law enforcement issues in Indian gaming. There has been a 
hysteria surrounding Indian gaming from the begiiming. There have been allegations of 
organized crime and money laundering rampant on reservations. Today, we will hear from 
the law enforcement agencies charged with regulating Indian gaming and enforcing federal 
laws on the reservations. We will also hear from tribal witnesses and private parties to get 
their perspectives on law enforcement issues in Indian gaming. 

This Subcommittee is committed to seeking the truth on these matters. These 
allegations are quite significant and the Committee takes its oversight responsibilities very 
seriously. If there is criminal activity in these gaining operationt, we need to know about 
it and actively work to put a stop to it If the level of criminal activity is not at serious as 
some allege, we must work to ensure that this industry is weQ regulated and the criminal 
elements are kept in check. But we must begin by asking the questions • which is our 
purpose today. 



SUMMARY OF THE INDIAN GAMING REGULATORY ACT 

On October 17, 1988, the President signed into law the Indian 
Gaming Regulatory Act, Public Law 100-497, 25 U.S.C. 2701 et sea . 
The Act provides a system for the regulation of gaming on Indian 
lands by dividing gaming into three classes, establishing the 
National Indian Gaming Commission to regulate Class II gaming and 
authorizing compacts between tribes and states for the regulation 
of Class III gaming. 

Class I Gaming 

Class I gaming includes social or traditional gaming which is 
played in connection with tribal ceremonies or celebrations. Class 
I gaming is regulated exclusively by the tribes. 

Class II Gaming 

Class II gaming includes bingo and, if played at the same 
location as bingo, pull tabs, lotto, punch boards, tip jars, and 
instant bingo. Class II gaming also includes card games which are 
authorized by state law or not explicitly prohibited by state law 
and played at any location in the state. The card games must be 
played in conformity with state law or regulations regarding hours 
of operation and pot limits. 

A tribe may engage in Class II gaming if the state in which 
the tribe is located permits such gaming for any purpose by any 
person, organization or entity. Class II geiming is regulated by 
the National Indian Gaming Commission and the tribe or solely by 
the tribe if issued a certificate of self -regulation. 

Class III Gaming 

Class III gaming includes all gaming not included in Class I 
or Class II, such as casino-type games, gambling devices, pari- 
mutuel betting, etc. 

Class III gaming is prohibited unless authorized by a tribal- 
state compact. 

Class III Gaming and Tribal-State Compacts 

Class III gaming is lawful when it is authorized by a tribal 
ordinance approved by the chairman of the Commission, is located in 
a state that permits such gaming (whether for charitable, 
conunercial, or governmental purposes), and is conducted in 
conformance with a tribal-state compact which has been approved by 
the Secretary of the Interior. 

The Act authorizes an Indian tribe and the state in which the 
tribe is located to enter a compact governing gaming activities. 
The compact may include provisions concerning: the application of 



10 



tribal or state criminal and civil laws directly related to gaming, 
the allocation of jurisdiction between the state and the tribe, 
state assessments to defray the costs of regulating the activity, 
taxation by the tribe in amounts comparable to state taxation, 
remedies for breach of contract, standards for the operation and 
maintenance of the gaming facility, and any other subjects related 
to the gaming activity. 

The state is not authorized to impose a tax or assessment 
(except assessments that are agreed to) upon a tribe or person 
authorized by a tribe to conduct a gaming activity. The state 
cannot refuse to negotiate a compact based on its inability to 
impose a tax, fee, or other assessment. 

The federal districts courts are vested with jurisdiction 
over: actions by Indian tribes arising from the failure of a state 
to negotiate with a tribe seeking to enter a compact or to 
negotiate in good faith, any action by a state or tribe to enjoin 
a Class III activity which violates the tribal-state compact. 

A tribe may initiate an action for failure to negotiate in 
good faith against a state only after the passage of 180 days from 
the date the tribe requested the state to enter negotiations for a 
compact. If the court finds that the tribe has failed to negotiate 
in good faith, it shall order the state and the tribe to conclude 
a compact within 60 days. 

If the state and the tribe fail to conclude a compact within 
the 60-day period, the parties are to submit a court-appointed 
mediator their last best offers for a compact. 

The Secretary of the Interior is authorized to approve tribal- 
state compacts. The Secretary may disapprove a compact if it 
violates: the Act, any other federal law that does not relate to 
jurisdiction over Indian gaming, or the trust obligations of the 
United States to Indians. The compact takes effect once the 
Secretary publishes a notice in the Federal Register that the 
compact has been approved. 

Gaming on Indian Lands after Enactment 

Gaming is prohibited on land acquired by the Secretary in 
trust for an Indian tribe after the date of enactment of the Act 
unless: (1) the land is within or contiguous to the tribe's 
existing reservation boundaries; or (2) if an Oklahoma tribe, the 
lands are within the tribe's former reservation or the lands are 
contiguous to other land held in trust or restricted status for 
that tribe. This prohibition does not apply if the Secretary 
determines that a gaming facility would be in the best interests of 
the tribe and its members and would not be detrimental to the local 
community and the governor of the state concurs with the 
Secretary's determination. This prohibition also does not apply to 



11 



lands: taken in trust as part of a settlement of a land claim, 

comprising the initial reservation of a tribe federally 

acknowledged, or restored to a tribe that has been restored to 
federal recognition. 

National Indian Gaming Commission 
Composition 

The Commission is composed of three full-time members with the 
Chairman appointed by the President and the other two members 
appointed by the Secretary of the Interior. Two of the three 
Commissioners must be members of federally recognized Indian tribes 
and no more than two members can be of the same political party. 
The Chairman of the Commission is Anthony J. Hope. The two 
Commissioners are Jana McKeag and Joel Frank. 

Powers of Chairman 

The Chairman is empowered to: (1) issue temporary closure 
orders; (2) levy civil fines; (3) approve tribal gaming ordinances; 
and (4) approve management contracts. The Chairman is also vested 
with such powers as the Commission may delegate. 

Powers of the Commission 

The Commission is vested with the following powers which 
cannot be delegated: (1) approve the annual budget; (2) adopt 
regulations for civil fines; (3) adopt an annual schedule of fees; 
(4) authorize Chairman to issue subpoenas; and (5) permanently 
close a gaming activity. 

The Commission is vested with the following additional powers: 
(1) monitor gaming activities; (2) inspect gaming premises; (3) 
conduct background investigations; (4) inspect records related to 
gaming; (5) use the U.S. mails; (6) procure supplies; (7) enter 
into contracts; (8) hold hearings; (9) administer oaths, and (10) 
promulgate regulations. 

Tribal Self -Regulation 

A tribe may petition the Commission for a certificate of self- 
regulation if it has been engaged in a Class II activity 
continuously for a three-year period with at least one of the years 
being after the date of enactment of the Act and has otherwise 
complied with the Act; The Commission may issue the certificate if 
it is satisfied that the tribe has: 

(1) conducted the gaming activity in a manner that has 
resulted in an honest accounting of all revenues, has a reputation 
for a safe and honest operation, and is generally free of evidence 
of criminal or dishonest activity; 



12 



(2) adopted and is implementing an adequate system for: 
accounting of revenues, investigation, licensing, and monitoring of 
employees, and investigation, enforcement, and prosecution for 
violations of its gaming laws; and 

(3) conducted the gaming activity on a fiscally sound basis. 

Management Contracts 

The Chairman may approve a management contract if it provides: 
(1) adequate accounting procedures; (2) access by tribal officials 
to the gaming operations in order to verify the daily gross 
revenues and income; (3) a minimum guaranteed payment to the tribe 
that has preference over the retirement of development and 
construction costs; (4) a ceiling for the repayment of such costs; 

(5) a maximum term of 5 years or, at tribal request, 7 years; and 

(6) grounds and procedures for terminating the contract. 

The management fee cannot exceed 30 percent of the net 
revenues unless the tribe requests a higher percentage. The 
Chairman may approve a higher percentage, not to exceed 40 percent, 
if a higher percentage is justified based on the capital investment 
and projected income. 

All existing ordinances and management contracts, whether or 
not approved by the Secretary, must be submitted to the Chairman. 

Commission Funding 

The Commission is authorized to assess each gaune a fee which 
is based on a sliding fee scale from one-half of one percent to two 
and one-half percent on the first $1,500,000 of gross revenues and 
up to five percent of amounts over $1,500,000. The total amount of 
fees which the Commission can assess in any fiscal year is limited 
to $1,500,000. The Commission is authorized to request 
appropriations in an amount equal to the annual assessment. 
Section 8. Thus, the commission's annual budget cannot exceed 
$3,000,000 ($1,500,000 from assessments and $1,500,000 from 
appropriations) . There is authorized to be appropriated in an 
amount not to exceed $2,000,000 for the first fiscal year. 



13 



CRS 



Congressional Research Service • The Library of Congress • Washington, D.C. 20540-7000 



ESTIMATED FINANCIAL TRENDS IN 
NATIONAL AND INDIAN GAMING: 
Tables and Charts for a Briefing Book 



Compiled by Roger Walke 

Analyst in American Indian Policy 

Government Division 

October 4, 1993 



14 



Table 1. Estimated National Legal Gaining HANDLE ('Churned' Dollars), by Type of Gaming, 

1982-1992 

1M2 ie«3 IM4 U» I9M IM7 



P«in 



Hono - Tnck 
Hones -OTB 
Horac* - Subtotal 
Gnyhounds - Track 
Gnyhouoda - 0TB 
Greyhounds - Subtoul 

Toul • Perifliutuele 
Loltenes 

All Other Guno 

Video Lotteries 
Totsl - Lotteries 
Cesinoe 

SV/SJ Slot Mschlnes 

NV/NJ Tebie Guses 

Cruise Ships 

Rjverbosts 

Other Commert:ieJ 
Ceeinos- 



»9.990.62«,S72 
»l.707^1.903 
>II.697.900.47S 
S2J08.S61.89S 

I2J08.561.898 

J622.7S2.3KI 

I14.629.2».73« 



M. 088.300.000 



si4.400.ooo.oaa 

S87.0O0.0Oa.0O0 



$9,932,179,428 
S1.71S.986.659 
Sll.S48.166.aS6 
S2.326.S46.934 
SS61.369 
S2.326.39S.303 
S619.8a4.39l 
$14,694,367,779 



S 18.800.000.000 
SS7JO0.0OO.0Oa 



SI0.417.6l!k.960 
Sl.766.4S2.79a 
$12,183,071,760 
$2,461,386,761 
$e.631.S4S 
$2,466,917,699 
$666,869,006 
$16,306,868,366 



$23,792,860,563 
S92.86S.783. 646 



$10,486,397,644 
S1.763.S60.97S 
$12J40.248.622 
$2,698,934,362 
$4,423,618 
$2,703,367,980 
S663.96SJ72 
$16,607,574,774 



$10,481,686,728 
$1,938,990,563 
$12.420.67ej91 
$3,009,193,413 
$9,420 J61 
$3.0 18.5 13.664 
$667,575,369 
$16,106,866,324 



$26,182,148,083 
S99.557.639.436 



$28,503,598,369 
$101,438,240,164 



$11,007,987,415 
$2,104,253,896 
$13.112241.310 
$3,190,892,997 
$12,428,724 
$3,203,321,721 
$707,507,464 
$17,023,070,495 



$8,132,600,000 $10,213,260,000 $12,479,720,000 $13,140,292,000 



S3Z794J63,961 
$112,043,911,391 



Total • Cesinoe 
Legal Bookmaking 

Sportsbooks 

Horaebooks 

Total - Legal Bookmeking 

Canl Rooms 

Bingo (other than on 
Indian reservations] 

Chantable Games 

Indian ITsssi islloHS 

Class n 

Class m 
Total — ladUn Ras. 
TOTAL LEGAL 



$101,400,000,000 $106,000,000,000 $I16.661.644J0S $126,739,667,619 $129,941,836,623 $144,838,166,342 



$416,161,891 $692,019,766 S929.114.79S $886,867,210 

$122,800,048 $160,326,188 S1S4.367232 $243,249,092 

$637,970,939 SS62344.944 $1,113,482,030 Sl.129.106.302 

$1,000,000,000 $1,062,000,000 Sl.066.000.000 $1,096,960,000 

$3,000,000,000 S3.070.0Oa.0OO $3,164,118,000 $3,437,988,620 

$1200.000.000 $1,400,000,000 $1,640,000,000 $1,681,680,000 



$126,766,506,675 



— — $250,000,000 

$132,139,912,723 $146,972,602,693 $169.166267216 



$898,939,394 Sl.014.319.728 

$290. 180.529 $366,564,366 

$1,189,119,923 $1,379,884,084 

$1,118,889,000 $3,125,000,000 

$3,599,574,086 $3,977,169,407 



$1,789,307,520 



$286,714,286 
$166,611,028,661 



S2.0O2. 960.838 



$314JS6.714 
$186,800,817,880 



Sourt:e: Annual estimates prepared by ChristiansenyCununin^ Assocdates, Inc., for Gaming & Wagering Business 

magazine's July 15-S«pt. 14 issues, 1989-1993. Most recently revised figures used. 
Notes: • "Other Commertnal Casinos" includes all commercial land -based casinos that are not in Nevatla or New Jersey 

and are not on Indian reservations. Examples of such casinos are those in Deadwood, SD, and in certain towns in 

Colorado. 

•• "Non-Casino Gaming Devices" includes gaming devices in State-regulated non-casino establishments such as 

bars, restaurants, stores, etc. 

OTB = Off-Track Bettmg 



15 



Table 1. Estimated National Legal Gaming HANDLE ('Churned' Dollars), by Type of Gaming, 

1982-1992 



PanmuluelB 

Hocaf ■ Track 
Hoi»> . OTB 
Horses - SubtoUj 
Greyhounds - Trmck 
Greyhounds - OTB 
Gniyhounds - Subtotal 
Jsi-alai 

ToUl - Psximutuels 

All Other Games 
Video Lotteries 
Total - Lotteries 

NV/NJ Slot Machines 

NV/NJ Table Games 

Cnjise Ships 

Riverboata 

Other Commercial* 

Non-Casino Devices** 
Total - Casino* 
Legal Bookmaking 

Sporlabooka 

Horsefaooks 
Total • Legal Bookmaking 
Card Rooms 



til. 181.073.866 
IZ487.088.e21 
SI3.668. 162.387 
83.246.422,210 
$16.SS0.28S 
$3,262,972,496 
$639,224,435 
$17,570,369,317 



$10,312,606,882 
$3,417,069,719 
$13,929,576,601 
$3,183,112,602 
$28,571,564 
$3,211,684,166 
$552,746,477 
$17,694,007,244 



$17,051,880,000 $19,488,330,000 

$67,667,092,665 $65,790,588,454 

$126,295,623,085 $127,774,754,003 

$1,762,500,000 

$23,141,217 

$230,000,000 $249,874,874 

$184,192,716,740 $195,600,858,548 

$1,317,304,075 $1,434,952,978 

$414,563,172 $403,178,763 

$1,731,867,247 $1,838,131,741 

$3,453,125,000 $7,564,918,000 

$3,670,167,867 $3,794,482,916 



$10,414,964,557 
$3,721,698,942 
$14,136,653,499 
$3,438,744,803 
$26,886,215 
$3,466,631,018 
$666,627,881 
$18,157,912,398 



$9,863,556,679 
$4,028,593,038 
$13,892,149,717 
$3,463,487,796 
$38,898,771 
$3,602,386,567 
$488,368,157 
$17,882,904,441 



$20,734,834,000 $20,678,640,000 

$281,946,000 $354,842,000 

$21,016,780,000 $20,933,482,000 



$76,166,608,629 

$161,638,696,232 

$3,708,296,000 

$3»4,S67,261 

$306,800,000 

$242,204,966,122 



$84,398,462,227 

$149,744,002,493 

$4,076,676,000 

$1,099,431,461 

$771,022,759 

$363,603,126 

$240,463,097,066 



$1,672,279,393 $1,871,063,086 

$483,530,637 $392,124,903 

$2,156,810,530 $2,263,187,989 

$8,378,107,000 $8,399,639,000 

$4,071,613,000 $4,230,164,000 



$9,633,550,092 
$4,677,706,686 
$14,111,265,778 
$3,242,150,864 
$62,229,466 
$3,304,380,320 
$426,890,129 
$17,841,526,227 

$23,036,474,000 
$1,326,363,000 
$24,361,827,000 

$94,567,329,008 

$143,100,618,577 

$4,280,608,760 

$7,319,681,198 

$3,078,234,749 

$667,447,916 

$262,893,820,498 

$1,800,782,918 
$307,612,279 
$2,108,296,197 
$8,428,086,000 
$4,306,214,000 



Charitable Gamta 
Indian Resarvations 

Class n 

Class m 
Total — Indian Raa. 
TOTAL LEGAL 



$3,581,133,231 $4,222,352,352 $4,467,407,000 $4,606,898,000 



$1,294,000,000 $1,397,500,000 

$1,346,100,000 $4,038,260,000 

$2,640,100,000 $6,435,760,000 

$303,092,696,050 $304,204,122,486 



$345,714,286 $1,000,000,000 

$231,596,962,688 $251,203,080,800 



$4.774.84 1 000 

$1,430,000,000 
$13,744,500,000 
$15,174,600,000 
$329,889,108,922 



Annual estimates preparetl by ChhstiansenyCtimmings Associates, Inc.. for G<xming & Wagering Business magazine's 

July 15-Sept. 14 issues, 1989-1992, and July 15-Aug. 14, 1993, issue. Most recently revised figures used. 

* "Other Commercial Casinos" includes all commennal land-based casinos that are not in Nevatla or New Jersey and 

are not on Indian reservations. Examples of such casinos are those in Deadwood, SD, and in certain towns in 

Colorado. 

•• "Non-Casino Gaming Devices" includes gaining devices in State-regulated non-casino establishments such as bars, 

restatirants, stores, etc. 

OTB = Off-Track Betting 



16 



Table 2. Changea In National Legal Gaming HANDLE ("Churned' Dollars), by Type of Gaming, 
1982-1992 and 1985-1992 



Overall Average Annual 

Percent Change: Percent Change: 

1982 to 1992 1982 to 1992 



Overall Average Annual 

Percent Change: Percent Change: 

1985 (or later 1985 (or later 

year) to 1992 year) to 1992 



PwinutueU 
Mono ■ Tnck 
Hono OTB 
HonM - Subtoul 
Greyhouoda • Track 
Grayhounda • OTB 
Greybounda • Subtotal 

Total • Panmutuola 

AU Other Canca 
Video Lotteriee 
Total ■ Lotteriee 

NV/NJ Slot Machlnee 
NV/NJ Table Ganiee 
Cruiae Shipe 

Other Commercial Caainoe* 

Non-Caeino Gaming Devices*' 
Total • Caaioee 
Legal Bootrmelring 

Sportebooka 

Hotvebooka 

Total - Legal Bookntakiog 

Card Rooma 

Bingo (other than on Indian 
leaervational 

Charitable Gamea 

Indian R aeei laUona 

CUaan 

Claaain 
ToUl — Indian Rm. 
TOTAL LEGAL 



IM I3« 

20.63% 

46.10% 

11.106.36% 

49.62% 
.0161% 

22-80% 



SS6 66% 
64.40% 



333.7S% 
150.40% 
291.90% 
742.61% 
43.S4% 

297.90% 



162.33% 



-0.47% 


-9.09% 


10.37% 


161.01% 


1.89% 


16.29% 


3.91% 


20-13% 


69.07% 


1.306.75% 


4.11% 


22.23% 


■3.73% 


-35.86% 


207% 


14 31% 


_ 


11 10% 


- 


370.43% 


19.54% 


138 53% 


20.71% 


261.16% 


5.10% 


43.74% 


- 


14287% 


- 


566.77% 


- 


13.201.96% 


- 


14237% 


9.67% 


101.12% 


15.30% 


103^8% 


9.61% 


26.42% 


14.64% 


86,72% 


23.76% 


668.32% 


36«% 


26.26% 



10.51% 

921.06% 

6.969.80% 

107 jn% 



■136% 
14.69% 

2.05% 

2.66% 
46.89% 

2.91% 
•S.15% 

1.93% 

6.40% 
1 16 89% 
13.22% 

20 14% 
5.32% 

34 42% 
666.77% 
410.47% 

24.77% 

10,50% 

10.67% 
3,41% 
9-33% 

33.82% 
321% 

16 08% 

6.12% 
21964% 
79.78% 
10.97% 



Source: Calculated by CRS from annual estimates prepared by Cbristiansen/Cummings Associates, Inc. for Gaming & 

Wagenng Business magazue's July 15-Sept. 14 issues, 1989-1993. Most recently revised figures used. 
Notes: * "Other Commerciai Casinos' includes all cnmmerdal land-based casinos that are not in Nevada or New Jersey and 

are not on Indian reservations. Examples of such casinos are those m Deadwood, SO, and in certain towns in 

Colorado. 

•• "Non-Casmo Gaming Devices" mcludes gaming devices in State-regulated non-casino establishments such as bars, 

restaurants, stores, etc 

OTB = Off-Track Betting 



17 



Table 3. Each Gaming Type's Share of National Legal Gaming HANDLE CChumed" Dollars). 1982-1992 
~~^~ 1982 1983 1984 1985 liie 1987 lisi 1989 1990 1991 1992 



Panmutuels 

Horses • Track 
Horses - 0TB 
Horses - Subtotal 
Greyhounds - Track 
Greyhounds - 0TB 
Greyhounds - Subtotal 
Jai-alai 

Total - Parimutuels 

Total - Lotteries 

Casinos 

NV/NJ Slot Machines 
NV/NJ Table Games 
Cruise Ships 
Riverboats 
Other Commercial 
Non-Casino Devices 

Total - Casinos 

Legal Bookmaking 
Sportsbooks 
Horsebooks 

Total - Legal Bookmaking 

Card Rooms 

Bingo [other than on Indian 

reservations] 

Charitable Gaines 

Total — Indian 

Reservations 

TOTAL LEGAL 



7.94% 7.52% 7.09% 

1.36% 1.30% 1.20% 

9.30% 8.82% 8.29% 

1.76% 1.76% 1.67% 

1.76% 1.76% 1.67% 

0,50% 0.47% 0.45% 

11.55% 11.04% 10.41% 

3.25% 3.91% 5.53% 



11.45% 14.23% 16.19% 16.45% 17.12% 17.65% 24.90% 26.19% 25.13% 27.74% 28.66% 

69.18% 65.99% 63.19% 62.55% 60.92% 60.30% 54.53% 50.87% 53.33% 49.23% 43 38% 

— — — — — — — 0.70% 1.22% 1.34% 1.30% 

— — — — — — — — — 0.36% 2.22% 

— — — — — — — 0.01% 0.13% 0.25% 0.93% 

— — — — — — 0.10% 0.10% 0.10% 0.12% 0.17% 
80.63% 80.22% 79.38% 79.00% 78.04% 77.95% 79,53% 77.87% 79.91% 79.04% 76.66% 



6.59% 


6.29% 


5.92% 


4.83% 


4.18% 


3.44% 


3.24% 


2.89% 


1.10% 


1.16% 


1.13% 


L07% 


1.36% 


L23% 


1.32% 


1.39% 


7.69% 


7.46% 


7.06% 


5.90% 


5.55% 


4.66% 


4.57% 


4.28% 


1.70% 


1.81% 


1.72% 


1.40% 


1.27% 


1.13% 


1.14% 


0.98% 


— 


0.01% 


0.01% 


0.01% 


0.01% 


0.01% 


0.01% 


0.02% 


1.70% 


1.81% 


1.72% 


1.41% 


1.28% 


1.14% 


1.15% 


1.00% 


0.42% 


0.40% 


0.38% 


0.28% 


0.22% 


0.18% 


0.16% 


0.13% 


9.81% 


9.67% 


9.16% 


7.59% 


7.04% 


5.99% 


5.88% 


5.41% 


6.42% 


7.49% 


7.07% 


7.36% 


7.76% 


6.93% 


6.88% 


7.38% 



0.33% 


0.52% 


0.63% 


0.56% 


0.54% 


0.10% 


0.12% 


0.13% 


0.15% 


0.17% 


0.43% 


0.65% 


0.76% 


0.71% 


0.71% 


0.80% 


0.80% 


0.72% 


0.69% 


0.67% 


2.39% 


2.32% 


2.15% 


2.16% 


2.16% 



0.95% 1.06% 1.05% 



0.55% 0.57% 0.57% 

0.20% 0.18% 0.16% 

0.74% 0.75% 0.73% 

1.68% 1.49% 3.01% 

il4% 1.58% L51% 

1.06% 1.07% 1.08% 1.55% 1.68% 

0.16% 0.17% 0.17% 0.15% 0.40% 



0.55% 0.62% 0.55% 

0.16% 0.13% 0.09% 

0.71% 0.74% 0.64% 

2.76% 276% 2.55% 

1.34% L39% L31% 

1.47% 1.51% 1.45% 

0.87% L79% 4.60% 



100.0% 100.0% 1000% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 



Source: Calculated by CRS from annual estimates prepared by Christiansen/Cummin^ Associates, Inc., for Gaming & Wagering 

Business magazine's July 15-Sept. 14 issues, 1989-1993. Most recently revised figures used. 
Notes: • "Other Commercial Casinos" includes all commercial land-based casinos that are not in Nevada or New Jersey and 

are not on Indian reservations. Examples of such casinos are those in Deadwood, SD, and in certain towns in Colorado. 

•• "Non-Casino Gaming Devices" includes gaming devices in State-regulated non-casino establishments such as bars, 

restaurants, stores, etc. 

OTB = Off-Track Betting 



18 



Table 4. Estimated National Legal Gaming WIN (Gross Revenues), by Type of Gaining, 

1982-1992 



PtnmutueU 

Hono Trmck 
Hoim OTB 
HorwM ■ SubloUi 
Gnyhound* • Track 
Grayhounds - OTB 
Gnylwund* - SubtouJ 

ToUl — Puimulueb 
Lotteries 

All Other Gemcs 

Video LoUerio 
ToleJ — Lotuna 

NV/NJ Slot Meohino 
NV/NJ Table Gemee 
Cniiee Shipe 
Rjverboela 



SI.S6O.00a,000 
(400.000.000 

lZ2M.ooo,ooa 
S430.ooo.oao 

(430,000.000 

1112.000.000 

S2. 792.000.000 



S1.867.3IS.000 
S40 1.640.644 

S2.25S.8SS.644 

S4&3.&40.152 

SO 

S4U.S40.162 

S11I.S64.790 

S2.S23.963.S86 



S1.94S.089. 136 
S40S.9I6.009 

S2.357.005. 145 

S47S.020.221 

Sl.OSI.OSl 

S479.071.272 

S122.090.OI2 

S2.958. 166.429 



SI.980.8S0.496 
S409.267.26S 

S2.390. 147.764 

S626.292.201 

$640,487 

S627.132.GS8 

S129.3S4.980 

S3.D46.666.432 



S 1.979.990.434 
S452.S60.397 

S2.432.550.831 

S686. 792.716 

S 1.789.848 

S6S8.S82.S64 

S130.108.421 

S3.IS1.241.816 



S2.176.201.lll 
S482.226,76S 

S2.6S8.427.S79 

S620.947.777 

S2.423.369 

S623.371.146 

S 137.75 1.703 

S3.419.S60.72a 



$2,170,000,000 S3.044.0OO.0OO S4. 147.575.000 S5.208.772.800 S6.334.406.359 $6,581,972,263 



S2.000.000.000 

S2j;oo.ooo.ooo 



S2.35S.0O0.0OO $2,647,333,012 S2.904.619.182 $3,153,117,000 S3.SS4.S2S.000 

$2,252,000,000 S2.400.194.79S $2,543,614,412 $2,590,901,883 SZ81 1.01 1.000 



ToteJ — Cesiooe 

Sportsbooka 

Horaeboolu 
Totel — Legal Bookmeldng 
Cerd Roome 

Bingo [other then OD Indieo 
reeervetionel 
Cberiteble GeiDce 
Indian R eeei lalloae 

cum n 

Clmam IH 



TOTAL LEGAL 



$4,200,000,000 K610.000.000 $6,047,527,810 $6,448,233,594 SS.744.018.8S3 $6,395,839,000 



$7,724,862 
$13,037,685 
$25,762,547 
$60,000,000 
$780,000,000 



$19,250,974 
$24,262,825 
$43,513,799 
$62,000,000 
$798,000,000 



$21,634,417 

$31,212,619 
$52,747,036 
$53,260,000 
SS17.862.797 



$21,947,393 
$39,056,828 
$61,004,221 
$54,847,500 
$910,035,688 



$35,598,000 
$45,007,000 
$80,605,000 
$55,944,450 
$941,648,581 



$29,821,000 
$55,383,000 
$86,204,000 
$260,000,000 
SS94.863.117 



$396,000,000 $464,000,000 $539,000,000 S682.000.000 SS05.S37.236 $674,846,891 



- - - $87,500,000 SIOO.OOO.OOO $110,000,000 

$10,413,762,547 $11,834,477,365 $13,616,129,072 $16,399,059,135 $16,913,702,325 $18,312.275990 



Source: Anntial estimates prepared by ChnstJansenyCiimmings Associates. Inc., for Gaming & Wagering 

Business magazine's July 15-Sept. 14 issues, 19S9-1993. Most recently revised figures used. 
Notes: * "Other Commertnal Casinos' includes all co.timerdal land-based casinos that are not in Nevada or 

New Jersey and are not on Intlian reservations. Examples of such casinos are those in Deadwood. SD, 

and in certain towns in Colorado. 

** *Non-Caaino Gaming Devices" includes gaming devices in State-regtilated non-casino establishments 

such as bars, restaurants, stores, etc. 

OTB = Off-Track Betting 



19 



Table 4. Estimated National 



Legal Gaming WIN (Gross Revenues), by Type of Gamine 
1982-1992 





ia«8 


1988 


1990 


19SI 


1902 


Parimuluela 

Horse. . Truk 


$2,262,497,269 


$2,089,381,419 


$2,090,342,557 


J 1.976,45 1.169 


$1,939,309,121 


Honws . 0TB 


1509.750,996 


$734,302,421 


$806,503,403 


$865,005,296 


$969,662,063 


Horeea - SubtotAi 


$2,762,248,265 


$2,823,683,840 


$2,896,845,960 


$2840.466.464 


$2908,871,184 


Greyhounds - Track 


$625,017,715 


$627,243,054 


$691,774,030 


$701,246,641 


$675,367,175 


Greyhounds ■ OTB 


$3,231,734 


$5,427,066 


$6,087,339 


$7,416,330 


$12,711,226 


Greyhounds - SubtoUi 


$628,249,449 


$632,670,120 


$696,861,369 


$708,662,971 


$688,078,400 


Jsi-diU 


$124,187,617 


$107,766,036 


$113,131,625 


$100,343,331 


$89,264,492 


Tolsl — Psumutuol. 


$3,514,686,331 


$3,564,119,996 


$3,706,838,854 


$3,649,462,766 


$3,686,214,076 


LottoHes 












All Olher Gimta 


- 


- 


$10,192,418,000 


$10,105,539,000 


$11,214,733,000 


Video LoltencM 


- 


- 


$96,462,000 


$121,841000 


$242230,000 


ToUl — UlUne. 
Casinos 


J8.423.628.720 


$9,599,360,000 


$10,288,880,000 


$10,227,381,000 


$11,466,963,000 


NV/NJ Slol Mjchinoi 


$4,006,823,000 


$4,360,125,000 


$4,890,301,000 


$6.242299.000 


$6,830,586,443 


NV/NJ Table Camea 


$3,054,030,000 


$3,103,516,000 


$3,412,892,000 


$3,200,968,000 


$3,120,137,399 


Crujse Ships 


- 


$170,000,000 


$260,759,000 


$290,887,000 


$306,431,350 


Riverboata 


- 


- 


- 


$79,686,780 


$418,021,561 


Other Commercial 


- 


$2,140,293 


$31,972,405 


$63,912,237 


$224,300,143 


Non-Caaino Gaming 
Devices** 


$96,770,000 


$107,443,693 


$132,613,300 


$167,680,407 


$242172,466 


Tolal — Casinos 


$7. 156.623.000 


$7,733,224,986 


$8,728,537,706 


$9,036,432,424 


$10,140,649,362 


Legal Bookjsaldng 












Sportsbooka 


$42,022,000 


$46,775,000 


$48,799,000 


$62300.000 


$60,601000 


Horsobooka 


$61,687,000 


$69,993,000 


$76,466,867 


$66,079,878 


$46,799,000 


Tolal - Ug.1 Bookmaking 


$103,709,000 


$106,768,000 


$125,254,867 


$107,379,878 


$97,401,000 


Card Rooma 


$276,250,000 


$695,510,064 


$667,593,000 


$659,114,000 


$660,811,000 


Bingo [other than on Indian 
reservationat 


$1,056,103,272 


$947,600,236 


$1,019,194,000 


$1,064,613,000 


$1,090,944,000 


Charitable Games 


$712,409,564 


(I.114.337.S78 


$1,194,044,000 


$1,230,120,000 


$1,298,949,000 


Indian RaMmUona 












Class a 


- 


- 


S3S«,20a,000 


«4 19.260.000 


$429,000,000 


CUaain 


- 


- 


(100,300,000 


$300,900,000 


$1,069,940,000 


Total — Indian 
Raaarvntions 


$121,000,000 


$300,000,000 


$488,600,000 


$720,160,000 


$1,498,940,000 


TOTAL LEGAL 


$2I.3S3.40».877 


$23,969,821,159 


$26,208,842,416 


$26.6a3, 663,068 


$29,930.871,43» 


Source: Annual estimatea prepared by Chriatiansen/C 

Buainesa magazme's July 15-Sept. 14 issues, 

Notes: • "Other Commercial Casinos' ineluiiea all r 


lummings Associates, Inc., for 


Gamine & Waeerinr 


1989-1993. Most recently revised Ggtlres used. 



■ — --— ™o."»i uuiu-wuKni auunae mat are not in nevada or 

New Jersey and are not on Indian reservations. Eiamples of such casinos are those in Deadwood. SD 

and m certain towns in Colorado. 

•• 'Non-Casino Gaming Devices' includes gaming devices in State-regulated non-casino establishments 

such as bars, restaurants, stores, etc. 

OTB = Off-Track Betting 



20 



Table 3. Changes in National Legal Gaming WIN (Gross Revenues), by Type of Gaming, 
1982-1992 and 1985-1992 



Overall Percent Annual Average Overall Average Annual 

Change: Percent Change: Percent Change: Percent r-hange: 

1982 to 1992 1982 to 1992 1985 (or later 1985 (or later 

year) to 1992 year) to 1992 



HorK> - Tr>ct 
Hoi»»aTB 
Horacs -SubtoUj 
Greyhounds • Track 
Greyhounda • OTB 
Greyhounds - Sublotsl 
Jsi sisi 

Total — Psnmuluels 

Lotteries 

All Othsr Gsnas 
Video Lotteries 

Tolsl — Lotteries 



Caair 



NV/NJ Slot Madiines 
NV/NJ Table Gaaus 
Cmise Ships 
Riverhosts 



4M% 
142.39% 
29.2«* 
57.06% 
1.109.38% 
SO 02% 
20 30* 
32.03% 



191.53% 
4182% 



0.47% 
9.26% 
260% 
4.62% 
36 56% 
4.81% 
-2.24% 
2.82% 



11.29% 
3.56% 



-210% 
136.90% 
21.70% 
28.33% 
1.412.36% 
30.53% 
-3101% 
20.99% 

10.03% 
151.11% 
119.96% 

100,73% 
22.67% 
79.67% 
424.59% 
10.379,88% 



0,30% 
13.11% 

285% 

3.63% 
47.41% 

3.88% 
■5.16% 

276% 

4.90% 
58.47% 
1192% 

10.47% 

2.96% 

21.57% 

424 59% 

371.47% 



Non-Casino Gaining 

Devices" 
Total — (dittos 
Legal BoolUDsking 

Sportabooks 

Horsebooka 
Total — Legal Bookraaking 
Card Rooms 
Bingo father than on Indian 

Charitable Games 
Indias RsssrvsUons 

Class n 

Class m 
TotsJ — ladUa 

TOTAL LEGAL 



555 05% 

159.45% 

278.07% 

1.221.62% 

39.86% 

228.02% 



20.68% 
10.00% 
14.22% 
29.45% 
3.41% 

1261% 



15187% 



130.56% 
19.82% 
59.66% 
1,104.82% 
19.88% 

12^.19% 

10.51% 
966,74% 
1.613,07% 



26,10% 



12.67% 
262% 
6.91% 

42.70% 
262% 

1216% 

5.12% 
226.61% 
50.06% 



CaltnjJated by CRS from annual estimates prepared by ChnstiansenyCummings Associates, Inc.. for 

Gaming & Wagering Business magazine's July 15-Sept. 14 issues, 1989-1993. Most recently revised 

figures tjsed, 

* -Other Commercial Casinos" includes all commercial land-based casinos that are not ui Nevada 

or New Jersey and are not on Indian reservations. Examples of such casinos are those in Deadwood, 

SD, and in certain towns in (Colorado. 

•• -Non-Casmo (5ammg Devices' includes gaming devices in Sute-regulated non-casino 

establishments such as bars, restaurants, stores, etc. 

OTB = Off-Track Betting 



21 



Table 6. E^ach Gaining Type's Share of National Legal Gaming WIN (Gross Revenues), 1982-1992 





1982 


1983 


1984 


1985 


1986 


1987 


1988 


1989 


1990 


I99I 


1992 


Parimutuela 
























Horses - Track 


17.76% 


15.69% 


14.31% 


12.86% 


1L71% 


1L88% 


10.54% 


8.72% 


7.98% 


7.45% 


6.48% 


Horses - 0TB 


3.84% 


3.39% 


3.00% 


2.66% 


268% 


2.63% 


2.39% 


3.06% 


3.08% 


3.22% 


3.24% 


Horses — Subtotal 


21.61% 


19.09% 


17.31% 


15.52% 


14.38% 


14.52% 


12.93% 


11.79% 


11.05% 


10.66% 


9.72% 


Greyhounds - Track 


4.13% 


3.83% 


3.51% 


3.42% 


3.47% 


3.39% 


2.93% 


262% 


2.64% 


i66% 


226% 


Greyhounds - 0TB 






0.01% 


0.01%. 


0.01% 


0.01% 


0.02% 


0.02% 


0.02% 


0.03% 


0.04% 


Greyhounds — 


4.13% 


3.83% 


3.52% 


3.42% 


3.48% 


3.40% 


294% 


2.64% 


266% 


269% 


230% 


Subtotal 
























Jai-alai 


1.08% 


0.94% 


0.90% 


0.84% 


0.77% 


0.75% 


0.58% 


0.45% 


0.43% 


0.38% 


0.30% 


Total — Parimutuels 


26.81% 


23.86% 


21.73% 


19.78% 


18.63% 


18.67% 


16.45% 


14.88% 


14.14% 


13.73% 


12.32% 


Total — Lotteries 


20.84% 


25.72% 


30.46% 


33.83% 


37.45% 


35.94% 


39.43% 


40.06% 


39.26% 


38.26% 


38.28% 


Casinos 
























^fv/NJ Slot 


19.21% 


19.92% 


19.44% 


18.86% 


18.64% 


19.58% 


18.76% 


18.16% 


18.66% 


19.61% 


19.48% 


Machines 
























NV/NJ Table Games 


21.13% 


19.03% 


17.63% 


16.52% 


15.32% 


15.35% 


14.30% 


12.95% 


13.02% 


11.98% 


10.42% 


Cruise Ships 


— 


— 


— 


— 


— 


— 


— 


0.71% 


0.99% 


L09% 


L02% 


Riverboats 


— 


— 


- 


- 


- 


- 


- 


— 


- 


0.30% 


1.40% 


Other Conunerdal 


_ 


_ 


— 


— 


_ 


— 


_ 


0.01% 


0.12% 


0.24% 


0.75% 


Casinos' 
























Non-Casino Gaming 


— 


— 


_ 


— 


— 


_ 


0.45% 


0.45% 


0.51% 


0.59% 


0.81% 


Devices" 
























Total — Casinos 


40.33% 


38.95% 


37.07% 


35.38% 


33.96% 


34.93% 


33.50% 


32.28% 


33.30% 


33.80% 


33.88% 


Legal Bookmaking 
























Sportsbooks 


0.07% 


0.16% 


0.16% 


0.14% 


0.21% 


0.16% 


0.20% 


0.19% 


0.19% 


0.20% 


0.17% 


Horsebooks 


0.17% 


0.21% 


0.23% 


0.25% 


0.27% 


0.30% 


0.29% 


0.25% 


0.29% 


0.21% 


0.16% 


Total — Legal 


0.25% 


0.37% 


0.39% 


0.40% 


0.48% 


0.47% 


0.49% 


0.44% 


0.48% 


0.40% 


0.33% 


Bookmaking 
























Card Rooms 


0.48% 


0.44% 


0.39% 


0.36% 


0.33% 


1.37% 


1.29% 


2.49% 


2.51% 


2.47% 


2.21% 


Bingo (other than on 


7.49% 


6.74% 


6.01% 


5.91% 


5.57% 


4.89% 


4.94% 


3.95% 


3.89% 


3.99% 


3.64% 


Indian reservations] 
























Charitable Games 


3.80% 


3.92% 


3.96% 


3.78% 


2.99% 


3.14% 


3.33% 


4.65% 


4.56% 


4.65% 


4.34% 


Total — Indian 


_ 


_ 


_ 


0.57% 


0.59% 


0.60% 


0.57% 


1.25% 


1.86% 


2.69% 


5.01% 


Reservations 
























TOTAL LEGAL 


100.0% 


100.0% 


100.0% 


100.0% 


100 0% 


100.0% 


100.0% 


100.0% 


100.0% 


100.0% 


100.0% 



Calculated by CRS from annual estimates prepared by Christiansen/CummingB Associates, Inc., for Gaming & Wagering 

Business magazine's July 15-Sept. 14 issues, 1989-1993. Most recently revised figures used. 

* "Other Commercial Casinos" includes all commercial land-based casinos that are not in Nevada or New Jersey and 

are not on Indian reservations. Examples of such casinos are those in Deadwood, SD, and in certain towns in Colorado. 

•• "Non-Casino Gaming Devices" includes gaming devices in State-regulated non-casino establishments such as bars, 

restaurants, stores, etc. 

0TB = Off-Track Betting 



22 





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32 

Mr. Richardson. With that, I would Uke to recognize the rank- 
ing member of our subcommittee. 

STATEMENT OF HON. CRAIG THOMAS 

Mr. Thomas. Thank you, Mr. Chairman. I heard you. I will also 
insert mine in the record. I think it is very important that we have 
this hearing. This is the fifth one. 

It seems to me, and I am not an old hand at this issue, but it 
does seem to me there are a number of issues that, as we move for- 
ward, need to be clarified. One, I suppose, is the notion among gov- 
ernors and others that there is absolutely no control over what the 
tribes do, and obviously that is not true. Under the arrsingements 
the tribes do only what can be done in the State. 

On the other hand, I think there is some feeling among some of 
the tribes that they shouldn't have any restrictions at all, and I 
don't think that is a realistic notion. 

So, somehow we need to get those things somewhat clarified. 

In any event, I am delighted to have this hearing, and I espe- 
cially want to welcome our witnesses, our counterparts from the 
Senate. 

Grentlemen, it is nice to have you here, and I look forward to your 
testimony. 

Thank you, sir. 

[Prepared statement of Mr. Thomas follows:] 



33 



Statement of the 
Honorable Craig Thomas of Wyoming 

ON 

Oversight of the I.G.R.A 
October 5, 1993 

Thank you Mr. Chairman. 



I am pleased to take part in this, the fifth in a series of 
oversight hearings on the Indian Gaming Regulatory Act. 
I think that it is vitally important that we as a body fully 
examine all facets of this issue before moving on to 
considering any legislation. 

As you know, I am fully committed to the goals and 
objectives of the Indian Gaming Regulatory Act. Gaming 
in Indian country since the enactment of IGRA has resulted 
in unparalleled economic growth, both for the tribes and for 



34 

their surrounding non-Indian communities. Once poverty- 
stricken tribes have picked themselves up by their boot- 
straps and are now providing educational, employment, 
economic, and social benefits to their members. In 
addition, gaming has produced a beneficial ripple effect in 
many local economies. 

While IGRA has, in my opinion, worked well in its present 
form, it is clear that some recent developments require that 
we reexamine the Act to fine-tune It. While there are some 
issues that we need to address ~ the issue of good-faith 
compacting, for example ~ there are others which have 
been raised as canards by opponents of Indian gaming 
and which I believe we need simply to refute and subse- 
quently discard. 



Among these is the allegation that Indian gaming is being 
significantly infiltrated by organized crime. Although 
opponents of Indian gaming have consistently made this 
allegation, their contention lacks both specifics and proof. 
I have seen no credible evidence to back up their asser- 
tion. In fact, the Department of Justice has repeatedly 
stated that this is simply not the case. I look forward to the 
testimony of the representatives from the FBI, DO J, and 
IRS on this issue today, and hope that it will lay to rest 
these accusations once and for all. 

Another fiction put forward by the opponents of Indian 
gaming Is that the tribes have been somehow provided an 
unfair competitive advantage over other citizens. However, 
our tragic treatment of Indian people over the years has 
placed them at a severe disadvantage both economically 



36 

and socially: 31% of Indian people live In poverty; Native 
Americans are three times as likely to be unemployed as 
non-Indian people; tubercolosis levels are 480% higher 
than for the general population, alcoholism 388% higher, 
diabetes 169% higher, and suicides 300% higher. Given 
these figures, even if we had intended IGRA to give the 
tribes such an economic edge I could not characterize it as 
unfair. 

In any event, I would note that triabi gaming enterprises 
are subject to many legal limitations which non-Indian 
enterprises are not. Only Indian gaming is subject to 
federal oversight and regulation. Only Indian tribes are 
required to negotiate with state governments before they 
can engage in any form of casino-type gaming. Only 
Indian tribes are required to spend their gaming income 



37 

solely for tribal governmental purposes and not for private 
business profit. 

In closing, Mr. Chairman, I would like to welcome our 
witnesses today -- especially our counterparts from the 
other body Senators Inouye and McCain. I look fonA/ard to 
their testimony. In addition, at this point I have several 
documents that I would like to submit for inclusion in the 
record. 

Thank you, Mr. Chairman. 



38 

Mr. Richardson. The chair recognizes the gentleman from Ha- 
waii. 

STATEMENT OF HON. NEIL ABERCROMBIE 

Mr. ABERCROMBIE. Thank you, Mr. Chairman. 

Mr. Chairman, my remarks will consist only of welcoming Sen- 
ator Inouye here, not only as a colleague but as a mentor of some, 
more than three decades now. Senator, since I first shook your 
hand on the comer of Kapewani Boulevard. We have seen a lot of 
changes since then. 

But one of the changes that are most important, Mr. Chairman, 
for purposes of this hearing is that Senator Inouye has led the way 
in this Nation in contemporary times to see to it that Native Amer- 
ican affairs receive the kind of legislative attention and redress 
that was necessary. 

I don't believe that it is possible to cite anyone else in the Nation 
in our legislative history that has shown more concern and taken 
more practical advantage of the opportunity to lead than Senator 
Inouye has. 

So I, as one of those who has not only followed his career but 
been the beneficiary of his legislative expertise, am very, very 
happy to be here serving on this subcommittee as a counterpart to 
the leadership that he has provided in the United States Senate. 

Mr. Richardson. The chair recognizes the gentleman from Cali- 
fornia. 

STATEMENT OF HON. KEN CALVERT 

Mr. Calvert. Thank you, Mr. Chairman. I have a brief state- 
ment. 

Coming from a State which has the largest number of federally- 
recognized Indian tribes in the Nation, I am particularly concerned 
about the potential for organized criminal activity and corruption 
when gaming operations are not properly regulated. Let me hasten 
to add that I support the legal right of Indian tribes to offer various 
games of chance on the reservations as long as those games are 
consistent with State law and as long as they are properly regu- 
lated. 

There are several Indian tribes in California that currently have 
extremely well-run gaming operations to promote economic devel- 
opment, self-sufficiency, and strong tribal government. I support 
those operations. My interest is simply to make certain that all 
gaming operations on Indian lands are free of corrupting influence, 
to ensure that the tribes, not outsiders, are the primary bene- 
ficiaries, and that the State of California is not saddled with in- 
creased costs of law enforcement and regulation. 

When it comes to Indian gaming, I want the Indians and people 
of California to be winners and not forces of organized crime. 

Thank you, Mr. Chairman. 

Mr. Richardson. I recognize the gentleman from South Dakota. 

STATEMENT OF HON. TIM JOHNSON 

Mr. Johnson. Thank you, Mr. Chairman. I commend you for 
holding this very timely and critically important hearing. I wel- 
come the members of the panel, who I know will ail make very 



39 

positive contributions to the dialogue on this ongoing debate that 
we have over the role of Indian gaming and its relationship with 
the various States. 

In the State of South Dakota, we have nine Indian reservations. 
We have ongoing, very active gaming operations. The negotiation 
with the State has sometimes been a bit rocky but, on the whole, 
has worked itself out fairly well. 

I think it is regrettable in some respects that gaming seems to 
be such a major engine for economic development and job oppor- 
tunity on Indian reservations, but after over 100 years of virtually 
utter failure in my State of South Dakota developing other kinds 
of economic opportunities, I would have to say that at this point 
we have over 1,000 Native Americans employed in the gaming in- 
dustry, generating a large amount of revenue for tribes, for the 
most part used for very worthy purposes. These Native Americans 
who are employed in many cases have never held employment be- 
fore, and I think that the combination of new economic opportuni- 
ties plus enhanced education opportunities with the development of 
our tribal colleges has been two of the most positive things that we 
have seen in a long, long time in my State to break the cycle of 
poverty and to break the ongoing dependence of Native Americans 
to the Federal Government, to create a greater sense of self-suffi- 
ciency and to develop a greater degree of viability, economic viabil- 
ity, on the reservations. 

Nonetheless, it does require a delicate balance between the 
States and the tribes, it does require a very aggressive monitoring 
to make sure that organized crime does not become involved here, 
that the money — that the revenues are audited properly, that the 
management is kept on a high level. So I think this hearing will 
be a valuable contribution in our effort to oversee and possibly to 
pass legislation relative to Indian gaming. 

So I thank you, Mr. Chairman, for holding this hearing on an 
issue that is critically important not just to us in the West but real- 
ly all across the country. 

Mr. Richardson. I thank the gentleman. 

I would like to welcome our four distinguished Members of the 
House and Senate who will be making their testimony. 

As you all know, it is the committee practice that the statement 
is fully included in the record. 

I would first like to welcome the distinguished chairman of the 
Senate Committee on Native American Affairs who has been ag- 
gressively pursuing a solution to this issue. He is a champion of 
many Native American causes. It is an honor for us to have him 
appear with us along with his vice chairman. TTie chair recognizes 
the distinguished Senator from Hawaii. 

STATEMENT OF HON. DANIEL K. INOUYE, A U.S. SENATOR 
FROM THE STATE OF HAWAII, AND CHAIRMAN, SENATE 
COMMITTEE ON INDIAN AFFAIRS 

Senator Inouye. Thank you very much, Mr. Chairman. 

Mr. Chairman and members of the committee. Senator McCain 
and I are most grateful to you for your invitation to share our 
thoughts with you on a matter pending before your committee. 



40 

While Senator McCain will present to you an analysis of the his- 
tory and conditions that led to the now famous Supreme Court case 
in Cabazon, I will try to briefly share with you my thoughts on why 
I feel the Government of the United States, of which we are a part, 
plays an important role in the furtherance of the general welfare 
of native peoples. 

Although it seems trite and redundant to say so, it must be re- 
peated often enough so that all Americans will always keep in 
mind that Indians were here before we came along — ^that this was 
their world — ^that in this world they established and maintained 
sovereign governments, governments that flourished, governments 
that were led by people who were highly sophisticated and most 
talented. 

We should remind ourselves that in recognition of this reality, 
when the Constitution of the United States was drafted, our 
Founding Fathers specifically included the native peoples of this 
land and set forth the foundation of what we now call trust rela- 
tionship, and in subsequent laws and Supreme Court rulings this 
trust relationship has been consistently upheld, even during the 
dark days of the so-called Indian Wars. 

In recognizing this special relationship, our Grovemment, more 
importantly, recognized the sovereign nature of the governments of 
native people. This fact must be emphasized again and again. In- 
dian nations are sovereign nations. 

To that end, our predecessors in the Congress during the last 
century and the century prior to that entered into negotiations 
with these sovereign tribes culminated by the signing of solemn 
treaties. 

It has been said that the Government of the United States sol- 
emnly entered into 800 treaties with the various tribes and nations 
of Indian country. Like all treaties, we made promises and Indians 
made promises. In each case, we expected and we demanded that 
Indians live up to their promises. But I am sad to say that, of the 
800 treaties, 430 were ignored by my predecessors in the United 
States Senate. The Members of the United States Senate simply re- 
fused to act upon them. Of the 370 that were ratified, we, the Unit- 
ed States, proceeded to violate provisions in every single one of 
them. Now we have before us the matter of Indian gaming. 

As the Supreme Court in the Cabazon case and the United 
States Constitution and subsequently enacted laws have clearly 
recognized, Indian nations are sovereign. It is in this context and 
in our desire to uphold the Constitution and honor the intent of our 
Founding Fathers that we enacted the Indian Gaming Regulatory 
Act of 1988. 

However, this law has a fundamental but often unrecognized al- 
teration to our national policy of trust relationship. In a real sense, 
the relationship, when it concerns the conduct of gaming activities 
on Indian lands, should have been between the Federal Govern- 
ment and Indian nations. 

However, because of the complex variety in the laws of the 50 
States, we soon found that it was almost impossible to develop a 
Federal law or standard that would apply in a consistent and uni- 
form manner in all 50 States. Some States have lotteries, some 
have the full array of casino operations, and some, like my home 



41 

State, have no gaming at all. So with the full understanding of In- 
dian nations, we enacted a law that called for compacts to be en- 
tered into by two sovereign entities, a State and an Indian nation. 

Since July of this year, under the sponsorship of the Senate Com- 
mittee on Indian Affairs, representatives of the National Governors 
Association, representatives of the National Association of Attor- 
neys General, representatives of the Federal Government, and rep- 
resentatives of tribal governments have come together to clarify 
questions that have arisen as the result of the implementation of 
this law. 

Many meetings have been held in this city, in the State of Wash- 
ington, in New Mexico, in Arizona, and in Colorado. Countless hun- 
dreds of hours have been expended on discussions and negotiations, 
and, Mr. Chairman, I believe that we are close to resolution. 

For example, all parties recognize that gaming has become an 
enterprise upon which many State governments across this land in- 
creasingly rely so that these governments may provide a full range 
of governmental services to their citizens. 

What was once strictly a private commercial enterprise is neither 
solely private nor commercial any longer. Whether we may like it 
or not, in this Nation, govemmentally-sponsored and govem- 
mentally-conducted gaming is growing geometrically each year, and 
so tribal governments have begun to join their sister State govern- 
ments in this enterprise. 

In this process of discussion and negotiation, all parties appear 
to desire greater certainty in the determination of what games are 
permitted to be played under the laws of each State. All parties 
recognize that for those States that do not elect to enter into tribal- 
State compacts, there must be an alternative process for securing 
authority to conduct Class III gaming on Indian lands. All parties 
strongly endorse the most stringent regulation of gaming and the 
need for comprehensive and cooperative law enforcement. Through 
this process of discussion and negotiation, we have found that there 
are more interests in common and fewer over which there is a dif- 
ference in perspective. 

On October 19, we will have a meeting of all the principals, and 
I am hopeful that at this meeting we may come forth with some 
final resolution of the matter before us. We are working towards 
that end, and, if I may, through these means, I would like to thank 
all of the parties for their many hours of patient effort and dedica- 
tion to this process. 

Mr. Chairman, I am aware that most Americans are surprised to 
learn that Indians are sovereign. While Indians live on lands that 
have been set aside for them and, for the most part, held in trust 
by our Government, many of these sovereign Indian nations collect 
taxes, they enact ordinances and laws, they have the power and 
authority to arrest, to levy fines and impose punishment, they have 
the power to regulate the environment, to administer education 
and health care programs, they have the power to operate judicial 
systems and to enter into the agreements and compacts with other 
governments. 

Mr. Chairman, in recent months I have spoken before various 
groups and councils advocating the right of Indian nations to estab- 
lish and conduct gaming operations in those States that do not 



42 

criminally prohibit such activities. In a sense, I find myself a bit 
uncomfortable in this role because throughout my adult life I have 
opposed gaming as a means of raising revenue to support govern- 
ment activities. As you may know, the State of Hawaii prohibits all 
forms of gaming, including bingo. 

Mr. Chairman, however, in the case of Indian nations, I support 
the tribes in their gaming activities because I believe that we as 
a nation have failed in our job of upholding our responsibilities and 
obligations. 

In the 800 treaties that we have either ignored or violated, we 
promised the Indians that in exchange for the hundreds of millions 
of acres that they ceded to us we would protect them, assure their 
security, and provide for their general welfare, but history shows 
that we have failed and failed miserably. 

Instead, we participated in massacres, we did not come to their 
aid in times of pestilence and starvation, and so today Indian na- 
tions that once flourished and numbered in excess of 10 million 
people have little more than 2 million in their population. In com- 
parison, every ethnic group in the United States has increased in 
size over the past 200 years. 

But in this great country of ours, the Indian unemployment is 
the highest, their health statistics are the worst, their economic 
conditions know no equal, and yet, Mr. Chairman, in all of the 
wars of this century in which we have participated, Indian people 
have, in the spirit of brotherhood, volunteered to serve in every one 
of them. In fact, on a per capita basis, there are more veterans in 
Indian country than in the rest of this Nation. On a per capita 
basis, more IndiEins have given their lives and their limbs in the 
service of our country than any other ethnic group. 

Mr. Chairman, clearly they have paid their dues. I believe the 
time has come for this Nation to reciprocate, and I thank you once 
again for this opportunity, and I thank my colleague from Hawaii 
for his very generous remarks. Thank you very much, sir. 

[Prepared statement of Mr. Inouye follows:] 



43 



STATEMENT OF SENATOR DANIEL K. INOUYE 

CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS 

UNITED STATES SENATE 

BEFORE THE OCTOBER 5, 1993 HEARING 

OF THE 

SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

COMMITTEE ON NATURAL RESOURCES 

U.S. HOUSE OF REPRESENTATIVES 

MR. CHAIRMAN, AND MEMBERS OF THE SUBCOMMITTEE ON NATIVE AMERICAN 
AFFAIRS, SENATOR McCAIN AND I ARE MOST GRATEFUL TO YOU FOR YOUR 
INVITATION TO SHARE OUR THOUGHTS WITH YOU ON THE MATTER THAT IS BEFORE 
YOUR COMMITTEE TODAY -- INDIAN GAMING. 

WHILE SENATOR McCAIN WILL PRESENT TO YOU AN ANALYSIS OF THE HISTORY 
AND CONDITIONS THAT LED TO THE NOW-FAMOUS SUPREME COURT RULING IN THE 
CABAZON CASE, 1 WILL TRY TO BRIEFLY SHARE WFTH YOU MY THOUGHTS ON WHY I 
FEEL THE GOVERNMENT OF THE UNITED STATES, OF WHICH WE ARE A PART. PLAYS AN 
IMPORTANT ROLE IN THE FURTHERANCE OF THE GENERAL WELFARE OF INDL\N 
PEOPLE. 

ALTHOUGH IT SEEMS TRITE AND REDUNDANT TO SAY SO, IT MUST BE REPEATED 
OFTEN ENOUGH SO THAT ALL AMERICANS WILL ALWAYS KEEP IN MIND THAT INDL\NS 
WERE HERE BEFORE THE EUROPEANS -- THAT THIS WAS THEIR WORLD. 

THAT IN THIS WORLD THEY ESTABLISHED AND MAINTAINED SOVEREIGN 
GOVERNMENTS -- GOVERNMENTS THAT FLOURISHED -- GOVERNMENTS THAT WERE 



44 

LED BY PEOPLE WHO WERE HIGHLY SOPHISTICATED AND TALENTED. 

WE SHOULD REMIND OURSELVES THAT IN RECOGNITION OF THIS REALITY. 
WHEN THE CONSTITUTION OF THE UNITED STATES WAS DRAFTED, OUR FOUNDING 
FATHERS SPECIFICALLY INCLUDED THE NATIVE PEOPLES OF THIS LAND AND SET 
FORTH THE FOUNDATION OF WHAT WE NOW CALL THE TRUST RELATIONSHIP. 

AND IN SUBSEQUENT LAWS AND SUPREME COURT RULINGS. THIS TRUST 
RELATIONSHIP HAS BEEN CONSISTENTLY UPHELD, EVEN DURING THE DARK DAYS OF 
THE SO-CALLED "INDL^iN WARS". 

IN RECOGNIZING THIS SPECL«iL RELATIONSHIP. OUR GOVERNMENT -- MORE 
IMPORTANTLY -- RECOGNIZED THE SOVEREIGN NATURE OF THE GOVERNMENTS OF 
NATIVE PEOPLES. THIS FACT MUST BE EMPHASIZED AGAIN AND AGAIN. INDIAN 
NATIONS ARE SOVEREIGN. 

TO THAT END, OUR PREDECESSORS IN THE CONGRESS, DURING THE LAST 
CENTURY AND THE CENTURY PRIOR TO THAT, ENTERED INTO NEGOTL\TIONS WITH 
THESE SOVEREIGN TRIBES -- CULMINATED BY THE SIGNING OF SOLEMN TREATIES. 

IT HAS BEEN SAID THAT THE GOVERNMENT OF THE UNITED STATES SOLEMNLY 
ENTERED INTO 800 TREATIES WITH THE VARIOUS TRIBES AND NATIONS OF INDIAN 
COUNTRY. LIKE ALL TREATIES, WE MADE PROMISES, AND THE INDL^iNS MADE 
PROMISES. 

IN EACH CASE, WE EXPECTED THE INDIANS TO LIVE UP TO THEIR PROMISES. BUT 



45 



I AM SAD TO REPORT, THAT OF THE 800 TREATIES, 430 WERE IGNORED BY MY 
PREDECESSORS IN THE UNITED STATES SENATE - THE MEMBERS OF THE SENATE 
SIMPLY REFUSED TO ACT UPON THEM. 

OF THE 370 THAT WERE RATIFIED. WE, THE UNITED STATES, PROCEEDED TO 
VIOLATE PROVISIONS IN EVERY SINGLE ONE OF THEM. 

NOW WE HAVE THE MATTER OF INDIAN GAMING BEFORE US. AS THE SUPREME 
COURT IN THE CABAZON CASE AND THE UNITED STATES CONSTITUTION AND 
SUBSEQUENTLY-ENACTED LAWS HAVE CLEARLY RECOGNIZED, INDIAN NATIONS ARE 
SOVEREIGN. 

IT IS IN THIS CONTEXT AND IN OUR DESIRE TO UPHOLD THE CONSTITUTION AND 
HONOR THE INTENT OF OUR FOUNDING FATHERS THAT WE ENACTED THE INDIAN 
GAMING REGULATORY ACT OF 1988. 

HOWEVER, THIS LAW, HAS A FUNDAMENTAL BUT OFTEN UNRECOGNIZED 
ALTERATION TO OUR NATIONAL POLICY OF TRUST RELATIONSHIP. 

IN A REAL SENSE, THE RELATIONSHIP -- WHEN IT CONCERNS THE CONDUCT OF 
GAMING ACTIVITIES ON INDIAN LANDS -- SHOULD HAVE BEEN BETWEEN THE FEDERAL 
GOVERNMENT AND INDIAN NATIONS. 

HOWEVER, BECAUSE OF THE COMPLEX VARIETY IN THE LAWS OF THE FIFTY 
STATES. WE SOON FOUND THAT IT WAS ALMOST IMPOSSIBLE TO DEVELOP A FEDERAL 
LAW OR STANDARD THAT WOULD APPLY IN A CONSISTENT AND UNIFORM MANNER IN 



46 



ALL HFTY STATES. 

SOME STAT1ES HAVE LOTTERIES, SOME HAVE THE FULL ARRAY OF CASINO 
OPERATIONS. AND SOME, LIKE MY HOME STATE. HAVE NO GAMING AT ALL. 

AND SO, WITH THE FULL UNDERSTANDING OF THE INDIAN NATIONS, WE 
ENACTED A LAW THAT CALLED FOR COMPACTS TO BE ENTERED INTO BY THE 
SOVEREIGN ENTITIES -- STATES AND INDL^iN NATIONS. 

SINCE JULY OF THIS YEAR, UNDER THE SPONSORSHIP OF THE COMMITTEE ON 
INDIAN AFFAIRS, REPRESENTATIVES OF THE NATIONAL GOVERNORS ASSOCIATION, 
REPRESENTATIVES OF THE NATIONAL ASS0CL\T10N OF ATTORNEYS GENERAL, 
REPRESENTATIVES OF THE FEDERAL GOVERNMENT AND REPRESENTATIVES OF TRIBAL 
GOVERNMENTS HAVE COME TOGETHER TO CLARimf QUESTIONS THAT HAVE ARISEN 
AS A RESULT OF THE IMPLEMENTATION OF THIS LAW. 

MEETINGS HAVE BEEN HELD IN WASHINGTON, DC, AND IN WASHINGTON STATE. 
AND IN NEW MEXICO. 

COUNTLESS HUNDREDS OF HOURS HAVE BEEN EXPENDED ON DISCUSSIONS AND 
NEGOTLaiTIONS, AND IT WOULD NOW APPEAR THAT WE ARE CLOSE TO RESOLUTION. 

FOR EXAMPLE, ALL PARTIES RECOGNIZE THAT GAMING HAS BECOME AN 
ENTERPRISE UPON WHICH MANY STATE GOVERNMENTS ACROSS THIS LAND 
INCREASINGLY RELY, SO THAT THESE GOVERNMENTS MAY PROVIDE A FULL RANGE OF 
GOVERNMENTAL SERVICES TO THEIR CITIZENS. 



47 



WHAT WAS ONCE STRICTLY A PRIVATE COMMERCIAL ENTERPRISE IS NEITHER 
SOLELY PRIVATE NOR COMMERCIAL ANY LONGER. 

AND WHETHER WE MAY LIKE IT OR NOT, IN THIS NATION, GOVERNMENTALLY- 
SPONSORED AND GOVERNMENTALLY-CONDUCTED GAMING IS GROWING 
GEOMETRICALLY EACH YEAR. 

TRIBAL GOVERNMENTS HAVE BEGUN TO JOIN THEIR SISTER STATE 
GOVERNMENTS IN THIS ENTERPRISE. 

IN THIS PROCESS OF DISCUSSION AND NEGOTL\TION, ALL PARTIES APPEAR TO 
DESIRE GREATER CERTAINTY IN THE DETERMINATION OF WHAT GAMES ARE 
PERMITTED TO BE PLAYED UNDER THE LAWS OF EACH STATE. 

ALL PARTIES RECOGNIZE THAT FOR THOSE STATES THAT DO NOT ELECT TO 
ENTER INTO TRIBAL-STATE COMPACTS, THERE MUST BE AN ALTERNATIVE PROCESS 
FOR SECURING AUTHORITY TO CONDUCT CLASS III GAMING ON INDL^iN LANDS. 

ALL PARTIES STRONGLY ENDORSE THE MOST STRINGENT REGULATION OF 
GAMING, AND THE NEED FOR COMPREHENSIVE AND COOPERATIVE LAW 
ENFORCEMENT. 

THROUGH THIS PROCESS OF DISCUSSION AND NEGOTL\TION, WE HAVE FOUND 
THAT THERE ARE MORE INTERESTS IN COMMON. AND FEWER OVER WHICH THERE IS A 
DIFFERENCE IN PERSPECTIVE. 



48 



ON OCTOBER THE 19TH, WE WILL HAVE A MEETING OF ALL OF THE PRINCIPALS 
AND I AM HOPEFUL THAT AT THIS MEETING, WE MAY COME FORTH WITH SOME HNAL 
RESOLUTION OF THE MATTER BEFORE US AND WE ARE WORKING TOWARDS THAT 
END. 

AND IF I MAY, THROUGH THESE MEANS, I WOULD LIKE TO THANK AND 
CONGRATULATE ALL OF THE PARTIES FOR THEIR MANY HOURS OF PATIENT EFFORT 
AND DEDICATION TO THE PROCESS. 

I AM AWARE THAT MOST AMERICANS ARE SURPRISED TO LEARN OF INDIAN 
SOVEREIGNTY. WHILE INDIANS LIVE ON LANDS THAT HAVE BEEN SET ASIDE FOR 
THEM AND FOR THE MOST PART HELD IN TRUST BY OUR GOVERNMENT. MANY OF 
THESE SOVEREIGN INDIAN NATIONS COLLECT TAXES, ENACT ORDINANCES, HAVE THE 
POWER AND AUTHORITY TO ARREST. TO LEVY FINES AND IMPOSE PUNISHMENT, TO 
REGULATE ENVIRONMENTAL QUALITY, TO ADMINISTER EDUCATION AND HEALTH 
CARE PROGRAMS, TO OPERATE JUDICIAL SYSTEMS, AND TO ENTER INTO AGREEMENTS 
AND COMPACTS WITH OTHER GOVERNMENTS. 

MR. CHAIRMAN. IN RECENT MONTHS, I HAVE SPOKEN BEFORE VARIOUS GROUPS 
AND COUNCILS ADVOCATING THE RIGHT OF INDIAN NATIONS TO ESTABLISH AND 
CONDUCT GAMING OPERATIONS IN THOSE STATES THAT DO NOT CRIMINALLY 
PROHIBIT SUCH ACnVITIES. 

IN A SENSE, 1 FIND MYSELF A BIT UNCOMFORTABLE IN THIS ROLE BECAUSE 
THROUGHOUT MY ADULT LIFE, I HAVE OPPOSED GAMING AS A MEANS OF RAISING 
REVENUE TO SUPPORT GOVERNMENTAL ACTIVITIES. 



49 



AS YOU MAY KNOW, THE STATE OF HAWAII PROHIBITS ALL FORMS OF GAMING, 
INCLUDING BINGO. 

HOWEVER, IN THE CASE OF THE INDIAN NATIONS, I SUPPORT THE TRIBES IN ALL 
OF THEIR ACnVITIES, BECAUSE I BELIEVE THAT WE AS A NATION HAVE FAILED IN OUR 
JOB OF UPHOLDING OUR RESPONSIBILITIES. 

IN THE 800 TREATIES THAT WE HAVE EITHER IGNORED OR VIOLATED, WE 
PROMISED THE INDL\NS THAT IN EXCHANGE FOR THE HUNDREDS OF MILLIONS OF 
ACRES THAT THEY CEDED TO US, WE WOULD PROTECT THEM, ASSURE THEIR SECURITY 
AND PROVIDE FOR THEIR GENERAL WELFARE. 

BUT HISTORY SHOWS THAT WE HAVE FAILED MISERABLY. INSTEAD, WE 
PARTICIPATED IN MASSACRES. WE DID NOT COME TO THEIR AID IN TIMES OF 
PESTILENCE AND STARVATION. AND SO TODAY, INDIAN NATIONS THAT ONCE 
NUMBERED IN EXCESS OF 10 MILLION PEOPLE HAVE LITTLE MORE THAN 2 MILLION IN 
THEIR POPULATION. 

IN COMPARISON, EVERY ETHNIC GROUP IN THE UNITED STATES HAS INCREASED 
IN SIZE OVER THE PAST 200 YEARS. BUT IN THIS GREAT COUNTRY OF OURS, THE 
INDIAN UNEMPLOYMENT IS THE HIGHEST, THEIR HEALTH STATISTICS ARE THE WORST, 
THEIR ECONOMIC CONDITIONS KNOW NO EQUAL. 

AND YET, MR. CHAIRMAN, IN ALL OF THE WARS OF THIS CENTURY, THE INDIAN 
PEOPLE HAVE, IN THE SPIRIT OF BROTHERHOOD, HELPED US IN EVERY WAR. 



50 



ON A PER CAPITA BASIS THERE ARE MORE VETERANS IN INDIAN COUNTRY THAN 
IN THE REST OF THE NATION. ON A PER CAPITA BASIS. MORE INDIANS HAVE GIVEN UP 
THEIR LIVES AND THEIR LIMBS THAN ANY OTHER ETHNIC GROUP. 

MR. CHAIRMAN. THEY HAVE PAID THEIR DUES. I BELIEVE THE TIME HAS COME 
FOR THIS NATION TO RECIPROCATE. 



51 

Mr. Richardson. Thank you, Senator Inouye. 
The chair recognizes the distinguished vice chairman, my col- 
league and neighbor from Arizona, John McCain. 

STATEMENT OF HON. JOHN McCAIN, A U.S. SENATOR FROM 
THE STATE OF ARIZONA, AND VICE CHAIRMAN, SENATE 
COMMITTEE ON INDIAN AFFAIRS 

Senator McCain. Thank you, Mr. Chairman, and I want to thank 
you for holding this hearing. I also want to express my appreciation 
for your and Congressman Thomas's stewardship of a much needed 
Subcommittee on Indian Affairs. We appreciate the working rela- 
tionship that we have, and I am optimistic about our ability to con- 
tinue to work on behalf of Native Americans not only on this issue 
but many others, and I am grateful for the many-year commitment, 
Mr. Chairman, you have had to Native Americans both in your 
State and mine. 

Mr. Chairman, I want to just discuss the Act with you for a 
minute and then talk about one of the major issues of this hearing, 
and that is the issue of organized crime and its involvement in In- 
dian gaming. 

As you Imow, Mr. Chairman, the Cabazon decision held that if 
a State civilly regulates any form of gaming, then the tribes in that 
State can engage in that activity free of State regulation. Remem- 
ber that all of this began with the Cabazon decision. The Cabazon 
decision also held that if a State law criminally prohibits a form 
of gambling, then the tribes within that State cannot engage in 
that activity. 

Let's make it clear, Mr. Chairman. If a State wants to criminally 
prohibit gaming in their State, then the Indians cannot engage in 
gaming in that State, and that is something, I think, that is ne- 
glected quite a bit. 

Under the Act, as you know, it says that the States can deter- 
mine what gaming activity is permitted, and at the insistence of 
the States in the non-Indian gaming industry, the Act further re- 
stricted tribal rights by requiring a tribal-State compact for most 
forms of gaming, except bingo and pull tabs. 

Mr. Chairman, let the record show that the Act has worked well 
in those States where the parties wanted it to work. There are now 
76 compacts in 12 States in this country, 12 in my own State of 
Arizona, and where the State and Indian interests have come to- 
gether and sat down and negotiated in honest good faith, there 
have been successful compacts agreed to. 

Let me also mention, Mr. Chairman, what you said at the begin- 
ning of the hearing. Accidental deaths, the death rate of Indians 
is 295 percent greater than U.S. rates; the suicide rate among Indi- 
ans is 95 percent greater; high school dropout, 35 percent greater; 
unemployment; and on and on. The statistics are appalling and 
egregious and outrageous, and you and I and Senator Inouye, and 
every member of this committee has worked for years on the an- 
swer, and the answer is economic development, and we have failed, 
and all you have to do is visit a reservation in your State or mine, 
and we know that we have failed. 

What has provided funds for these much needed programs? Not 
the Federal Grovemment but Indian gaming. I don't like Indian 



52 

gaming, you don't like Indian gaming, others may not like Indian 
gaming. The fact is, Indian gaming has provided much needed rev- 
enues to provide these people with an opportunity which we owe 
all of our citizens. 

I just want to finally, Mr, Chairman, talk about one issue, the 
possibility or likelihood of organized crime infiltration into Indian 
gaming. Senator Inouye's leadership led us to a hearing on March 
18, 1992. One of the witnesses was Mr. Paul Maloney, senior coun- 
sel for policy of the Criminsd Division of the Justice Department. 
Mr. Chairman, I ask unanimous consent that his entire statement 
be made part of the record. 

Mr. Richardson. Without objection. 

[Prepared statement of Mr. Maloney follows:] 



53 




g^parlmntt of |ustue 



STATEMENT 
OF 



PAUL L. MALONEY 

SENIOR COUNSEL FOR POLICY 

CRIMINAL DIVISION 



BEFORE 
THE 



SELECT COMMITTEE ON INDIAN AFFAIRS 
UNITED STATES SENATE 



CONCERNING 
INDIAN GAMING REGULATORY ACT 

ON 
MARCH 18, 1992 



54 



Mr. Chairman and Members of the Cosunittee — 

My name is Paul L. Maloney, and I am Senior Counsel for Policy 
in the Department of Justice Criminal Division. With ne once again 
is the Honorable Linda A. Akers, United States Attorney for the 
District of Arizona and Chair of the Indian Affairs Subcommittee of 
the Attorney General's Advisory Committee of United States 
Attorneys. Also accompanying me is Jim E. Moody, Chief of the 
Organized Crime Section of the Federal Bureau of Investigation. 

As I stated in my testimony on February 5th, the Department of 
Justice is dedicated to respond promptly to serious and flagrant 
non-compliance with Indian gaming laws. The Department of Justice 
will utilize its enforcement weapons against operations conducted 
without tribal sanctions or where there is evidence of organized 
crime infiltration, skimming or other forms of crime. For example, 
several prosecutions were brought against private entrepreneurs 
operating casinos in violation of tribal, state and federal laws on 
the St. Regis Mohawk reservation in the Northern District of New 
York; casinos operated without tribal authority were closed down in 
the District of Montana and the Eastern District of Oklahoma; a 
casino operation in the Northern District of California was closed 
down when reports of skimming by the manager, allegedly an 
associate of organized crime figures, was investigated; and, in the 
Southern District of California, an Indian official was convicted 
of embezzlement, and his wife of income tax violations, arising out 
of his skimming from the tribal gaming establishment he managed. 



55 



2 
But I wish to reiterate and emphasize what I stated earlier: 
The perception in the media and elsewhere that Indian gaming 
operations are rife with serious criminality does not stand up 
under close examination. Under analysis, the contention breaks 
down into three assertions - that the tribal games have been 
infiltrated by organized crime families; that, they have been 
victimized by criminal elements not associated with the major crime 
families; or that the tribes are conducting illegal gaming. 

Insofar as organized crime is concerned, the Department of 
Justice believes that to date there has not been a widespread or 
successful effort by organized crime to infiltrate Indian gaming 
operations. For several years the FBI has focussed its efforts on 
monitoring those organizations and their associates to apprehend 
them as they engage in illegal activity or attempt to infiltrate 
legitimate enterprises. This kind of investigation revealed the 
attempt - which did not succeed - to infiltrate the gaming 
operation of the Rincon Band in California that I informed you last 
time resulted in the indictment of ten men on charges of 
racketeering, extortion, mail fraud and wire fraud. The FBI, 
moreover, informs me that there are at present fewer than five open 
investigations of organized crime family activity relating to 
gaming on Indian lands. As monitoring those families is one of the 
FBI's highest priorities, I am confident that should evidence of 
federal crime develop it will be fully investigated and referred to 
the United States Attorneys for appropriate action. 



56 



3 
Furthermore, there has also been little evidence of criminal 
activity committed by criminal elements not associated with the 
major organized crime families. Again, on those occasions when 
such allegations have been brought to our attention, they have been 
investigated, and when sufficient evidence is developed for 
conviction, we have not hesitated to prosecute. One such case is 
that of the Indian official who skimmed the receipts of his tribe's 
bingo hall. I am informed that there are a handful of 
investigations into allegations of similar misconduct now being 
conducted. 

Finally, we come to the assertion of "illegal gaming." This 
label also covers different kinds of regulatory violations. One 
set is gaming that is not operated under tribal auspices, and 
therefore cannot be legal under any circximstances. To my 
knowledge, all such operations have been shut down. They include 
the St. Regis casinos and those on Crow and Choctaw lands. 

The other set of allegedly illegal gaming is gaming under 
tribal auspices. It would appear that all of the games so 
identified are instances in which the characterization of the 
gaming as illegal means gaming believed to fall in class III under 
the Indian Gaming Regulatory Act (IGRA) that is being conducted 
without the benefit of a compact negotiated with the state. In 
some cases the classification is in dispute, with the tribes 
claiming it properly falls in class II, Until the National Indian 



57 



4 

Gaming Commission (NIGC) issues its final definition regulations 
later this year, it cannot be said with positive assurance that 
such gaming is not class II. In other instances of admitted class 
III gaming, the state and tribes are in the course of negotiation 
that will result in compacts allowing or disallowing the games. In 
still other cases the state has declined to include certain games 
within the compact and the tribe is expected to discontinue the 
games or file suit under the IGRA, if it has not already done so. 
In still other cases suits have been filed because the whole 
negotiation process has reached an impasse. Thus, at the moment, 
as I previously testified, the illegality of the challenged games 
is in doubt or in dispute. In these instances, the United States 
Attorneys are faced with the difficult decision to allocate scarce 
investigative and prosecutorial resources against these alleged 
tribal regulatory violations when there are so few that could not 
colorably be legitimated under the IGRA through Commission, state 
or judicial action, and are in the process of resolution. 

This can best be demonstrated by a review of the map that 
Senator DeConcini asked me to investigate at the previous hearing. 
That map, incidentally, was prepared by the Department of the 
Interior (DOI) from anecdotal material supplied by its field staff. 
The map is an outline map of the lower 48 states. Within the 
outlines of nine states are a total of 41 orange dots which the key 
identifies as signifying "illegal gaming." The characterization of 
gaming as illegal represents informal information which may or may 



58 



5 
not prove correct (e.g., that the gaming is class III) or upon a 
fact situation that is in flux (e.g., no compact is in existence). 
We have examined the status of the gaming activity represented by 
each of the orange dots and in most instances the tribes are either 
in the process of negotiation with the state or the tribes have 
filed suit against the state contending that the state has not 
negotiated in good faith. In other instances, where those 
conditions are not present, the operations have been closed down by 
federal and local law enforcement. 

In sum, the informal survey of the Department of the Interior, 
when properly evaluated, does not support a perception that there 
is widespread serious criminal activity involving gaming on Indian 
reservations. What you have is gaming of questionable legality in 
the process of moving toward compliance with the IGRA. If the 
tribes and states continue in good faith under the soon to be 
published regulations of the NIGC, these regulatory violations, 
both real and apparent, will cease to exist. 

The Department of Justice does not withdraw its repeated 
warnings that the flow of currency through Indian casinos requires 
continuing vigilance to avert illegal activities such as 
embezzlement, fraud and money laundering and to protect the tribes' 
interests. This is true of non-Indian gaming as well. Strict 
compliance with the scheme of regulation ordained by Congress is of 



59 



6 
Utmost importance to insure the benefits of lawful gaming by the 
Indian tribes. 



•Mr. Chairman, this concludes my statement and I, along with 
Ms. Akers and Mr. Moody, would be glad to answer any questions from 
you and members of the Committee. 



60 

Senator McCain. On page 2 — this is the statement by Mr. 
Maloney — "But I wish to reiterate and emphasize what I stated 
earUer. The perception in the media and elsewhere that Indian 
gaming operations are rife with serious criminaUty does not stand 
up under close examination. Insofar as organized crime is con- 
cerned, the Department of Justice believes that to date there has 
not been a widespread or successful effort by organized crime to in- 
filtrate Indian gaming operations. For several years, the FBI has 
focused its efforts on monitoring those organizations and their asso- 
ciates to apprehend them as they engage in illegal activity or at- 
tempt to infiltrate legitimate enterprises. This kind of investigation 
revesded the attempt which did not succeed to infiltrate the gaming 
operation of the Rincon Band in California. I am confident that 
should evidence of Federal crime develop, it will be fully inves- 
tigated and referred to the United States attorneys for appropriate 
action." 

We also have the commitment from the Justice Department, Mr. 
Chairman, to bring to our attention any serious evidence that 
might indicate organized crime infiltrating. 

Mr. Chairman, I want to say something we all know, wherever 
there is gambling, there is the possibility of infiltration of criminal 
elements, there is just too much temptation there, but to come be- 
fore this committee and allege that organized crime is infiltrating 
the Indian gaming in this country does not stand up with the testi- 
mony of the Department of Justice whom I would rely upon. 

Finally, Mr. Chairman, perhaps the most revered man that you 
and I have had the privilege of serving with was Morris Udall. In 
July of 1988, Morris Udall said the following: "Mr. Speaker, the In- 
dian tribes, using treaties we forced upon them, laws which were 
passed without their consent, and our own courts, sued to vindicate 
their right to self-government so jealously guarded by them and so 
solemnly promised by us. They went to our courts to fight for their 
right to engage in gaming activities without hindrance by State 
governments, and they won. In the economic wasteland of the res- 
ervations that we have fostered, some of the tribes have found a 
small ray of hope for economic betterment, a chance for better 
health, better education, better jobs, a better future, but we can't 
permit that. Powerful economic forces have mobilized to ensure 
that it does not happen. And what is the justification given for once 
again breaking our word to the Indians? The opponents of Indian 
gaming activities raise the specter of organized crime. In 15 years 
of commercial gaming activity on Indian reservations, there has not 
been one clearly proven case of organized crime infiltrating gaming 
activity. Yes, there has been whispered rumors of such activities, 
and yes, there is potential, and I do share that concern." 

Finally, Mr. Chairman, let me quote from Mr. Udall in conclu- 
sion. In July 1988, Congressman Mo Udall said, 

I must oppose legislation damaging to Indian self-government and Indian rights. 
It may be that an intransigent non-Indian gaming industry has the economic power 
and poUtical muscle to shove State rule over Indian governments down the throat 
of the tribes or to simply destroy the right by a Federal ban, but it will be done 
without my consent and without my support. 



61 

Mr. Chairman, it will be done without my consent and without 
my support. I thank you, Mr. Chairman. 
[Prepared statement of Mr. McCain follows:] 



62 



STATEMENT 

OF 

SENATOR JOHN M 'AIN 

BEFORE THE 

SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

OF THE 

COMMITTEE ON NATURAL RESOURCES 

OVERSIGHT HEARING ON THE INDIAN GAMING REGULATORY ACT 
OCTOBER 5, 1993 

Mr. Chairman and Members of the Subcommittee, I am pleased 
to be here with you today and I thank you for providing this 
opportunity to appear before you. I also want to associate 
myself with the remarks made by my good friend, Senator Inouye. 

During the 102nd Congress the Senate Committee on Indian 
Affairs held three oversight hearings to determine how the Indian 
Gaming Regulatory Act was being implemented. We have spent much 
of this year engaged in a process aimed at reaching a consensus 
between state, federal and tribal government officials on any 
amendments to the Act which may be necessary to improve its 
implementation. This process has already yielded genuine 
progress and we remain hopeful that it will soon result in an 
agreement on amendments to the Act. 

Based on our experience since the Act was enacted in 1988, I 
think that a few general conclusions can be reached with regard 
to the effectiveness of the Act. First, it is clear that the Act 
has worked well in every state where the parties have made the 
effort to work cooperatively. On the other hand, where the 
states have refused to negotiate, the Act has not always worked 
well and litigation and bitterness have replaced cooperation and 
successful negotiations. Overall, the Act has now resulted in 76 
compacts in twelve states to govern the operation of Class III 
gaming. In my own State of Arizona, implementation of the Act 
has been difficult and contentious. This year, after several 
years of failed efforts to enter into compacts, the state and 
twelve tribes have now reached final agreements and more 
agreements are likely in the coming months. 

Since 1988, Indian gaming has grown from gross revenues of 
about $1 billion to $6 billion in 1992. Nationwide Indian gaming 
constitutes about 3% of all gaming activity. Net revenues from 
Indian gaming in 1992 were estimated at $750 million and were 
primarily used to provide tribal members with education, health 
care, employment and the infrastructure necessary for economic 
growth and development. 

The second conclusion which can be reached is that the fears 
which have been raised over the years about the infiltration of 
Indian gaming by organized crime are false and unfounded. The 



63 



Senior Counsel for Policy of the Criminal Division of the 
Department of Justice testified before the Senate Committee on 
Indian Affairs on March 18, 1992 and stated: 

Insofar as organized crime is concerned, the Department of 
Justice believes that to date there has not been a 
widespread or successful effort by organized crime to 
infiltrate Indian gaming operations. . . . Furthermore, 
there has been little evidence of criminal activity 
committed by criminal elements not associated with the major 
organized crime families. 

The simple fact of the matter is that there has been very little 
criminal activity associated with Indian gaming. In large part 
the reason for this has been the vigilance of the tribal 
governments. They know as well or better than any of us that any 
criminal activity will ruin their chances to make gaming the 
viable economic activity which it has shown it can be on so many 
Indian reservations. 

Mr. Chairman, I believe that it would serve the Subcommittee 
and the entire Congress well to remember the words of our 
colleague, the distinguished former Chairman of the Committee on 
Interior and Insular Affairs, Morris Udall. On July 6, 1988, a 
few short months before the Indian Gaming Regulatory Act was 
enacted. Chairman Udall addressed the House on the issue of 
Indian gaming generally and the fear of organized crime in 
particular: 

Mr. Speaker, the Indian tribes, using treaties we forced 
upon them, laws which were passed without their consent, and 
our own courts, sued to vindicate their right to self- 
government, so jealously guarded by them and so solemnly 
promised by us. They went to our courts to fight for their 
right to engage in gaming activities without hindrance by 
State governments. And they won. 

In the economic wasteland of the reservations that we have 
fostered, some of the tribes have found a small ray of hope 
for economic betterment. A chance for better health, better 
education, better jobs, a better future. But we can't 
permit that. Powerful economic forces have mobilized to 
ensure that it does not happen. 

The most effective way to prevent it is to take away their 
right to self-government to make that choice for themselves 
and to subject them to the laws and the jurisdiction of the 
States. And that is what we are asked to do — to destroy 
that tribal right of self-government by unilaterally 
imposing upon them State rule. 

And what is the justification given for once again breaking 
our word to the Indians? The opponents of Indian gaming 
activities raise the specter of organized crime. In 15 



64 



years of commercial gaming activity on Indian reservations, 
there has not been one clearly proven case of organized 
crime infiltrating Indian gaming. Yes there has been 
whispered rumors of such activity. And yes, there is a 
potential and I too share that concern. 

However the opponents of Indian gaming, with little 
evidence, assert that the infiltration of organized crime is 
a clear and present danger and the only remedy is State 
jurisdiction. They say the Tribes and Federal government 
cannot handle organized crime; only the states can. They 
would have us believe that the FBI, the Justice Department 
and other federal law enforcement agencies cannot do what 
the states can. 

Mr. Chairman, here we are five years after enactment of the 
Indian Gaming Regulatory Act and we find the opponents of Indian 
gaming making the exact same arguments which Chairman Udall noted 
in July of 1988. Even a casual reading of some of the bills 
which have recently been introduced to amend the Act demonstrates 
this fact. For example, the proponents of H.R. 2287, the Gaming 
Regulatory and State Law Enforcement Act of 1993 claim that there 
is a law enforcement crisis in Indian gaming which can only be 
rectified by placing Indian gaming totally under state control 
and greatly limiting Indian gaming activity. There is no law 
enforcement crisis. Legislation of this type is intended to 
destroy Indian gaming. Nothing more and nothing less. 

To this extent, little has changed in the five years since 
the Act became law. On August 3, 1988 the Senate Committee on 
Indian Affairs filed its report on S.555, the bill which became 
the Indian Gaming Regulatory Act. In my Additional Views which 
accompanied the report, I noted that: 

As the debate unfolded, it became clear that the 
interests of the states and of the gaming industry 
extended far beyond their expressed concern about 
organized crime. Their true interest was protection of 
their own games from a new source of economic 
competition.... the States and the gaming industry have 
always come to the table with the position that what is 
theirs is theirs and what the Tribes have is 
negotiable. 

The States and the non-Indian gaming industry prevailed in many 
ways in the Indian Gaming regulatory Act. The Act embodies a 
significant infringement on tribal rights of self -governance. As 
the members of the Subcommittee know, the Act is premised on the 
Supreme Court's decision in the Cabazon case. The Court found 
that if state law criminally prohibits a form of gambling, then 
the tribes within that state may not engage in that activity. If 
on the other hand, state law civilly regulates a form of gaming, 
then the tribes in that state can engage in that activity free 



65 



from state control. The Act takes the Cabazon restriction a step 
further with its requirement that Class III gaming can only be 
conducted pursuant to an approved tribal/state compact. This 
provision was included in the Act over the objections of most 
tribes and at the insistence of the states and the non-Indian 
commercial gaming industry. 

The States, not the Tribal or Federal governments, 
determine what gaming activity, if any, will ultimately be 
permitted. Despite this fact, it is apparent that some states 
and some non-Indian gaming operators are once again anxious to 
destroy Indian gaming to eliminate it as a competitive force. 

If I may, I would like to once again refer to the remarks of 
Chairman Udall in July of 1988: 

... I must oppose legislation damaging to Indian self- 
government and Indian rights. It may be that an 
intransigent non-Indian gaming industry has the economic 
power and political muscle to shove State rule over Indian 
governments down the throat of the tribes or to simply 
destroy the right by a federal ban. But it will be done 
without my consent and without my support. 



66 

Mr. Richardson. I thank the gentleman. 

The chair recognizes a leader in this House on many issues on 
law enforcement and crime, and we are pleased that the gentleman 
from New Jersey, the Honorable Bill Hughes from the Second Dis- 
trict, is here. 

Please proceed. Bill. 

STATEMENT OF HON. WILLIAM J. HUGHES, A REPRESENTA- 
TIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. Hughes. Thank you very much, Mr. Chairman. Good morn- 
ing, and thank you very much for inviting me to testify here today 
before this most distinguished subcommittee. 

At the outset, I would like to extend my thanks to you, Chairman 
Richardson, Chairman George Miller, and other members of this 
panel for the courtesies you have extended to me these past several 
months in our discussions about the Indian Gaming Act. 

I am really very pleased that you understand both the problems 
which exist with the current Indian Gaming Regulatory Act and 
the need to make some reforms, particularly in the regulatory as- 
pects of the law. I look forward to continuing our dialogue and to 
working with you to develop remedies which are in the public in- 
terest and are fair and reasonable to all parties involved. 

As the committee knows, it has been six years since Congress 
voted to sanction gambling operations on Indian reservations. 
While I believe the intent of the law was to balance both the State 
interests, including effective enforcement, and Indian sovereignty 
concern, I feel the Act has fallen short in many respects. 

At the time of enactment, I did not believe that the Act would 
guarantee that a carefully constructed and effective regulatory 
framework would be put in place to keep the gaming activities 
clean and consistent with State laws, regulations, and economic 
and other interests. I also believed that the compact negotiation 
process for Class 3 gaming was essentially unworkable and would 
merely spawn conflict and litigation. Unfortunately, many of my 
concerns are now realized. 

What started out as an effort to recognize the right of Indian 
tribes to conduct carefully regulated forms of legalized gambling 
has since led to the proliferation of high-stakes gaming activities 
among some 71 tribes in 18 different States without the safeguards 
that would balance all State interests that we have a right to ex- 
pect. 

I am concerned that many of these gaming operations are not 
subject to adequate licensing, supervisory, or enforcement mecha- 
nisms which are capable of dealing with high-staking gambling and 
the many problems associated with it. This, in turn, has raised se- 
rious concerns that the gaming operations are vulnerable to corrup- 
tion and infiltration of organized crime. Just as importantly, it has 
raised the ire of many local citizens who fear that gaming oper- 
ations are being forced into their communities without their con- 
sent. 

The ambiguity of the law has spawned a proliferation of lawsuits, 
as I mentioned, between Indian tribes and the States rather than 
encouraging the type of good-faith negotiations which were the in- 
tent of the 1988 Act. 



67 

While there is some consensus on the problems that the Indian 
Gaming Act has created, there is little agreement on the solutions. 
Indeed, there is no consensus even within the gaming industry in 
my own area, Atlantic City, which is located in the district that I 
have the privilege to represent. 

For that reason, I have asked the New Jersey Casino Associa- 
tion, which has tremendous experience and expertise, to put to- 
gether a working group and to advise me on this most important 
and highly complex issue. Hopefully, this working group can also 
complement the ongoing efforts of the States and Indian tribes to 
resolve their differences, and I salute the Senator, Senator Inouye, 
and Senator McCain, and others who are working with the gov- 
ernors and other interests to try to bring some resolution to this 
very, very difficult and complex issue, or series of issues. 

Task forces have been established by the National Governors As- 
sociation, the Association of Attorneys General, and that is what 
has been involved in the ongoing negotiations, and I am happy that 
we have a meeting, I think scheduled for October 19, that may see 
a resolution of these very difficult issues. I applaud those efforts 
and hope they will lead to a fair, reasonable, and balances resolu- 
tion of the concerns which many of us have raised. 

From my own perspective, I believe that any legislation to amend 
the Indian Gaming Act must embody one basic principle. That is, 
it must protect the integrity of any gaming operation by assuring 
this it adequately regulates and enforces and ensures that it does 
not put other State-regulated interests at a competitive disadvan- 
tage. The latter concern was specifically recognized by the 1988 Act 
as a legitimate and important factor to be considered. 

For instance, in my own State of New Jersey, we have tens of 
thousands of jobs involved, and billions and billions of dollars in 
which our State has a vital interest. It is my belief that States and 
their citizens have the right to insist that any gaming operation 
within their borders receive the same level of regulatory scrutiny 
that they impose on their own licensees and play by the same rules 
mandated by the State for non-Native American interests in that 
State. 

The reason for this is not so much a sense of fairness to the li- 
censees but that the States clearly have a protectable interest in 
the integrity of all gaming as well as the socioeconomic well-being 
of all of its citizens. 

Moreover, if gaming operations are allowed to take place on an 
Indian reservation at a lower level of scrutiny than that which is 
accorded other gaming operations in the State, that threatens to 
undermine the public's confidence that gaming can be effectively 
run and supervised. 

As long as States are going to be required to agree to a compact, 
as the Indian Gaming Regulatory Act now provides, then I believe 
the Indian gaming operations must either subject themselves to the 
jurisdiction of their States' regulatory system or be required to es- 
tablish a regulatory system of their own which is comparable to the 
States' in every respect. Indeed, I believe that was the clear intent 
of the 1988 Act. 

Unfortunately, the Act has not worked as well as was intended. 
I believe the New Jersey Casino Control Act offers a model to not 



68 

only regulate the gaming industry but also to assure the public's 
confidence in the integrity and credibility of the entire industry. 

In fact, I read with great interest this morning after I received 
Jim Moody's testimony, that he makes the same suggestion. He is 
the section chief, as you know, of the Organized Crime Drug Oper- 
ations Criminal Investigative Division of the Federal Bureau of In- 
vestigation. I believe that that Act in New Jersey is well reasoned, 
it has been tested, and has proven to be effective. 

In New Jersey, enforcement of the Casino Control Act is divided 
among two agencies, the Casino Control Commission, which is in 
charge of licensing and regulatory affairs, and the Division of Gam- 
ing Enforcement, which is the investigative and prosecutorial agen- 
cy. At the present time, the combined staffs of these two agencies 
is in excess of 850 personnel. Their combined budgets are approxi- 
mately $56 million, every penny of which is paid out of fees and 
assessments against the casino industry and its licensees. 

Some of what the Casino Control Commission does is obvious; 
they license the companies and the people who work for the compa- 
nies which run the casinos; they also supervise and set the rules 
for the games; and they are very much involved in supervising the 
passage of money and the control of credit. Those are the core mis- 
sions of the CCC. 

But there is more to the regulatory system in New Jersey than 
just that. The State also licenses and regulates any business that 
does business with the casinos on a regular basis. This includes ca- 
sino-related operations such as those which sell cards or dice to the 
casinos as well as non-gaming businesses including those which 
sell liquor, food, furniture, and so forth. The State investigates 
each of these companies as well as their principal officers. 

In addition, any company which is involved in loaning money to 
a casino to build or finance the construction of a casino, hotel, or 
expand it, must be licensed to do so. As a result, the law blankets 
the casinos themselves, all companies which do business with them 
on a regular basis, and all the financial sources of the casino com- 
panies. 

I point this out because I believe it addresses the three central 
issues in this debate: Where will the regulation of Indian gaming 
activities take place? How will it be paid for? And what form will 
it take? Once again, I believe the New Jersey experience provides 
an excellent model for addressing each of these concerns. 

Certainly there are other side issues to be addressed as well. For 
example, serious questions have been raised about the efforts by 
some tribes to expand their enclaves to lands which are not a part 
of their recognized reservations. I find that particularly troubling. 

At the present time, the Indian Gaming Regulatory Act is not 
providing an adequate level of protection, with some notable excep- 
tions, I might say. Indeed, it contains loopholes and ambiguities 
which cripple its effectiveness. If we don't act to soon correct the 
deficiencies in the law, it is only a matter of time before the 
public's confidence in the integrity and acceptance of systems of le- 
galized gaming will be destroyed. If that happens, the implications 
of such a catastrophe will go well beyond the damage to any indi- 
vidual casino or Indian tribe or State. It will undermine the public 



69 

confidence in our ability to keep organized crime and other ele- 
ments out of this industry. 

Mr. Chairman, those are my overall concerns. I look forward to 
working with you to develop a framework which will enable us to 
address these serious concerns. I thank you again and look forward 
to that kind of cooperative effort that I have seen in the last few 
months. 

Mr. Richardson. I thank the gentleman. 

[Prepared statement of Mr. Hughes follows:] 



70 



TESTIMONY BY THE HONORABLE WILLIAM J. HUGHES, M.C. 
SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS, OCT. 5, 1993 

THANK YOU VERY MUCH, MR. CHAIRMAN. I AM WILLIAM J. HUGHES, 
MEMBER OF CONGRESS, REPRESENTING NEW JERSEY'S SECOND 
CONGRESSIONAL DISTRICT. I APPRECIATE THE OPPORTUNITY TO TESTIFY 
BEFORE THIS DISTINGUISHED SUBCOMMITTEE TODAY, TO SHARE WITH YOU 
SOME OF MY THOUGHTS AND CONCERNS ABOUT INDIAN GAMING. 

AT THE OUTSET, I WANT TO EXTEND MY THANKS TO YOU, CHAIRMAN 
RICHARDSON, AS WELL AS FULL COMMITTEE CHAIRMAN GEORGE MILLER AND 
OTHER MEMBERS OF THIS PANEL, FOR THE COURTESIES YOU HAVE EXTENDED 
TO ME THESE PAST MONTHS IN OUR DISCUSSIONS ABOUT THE INDIAN 
GAMING ACT. 

I AM VERY PLEASED THAT YOU UNDERSTAND BOTH THE PROBLEMS 
WHICH EXIST WITH THE CURRENT INDIAN GAMING REGULATORY ACT, AND 
THE NEED TO MAKE SOME REFORMS, PARTICULARLY IN THE REGULATORY 
ASPECTS OF THE LAW. I LOOK FORWARD TO CONTINUING OUR DIALOGUE, 
AND TO WORKING WITH YOU TO DEVELOP REMEDIES WHICH ARE IN THE 
PUBLIC INTEREST AND ARE FAIR TO ALL PARTIES INVOLVED. 

AS THE COMMITTEE KNOWS, IT HAS BEEN SIX YEARS SINCE CONGRESS 
VOTED TO SANCTION GAMBLING OPERATIONS ON INDIAN RESERVATIONS. 
WHILE I BELIEVE THE INTENT OF THAT LAW WAS TO BALANCE BOTH THE 
STATE INTERESTS, INCLUDING EFFECTIVE ENFORCEMENT, AND INDIAN 
SOVEREIGNTY CONCERNS, I FEEL THE ACT FELL SHORT OF THAT GOAL. 



71 



-2- 



AT THE TIME OF ENACTMENT, I DID NOT BELIEVE THAT THE ACT 
WOULD GUARANTEE THAT A CAREFULLY CONSTRUCTED AND EFFECTIVE 
REGULATORY FRAMEWORK WOULD BE PUT IN PLACE, TO KEEP THE GAMING 
ACTIVITIES CLEAN AND CONSISTENT WITH STATE LAWS, REGULATIONS AND 
ECONOMIC AND OTHER INTERESTS. 

I ALSO BELIEVED THAT THE COMPACT NEGOTIATION PROCESS FOR 
CLASS III GAMING WAS ESSENTIALLY UNWORKABLE, AND WOULD MERELY 
SPAWN CONFLICT AND LITIGATION. UNFORTUNATELY, MANY OF MY 
CONCERNS ARE NOW BEING REALIZED. 

WHAT STARTED OUT AS AN EFFORT TO RECOGNIZE THE RIGHT OF 
INDIAN TRIBES TO CONDUCT CAREFULLY REGULATED FORMS OF LEGALIZED 
GAMBLING, HAS SINCE LED TO A PROLIFERATION OF HIGH-STAKES GAMING 
ACTIVITIES AMONG SOME 71 TRIBES IN 18 DIFFERENT STATES, WITHOUT 
THE SAFEGUARDS THAT WOULD BALANCE ALL STATE INTERESTS THAT WE 
HAVE A RIGHT TO EXPECT. 

I AM CONCERNED THAT MANY OF THESE GAMING OPERATIONS ARE NOT 
SUBJECT TO ADEQUATE LICENSING, SUPERVISORY OR ENFORCEMENT 
MECHANISMS, WHICH ARE CAPABLE OF DEALING WITH HIGH-STAKES 
GAMBLING AND THE MANY PROBLEMS ASSOCIATED WITH IT. THIS, IN 
TURN, HAS RAISED SERIOUS CONCERNS THAT THE GAMING OPERATIONS ARE 
VULNERABLE TO CORRUPTION AND INFILTRATION BY ORGANIZED CRIME. 

JUST AS IMPORTANTLY, IT HAS RAISED THE IRE OF MANY LOCAL 
CITIZENS, WHO FEAR THAT GAMBLING ACTIVITIES ARE BEING FORCED INTO 
THEIR COMMUNITIES WITHOUT THEIR CONSENT. THE AMBIGUITY OF THE 
LAW HAS ALSO SPAWNED A PROLIFERATION OF LAWSUITS BETWEEN INDIAN 
TRIBES AND THE STATES, RATHER THAN ENCOURAGING THE TYPE OF GOOD- 
FAITH NEGOTIATIONS WHICH WERE THE INTENT OF THE 1988 ACT. 



72 



-3- 



WHILE THERE IS SOME CONSENSUS ON THE PROBLEMS WHICH THE 
INDIAN GAMING ACT HAS CREATED, THERE IS LITTLE AGREEMENT ON THE 
SOLUTIONS. INDEED, THERE IS NO CONSENSUS EVEN WITHIN THE GAMING 
INDUSTRY IN ATLANTIC CITY, WHICH IS LOCATED IN THE DISTRICT THAT 
I HAVE THE PRIVILEGE TO REPRESENT. 

FOR THAT REASON, I HAVE ASKED THE NEW JERSEY CASINO 
ASSOCIATION--WHICH HAS TREMENDOUS EXPERIENCE AND EXPERTISE--TO 
PUT TOGETHER A WORKING GROUP TO AND ADVISE ME ON THIS MOST 
IMPORTANT AND HIGHLY COMPLEX ISSUES. 

HOPEFULLY, THIS WORKING GROUP CAN ALSO COMPLEMENT THE 
ONGOING EFFORTS OF THE STATES AND INDIAN TRIBES TO RESOLVE THEIR 
DIFFERENCES. 

TASK FORCES HAVE ALSO BEEN ESTABLISHED BY THE NATIONAL 
ASSOCIATION OF ATTORNEYS GENERAL AND THE NATIONAL GOVERNORS 
ASSOCIATION. THESE TASK FORCES AND REPRESENTATIVES OF INDIAN 
TRIBES HAVE BEEN MEETING TO STUDY AND MAKE RECOMMENDATIONS TO THE 
CONGRESS, ON HOW TO IMPROVE THE STATUTORY FRAMEWORK FOR THE 
REGULATION OF GAMBLING ON INDIAN LANDS. 

I APPLAUD THESE EFFORTS AND HOPE THEY WILL LEAD TO A FAIR, 
REASONABLE AND BALANCED RESOLUTION OF THESE CONCERNS WHICH THE 
CONGRESS CAN CONSIDER AND, HOPEFULLY, EMBRACE. 

FROM MY OWN PERSPECTIVE, I BELIEVE THAT ANY LEGISLATION TO 
AMEND THE INDIAN GAMING REGULATORY ACT MUST EMBODY ONE BASIC 
PRINCIPLE. THAT IS, IT MUST PROTECT THE INTEGRITY OF ANY GAMING 
OPERATION BY ASSURING THAT IT IS ADEQUATELY REGULATED AND 
ENFORCED, AND ENSURE THAT IT DOES NOT PUT OTHER STATE-REGULATED 
INTERESTS AT A COMPETITIVE DISADVANTAGE. 



73 



-4- 



THE LATTER CONCERN WAS SPECIFICALLY RECOGNIZED BY THE 1988 
ACT AS A LEGITIMATE AND IMPORTANT FACTOR TO BE CONSIDERED. 

IT IS MY BELIEF THAT STATES AND THEIR CITIZENS HAVE THE 
RIGHT TO INSIST THAT ANY GAMING OPERATION WITHIN THEIR BORDERS 
RECEIVE THE SAME LEVEL OF REGULATORY SCRUTINY THAT THEY IMPOSE ON 
THEIR OWN LICENSEES. 

THE REASON FOR THIS IS NOT SO MUCH A SENSE OF FAIRNESS TO 
THE LICENSEES, BUT THAT THE STATES CLEARLY HAVE A PROTECTABLE 
INTEREST IN THE INTEGRITY OF ALL GAMING. 

IF GAMING OPERATIONS ARE ALLOWED TO TAKE PLACE ON AN INDIAN 
RESERVATION AT A LOWER LEVEL OF SCRUTINY THAN THAT WHICH IS 
ACCORDED TO OTHER GAMING OPERATIONS IN THE STATE, THAT THREATENS 
TO UNDERMINE THE PUBLIC'S CONFIDENCE THAT GAMING CAN BE 
EFFECTIVELY RUN AND SUPERVISED. 

AS LONG AS STATES ARE GOING TO BE REQUIRED TO AGREE TO A 
COMPACT, AS THE INDIAN GAMING REGULATORY ACT NOW PROVIDES, THEN I 
BELIEVE THE INDIAN GAMING OPERATIONS MUST EITHER SUBJECT 
THEMSELVES TO THE JURISDICTION OF THEIR STATE'S REGULATORY 
SYSTEM, OR BE REQUIRED TO ESTABLISH A REGULATORY SYSTEM OF THEIR 
OWN WHICH IS COMPARABLE TO THE STATE'S IN EVERY RESPECT. 

INDEED, I BELIEVE THAT WAS THE CLEAR INTENT OF THE 1988 ACT. 
UNFORTUNATELY, THE ACT HAS NOT WORKED AS WELL AS IT WAS INTENDED. 

BY COMPARISON, I BELIEVE THE NEW JERSEY CASINO CONTROL ACT 
OFFERS A MODEL TO NOT ONLY REGULATE THE GAMING INDUSTRY, BUT ALSO 
TO ASSURE THE PUBLIC'S CONFIDENCE IN THE INTEGRITY AND 
CREDIBILITY OF THE ENTIRE INDUSTRY. 



74 



-5- 



IN NEW JERSEY, ENFORCEMENT OF THE CASINO CONTROL ACT IS 
DIVIDED AMONG TWO AGENCIES: THE CASINO CONTROL COMMISSION, WHICH 
IS IN CHARGE OF LICENSING AND REGULATORY AFFAIRS; AND THE 
DIVISION OF GAMING ENFORCEMENT, WHICH IS THE INVESTIGATIVE AND 
PROSECUTORIAL AGENCY. 

AT THE PRESENT TIME, THE COMBINED STAFFS OF THESE TWO 
AGENCIES IS IN EXCESS OF 850. THEIR COMBINED BUDGETS ARE 
APPROXIMATELY $56 MILLION, EVERY PENNY OF WHICH IS PAID FOR OUT 
OF FEES AND ASSESSMENTS AGAINST THE CASINO INDUSTRY AND ITS 
LICENSEES. 

SOME OF WHAT THE CASINO CONTROL COMMISSION DOES IS OBVIOUS. 
THEY LICENSE THE COMPANIES AND THE PEOPLE WHO WORK FOR THE 
COMPANIES WHICH RUN CASINOS. THEY ALSO SUPERVISE AND SET THE 
RULES FOR THE GAMES, AND ARE VERY INVOLVED IN SUPERVISING THE 
PASSAGE OF MONEY AND THE CONTROL OF CREDIT. THOSE ARE THE CORE 
MISSIONS OF THE CCC. 

BUT THERE IS MORE TO THE REGULATORY SYSTEM IN NEW JERSEY 
THAN JUST THAT. 

THE STATE ALSO LICENSES AND REGULATES ANY BUSINESS THAT DOES 
BUSINESS WITH THE CASINOS ON A REGULAR BASIS. THIS INCLUDES 
GAMING-RELATED OPERATIONS, SUCH AS THOSE WHICH SELL CARDS OR DICE 
TO THE CASINOS, AS WELL AS NON-GAMING BUSINESSES, INCLUDING THOSE 
WHICH SELL THEM LIQUOR, FOOD, FURNITURE, AND SO FORTH. THE STATE 
INVESTIGATES EACH OF THESE COMPANIES AS WELL AS THEIR PRINCIPAL 
OFFICERS. 



75 



-6- 



IN ADDITION, ANY COMPANY WHICH IS INVOLVED IN LOANING MONEY 
TO A CASINO TO BUILD OR FINANCE THE CONSTRUCTION OF A CASINO- 
HOTEL, MUST BE LICENSED TO DO SO. AS A RESULT, THE LAW BLANKETS 
THE CASINOS THEMSELVES, ALL COMPANIES WHICH DO BUSINESS WITH THEM 
ON A REGULAR BASIS, AND ALL THE FINANCIAL SOURCES OF THE CASINO 
COMPANIES. 

I POINT THIS OUT BECAUSE I BELIEVE IT ADDRESSES THE THREE 
CENTRAL ISSUES IN THIS DEBATE: WHERE WILL THE REGULATION OF 
INDIAN GAMING ACTIVITIES TAKE PLACE, HOW WILL IT BE PAID FOR, AND 
WHAT FORM IT WILL TAKE. 

ONCE AGAIN, I BELIEVE THE NEW JERSEY EXPERIENCE PROVIDES AN 
EXCELLENT MODEL FOR ADDRESSING EACH OF THESE CONCERNS. 

CERTAINLY THERE ARE OTHER SIDE ISSUES TO BE ADDRESSED AS 
WELL. FOR EXAMPLE, SERIOUS QUESTIONS HAVE BEEN RAISED ABOUT THE 
EFFORTS BY SOME TRIBES TO EXPAND THEIR ENCLAVES TO LANDS WHICH 
ARE NOT A PART OF THEIR RECOGNIZED RESERVATIONS. I FIND THAT 
ESPECIALLY TROUBLING. 

AT THE PRESENT TIME, THE INDIAN GAMING REGULATORY ACT IS NOT 
PROVIDING AN ADEQUATE LEVEL OF PROTECTION, WITH SOME NOTABLE 
EXCEPTIONS. INDEED, IT CONTAINS LOOPHOLES AND AMBIGUITIES WHICH 
CRIPPLE ITS EFFECTIVENESS. 

IF WE DON'T ACT SOON TO CORRECT THE DEFICIENCIES IN THE LAW, 
IT IS ONLY A MATTER OF TIME BEFORE THE PUBLIC'S CONFIDENCE IN THE 
INTEGRITY AND ACCEPTANCE OF SYSTEMS OF LEGALIZED GAMING WILL BE 
DESTROYED. 



76 



-7- 



IF THAT HAPPENS, THE IMPLICATIONS OF SUCH A CATASTROPHE WILL 
GO WELL BEYOND THE DAMAGE TO ANY INDIVIDUAL CASINO OR INDIAN 
TRIBE OR STATE. IT WILL UNDERMINE THE PUBLIC CONFIDENCE IN OUR 
ABILITY TO KEEP ORGANIZED CRIME AND OTHER ELEMENTS OUT OF THIS 
INDUSTRY . 

MR. CHAIRMAN, THESE ARE MY OVERALL CONCERNS. I LOOK FORWARD 
TO WORKING WITH YOU TO DEVELOP A FRAMEWORK WHICH WILL ENABLE US 
TO ADDRESS THESE CONCERNS. THANK YOU AGAIN FOR ALLOWING ME TO 
APPEAR BEFORE YOU TODAY. 



# # # 



77 

/ 
Mr. Richardson. The chair recognizes the gentlfc. 
Jersey, a very distinguished member of this body. 

STATEMENT OF HON. MARGE ROUKEMA, A REPRESENTAl i . 
IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mrs. ROUKEMA. Thank you, Mr. Chairman. I am certainly deeply 
grateful to you. Chairman Richardson, for permitting me the oppor- 
tunity to share this testimony today with the subcommittee. 

The proliferation of Indian gambling is a serious national issue, 
and it is a very serious issue in New Jersey, particularly in my 
Fifth Congressional District. Gaming, casino or otherwise, can 
produce serious consequences for the host community. 

It would take months to address all the sociological, economic, 
moral, legal, and law enforcement problems associated with gam- 
bling. These issues are so serious to the citizens of New Jersey that 
when casino gambling was proposed for Atlantic City, the question 
was subject to Statewide referendum, and an amendment to the 
State Constitution was required. 

While I hope that the subcommittee will address each of the 
aforementioned issues in subsequent hearings, I come before you 
today to discuss a situation presently pending in my district which 
has broad Indian gaming ramifications and which raises some seri- 
ous questions, in my opinion, about illicit financing of some Indian 
gaming operations. 

A group of people residing in parts of my district have been seek- 
ing Federal recognition as a Federal Indian tribe for nearly 20 
years. When representatives of the Ramapough Mountain People 
first approached me in the mid-1980's, seeking a private bill rec- 
ognizing the group as an Indian tribe, I was skeptical of the mo- 
tives behind their drive for recognition. After all, this was a clear 
attempt to circumvent normal procedures. 

To this day, the leaders of the Ramapough community have 
maintained that their sole reason for seeking Federal acknowledg- 
ment is to improve their housing, education, and social welfare. 
However, from my very first discussions with the group almost 10 
years ago, it has been quite clear to me their sole interest in Fed- 
eral acknowledgment is to circumvent local. State, and Federal ju- 
risdiction for the sole purpose of establishing casino gambling in 
Bergen County, New Jersey. 

No member of the group has ever contacted my office to discuss 
improvement in housing or education. They are integrated with the 
local communities and have been for some time. 

On November 20, 1985, representatives of the Ramapough people 
signed a 15-year contract with Rory Management Corporation of 
Elizabeth, New Jersey. The purpose was to finance the group's Fed- 
eral lobbying efforts in return for a percentage of future gaming op- 
eration profits. 

At the time, the president of Rory Management Corporation was 
a Mr. Robert Frank of Miami, Florida, who, shortly after signing 
the Ramapough agreement, resigned as president of a similar firm 
under allegations of criminal involvement with a California Indian 
tribe's gaming operations. 



78 

Subsequent newspaper reports indicated that Rory Management 
Corporation was prepared to spend several million dollars in order 
to secure Federal recognition, land, and gaming facilities for the 
Ramapough group. Mr. Frank was to receive 49 percent of the 
gaming profits. The Ramapoughs were guaranteed $29 million over 
15 years. 

On September 13, 1993, an article appeared in the New Jersey 
Law Journal documenting Mr. Frank's ties to organized crime. Ac- 
cording to the Journal, he has had long-standing ties to Mafia 
bosses. 

Mr. Chairman, I would like unanimous consent to have the New 
Jersey law article entered into the record. 

Mr. Richardson. Without objection. 

[The article follows:] 



79 



Was Mob Behind Tribe's Casino? 



By Itn O'Biioi 



The HMD wlxm the Raniapoiigh 
MouaaiD f^ople of Bergea County 
once retained to hdp them gain fed- 
eral reoognitiaa is a bona &de Indian 
triK — and mbvqacnlly manage any 
guniag operatiaas on ibeir reservation 
— has kng-staoding lies to an asso- 
date of Mafia boss Anthony (TUmac) 
Aoocttmo. 

A uLCtuuu is the kwgnsie head of 
the New Jeney EKtioD of the Lac- 
drsB crime bmily wiio has been 
iovoived in biafo on Indiaa reKrva- 
tioBs. aad dse^rtioe, for mioy yean. 
Oo Aug. 13, be was ooavKied in 
Ocean Cooty of ncketeering, exlor^ ' 
tkn, ooQspsacy and Inarting an or- 
pHned-criine bnity. wtiBe aa ua- 
deitng of bis was convicted of mul^ ° 
*»- ■ L 



The consukaol who signed oa with 
die reclusive Ratnapoogh dan ia 198S 
is Robeit Frank of Miami Lakes. 
Ha., who has beea iorvoived in biogo 
hails elsewhere siace tlK 1970s, i>- 
cludiog one oo aa ladian neaervation 
in which a dvil coun ruled he com- 
milted fraod. 

Frank is a kngiiiDe a^vy ia tr of a 
inajor bingo operator, James L. Wil- 
liams. of Boca Ratoo, Fla., who is 
descr i bed by taw-enfarcemect aulliar- 
tties as a clcBe .winr i afr of Accetnoo 
as well as of olfaer ondenporid fig- 
ures, iarfadlt^g die now-decened £t- 
totc Zappi, a capo in (be *^'h*""" 
crime tkoatf. WOaum wai conv i aed 
in a fedetal oouit in Flocida in 1987 
of tax eradoo^^ecificaliy, of dom- 
miag.abKa $330,000 fiiom-Kveni 
Bniwaid Coonty biago opentiaBs, 
inrhirtiag one openied by Incfiaos. He 
served two yean.' ' . " " 



The issue of poteatial orputized- 
crime infliMmrr has become a hot 
botlon in die high-HakES battle over 
the Ramapnngbs' (kive for teoog- 
mtkn. Oppaootts. Jnrinding casioo 
owaer Dcoaid Tramp aitd Bergen 
County's two tepicsentaives in die 
House, Repablican Maige """f'n* 
and Be m o an. Robert Tonice&i, have 
raised die qKcter oTotgasitsd dime, 
while backers ot. the Ramapougbs 
have biasaed the tactic as imftmnrtnrl 
and IS fear-mougej aig* 

The Ranapovghs' ttanef, Gevge 
Sdmeider of Fairfield's Loiber, 
Schneider. Nozzi, Yidaiess St. Bil- 
iokas, as wdl as Ifaeir chief. RooaJd 
Van IXiak. aqs Prank's role ended 
two yean ago. aUawgb bodt say be 
frtnams. "a friend .of Inc tiAe" imei^ 
esled' ia teniae odr oaiy k the push 

ooMn<uB>p(«n«iS4 



80 



NEW jEtser LAW joumwAi. sgrngjBgB i*. l**» 



us N.J.LJ. lU 



Was Mob Behind Tribe's Casino? 



lot uitm] recofliltlon bul in suh- 
9^^)u<n) veniurcs 

rrtMd of tbc Tribt 

Sart \*ii Punk- "W« )om tli tiea 
».tb Bot Fr»nk b«c«us« h« Juti no 
nut or mMey. He kft on ftOOd wrmt 
and he U ■ |ood fileod. W« cip«ci lo 
Kc htm i( ou» o«l powwow " 

«'>Mn tob] of Bob FrmAk'a dcalmM 
w,oi T^illiam*. sod th« WiUltmi n 
conitdetfd by fcdeial pro»ecuiori lO 
b« I (ooipifnc utociale of Acceliuro. 
Van Dvrh uid. "I ffl gUd wc TounJ 
thai out Take tny «ord Tor It H« hu 
no (jiv<)l\tm<u u ill None. Nothing 
•I all Dm BIA (Buruu of Itiditn 
AlTainl hm> to ftp(ro«e til buiinest 
dcilin|) ai^ iKat »ould bto« ui out 
of tht Mter" 

frmfk, 31. • romwr Eluabcth 
mident tnd Ort«tlm« luUonal »d- 
vcniimt mwager for 37if Dotty 
J.^unuii v«rp«per ia Eltubeih, now 
defuiKt. coaKrTTB Otai hU offtciil rok 
*i(h Um tri^ ended in 1991 Bui he 
loo uyi tfMt he U hopeful thst ihouid 
the ItanipougSf glin tecofnltion, 
K« It h« hired to hdp with eithct 
pmiPS Of fcpoomic development 
• Im y*rf clow ic ih« uib«." oyi 
Frank. »lding. "K iJtey wtTC |Oing 10 
an rxnehing iit N<w Jeri«y. Id Ilk* 
in cotrc Mck home wmI help." 

Frank, Uibe »oon»ey SchMidcr. 
chtcf Van [>unk and the liibe'a 
V^tkhiigion. DC. Votjbylu. Albert 
Caultoo. •>! d«CT)&a Prank'a curreoi 
ktarwi as acnront wahtof In the 
<«.in|i ihould the cUn receive Uibtl 

OtVf ! , pantcoUrty law enfoice- 
mcni c-ffielali. char3Ci«rirt Frank ai a 
ftstit fct Williima and Wimims' | 
Mafia •'(fociaict And Wlltianu. uy 1 
If^era'. f ro»«cutt>r». has been Involved 
in bingo iinc« ht mn an Akfcn bingo j 
hoil in 1973 fw JoKph Merle, de- 
^Lrribed by iuthoT.lici u an OhIO 
hinjrt kn| convicted in 1979 of con- 
duciini an ill«t«! bwjo operation, 
gfarMJ Ui-tft and gatnbllng. 

Ftink I invoWetnent with Williams 
f;nca tack to 1978 -vhen. according to 
toutl pipert rilei< h)' the rcdctal 
Mum) Siiike Ftwcc In 1911, Frvnk 
■ paved 4 miflor fc1« Hi anetnpta b)* 
U'liiiam anJ Mherr to btit* a Rmida 
'.-.iie tCMBioT lo p«ish tnroufh M))(o 
ifsi^ladc-n favnrablt to them 



Ace«tlur« a« Blace Man 

Frajik ackjtowletltes ilnling with 
Wiiittm%. but layi be hain't dealt 
viih him iltKc late 1985. 

As fcr Aocemirs, who moved to 
Saudt Ftonda in tSe I970l » avoid 
<rulfytn,t before Ihc New Jericy Suta 
Cotnmltston on Itwfti^aiton. Prank 
layl, "1 k/w>w Atuhooy Yean ago I 
mei hlni. 1 grew up in Petersburg (an 
F]uah«4h Mlihborhood) and he use to 
come O'er to Eltnbaih. His grand- 
parew» were friends wUh my graAd- 
parenii, but I nevifr h«d tnyOiing to 
do wuh him " 

Accatturo. according to foderml ao- 
thorttln. becjma invoNed in running 
»nd aujifilytnt blngo 0(>*ratipni on 
Lftd^ rtaervmnona and clacv^er*. 
Accofdini lo a prc-aeniCDce aiemo 
itndum m WUUanu' ut caae, Ac- 
ccmirr held tntereiu in at leatt two 
biogo halli ownel by WiHiama in 



SovA Florida In the ewhr t980a. n 
well u In another Wilflama-owMd 
binjo opcratl'Mt In Ailama 

A :979 For^tM migizliw irtWk 
dncrib*d Accetcuro aa "(be khigpla 
of Florida biQ<o" and detailad Wll- 
liarnj' conncctlona 10 ACCtttUfO. ^H- 
hams sued Forhis but »-t[hdrew hla 
sjii voluntarily after he wbb dcpoaed. 

In addition, (ha mcfnoiandum vay« 
that Atcenuro Operaiad a paper com- 
pany that ruppttcd blngo cvd> to 
halla. including some on Indian rea* 
ervaik>o>. AccenufO also rrled lo boy 
a riorida pr«5s company rtiat pro- 
duced blngo lupplkJ. with WillUma 
helping AccrtlufO wHh Iha purchaH 
re(.oriat»ona. 



Riomo random, 
wnilen by tulilant U.S. aaomeya I. 
kaidalt Gold and Thomas McNuUy to 
Mirch 1987. seven weeks tfter Wll- 
liams' convtciton. describe* Accetluro 
19 lomcona who sklmi proflta from 
tingo opcradom Ootd and NicNuliy 
ictuse Williams of mnfllnf Nngo 
fames for charities, boih ret! and 



SINQO l» »• 

GAMIi Robert 

Prank, accn M 

rlyht during • 

press coofertDC* 

wllhUM 

iUfiiapeu^ iB 

Mahwah Sa IMP. 

niTcr dlKlrvrd M 

(he KoM tbat h* 

WHS befng BCCV9C4 

tu CttfforrJa of 

sUmmlttt f^^««^ 

ftn Ifidita>nai 

blRfo hall. Vnuik 

sap Im r«s!cT«i4 

n-om (ha Mofe 

minftgcmcnt firm 

ha h«adfd wid 

did ool know 

uTUtI csncd b7 tbt 

law Joumai ib»t 

h« wu cUc4 for 

Uma6 and 

4fnb*z2leti*«nt hi 

a $534.«0f 

judnmeat aigalost 

hira bmI bli 

partnara. 



Mococied, with moil of the proflu 
gciiig. nietally, to WlUtenu* com- 
panies rather than the charities. 

Wllltama. for huuiMsa, wu oocc 
shut down by authorltlas In NashvlHe 
who auipccird the proceeds wsre not 
gcing to churity at stawd. AfUt baJBg 
shut down, th« «xecuilva director of 
tht charity scl up by WtUi^ms. the 
A.-nerican Hypcrtcnsioo AasoclMton. 
tnc . obtained a mail-order ordtitktloii 
tr4 rented for a charitablo loUc- 
it^itions permit aa a mlnlsttf. The 
enacuUv* director was Frank Oerillo, 
detcribed in coun papcrt ti an asso- 
ciate of Accettuio wno wu indicted 
with th* mob bo»« In 1980 for fixing 
races in Rorlds. Ocrillo was coo- 
victed in 1981, while AcccAuro wu 
found to b« incompctctil to stand trial 
on medical grounds. Accethiro't net 



worti was p«g8*^ by du FBI at soma 
$33 mlUlon du/lnt (he ear<y 1980|. 

According to la w-on force ment of* 
fklllS in is tai tvaakM case and 

ebewhrfo, Williams' has a hk»toiY of 
owning and ninivhig businesses, from 
blngo pulorv lo swtp olubs, wW» 
othen rroniteg for him. And io at 
leaat three cases, Frank appstrs lo be 
frontinR for WUIiams. 

Id the first case. FrttA. according 
to New Meitco authofkW. cama to 
AtbDqtierquc b 1981 ht an stttmpt to 
open a high-ciikts bingo bushMSS for 
William!! According lo a 1982 rtpon 
Issued by The Ooverrwr'i Orga-*uxad 
Crime Prevention CommlMloD titled, 
"Infittrstioa of Organlicd Crime Into 
Blngo io N«w Maiico." Fnnk failed 
to dlacfoae both his sod WUIiaim' 
interest ht the proposed bingo hal). 
Frank, according (o iba rrpovt, uiod 
the name of sft tmployte of his from 
Hiakah Hall, s Witgo parlor In Ffor- 
kla, a> the owner, when In reality 
Williams was to bookroU the potantial 
business ss well n aivxher venture on 
en Indlin reservation. 




PiMk •cki»«4e^ei ploying s rola 
bi trying to an up the blngo oper tK m 
(or Williams lo Albuqucroue in 1981- 
83. and hrtiter acknowleogea thai the 
named principals In the proposed 
vcMura worked at Hialeah HaD. 
which ha owned. But be says, "I was 
on m> way to Califon^la tad Jimmy 
asked me lo atop by arrd check il out. 
Me valued by opinion, and he paid 
me." 

HWe^ Hall t«pf«eeMS the second 
oumcic of Prank allegedly frontiog 
for WllUsms. While Frank admits he 
owned Iho boitoess, and white Florida 
corpormte reconls llH him. and not 
Wtllbme. aa ea offVccr of tbe busl- 
MW. the proaecuatvs In the WUIlana 
tax case wrolo hi 1917 thit "there 
WW elcnr evUence thai (WUllams) 
wu riming Htalcah Hall. " Williams' 



name was on the leatc, reported the 
proaccutora. 

Says Frank about Hialeah HsU. 
'Jimmy Williams bulh k end I owoe^ 
il Th« butidlr.! was leaaed to a 
Charity so I was fu« ihe landlord. " 

The New Msulco report said that 
the HUleah buslocaa wai cited fbr 
violallou of Florida's ganring stat* 
utei Frank says. "Thai's inw, but I 
Juti owvsd ttM building " 

Alleged SUiimJiit •! Hnae Profhg 

In iM third cun^ ched by aa* 
thOfkiai, Prsnk. ■ 1937 graduate of 
SetOA Halt UnKeriity. uraa himself 
accused, slong wldi Williams, of 
skimming from an Indian- operated 
blngo hsl! In Jackson. Cs 

The eccusstlofi wss being made In 
early 1986, s f*w momhi sflcr the 
Rarrjpoughi' chief. Van Dunk, wu 
Introducing Prank k) Ihe New Jersey 
prrs« sa (he tribe's Mw tnonsg*'"*^ 
coTuultint. Frank's New Jersey com* 
pany, Rory MsfMgenwrt Corp.. had 
signed t oofflract wMh the clan lA 
1983 to help In the effort to secure 
recognliioo, snd ti> subsequently run s 
lighstakcs blngo hall for 49 percent 
cf the revenues; the Ramapoughs 
wars to |« 51 percinl. The contract 
ruaraoteed Ihe tribe 129 mllilo» over 
13 ytari. aocordlnf to Fraok eod Van 
Dunk. 

About seven months sfksr Ihot )uly 
1983 aanouDcemem. a blngo hall bo- 
ing operated by Prsnk, Williams and, 
according to foderal proaecuton. thTCO 
convicted felons. In Jackaon — about 
30 mites* northeast of Seeiameoto — 
wu closed down after four month* 
when ks chief flMnelai backer ae- 
cosed ihe operaton of skimming rann 
than StS.OCC a night After yea'i of 
Utigaifon. aa Amador Counhr JudfS 
awarded a )udcr'>*nl of S5>4.o00 Dl«t 
farterer and sttomsys f^es to CaH- 
fomfcs dov»1op*f Lynn Awbry in Oc* 
lobcr 1991. Though about half the 
judgmem wu for IndemnirVctilon, 
other causes of action bcluded fraud 
and cmbenkmcnt. 

Freak and WUHams left the atito 
and the Ju^ment wu ordered by 
default. Federal proeecuton In Rorlds 
sty, ttiotilb. Ihsl the Wllllams/Frsnk 
group, sner Rcurini u\ ernployment 
oontraa whh the Mi-Wuk Indians, 
•old 90 percent of tbe contraa to 
ennther groi^f for $730,000 

Franlt 'Restt**' •> l*m dd snl 

Ai hi liM ea«e aT the .v-«' }9tzt/ 
corporation, »ory Managcmeai. 
Prank wu the presktent of Arrow 
Management Services, Inc., Ki ths 
lackson venture Arrow rtpreae nted 
itself as s busloeu eioen in running 
blngo halls on reservations. 

Frank, kowavar, says ha resigned 
u pruk9eni of Arrow MsnogetncM on 
Nov. 39. 1983, "before the accusa- 
tions Started." He ssyi he was wv- 
comfortable "whh the teem brought 
In by WiUiama," MClAcally, (he 
three pecplt he ssyi fw later discov- 
ered were convicted Woru f^om New 
Buland 

He produced a ietiar fVom the 
PloiidB ttlomey teprasemtng Williams 
which achoowledm thai Frank ra> 
signed on Nov. 29, I9t3, and thcre- 
fote sbouM not have bcee inckided u 
en InKlal plilnilff or • subsequent 
cross daf^ndsot. Initlslly. Frank, 
Williains and Arrow h^aoageraeat 
sued Awbry for Inttrfsrlng Mm their 
eontrsa, and Awbry counlaMued. 
The Iswyer, Srvce Randall of Fort 
Lauderdale, eonduded In the June 



81 








Uml 









nimmuum 



i 



«i ^ Iff 155111 

il --irhsls 

" - 5-3,. *ii * S = v t 



:"£•=<», „a«^ St |i sSafiSS 



.=1 



=^^^111 







82 

Mrs. RouKEMA. Representatives of the Ramapough group claim 
all official contact with Mr. Frank and his company have ceased 
since 1991. However, the same Ramapough officials recognize him 
as a close friend of the group, and they suggest that Mr. Frank will 
assume an official capacity with the group should the Bureau on 
Indian Affairs grant the Ramapoughs Federal acknowledgment. 

Clearly, Mr. Frank and his associates are not far removed from 
the Ramapough efforts and somebody is continuing to pay large 
sums of money for a Washington lobbyist to manage the 
Ramapoughs' petition that is currently before the BIA. 

It should be noted in fairness that not all of the Ramapough peo- 
ple supported the contract. For those who were in opposition, I 
deeply regret that the Ramapough people may be pawns in a high- 
ly organized effort to bring high-stakes gambling to northern New 
Jersey. 

Many local officials and citizens in the affected areas of my dis- 
trict have contacted my office in absolute alarm over their inability 
to take action against, or simply manage the arrival of, high-stakes 
gambling in their back yards not to mention all of the societal ills 
that may accompany it. 

Is it fair to ask the taxpayers to pay for increased law enforce- 
ment when they have no control over the gaming decisions? 

Mr. Chairman, I am sure that we can all agree, Federal acknowl- 
edgment as a Native American tribe is a serious matter. Native 
American recognition and benefits should only be granted to people 
with legitimate claim to it and to groups who have a general inter- 
est in preserving their culture and heritage, not for the purpose of 
exploiting the Indian Gaming Regulatory Act. 

Failure to control the growing number of spurious claims to fed- 
eral Native American status, brought about by the lure of big 
money from high-stakes gaming following approval of the Indian 
Gaming Regulatory Act, only denigrates the proud heritage of our 
Nation's first inhabitants. 

In making this distinction, I realize the Indian gaming experi- 
ences of an established, historically recognized, tribe, free from the 
coercion of unsavory interests seeking to make a fast dollar, may 
differ from those of an upstart group seeking Federal Native Amer- 
ican status. 

However, the subcommittee must realize that while tribal sov- 
ereignty may not significantly affect citizens' rights on a large res- 
ervation in a rural area, it absolutely tramples the rights of tax- 
paying citizens in crowded urban and suburban areas such as Ber- 
gen County, New Jersey. 

Whether the subcommittee wishes to recognize it or not, Indian 
gaming has become a big business. The gaming business, by its 
very nature, attracts speculators and investors with large sums of 
cash. By failing to sufficiently regulate Indian gaming and by ne- 
gating State and local autonomy regarding Indian gaming oper- 
ations, the Federal Government is inviting disreputable individuals 
or organizations to become involved in gaming operations. 

M^e no mistake, BIA acknowledgment of the Ramapoughs will 
result in Indian gaming in northern New Jersey and it will almost 
surely bring organized crime with it under these circumstances. 



83 

I believe the current example from my district in northern New 
Jersey raises many questions about the Federal Indian acknowl- 
edgment process, potential infiltration of organized crime in some 
Indian gaming operations, the lack of Federal oversight for Indian 
gaming operations, and the need for comprehensive reform of the 
Indian Gaming Regulatory Act. 

Accordingly, I believe Congressman Torricelli's legislation, H.R. 
2287, the Gaming Integrity and State Law Enforcement Act, de- 
serves full and fair consideration by this subcommittee and the 
House of Representatives. I am a co-sponsor. But, most of all, I be- 
lieve it is time for the Federal Government to allow the citizens of 
each State to reassert control over the proliferation of Indian gam- 
ing operations. 

Thank you, Mr. Chairman, for allowing me to state my observa- 
tions here and to state the concerns on behalf of the citizens of the 
Fifth Congressional District in New Jersey. 

[Prepared statement of Mrs. Roukema follows:] 



84 



TESTIMONY OF THE 

HONORABLE MARGE ROUKEMA 

BEFORE THE HOUSE NATURAL RESOURCES 

SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

OCTOBER 5, 1993 

I am grateful to Chairman Richardson for affording me this 
opportunity to share my testimony regarding Indian gaming with the 
Subcommittee on Native American Affairs here today. The proliferation of 
Indian gaming is a serious national issue, it is a serious issue in New 
Jersey, and it is a very serious issue in my congressional district. New 
Jersey's Fifth. 

Gaming, casino or otherwise, can produce serious consequences for the 
host community. It would take months to address the sociological, 
economic, moral, legal, and law enforcement problems associated with 
gambling. These issues are so serious to the citizens of New Jersey that 
when casino gaming was proposed for Atlantic City the question was 
subject to state -wide referendiim, and amendment of the state constitution 
was required. 

While I hope the subcommittee will address each of the aforementioned 
issues in subsequent hearings, I come before you today to discuss a 
situation presently pending in my congressional district, which has broad 
Indian gaming ramifications, and which raises some serious questions 
about illicit financing of some Indian gaming operations. 

A group of people residing in parts of two communities in my 
congressional district have been seeking federal recognition as a federal 
Indian tribe for nearly 20 years. When representatives of the so called, 
"Ramapough Mountain Indians" first approached me in the mid-1980s seeking 
a private bill recognizing the group as an Indian tribe, I was skeptical 
of the motives behind their drive for recognition. 

To this day, the leaders of the Ramapough community have maintained 
their sole reason for seeking federal acknowledgment is to improve their 
housing, education, and social welfare. However, from my very first 
discussions with the group almost ten years ago, it has been quite clear 
to me their sole interest in federal acknowledgment is to circumvent 
local, state, and federal jurisdiction for the purpose of establishing 
casino gambling in Bergen County. New Jersey . 

On November 20, 1985, representatives of the Ramapough people signed 
a 15 year contract with Rory Management Corporation of Elizabeth, New 
Jersey, to finance the group's federal lobbying efforts in return for a 
percentage of future gaming operation profits. At the time, the 
President of Rory Management Corporation was Mr. Robert Frank of Miami, 
Florida, who shortly after signing the Ramapough agreement resigned as 
President of a similar firm under allegations of criminal involvement 
with a California Indian tribe's gaming operations. 

Subsequent newspaper reports indicated Rory Management Corporation 



85 



was prepared to spend several million dollars in order to secure federal 
recognition, land, and gaining facilities for the Ramapough group. Frank 
was to receive 49 percent of the gaining operation profits. The 
Rcunapoughs were guaranteed $29 million over 15 years. 

A September 13, 1993, article in the New Jersey Law Journal . 
indicates Frank's ties to organized crime are well established. 
According to the Journal . Frank has "long-standing" ties to Mafia boss 
Anthony Accetturo, head of the New Jersey Luchese crime family, who was 
recently convicted by the state on charges of racketeering, extortion, 
conspiracy, and leading an organized crime family. Some of Accetturo 's 
criminal legacy reportedly involved Indian bingo operations. I will 
submit a copy of this article for the record, and remind the subcommittee 
that none of these accounts have been publicly challenged or refuted. 

Representatives of the Ramapough group claim all official contact 
with Frank and his company ceased in 1991. However, the same Ramapough 
officials recognize him as a close friend of the group, and they suggest 
that Frank will assume an official capacity with the group should the 
Bureau of Indian Affairs (BIA) grant the Ramapoughs federal 
acknowledgment. Clearly, Frank and his associates are not far removed 
from the Ramapough efforts, and somebody is continuing to pay large sums 
of money for a Washington lobbyist to manage the Ramapoughs' petition 
before the BIA. 

It should be noted, not all of the Ramapough people supported the 
contract with Frank. For those in opposition, I deeply regret that the 
Ramapough people may be pawns in a highly organized effort to bring high 
stakes gambling to northern New Jersey. 

Many local officials and citizens, in the affected areas of my 
district, have contacted my office in absolute alarm over their inability 
to take action against, or simply manage, the arrival of high stakes 
gambling in their back yards- -not to mention all of the societal ills 
which accompany it. Is it fair to ask the taxpayers to pay for increased 
law enforcement when they have no control over Indian gaming decisions? 

Mr. Chairman, I am sure we can all agree federal acknowledgment as a 
Native American Indian tribe is a serious matter. Native American 
recognition and benefits should only be granted to peoples with 
legitimate claim to it, and to groups that have a genuine interest in 
preserving their culture and heritage- - NOT for the purpose of exploiting 
the Indian Gaiming Regulatory Act. Failure to control the growing number 
of spurious claims to federal Native American status, brought about by 
the lure of big money from high stakes gaming following approval of the 
Indian Gaming Regulatory Act, only denigrates the proud heritage of our 
Nation's first inhabitants. 

In making this distinction, I realize the Indian gaming experiences 
of an established, historically recognized, Native American tribe, free 
from the coercion of unsavory interests seeking to make a fast dollar, 
may differ from those of an upstart group seeking federal Native American 
status. However, the subcommittee must realize that while tribal 
sovereignty may not significantly affect citizens' rights on a large 
reservation in a rural area, it absolutely tramples the rights of 
taxpaying citizens in crowded urban and suburban areas. 



86 



Whether the subcommittee wishes to recognize it or not, Indian gaming 
has become a big business. The gsuning industry, by its very nature, 
attracts speculators and investors with large sums of cash. By failing 
to sufficiently regulate Indian gaming, and by negating state and local 
autonomy regarding Indian gaming operations, the federal government is 
inviting disreputable individuals or organizations to become involved in 
Indian gaming operations. Make no mistake . BIA acknowledgement of the 
Ramapoughs will result in Indian gaming in northern New Jersey and it 
will, almost surely, bring organized crime with it! 

I believe the current example from my district in northern New Jersey 
raises many questions about the federal Indian acknowledgment process, 
potential infiltration of organized crime in some Indian gaining 
operations, the lack of federal oversight for Indian gaming operations, 
and the need for comprehensive reform of the Indian Gaming Regulatory 
Act. Accordingly, I believe Representative Robert G. Torricelli's 
legislation, H.R. 2287, the "Gaming Integrity and State Law Enforcement 
Act," deserves full and fair consideration by this subcommittee and the 
U.S. House of Representatives. But most of all, I believe it is time for 
the federal government to allow the citizens each state to reassert 
control over the proliferation of Indian gaming operations. 

Thank you, Mr. Chairman, for allowing me to share my feelings and the 
concerns of many citizens in New Jersey's Fifth Congressional District 
with you here today. 



87 



MARGE ROUKEMA 




(Tonfircss of the lanittd States 

liouse of HqirtstntatiDts 
IDashington, ©£ 20515-3005 



EDUCATION AND LABOR COMMITTEE 



SELECT COMMITTEE ON HUNGER 

October 6, 1993 

The Honorable Bill Richardson 

Chairman 

Subcommittee on Native American Affairs 

1522 Longworth House Office Building 

Washington, DC 20515-6205 

Dear Chairman Richardson: 

During the Subcommittee on Native American Affairs' October 5, 1993, hearing on Indian 
gaming, some members of the subcommittee and the first panel disputed my testimony regarding the 
eligibility of the Ramapough Mountain people to conduct Indian gaming on their "tnist" lands, should 
the group receive federal acknowledgement from the Secretary of the Interior. I would like to submit 
for the official record of the hearing a summary of the provisions of Section 20 of the Indian Gaming 
Regulatory Act (P.L. 100-497), which clarifies the concerns I raised as part of my official testimony. 

Section 20 of the Indian Gaming Regulatory Act (IGRA) generally prohibits gaming on lands 
placed in trust for an Indian tribe by the Secretaiy of the Interior following the date of enactment. 
However, under Subsection (b), the prohibition on Indian gaming does not app ly when the lands 
taken into trust by the Secretary of the Interior are part of "the initial reservation of an Indian 
tribe acknowledged by the Secretai^ under the Federal acknowledgment process." 

If the Bureau of Indian Affairs (BIA), and the Secretary of the Interior, officially acknowledge the 
Ramapough group, the lands taken into trust by the Secretary would be the tribe's "initial reservation," 
and therefore, gaming would be permissible under terms of the IGRA. I have verified my 
interpretation of this provision with the Director of the BIA Indian Gaining Management office, Hilda 
Manuel, and Ms. Maureen Murphy, Legislative Attorney, for the CRS American Law Division. 

I realize the provision of the IGRA to which I refer has never been tested in federal court. 
Nevertheless, I believe my concerns regarding Indian gaming in northern New Jersey are well founded 
based upon Section 20 of the IGRA. I hope the subcommittee will consider my thoughts, and I hope 
this letter clears up any misunderstanding regarding my testimony. 

I am looking forward to working with you and the entire Subcommittee on Native American 
Affairs in the near future. 

^incerely. 



ik 



Marge 'Roukema 
Member of Congress 
MSR:bb 



cc: The Honorable George Miller, Chairman 

Members of the Subcommittee on Native American Affairs 



88 

Mr. Richardson. I thank the gentlelady. 

Before some of my colleagues are recognized for questions, if any, 
I would like to aclmowledge the presence of the chairman of the 
fall committee, the gentleman from California, and I would like to 
recognize him for any opening statement or to be the first to ask 
questions of this panel. 

STATEMENT OF HON. GEORGE MILLER 

Mr. Miller. Thank you, Mr. Chairman. 

I will include my opening statement for the record and just want 
to thank you for holding these hearings and for our colleagues in 
the attendance of these hearings. 

I think it is terribly important that we have the ability on behalf 
of the public to sort out what are unfounded allegations and what 
are allegations that are being used in rather clever lobbying at- 
tempts against the establishment of Indian gaming and what is, in 
fact, fact with respect to the problems of organized crime or any 
other kind of criminal activity, organized or unorganized, within 
the Indian gaming industry. 

We have listened as a committee, and I think Senator McCain 
and Senator Inouye have listened as individuals and members of 
a committee, to this for 20 years. And, interestingly enough, it has 
all been more a matter of press speculation than any fact at all. 

We have had numerous hearings on this issue, and the fact re- 
mains that Indian gaming may be better situated than their com- 
petitors in non-Indian gaming in terms of their historical involve- 
ment and their current problems with criminal activity — again, or- 
ganized or unorganized. 

So I think this is an important hearing. I think Senator Inouye 
has pointed out that this is a difficult tightrope. We have to recog- 
nize the rights of these Indian sovereign nations. That rubs many 
people the wrong way, but it is a fact of American history that that 
is what these tribal lands are, and they, in fact, have certain^ rights 
under the laws and the treaties of this country, and it doesn't mat- 
ter whether or not you make application for Federal recognition 
today or you made application 50 years ago. 

That process puts you through the most rigorous examination of 
your anthropological backgrounds and your cultural heritage and 
your history beyond recognition. In fact, the argument of most peo- 
ple is that the process doesn't work because it is almost impossible 
for anybody to get through that process in today's world. 

So I think we have got to separate a number of different issues 
here. Some people don't like Indian sovereignty at all. It simply 
rubs them the wrong way that there are rights that are accorded 
to the Indian nations of this country. Other people don't like com- 
petition from what now has become successful gambling on Indian 
reservations. And other people just don't want to hear about this 
problem. 

Those are all interesting camps, but they have got to be sorted 
out in this process, and we cannot, because of the concerns that 
people have with Indian gaming from a competitive point of view 
or from a chauvinistic point of view, or from whatever point of 
view, we cannot then use that to trample on the rights of these In- 



89 

dian nations, and recognizing that these are most difficult ques- 
tions. 

Senator McCain's State has gone through a torturous process, 
but finally, when everybody got engaged and started working to- 
ward a solution, they worked toward a solution that has the agree- 
ment of both the State and the Indian nations and the Federal 
Government, and the fact is that that is happening throughout the 
country. It doesn't mean that they are all the same, it doesn't mean 
that there are not hard cases, because clearly there are. 

As Congresswoman Roukema points out, urban areas are tougher 
than rural areas, but the Indian nations and their treaties and our 
Government didn't ascribe to them a different set of rights because 
they would eventually end up a hundred years later in an urban 
area. But we have got to go through the process of sorting that out. 

I come from a State that has never legally allowed slot machines 
in its State, and we are terribly concerned that Indian gaming can 
drive the process of the State having to accept slot machines. 

So everybody has these concerns, but we have got to work them 
out, not based upon rumor and innuendo and wild accusations, we 
have got to work them out based upon the facts, and I hope that 
this hearing will proceed along that process, and I will wait my 
turn for questioning because other Members arrived ahead of me. 

Thank you, Mr. Chairman. 

[Prepared statement of Mr. Miller follows:] 



90 



8TATEKEMT 07 CHAZRMAH QEORGB MILLER 

OVERSIGHT INCIAH OAMIMa 

SUBCOMMITTEE OM NATIVE AMERICAH AP7XIRS 

OCTOBER S, 1993 



After much debate, research and compromise Congress enacted the 
Indian Gaming Regulatory Act in 1988. The purpose of the Act was 
to regulate gaming on Indian lands. The Act allowed that Class One 
games which consist of traditional Indian games be regulated by the 
tribe. Class Two games which consist of bingo, pull tabs, and 
lotto would be regulated by the tribe in conjunction with the 
Federal Indian Gaming Commission. Class Three games such as table 
games and slot machines would be regulated pursuant to a compact 
between the tribes and the states. 

Indian gaming is governmental gaming and as such, all proceeds are 
mandated by law to go back to the tribal government. On one 
reservation in Minnesota I had the opportunity to visit a new 
health care facility, a child care center with 24 hour supervision 
for children whose parents have to work a midnight shift, a new 
school, and a new, safe, water tower - all constructed with gaming 
proceeds. These dollars are turned immediately into "quality of 
life" opportunities for Indian children so that they cem have some 
of the benifits that non Indian children take for granted. 

I'm sure that what New Jersey and Nevada do for their citizens with 
the casino taxes they receive are very important to the residents 
of those states. New Jersey can be proud of the fact that senior 



91 



2 

citizens pay only $5.00 per prescription with the aloost 7% of 
gross casino proceeds that go to the State. Imagine how much good 
New Jersey and Nevada could do with 100% of proceeds from gaming! 
This is the case on Indian reservations where all the money serves 
to better the community. 

Indian geuning is incredibly small compared to privat* for-profit 
casinos and lotteries. When put up against all foms of legalized 
gaming, Indian gaming in 1992 is a mere 5% . That's all - 5t - 
with all the recent news articles and publicity against Indian 
gaming you'd think Indian geaing was <Q>out to topple Las Vegas and 
shove Atlantic City right into the oce<m! 

But that 5% is of vital importance to ailing Indian communities. 
Gaming is the first opportunity in ages for many Indian tribes to 
promote economic development and raise their standard of living. 
Not all tribes are interested in gaming, but for those that are it 
can mean the difference between their tribal members living in 
squalor with no chance of getting out and having the means to 
better feed, house, and educate their members. 

It is absurd and quite naive to think that an Indian tribe would 
risk all of this by engaging in business practices with someone of 
questionable background. Indian tribes have a vested interest in 
ensuring that Indiem qaminq is free from corruption and that the 
benefits of gaming reach the tribal members. 



92 



3 

The hearing this morning will focus on lav enforcement issues as 
they affect Indian gaming. To those who say that Indian geuning is 
not regulated - I say - LOOK AT THE FACTS. Indian gaming is 
regulated and supervised by FIVE authorities: 

1. FBI and the Justice Department have the responsibility to work 
with the National Indian Gaming Commission in conducting background 
checks on persons wishing to enter into business with a gaming 
tribe. The FBI also follows all leads regarding organized crime 
figures who might attempt to infiltrate Indian gaming. Violators 
are prosecuted by the U.S. Attorney in Federal Court. 

2. The National Indian Gaming Coonission which was authorized by 
the Indian Gaming Regulatory Act, is responsible for regulating all 
Class Two games as well as conducting background checks on persons 
wishing to contract with Indian tribes for Class Two or Three 
gaming activities. Management contracts are subject to intense 
scrutiny by the Commission prior to approval. 

3. States - Through Class Three compacts with Indi<m tribes, states 
are free to exercise as much or as little authority as is mutually 
agreed upon. 

4. Department of the Interior - The Secretary of the Interior must 
approve ALL gaming compacts between tribes and states. The BIA 



93 



4 

maintains a general trust responsibility to provide civil 
regulation and criminal law enforcement on reservations. 

5. Indian Tribes. Tribes are governments much ii]ce states and have 
the governmental responsibility to make sure that the games are 
properly regulated, operated cleanly, and fairly with the best 
return to the tribe. Indian tribes take these governmental 
responsibilities as seriously as any state. 

This Committee has dedicated Itself to finding out what aspects of 
the Indian Gaming Regulatory Act are working, what aspects are not 
working, and what needs to be adjusted. Chairman Richardson has 
conducted exhaustive research and previously held 4 oversight 
hearings on different aspects of gaming already this year. If 
something is broken and Indian tribes are vulnerable to unsavory 
characters then this Committee will fix it. Let me assure you - I 
will not sit idly by and watch organized crime Infiltrate Indian 
gaming as has been alleged by some. What this Committee will NOT 
do is foist gratuitous state jurisdiction upon tribes which have no 
merit just to say we did something. Nor will this Committee allow 
itself to b« used unquestioning as a sounding board for those whose 
only concern is the fear of competition. 

I look forward to hearing the testimony and from all the witnesses 
today and engaging in helpful dialogue. 



94 

Mr. Richardson. I thank the chairman. 

Do any of my colleagues on the minority side have any questions 
for this panel? 

The gentleman from Wyoming. 

Mr. Thomas. Just very briefly. 

Obviously, there are two points of view about State regulations. 

Senators, either of you, how do you deal with the notion that if 
a State allows gambling in their own State and has a regulatory 
body, do you think the tribal activities are adequately regulated, or 
why shouldn't the same regulations and controls apply? 

Senator INOUYE. Under the Indian Gaming Regulatory Act of 
1988, if a State does not criminally prohibit gaming activities, then 
a federally recognized tribe living on trust lands can enter into ne- 
gotiations and discussions with the State government with the aim 
of entering into a compact to establish games. A compact, obvi- 
ously, assumes that there would be negotiations. 

A State may not get everything it wants, the Indians may not 
get everything they want, and, obviously, in a compact, if I were 
the State governor or the attorney general, I would insist that 
these games should be regulated in a way similar to that carried 
out in the State. 

As to the gentlelad/s concern in New Jersey, if I may most re- 
spectfully suggest, the Gaming Act says that those lands that were 
in trust at the time of the enactment would be those lands that 
may be used for such gaming purposes. 

If the Indian people in New Jersey are still not recognized — and 
apparently they don't have any reservation — then they would seem 
to be outside the law. 

Secondly, assuming that they are recognized at some later date, 
if such lands are going to be placed in trust for the purpose of gam- 
ing and if those lands are located off the tribe's reservation, the 
Secretary must so approve, with the concurrence of the State gov- 
ernor, and so it would seem inconceivable that the State of New 
Jersey, listening to the desires of her constituents, would say, 
"Okay, Indians, go ahead and have gaming in this district." So I 
think the law is rather clear in this respect. 

The thing that is very difficult for most Americans to appreciate 
and understand, I think, was very clearly stated by Chairman Mil- 
ler, and that is the concept of sovereignty. There are many levels 
of sovereignty, as we are all aware. The states delegated certain 
powers and authorities to the Federal Grovemment. The States also 
delegated some authorities to the counties and cities. 

We have other sovereign entities in the United States; embassy 
grounds, for example. And Indians are sovereign, but in the area 
of gaming, it depends upon the arrangement they have made with 
the State Government and the Federal Government. 

Some sovereign Indian nations could arrest me if I went speeding 
through their jurisdiction. Some would call upon the State police to 
do that job. But the courts have consistently recognized that there 
is this sovereign aspect to Indian tribal governments, and this rec- 
ognition must be honored by the Congress of the United States un- 
less we are willing to, well, amend the Constitution of the United 
States, repeal all of the hundreds of laws that we have passed since 
our founding, and I can't see that happening. 



95 

But, as Senator McCain has pointed out, in all of these 72 com- 
pacts, we are still to hear from the FBI that there exists organized 
crime or criminal elements involved in such activities. So I take the 
word of the FBI, and I believe that they have done a good job. 

Senator McCain. Mr. Chairman, could I just add one additional 
comment? 

Mr. Richardson. Sure. 

Senator McCain. When we passed the Indian Gaming Regu- 
latory Act, the provisions of the Act called for the setting up an In- 
dian Gaming Commission, which is one of the later witnesses here 
this morning. That Indian Gaming Commission was given the au- 
thority to set regulations, enforcement, et cetera. 

Now, in all candor. Congressman Thomas, the last administra- 
tion was very slow in implementing this Act, in appointing mem- 
bers of the commission, and getting this whole system up to speed, 
and, because of that, I think that there were some problems, and 
some problems may still exist. 

But if you passed a law today that said that the Indian tribes 
who engage in Indian gaming operations are now under State regu- 
lation, it would be 24 hours, in my view, before that would be 
thrown out in court because of the constitutionality of it. 

The State does not have the right to regulate Indian tribes be- 
cause of the sovereign basis of our recognition of the Indian tribes, 
and I believe that if there is a problem with the Indian Gaming 
Commission in their enforcement and their regulation, I would look 
towards beefing them up, making sure they are doing their job, 
rather than taking an approach which I think would be viewed by 
the courts as unconstitutional. 

Mr. Thomas. Thank you. It is true, however, that some States, 
through their compact, the tribes have agreed to State regulation. 

Mr. Richardson. I thank my colleague. 

Let me remind my colleagues that we have five panels for this 
hearing, and I would hope that we could move ahead. 

The gentleman from Hawaii. 

Mr. Abercrombie. Just a couple of points I want to make certain 
that I understand. 

Mr. Hughes, on page 3 of your testimony at the bottom, you 
speak about protecting the integrity of any gaming operation and 
assuring that it does not put other State-regulated interests at a 
competitive disadvantage. You go on, on page 4, to talk about any 
gaming operation receiving the same level of regulatory scrutiny. 

Following up on what Senator McCain said, wouldn't this simply 
be a question of the kind of compact that was arrived at between 
the Indian nation and the regulatory agency under existing State 
law in whatever State it was in. New Jersey or otherwise? 

Mr. Hughes. Well, that would be the case if, in fact, there is a 
compact that is negotiated. But there is a process, as you know, 
that if the State and Native American interest cannot reach accom- 
modation, there is a process for the Commission to approve, after 
a mediation process, a compact so it went into effect. 

But what I am saying is that there is an overriding public inter- 
est in ensuring that we have effective regulation and enforcement 
in place. 

Mr. Abercrombie. I understand that. 



96 

Mr. Hughes. And that is an overriding interest. 

Mr. Abercrombie. I understand that. But am I correct then in 
saying that there is a process, which perhaps you may think may 
be improved in legislation here — nonetheless, there is a process 
whereby, in the compact negotiation, a conclusion can be reached 
as to how the regulations and the supervision will take place? 

Mr. Hughes. I can give you a scenario where that is not assured. 
For instance, if in fact there is disagreement, which there often is, 
between a State and the Indian tribes negotiating the compact and 
the mediator recommends — let's say the Indian tribe doesn't have 
in place in the enforcement section the same type of enforcement 
and regulatory mechanisms in that State or required by that State, 
if there is to be Indian gaming, you wouldn't have a guarantee that 
we would have that kind of enforcement. 

Mr. Abercrombie. Is it your suggestion then that that kind of 
assurance be built into any changes in the law? 

Mr. Hughes. That is the point I am making. That is an over- 
riding public concern. In New Jersey, as I indicated, W3 spend over 
$50 million in enforcement and regulation, and we still have a very 
difficult time at times trying to prevent money laundering activi- 
ties, for instance. 

Mr. Abercrombie. That brings me to the point here. It seems 
there is a bit of a straw figure being beaten on here. I am not so 
certain that the history of State-regulated gambling in this country 
has been unfettered by accusations of criminal activity, and to sud- 
denly bring it up with respect — or to bring it up with emphasis 
with respect to Indians, it seems to me, is a little bit condescend- 
ing, patronizing, or even racist in its connotation. 

So it seems to me that what you are suggesting here is a per- 
fectly sound and reasonable approach, that we examine the exist- 
ing law to see whether or not we can make some changes here that 
will allow the Indian nations the same opportunities to have super- 
vision and regulation, which will assure the tribal members that 
they are being protected, just as any other individual or group 
should be able to feel that they are being protected with respect to 
the attempts of organized criminals or any other group to try and 
subvert the intent of the law. 

Mr. Hughes. Precisely, that is the point that I make. I think 
that the enforcement and the supervisory regulatory aspects are 
deficient. I thought so in 1988 when I voted against it, because I 
did not feel that it would guarantee that we would put in place 
those types of protections, protections for the Indian tribes as well 
as the non-Indian citizens of a particular State. 

Mr. Abercrombie. Thank you. I think your testimony is very 
well taken. I think your approach is good. 

Finally then, Mr. Chairman, from what I see so far in looking at 
the rest of the testimony and some of the other information, it 
seems to me the principal worry here is, they are afraid for once 
the Indians are going to be able to compete. I thought competition 
was the big deal here. If that is the case, then it seems to me this 
is the Indians' version of NAFTA for gambling. Let them compete. 
If you are afraid to compete against the Indians and the tribal 
nations, that is your problem, not the tribes'. 
Mr. Richardson. The chair thanks the gentleman. 



97 

Mr. Abercrombie. Thank you. I appreciate the opportunity for 
some editorial comment, Mr. Chairman. 

Mr. Richardson. The chair recognizes the chairman of the com- 
mittee. 

Mr. Miller. Thank you. 

Hopefully, when this hearing is done, as I said, we will separate 
out a lot of different issues. I think that the notion is out there that 
this is a willy-nilly decision: A group of Indians get together, they 
get themselves recognized, and they get some investors, and they 
have a casino, and they are on their way. And nothing could be fur- 
ther from the truth. Either whether they go through the Federal 
recognition process and if they are successful there, if they have 
not been recognized to date, can they establish a land base? Can 
their land base, as Senator Inouye pointed out, be established for 
this purpose? And whether or not they have worked out an agree- 
ment with the governor and the Secretary of the Interior, which 
would be highly unlikely to be approved if they did not agree to 
that. 

Not only that, also what needs to be separated out here is really 
the rather incredible oversight of Indian gaming that exists in this 
country today by virtue of State compacts. If you look at your 
neighbor there, Connecticut, in the State agreement they have 
mandatory licensure for all of their employees, they have agreed to 
all the Federal regulatory oversight, they have mandatory regu- 
latory oversight during all hours of operation, on-site police pres- 
ence during all hours of operation, liquor control agents on site in 
all hours of operations, exhaustive State background checks of all 
casino executives, mandatory yearly audit by outside auditing 
firms, and then they have got to go through the Federal process, 
which is all the memorandums of understanding that I believe now 
exist between the FBI and the BIA for background checks; for the 
Indian commission's approval of these management contract, back- 
ground checks of all of the parties to that; and it goes on and on 
and on. Many of these, in fact, don't exist in New Jersey or Nevada 
where gambling is a much larger operation. 

So I think we have got to calm this thing down a bit and under- 
stand what the real process is for this process to take place and 
how extensively regulated it is, and that the Commission has the 
ability to assess these operations, and at any time it thinks that 
it does not have the adequate funding or oversight to go through 
this, it has the ability to assess this and to beef up that regulatory 
process. 

I want to thank my colleagues for their testimony. 

Senator McCain. Chairman Miller, could I make one additional 
comment to your statement which I think is important? 

Mr. Miller. Certainly, Senator. 

Senator McCain. In the very long and detailed and many times 
agonizing negotiations that the chairman and I have had with the 
governors and the attorneys general, the issue that we are hung up 
on has nothing to do with enforcement of gaming, it has nothing 
to do with the problem of infiltration of organized crime. The one 
remaining problem we face in our negotiations with the governors 
is the issue of scope of gaming. 



98 

So I would suggest, Mr. Chairman, that your words are correct 
in that the governors and the attorneys general do not raise this 
alarm that seems to have been raised here at this hearing and in 
other parts of America. 

Mr. Miller. Congressman Hughes, just for a second here, on 
that point, I think the concern of the governors here, you and I 
have spent an incredible number of hours discussing this issue and 
the concerns that would be raised in your State and your region, 
because I think, as Congresswoman Roukema points out, what hap- 
pens in this region with this population density is obviously of 
great concern. 

My understanding — and correct me if I am wrong — is that New 
Jersey has not really participated in the discussions that Senator 
Inouye referred to earlier, that they have opted out of those discus- 
sions. Is that correct? 

Mr. Hughes. I think that is essentially correct, except that I 
know that Bob Del Tuso, when he was attorney general, I believe, 
was privy to much of the discussions that were taking place. So 
they monitored; i don't think they took the lead. 

Mr. Miller. If you might check on that, because my understand- 
ing is that their position is no Indian gaming, and so they are not 
part of this. But I think that is not going to become the law of the 
land, and this process is going to remain in place, maybe with some 
technical changes and what-have-you, and this is being worked on. 

It would seem to us if this particular issue has not been raised 
to a great extent in those discussions and yet New Jersey feels that 
this is an important issue. New Jersey, it seems to me, should be 
participating in those discussions so that they can weigh in on 
that. 

I mean what we are trying to do is to get the attorneys general 
and the governors together to let's find out what concerns are real 
and what concerns aren't or a misreading or a misunderstanding 
of the laws or what the law doesn't address, and it would seem to 
me that New Jersey, that feels it has so much at stake, would do 
well to get involved in that process instead of coming back at the 
end and saying, "Well, we don't accept this," or, you know, "This 
has got to be redone." They should get into the front door here. 

Mr. Hughes. Well, I agree with that. But my understanding — 
and I will double-check it — is that our State has been privy to the 
negotiations. They have not taken a lead in those negotiations, but 
they certainly do have a vital interest in these issues, including 
scope of play, which is a problem because of vague definitions with- 
in the Act which we are going to have to address, in my judgment. 

And the negotiating process, my State obviously has to have a 
decided interest in that. And in the regulatory side, obviously they 
have a decided interest, as I have indicated, because of the poten- 
tial economic disadvantage it would put States like New Jersey if, 
in fact, we don't play by the same level playing field. 

Mr. Miller. Well, if you would check that out, I would appre- 
ciate it. 

Mr. Chairman, finally, let me just say that I am told that in the 
entire history of the recognition process only nine out of 120 tribes 
that have sought recognition have ever been recognized under rec- 
ognition process, and, I think in the one that we just did legisla- 



99 

tively, conditions were placed upon the recognition for the purposes 
of gaming which I think limited it only to bingo, and that was by 
agreement of the tribe and the State in South Carolina that that 
would be the condition of the recognition. So this is not a free and 
open process by which you just show up with a casino. 

Mrs. ROUKEMA. Mr. Chairman, may I interject something here? 
There has been reference, at least two or three references, to our 
particular situation, and now Mr. Miller has again referred to the 
recognition, the conditions under which recognition are given. 

I think the point is that there is no clarity under the law as to 
what can be permitted once a tribe achieves recognition. There is 
no reason to be hiring high-paid, multi-million-dollar lobbyists in 
Washington if this tribe simply wants local recognition for no other 
purpose but to automatically qualify for casino gambling. Now that 
certainly is the legal understanding, or legal interpretation that we 
have had now. 

Mr. Miller. They can't get recognition that way. They can get 
recognition 

Mrs. RouKEMA. No, I am not talking about how they get recogni- 
tion but once recognized 

Mr. Miller. That is right. Once you are an Indian nation, you 
are an Indian nation, and you have all the rights and responsibil- 
ities of that nation. 

Mrs. Roukema. Exactly, and they would then qualify 

Mr. Miller. But if they, in fact, can provide adl of the evidence 
as to the recognition 

Mrs. Roukema. Oh, exactly. 

Mr. Miller. You wouldn't say that they are not entitled to be 
recognized? 

Mrs. Roukema. No, I am not saying that, not at all. But I am 
saying with reference to a statement that was made earlier that no 
tribe who would be recognized after the law could then retro- 
actively gain the right to Indian gambling. There was a reference 
made here earlier to that question, and I am saying that this 
Ramapough group, if — once recognized, will automatically qualify. 

Mr. Miller. That is their theory. 

Mrs. Roukema. Pardon me? 

Mr. Miller. That is their theory. I don't know if that is factual. 
I appreciate what they are sajdng, 

Mrs. Roukema. Yes. 

May I make another point, because I think it is not specific to 
the question of criminal activity, but it is specific to the question 
of under what circumstances there should be recognition and how 
you qualify for gambling. 

There is another situation in my district where there is a group 
that wants to invite a Delaware tribe from Oklahoma to relocate 
in Sussex County, New Jersey, and then they will qualify for In- 
dian gambling. 

Mr. Miller. I hope their attorneys are earning a lot of money, 
because they have got an impossible case. 

Mrs. Roukema. I hope so, too. But you can see how things have 
gotten pretty far out of hand. 

Mr. Abercrombie. Mr. Chairman. 



100 

Mr. Richardson. The chair recognizes the gentleman from Ha- 
waii for one minute. 

Mr. Abercrombie. Less than one minute. 

Mr. Chairman, before we go any further, I don't know if it is a 
point of order, but allegations are flying back and forth here about 
what the intentions are of a group called the Ramapough, and as 
far as I can see on the witness list they don't appear here, and I 
would just request that before we accept as gospel what the inten- 
tions of any particular individual or group are, they at least be 
given an opportunity to state for themselves what their intentions 
are or are not now. 

If there are a group of people, a community, now engaged in the 
process of attempting to achieve tribal status through the processes 
that we have established, that is one thing, but, from my point of 
view, I don't accept the idea that someone else can speak for them 
as to what their intentions are. 

Mr. Richardson. Let me just state that the record will be open 
for two weeks in the hearing. 

Let me thank your distinguished witnesses for being so patient 
and helpful. Let me mention, too, that all of you are welcome to 
join the panel as we move ahead in this hearing. I want thank the 
distinguished witnesses. 

PANEL CONSISTING OF JIM E. MOODY, SECTION CHIEF, ORGA- 
NIZED CRIME/DRUG OPERATIONS, CRIMINAL INVESTIGA- 
TIVE DIVISION, FEDERAL BUREAU OF INVESTIGATION; LAU- 
RENCE A. URGENSON, ACTING DEPUTY ASSISTANT ATTOR- 
NEY GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF 
JUSTICE; DAVID B. PALMER, DEPUTY ASSISTANT COMMIS- 
SIONER FOR CRIMINAL INVESTIGATION, INTERNAL REVE- 
NUE SERVICE, ACCOMPANIED BY PETER G. DJINIS, DIREC- 
TOR, OFFICE OF FINANCIAL MANAGEMENT, DEPARTMENT 
OF THE TREASURY 

Mr. Richardson. Now we move on to panel number two: Mr. Jim 
E. Moody, section chief. Organized Crime/Drug Operations, from 
the FBI; Mr. Laurence Urgenson, acting deputy assistant attorney 
general. Criminal Division, Department of Justice; David Palmer, 
deputy assistant commissioner for criminal investigation, IRS, ac- 
companied by Mr. John Monaco, assistant commissioner for exam- 
ination, IRS; and Mr. Peter Djinis, director, Office of Financial 
Management, U.S. Department of the Treasury. 

I would ask that the hearing come to some reasonable order and 
that we move ahead with our first panel. 

Gentlemen, let me welcome you to the subcommittee. As is the 
custom, your full statements will be submitted in the record, and 
we ask that you summarize your statement. The little light will be 
exercised. When you see the yellow light, it means that your five 
minutes are fast approaching. When you see the red light, we ask 
you to wrap up. So, again, thank you for coming. 

We will start first with Mr. Jim Moody. 

Let me also mention that our distinguished colleague from New 
Jersey, Bob Torricelli, has joined the panel, and he will be intro- 
ducing our next witness. 



101 

I wonder if the gentleman from New Jersey wished to say any- 
thing at this time. 

Mr. TORRICELLI. Mr. Chairman, only to thank you for holding 
these hearings. 

As 49 governors have requested and the President of the United 
States has commented upon, there is a responsibility in this Con- 
gress to deal with the complexities confronted by Indian gaming. 
Your hearing today is an important beginning in that process, 
which I hope will take us to rectifying whatever problems we find 
during the process of these discussions. 

In any case, I thank you for having these hearings and for allow- 
ing me to participate. 

Mr. Richardson. I thank the gentleman. 

Mr. Moody, please proceed. 

STATEMENT OF JIM E. MOODY 

Mr. Moody. Good morning, Mr. Chairman. 

My name is Jim Moody. I am the section chief for the Organized 
Crime/Drug Operation Section for the Federal Bureau of Investiga- 
tion. As such, my section is responsible for the FBI investigations 
of organized criminal enterprises such as the American La Cosa 
Nostra, Asian, and European organized crime groups. This section 
is also responsible for Italian organized crime groups such as the 
Sicilian Mafia Camorra and 'Ndrangheta. 

I am pleased to appear here this morning to assist you and to 
discuss some of the law enforcement issues relative to the Indian 
Gaming Regulatory Act. 

Organized crime is in the business of making money. They are 
motivated by greed and are consistently and constantly seeking 
ways to generate both legal and illegal monies from legal and ille- 
gal means. Since the gaming industry is a cash-intensive industry, 
those factors of cash and the need to generate legal and illegal 
money, coupled with the dynamics of the industry, makes it very 
attractive for organized crime to look at any t3T)e of gaming activ- 
ity. 

We have seen organized crime's involvement in gaming range 
from many activities associated with the industry. We have also 
heard many more rumors and innuendo than we have been able to 
prove over the years. 

Most of the discussions of organized crime in the gaming indus- 
try seem to center on skimming. Now we define skimming as the 
generation of illegal income from a casino generally by the owners 
or those managing the casino. Skimming is completely different 
than embezzlement which generally involves the employees steal- 
ing monies from their employer. 

There have been cases where organized crime has been involved 
in embezzlement of money from the casinos. There have also been 
cases where organized crime has sponsored teams of cheats that 
defraud the casinos. But we look at organized crime's infiltration 
of the casino in skimming as the most damaging form of organized 
crime. This occurs when they are able to control the casino. 

Skimming has traditionally been accomplished through the use 
of a strawman. A strawman is a person controlled by organized 
crime who can undergo the scrutiny of a law enforcement back- 



102 

ground check and obtain a gaming license. There have been several 
strawman-type cases prosecuted in the United States which re- 
sulted in convictions of significant organized crime figures. 

The strawman technique was used by organized crime on the 
Rincon Indian Reservation. This is the only FBI case wherein orga- 
nized crime members have been convicted for attempting to control 
an Indian gaming establishment. 

The FBI has learned over the years that strong regulation of the 
gaming industry and of its supporting industries is the best and 
most effective means of keeping organized crime out of the indus- 
try. Gaming regulations and enforcement are important for protect- 
ing Indian gaming because once organized crime gains control or 
gains a foothold, it becomes very, very difficult and extremely man- 
power intensive to remove organized crime from the casino. 

As legalized gambling spreads throughout the United States, we 
expect that States with poor regulations and controls may experi- 
ence an organized crime influx. We look at the primary responsibil- 
ity for the gaming regulation and enforcement as resting with the 
State or with the National Indian Gaming Commission. The FBI 
becomes involved when organized crime is infiltrating a gaming op- 
eration. It is either ongoing or after the fact quite often before we 
may hear about it. 

Now Indian gaming poses a unique challenge to the National In- 
dian Gaming Commission. The FBI has investigative responsibil- 
ities on some of the reservations and we have investigative re- 
sources fully committed to these Indian reservations, as we have 
investigative resources fully committed to organized crime inves- 
tigations. 

The FBI, however, is not equipped to assume a regulatory or en- 
forcement role in Indian gaming. We are willing to provide support 
to law enforcement and regulatory agencies that will have respon- 
sibility for monitoring Indian gaming, and, due to Federal laws and 
procedures, it is much easier for us to cooperate with regulatory 
agencies that do have law enforcement authorities than those that 
don't. Consequently, we would recommend that regulatory agencies 
have such law enforcement authority. 

We will, however, continue to monitor the activities of organized 
crime, and if we discover organized crime involvement in Indian 
gaming, we will take appropriate action, as we have done in the 
past. 

The gaming industry is a relatively closed industry. Dishonest 
employees will be quickly identified and dismissed. Honest man- 
agement will identify problem employees long before law enforce- 
ment. The vast majority of gaming operations are run as legitimate 
legal enterprises. With strict regulation, strong internal control, 
strong enforcement, and constant vigilance, organized crime's infil- 
tration can be impeded. 

This concludes my shortened version of the statement, and I will 
be happy tb answer any questions. 

[Prepared statement of Mr. Moody follows:] 



103 

STATEMEirr OF JIM £. MOODY 

SECTION CHIEF 

ORGANIZED CEUME/DROG OPERATIONS 

CRIMINAL INVESTIGATIVE DIVISION 

FEDERAL BDREAU OF INVESTIGATION 

BEFORE THE 

SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

COMMITTEE ON NATURAL RESOURCES 

UNITED STATES HOUSE OF REPRESENTATIVES 

WASHINGTON, D.C. 

OCTOBER 5, 1993 



104 

GOOD MORNING, MR. CHAIRMAN, SUBCOMMITTEE 
MEMBERS, AND STAFF. MY NAME IS JIM MOODY AND I AM THE 
SECTION CHIEF OF THE ORGANIZED CRIME/DRUG OPERATIONS 
SECTION #2 OF THE FEDERAL BUREAU OF INVESTIGATION. 

MY SECTION IS RESPONSIBLE FOR THE FBI 
INVESTIGATIONS OF ORGANIZED CRIMINAL ENTERPRISES SUCH 
AS THE LA COSA NOSTRA, ASIAN AND EUROPEAN ORGANIZED 
CRIME GROUPS. THE SECTION IS ALSO RESPONSIBLE FOR 
INVESTIGATIONS OF ITALL\N ORGANIZED CRIME GROUPS SUCH 
AS THE SICILL\N MAFIA, 'NDRANGHETA AND CAMORRA. 

I AM PLEASED TO APPEAR HERE THIS MORNING TO 
ASSIST YOU IN YOUR OVERSIGHT FUNCTION AND TO DISCUSS 
SOME OF THE LAW ENFORCEMENT ISSUES RELATIVE TO THE 
INDIAN GAMING REGULATORY ACT. 

BEFORE WE CAN SPECIFICALLY ADDRESS ORGANIZED 
CRIME'S INTEREST IN INDIAN GAMING, I THINK IT IS IMPORTANT 
TO HAVE AN UNDERSTANDING OF ORGANIZED CRIME. 
ORGANIZED CRIME IS IN THE BUSINESS OF MAKING MONEY. 



105 

THEY ARE MOTIVATED BY GREED AND ARE CONSTANTLY 
SEEKING WAYS TO GENERATE WEALTH AND POWER THROUGH 
BOTH LEGAL AND ILLEGAL MEANS. ORGANIZED CRIME HAS, 
AND WILL CONTINUE TO USE VIOLENCE, INTIMIDATION, FEAR 
AND CORRUPTION TO OBTAIN ITS GOALS. THEY CORRUPT 
INDIVIDUALS, POLITICAL SYSTEMS AND INSTITUTIONS. 

THE GAMING INDUSTRY IS A CASH INTENSIVE 
INDUSTRY. THE VAST SUMS OF CASH THAT ARE HANDLED BY 
CASINOS RIVAL THAT OF SOME BANKS. THESE FACTORS, 
COUPLED WITH ORGANIZED CRIME'S HISTORICAL INVOLVEMENT 
IN ILLEGAL GAMBLING, MAKE ANY GAMING ACTIVITY 
ATTRACTIVE TO ORGANIZED CRIME. THEY WILL ATTEMPT TO 
INFILTRATE ANY OPERATION OR INDUSTRY, NOT JUST GAMING, 
THAT THEY BELIEVE IS VULNERABLE. 

HISTORICALLY, WE HAVE SEEN ORGANIZED CRIME'S 
INVOLVEMENT IN GAMING RANGE FROM CONTROLLING LEGAL 
BINGO PARLORS AND "LAS VEGAS NIGHTS" FOR CHARITIES, TO 
ILLEGAL NUMBERS OPERATIONS AND INFILTRATING MAJOR 
CASINOS AND THEY ARE ALLEGED TO EVEN OWN OFFSHORE 



106 

CASINOS. ORGANIZED CFxIME HAS ALSO GAINED INFLUENCE BY 
CONTROLLING SOME OF THE ANCILLARY SERVICE INDUSTRIES 
AND LABOR UNIONS THAT SERVE CASINOS. 

MOST DISCUSSIONS OF ORGANIZED CRIME 
INFILTRATION IN THE GAMING INDUSTRY SEEM TO CENTER ON 
THE ISSUE OF SKIMMING. WE DEFINE SKIMMING AS 
GENERATING ILLEGAL INCOME FROM A CASINO BY OWNERS, BY 
A CONTROL GROUP OF A CORPORATION, BY CASINO MANAGERS, 
OR BY THE OWNERS ON BEHALF OF HIDDEN INTERESTS. 
SKIMMING IS DIFFERENT THAN EMBEZZLEMENT, WHICH 
INVOLVES EMPLOYEES STEALING MONEY FROM THEIR 
EMPLOYER, OR FROM THEFT, WHICH IS AN OUTSIDE PERSON OR 
GROUP STEALING FROM THE CASINO WITHOUT THE 
KNOWLEDGE OF THE MANAGEMENT. ORGANIZED CRIME HAS 
USED ALL OF THESE METHODS TO GET MONEY ILLEGALLY 
FROM CASDSIOS. 

THERE HAVE BEEN CASES WHERE ORGANIZED CRIME 
MEMBERS AND ASSOCIATES HAVE BEEN INVOLVED IN THE 
EMBEZZLEMENT OF MONEY FROM CASINOS BY WORKING IN 



107 

CONCERT WITH EMPLOYEES TO CHEAT AT CASINO GAMES. 
THERE HAVE ALSO BEEN ORGANIZED CRIME SPONSORED 
TEAMS OF CHEATS THAT HAVE GONE INTO CASINOS TO 
DEFRAUD THE CASINOS WITHOUT THE INVOLVEMENT OF 
CASINO EMPLOYEES. STRONG INTERNAL CONTROLS BY THE 
CASINOS AIDED IN THEIR APPREHENSION. 

THE MOST DANGEROUS AND POTENTL\LLY MOST 
DAMAGING FORM OF ORGANIZED CRIME INFILTRATION OF 
GAMING OCCURS WHEN THEY ARE ABLE TO CONTROL A CASINO 
AND/OR ITS SUPPORTING SERVICES. WHOLESALE SKIMMING 
FROM A CASINO CANNOT OCCUR WITHOUT MANAGEMENT 
INVOLVEMENT. 

SKIMMING HAS TRADITIONALLY BEEN ACCOMPLISHED 
THROUGH THE USE OF A "STRAWMAN". A "STRAWMAN'' IS A 
PERSON CONTROLLED BY ORGANIZED CRIME WHO CAN 
UNDERGO THE SCRUTINY OF A LAW ENFORCEMENT 
BACKGROUND CHECK AND OBTAIN A GAMING UCENSE. 

THERE HAVE BEEN SEVERAL "STRAWMAN "-TYPE 



108 

CASES PROSECUTED THROUGHOUT THE 1970S AND 1980S. THESE 
CASES HAVE RESULTED IN THE CONVICTIONS OF SIGNIFICANT 
ORGANIZED CRIME FIGURES AND HAVE DEMONSTRATED THAT 
WITHOUT MANAGEMENT'S SUPPORT, LARGE SCALE, 
SYSTEMATIC SKIMMING AND MONEY LAUNDERING CANNOT 
OCCUR WITHIN A CASINO. 

THE "STRAWMAN" TECHNIQUE WAS EVIDENT IN THE 
ATTEMPT BY THE CHICAGO ORGANIZED CRIME FAMILY TO 
OBTAIN A HIDDEN OWNERSHIP OR CONTROL OF THE GAMING 
OPERATIONS ON THE RINCON INDIAN RESERVATION NEAR 
SAN DIEGO, CALIFORNL\. THIS IS THE ONLY FBI CASE WHEREIN 
ORGANIZED CRIME MEMBERS WERE CONVICTED FOR 
ATTEMPTING TO CONTROL AN INDL\N GAMING 
ESTABLISHMENT. THIS CASE DEMONSTRATED THE IMPORTANCE 
OF INTELLIGENCE AND VIGILANCE IN THE FIGHT TO KEEP 
ORGANIZED CRIME OUT OF INDL^N GAMING. 

FROM OUR EXPERIENCE, THE FBI HAS LEARNED THAT 
STRONG REGULATION OF THE GAMING INDUSTRY, AS A WHOLE, 
AND OF ITS SUPPORTING INDUSTRIES IS THE BEST AND MOST 



109 

EFFECTIVE MEANS OF KEEPING ORGANIZED CRIME OUT OF THE 
INDUSTRY. MUCH CAN BE LEARNED FROM THE GAMING 
REGULATIONS THAT REGULATE THE NEVADA AND NEW JERSEY 
GAMING INDUSTRIES. GAMING REGULATIONS AND 
ENFORCEMENT, SIMILAR TO WHAT IS IN PLACE IN NEVADA AND 
NEW JERSEY, ARE IMPORTANT FOR PROTECTING INDIAN 
GAMING. ONCE ORGANIZED CRIME GAINS A FOOTHOLD, IT 
BECOMES VERY DIFFICULT AND EXTREMELY MANPOWER 
ESfTENSIVE TO REMOVE THEM. 

AS LEGALIZED GAMING SPREADS THROUGHOUT THE 
UNITED STATES, WE ARE SEEING THAT THOSE STATES WITH 
STRONG REGULATIONS AND ENFORCEMENT ARE NOT 
EXPERIENCING AN INFLUX OF ORGANIZED CRIME ACTIVITY. 
HOWEVER, WE EXPECT THAT STATES WITH POOR REGULATIONS 
AND CONTROLS MAY EXPERIENCE SUCH AN INFLUX. 

PRIMARY RESPONSIBILITY FOR GAMING REGULATION 
AND ENFORCEMENT RESTS WITH THE STATE OR WITH THE 
NATIONAL INDL\N GAMING COMMISSION. THE FBI 
TRADITIONALLY BECOMES INVOLVED WHEN ORGANIZED CRIME 



no 

IS ILLEGALLY INFILTRATING A GAMING OPERATION OR WHEN 
THE CRIMINAL ACTIVITY INVOLVES MORE THAN ONE STATE. IN 
SOME INSTANCES OF ORGANIZED CRIME INFILTRATION, THE USE 
OF FEDERAL STATUTES, SUCH AS RICO OR FEDERAL 
ELECTRONIC SURVEILLANCE STATUTES ARE ESSENTL\L FOR 
SUCCESSFUL INVESTIGATION AND PROSECUTION. 

INDIAN GAMING POSES A UNIQUE CHALLENGE TO 
THE NATIONAL INDIAN GAMING COMMISSION. THE FBI HAS 
INVESTIGATIVE RESPONSIBILITIES ON SOME RESERVATIONS AND 
HAS TRADITIONALLY INVESTIGATED FEDERAL GAMBLING 
VIOLATIONS. IN THESE TIMES OF BUDGETARY RESTRAINT, THE 
INVESTIGATIVE RESOURCES OF THE FBI ARE FULLY 
COMMITTED AND THE FBI IS NOT EQUIPPED TO ASSUME A 
REGULATORY OR ENFORCEMENT ROLE IN INDL\N GAMING. 
THE FBI IS WILLING TO PROVIDE SUPPORT TO LAW 
ENFORCEMENT AND REGULATORY AGENCIES THAT WILL 
HAVE THE RESPONSIBILITY OF MONITORING INDL\N GAMING. 
DUE TO FEDERAL LAWS AND PROCEDURES, IT IS MUCH EASIER 
FOR US TO COOPERATE WITH REGULATORY AGENCIES THAT 



Ill 

HAVE LAW ENFORCEMENT AUTHORITY THAN THOSE THAT 
DON'T. CONSEQUENTLY, WE WOULD RECOMMEND 
THAT REGULATORY AGENCIES HAVE SUCH AUTHORITY. WE 
WILL, HOWEVER, CONTINUE TO MONITOR THE ACTIVITIES OF 
ORGANIZED CRIME AND, IF WE DISCOVER ORGANIZED CRIME 
INVOLVEMENT IN INDL\N GAMING, THE FBI WILL TAKE 
APPROPRIATE ACTION, AS WE HAVE DONE IN THE PAST. 

THE GAMING INDUSTRY IS A RELATIVELY CLOSED 
INDUSTRY. THE INDIVIDUALS THAT MANAGE AND OPERATE 
CASINOS WILL QUICKLY RECOGNIZE EMBEZZLEMENT OR THEFT 
IN THEIR OPERATIONS. DISHONEST EMPLOYEES WILL BE 
QUICKLY IDENTIFIED AND DISMISSED IN CASINOS THAT ARE 
SUBJECTED TO STRONG REGULATION AND ENFORCEMENT. 
HONEST MANAGEMENT WILL IDENTIFY PROBLEM EMPLOYEES 
LONG BEFORE LAW ENFORCEMENT. THE VAST MAJORITY 
OF GAMING OPERATIONS ARE RUN AS LEGITIMATE LEGAL 
BUSINESSES. THE GAMING INDUSTRY IS VERY IMAGE 
CONSCIOUS, PROFIT DRIVEN, AND HAS A VESTED INTEREST IN 
ENSURING THAT THE CRIMINAL ELEMENT IS KEPT OUT OF THE 



112 

INDUSTRY. WITH STRICT REGULATION, STRONG INTERNAL 
CONTROL, STRONG ENFORCEMENT AND CONSTANT VIGILANCE, 
ORGANIZED CRIMES INFILTRATION CAN BE IMPEDED. 

TfflS CONCLUDES MY OPENING STATEMENT AND I 
WILL BE HAPPY TO ANSWER ANY QUESTIONS. 



113 

Mr. Richardson. I thank the gentleman. 

The chair recognizes Mr. Laurence Urgenson, acting deputy as- 
sistant attorney general, Criminal Division, Department of Justice, 
and I would ask the gentleman from Hawaii to temporarily chair. 

STATEMENT OF LAURENCE A. URGENSON 

Mr. Urgenson. Mr. Chairman, members of the subcommittee, 
good morning. My name is Larry Urgenson. I am an acting deputy 
assistant attorney general in the Criminal Division of the Depart- 
ment of Justice. I am happy to be here today to testify concerning 
the important issue of Indian gaming. 

As you well know, for several years Congress labored to develop 
legislation that would accommodate the conflicting interests of law 
enforcement agencies, opponents of Indian gaming, champions of 
Tribal sovereignty, and those who saw gaming as a solution to the 
enormous economic problems of the Native American tribes. The 
result of that labor was the enactment of the Indian Gaming Regu- 
latory Act in October 1988. 

The congressional findings and policies explicitly set forth in the 
Act and implicit in its regulatory scheme are strongly supportive 
of the Native American tribes' need and right to conduct gaming 
while recognizing the need for regulation and the prevention of in- 
filtration by organized crime. 

The Department of Justice is dedicated to responding promptly 
to serious and flagrant noncompliance with Indian gaming laws. 
The Department will utilize its enforcement weapons against oper- 
ations conducted without tribal sanctions or where there is evi- 
dence of organized crime infiltration, skimming, or other forms of 
crime. 

Although we have successfully prosecuted certain instances of 
criminal activity in connection with gaming on Indian lands, I em- 
phasize that the belief held by some that Indian gaming operations 
are rife with serious criminality is not established by the data cur- 
rently available. 

The Department of Justice believes that to date there has not 
been widespread or successful effort by organized crime to infiltrate 
Indian gaming operations. For several years, the FBI has focused 
its efforts on monitoring these organizations and their associates so 
that they will be apprehended if they engage in illegal activity or 
attempt to infiltrate legitimate enterprises. Because monitoring 
these families is one of the FBI's highest priorities, I am confident 
that any evidence of Federal crime that may be developed will be 
fully investigated and referred to the United States Attorneys for 
appropriate action. 

Similarly, there has been little evidence of illegal activity com- 
niitted by criminal elements not associated with the major orga- 
nized crime families. Again, on those occasions when such allega- 
tions have been brought to our attention, they have been inves- 
tigated, and when sufficient evidence was developed for conviction, 
\ve have not hesitated to prosecute. Two examples are our prosecu- 
tion of a Native American official who skimmed the receipts of a 
tribe's bingo hall and the prosecution of persons who looted and 
burned a New York casino. There are a handful of investigations 
into allegations of similar misconduct now being conducted. 



114 

Finally, there are instances of illegal gaming in Indian country. 
These instances include regulatory violations stemming from gam- 
ing conducted by tribes on Indian lands and gaming that is con- 
ducted on Indian lands but not by Native American tribes. 

Gaming that is not operated under tribal auspices cannot be 
legal under any circumstances. I believe that all operations in this 
category have been shut down. 

However, even certain gaming activity conducted under tribal 
auspices may be illegal. The Indian Gaming Regulatory Act estab- 
lished the regulatory framework for this gaming and provides dif- 
ferent requirements for games separated into three classes. Class 
I, social gaming, is solely regulated by the tribes. Class II gaming 
requires administrative approval of management contracts and 
tribal gaming ordinances. The National Indian Gaming Commis- 
sion has oversight responsibilities with respect to the Class II re- 
quirements. 

The principal category of gaming characterized as illegal consists 
of those games which arguably, but not clearly, are Class III games 
and which are conducted without a compact negotiated between the 
State and tribe as required under the Gaming Act. 

In some cases, the gaming classification is in dispute because of 
the tribe's claim that the game properly falls in Class II and re- 
quires no compact. 

The final gaming definitions which have been issued by the Com- 
mission should give greater certainty to the gaming classification. 
Nevertheless, some classification issues remain in dispute. 

There are many possible sources for confusion and frustration for 
law enforcement when Class III gaming is at issue. In some in- 
stances of clear, admitted Class III gaming, a State may change its 
law to permit previously forbidden games, thus obligating the 
States to enter into compact negotiations they were once able to 
refuse. A tribe may be conducting Class III gaming without a com- 
pact, but the State and tribe may be in the course of negotiations 
that may result in a compact that allows the games. A State may 
have negotiated the inclusion of certain games in a compact but 
has declined to include certain other games or has placed limits on 
them. The prosecutor is then uncertain whether the tribe will dis- 
continue the games or file suit under the Gaming Act. 

A tribe may be conducting gaming without a compact but has 
filed suit against the State because the compact negotiation process 
has reached an impasse. A related complication is that some States 
have successfully blocked these tribal suits by invoking the immu- 
nities of the 10th and 11th amendments. 

Under these circumstances, the United States Attorneys are 
faced with difficult decisions. It can be hard to justify the expendi- 
ture of resources for those alleged violations which are in the proc- 
ess of resolution and which, under the Gaming Act, may eventually 
be validated by actions of the Commission, the State, or the courts. 
In sum, the current record does not support the argument that 
there is widespread infiltration of organized crime into gaming on 
Indian reservations. However, there is gaming of disputable legal- 
ity, some of which will eventually come into compliance with the 
Gaming Act after negotiations between the tribe and the State. 



115 

If the tribes and States continue to negotiate in good faith under 
the published regulations of the Commission, there will be far 
fewer regulatory violations. We will continue to be diligent in this 
area. The Department has repeatedly warned that the flow of cur- 
rency through Indian casinos requires vigilance to avert illegal ac- 
tivities such as embezzlement, fraud, money laundering, as well as 
to protect the tribes' interests. Strict compliance with the scheme 
of regulation ordained by Congress is of utmost importance. 

Mr. Chairman, this concludes my statement. I will be happy to 
answer any questions that the subcommittee may have. 

[Prepared statement of Mr. Urgenson follows:] 



116 




IBtpnxtmtnt of Sns^titt 



STATEMENT 



OF 



LAURENCE A. URGENSON 

ACTING DEPUTY ASSIST/U^T ATTORNEY GENERAL 

CRIMINAL DIVISION 

BEFORE THE 

SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

COMMITTEE ON NATURAL RESOURCES 
UNITED STATES HOUSE OF REPRESENTATIVES 

CONCERNING 

THE OVERSIGHT OF THE INDIAN GAMING REGULATORY ACT 

ON 

OCTOBER 5, 1993 



117 



Mr. Chairman and Members of the Subcommittee — 

Good Morning. My name is Larry Urgenson. I am an Acting 
Deputy Assistant Attorney General in the Criminal Division of the 
Department of Justice. 

I am happy to be here today to testify concerning the 
important issue of Indian gaming. As the agency responsible for 
the enforcement of criminal violations of federal gambling laws, 
and in particular, the Indian Gaming Regulatory Act (IGRA) , the 
Department has a keen interest in the compliance with Indian 
gaming laws. As you well know, for several years Congress 
labored to develop legislation that would accommodate the 
conflicting interests of law enforcement agencies, 
opponents of Indian gaming, champions of tribal sovereignty and 
those who saw gaming as a solution; to the enormous economic 
problems of the Native American tribes. The result of that labor 
was the enactment of the Indian Gaming Regulatory Act in October 
1988. 

The congressional findings and policies explicitly set forth 
in IGRA, and implicit in its regulatory scheme, are strongly 
supportive of the Native American tribes need and right to 
conduct gaming while recognizing the need for regulation and 
prevention of the infiltration by organized crime. 



118 



2 

The Department of Justice is dedicated to responding 
promptly to serious and flagrant non-compliance with Indian 
gaming laws. The Department will utilize its enforcement weapons 
against operations conducted without tribal sanctions, or where 
there is evidence of organized crime infiltration, skimming or 
other forms of crime. 1 cite several recent examples: 

* Prosecutions were brought against private entrepreneurs 
operating casinos in violation of tribal, state and federal laws 
on the St. Regis Mohawk reservation in the Northern District of 
New York; 

* Casinos operated without tribal authority were closed 
down in the District of Montana and the Eastern District of 
Oklahoma ; 

* A casino operation in the Northern District of 
California was closed down when reports of skimming by the 
manager, allegedly an associate of organized crime figures, was 
investigated; 

* In the Southern District of California, an Indian 
official who skimmed from the tribal gaming establishment he 
managed was convicted of embezzlement, and his wife was convicted 
of income tax violations; and 

* Several members of a New York tribe who, after taking 
over a tribal casino from its authorized operators, divided up 
the take and then firebombed the facility, were successfully 
prosecuted for those offenses. 



119 



3 

Although we have successfully prosecuted certain instances 
of criminal activity in connection with gaining on Indian lands, I 
emphasize that the belief held by some that Indian gaming 
operations are rife with serious criminality is not established 
by the data currently available. That belief breaks down into 
three assertions: (1) that the tribal games have been infiltrated 
by organized crime families; (2) that the tribes have been 
victimized by criminal elements not associated with the major 
crime families; and (3) that the tribes are conducting illegal 
gaming. 

The Department of Justice believes that to date there has 
not been a widespread or successful effort by organized crime to 
infiltrate Indian gaming operations. For several years, the FBI 
has focussed its efforts on monitoring these organizations and 
their associates so that they will be apprehended if they engage 
in illegal activity or attempt to infiltrate legitimate 
enterprises. One such investigation has revealed an unsuccessful 
attempt to infiltrate the gaming operation of the Rincon Band in 
California. This investigation resulted in the indictment of ten 
men, and the conviction of all but one, on charges of 
racketeering, extortion, mail fraud and wire fraud. Moreover, 
the FBI now has fewer than five open investigations of organized 
crime family activity relating to gaming on Indian lands. 
Because monitoring these families is one of the FBI's highest 
priorities, I am confident that any evidence of federal crime 



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4 
that may develop will be fully investigated and referred to the 
United States Attorneys for appropriate action. 

Similarly, there has been little evidence of illegal 
activity committed by criminal elements not associated with the 
major organized crime families. Again, on those occasions when 
such allegations have been brought to our attention, they have 
been investigated, and when sufficient evidence is developed for 
conviction, we have not hesitated to prosecute. Two examples are 
our prosecution of a Native American official who skimmed the 
receipts of his tribe's bingo hall and the prosecution of persons 
who looted and burned a New York casino. There are a handful of 
investigations into allegations of similar misconduct now being 
conducted . 

Finally, there are instances of illegal gaming in Indian 
country. These instances include regulatory violations stemming 
from gaming conducted by tribes on Indian lands and gaming that 
is conducted on Indian lands, but not by Native American tribes. 
Gaming that is not operated under tribal auspices, such as the 
casinos on Crow and Choctaw lands, cannot be legal under any 
circumstances. I believe that all operations in this category 
have been shut down. 

However, even certain gaming activity conducted under tribal 
auspices may be illegal. The Indian Gaming Regulatory Act 



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5 
established the regulatory framework for this gaming, and 
provides different requirements for games separated into three 
classes. Classes I (social) gaming is solely regulated by the 
tribes. Class II gaming requires administrative approval of 
management contracts and tribal gaming ordinances. The National 
Indian Gaming Commission (the Commission) has oversight 
responsibilities with respect to the Class II requirements. 

The principal category of gaming characterized as illegal 
consists of those games which arguably, but not clearly, are 
class III games, and which are conducted without a compact 
negotiated between the state and tribe, as required by IGRA. In 
some cases, the gaming classification is in dispute because the 
tribes claim that the game properly falls in class II and 
requires no compact. The final gaming definitions, which have 
been issued by the Commission, should give greater certainty to 
gaming classification. Nevertheless, some classification issues 
remain in dispute, although both district and appellate courts 
have approved both specific definitions and the Commission's 
interpretive approach to IGKA provisions. 

There are many possible sources of confusion and frustration 
for law enforcement when class III gaming is at issue: 

* In some instances of clear, admitted class III gaming, 
a state may change its law to permit previously forbidden games. 



122 



6 
thus obligating the states to enter into compact negotiations 
they were once able to refuse. 

* A tribe may be conducting class III gaming without a 
compact, but the state and tribe may be in the course of 
negotiations that may result in a compact that allows the games. 

* A state has negotiated the inclusion of certain games 
in a compact, but has declined to include certain others, or has 
placed limits upon them. The prosecutor is then uncertain 
whether the tribe will discontinue the games, or file suit under 
IGRA. 

* A tribe may be conducting gaming without a compact, but 
has filed suit against the state because the compact negotiation 
process has reached an impasse. A related complication is that 
some states have successfully blocked these tribal suits by 
invoking the immunities of the 10th and 11th Amendments. 

Under these circumstances, United States Attorneys are faced 
with the difficult decision of whether to allocate scarce 
investigative and prosecutorial resources. It can be hard to 
justify the expenditure of resources for these alleged violations 
which are in the process of resolution and which, under IGRA, may 
eventually be validated by actions of the Commission, the state 
or the courts. 

Let me give you a few examples of these predicaments: 



123 



7 

* After encouraging the United States Attorney to 
announce that she would not tolerate illegal gambling devices on 
Montana reservations when there was no compact, the state 
Attorney General appealed to his congressional delegation to have 
the Congress grant a special six month immunity to violators in 
that state. 

* In Oklahoma, shortly after the state Attorney General 
filed a brief in federal court demonstrating the illegality of 
slot machines, the Governor negotiated a compact for their 
introduction on to tribal lands. When the tribe later sought to 
enjoin the United States Attorney for the Western District from 
interfering with their devices, the federal court held, in accord 
with the views of both the Attorney General and the United States 
Attorney, that the devices were illegal under Oklahoma law and 
were not the proper subject of negotiation. The Court of Appeals 
for the Tenth Circuit affirmed. 

* In Arizona, after state officials made clear that they 
would not negotiate with respect to slot machines, the United 
States Attorney, through repeated warnings, effected the closure 
of seven casinos. Two closed after her final warning and the 
others were shut down by seizure of their machines. One 
reservation resisted the seizure and, during the ensuing stand- 
off, the Governor intervened as mediator. 



124 



8 

The Arizona Governor entered into compacts with four of the 
tribes. When three of the tribes each made what he considered 
imreasonable demands for 2500 machines, he broke off negotiations 
and was sued. The court denied the immunity claims and sent the 
matter to a mediator who selected the compacts proposed by the 
tribes. In response, a special session of the legislature was 
called to enact legislation that declared all gaming illegal 
except for the state-run lottery and parimutuel horse and dog 
racing. (The question will soon be the subject of a state 
referendum. ) 

Finally, the sensitive relationship between the tribes and 
the United States Attorneys also inhibits precipitous action. 
The federal government has a trust obligation to encourage tribal 
self-government and economy. Congress has endorsed gjuning as a 
legitimate measure for raising revenue, and the United States 
Attorneys are in constant collaboration on other governmental 
matters with the tribal officials who are also involved in the 
gaming disputes. Given the uncertainty that exists over whether 
or not tribes may engage in particular forms of gaming, the risk 
of violence attendant upon enforcement of regulatory provisions, 
and the nature of federal-tribal relations, the caution federal 
prosecutors are exercising in moving against the tribes is 
understandable and appropriate. 



125 



9 

In sum, the current record does not support the argument 
that there is widespread infiltration of organized crime into 
gaming on Indian reservations. However, there is gaming of 
disputable legality, some of which eventually comes into 
compliance with IGRA, after negotiations between the tribe and 
state. If the tribes and states continue to negotiate in good 
faith under the published regulations of the Commission, there 
will be far fewer regulatory violations. 

We will continue to be diligent in this area. The 
Department of Justice has repeatedly warned that the flow of 
currency through Indian casinos requires vigilance to avert 
illegal activities such as embezzlement, fraud and money 
laundering, as well as to protect the tribes' interests. This 
observation is true of non-Indian gaming as well. Strict 
compliance with the scheme of regulation ordained by Congress is 
of utmost importance to insure the benefits of lawful gaming by 
the Indian tribes. 

Mr. Chairman, this concludes my statement. I will be glad 
to answer any questions from you and other members of the 
Subcommittee . 



84-760 O - Q4 - R 



126 

Mr. Richardson. Thank you. 

The chair recognizes Mr. David Palmer. 

STATEMENT OF DAVID B. PALMER 

Mr. Palmer. Thank you very much, Mr. Chairman, good morn- 
ing, and members of the subcommittee. 

I am David Palmer, the deputy assistant commissioner for the 
Criminal Investigation Division of the Internal Revenue Service. 
With me today is Mr. Peter Djinis, director of the Office of Finan- 
cial Enforcement, Department of the Treasury. The Office of Finan- 
cial Enforcement is the office responsible for the Bank Secrecy Act 
compliance and enforcement. 

We appreciate this opportunity to appear before you today to dis- 
cuss current IRS activities involving enforcement of Internal Reve- 
nue Code Section 60501 and the Bank Secrecy Act, also known as 
the BSA, as they relate to casinos and the Indian gaming industry. 

The IRS is strongly committed in its efforts to fight money laun- 
dering and to increase compliance with the currency reporting laws 
while maintaining an overall effective tax administration program. 
Because of the efforts of law enforcement and regulatory compli- 
ance functions, money laundering techniques are constantly chang- 
ing. Where once we concentrated our efforts on the deposit of large 
sums of cash into banks, we now focus our efforts towards less tra- 
ditional methods of money laundering such as the use of nonbank 
financial institutions, including money transmitters, check cashing 
businesses, and casinos. 

The Internal Revenue Service has a dual responsibility in its 
anti-money-laundering role. IRS, through its Criminal Investiga- 
tion Division, has been delegated authority to conduct criminal in- 
vestigations relative to financial transactions involving money 
laundering activity. This includes the criminal money laundering 
offenses of Title 18 and the currency reporting crimes of the BSA, 
Title 31, and Internal Revenue Code Section 60501, Title 26. 

The IRS Examination Division is responsible for ensuring compli- 
ance with the reporting and record-keeping provisions of the BSA 
by all financial institutions under its jurisdiction. These include 
any financial institution not under the supervision of Federal bank 
regulatory agencies or the Securities and Exchange Commission — 
basically, all nonbank financial institutions, including casinos, ex- 
cept those located in Nevada. 

The Examination Division also is responsible for ensuring com- 
pliance with Section 60501 which presently applies to all trades or 
businesses other than those subject to BSA, including Indian gam- 
ing operations. 

A database of these required currency reports is maintained by 
IRS in the currency and banking retrieval system at our Detroit 
Computing Center. This database is used by IRS for civil and 
criminal law enforcement and tax administration purposes. 

Certain BSA information contained in the database is also dis- 
seminated to other Federal and State agencies for law enforcement 
and regulatory purposes. 

Non-tribal casinos have been subject to the BSA currency report- 
ing and record-keeping requirements since 1985. Like other finan- 



127 

cial institutions, non-tribal casinos must complete a currency re- 
porting form, a Currency Transaction Report for Casinos, or a 
CTRC, for all currency transactions in excess of $10,000 whether 
as a deposit, a withdrawal, an exchange, a redemption or purchase 
of chips, receipts from a slot machine payoff, et cetera. 

In addition, like the other financial institutions, non-tribal casi- 
nos must maintain specific financial records for five years including 
payer rating cards maintained by the casino to monitor its cus- 
tomers' waging, wins, and losses. The IRS Examination Division 
has been delegated the authority to examine these non-tribal casi- 
nos for compliance with the BSA requirements. 

Pursuant to a 1985 memorandum of agreement with the Depart- 
ment of the Treasury, the State Gaming Control Board assumes 
regulatory responsibility for casinos located in Nevada. Nevada ca- 
sinos file reports similar to the CTRC's directly with the State 
Gaming Control Board under State regulatory requirements. These 
reports are then forwarded to the IRS for inclusion in the Detroit 
computing center database along with the other CTRC's. 

Prior to the BSA application to casinos, money laundering activi- 
ties occurred involving casinos in a variety of ways, including the 
purchase of chips with large amounts of cash and later redeeming 
the chips for casino cashiers' checks without any significant gam- 
bling. Casinos also have been utilized to exchange narcotics pro- 
ceeds in small denomination bills for $100 bills to ease smuggling 
cash out of the country. 

The currency reporting and record-keeping features of the BSA 
have enabled the IRS to utilize the CTRC's and similar documents 
to successfully identify and prosecute individuals involved in money 
laundering where casinos were involved. 

Pursuant to the new Treasury Department regulations effective 
March 1, 1994, each casino will have to develop and implement a 
BSA compliance program reasonably designed to assure and mon- 
itor compliance with the Bank Secrecy Act. These BSA compliance 
programs are similar to those imposed on all Federally regulated 
banks since 1987 which have proven to be extremely successful. 

Section 20(d)(1) of the Indian Gaming Regulatory Act provides 
that certain provisions of the Internal Revenue Code, including sec- 
tion 60501, shall apply to Indian gaming operations. There is a 
technical defect in the Act which says Section 60501 pertains to 
gambling winnings. However, Section 60501 applies only to incom- 
ing cash and not to cash-out or winnings as indicated by the Act. 

Nevertheless, it is our view that Indian tribal casinos are pres- 
ently subject to the limited currency reporting requirements under 
Section 60501 which pertain to cash received and contain no record- 
keeping requirements. In comparison, the BSA mandates a com- 
prehensive currency reporting and detailed record-keeping system 
with numerous anti-money-laundering safeguards. Section 60501 
requires the reporting of receipts of cash in excess of $10,000 on 
form 8300, which is the report of cash payments over $10,000 re- 
ceived in a trade or business. 

The following example illustrates the distinction between a non- 
tribal casino required to file a CTRC as compared to an Indian trib- 
al casino required to file form 8300. 



128 

Casino A is a nontribal casino subject to the Bank Secrecy Act. 
Casino B is a tribal casino subject to Section 60501. Gambler Doe 
walks into Casino A and purchases chips for $15,000 in cash. At 
the end of the night, Gambler Doe cashes in his chips, including 
winnings, and gets $25,000 in cash. 

Casino A is required to file a CTRC which provides identification 
information on Gambler Doe and reports both of the transactions, 
the cash in a bond entry, the $15,000, and the cash out, a bond de- 
parture, the $25,000. 

Gambler Doe then enters Casino B and purchases chips in ex- 
change for $15,000 in cash. He later departs and cashes in the 
chips for $35,000 in cash. Pursuant to Section 60501, Casino B is 
only required to provide Gambler Doe's identification and report 
only the first half of the transaction, the incoming cash. 

Mr. Chairman, based on the IRS and Treasury involvement with 
the Indian gaming industry to date, I am providing the following 
joint IRS/Treasury recommendation for the subcommittee. 

We recommend a statutory amendment to both the Bank Secrecy 
Act and the Indian Gaming Regulatory Act to specify that Indian 
gaming operations are subject to the Bank Secrecy Act rather than 
to Section 60501. The comprehensive nature of the Bank Secrecy 
Act would provide additional safeguards to the tribes while provid- 
ing law enforcement the paper trail necessary for effective and effi- 
cient financial enforcement. 

In addition, the IRS and Treasury plan to work jointly with the 
Justice Department to coordinate a national Indian gaming con- 
ference and will continue the ongoing outreach educational initia- 
tives with the Indian gaming industry. 

In conclusion, I would like to emphasize that our goal is to 
strengthen the cooperative relationships among the Federal agen- 
cies working with the Indian gaming industry, and I thank the 
subcommittee for its interest in our activities relating to money 
laundering enforcement and the Indian gaming industry. 
We would be happy to respond to any questions, Mr. Chairman. 
[Prepared statement of Mr. Palmer follows:] 



129 

Statement of 

David 6. Palmer 

Deputy Assistant Commissioner 

(Criminal Investigation) 

Internal Revenue Service 

Before the 



Subcommittee on Native American Affairs 
House Committee on Natural Resources 

Money Laundering Enforcement and the 
Indian Gaming Industry 



Octobers. 1993 




130 



STATEMENT OP 

DAVID B. PALMER 

DEPUTY ASSISTANT COMMISSIONER (CRIMINAL INVESTIGATION) 

INTERNAL REVENUE SERVICE 

BEPORE THE 

SUBCOMMITTEE ON NATIVE AMERICAN AFPAIRS 

HOUSE COMMITTEE ON NATURAL RESOURCES 

OCTOBER 5, 1993 

Mr. Chairman and Members of the Subcommittee: 

With me today is Peter G. Djinis, Director of the Office of 
Financial Enforcement, Department of the Treasury. The Office of 
Financial Enforcement is the office responsible for Bank Secrecy 
Act compliance and enforcement. We appreciate this opportunity 
to appear before you today to discuss current IRS activities 
involving enforcement of Internal Revenue Code Section 60501 
("Section 60501") and the Bank Secrecy Act ( "BSA" ) as they relate 
to casinos and the Indian Gaming industry. 

More specifically, I hope to provide you with a broader 
understanding of what money laundering is and how it can occur in 
a casino and the Indian Gaming industry; IRS' role in money 
laundering enforcement; and, how Section 60501 and the Bank 
Secrecy Act safeguard against money laundering while assisting 
the IRS in its anti-money laundering enforcement and tax 
administration. The IRS is strongly committed in its efforts to 
fight money laundering and to increase compliance with the 
currency reporting laws while maintaining an effective overall 
tax administration program. 



131 



2 
I . INTRODUCTION 

Simply put, money laundering is any method used to conceal 
or disguise the existence and origin of money generated from 
illicit activity, including tax evasion. The objective of those 
engaged in money laundering is to move the illicit proceeds into 
and through the financial system and then back into the economy 
in a form which appears legitimate — the source of which cannot 
be traced. Money laundering is executed in three stages: 1) 
Placement, 2) Layering, and 3) Integration. 

The "Placement" stage is the initial process by which 
launderers inject their illicit proceeds into the financial 
system. This may include the physical disposal of large amounts 
of cash into banks, as we saw during the late 1970s and early 
1980s; or by "structuring" or "smurfing" cash deposits of less 
than $10,000 into banks and other financial institutions 
including casinos. Many other methods of placement exist 
including the smuggling of bulk cash out of the United States for 
placement into the financial system in other jurisdictions. 
Generally, during the placement stage money launderers must 
utilize bank and nonbank financial institutions (NBFIs), 
including casinos. 

Structuring is the technique for depositing cash or 
converting it to monetary instruments to avoid the filing of 
currency reporting forms. For example: Person A has a total of 



132 



3 

$18,000 in currency and wants to deposit it into a bank account 
without a currency transaction report being filed by the bank 
with the government. Person A purchases a cashiers check for 
$9,000 then deposits the cashier's check with the remaining 
$9,000 in cash in the bank account. Under the BSA, Person A has 
structured his financial transactions to avoid the currency 
reporting laws. 

Once the illicit proceeds are placed into the financial 
system, they are easily moved around to separate the funds from 
their source by creating complex layers of financial 
transactions. This is known as the "Layering" stage and often 
money launderers convert the placed cash into cashiers checks or 
wire transfer funds from one bank account to another, from one 
bank to another, and from one country to another. These layers 
of financial transactions, even with their paper trails, make it 
difficult (and sometimes impossible due to foreign bank secrecy 
laws) for law enforcement to follow and trace the illicit funds 
back to the launderer or illicit activities. 

The final stage of the money laundering process is 
"Integration" where the launderer moves the funds back into the 
economy by creating a legitimate appearance or explanation of the 
once illicit proceeds. The use of front companies, sham loans, 
real estate transactions and gambling winnings are just a few 
exaimples of the integration of illicit proceeds into the economy. 



133 



4 
After the illicit proceeds are integrated back into the economy, 
the launderers have successfully completed their objective. Many 
people equate money laundering solely with the proceeds of 
narcotics trafficking. However, to IRS it includes income 
derived from any illicit activity, including white collar crime, 
as well as unreported income from an otherwise legitimate 
activity . 

Because of the efforts of law enforcement and regulatory 
compliance functions, money laundering techniques are constantly 
changing. Where once we concentrated our efforts on the deposit 
of large sums of cash into banks, we now focus our efforts toward 
less traditional methods of money laundering, such as the use of 
non-bank financial institutions (NBFIs) including casas de 
cambio, money transmitters, giros, check cashing businesses, 
casinos, and those that sell money orders. Further, experience 
has shown that money launderers have not stopped at the use of 
non-bank financial institutions; rather, they have utilized cash 
intensive trades and businesses, and have resorted to cash 
purchases of material assets which are later resold. Because of 
this evolution, we too must remain flexible in continually 
seeking new and innovative ways to address this ever-changing 
criminal activity. 



134 



5 
II. IRS JURISDICTION PERTAINING TO MONEX LAUNDERING ENFORCEMENT. 

When we speak of "money laundering enforcement," we actually 
are making reference to the enforcement of three separate laws; 
The recordkeeping and currency transaction reporting requirements 
of the "Bank Secrecy Act" (Title 31); Section 60501 of the 
Internal Revenue Code (Title 26); and, the money laundering 
criminal statutes (Title 18). The Bank Secrecy Act (BSA) and IRC 
Section 60501 provide a means to identify and fight money 
laundering through currency transaction reporting and financial 
recordkeeping. The money laundering criminal statutes provide a 
direct means for the investigation and prosecution of money 
laundering activity. These three laws prescribe severe criminal 
and civil penalties and forfeiture provisions . 

The IRS has a dual responsibility in its anti-money 
laundering role: IRS, through its Criminal Investigation 
Division, has been delegated authority to conduct criminal 
investigations relative to financial transactions involving money 
laundering activity. This includes the criminal money laundering 
offenses of Title 18; and, the currency reporting crimes of the 
BSA (Title 31) and IRC Section 60501 (Title 26). 

IRS Examination is responsible for ensuring compliance with 
the reporting and recordkeeping provisions of the BSA by all 
financial institutions under its jurisdiction. These include any 
financial institution not under the supervision of federal bank 



135 



6 

regulatory agencies or the Securities and Exchange Commission, 
i.e. , all nonbank financial institutions and include casinos 
(except those located in Nevada). Examination also is 
responsible for ensuring compliance with Section 60501, which 
presently applies to all trades or businesses other than those 
subject to the BSA, including Indian Gaming operations. 

Bank Secrecy Act 

Under the authority of the Bank Secrecy Act, Congress 
established certain currency information reporting requirements. 
These reporting requirements help us identify those persons who 
attempt to conceal their participation in crimes where 
substantial amounts of currency are involved. The information 
reports provide a paper trail of records that must be maintained 
by financial institutions for a period of five years. Of equal 
importance to the reporting requirements of the BSA, the BSA also 
contains requirements that financial institutions maintain 
records necessary to reconstruct financial transactions in the 
event of a later criminal or tax case. The Bank Secrecy Act and 
its reporting requirements provide additional tools to curb money 
laundering indirectly by authorizing criminal prosecution of 
those persons who intentionally fail to file, or file false, 
currency information reports. IRS has been delegated authority 
to conduct all criminal investigations relative to the BSA with 
the exception of matter involving cross-border transportation of 
currency and monetary instruments (U.S. Customs Service Currency 



136 



7 
and Monetary Instruments Reports - CMIRs). IRS' regulatory 
responsibilities include ensuring the timely and accurate filing 
of the following three Bank Secrecy Act reports: 

1. Currency Transaction Report (Form 4789) . A "Currency 
Transaction Report" (CTR) must be filed by a financial 
institution for each cash deposit, withdrawal, exchange, or other 
payment or transfer involving currency in excess of $10,000 on a 
business day. 

2. Currency Transaction Reports by Casino (Form 8362) . Any 
licensed casino operating in the United States with gross annual 
gcuning revenues in excess of $1 million must file a "Currency 
Transaction Report by Casino" (CTRC) for each currency 
transaction in excess of $10,000 on a day. A currency 
transaction at a casino includes both incoming and outgoing cash. 
CTRCs are not currently required to be filed by Indian Geuning 
operations or casinos located in Nevada. 

3. Report of Foreign Bank and Financial Accounts (Treasury 
Form TDF 90-22.1) . Any person subject to U.S. jurisdiction 
(including a U.S. citizen residing abroad) who has a financial 
interest in or signature authority over account (s) with a value 
of more than $10,000 must file a Report of Foreign Bank and 
Financial Accounts (FBAR). 



137 



8 

IRC Section 60501 

Section 60501 of the Internal Revenue Code provides another 
key tool for the tax compliance and law enforcement community to 
use in its efforts to detect unreported or illicit income and 
prevent the laundering of that income. This section requires the 
reporting of receipts of cash in excess of $10,000 by persons 
engaged in any trade or business (other than financial 
institutions required to report under the BSA) on a Report of 
Cash Payments Over $10.000 Received in a Trade or Business (IRS 
Form 83001 . This section applies to casinos with gross annual 
geiming revenue of $1 million or less (the BSA applies to casinos 
with over $1 million) and to all Indian gaming operations. 
Section 60501 is referenced in the Indian Gaming Regulatory Act 
( hereinafter the Act ) . 

Similar to the BSA, Section 60501 provides for both civil 
and criminal sanctions for failure to file reports; for filing 
false reports; and, for structuring, or assisting in structuring 
financial transactions to evade tne reporting requirements. 
Unlike the BSA, Section 60501 contains provisions for 
notification to the effected parties and for the inclusion of 
certain monetary instruments as cash. IRS Examination is 
responsible for ensuring the reporting requirements are met and 
IRS Exeunination conducts routine compliance checks of businesses. 
IRS Criminal Investigation conducts investigations of alleged 
criminal violations of Section 60501 which are prosecuted 



138 



9 

criminally under the provisions of IRC Section 7203 (willful 
failure to file) or Section 7206 (false or fraudulent statement). 

A database of these required currency reports is maintained 
by IRS in the Currency and Banking Retrieval System (CBRS) at our 
Detroit Computing Center. This database is used by IRS for civil 
and criminal law enforcement and tax administration purposes. 
Certain information contained in the database is also 
disseminated to other federal and state agencies for law 
enforcement and regulatory purposes. 

The following exeimple illustrates the distinction between a 
casino required to file a CTRC as compared to an Indian Tribal 
casino required to file Forms 8300: 

Casino A is a non-Tribal casino subject to the BSA. Casino 
B is a tribal casino subject to Section 60501. Gambler Doe walks 
into Casino A and purchases chips for $15,000 in cash. At the 
end of the night Geunbler Doe cashes in his chips including 
winnings and receives $25,000 in cash. Casino A is required to 
file a CTRC which provides identification information on Gambler 
Doe and reports both of the transactions — cash in upon entry 
and cash out upon departure. Gambler Doe then enters Casino B 
and purchases chips in exchange for $15,000 in cash. Geunbler Doe 
later departs after cashing in chips for $35,000 in cash. 
Pursuant to Section 60501, Casino B is only required to provide 



139 



10 
identification information and report only the first half of the 
transaction — the incoming cash to purchase chips upon entry. 
This limited information reporting cuts off the paper trail 
thereby eliminating further financial analysis of Gambler Doe ' s 
currency transactions. In addition. Casino A is required to 
maintain additional supporting documents concerning Gambler Doe * s 
financial transactions for five years. Casino B is not required 
to maintain any additional documents. 

III. VULNERABILITY OF CASINOS FOR MONEY LAUNDERING ACTIVITY 

In May of 1985, the Department of the Treasury amended the 
BSA regulations (31 C.F.R. Part 103) to designate non-Tribal 
casinos as financial institutions subject to the BSA currency 
reporting and recordkeeping requirements. Like other financial 
institutions, non-Tribal casinos must complete a currency 
reporting form (CTRC) for all currency transactions in excess of 
$10,000, whether as a deposit, withdrawal, exchange, or 
redemption or purchase of chips, receipts from slot machine 
payoffs, etc. In addition, like the other financial 
institutions, non-Tribal casinos must maintain specific financial 
records for five years, including player rating cards maintained 
by the casino to monitor its customer's waging wins and losses. 
IRS Excunination has been delegated the authority to examine non- 
Tribal casinos (except those located in Nevada) for compliance 
with the BSA requirements. 



140 



11 

Also in 1985, the Department of the Treasury entered into a 
Memorandum of Agreement with the State of Nevada. Pursuant to 
the agreement, the State Gaming Control Board assumes regulatory 
responsibility for casinos located in Nevada. Nevada casinos 
file reports under state regulatory requirements similar to the 
CTRCs for cash-in transactions directly with the State Gaming 
Control Board. Nevada casinos also file currency transaction 
incidence reports for cash-out transactions directly with the 
Board. These reports are then forwarded to the IRS for inclusion 
in the Detroit Computing Center database containing the other 
CTRCs . 

Prior to the BSA application to casinos, money laundering 
activities occurred involving casinos in a variety of ways 
including the purchase of chips with large cunounts of cash and 
later redeeming the chips for casino cashier ' s checks without 
significant geunbling. Casinos also have been utilized to 
exchange narcotics proceeds in small denomination bills for $100 
bills to ease smuggling cash out of the country. The currency 
reporting and recordkeeping features of the BSA have enabled the 
IRS to utilize the CTRCs to successfully identify and prosecute 
individuals involved in money laundering where casinos were 
involved. The following are only a few such examples. 

' An attorney laundered over $3 million dollars of drug 

proceeds from his client at the casinos over a period of 



141 



12 
several months. The attorney exchanged large amounts of 
cash for casino cashier's checks without any substantive 
gcunbling activity. The attorney eventually pled guilty to 
failure to file CTRs (since the attorney was acting as a 
non-bank financial institution), conspiracy to launder money 
and drug conspiracy. He was sentenced to 15 years in 
prison. 

An individual using false identification, cashed out casino 
chips for "high rollers" for a 5% fee. The "high rollers", 
including numerous narcotic traffickers would purchase chips 
and gamble enough to avoid suspicion and then give the chips 
to this "five percenter" to redeem for them. The "five 
percenter" would redeem the chips in $100 dollar bills and 
allow the CTRCs to be filed using his false identification. 
Over a period of 11 months, 5 casinos filed 45 CTRCs 
totaling over $1 million, containing false identification 
information provided by the "five percenter". The "five 
percenter was eventually prosecuted and convicted. 

An attorney entered into an agreement with an international 
heroin smuggling organization to launder their drug proceeds 
for a fee of 3%-5%, depending on the eunount handled. The 
attorney took receipt of millions of dollars of heroin 
proceeds in $5, $10, and $20 dollar bills. The attorney 
used "smurfs" to exchange these small bills for $100 bills 



142 



13 

at numerous casinos. The less voluminous $100 bills were 
then smuggled to the Bahamas, Canada, and Bermuda. The 
currency was then shipped from Canada and Bermuda by 
commercial couriers to Switzerland for deposit into banks. 
Wire transfers were used to move the money from the Bahamas 
to the same Swiss banks. 

The CTRCs and other BSA required records are also utilized 
for successful civil and criminal tax enforcement. IRS 
Examination and Collection divisions utilize this data to 
identify potential nonfilers as well as to identify unreported 
taxable income. 

Although subject to the BSA since 1985, casinos were not 
previously required to implement a BSA compliance program within 
each casino. However, Atlantic City casinos did voluntarily 
adopt BSA compliance programs as far back as November 1988. 
Pursuant to the new Treasury Department regulations effective 
March 1, 1994, each casino will have to develop and implement a 
BSA compliance program reasonably designed to assure and monitor 
compliance with the BSA. Each compliance program is required to 
include components for: 

1) internal controls; 

2) testing (auditing) of compliance; 

3) training of casino personnel in BSA compliance 
responsibilities ; 



143 



14 

4) appointment of personnel to assure day-to-day 
compliance; 

5) identification of required persons; 

6 ) identifying reportable or recordable multiple 
transactions; and, 

7) use of in-house information and computer systems to 
enhance compliance. 

These BSA compliance progreuns are similar to those imposed 
on all federally regulated banks since 1987 which have proven to 
be successful. Treasury BSA compliance initiatives, such as the 
imposition of these compliance programs, have contributed to the 
significant reduction in money laundering activity involving 
traditional banks. Treasury continues to work with the casino 
industry to strengthen the industry ' s commitment to preventing 
money laundering . 

IV. INDIAN GAMING INDUSTRY AND BANK SECRECY ACT APPLICATION 

In 1988, Congress enacted the Indian Gaming Regulatory Act, 
25 U.S.C. 2701 et .sea. . which governs gaming operations conducted 
on Indian lands. Section 20(d)(1) of the Act (25 U.S.C. 
2719(d)(1)) provides that certain provisions of Title 26, 
including Section 60501, shall apply to Indian gaming operations. 
There is a technical defect in the Act which says 60501 pertains 
to gambling winnings. Of course Section 60501 applies only to 
incoming cash and not to cash-out as winnings. Nevertheless, it 



144 



15 

is our view that Indian Tribal casinos are presently subject to 
the limited currency reporting requirements under Section 60501 
which pertain to cash received and contain no recordkeeping 
requirements. In comparison, the BSA mandates a comprehensive 
currency reporting and detailed recordkeeping system with 
numerous anti-money laundering safeguards. 

Based upon IRS ' s investigative and regulatory experience , we 
know that loose or inadequate regulation and recordkeeping will 
lead to enforcement problems. Over the past ten years or more, 
every action the federal government has taken to eliminate or 
reduce identified methods of money laundering, has generated a 
counteract by the creative launderers who continue to expand to 
new and inventive methods to launder their illicit proceeds . We 
believe the I ndiari Gaming industry, while still in its infancy, 
would substantially benefit from additional regulation and 
recordkeeping covering currency transactions to implement 
additional safeguards for deterrence of money laundering. 

The Indian Gaming industry is relatively new and the Act has 
only been in place a short time. Some of the tribes are unsure 
of their new responsibilities pertaining to the casinos under 
federal law. In this regard, IRS Examination has initiated an 
extensive nationwide outreach progreun aimed at educating the 
Indian geuning industry of its responsibilities. 



145 



16 

IRS Examination is working with the tribes to better 
understand issues in Indian Country and has developed and 
implemented a plan to address these issues. Activities of this 
plan included making presentations and staffing information 
booths/exhibits at tribal conferences dealing with Indian Gaming 
such as: United South and Eastern Tribes (USET); National Indian 
Gaming Association (NIGA) ; 1st Annual Indian Nations Gaming and 
Trade Show; National Conference on Indian Gaming; and. National 
Congress of American Indians (NCAI) mid-year conference. Future 
planned conference activities involve the Northwest Indian Gciming 
Tribe (NIGT) and the Midwest Indian Gaming Association (MIGA) . 
The Tribal leaders have been very receptive to this outreach 
process. 

IRS Examination is also chairing an inter-agency task force 
consisting of representatives from the Department of the 
Treasury; Department of the Interior (Bureau of Indian Affairs, 
Indian Gaming Management Office, and the National Indian Gaming 
Commission); Bureau of Alcohol, Tobacco and Firearms; and all 
functions of the IRS. IRS Examination has also been active 
within the IRS organization educating the Service nationwide on 
Indian Geuning and related issues. 



146 



17 
V. RECOMMEKDATIONS AND CONCLUSION 

Based on IRS and Treasury involvement with the Indian Gaming 
industry to date, I am providing the following joint IRS/Treasury 
recommendation for the Subcommittee's consideration. 

We recommend a statutory amendment to both the Bank Secrecy 
Act and the Indian Gaming Regulatory Act to specify that Indian 
Gaming operations are subject to the Bank Secrecy Act rather than 
to Section 60501. The comprehensive nature of the BSA would 
provide additional safeguards to the tribes, while providing law 
enforcement the paper trail necessary for effective and efficient 
financial enforcement. 

In addition, the IRS and Treasury plan to work jointly with 
the Justice Department to coordinate a national Indian Gcuning 
Conference and will continue the ongoing outreach-education 
initiatives with the Indian Gaming industry. 

In conclusion, I would like to emphasize that our goal is to 
strengthen cooperative relationships among the Federal agencies 
working with the Indian Gciming industry. I thank the 
Subcommittee for its interest in our activities relating to money 
laundering enforcement and the Indian Gaming industry. We would 
be pleased to respond to any questions you may have. 



147 

Mr. Richardson. Thank you. 

The chair recognizes the gentleman from Wyoming. 

Mr. Thomas. Just one very quick question, Mr. Urgenson. 

When you are asked to investigate or prosecute, where do the 
complaints come from normally? Do they come from this regulatory 
commission, or how do you arrive at where there is a problem? 

Mr. Urgenson. Complaints often come— they are delivered most 
often in the field to the local United States Attorney's office or the 
to the FBI, and perhaps Mr. Moody could elaborate more specifi- 
cally. 

Mr. Moody. Concerning organized crime investigations, over 90 
percent of all of our investigations are based upon our own intel- 
ligence base. We don't have that many people come through the 
front door and tell us about organized crime. 

Mr. Thomas. Well, that is good. I am glad to hear that. 

I am just curious. You need some sort of a regulatory group, it 
would seem to me. That is not your role, is it, in the Justice De- 
partment? 

Mr. Urgenson. Typically, in a regulated industry, a good portion 
of the referrals come from the regulatory community. That is an ac- 
curate statement, yes. 

Mr. Thomas. Tell me just quickly the comparison between — what 
is your involvement in private gaming such as in New Jersey that 
is not tribal? Do you have any particular involvement in that? 

Mr. Urgenson. The involvement, I suppose, would be limited to 
federal crimes, such as organized crime and perhaps money laun- 
dering, and Mr. Moody indicates he would like to add to that. 

Mr. Moody. We have memoranda of understanding with both 
Nevada and New Jersey, groups that address the gaming in those 
States. Both of them have law enforcement authority, so it makes 
it very easy to work with them. 

Mr. Thomas. So your involvement with tribal gaming and 
nontribal gaming is similar? 

Mr. Moody. With tribal gaming, it is different in that we have 
requests come in and we respond to them, but not all of the agen- 
cies that have oversight have law enforcement authority, so we 
can't quite share the same type of information. 

Mr. Thomas. I see. 

Thank you, Mr. Chairman. 

Mr. Richardson. The chair recognizes the gentleman from Cali- 
fornia. 

Mr. Calvert. Thank you, Mr. Chairman. 

My question is also for Mr. Psdmer. 

In California, as you know, we only have Class 2 gaming. How- 
ever, there are certain reservations that are engaged in Class 3 
gaming at the present time. The National Indian Gaming Commis- 
sion is only empowered to enforce Class 1 and Class 2 gaming, and 
so the Class 3 gaming in California is not being regulated. 

The 700-plus slot machines that are in California at the present 
time — ^what types of controls are in place at the present time to 
find out where that money was coming from and where it is going? 

Mr. Palmer. Congressman, I don't know if I can answer that 
specifically, but right now, as I stated, as far as the civil side of 
the Internal Revenue Service, Department of the Treasury, that 



148 

would fall under the compliance of the Examination Division. I can- 
not specifically answer. I don't know exactly what we are doing in- 
sofar as those specific locations in California. But I will be happy 
to get back to you and provide you with the record of that. 

But as I said in my statement, as long as those activities do not 
fall under the supervision of the Federal Bank Regulatory or the 
SEC, they would fall under the purview of the Examination Divi- 
sion as far as civil oversight. 

Mr. Calvert. What mechanisms are currently in place to ensure 
that the cash flow in an Indian casino is fully and effectively mon- 
itored? 

Mr. Palmer. Pardon? Could you repeat that? 

Mr. Calvert. What mechanisms? Is this the same? Would it be 
the same answer? What mechanisms are currently in place to en- 
sure that the cash flow in an Indian casino is fully and effectively 
monitored? 

Mr. Palmer. That would also be within the Examination Divi- 
sion. 

Mr. Calvert. So we would need to talk to someone within the 
Examination Division to get an answer to those questions. 

Mr. Palmer. Yes, sir. 

Mr. Calvert. I understand — and maybe this question would go 
back to Mr. Moody — that there is no control on the revenue that 
is coming out of those slot machines, for instance, in California. Is 
that an accurate statement? 

Mr. Moody. I believe that is an accurate statement, yes, sir. 

Mr. Calvert. I understand that there is also no control on the 
types of odds on those machines or the quality of the machines. Is 
that an accurate statement? 

Mr. Moody. I believe that is an accurate statement. 

Mr. Calvert. I also understand that the National Indian Gam- 
ing Commission has no right, no jurisdiction, to involve itself in 
Class 3 gaming in California since Class 3 gaming technically is 
not legally permissible in California, so nobody is regulating that. 
Is that an accurate statement? 

Mr. Moody. I would rather you asked that with the Gaming 
Commission, sir. As far as I know in California, there are some 
regulatory agencies set up because you also have the card clubs out 
there. The specificities of what the Gaming Commission does, I 
would appreciate it if you would refer that to them. 

Mr. Calvert. Do we have any idea then if it is accurate to say 
that that revenue isn't being— do we know where the money came 
from in the first place to acquire those slot machines? Do we have 
any knowledge of that? 

Mr. Moody. No, sir, I don't. I can look into it. 

Mr. Calvert. If I can continue on this, it is common knowledge 
that Class 3 gaming is being conducted on many California, New 
Mexico, Washington State Indian reservations without a tribal- 
State compact, including electronic games of chance, video-poker, 
slot machines, and video black jack. Is it not a violation of State 
and Federal law to conduct such gaming without a compact, as- 
suming the States can compact for the games in the first place? 

Mr. Urgenson. I think it would be a violation of the law to con- 
duct Class III games without a compact, that is correct, and the 



149 

issue for us is whether or not it would be something which war- 
rants law enforcement, criminal law enforcement, involvement. 

As I have attempted to indicate in our statement, that is a very 
complicated question which requires an analysis of the specific 
facts, and if there is any specific evidence of such conduct which 
should be addressed in California, I think it should be addressed 
through the United States Attorney's office there. 

Mr. Calvert. To carry on from what you just said, why is the 
Federal Government allowing Class 3 gaming to take place in Cali- 
fornia if, in fact, it is not allowed? 

Mr. Urgenson. I am not familiar with the specific factual situa- 
tion in California, so I can't give you a detailed response. What I 
have generally tried to address in my statement is that there are 
instances in which it is alleged that illegal Class III gaming is 
going on in a particular jurisdiction, and whether or not it is in fact 
Class III gaming, whether or not the classification is in question, 
whether there are ongoing negotiations with respect to a compact, 
whether or not there is litigation in court concerning the fairness 
with which the States have dealt with the tribes, are all factors 
that are considered in a specific case as to whether or not we are, 
as you might suggest, allowing something or acting. 

Mr. Calvert. I will ask Mr. Moody. 

Mr. Moody, do you think that 700 slot machines in Southern 
California would classify as Class 3 gaming? 

Mr. Moody. That depends upon my counsel here on my right. 
Whenever we have situations like that, quite frankly, we wait until 
it is cleared up more before we commit manpower to conduct inves- 
tigations on something like that. 

Mr. Calvert. I had just one more question for you, Mr. Moody. 
There was an article in U.S. News some time ago when you were 
asked a question, "Which crime families are involved in Indian 
gaming?" Do you remember your answer to that question? 

Mr. Moody. No, sir, I don't. 

Mr. Calvert. According to U.S. Business News Report, "I don't 
know of any that aren't." 

Mr. Moody. No, that is not quite a quote. The question was, 
"Which crime families would be interested in Indian gaming? " And 
I believe that I responded that I don't believe I would know that 
any wouldn't be. 

If you go back to my original definition, organized crime address- 
es — they are after money, and any time they can penetrate a gam- 
bling operation that generates large amounts of money, they will, 
but, as Mr. Urgenson said, we do not see a concerted effort by orga- 
nized crime to infiltrate Indian gaming. We have had a couple of 
instances that we have investigated; we have had one that we have 
prosecuted. 

Mr. Calvert. Thank you, Mr. Chairman. 

Mr. Richardson. I recognize the gentleman from Hawaii. 

Mr. Abercrombie. Thank you, Mr. Chairman. 

Mr. Urgenson, on page 4 of your testimony, you say, "Similarly, 
there has been little evidence of illegal activity committed by crimi- 
nal elements not associated with major organized crime families." 
And then in reference to — keeping that in mind, if you would — ^Mr. 
Palmer's testimony, which, parenthetically, Mr. Palmer, I want to 



150 

say is exceptionally well stated. It has taken a relatively com- 
plicated issue that some of us may not be familiar with and stated 
it in such a way as it makes it crystal clear as to what we are deal- 
ing with. 

Mr. Palmer's testimony — I don't know if you have had a chance 
to go over it in detail, Mr. Urgenson 

Mr. Urgenson. No, but I have listened to it. 

Mr. Abercrombie. Okay — indicates that a lot of the difficulties 
with respect to casinos are outside forces or elements, like lawyers 
trying to launder drug money, for example, trying to utilize a ca- 
sino. Am I correct that this could be done by any person intent 
upon that kind of activity in any casino, whether it was Indian 
gaming or anybody else legitimately pursuing gambling? 

Mr. Urgenson. I think that is a fair statement. 

Mr. Abercrombie. Is that your contention also, Mr. Palmer? 

Mr. Palmer. Yes. 

Mr. Abercrombie. That it wouldn't necessarily be zeroing in on 
Indian gambling? 

Mr. Palmer. No, of course not. 

Mr. Abercrombie. Then, Mr. Palmer, if I could go to you, the lat- 
ter part of your testimony on page 15 and 16 — would it be correct 
to summarize that testimony as indicating that you have a good 
working relationship with various tribal groupings and gambling — 
gaming interests among tribes with respect to what their obliga- 
tions are and what they can do to improve their capacity to resist 
this kind of infiltration, criminal infiltration? 

Mr, Palmer. Congressman, I would answer that, we are still in 
the infancy, but our experience, you know, during this infancy, is, 
I would say yes, we have had a very good reception from, I think, 
most, if not all, the tribal leaders, trjdng to educate them in our 
outreach process, and, as I said, educate them as to what their re- 
quirements are so that they can be in compliance with 60501, or, 
if this changed, to the Bank Secrecy Act, to ensure the proper safe- 
guards and checks and balances will be there. 

Mr. Abercrombie. Then finally, are the recommendations that 
you are making in your testimony — and I want to indicate, I have 
only gone over your testimony this morning, so I may have missed 
a sentence or two that more specifically addresses my questions. 
But are the recommendations that you are making with respect to 
the Bank Secrecy Act and the 60501 regulations — are you making 
these recommendations with respect to all reporting with respect to 
gambling transactions, gaming transactions, or more specifically to- 
wards gaming and tribal activity? 

Mr. Palmer. I will let Mr. Djinis 

Mr. Djinis. Maybe if I can clarify — I hope I understand the ques- 
tion correctly — I think the recommendation essentially is that the 
Treasury Department be authorized to place and to issue regula- 
tions that would place Indian casinos under the Bank Secrecy Act, 
under the same types of requirements that are subject now. 

That is not to say that every form of Indian gaming, whether it 
is a slot machine or other kinds of gaming, would be subject to the 
Bank Secrecy Act but, rather, the same kinds of standards that are 
employed now for nontribal gaming. 



151 

Right now, the Treasury Department has regulations which es- 
sentially kick in at a $1 million gross earnings level per year, and 
presumptively the same standards would apply for tribal gaming. 

Mr. Abercrombie. So you see the principal danger here over and 
above the questions of whether it is a good idea to have gaming or 
not or whether there is an adequate compact negotiated, and I am 
taking into consideration Mr. Urgenson's multiple examples of the 
difficulties of trying to decide whether to prosecute something or 
whether to move forward on any legal basis, civil or otherwise, 
keeping that in mind. Your intentions here are to deal principally 
with laundering activities and other activities that would be crimi- 
nal in nature over an above the question of the operation of the ca- 
sinos themselves, right — the gaming operations themselves? 

Mr. Palmer. Yes, that is correct. Congressman. 

Mr. Abercrombie. Now, are there any exemptions presently ex- 
isting to the kind of reporting processes that you are recommend- 
ing here? 

Mr. Palmer. No, other than the fact right now the Indian casinos 
are under 60501 versus the BSA, the Bank Secrecy Act, and an ex- 
ample I gave, right now under 60501, the filing of the Form 8300 
really only gives us the first half or the first third of the trans- 
action — that is, the money the player brings into the casino — 
whereas the amendment into the Bank Secrecy Act will show all 
the exchanges of money which happen, not only the money that is 
brought into the casino, the exchange for chips, the winnings, 
winnings from the slots, it gives the whole financial picture so 
there is an adequate audit trail then for financial or law enforce- 
ment purposes. 

Mr. Abercrombie. Would it be fair to say that if your rec- 
ommendations were incorporated into the existing law and/or regu- 
lations that come from the existing law, that this would go a long 
way toward ensuring both the tribes and the general public that 
the operations were being conducted on a basis that were as devoid 
as possible of infiltration of criminal activity? 

Mr. Palmer. I believe it would be a major step in the right direc- 
tion, yes. 

Mr. Abercrombie. Thank you very much. 

Mr. Richardson. The chair recognizes the chairman of the com- 
mittee. 

Mr. Miller. Thank you. 

Following up on Mr. Abercrombie's point, is there anything in 
the law that would prohibit the Secretary to extend these provi- 
sions of the Bank Secrecy Act to the Indian gaming? 

Mr. Djinis. Well, generally the way that the currency reporting 
statutes — the Federal currency reporting statutes — work is that ei- 
ther you are a financial institution, which is defined under our reg- 
ulations, or you are a trade or business. 

Right now, our regulations do not define tribal casinos as a ca- 
sino. Therefore, it is not a financial institution and not subject to 
the Bank Secrecy Act. Therefore, it is a trade or business, and that 
is consistent with the Indian Gaming Regulatory Act and to the ad- 
monition that 60501 reporting should occur. 



152 

So it is our view that unless the statute is changed, tribal casinos 
are not subject to the Bank Secrecy Act and we cannot issue a reg- 
ulation to that effect. 

Mr. Miller. What is the arrangement with the State of Nevada 
in the Bank Secrecy Act? 

Mr. Djinis. The State of Nevada, pursuant to regulations in the 
Bank Secrecy Act and pursuant to a memorandum of understand- 
ing between Treasury and the State executed in 1985, has adopted 
its own parallel system of reporting, if you will, where it is sub- 
stantially similar to the Bank Secrecy Act. 

Those reports are submitted to the Nevada regulators, which in 
turn are submitted to the Internal Revenue Service, but the report- 
ing itself goes from the casino to the regulator and then ultimately 
to the Internal Revenue Service. 

Mr. Miller. Does the IRS reserve to itself the right to audit 
that? Has the IRS authority under law to audit those reports? 

Mr. Djinis. Well, it is interesting you should ask that question. 
Traditionally, the examination component has been conducted by 
the State, but the State — ^we had meetings with the State just 
three weeks ago, I believe, and we are going to be doing a joint 
compliance examination. 

So there is nothing that prohibits compliance examinations being 
conducted by the Internal Revenue Service, and we will see how 
this one works out. 

Mr. Miller. So what is the current arrangement prior to this 
new process? They do this auditing themselves, and they turn that 
in to the IRS. For what use by the IRS? 

Mr. Djinis. Let me just see if I can clarify. 

Mr. Miller. Thank you. 

Mr. Djinis. The auditing that I am referring to — and I hope it 
is the same question that you are referring to — is the auditing or 
the examination by the Nevada regulators, by the Nevada Gaming 
Control Board, over the casino's compliance with Nevada's report- 
ing system and other provisions. 

Mr. Miller. The purpose of which is the same as, in theory, the 
same as 

Mr. Djinis. The purpose is identical in theory to the examination 
component that the Internal Revenue Service performs when exam- 
ining casinos' compliance in Atlantic City, for example, with the 
Bank Secrecy Act. 

Mr. Miller. But when you went through your examples of Ca- 
sino A and Casino B, the purpose of the Bank Secrecy Act in the 
Nevada regulatory scheme is for the purposes of watching the flow 
of the money, for the purpose of laundering. Is that correct? 

Mr. Djinis. Well, I think it is a broader purpose. Number one, 
the purpose — there are three recognized components of the Bank 
Secrecy Act: Its use in criminal investigations and proceedings, in- 
cluding investigations concerning financial crime; its use in identi- 
fying tax enforcement essentially, to be utilized for tax enforcement 
purposes; and the third, as you have mentioned, consistent with 
the Bank Secrecy Act, is for determining regulatory compliance. 

So clearly, money laundering is a very important component, but 
there are three vital interests that are in effect in the Bank Se- 
crecy Act. 



153 

Mr. Miller. But those records are — basically, Nevada has set up 
its own system of compliance and then has its own system of audit- 
ing whether or not compliance is taking place, and that is the end 
of the process. They turn the data over to the IRS, but the IRS, 
under the current system today, has no ability or does not go in 
and audit whether or not the compliance is achieving the goals for 
the purpose for which it was set up an/or whether it is accurately 
done. That is not done today? 

Mr. Djinis. Well, I cannot — obviously, I am not with the Nevada 
Gaming Control Board, so I can't speak to the efficacy of their ex- 
amination process. 

Mr. Miller. I understand that. 

Mr. Djinis. What I can say is that there is a process in the State, 
and we will find out there through this joint examination. At least 
there will be an inquiry into the utility of the program there. 

The Gaming Control Board in the Nevada has not sat idly by; 
they have enforced violations of their own compliance program over 
the years. 

Mr. Miller. But in terms of the injection of what is this new ar- 
rangement that you are laying out, you are now injecting essen- 
tially Federal oversight, because you will go through a joint audit- 
ing process to determine whether or not the purposes of the Bank 
Secrecy Act are in fact being complied with by this system of State 
regulation that is put in, in lieu of the Bank Secrecy Act. 

Mr. Djinis. I think that is correct. 

Mr. Miller. To date, we don't know that, as a matter of ongoing 
oversight. We may know it in a specific case where one system 
broke down or you didn't catch one transaction and somebody 
might have caught it under a different system, but that is not a 
matter of ongoing oversight. 

Mr. Djinis. That is correct. 

Mr. Miller. Why are you going to this new regime? 

Mr. Djinis. There are a number of different reasons, and I think 
the best way to describe it is that the thinking has evolved, the 
thinking in terms of anti-money-laundering compliance, the think- 
ing in terms of our experience with examining casinos and the In- 
ternal Revenue Service's experience with examining casinos in 
other properties such as New Jersey and in Puerto Rico. 

We have a certain degree of expertise to offer, and I think it is 
also true that Nevada, which has been dealing with these subjects, 
has their own degree of expertise to offer. We see gaming extending 
to numerous other States, and it is time for us now to start work- 
ing together. 

Although there is a parallel system in place in Nevada, that is 
not to suggest that either we can't learn from the systems that 
have been employed in Nevada or that I believe the Nevada Gam- 
ing Control Board can learn from some of the techniques, the au- 
diting programs, the computer software that we have developed to 
ensure compliance with the BSA as well. It is time for us to start 
working together. 

Mr. Miller. What is the rate of violation today within the casino 
industry in the Bank Secrecy Act? 

Mr. Djinis. The rate of violation? 



154 

Mr. Miller. Do you get five a year? Ten a year? How many 
transactions? Is this a lot of transactions that are monitored? There 
are obviously a lot of transactions, I assume, that are monitored. 
Mr. Djinis. All of the currency reports are fed into a database, 
a Treasury database, and I don't have the exact figures with me 
right now, but I believe we are looking at something in the nature 
of approximately 60,000 such transactions, all in excess of $10,000 
in currency that are filed annually. 

Mr. Miller. And the Justice Department — the compliance, 
where are you on that? Is this all done in compliance, or are there 
people out of compliance? Do you have prosecutions open? 

Mr. Urgenson. I am not aware of specific instances, or statistics, 
I should say, with respect to casino-based prosecutions. I know that 
evidence of money laundering in casinos frequently comes up in 
connection with white-collar and other kinds of prosecutions. So it 
is a very useful database to have, and there is a lot of money 
laundered through casinos. But I couldn't give you a specific statis- 
tic as I am sitting here. 

Mr. Miller. I guess what I am trsdng to determine is, given the 
Bank Secrecy Act and the regulatory schemes that we have set up, 
this apparently — what you are saying is that it is apparently a sort 
of typical endeavor to try and launder money. Whether or not you 
are successful or not is different, but this is looked upon as an in- 
dustry in which you can certainly — it is worth making the attempt, 
or do people attempt it on a regular basis? 

Mr. Urgenson. I think that is a fair statement, yes. 

Mr. Miller. It is a method. 

Mr. Moody. By an individual generally. If you have an organized 
crime group take over the casino, they are going to launder it any- 
way and not comply with that in the first place. But then the law 
itself enables us to later on reconstruct what happened. The major- 
ity of money laundering in casinos is a method by an individual to 
try to launder money through the casino. 

Mr. Miller. And that is picked up how? 

Mr. Moody. Various ways: Through the computer database 
maintained by Treasury, and/or later on we may come up with in- 
formation of a certain individual being involved in drug trafficking 
or some other activity, where we go back and trace his activities. 

Mr. Miller. So it is not an uncommon attempt. 

Mr. Moody. No, it is not uncommon. 

Mr. Miller. How common are the prosecutions for it? 

Mr. Moody. It is getting so in almost all prosecutions the FBI 
has on organized crime and white collar crime that money launder- 
ing is involved in it. So money laundering of some sort is very ac- 
tive, because people are always trying to generate the illegal mon- 
ies into legal monies. Now how much is coming out of the casinos 
I don't know, sir. 

Mr. Miller. How common are prosecutions against casinos? 

Mr. Moody. Not very common at all, sir. It has been a number 
of years since we have had any against a casino. The casinos them- 
selves don't want the money laundering because they are worried 
about the taint that would go along with it. 

Mr. Miller. It affects their license obviously, I assume. 

Mr. Moody. Yes, sir. 



155 

Mr. Djinis. Mr. Chairman, if I could clarify again, I think there 
was testimony that was alluded to earlier about what the Bank Se- 
crecy Act involves, and frankly, although the true enforcement of 
the Bank Secrecy Act is going to be by compliance by casinos, that 
is not to suggest that the currency reports that are required are 
there to somehow implicate a casino. 

In fact, the majority of our interest is on the patrons' activity, not 
on the activity of a particular financial institution, and a lot of the 
research, the proactive targeting, or whatever, that is done is fo- 
cused upon individuals or people who are identified with organiza- 
tions who happen to be conducting transactions through a casino. 

The second thing I would like to clarify is that it is not so much 
that casinos represent the most prevalent form of money launder- 
ing or tax evasion or whatever. Casinos, like other kinds of bank 
and nonbank financial institutions under the Bank Secrecy Act, are 
subject to currency reporting and other kinds of record-keeping re- 
quirements in order to, if nothing else, have a chilling effect to 
properly identify individuals engaged in those transactions and to 
make sure that there is an audit trail of those transactions when 
they involve currency. 

Mr. Miller. That is not to suggest that there hasn't been institu- 
tional involvement in intentional attempts to go around the Bank 
Secrecy Act. 

Mr. Djinis. I am not suggesting that at all. What I am suggest- 
ing is that there is more than a focus against the financial institu- 
tion, whether it is a casino or a money transmitter or a savings and 
loan. It is also on the transactions. 

Mr. Miller. I understand, but the Act is set up recognizing that 
there are two parties to the transaction, right? 

Mr. Djinis. That is correct. 

Mr. Miller. Okay. Thank you. 

Mr. Richardson. Does the gentleman from New Jersey wish to 
be recognized for questions? 

Mr. TORRICELLI. If I could, Mr. Chairman, for a few moments. 

Mr. Moody, your title is that you are with the organized crime 
and drug operations of the FBI? 

Mr. Moody. Yes, sir. 

Mr. Torricelli. And who is it that heads your task force on in- 
vestigating Indian gaming? 

Mr. Moody. If it has an)i;hing to do with organized crime, I am 
responsible. 

Mr. Torricelli. No. I mean your dedicated task force to Indian 
gaming. Who runs that operation on a day-to-day basis? 

Mr. Moody. We don't have a dedicated 

Mr. Torricelli. You don't have a task force? 

Mr. Moody. No, sir. 

Mr. Torricelli. We have in New Jersey 985 people who monitor 
18 casinos, virtually an inspector per table. How many agents do 
you have dedicated to dealing with the problems of corruption on 
Indian reservations on a full-time basis, as we do — ^the number of 
people who are dedicated to this purpose? 

Mr. Moody. Concerning Indian reservations themselves, we have 
other responsibilities on the Indian reservations. 



156 

Mr. TORRICELLI. I understand that. But dealing with the prob- 
lems of gaming we are focused on. 

Mr. Moody. Okay. Let me take a step back. Concerning the In- 
dian reservations, we have about 44 agents assigned to the Indian 
reservations to conduct all sorts of investigations. 
Mr. TORRICELLI. On all purposes, you have 44. 
Mr. Moody. Yes, sir, organized crime investigators. 
Mr. TORRICELLI. How many Indian gaming establishments are 
there in the country? 
Mr. Moody. They are growing rapidly every day. 
Mr. TORRICELLI. Well, isn't it fair to say there are 124? 
Mr. Moody. Right. 

Mr. TORRICELLI. Now I am told that while we in New Jersey 
have an inspector on each table each day in every casino, you do 
not have enough agents, in fact, involved in dealing with corruption 
on Indian reservations that they could be visited on an annual 
basis. Would that be a fair statement? 

Mr. Moody. We are not visiting casinos for regulatory functions 
on the Indian reservations. 

Mr. TORRICELLI. I see. So during the course of a year, a year 
could pass and, in fact, these casinos could never be visited by a 
Federal official under your jurisdiction. That would be a fair com- 
mentary? 
Mr. Moody. That is very possible. 
Mr. Miller. Would the gentleman yield? 
Mr. TORRICELLI. I would be happy to yield to the chairman. 

Could I go through a few questions and then 

Mr. Miller. Just on that point, your jurisdiction is organized 
crime, not casinos? 

Mr. Moody. That is correct. My jurisdiction is organized crime. 
Now in organized crime I have 903 agents. 

Mr. Miller. They work on the organized crime end of the spec- 
trum. 
Mr. Moody. That is correct. 

Mr. TORRICELLI. Well, let's take them that way. How many of 
those organized crime people are dedicated to dealing with orga- 
nized crime involvement in Indian gaming? I will take the chair- 
man's distinction; it is a fair point. How many of those are dedi- 
cated to dealing with organized crime in Indian gaming? 
Mr. Moody. I do not dedicate any of them to organized crime in 

casinos, but I do dedicate them 

Mr. TORRICELLI. So the answer is essentially the same, none. 
Mr. Moody. But I do dedicate them to organized criminal groups. 
Mr. Miller. Let the gentleman finish. 

Mr. TORRICELLI. Yes, I would be glad to have him finish. I would 
like, though, for this period of time, to go through this relatively 
quickly, if I could, Mr. Chairman, because I have a lot of questions. 
Mr. Moody. I dedicate the agents to organized criminal groups 
involved in the totality of their violations or their activities. That 
is what I am interested in. 

Mr. TORRICELLI. Well, let's then, to sum up then, before I move 
on — the number who are dedicated to organized crime in Indian 
gaming is essentially none, and you were not contradicting my 
point that during the course of the year, even those who deal tan- 



157 

gentially with the issue may not visit Indian gaming at all while, 
in fact, those other casinos established under laws in New Jersey 
and Nevada have hundreds of agents. 

If you would like to quarrel with that, I would be glad to have 
you do so. 

Mr, Moody. No, sir, that is not quite accurate. I don't necessarily 
visit any Nevada or New Jersey gaming casino unless I am looking 
at organized crime involvement. 

Mr. TORRICELLI. No, of course, but we have taken care of that 
problem by having 985 people who do. 

Mr. Moody. Those are State regulators, yes, sir. 

Mr. TORRICELLI. Let me move on, if I could. 

Mr. Miller. Would the gentleman yield? 

Mr. TORRICELLL Yes. 

Mr. Miller. Then you have to compare that to, in many reserva- 
tions and the States all have their people who visit the reserva- 
tions and ongoing surveillance from local law enforcement, from 
tribal law enforcement — okay, so there is an overlay. 

Mr. TORRICELLI. Yes, that is a fair point. 

How many of the Indian gaming authorities of the Federal Grov- 
emment — how many inspectors do they have? 

Mr. Moody. I don't know, sir. 

Mr. TORRICELLI. Twenty seven. So the combined resources of the 
FBI and the Indian gaming authorities are 27. 

Let me move on, if I could. 

The inspector general's report concluded, on page 2, "Indian 
tribes may be losing significant income because of fraud or abuse 
in an industry that is generating revenues of $2 billion a year on 
Indian lands." Indeed, the report concludes that generally the fraud 
could be in the millions of dollars. 

Since this report was issued, has there been a new dedication of 
resources or an investigation to find the veracity of the inspector 
general's report? 

Mr. Moody, Not in organized crime because I don't believe that 
it states anything in there about organized crime involvement in 
that. 

Mr. TORRICELLI. No, but I am dealing generally with the ques- 
tion of fraud or abuse. This report obviously raises some serious 
questions. I am concerned about the FBI's reaction to it and in see- 
ing whether or not there is veracity in these claims. 

Mr. Moody, I don't know, sir, and it depends also on the individ- 
ual reservation whether we are even investigating there, 

Mr. TORRICELLI. Mr. Chairman, I will be very brief, but, Mr. 
Urgenson, tell me, of the 124 Indian casinos operating, how many 
of them have arrangements with the IRS similar to New Jersey or 
Nevada, or indeed the Indian casino in Connecticut, with regular 
operations to protect against laundering? 

Mr. Urgenson. I don't know the answer to that question, Con- 
gressman, as to whether any of them have. 

Mr. TORRICELLI. You are not aware that any of them have simi- 
lar arrangements? 

Mr. Urgenson, One way or the other, I am just not aware of it. 

Mr. TORRICELLI. I see. 



84-760 O - 94 - 6 



158 

What is important to me is that your testimony here, particularly 
you, Mr. Moody, has enormous credibility with this committee and 
with this Congress and in many wavs will influence the judgment 
of individual Members whether to proceed, and while I think we 
should all be appreciative of your presence today and the expertise 
that you add, that level of expertise is extremely important for us 
to make judgments. 

It is obviously my own conclusion that we can neither affirma- 
tively discount or account for the level of organized crime involve- 
ment, because I don't believe indeed anybody actually knows. 

For example, in the Seminole case in Florida, the Department of 
the Interior concluded that it could not proceed with an investiga- 
tion for lack of resources. Was that indeed followed by an FBI in- 
vestigation in the case of the Seminoles? 

Mr. Moody. It is my understanding that allegations concerning 
the Seminole case in Florida involved an individual by the name 
of Anthony Accetturo which, for your information, he was just con- 
victed of racketeering charges in New Jersey, not necessarily hav- 
ing to do with the Indian casino in Florida, 

Mr. TORRICELLI. Yes. 

Mr. Moody. So we try to take these individuals out when we 

Mr. TORRICELLI. Mr. Moody, lest you think that somehow you 
have raised a point here that would deflect my interest, it is your 
point that is exactly my interest. 

I know where these people are coming from, because I live with 
them every day in my State. I know who they are, and I know 
what is taking place here. That is why I am asking the question. 

Now, before I conclude, I simply want for the purpose of the 
members of the committee to understand the level of FBI involve- 
ment in this investigation to date. Could you therefore tell me, as 
a witness coming before this committee, what you know about the 
sourcing of buying slot machines with the Mohawk Tribe in New 
York? 

Mr. Moody. I don't know anything about the sourcing of slot ma- 
chines for the Mohawk. 

Mr. TORRICELLI. I see. They were purchased by associates of 
John Grotti. 

Could you tell me anything about Robert Sabes? 

Mr. Moody. No, sir, I don't know anything 

Mr. TORRICELLI. Mr. Sabes is involved with the Lucchese crime 
family by a contractual basis in that he rents real estate to them 
and is involved with Indian tribes in Minnesota. 

Finally, could you tell me about the FBI investigation concerning 
Mr. Alvarez? 

Mr. Moody. I can't tell you about any investigation. 

Mr. TORRICELLI. Well, Mr. Moody, I could. Mr. Alvarez was mur- 
dered after he refused to engage in discussions on Indian gaming 
contracts. He £ind two associates were found dead, according to a 
report of the attorney general's office of the State of California. 

Mr. Moody, with all due respect, I appreciate the fact that you 
are here to help with this questioning, but indeed isn't it fair that 
if this were a court of law and you were to have to be sworn in 
as an expert witness on Indian gaming and the problems of corrup- 



159 

tion, it is doubtful that in fact you could be an expert witness on 
that issue? 

Mr, Moody. On Indian gaming, that may be true, but on orga- 
nized crime I have been qualified in several courts as being an ex- 
pert witness. 

Mr. TORRICELLI. Of course, but we are not talking about the New 
York waterfront, we are talking about Indian gaming. 

I have no further questions, Mr. Chairman. Thank you for the 
time. 

Mr. Richardson. I have to ask Mr. Moody just one question, be- 
cause this has been, as the gentleman said, a very important panel. 

You mentioned that the FBI has fewer than five open investiga- 
tions of organized crime in Indian gaming. 

Mr. Moody. Yes, sir, I have in the past. 

Mr. Richardson. Now how does that compare with any inves- 
tigations you are undertaking in New Jersey or Nevada? 

Mr. Moody. We have more investigations in New Jersey and Ne- 
vada, but as far as the casinos go, we have less than five investiga- 
tions in New Jersey or Nevada involving the casinos. 

Mr. Richardson. Now, the Rincon reservation case 

Mr. Moody. Yes, sir. 

Mr. Richardson. Who tipped you off on that? 

Mr. Moody. Our intelligence base, sir. 

Mr. Richardson. Well, I am on the Intelligence Committee; you 
can tell me. 

[Laughter.] 

Mr. Richardson. All right. Let me thank 

Mr. Miller. Mr. Chairman, if I might have a round of questions. 

Mr. Richardson. Yes. 

Mr. Miller. Mr. Moody, I don't quite get what Mr. Torricelli's 
point was, but let me go back and reconstruct what took place here. 
Your testimony is — and correct me if I am wrong — is essentially 
that your unit has not found any significant problem with respect 
to organized crime within Indian gaming. Is that correct? 

Mr. Moody. That is correct. 

Mr. Miller. Your testimony is not that there have not been inci- 
dents where organized crime has tried to take advantage one way 
or another within the Indian gaming industry, that there are epi- 
sodes, the Rincon Tribe, others where that has happened. In one 
case, that has been a successful prosecution. 

Mr. Moody. That is correct. 

Mr. Miller. Your expertise here is as to the activities of orga- 
nized crime, correct? 

Mr. Moody. That is correct. 

Mr. Miller. And looking at it from the question of whether or 
not — what is the extent of the involvement of organized crime, 
again, it is that there is no significant activity here to date that 
you can document. 

Mr. Moody. That is correct. 

Mr. Miller. By the same token, the issue of whether or not you 
dedicate people to New Jersey casinos or Nevada casinos or Indian 
casinos has no bearing on that issue either, does it? 

Mr. Moody. No, sir. I dedicate my manpower to the La Cosa 
Nostra family. 



160 

Mr. Miller. I would think that in America when most people 
think about organized crimes and the problems that confront them 
as taxpayers, Indian casinos would be fairly far down on the list 
when they consider all of the problems that we have with illicit 
drug involvement, with what happened in some of our banks, with 
what happens with illicit gun trafficking. I would assume you are 
being prudent when you are not dedicating people to hang out in 
Indian casinos to see if they can spot organized crime. 

Mr. Moody. I hope I am being prudent. Our target is the La 
Cosa Nostra family. We are trying to destroy them, and that is 
what we are emphasizing, and we will destroy them on any identi- 
fied illegal activity that we can come up with. 

Mr. Miller. So if your involvement in this comes through the or- 
ganized crime networks, you follow those leads wherever they take 
you. They could take you to the race tracks, to a savings and loan, 
to a bank, to a politician's office; they could take you anywhere, 
right? 
Mr. Moody. That is correct, sir. 

Mr. Miller. You don't try to come around and anticipate where 
they might show up on any given evening. 
Mr. Moody. No, sir. 

Mr. Miller. I think it is very important, Mr. Chairman, that we 
delineate that issue. 

Now with regard to the second issue, whether or not there has 
been illegal activity within the Indian gaming industry, whether 
employees have taken money out the back door, whether dealers 
have skimmed, all of the things that we know go on in this indus- 
try across the board, people are dismissed on a regular basis within 
this industry for some impropriety with respect to the security of 
the cash flow. That does not trigger on any level FBI involvement, 
does it? 

Mr. Moody. It can possibly trigger our involvement if we have 
responsibility for the Indian reservation, and it may be referred to 
us. 

Mr. Miller. But in the general gaming industry that is not the 
case. It may trigger the Nevada Gaming Commission, the Indian 
Gaming Commission, it may trigger the IRS if this person shows 
up that he is signing for all these $10,000 transactions; it may trig- 
ger a lot of things; but that doesn't necessarily rise to the occur- 
rence of an — I think it is very important here that we understand 
that, that we not try to give the illusion that something exists here 
that factually does not exist to date as we know it, given the sur- 
veillance and the involvement of these agencies that are respon- 
sible for it. That does not give Indian gaming or non-Indian gaming 
a clean slate with the involvement of their — with State regulatory 
agencies, with Federal agencies, with their employees, their man- 
agement, and others who are involved in this process. But that is 
true of the hardware industry too, and, I suspect, the grocery store 
industry, that people are running away with other people's monies 
all the time, and we ought to just keep that in perspective, Mr. 
Chairman. 

I was very concerned that the suggestion was, somehow, because 
an FBI agent wasn't on the spot, that that suggested either lack 



161 

of enforcement or the misapplication of Federal manpowers and re- 
sources. Thank you. 

Mr. TORRICELLI. Mr. Chairman, would you yield for a moment? 

Mr. Miller. Sure. 

Mr. TORRICELLL Perhaps we can conclude this round, having dis- 
agreed on the past, we could agree on the future. 

You were quoted in the Boston Globe last week as saying, Mr. 
Moody — and I quote — "I don't believe that organized crime is just 
sitting back and saying, "Why would we want to get involved in 
that?' I say they are going to be looking at every one of them and 
tr3dng to identify certain areas to get into." 

Therefore, Mr. Moody, you and I may dispute what has happened 
to date, but indeed if you will affirm that that is your quote, I take 
it we can agree that in the future organized crime is going to be 
looking at Indian gaming as it is now constituted, it is something 
on which we need to be vigilant and to address changes in the law, 
if indeed that is possible. Would that be a fair conclusion for this 
round of testimony? 

Mr. Moody. I don't know about that quote; I never saw it. But 
this is my opinion of organized crime, sir 

Mr. TORRICELLL Mr. Moody 

Mr. Moody. If you will give me one second 

Mr. TORRICELLL My concern would be, this is about the third 
time we have raised a newspaper quote with you here today. I live 
in politics, so I understand what it is like to be misquoted, but you 
have a unique propensity. Did you not make this quote in the Bos- 
ton Globe last week? 

Mr. Moody. I don't even recall talking to the Boston Globe, sir; 
I really don't. 

Here's the way I look at organized crime. It is made up of a lot 
of individual criminal entrepreneurs, and any time you have any 
industry or any way that can generate money, especially one with 
a lot of cash, you are always going to have certain individuals in- 
volved in that, that want to try to penetrate that activity. 

So if you have any t3rpe of gaming operation, there is always the 
potential that you will have somebody in organized crime trying to 
penetrate that, and that is why my recommendation here is that 
strong regulatory agencies be set up to prevent that. 

Mr. TORRICELLL Very good, Mr. Moody. Whether or not you af- 
firm the quote, you certainly affirm the thought, and for that I am 
appreciative. Thank you. 

Mr. Richardson. I want to thank this panel. You have been very 
patient, and you have provided a very interesting component for 
this hearing. 

We now would move on to our third panel: Our colleague from 
New Jersey, the Honorable Robert Torricelli, U.S. Representative, 
New Jersey Ninth District, and Mr. Donald Trump, chairman and 
president. Trump Organization, from New York City. 

I want to welcome our witnesses and would ask them to step for- 
ward to the panel, and I would defer to our colleague from New 
Jersey to introduce his colleague or to provide us with the first 
round of testimony. Again, we have a very key issue here in this 
committee, and we heard Senator Inouye talk about an October 19 
decision on what the other body is doing. 



162 

I want to thank our colleague from New Jersey, and I would ask 
him to please proceed. 

STATEMENT OF HON. ROBERT G. TORRICELLI, A REPRESENT- 
ATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. TORRICELLI. Thank you, Mr. Chairman, very much, and 
thank you for this opportunity. 

I am before you today to share both my thoughts with you on the 
question of Indian gaming, an industry important to my State, the 
ramifications of its problems, I think affecting all of us, and out of 
concern that you would not recognize your next witness, I wanted 
to introduce him to you this morning. 

Mr. Chairman, for almost a century my State and many areas 
of this country have been plagued with the scourge of organized 
crime. It has been a parasite on businesses that have legitimately 
attempted to operate in my State and, indeed, been an embarrass- 
ment to many parts of our community. 

After extraordinary efforts by the Federal Government and sig- 
nificant changes in the law in recent years, by any accounts, we are 
close to breaking the back of organized crime. But an extraordinary 
irony is arising. Just as we find family after family that are being 
broken, it is my own judgment that a drowning Mafia is being 
tossed a lifeline for its own survival. Unregulated casino gaming 
without provisions for the protection of the transfer of cash, with- 
out provisions to do background checks or investigations, has 
opened an enormous door for the survival of organized crime as we 
know it. 

Indeed, a multi-billion-dollar operation is already operating in 
this country. Without question, some of the 175 operations in 26 
States are already compromised. It can be no surprise that 22 seri- 
ous allegations have already been made concerning some of these 
operations. 

Mr. Chairman, I think just for a moment it bears citing what 
some of these allegations are. I will not attempt to name most of 
them, but I will mention only a few. 

The State of California, Barona Rancheria, Stewart Siegel admit- 
ted to being a front for orgsinized crime. He had for a while headed 
the tribe's management firm. 

Cabazon Indian Tribe in California. After tribal Vice President 
Fred Alvarez began complaining of money skimming, he mysteri- 
ously was found dead with two friends. 

The Rincon Indian Reservation in San Diego County, Sam 
"Wings" Carlisi and eight other organized crime figures were in- 
dicted in a 15-count indictment comprised of felony charges. 

Jackson Rancheria: Anthony "Tumac" Accetturo managed a bingo 
hall in 1985. He recently was convicted as being head of the 
Lucchese organized crime family. 

The State of Minnesota, the White Earth Tribe, Angelo Medure, 
an alleged associate of the Pittsburgh organized crime figure, Car- 
men Ricci, an alleged associate of New Jersey's Scarfo, who indeed 
had attempted to penetrate New Jersey casino gaming in previous 
years, has raised an investigation by law enforcement personnel. 



163 

In the State of New York, as I cited earlier, in the Mohawk 
Tribe, an associate of John Grotti was arrested for shipping slot ma- 
chines to the reservations. 

And in my own State of New Jersey, the Ramapough Indians em- 
ployed one Robert Frank as a consultant. He was later convicted, 
along with Mr. Accetturo, of racketeering and extortion, of being 
the head of New Jersey's Lucchese crime family. 

Not anecdotes, Mr. Chairman, 22 States, 22 instances, where the 
threat of organized crime is not a theory, it is not somebody's con- 
spiracy, it is a reality of everyday life, and the question is, what 
is this committee and what is Congress going to do to deal with the 
problem? 

Forty-nine governors and, indeed, the President of the United 
States have all cited the current state of affairs cannot be allowed 
to continue. This committee heard previously from Senator Inouye 
claiming that negotiations with the governors would solve this 
problem, but indeed a letter from the Grovernors Association that 
Senator Inouye has received claims that those negotiations are not 
adequate and they are not coming to a resolution and that indeed 
this Congress must act. 

Mr. Chairman, I know the good intentions of this Congress and 
of this committee in trying to open opportunity for Indian Ameri- 
cans. I do not come before you claiming that there are not problems 
with Indian Americans. They are profound, and they are an embar- 
rassment to each and every American. We have violated our word, 
we have not respected the most basic human rights of our Native 
Americans. 

But this is no answer. We are doing no favor to Indian American 
culture by destroying it by opening up Indian gaming as a pro- 
tected industry for them. We are destroying their culture, we are 
destroying their traditional leadership, by inviting corruption in an 
industry without oversight, without basic controls for money laun- 
dering. 

Finally, Mr. Chairman, I make no apologies for the fact that, 
aside from this being a concern for a variety of reasons with orga- 
nized crime, with a concern for the destruction of Indian culture, 
it is also an enormous concern for my State of New Jersey. 

Six percent of the revenues of my State come from legitimate ca- 
sino gaming. If indeed Americans, every American, comes to believe 
that casino gaming in this country is compromised, that it is not 
legitimate, that they cannot be treated fairly at their tables, then 
indeed not only will Indian gaming suffer but Las Vegas and Atlan- 
tic City, where we have made real and substantial efforts to ensure 
the integrity of the industry, will also be compromised, and we will 
lose the revenue, and so will the senior citizens, and the institu- 
tions that are established for the disadvantaged that profit from 
those taxes also suffer. 

Mr. Chairman, I would at this point like to jdeld and introduce 
Mr. DonEild Trump. The Trump Organization is by far the largest 
investor in Atlantic City. It has invested not simply millions but in- 
deed in excess of a billion dollars in the operations of legitimate ca- 
sino gaming in Atlantic City. 

This much I can say about Mr. Trump will distinguish him from 
what you have heard today about Indian gaming. The State of New 



164 

Jersey knows Mr. Trump. He chose to do business in Atlantic City. 
So we know who invests in his companies. We know who he buys 
his supplies from. We know who works for him. We know who 
walks in his casinos with cash, where it came from, and where it 
went. We know a lot about Mr. Trump, and we know a lot about 
everybody who attempted to come to Atlantic City. 

From established organizations like the Hilton organization 
through many lesser applicants, we rejected people because they 
didn't meet our standards, and today we spend not simply millions 
but many millions of dollars not simply with a few inspectors but 
hundreds of inspectors, to make sure that the same people who I 
cited as being involved in organized crime in Indian casinos 
throughout this country will not be in the State of New Jersey. We 
chased them out, we kept them out, they are out, and because they 
are out of the State of New Jersey, they are seeking to take advan- 
tage of Native Americans who want opportunity but who will be 
victimized if we fail to protect them. 

I do not want to see discrimination. I want no part of denying 
opportunities to Native Americans. I come today not because but 
in spite of those who would restrict their opportunities. It is simply 
a question of assuring that they are safeguarded, like Atlantic City 
and Las Vegas are safeguarded and indeed that we all are pro- 
tected against these elements which we are so close to defeating in 
our country. 

With that, Mr. Chairman, if I could, I would like to yield to Mr. 
Trump. 

[Prepared statement of Mr. Torricelli follows:] 



165 



STATEMENT OF REP. ROBERT G. TORRICELLI 

BEFORE THE HOUSE SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

OCTOBER 5, 1993 

I'd like to thank Chairman Richardson for holding today's 
hearing and offering me the opportunity to testify. 

It would be difficult to overstate the importance of today's 
hearing not only to my home state of New Jersey, but to the country 
as a whole. For what we have seen over the past five years -- the 
proliferation of over 175 commercial Native American gaming 
establishments in 26 states -- has enormous consequences to our 
social fabric and our law enforcement capabilities. 

What we have seen is the spread of de- regulated casino gaming 
across the country without the citizens of the United States or 
their elected representatives ever having made the decision to let 
that happen. As a representative from one state that does allow 
high stakes casinos, I believe that is the wrong way to proceed. 

Gambling in New Jersey was a very difficult public policy 
decision. It was made only after careful consideration by the 
people of New Jersey and their elected officials, and it was 
accompanied by an amendment to the state's Constitution. I believe 
that decisions to allow casino gaming on Native American lands 
should undergo the same public scrutiny and the same input from 
affected communities. 

But the purpose of today's hearing is not to discuss whether 
we should allow the further proliferation of these casinos. The 
purpose, instead, is to discuss whether these casinos are properly 
regulated and whether they pose an irresistible invitation to 
organized crime. 

I believe that if one compares the regulation of casino gaming 
in New Jersey with the regulation of tribal casinos, there is great 
cause for concern. 

Atlantic City's casinos operate under the most comprehensive 
system of gaming regulations in the world . In developing its 
regulations. New Jersey officials sought considerable input from 
their counterparts in Nevada. We took what worked best in Las 
Vegas and adopted it for our own, and we went above and beyond Las 
Vegas' regulations where we thought it was necessary. 

New Jersey spends $60 million each year to fund two government 
agencies that enforce its regulations. Virtually all aspects of 
casino operations, from who can be involved to the specific 
dimensions of a chip, are strictly enforced. 



166 



In Atlantic City, background checks are conducted on any 
individual who handles any money or who is involved directly in the 
games. These checks are so thorough that the owners of the Hilton 
Hotel chain were originally turned down for a license because the 
company had some dealings that were not sufficiently explained to 
state regulators. 

New Jersey's casinos are also subject to the Bank Secrecy Act, 
which requires meticulous reporting and recordkeeping of cash 
transactions. In fact, every single dollar is accounted for and 
reported back to the state. 

Tribal casinos, on the other hand, are regulated by the tribes 
themselves. The Federal Government is severely limited in the 
amount of oversight it can provide, and the states can only monitor 
the games subject to conditions laid out by a tribal-state compact. 

The federal Indian Gaming Commission does have oversight 
responsibilities for Class II gaming, such as bingo. But the 
Commission has a $3 million budget and a staff of 24 to oversee 
more than 100 class II Indian gaming operations across the country. 
By contrast. New Jersey gaming regulators, who have responsibility 
for 12 gaming operations in one city, have a $60 million budget and 
985 employees . 

Operators of tribal casinos are hired by the tribes 
themselves, and often undergo no background investigations. 
To illustrate how inadequate background checks can be, an 
individual who headed the management firm for gaming operations on 
the Barona Rancheria reseirvation in San Diego was twice turned down 
for a license by the Nevada Gaming Control Board. 

Furthermore, these casinos are not subject to the Bank Secrecy 
Act. The danger of this situation has attracted the attention of 
Treasury Secretary Bentsen, who has stated support for making 
tribal casinos subject to the Act, and who wrote recently that 
"without adequate recordkeeping, internal controls, and currency 
reporting, Indian gaming has. . .potential to be an attractive target 
for money laundering." 

We are aiL.ady beginning to see the negative coi.-equences of 
this loose regulation. 

* In a report issued last December, the Inspector General for 
the U.S. Interior Department said gaming revenues of over $12 
million may have been improperly diverted from tribes to 
operators and suppliers, principally because of theft and 
mismanagement by contracted operators of gaming 
establishments. In last Wednesday's Boston Globe , the author 
of that report stated that "those places are sitting ducks for 
fraud. " 



167 



* On the Rincon Reservation outside of San Diego, three 
reputed mob leaders from Chicago and two local men were 
convicted of conspiracy to launder money and defraud the 
tribe. 

* There have been repeated allegations of ties between 
the Seminole Indian Tribe's bingo operation in Florida 
and organized crime. Both the Interior Department and 
the Attorney General of Florida have begun 
investigations. And the FBI recently reported that ties 
do indeed exist. 

* The Cabazon tribe in California hired a member of a 
local crime syndicate to run its casino. A tribal 
official who accused the manager of skimming profits was 
forced out of office and found dead two months later. 
While the case has not yet been solved, investigators 
believe that the murder was mob related. 

* New Jersey's Ramapough Mountain Tribe signed a contract with 
the Rory Management Company (RMC) . In return for spending 
millions of dollars on lobbying efforts to secure federal 
recognition for the tribe, RMC would be allowed to co-own and 
operate a high stakes bingo hall and casino on tribal land. 
Robert Frank, RMC's president, was sued less than a year later 
for $6 million for alleged fraud and embezzlement scheme at a 
California Indian bingo hall. He was subsequently the subject 
of a criminal investigation for fraud, interstate money 
laundering, and possible ties to organized crime. 

* The FBI is currently investigating Angelo Medure, who 
manages a casino for Minnesota's White Earth Band of Chippewa 
Indians. Medure is a business associate of Henry Zottola, who 
works for the Genovese crime family. It is suspected that 
these men are laundering money for that crime family. 

To accompany my written testimony, I am submitting for the 
record 22 specific examples of organized crime infiltration or 
corruption in tribal gaining that have been reported in the media. 

Some will say that these are isolated instances, or that they 
are only rumor and hearsay. But the fact is that in the five years 
since passage of IGRA, tribal casinoshave opened in 26 states, and 
reports of corruption or ties to organized crime have already 
surfaced in 10 of them. 

Anyone who honestly examines the manner in which tribal 
casinos are currently managed and regulated -- and the ability of 
organized crime networks to exploit this situation -- can only come 
to the conclusion that what we are seeing today is the tip of the 
iceberg. In fact, I am willing to submit that the only reason we 
have not seen even more evidence of ties between organized crime 
and tribal casinos is that no Federal regulatory apparatus exists 
to police it or look into it. 



168 



I have introduced legislation -- HR 2287, the Gaming Integrity 
and State Law Enforcement Act -- that will address these problems. 
Similar legislation has been introduced by Senators Harry Reid and 
Richard Bryan in the other body. 

* HR 2287 will give states the right to reject forms of gaming 
on tribal lands that are not allowed elsewhere in the state 
and give states that do allow tribal gaming more power to 
negotiate regulatory controls in gaming compacts. 

* It will make it the responsibility of the Attorney General 
of the United States to ensure that adequate background checks 
are conducted on individuals affiliated with tribal casinos 
before those individuals begin work at a casino. 

* It will also address Secretary Bentsen's concerns by 
making Indian gaming establishments subject to the same 
financial reporting requirements as other businesses in 
the United States. 

Some have already branded my legislation as aji effort simply 
to protect the economic interests of New Jersey and Nevada. I will 
not deny that the economic health of Atlantic City's casinos is 
crucial to the economic health of New Jersey, and that I have an 
interest in looking out for my home state. But I would also point 
to cosponsorship of this legislation by Members and Senators from 
California, Wyoming, Florida, Arizona, Kentucky, Wisccns:n, New 
York and New Hampshire. 

Those with open minds will also see that this legislation 
comes from people who know gaming, and who see better than anyone 
else the dangers posed by loosely regulated casinos. We know that 
Native Americans themselves want to prevent criminal elements from 
infiltrating their operations. We also kjiow that gaming is the 
most productive engine of economic development that many tribes 
have ever experienced. We're simply trying to use our own 
experience to better protect them. 

We also understand better than anyone the stakes that are 
involved if just one tribal casino is found to be under mob 
i.i^luence, or if just one tribal casino is found guilty of fixing 
gcimes . The ramifications would not be limited to tribal casinos, 
but would reverberate throughout the entire industry. We cannot 
allow a few unscrupulous individuals to destroy an industry that 
has been built very carefully over several decades and that is the 
economic lifeblood of two states. 



169 



It is now my pleasure to introduce Donald Trump, the owner of 
three Atlantic City casinos, including the Taj Mahal, New Jersey's 
largest . 

Some will casually dismiss his testimony because of his 
financial interests. But I urge you to listen carefully, because 
Mr. Trump speaks as one who has seen first-hand the extent to which 
proper regulation is a necessity to keep the games clean and 
prevent the infiltration of organized crime. He also presents a 
rare example of a businessman who, cognizant of the dangers posed 
by lax oversight, actually seeks greater regulation by the Federal 
Government . 

Thank you, Mr. Chairman. I look forward to joining you to 
question the additional panels scheduled for this morning. 

MM 



170 



Arizona 1. Yavapai -Apache Tribe; Yavapai-Apache Reservation; 

Phoenix, Arizona 

1. Despite the fact that federal officials seized the 
business records of Robert Sabes in July, 1993 for Sabes' alleged 
ties to organized-crime figures, the Yavapai's have awarded him 
preliminary approval to manage their proposed casino north of 
Phoenix. (U.S. News and World Report, 8/23/93). 

Arizona 2. Mohave-Apache Indian Community; Fort McDowell Gaming 
Center; Fountain Hills, Arizona 

1. William Fontana, a security consultant under investigation 
by the FBI and the Mohave-Apache tribal police, for allegedly 
bilking $700,000 from the Fort McDowell tribal gaming center has 
faced similar charges twice in Arizona and once in Florida. He was 
hired by the casino manager to investigate, Al Weiss, the casino's 
security director in an effort to force Weiss out. ( The Arizona 
Republic, 2/3/93) 

California 1. Barona Rancheria; California 

1. Stewart Siegel admitted to being a front for organized 
crime; former head of the tribe's management firm. (Los Angeles 
Times, 10/8/91) . 

2. Emmett Munley, the head of a management firm that ran 
gaming operations on the Barona Rancheria twice failed to get a 
license from the Nevada Gaming Control Board. (Los Angeles Times, 
10/8/91) . 

3. During Congressional hearings in 1989, an anonymous 
witness, who was later revealed to be Stewart Siegel, admitted that 
he had cheated an Indian-gaming establishment out of $600,000 per 
year by paying a chief $1,000 per week. (Los Angeles Times, 
10/7/91) 

Californiia 2. Cabazon Indian Tribe; Cabazon Reservation; 

Southern California: 

1. According to ' t.ie California State Attorney General's 
Office, in May 1981, after tribal vice president Fred Alvarez began 
complaining of money skimming, Alvarez and two friends were shot 
dead. (Los Angeles Times, 10/8/91) 

2. A poker room was managed by reputed organized crime figure 
Rocco Zangari. (Los Angeles Times, 10/8/91) 

3. In 1985, John Nichols a non-Indian advisor to the Cabazon 
tribe was sentenced to four years in prison for trying to hire an 
undercover policeman to serve as a hit man. (San Francisco 
Chronicle, 9/5/91) . 



171 



California 3. Rincon Indian Reservation; San Diego County, 
California 

1. On January 10, 1992, the reputed acting boss of Chicago's 
mafia, Sam "Wings" Carlisi, and eight other organized-crime figures 
were indicted in a fifteen count indictment comprised of felony 
charges for their attempts to take over gambling operations and 
skim casino profits. (Proprietary to the United Press 
International, January 27, 1992). 

California 4. Jackson Rahcheria; Amador, California 

1. James L. Williams, an associate of Anthony "Tumac" 
Accetturo, managed a bingo hall in 1985. Accetturo was recently 
convicted of being the head of the Luchese organized-crime family 
of New York. (Los ANgeles Times, 10/8/91) . Williams was convicted 
in 1987 of failing to pay taxes on some $300,000 he earned from 
Indian bingo halls. (New Jersey Law Journal, 9/13/93); (.S. News 
and World Report, 8/23/93) . 

California 5. Mi-Wok Tribe; "Chicken Ranch"; Tolumne, California 

1. In 1984, an arson fire swept through the home of and 
incinerated an activist for the Mi-Wok tribe named Karl Mathiesen. 
Mathiesen had complained that Indians were not being given fair 
profits. Although there it was never proven that the crime was 
tied to gaming, California Deputy Attorney General Rudolf Corona, 
Jr. has stated that "someone wanted (Mathiesen) very dead." (Los 
Angles Times, 10/8/91) . 

California 6. Morongo Reservation, California 

1. In 1984, the tribe sued an outsider for running an 
unauthorized bingo on one member's land. Testimony later disclosed 
that reputed crime figures Rocco Zangari and Tommy Marson 
frequented the hall. (Los Angeles Times, 10/8/91). 

California 7. Rvunsey Rancheria; California 

■• A former tribal secretary was indicted for tax charges for 
allegealy fleeing to Nevada with a Rolls i\oyce and $400,000 in 
gaming proceeds. (Los Angeles Times, 10/7/91). 

California 8. Soboba Reservation; Riverside, California 

1. One Indian-gaming management firm was found to have 
embezzzled $252,000 and another included a fugitive from the French 
Connection Heroin case. (Los Angeles Times, 10/8/91). 



172 



California 9. Twenty-nine Palms Reservation; San Bernardino, 
California 

1. Wiretaps in 1987 overheard Chicago mobster Chris Petti 
discussing a possible hotel-casino, although the deal never 
materialized. (Los Angeles Times 10/8/91) . 

California 10. Cloverdale and Hopeland Bands of Porno Indians; 

Northern California 

1. Angelo Medure, an alleged associate of a Pittsburgh crime 
family plans to manage casinos for the Hopeland Band of Pomo 
Indians in Northern California, the Cloverdale Pomo Indians in 
Northern California. His involvement with the White Earth Tribe of 
Minnesota has led to investigation by local law enforcement 
officials. (U.S. News and World Report, 8/23/93). 

Connecticut 1. Mashantuckett Pequot Indian Tribe; Foxwoods 
Casino; Ledyard, Connecticut 

1. Robert W. Werner, Connecticut's top gambling regulator, 
complained that state police are not authorized to investigate 
financial backers of Indian casinos; the Hartford Courant noted 
that " as a reuslt, the state has been unable to conduct a full 
investigation of the Malaysian company that has bankrolled the $60 
million first phase of Foxwoods and much of the $142 million 
expansion now under construction" (Hartford Courant, 5/27/93) . 

2. The Courant reported that Werner also complained of "large 
backlogs" created by an inefficient background-investigation 
system." (Hartford Courant, 5/27/93) 

3. Connecticut State Police suspect a gang from Boston of 
theft of "several thousand dollars" from an electronic cash- 
transferral system at the Foxwoods casino. (Hartford Courant, 
January 19, 1993) 

Florida 1. Miccosulcee Tribe; Miccosukee Indian Reservation; 

Miami, Florida 

1. Tamiani Partners approved a bingo-papei supply contract 
with Frank Nannicola of Warren, Ohio. Nannicola is the son-in-law 
of Charles Imburgia, whom the Pennsylvania Crime Control Commission 
claims is a member of the Genovese organized-crime family from 
Pittsburgh. The National Indian Gaming Commission has never 
investigated Nannicola, the paper-supply concern run by Nannicola, 
or Tamiani Partners. (U.S. News and World Rpeort, 8/23/93). 



173 



Florida 2. Seminole Tribe; Seminole Indian Reservations; Tampa and 
Hollywood, Florida 

1. Two independent investigations by the FBI and the 
Department of Interior's Inspector General both concluded that the 
management companies that run the tribe's bingo operations have 
ties to organized crime. (The Blood Horse, January 30, 1993) 

2. The Interior Department report indicated the tribe's 
management contract includes no opportunity for the tribe to 
maintain control over the management firms. The state has no 
jurisdiction on reservations and the federal government will not 
spend the resources to ensure adequate oversight. (The Tampa 
Tribune, January 7, 1993) 

Minnesota 1. White Earth Tribe; Shooting Star Casino; Mahnomen, 
Minnesota 

1. The White Earth tribe's dealing with Angelo Medure, an 
alleged associate of Pittsburgh organized-crime figures, and Carmen 
Ricci, an alleged associate of New Jersey's "Nicodemo Scarfo" 
organized crime family, have raised concerns among citizens and 
law-enforcement officials. (U.S. News and World Report, 8/23/93). 

2. Angelo Medure, an alleged associate of the "Nicodemo 
Scarfo" crime family also plans to manage casinos for the Hopeland 
Band of Pomo Indians in Northern California, the Cloverdale Pomo 
Indians in Northern California, and the Senaca-Cayuga Tribe in 
Miami, Oklahoma in addition to the White Earth Tribe of Minnesota. 
(U.S. News and World Report, 8/23/93). 

Minnesota 2. Nett Lake Chippewa Tribe; Nett Lake Reservation; 

Minnesota 

1. The Nett Lake Chippewas of Minnesota, leased 172 slot 
machines from a company it later discovered was owned by the non- 
Indian casino manager and tribal attorney. As a result the tribe 
paid $2.5 million dollars to rent machines that would have cost 
$800,000 to purchase. (The Boston Globe, 9/29/1993) 

Montana 1. Assiniboine and bouix Tribes; Fort Peck Reservation; 

Wolf Point, Montana 

1. The Assiniboine and Souix of Montana signed a contract to 
build and manage a $10 million gaming/ retail complex with a 
company that had no experience in construction or casino 
management. $5 million of financing included "three instruments 
made out in German, drawn on a Swiss bank account and payable to an 
Italian national." (The Boston Globe, 9/29/93). 



174 



2. The Inspector General's report states "The international 
financial arrangements indicate the need for constant scrutiny to 
ensure that such arrangements are sound and protect the interests 
of Indian tribes. (The Inspector General's report) 

New York 1. Saint Regis Mohawk Tribe; Saint Regis Mohawk 
Reservation; upstate New York 

1. In 1990 an associate of John Gotti was arrested for 
shipping slot machines to the reservation. (Los Angeles Times, 
10/7/91) . 

2. A casino — legal only because of a compact signed after 
1991 -- opened there in July 1993. 

Oklahoma 1. Seneca-Cayuga Tribe; Miami, Oklahoma 

1. Angelo Medure, who is involved with operation in the 
Seneca- Cayuga gambling hall, has has been under investigation for 
his dealings with tribal casinos in California and Minnesota, and 
for his connections to the Genovese crime family. 

Wisconsin 1. Wisconsin Winnebago Nation; Winnebago Reservation; 

Madison, WI 

1. Under the management of Glenn Corrie, the Winnebago tribe 
of Madison, Wisconsin lost $2,000,000 in illegal payments to Corrie 
and cannot account for another $3,700,000 in casino revenue 
intended for the tribe. (Star Tribune (Wisconsin), July 4, 1993) 

2. The Inspector General's reports indicate that the tribe 
saw its $2 million dollars in savings become $2.5 million in debt 
over 18 months due to casino mismanagement. (The Boston Globe, 
9/29/93) 

New Jersey 1. Ramapough Mountain People; Ramapough "Reservation"; 

Bergen County, New Jersey 

1. The Rampough Mountain ^3ople, a group currently under ^ 
consideration for federal recognition that plans to open a casino 
in Northern New Jersey, employed Robert Frank as a "consultant" 
until 1991. Frank is a longtime associate of Anthony "Tumac" 
Accetturo, who has been involved extensively with Indian gaming 
operations across the country. Accetturo was recently convicted 
(in New Jersey) of racketeering, extortion, and being the head of 
New York's "Luchese" organized-crime family. Frank also maintains 
ties with James Williams, who was convicted in 1987 of failing to 
pay taxes on some $300,000 he earned from indian gaming bingo 
halls. (New Jersey Law Journal, 9/13/93); (U.S. News and World 
Report, 8/23/93) . 



175 

Mr. Richardson. I thank my colleague. 

Mr. Trump, please proceed, and welcome to this committee. 

STATEMENT OF DONALD TRUMP, CHAIRMAN AND PRESIDENT, 
TRUMP ORGANIZATION, NEW YORK, NY 

Mr. Trump. Thank you very much, Mr. Chairman. It is an honor 
to be here, and I appreciate the time. 

I had a rather long and probably very boring speech drawn out, 
and I have decided not to read this speech after having heard so 
much this morning. It was politically correct, it was something that 
was going to get me in no trouble whatsoever, but I just don't feel 
it is appropriate to go through it. 

I think that it is obvious from everything you have heard today 
that organized crime is rampant, is rampant — I don't mean a little 
bit — is rampant on the Indian reservations. People know it; people 
talk about it. 

I watched the FBI discussing the fact that they had virtually no 
agents checking, and I just wondered to myself, I wonder what J. 
Edgar Hoover would have said about this. 

What is happening on the Indian reservations is known by the 
Indians to a large extent. I don't believe anything is being done 
about it. And, to be honest with you, I think if you knew some of 
the characters that you are dealing with, I think they would be 
afraid to do anything about it. 

In Atlantic City and in Las Vegas we have the FBI, many, many 
folks from the FBI, we have our own people, we have the U.S. at- 
torneys, we have sheriffs, we have marshals, we have everything 
watching every move. 

As Congressman Torricelli said, they really know me better than 
I know myself, everybody, from the Casino Control Commission all 
the way up or down. It is really an incredible situation that I have 
to go through in terms of checks. Every check I sign, every docu- 
ment I sign is scrutinized by, not one, not two, but in many cases 
three, four, and five different groups of people, and in the end I am 
not saying that things can't be done wrong, I am not saying that 
things can't happen, but people are going to get caught; they are 
absolutely going to get caught. 

I have witnessed so many different things, and I can't tell you. 
We have an industry in Atlantic City that has contributed $2.5 bil- 
lion to the Casino Revenue Fund. That is a fund set up for senior 
citizens and the disabled. Two things can happen, and this is big 
money. This is, 9.25 percent of every dollar gets sent to the senior 
citizens and to the disabled in New Jersey and beyond, and beyond 
in terms of groups of people. 

If this continues as a threat, it is my opinion that it will blow, 
it will blow sky high, it will be the biggest scandal ever or one of 
the biggest scandals since Al Capone in terms of organized crime, 
and it is going to destroy an industry that is a legitimate industry, 
an industry that is watched carefully by everybody. This will be a 
scandal. Congressman Miller, I believe, will be very embarrassed 
by it, I believe a lot of you folks that are standing there, I believe 
honestly knowing that what you say is perhaps not as correct as 
you would like to make it sound. I believe that there is going to 
be a lot of embarrassed and a lot of red faces. 



176 

But to sit here and listen as people are saying that there is no 
organized crime, that there is no money laundering, that there is 
no anything, and that an Indian chief is going to tell Joey Killer 
to please get off his reservation is almost unbelievable to me. 

I listen about sovereign nation, the great sovereign nation, and 
yet $30 billion to all of the various programs was contributed to the 
sovereign nation for education, for welfare, for this, for that. 

I listened as to sovereign nation, and yet the sovereign nation 
and the people of the sovereign nation have the right to vote in our 
country. 

I listen as to sovereign nation, all of the medical, all of the other 
treaties. 

I want to know, can Indians sign treaties with foreign nations? 
Can they go and sign a treaty with Germany? The answer is no. 
How is it a sovereign nation? 

It is only a sovereign nation in that Indians don't have to pay 
tax, and what you have — what you have is, you have a very inter- 
esting dichotomy. We are paying $2.5 billion worth of tax. The Indi- 
ans don't have to pay tax. Nobody is more for the Indians than 
Donald Trump. 

And you ask about competing. I love to compete. Nobody likes — 
and I think many of you folks up there know for a fact that I love 
to compete. But I like to compete on an equal footing. I am compet- 
ing and paying hundreds of millions of dollars in tax. My so- 
called — as you would call them — opponent — and they are not an op- 
ponent — ^but my opponent is competing and paying no tax. It is not 
a fair situation. It is not fair to the States. 

If, in fact, Indian gaming were allowed in northern New Jersey, 
the Fund for Senior Citizens would be totally destroyed, the fund 
for medical care and all of the other uses that this tax money is 
paid for would be totally destroyed, and I think that is a real big 
problem. 

And one other thing I might add. We talk about Indians like 
gaming is going to be the salvation. You have a group of Indians 
in Connecticut. I have heard 300, I have heard 400. It is a casino 
that is far and away the most profitable in the world because, 
again, they don't pay tax. Why don't they distribute some of the 
funds to all of the other Indians throughout the United States that 
don't have a location of Connecticut right next to New York City 
and right next to Boston? 

Why is it that the Indians — ^we talk about these 300 Indians 
which, by the way, was rather recently formed — why don't they 
make their contributions to all of the Indians? You have probably 
a profit on that, I would estimate, of $400 or $500 million. This 
goes to a total of about 300 to 400 Indians. Why don't we make 
contributions? Why doesn't this money get taxed, and why doesn't 
this money be distributed throughout the United States to Indians 
who locationally can't have a reservation where you would have a 
casino because the casino is too far away from the population? 

So I listened to what has gone on today, and truly I am amazed, 
and I am disappointed. I am disappointed as a citizen. When I have 
to sit here and listen to people saying that everything is just 
peachy-dory, it is not, folks. It is going to blow. It is just a question 



177 

of time, and when it blows you are going to have a lot of very em- 
barrassed faces sitting right where you folks are sitting right now. 

Thank you very much. 

[Prepared statement of Mr. Trump follows:] 



178 

TESTIMONY 

Of 

DONALD TRUMP, PRESIDENT 

TRUMP ORGANIZATION 

Before 
The 

SUBCXDMMITTEE ON NATIVE AMERICAN AFFAIRS 



October 5, 1993 
9:30 a.m. 



179 



Good morning Mr. Chaimum and Members of the Committee. Thank you 
for the privilege of appearing before you today on this important issue. 

Thank you. Bob, for that warm introduction, and thank you for being here 
with me tod^. Your presence clearly indicates the importance of this matter to ±e 
people of New Jersey. 

I'm Donald TVump. Tm from New York where I develop, restore and create 
new prcpeities and hotels. As Bob Totricelli noted, I also operate three casinos in 
Atlantic City under license from the State of New Jersey and tliat is why I am here 
today. Those casinos have stockholders and bondholders other than myself. As 
Chairman of the Board of these casinos, I represem their interests as weU. 

Much has been said in recent weeks about the big casino interests - people 
like Donald Thmip taking on America's native people. Trump and all the moneyed, 
muscle crowd attacking minorities. That isn't the case at all. In a sense, this has 
little to do with the Indians. Neither I nor my colleagues in the indtistry oppose the 
right of our first countrymen to seek economic determinadon and to secure their 
futures. As you know, many people in our industry are helping Indian tribes 
accomplish that goaL 

I am not here to quarrel with Indians. But I and others do have a quanel 
with the federal government And when it comes time for a single citizen to stand 
up to the power and resources of Washington, all of us, including Donald Trump, 
are just members of John Q. Public. A little guy against the biggies. 



180 



But America is a great country and even little guys, in this case even Donald 
Trump, have some rights. And states also have some rights in our constitutional 
system. We believe that in this case the rights of Donald Trun^), the residents of 
New Jersey and the state itself are quite synoiqaQous. 

As stated, I operate three casinos in Atlantic Oty. Aaually, although a lot 
of people seem to think I know little about the business, I am the largest 
individual casino operator in the world. I say that modestly as you would expect 

However, in New Jersey, I and my colleagues don't merely operate casinos 
for our own fun and profit We are economic partners with the state. The first 9.25 
percent of every dollar we take in goes to New Jersey - off the top - off our gross, 
not our net Eight percent of that goes to support the Casino Revenue Fund (CRF). 
This is a state program we fund which supports seniors and thr disabled. It allows 
seniors to buy prescription drugs for $5.00, offsets their property taxes, helps reduce 
their electricity bills and provides other services like home health care. It offers our 
seniors and disabled both security and digniQr. 

In 1992 New Jersey casinos provided $255 million to this fund. Since 1978 
when Atlantic City's first casino opened, our industry has provided S2ii billion to the 
CRF. 

The next 1.25 percent of gross casino revenue goes to a state agency, the 
Casino Reinvestment Development Authority (CRDA). We are the sole funding 
source of that organization. Last year we provided $40 million to the CRDA which 
invests these funds in public projects throughout New Jersey. Through 2009, it is 



181 



estimated the CRDA will invest $654 million in Atlantic City, $413 million in 
southern New Jersey and $297 million in northern New Jersey. This money has and 
will continue to bxiild housing, day care centers, senior citizen con^)lexes and 
shopping centers in all of the state's urban areas. It's a lot of money, and it's for 
worthwhile causes. 

Some 75,000 New Jerseyans and their families are working because of our 
business; more than 43,000 directly in Atlantic Oty. We employ well over half of 
the city's entire work force. In 1992 alone we paid more than a billion dollars in 
wages and benefits to our people. 

More than $5 billion of investment, that's right $5 billion of private capital 
has made Atlantic City the economic base of the entire southern half of New Jersey. 
We represent over 4 percent of the state budget. 

We have accomplished all this under the most restrictive regulatory 
standards in the country. We are the most highly regulated business in any capacity 
in any venue. We pay the state over $60 million annually for our own regulation. 
That's ccnect • we pay to regulate ourselves although state regulation is separate 
and apart from us and beyond reproach. 

As I said, our regulation is stiff. Each of my businesses is relicensed on a 
biannual basis. As of now, I must personally requalify each year. All key employees 
must do so. This is no easy process. Every activity and transaction are checked by 
the State Police. Some eighty pages of documenution; associations, personal and 
business checks; family background; and resources. It is totally pervasive. Actually, 



182 



I am told that some of the owners of sports franchises in our country would not 
qualify for licensure in New Jerse/i casino industry. 

I can state without fear that we are solid corporate dtizeni operating a clean 
and honest entertainment business. Both we and New Jersey are proud of this 
record and rightfully so. 

Do you wonder, therefore, why we are so deeply concerned, even paranoid, 
that Indian tribe operations are not similarly regulated. Do you know what would 
happen to our reputations, our businesses if organized crime gained a foothold in 
any of the Indian operations. I am not suggesting that organized crime has done to 
although there have been numerous articles in the press that this has happened. It 
is the mere possibility that scares us. A scandal in any Indian casiiu) operation 
would reilect on us, rub off on our industry. Our honesty, our integrity, our 
reputations would be compromised at once. It is an old story - guilt by association. 
Years of work down the drain. We know that Indian tribes want clean and honest 
operations. However, we also know that people involved in advising some of the 
tribes, those operating and funding certain of their operations, are not subject to the 
strict licensing and qualifying regulations in place in New Jersey and other states. 
Yes, we are concerned, very concerned. The federal government has unleashed a 
process without regard to the economic or social consequences to the stau in which 
the activity takes place. 

However, I am not in law enforcement so I will let the law enforcement 
people discuss these matters. 



183 



I am here to talk about what oould happen in New Jeney if this process were 
applied there. I would like to trace for you what would happen to xis, our employees 
and their families, oiu seniors and disabled if the federal govemmem luilaterally 
detennined to recognize an Indian tribe in northern New Jersey near New York 
Qty. Please note I used the word would; not what oould happen. 

Pint of all, an Indian casino operation in northern New Jersey would be the 
econoo:ic death knell to Atlantic City. Much of our market, which we and the state, 
our economic partner, have worked hard to aeate and protect, would disappear. 
No one will ride two hours in trafSc to do the same thing that they could do in 
fifteen minutes or a half hour. We would lose jobs • a lot of them because casinos 
would be forced to close in a dwindling market. 

New Jersey's public investment in a new convention center, in airport 
development would be seriously compromised. Millions spent on new infrastructure 
and highway development would have been wasted. Atlantic City, even today, is a 
state resource and treasure which would be immediately undermined. 

Let's forget Donald Trump and the casino industry for a moment. What 
about New Jerse/i citizens. Certainly the millions for seniors and the disabled and 
reinvestment would decrease quite measurably. The money will not be replaced by 
an Indian casino. 



What about the state? Would New Jersey be able to assure itself that its 
public policy of strict regulation would be maintained? Not to the extent that it now 
controls the regulation of gaming in Atlantic Qty. Under existing lacws, no state has 



184 



prerogative over Indian gaming. Therefore, the state would be powerless to cany 
out it& regulatory policy over these operations. It is quite a dichotomy. New Jersey, 
which has prided itself as the state with the strictest form of casino regulation, could 
be forced to accept lesser standards for Indian tribes operadng within its sute. Such 
is the nature of State - bulian compact negotiationa where states are forced to 
accept less than optimum regulatory measures out of fear that they will be sued by 
Indian tribes for not negotiating in 'good faith.* 



And what about worken. Did you know, for example, this week at the AFL- 
CIO meeting in San Francisco that some of our largest unions, the Service Workers, 
the Seafarers, the Operating Engineers and the Restaurant and Hotel Worken 
joined to form the Riverboat and Indian Gaming Service Trade Council? The 
purpose of the council is clear-cut • to protect workers. Do you know why? Because 
federal laws, like the Taft-Hartley, like the jurisdiction of the National Labor 
Relations Board do not apply. They also cease to exist at the tribal land doorstep. 
At present, union worken even in states like New Jersey, would have no federally or 
state protected rights or the ability to organize in casinos operated on tribal lands. 
The unions hope to do something about this. They hope to gain the right to 
recognition, the right to organize if they so choose. Quite frankly, I hope they have 
better luck than we have had so far. 

So gentlemen, the issue is really not Donald Trump and the moneyed casino 
interests against various Indian tribes. The issue is whether our government in 
recognizing the legitimate rights of our native Americans will simultaneously assure 
that the rights of our state's own citizens, our workers, our senion and, yes, even 
Donald Trump, are not bargained away or stomped upon in the process. 



185 



Tbat is the reaiOQ that n^ielf and otben are supporting Bob Torricelli's 
legislation and also why I filed a lawsuit against the Seaetaiy of the Interior. I'm a 
citizen, and I believe it is nqr right to protect thyself and my companies when the 
government reftiaes to do so. 

Thank you. 



186 

Mr. Richardson. Thank you. 

Mr. Trump, let me start out by exercising the prerogative of the 
chair in asking the first question. You mentioned the words "ramp- 
ant organized crime infiltration on Indian gaming." 

Mr. Trump. Yes, sir. 

Mr. Richardson. Have you presented this evidence to the FBI 
or to this committee? Do you have documentation of that? 

Mr. Trump. Well what I have is, I have many, many instances 
of events one after another — organized crime figures, killings, 
deaths, laundering of money. I mean I could read them to you. 
Frankly, this would have been much more interesting to read than 
my own testimony. That is why I decided not to read my testimony. 
Wisconsin, White Earth tribe, all the Apache Tribe — all instances 
one afl:er another. I have more instances here. You folks know that. 
I really believe you know that, and I could give you any docu- 
mentation I have. 

Now, this is without having people watching. This is with listen- 
ing to an FBI person sajdng that he has got no men — no men, 
zero — assigned to the reservation. 

At the Taj Mahal, I spent more money on my security and my 
security systems than most Indians spend in building their entire 
casino, and I will tell you, without that kind of security equipment 
and that surveillance equipment and the numbers of people, you 
cannot police it. 

But what you really also need is, you need Grovemment help. 
When the bad guys come in, when the tough guys come in, you 
have got to have somebody behind you. There is nobody behind 
these people. There is nobody there. There is nobody there to help, 
and when the tough guys go up and they say what they want, I 
truly don't believe — I truly do not believe, and I don't believe you 
believe, that anybody is going to do anything about it. They are 
going to get ever3^hing they want. 

Mr. Richardson. Well, Mr. Trump, I don't agree with that. Let 
me just say, we want your evidence. Now you have detailed that 
in your opening statement. We want to investigate this. This com- 
mittee is not trying to cover anj^hing up. We are interested in this 
issue. 

You have basically stated that the problem seems to be that the 
FBI doesn't have any people, or is that correct? 

Mr. Trump. I think it is far beyond that. I think that people have 
got paper bags over their faces and nobody's looking. Everybody, it 
seems to me, from even just a common sense standpoint, knows 
what is going on. Everybody knows what is going on. 

I can tell you this. In New Jersey you have what is called a black 
list, or a list of people that we are not allowed to do business with. 
These people were a constant source of irritation. I can supply the 
list of names if you would like the list of names. But it was a large 
list of names, and these were not very good people, and some of 
them were plenty rough. These people were a constant irritation, 
a constant problem. We weren't supposed to, but they were always 
trying to get in, trying to be down there, trying to do whatever they 
do, and it was a constant source. 

One of my executives told me the other day, "The only good thing 
about the Indian reservation is that we don't see these people any 



187 

more, we don't see them any more." Now why don't we see them? 
I guess because they have a lot easier fish, I don't know, but we 
don't see them any more. So it makes our job a little bit easier. 

Mr. TORRICELLI. Mr. Chairman? 

Mr. Richardson. Mr. Torricelli. 

Mr. Torricelli. May I address your question? I was a young 
lawyer in our governor's office in New Jersey when we legalized ca- 
sino gaming, and I think that experience will help answer your 
question. 

We were extraordinarily naive. We passed good laws to keep or- 
ganized crime out of the casinos, and I am proud of what we did. 
A year hadn't gone by when they were monopolizing vending ma- 
chines, and then laundry operations. You will never find the pres- 
ence of organized crime without an intense effort. 

It is said there are none so blind as those who will not see. I 
didn't come here to embarrass the FBI today in my questioning. It 
was simply to point out that this will take a concerted effort. Mr. 
Trump may, by chance, come upon a name, as I have in these 22 
instances, from the popular media, but I will assure you, if the pop- 
ular media can find 22 States with organized crime involvement in 
a cursory look, a dedicated effort by the FBI is going to find some- 
thing more substantial. 

I first came to this issue in an interesting way. I heard constitu- 
ents of mine were raising money to create a management company 
in South Dakota to run an Indian bingo hall. I knew who they 
were, and I knew they were connected, and I got curious with the 
issue. That case isn't here, never been written about, nobody even 
knows about it. But this will not come from citizens rushing to the 
FBI, it will come because we have a concerted effort to establish 
laws, to regulate, and then to fine. 

Mr. Richardson. I agree with my colleague. 

Let me ask my last question to Mr. Trump. 

Mr. Trump. Yes, sir. 

Mr. Richardson. Did you submit this list to the FBI at any 
time? 

Mr. Trump. This was a list that was given to me by lawyers of 
various things that are currently going on and investigations and, 
by the way, convictions, many convictions on the list. 

I am not a law enforcement officer. I am not supposed to be going 
around checking Indian reservations. That is what you have the 
FBI for, and they are very capable, the most capable. But that is 
not my job. My job is to come here and tell you that from a stand- 
ard of the largest casino operator in the world, which I am, I will 
tell you that there is no way the Indian gaming is going to be con- 
trolled and not be totally taken advantage and, in my opinion, to- 
tally taken over in almost every instance, totally taken over, by the 
mob. There is no way that the Indians are going to protect them- 
selves from the mob. There is no way. 

I think most of you people sitting up there honestly believe that. 
I don't know that that is going to affect your judgment, but I be- 
lieve that you honestly believe that. 

From a common sense standpoint, from a practical standpoint, 
there is no way the Indians are going to protect themselves from 
the mob. 



188 

Mr. Richardson. But we have no evidence that the FBI has 
checked any of the 22 instances out, 

Mr. Trump. You can't have evidence when the FBI doesn't have 
one man assigned to Indian gaming. How can you have evidence? 
That is exactly the point. You need armies of people, armies of peo- 
ple to check. Every check that they have written, you have got to 
check those checks. You have got to see who is supplying the meat, 
who is supplying the potatoes, who is supplying the potato chips. 
You have got to check every supplier going into that Indian res- 
ervation. 

The checking is a joke. The checking is a joke, and you have got 
to do something because this will be the biggest crime problem in 
this country's history, in my opinion. 

Mr. Richardson. Let me just conclude by making a formal re- 
quest to you, Mr. Trump, that you provide this committee with all 
the available data, documentation, that you and my colleague have 
discussed today. 

Mr. Trump. It would be an honor. Thank you. 

[The information follows:] 



189 




October 25, 1993 



The Honorable Bill Richardson 

Chairman, Native American Affairs Subcommittee 

U.S. House of Representatives 

2349 Rayburn House Office Building 

Washington, D.C. 20515 



Dear Congressman Richardson, 

In the recent hearing of the Native American Subcommittee of the House Natural 
Resources Committee, Chairman Miller rep>-atcdl> chal'enged me to put forward evidence 
of organized crime involvement in the Indian j^aming industrj'. 

I am enclosing a list of 13 examples of jjcrious organized crime involvement in Indian 
reservation casinos many of which were widely reported in the press. The list includes the 
following incidents: 

* Barona Rancheria; California 

Stewart Siegel admitted to being a front for organized crime; 
former head of the tribe's management firm. 
Exhibit A (Los Angeles Times. 10/8/91). 

Emmett Munley, the head of a manngenienl firm that ran 
gaming operations t^l'icL• ".:i!i(' '.•: -'ct a license from the Nevada 
Gaming Control Board. 
Exhibit A (Los Angeles Times, 10/8/91). 

During Congressional hearings in 1989, an anonymous witness, 
who was later revealed to be Stewart Siegel, admitted that he 
had cheated an Indian gaming establishment out of $600,000 
per year by paying a Ci'.Ief $1,000 per week. 
Exhibit B (Los Angeles Times, 10/7/91). 



THE TRUMP ORGANIZATION 

725 RFTH AVENUE 'NEW YORK, IM.Y. 10022 212 •832 '2000 TELEX '427715 



84-760 O - 94 - 7 



190 



Cabazon Indian Tribe: Cabazon Reservation; 
Southern California 

According to the California State Attorney General's Office, in May 1981, 
after tribal Vice President Fred Alvarez began complaining of money 
skimming, Alvarez and two friends were shot dead. 
Exhibit A (Los Angeles Times, 10/8/91). 

A poker room was managed by reputed organized crime figure 

Rocco Zangari. 

Exhibit A (Los Angeles Times, 10/8/91). 

In 1985, John Nichols a non-Indian advisor to the Cabazon 
Tribe was sentenced to four years in prison for trying to hire 
an undercover policeman to serve as a hit man. 
Exhibit C (San Francisco Chronicle, 9/5/91). 

Jackson Rancheria: Amador. California 

James L. Williams, an associate of Anthony "Tumac" 
Accetturo, managed a bingo hall in 1985. Accetturo was 
recently convicted of being the head of the Luchese organized 
crime family of New York. 
Exhibit A (Los Angeles Times, 10/8/91). 

Williams was convicted in 1987 of failing to pay taxes on some 
$300,000 he earned from Indian bingo halls. 
Exhibit D (New Jersey Law Journal, 9/13/93); 
Exhibit E (U.S. News and World Report, 8/23/93). 

Miccosukee Tribe; Miccosukee Indian Reservation; 
Miami. Florida 

Tamiani Partners approved a bingo-paper-supply contract with 
Frank Nannicola of Warren, Ohio. Nannicola is the son-in-law 
of Charles Iniburgia, v»hom the Pennsylvania Crime Control 
Commission claims is a member of the Genovese organized 
crime family from Pittsburgh. The National Indian Gaming 
Commission has never investigated Nannicola, the paper-supply 
concern run by Nannicola, or Tamiani Partners. 
Exhibit E (U.S. News and World Report, 8/23/93). 



191 



* Mi-Wok Tribe: "Chicken Ranch": Toliimne. California 

In 1984, an arson fire swept through the home of and 
incinerated an activist for the Mi-Wok Tribe name Karl 
Mathiesen. Mathiesen had complained that Indians were not 
being given fair profits. Although it was never proven that the 
crime was tied to gaming, California Deputy Attorney General 
Rudolf Corona, Jr. has stated "someone wanted [Mathiesen] 
very dead." 
Exhibit A (Los Angeles Times, 10/8/91). 

* Morongo Reservation: California 

In 1984 the tribe sued an outsider for running an unauthorized 
bingo on one member's land. Testimony later disclosed that 
reputed crime figures Rocco Zangari and Tommy Marson 
frequented the hall. 
Exhibit A (Los Angeles Times, 10/8/91). 



Ramapough Mountain People; Ramaoough "Reservation'; 
Bergen County. New Jersey 

The Ramapough Mountain People, a group currently under 
consideration for a federal recognition that plans to open a 
casino in Northern New Jersey, employed Robert Frank as a 
"consultant" until 1991. Frank is a longtime associate of 
Anthony "Tumac" Accetturo, who has been involved 
extensively with Indian gaming operations across the country. 
Accetturo was recently convicted (in New Jersey) of 
racketeering, extortion, and being the head of New York's 
"Luchese" organized crime family. Frank also maintains ties 
with James Williams, who was convicted in 1987 of failing to 
pay taxes on some $300,000 he earned from Indian bingo halls. 
Exhibit D (New Jersey Law Journal 9/13/93); 
Exhibit E (U.S. News and World Report, 8/23/93). 

Rincon Indian Reservation; San Diego County. 
California 

On January 10, 1992 the reputed acting boss of Chicago's 
mafia, Sam "Wings" Carlisi, and eight other organized crime 
figures were indicted in a fifteen-count indictment comprised 
of felony charges for their attempts to take over gambling 
operations and skim casino profits. 
Exhibit F (Proprietary to the United Press International, 1/27/92). 



192 



Saint Regis Mohawk Tribe; Saint Regis Mohawk 
Reservation; upstate New York 

In 1990 an associate of John Gotti was arrested fof shipping 
slot machines to the reservation. 
Exhibit B (Los Angeles Times, 10/7/91). 

A casino - legal only bec;iuse of a compact signed after 1991 
— opened there in July 1993. 

Soboba Reservation; Riv er side California 

One Indian gaming management lirm was found to have 
embezzled $252,000 and another included a fugitive from the 
French Connection Heroin case. 
Exhibit A (Los Angeles Times, 10/8/9}). 

White Earth Tribe; Shooting Star Casino; Mahnomen, 
Minnesota 

The White Earth Tribe's dealings with Angelo Medure, an 
alleged associate of Pittsburgh organized crime figures, and 
Carmen Ricci, an alleged associate of New Jersey's "Nicodemo 
Scarfo" organized crime family, have raised concerns among 
citizens and law enforcement officials. 
Exhibit E (U.S. News and World Report, 8/23/93). 

Medure also plans to manage casinos for the Hopeland Band of 
Pomo Indians in Northern California, and the Senaca-Cayuga 
Tribe in Miami, Oklahoma. 
Exhibit E (U.S. News and World Report, 8/23/93). 

Wisconsin Winnebago Nation; Winnebago Reservation; 
Minnesota 

Under the management of Glenn Corrie, the Winnebago Tribe 
of Madison, Wisconsin losl $2,000,000 in illegal payments to 
Corrie and cannot account lor auother $3,700,000 in casino 
revenue intended for the tribe. 
Exhibit G (Star Tribune, Wisconsin, 7/4/93). 



193 



* Yavapai-Apache Tribe; Yavapai-A pti che Reservation; 

Phoenix. Arizona 

Despite the fact that federal officials seized the business records 

of Robert Sabes' in July 1993 for Sabes' alleged ties to 

organized crime figures, the Yavapai's have awarded him 

preliminary approval to manage their proposed casino north of 

Phoenix. 

Exhibit E (U.S. Ne>vs and World Report, 8/23/93). 

All of these incidents were found despite tlie fact that the F.B.I. , per the testimony 
of Agent Jim E. Moody (Section Chief, Organized Crime/Drug Operations of the Criminal 
Investigative Division of the F.B.I.) at your hearings, had no agents assigned to the Indian 
reservations. 

I know some will argue that many of these s frious situations took place before the 
enactment of the 1988 Indian Gaming Act. However, as I am sure you are aware, the 
Inspector General of the National Indian Gaming Commission recently reported that the 
1988 Act is not being enforced. 

Consequently, there is every reason to believe that organized crime involvement in 
Indian casinos will continue until government regulation and oversight is put in place to 
insure the integrity of those individuals involved in Indian gaming, and until Indian 
reservations are subject to the same Banking Secrecy and Currency Transaction regulations 
and taxation that the rest of the casino industry in the rest of the United States are subject 
to. 



Sincerelv 




Donald J. Trump 



194 



APPENDIX TO MEMORANDA DATED 2/24/93: 

General comments in the media regarding the lack of 
effective law enforcement efforts to prevent organized 
crime infiltration of Indiem gaming operations. 

Specific examples of organized crime infiltration into 
Indian geuning operations: media reports 



Exhibit A 
Exhibit B 
Exhibit C 
Exhibit D 
Exhibit E 
Exhibit F 
Exhibit 6 



Los Angeles Times 10/08/91 
Los Angeles Times 10/07/91 
San Francisco Chronicle 9/05/91 
New Jersey Law Journal 9/13/93 
U.S. News and World Report 8/23/93 



Proprietary to the United Press 
International 1/27/92 



Star Tribune 



7/04/93 



195 



6TH STORY Of Level 1 printed in FULL format. 

Copyright 1991 The Times Mirror Company 
Los Angeles Times 

October 8, 1991, Tuesday, Home Edition 

SECTION: Part A; Page 1; Column 5; Metro Desk 

LENGTH: 3667 words ' 

HEADLINE: TRIBE HITS JACKPOT WITH ITS GAMBLING OPERATION; 

INDIANS: LED BY WELFARE MOTHER, CLAN MEMBERS TAKE BACK BUSINESS FROM OUTSIDERS 

AND TRANSFORM THEIR LIVES. 

SERIES: THE INDIAN'S GAMBLE: Tribal Economies Are Banking on a Billion-Dollar 
Gambling Industry. Third in a five-part series. Next: Amid confusion among 
regulators, tribes embrace slot-type gambling machines. 

BYLINE: By PAUL LIEBERMAN, TIMES STAFF WRITER 

DATELINE: SYCUAN RESERVATION, Calif. 

BODY : 

Anna Sandoval remembers the low point as the day she trudged 10 miles to El 
Cajon, a Mission Indian on welfare looking for milk for her five children. 
Passing the wooden shacks with outhouses on the rocky hillsides of her 
reservation, she prayed for deliverance of her people. 

"I said, 'God, what can you do to help us?' " she recalled. 

Two decades later, when the bingo came, the first thing she did was build a 
new church. 

Then came the houses. Sprouting on the hillsides were 29 Spanish-style home 
rivaling those of any suburban subdivision. 

Built nearby were a health clinic and firehouse designed to save lives of 
Indians and non-Indians alike throughout the Dehesa Valley in eastern San Dieg 
County. 

And last November, Sandoval -- by then a fixture as tribal chairman — 
dedicated a new 68 , 000-square-foot Sycuan Gaming Center, a sparkling complex 
reminiscent of the Vegas Strip with a 1,500-seat bingo parlor, 520-seat 
off-track betting "theater" and sunken 3 5-table poker area overlooked by a 
restaurant, bar and gift shop. 

Sycuan -- a square mile of wasteland where the government dumped a few Indi; 
families a century ago -- had become one of the great success stories of Indiai 
gambling, up there with the San Manuel band in San Bernardino, the Seminoles ii 
Florida and the Shakopee Sioux in Minnesota. 

There is a grim underside, to be sure, to the industry that in one decade h. 
come to dominate Indian economies: reservations left with empty bingo halls, 
victimized by Mafia infiltration, devastated by internal battles. For the 
majority, the alluring promise of gambling has not been realized. It's been a 
marginal moneymaker, an occasional source of jobs and trickle of profits. 



196 



1991 Los Angeles Times, October 8, 1991 

But some have prospered. In California, for example, gambling has brought 
clear economic gains to a half dozen of the state's 96 Indian communities. 

Reservations once derided as blights on the surrounding area now hire their 
non-Indian neighbors. Tribes that once looked for charity hand it out. Familie 
that lacked indoor plumbing have satellite dishes in their back yards. 

Even more significant, perhaps, are the changed lives: Philip Knight freed 
from picking sugar beets to become full-time chief executive of the Rumsey 
Rancheria; the children at San Manuel rejoicing at receiving bonuses for good 
grades from kindergarten through college; and John Welmas, once sinking into 
cocaine addiction, now sober and running a $400 , 000-a-year business feeding 
gamblers at the Cabazon Reservation. 

"If it wasn't for the bingo," he said, "I probably wouldn't be around today 

Why have some reservations made it while others have become casualties? 

A prime location never hurts — proximity to a Minneapolis or San Diego. Go 
management is a must. But equally essential is political stability, particular 
leadership able to maneuver around the trapdoors that doom many tribes. 

This was difficult to find in California, where Indians were scattered on 
small plots. Few groups had the traditions of strong government seen among the 
great Indian nations elsewhere. 

While the Oklahoma Creeks had a two-house legislature and volumes of tribal 
law, politics here was of the extended family variety. One clan battled anothe 
for control of sewer hookups, housing funds — or bingo profits. Unscrupulous 
promoters could play one faction against another, offering gifts, jobs or cash 

"It's much like if you feed fish," said David W. Pen, a Bodega Mi-Wok who 
teaches anthropology at Cal State Sonoma. "If you have a small area and throw 
a crumb, the crumb disappears quickly. And what you have is people after each 
other in the hope that the crumb is still there." 

"Infighting, power and greed," was the way Anna Sandoval put it. "You put 
them all together and they'll destroy you." 

They never destroyed her. But after she wound up in the grandest home in 
Indian country, a Cadillac in the driveway, they did put a bittersweet ending 
what should have been her moment of triumph. 

Sycuan (pronounced SICK — wan) , needed crumbs — anything — when she was 
elected chairman in 1972. A short, stout woman with an air of confidence, she 
became the undisputed leader, the object of "a mother complex or whatever," sa 
Jim Trant, the non-Indian development expert she brought in as a consultant in 
1983. 

Even then, the reservation remained "largely neglected," a government surve- 

said. The average adult had a sixth-grade education. The only ccnmunal 

structures were a century-old Catholic church, reflecting their heritage as 

Kumeyaay Mission Indians, and a cinder-block meeting hall. 



197 



1991 Los Angeles Times, October 8, 1991 

The bingo hall would dwarf those. It was proposed in 1983 by Pan American 
International, a company that ran one of the pioneering Seminole halls in 
Florida and was looking to branch out to reservations coast to coast. 

When tribe members worried about the influx of strangers, Sandoval suggeste 
a construction site in a corner of the reservation — which happened to fall 9 
on her property and that of another member. "I said, 'We can put it on my land 
" she recalled. 

She'd get a larger share of the hassle — traffic right by her home — but 
also of the rental, which was based on profits. If the place prospered, so wou 
she. "They got mad about it later," she said of her fellow Indians. 

At the time, however, who knew what would become of bingo? Worried it could 
disappear any day, Sandoval rolled tortillas in her kitchen and sold them to t 
players. 

Indeed, it was no overnight success. 

Within a year, the hall was raided by San Diego County sheriff's deputies, 
who said an upstairs lounge featured illegal casino games. Court decisions had 
affirmed Indians' right to offer high-stakes versions of any gambling legal in 
state — then basically bingo and poker in California. At Sycuan, though, a ga: 
dubbed "bingo-jack" was being played at what were "obviously blackjack tables, 
then-Sheriff John Duffy declared. 

As late as 1987, testifying before the U.S. Senate Select Committee on Indi 
Affairs, Duffy distributed photos of "dilapidated conditions" at Sycuan to 
illustrate the failure of Indian gambling. "Reservations themselves . . . ha' 
not profited," he said. 

Sandoval was hearing similar criticism from her people. 

Tribe members received only small payments, $300 in the summer and at 
Christmas. "They promised us a lot of things, and I haven't seen nothing yet," 
one elder griped. 

The problem, Trant said, was that while the tribe was supposed to get 55% o 
the net, Pan Am reported little profit. 

There was grumbling from another direction as well. An Indian activist from 
Arizona, Dineh Eagle, rallied six elders to write their congressman asking to 
have "our reservation restored to our old ways." They accused Sandoval of bein 
part of "a money oriented cligue" ruining the place. 

Elsewhere, such factionalism was paralyzing. Here, Sandoval obtained a cour- 
order barring Eagle from the reservation. "She was just stirring them up," the 
chairwoman recalled. 

"Anna? If she likes you she's a great person. If she doesn't like you, stay 
out of her way," said Kenny Meza, then chairman of the nearby Jamul Reservatioi 

By the end of 1987, Sycuan made its big move: Declaring Pan Am in violation 
of a tribal licensing ordinance, the Tribal Council ordered the company off tht 
reservation. 



198 



1991 Los Angeles Times, October 8, 1991 

While the action was fought in court, Sycuan eventually prevailing, tribe 
members ran the bingo themselves — profitably. "The next month ... we had 
about $300,000 to distribute," Trant said. 

In 1989, Sycuan was among the first reservations to take advantage of the 
national Indian Gaming Regulatory Act by negotiating a "compact" with the stat 
to add off -track betting to its mix of games. 

To direct the expansion, Sycuan didn't pick the promoters regularly making 
pitches to Indians. Trant found an Arizona-based partnership. First Astri Corp 
whose background was in real estate and entertainment. 

Whereas some tribes allowed outside managers to hand them prof it-and- loss 
statements, Sandoval insisted the Indians count the chips themselves. 

"When they come in and say 'We want to help you, do this for you,' that's 
bull," she said. "They're here for money, not because they want to help the 
Indians. " 

This year, with $30 million in betting on horse races alone, the tribe 
expects to clear $4 million. But that estimate is conservative — the Indians 
received a check for $600,000 one month recently. 

The Sycuan Gaming Center bears little resemblance to unadorned aluminum or 
cinder-block bingo halls elsewhere. It has a Southwest look, sand-colored with 
peach accents, and an entryway with skylights and mirrored ceiling. You drive 
and a valet parks your car. 

People start coning at 9:30 a.m. for "Wake Up Action Bingo." There's 
"matinee" bingo also, then conventional evening sessions. 

While women are the mainstay of bingo, men are drawn by the plush poker 
parlor and off-track betting. Showing races on a 20-foot screen, the casino dr 
$150,000 in bets for the Kentucky Derby alone, the tribe keeping 2.3% of the 
handle. 

With 600 workers, Sycuan is one of the largest employers in east San Diego 
County. And with nearly 1 million visitors expected this year, marketing 
director Fritz Opel, a former Disney executive, has a motto: "Why go to Vegas 
when you can cone out to Sycuan?" 

For years, the Indians were the objects of complaints about run-down 
conditions, drunkenness and the like. 

Their problems with the surrounding community are very different when they 
run the most successful business around. 

Now neighbors complain about traffic and overdevelopment. Some look cynical. 
at Indian gambling as "people trying to get away with something, rather than 
accord them the dignity they deserve as governments trying to do good for thei. 
people," said Jerry Levine, attorney for the San Manuel Reservation in San 
Bernardino County. 

That's why the Sycuan Fire Department was so important. With an ambulance, 
two firetrucks and 13 employees, it began answering calls throughout the 



199 



1991 Los Angeles Times, October 8, 1991 

Dehesa Valley, where residents previously might wait 30 minutes for an ambulan 
from El Cajon. 

"Had the tribe offered this in any formal manner to the community, it 
probably would not have been accepted, just because of jealousy, resistance," 
Trant said. 

The tribe also sponsors a Little League team (the Sycuan Bandits) and bough 
computers for a nearby elementary school . 

Other bands similarly have learned the art of public relations. The Seminol 
have made campaign contributions to Florida state legislators and given bingo 
proceeds to Jerry Lewis' muscular dystrophy telethon. The Shakopee Sioux gave 
$78,000 to blacktop a road in nearby Prior Lake, Minn. 

But the Shakopee chairman, Leonard Prescott, is one of many tribal official 
under pressure to use gambling revenues — first and foremost — to take care 
public relations at home. 

Prescott faces tumultuous reservation politics. After disputes with a rival I 
faction escalated into fighting at one meeting, he hired 20 off-duty policemen ■ 
to keep peace. I 

So while the Shakopees have put in new sewers and homes, Prescott uses 65% i 
the gambling profits to keep constituents happy. Some families receive $80,000 | 
year. 

Host Indian leaders agree that such "per cap" payments are not ideal use of i 
the money because the community may be left with few permanent improvements. j 

"Politically, it's a real temptation," said Jana McKeag, an Oklahoma Cherok \ 
recently appointed to the Indian Gaming Commission. "But it's short-term." 

At Sycuan, Sandoval felt secure enough -to take the long-term view. 

Only 30% of the tribe's revenue is "per capped," adults in the 96-member ! 
tribe getting $6,000 a year. Another 25% goes into trust funds and insurance - ■ 
full health and $250,000 life policies for everyone. The rest is used for 
reservation projects. 

The houses were a startling contrast to the boxlike government homes seen o • 
most reservations. "We wanted something better," said tribal Vice Chairman Han ; 
Murphy, who got a 2 , 600-square-foot home with a "million-dollar view." ; 

Now Sycuan is one of the few tribes — "the real smart ones," noted gamblin | 

expert I. Nelson Rose — using gambling to rise above it. It's looking to inve I 

profits in businesses that, unlike gambling, won't be subject to whims of cour • 

or state legislatures, and that won't attract the shady outsiders drawn to j 

casinos. ! 

On the drawing board is an all-suite hotel to capitalize not only on j 

gamblers, but golfers using Singing Hills Country Club up the road. Also planni ! 

is a $7-million senior citizens housing project, whose 283 units will be rentei j 

mostly to non-Indians, Trant said. L 



200 



1991 Los Angeles Times, October 8, 1991 

There's talk as well of a vineyard to produce wine — with the Sycuan label 
of course. 

In Florida, the Seminoles already have invested in land, an orchard and a 
hotel. 

In Indio, the tiny Cabazon band is partner in a SlSO-million plant to produ 
power from agricultural waste and has plans for a 1,300-home real estate tract : 

Cabazon, which had to survive organized crime infiltration in the early 198 ; 

and still suffers from fierce internal feuds, has not made Sycuan' s gambling j 

profits and only months ago paved its first road. But the new projects, joint | 
ventures with outside investors, would be impossible if the tribe had not 

managed to keep its bingo and card room going, according to Mark Nichols, | 

Cabazon' s non-Indian chief executive officer. | 

"We had to be established as a fighting entity," Michols said. "Without '; 
gambling revenue, (the Indians) would not be dealing from a position of j 
respect. " i 



Cabazon has big plans for its gambling facilities, too. It hopes to expand 
55,000 square feet, one of several tribes looking to challenge the 
king-of-the-hill status held by the Sycuan facility unveiled last November. 

"Sycuan is the model," said the manager of another nearby Indian gambling 
hall. Agreed George Forman, a former government attorney who works vith many 
tribes: ''It's what Indian gaming should be." 

But just two weeks after the grand opening, events took a turn for Sycuan' s 
matriarch. 

Last Dec. 10, Sandoval's reign as chairman ended in a shocking election 
upset. Dan Tucker, then vice-chairman, beat her by three votes. 

Tucker declared his win a mandate for "more working together." 

"Anna," he noted, "did a lot of stuff on her own." 

He is of a new, more assimilated generation. Just 39, he rose from box boy 
become manager of a Ralphs supermarket. Whereas Sandoval likes to travel to 
traditional Indian pow-wows, his hobbies are playing golf and attending footba 
games. 

While Tucker pledged to turn the old church into a museum to "our heritage, 
no one mistook him for anything other than a modern-day managerial sort. 

Another of his projects? He'd like the Sycuan Band of Mission Indians to 
sponsor a golf tournament at Singing Hills Country Club. 

Anna Sandoval knew she'd alienated some tribe members by running things "wi 
an iron hand." But she couldn't hide the hurt. 

"I don't know if they appreciated what I did," she said. "No one has ever 
come to me and said 'Thank you, Anna.' " 



201 



1991 Los Angeles Times, October 8, 1991 

She retreated to her new hone. Dubbed the "house on the hill," it was the 
talk of reservations hundreds of miles away, with its imposing, tower-like frc 
— a kiva, actually, a round room for meditation or prayer. 

She hardly left office empty-handed: The rent for use of her land and pensi 
from her chairman's job total well over 3100,000 a year, according to tribal 
officials. Outside the land-rich Agua Caliente in Palm Springs, she may be the 
wealthiest Indian in California. 

But the onetime welfare mother wondered whether it all was worth it. 

While her new microwave worked fine, she sometimes found herself thinking, 
"Boy, it would be nice to have a wood stove." 

She thought back to the old days, when Sycuan survived on fried bread and 
acorn mush. While it was hard to be an Indian then, you felt free on the "res. 
There wasn't all this materialism. All this commotion. 

She wasn't about to give up the money, of course, nor the house, nor the 
Cadillac. But a thought came to her: "You have to give up something to get 
something. " 

Indian Gambling in California 

Two dozen of California's 96 reservations and tiny rancherias have 
experimented with gambling, producing several showplaces of industry — and so 
of its worst scandals, including two unsolved murders. 

1) BARONA RANCHERIA, San Diego (County) : Bingo manager Stewart Siegel was 
caught fixing games in 1986, then admitted being a front for organized crime. 
The current management firm is headed by Emmett F. Munley, who twice failed tc 
get a license from the Nevada Gaming Control Board. 

2) BISHOP RANCHERIA, Inyo: Bingo is played twice a week in a 125-seat hall. 
"It's just nip and tuck," a tribal official said. 

3) CABAZON RESERVATION, Riverside: A poker room was managed in 1980 by 
reputed organized crime figure Rocco Zangari. In May 1981, tribe vice presiden 
Fred Alvarez began complaining that "money was being skimmed," according to th 
state attorney general's office. Soon after, Alvarez and two friends were shot 
dead — a crime never solved. Fired by the tribe that November, Zangari accuse 
Cabazon's non-Indian administrator, John Nichols, of obtaining "fictitious 
salaries" from gambling. In 1985, Nichols was sentenced to four years in priso 
for trying to hire an undercover policeman to serve as a hit man in an unrelat 
incident. Cabazon now offers card, bingo, off-track betting and "pull-tab 
machines." Tribal officials insist Alvarez' murder was unrelated to gambling. 

4) CHICKEN RANCH, Tuolumne: In 1984, Mi-Wok activist Karl Mathiesen 
re-established a tiny rancheria so an outside firm could open a bingo hall. 
While he soon had a gold-grille Cadillac, he complained that the Indians were 
not given fair profits. On Nov. 15, 1987, an arson fire swept through the shac 
where he lived, incinerating him. There were no arrests, or proof the crime wa 
tied to gambling. But "someone wanted him very, very dead," said Deputy Atty. 
Gen. Rudolf Corona Jr. 



202 



1991 Los Angeles Times, October 8, 1991 

5) COLUSA RANCHERIA, Colusa: A 1,200-seat bingo hall has funded constructior 
of four homes. The tribe runs the business itself, rather than rely on 
outsiders, because "we know the way the world is," an official said. 

6) FORT YUMA RESERVATION, Imperial: "Snowbird" tourists who fill area traile 
parks in winter generate $500,000 in yearly bingo profits for 2,200 Quechan 
Indians. 

7) HOOPA VALLEY RESERVATION, Humboldt: A 600-seat bingo hall has "never 
turned a profit," a tribal official said. 

8) JACKSON RANCHERIA, Amador: Reputed Florida crime figure James L. Williams 
managed bingo in 1985 after contracting to pay $300,000 to a local man who 
financed the hall. "I was very dumb," the businessman said, complaining in 
Amador Superior Court that Williams paid him nothing, skimmed profits, then 
left. The hall reopened this summer. 

9) LONE PINE RANCHERIA, Inyo: Elders play bingo once a month. The "crowd?" 
About 25 elders. 

10) MORONGO RESERVATION, Riverside: The tribe in 1984 sued an outsider for 
running unauthorized bingo on one member's land. Testimony disclosed that two 
reputed crime figures — Zangari and Tommy Marson — sometimes hung out at his 
hall. The tribe now offers bingo, off -track betting and gambling machines. In 
1989, a local grandmother won $500,000 here playing MegaBingo, a televised gamt 
beamed to reservations. 

11) PIT RIVER TRIBE, Shasta: Weekly bingo with $30 prizes in a 74-seat room. 
"It's just for fun," a tribe member noted. 

12) RESIGHINI RANCHERIA, Del Norte: A failed bingo hall is used as a 
lunchroom by elders. 

13) RINCON RESERVATION, San Diego: FBI wiretaps detailed the Chicago mob's 
plot to take over the bingo hall, now closed. 

14) ROBINSON RANCHERIA, Lake: On-and-off bingo has prompted lawsuits among 
investors and the tribe. The FBI seized slot-type gambling machines in Februar> 

15) RUMSEY RANCHERIA, Yolo: Bingo liberated the Indians here from grueling 
farm labor. But a former tribal secretary is awaiting trial on tax charges for 
allegedly fleeing to Nevada with a Rolls Royce and $400,000 in proceeds. 

16) SAN MANUEL RESERVATION, San Bernardino: A 15-family tribe went to court 
to oust its first management firm, then established the most profitable bingo 
hall in the nation, seating 2,600 players. Tribe members have new homes and a 
scholarship fund rewards children for good grades from kindergarten through 
college. 

17) SANTA ROSA RANCHERIA, Kings: Bingo has financed a recreation center, pa> 
tribal bills and provides small "per cap" payments to 400 tribe members: adults 
get $27 and kids $18 per month. 

18) SANTA YNEZ RESERVATION, Santa Barbara: Even the backing of singer Wayne 
Newton could not overcome a remote location. A 1,800-seat bingo hall now is 



203 



1991 Los Angeles Times, October 8, 1991 
closed. 

19) SOBOBA RESERVATION, Riverside: Bingo is closed — for the fifth time. 
management firm was found to have embezzled $252,000. Another included a 
fugitive from the French Connection heroin case. "I think a lot of the tribes 
rely too much on bingo," Chairman Robert Salgado said. 

20) SYCUAN RESERVATION, San Diego: "Sycuan is the model," a rival says 
matter-of-factly. The showplace of Indian gambling. 

21) TABLE MOUNTAIN, Fresno: A tribal chairman was recalled "because we 
couldn't get (bingo) money ... to divide," the leader's brother noted. Now 
adult tribe members get $200 monthly from televised MegaBingo games. 

22) TRINIDAD, Humbolt: A 600-seat bingo hall financed a new roof for the 
tribal building. 

23) TWENTY-NINE PALMS RESERVATION, San Bernardino: Wiretaps in 1987 overhea 
mobster Chris Petti discussing a possible hotel-casino here, but the deal neve 
materialized. The tribe now has a request for a gambling "compact" pending 
before the state. 

24) VIEJAS RANCHERIA, San Diego: A casino will open soon. "They were hoping 
for something better than (gambling)," a tribal adviser said, but "there were 
not business opportunities other than that." 

GRAPHIC: Photo, Anna Sandoval in her hillside home built from gambling profits 
; Photo, Entrance of Sycuan reservation's gambling hall rivals Las Vegas. ; 
Photo, Gamble Pays Off: An Indian tribe in eastern San Diego County hit the 
jac)cpot with its gambling operation. Led by Anna Sandoval, above in front of h 
adobe home, the Indians took back the business from outsiders and transformed 
their lives. Part three of a five-part series. BARBARA MARTIN / Los Angeles 
Times; Photo, Enunett Munley ; Photo, Karl Mathiesen ; Photo, James Williams ; 
Photo, Wayne Newton ; Photo, Robert Salgado ; Map, California, JUAN THOMASSIE 
Los Angeles Times 

TYPE: Series; Infobox; List 

SUBJECT: AMERICAN INDIANS — SAN DIEGO COUNTY; GAMBLING — SAN DIEGO COUNTY; 
BINGO; INDIAN RESERVATIONS; GAMBLING — CALIFORNIA; AMERICAN INDIANS — 
CALIFORNIA 



204 



PACI 23 

15TE STORY df L«v«l 1 printid in FULL fonat. 

copyright 1991 Tb« ?!&•• Mirror Coapany 
Lo« Ang*l«a Tiaca 

Ootobar 7, 1991, Monday, Bob* Mltlon 

8ECTXOH1 Part A: Paga 1; Celuan li Matre Daak 

LKMQTK: 4716 words 

HEXOLIKZi HOW THZ MAPI A TAKGZTED TRIBS'B GANBLZKO BUSINESS; 

CHIME I THE MOB DR OPPE D BIO TO XNFZLTRATE SANSS KSAS SAM DXEOO, BOT WIRETAPS 

SUGGEST TIES TO OTHER RESERVATIONS. 

SERIES: THE INDIAN'S 0AXBI2: Triisal Econoalaa Ara Banking on a Billion-Dollar 
Gaabling Industry. Sacond in a flva-part sariaa. Naxtt Presparity aammm to tha 
rocky wasteland ^ars tha govamaant a cantury ago dumped a handful of Indiana. 

BYLINE I By PAUL LIEBERMAN, TIMES STAFF WRITER 

body: 

Chris Petti got the good news three days before Christmas, 1987: His aove 
to taks over gaabling on the Rincon Reservation bad been approved at the very 
top of the Chicago Mafia. 

"They wanna go with that thing," Nike Caracci told hia. "They wanne get a 
foothold down where you're at." 

The call followed a faailiar pattern. Caracci rang Petti 's San Diego hoae 
and gave hia a nuBber. Petti hurried across the street, to a pay phone outside 
a 7 -Eleven, and dialed it. 

Noaants later, Caracci was telling hia froa Chicago how the acting boas 
there, Saa carllsi, had given the crucial OX. "He said, '(Expletive) it, let's 
go, do it, do it.' " 

Petti, the criae faaily's top contact in Southern California, had been 
working toward this aoaent for a year. He bad nurtured a tribe aeaber to grease 
tha wfaaela on the reservation. He had found a front man whose naae could be sent 
to the Bureau of Indian Affaire. And he had endured the frustrations of dealing 
with the Indians, their changing demands, faaily sguabbls* and tha sxispicious 
questions of one stubborn wonan on the Rinoon Tribal Council. 

But now that Chicago was on board, he figured on making a fortune with bingo, 
cards and off-track betting on the remote reservation in Northern San Diego 
County. 

Only one thing could mess up the deal, Caracci cautioned hia. 

"The O.C. label," Petti replied. 

"You gotta really be careful," Caracci said. 

FBI organised criae agents logged the call at 8:33 a. a. They had been 
aaveadropping on Petti for six months. 



205 



PABB 34 

1991 Lo8 An9dl«t Tiiu, October 7, 1991 

A veteran of the cops-end-robbers 9aae, h« thou9ht ha vaa ■■£• doing buainase 
from 37 pay phonu around San Olago. Ha hadn't oountad on a naw federal "roving 
wiretap" law that eapoverad agcnta to aonltor a aeriea of phonea used by a 
auspect. 

Tbouaanda of pagea of wiretap reporta would docunent tbe CHloago Bob'a< aove 
to infiltrate the Rinoon-Keaervationr show oollaboration with aob faailie* 
acroaa the co^ttY.^and-auggeat-organiged nrlwe t1aa_to_other reaarvationai aa 
well. 



To thia day, govemaent offloiala and Indian laadera generally bellttlla the 
threat poaed by organised crine to the gaobling that haa become the ll-blllion 
oenterpieoe of tril»«l econoaiea. They diaaiaa warnings of aob Intereat aa 
paranoia or the raatlnga of peopl e trying to infringe o n Indian profita. 

But thoae^offlciale probably never heard of the Rincon wiretapa — there was 
no prosecution to bring tbea to light. After two yeara of plotting, the Chicago 
criaa faaily lost intereat in the reeervation. The FBI, in turn, ahifted its 
efforts to Petti '• involveaent in a juicy aoney-laundering case. 

Lost in the shuffle were wiretape that are a primer in how tbe aob can gat a 

foot In the door of gaabling halls, and how it counts on akiaaing and laa 

overaight to eheatltribea out of revenue aorely needed by aoae of the poqreat 
people in Aaerica. 

Aa Chris Petti i put it to his aain Indian contact i "Let's grab soae money, 
pal.- t i 

The promise of gambling had been hard to resist for Indians throughout 
California. i 

They had no vast ancestral lands with natural resources euch as tiabexr or 
ainerals. Displaced by Spanish missions, miners and other white settlsrs,i thsy 
wound up on 96 small reservations or postage-stamp "ranoherias* in the desert or 
mountains. "Pushedi into the rocka," an anthropologiet teraad it. 

Rincon was one of the aore scenic, set in a valley surrounded by 
brush-covered hillS. Only a third of its 3,075 acres was flat, however, and the 
land could barely support light faming, grazing and orchards. 

By the Bid-1980a, unemployment stood at 60% among ths 300 Luiseno Indians. To 
make ends aeet, eany rented aakeahift houaing to migrant worlcera, setting down 
ahac)cB, garages and camper sheila on the duaty landacape, often without 
plumbing. 

Tribal leadera didn't waste time when court decieiona gave then competitive 
advantages first ih bingo, then other games. After inviting proposals byioutsldo 
inveatore, they picked Charles Schlegel, an Orange County businessman with a 
theatrical flair, i 

He built a 33,000-sguare-foot, spaniah-atyle hall, diatributed buttone 
promoting the plaoe and hired dozene of tribe aeabera. Then he sat in a crow's 
neet watching the Ceetivities, smoking a cigar. 



206 



PACI 25 
1991 Lot ;^«1m TiBAt, OCtob«r 7, 1991 

Old-tlBsrs such •■ Max Natsattl vara thrlllad to halp tally tha handlavhan 
tha gaaaa bagan in 1984. "Z raaambar ona night va vara counting, $134,000 tha 
ona nightl' tba 70-yaar-old Mastatti racallad. "Zt vaa raally ■oaathlng for 
Rinconl" 

Thara waa ona problaB. Tha triba law no profits. 

schlagal, vho ii now daad, vas cupposad to shara any profita — but aaid 
thara vara nona. Though ha had takan in $10 million, it waa iapoaaibla to: finiah 
in tha blaok, ha aaid, trhlla offarlng tha jackpots naadad to cospata vithi other 
Indian bingo halls opaning around tha stats — ona at tha Barona Rasarvatlon, 
just to tha south. ' 

Ha oloaad Rlnoon's ball In Juna, 198B. A sacond sanagar vaa birad, buti alao 
raportad no profita. Bafora ha laft as vail, ha addad a nav attraction in lata 
1906, a card rooa vith 30 polcar tables. 

That Decaabar, tha rooa was raided by San Dlago County sheriff's deputies, 
who said it was offarlng illegal Chinese variations of polcar. To triba Baobars, 
it asaoad lilca another exaapla of prejudice againat than. "They're tryingi to 
give tha Indiana a hard tlsa," the poker aanagar declared. 

Cbrla Petti waa a frsguant viaitor to the poker parlor. In fact, a friend 
who want with hia aaid ha "actad lUca ha waa in charge," according an affidavit 
filed in federal court in San Diego by FBI agents aeelcing a wiretap. 

The FBI had baea intsreatad in Vetti, new €4, for yeara. Originally fros 
Illinois, be had surfaced in San Diego as bodyguard and chauffeur for thai 
amiable alder statasaan of California aobatars, Frank Boapensiero. 

When "The Boap" was gunned down in 1977, Petti stepped in to fill his 
shoes. Ha toon had his own live-in chauffeur. 

A tria Ban with blow-dried gray hair, ha was a neat dreaaer — Batching hia 
tie and breast hanAkerchief — and a follower of routinaa. He would have lunch 
on Hotel Circle north of downtown, than apand the afternoon at the Stardust 
Hotel i Country Cltib, whoso staaa rooa sarved aa hia unofficial offies. 

Xvaluations of Petti'a stature in the Mafia are a raaindar that such 
Intelligence la am iaprecise art. One survey listed hia the 4Bth aost affluent 
BObtter in the co«uitry, but Petti laaanted in wiretapa, "I 'a in bad shape,* 
and soae downplayed hia as a "hangar-on," a aan of Greek extraction (given name 
Chris Poulos) trying to iapress the traditionally Italian eriae faailies. 

He had convictions in San oiego for bookmaking and for using a baaeball bat 
in 1979 to aasault a aan who coaplained about a noiay party. Quoted ae saying he 
wanted to help the aan "get soae sleep," Petti waa fined $1,000. 

The chance to get a handle on Pettl's activities fell into the FBI'S lap in 
Auqust, 1986, when a friend naaed Robert Banjaain, a career criainal feeing a 
bank fraud charge, agreed to work under cover for agents. 

Petti was dealing directly with the boys in Chicago, Bcnjaain reported. 
Thair inaediate chare wae taking over accounts of recently aurderad Tony (The 
Ant) Spilotro, vhO! collected a "street tax" froa bookaakars throughout Nevada 



207 



I PACK 26 

! 1991 Loc AngalM TIbm, October 7, 1991 

I 
uid Southam California. But Patti's raal paaaien was "tba Rineon Indian 
Raaaxvatien," accoi^din? to tba affidavit. 

I 
Tba kay to it, ]|anjaain said, vat Pattl'a eleaa ralationahip vith triba 
B«Bbar Qlann Calae,| vhoaa fatbar vaa on tlta Rinoon oouneil. 

I 
Tha aaeurlty chlaf at tha oazd room, Calao was hard to Bias. A shada ovar aix 
faat tall, ha vaighad oloaa to 300 pounda and drova-a naw whita Cadillac. Calac, 
who had what fadacAl proaacutora oallad an "axtanaiva oriainal racerd," 
including a falony {burglary conviction, axartad influanca through "Buaola" and 
payoff I, Banjaaln aaid. 

Nhan ha quaationad Patti'a Intaraat in a vantura that aaaaingly loat aonoy, 
Banjaaln aaid, ha waa told that, in gaabling, all ia not what it aaaaa. Ba aaid 
ha evarhaard Patti aay that in tha card rooM, for inatanea, Calao alraady vaa 
"awallowing" proflta, not raporting ravanuaa to tha tribal cotincil. 

^^.Ihifwaan't lllca Navada, whara tha casing Control Board auditad your booka 
4Lnd paid surpriaa viaita to your counting rooa. You only had to ahow tha Indiana 
'% profit-and-loaa column at tha and of tha nonth, Patti said. \ 

A lot of monay liatad aa a loaa raally vaan't. Xt "atieka to your fingara," 
ha aaid. ' I 

Thara ia long praoadant for danial whan it ooaaa to organiiad eriaa in 
Aaariea. i 



No laaa than J. I Edgar Hoovar rafuaad to baliava thara waa a Mafia until 1957, 
whan Ita laadara vara caught aaating in Opatata Kaw Vork. Zn Laa Vagaa, navar 
Bind that Bugay Siagal opanad ono of tha first caalnoa and invaatigations found 
aob linka to 10 othara. "Many Navadans," raoallad forsar fadaral proaacutor C. 
Stanlay Buntarton, |kiaaad it off aa "a fadaral vandatta againat tbair atata." 

Haminga of "O.C." intaraat in Indian ganaa aiailarly hava baan nat by 
akapticiaa. 

**In 15 yaara of {gaaing activity on Indian raaarvatiena thara haa navar baan 
ona claarly provanicaaa of organiiad criainal activity," Ban. John McCain 
(R-Arizona) aaid upon tha 1988 introduction of lagialation to craata a National 
Indian caaing Coaaiaaion. 



Tha thraat vaa diaaiaaad with cbaie flair laat yaar at a Laa Vagaa aaating of 
tribal laadara and I Tony Hopa ~ a lawyar and tha aon of antartainar Bob aopa — 
who vaa naaad by Praaidant Buah to haad tha coaaiaaion. 

Whan an Apacha official coivlainad that Arizona 'a attomay ganaral aav tha 
Mafia bahind avary i cactua , Hopa of farad a atory to raaaaura tha Indiana that ha 
undaratood tha ludicreusnaaa of auch a notion: 
I 

"Z hava thia iaaga in ay own Bind whan thay talk about Mafia infiltration. On 
tha outikirta of Laa Vagaa, at aix in tha aoming. A black Lincoln, six paopla 
eoaa out of a houaa in black auita, black bata with a bunch of guna, opan tha 
trunk of tha Linoeln and apaad out aeroaa tha daaart 300 allaa to put tha auacla 
on" — nov tha punch lina — "30,000 haavily araad Indiana." 



208 



PAS! 27 
I 1991 Los An9tl«l TlBM, OCtobir 7, 1991 

Th* erovd burst 'into laugbtsr. 

Chris Pstti'a car was a Lincoln. On March 31, 1987, his drivar sssmI it up 
to tbs aast tarainal at San Diago'a Lindbargh riald to aaat two aan from 
Cbioaao: Nicbaal C^ Caraeci, 93, and Donald (Tba Nisard eC Odda) Angellni, 65, 
dascribad by tha ni as ovarsaar of tho Chicago sob's gaabling intarasts. 

On tha vay to Rinoon, thay sat Calae at a bakary in Bsoondido. An aqant 
ovarhaard anippata io« talki "Chips, avarything all raady." "Mot an unraasonatola 
contract." { 

Tha Ban rattimad tha naxt Bonth. Ovar dinnar, Banjamin raportad, tha 
vhlta-halrad Angalini announoad that tha eparation was going to ba run "our 
way." 

Travallna undarltha nana "Brooks." Angalini was a datail Ban. Ha notsd that 
tha bingo hall wa8i41 ailaa froB Hotal Cirela, that it naadad stucco and hid 
cracks in tha parking lot. Ha waighad tha pros and cons Ilka a classic aiddla 
nanagar, which ha w««, »• • "ob "capo," just balow tha vary top laadarship. 

Caraooi, Angaliai's brethar-in-law, was a stap lovar on tha totaa pola, 
assignad to "raaasart tha influanca of tha Chicago syndicata on tha Wast Coast," 
fadaral authoritias said. 

Thraa Bonths laiar, Angalini flaw back to California. Aganta raportad a 
aaating in Los Angelas with tha businassBan Patti proposed aa a "front," Saa 
Kaplan, a faatbar suppliar who sinoa haa diad. 

Kaplan has baam around "paopia," Patti aaid, but had a clean record, having 
even passed screening by the state attorney general 'a office when his naaa was 
subaitted with a card rooB proposal for laparial Beaeh. 

Mow his naaa woald go atop tha prospectus aubaitted to Rinoon. 

Ten other group* wanted to run the gaabling there after departure of the last 
aanagar, Includingia pair of foraar police officers. But whan Petti returned 
frea the Los Angeles aeeting July 13. his phons rang with an optimistic aessaga. 

"Everything is going forward," Calae told his. 

U.S. Dietrict Judge Gordon Thoiqpsen Jr. had approved the "roving" wiretap 
three days sarlieri All told, agents would intercept 6,033 ealla. 

They recordad Petti and Calae diacueaing several reservation deals around 
California. Ona gambling promoter waa inprassed with Petti, Calae said, and 
"won't Bake a aovei without first going through you." Another tiae, Calae 
laaanted that a veteran bingo nanager — who hae worked throughout the state — 
preferred "to go through" two reputed Pala Springa-area organixed criae figures. 

The Rincon ploti eolidified in the fall of 1987, when California approved 
off-track wagering] on horee racea. Undar court rulings, reservations could offsr 
it too. By Nov. Ill, in a call to Chicago, Petti envisioned alaoet a full 
oasino, with horsei betting added to tha carda and binge. 



209 

pa4i 



1991 Lea Angtlu TlMi, Oototer 7, 1991 
CarBooli "Omm, that's m big vlnnar, don't yeu thiztk?" 
Pattl: "You'll handla tvo or thr«* hundred thousand a (axplstlva) dajj 
Caraoelt "I just want to aaka aura va gat It, if anybody 'a gonna gat it." 



.i.. 



Thair propoaal gtiarantaad tha Tw<<i»«f $30,000 par month, plua 91% of any 
irofita — although^ "thay'll navar aaa" that part, calae notad in ■ oall to 
Patti. Tha trlba would hava to agraa, ha aald, baoauaa "aenay talka." 



But Patti and Calac undarastlaatad tha difficulty of gatting anything 
through Rinoon'a fiproa elan politioa. Chicago aoon vaa aaklngi Why ara thoaa 
"(axplatlva) aorona** talcing so long? i 

Aa Calao oxplainlad It, bia fallow Indiana alwaya argua. "go around in : 
oirelaa." Ha aald hk finally told thaat "Wa'ra going to ait down and you'ra 
aithar gonna (axplalblva) do it, or I'm walking away. You guys aran't gonna have 
(axplatlva) and wa'ra gonna go to tha Palm Springs Indians." 

Ha waa partioulalrly fruatratad Dao. 9, whan tha Tribal Council bald a aaaring 
on gaobling propoaajls. K San Diago attorney dalivorad a (1,000 faa to aoo^npany 
tha application baa^ing Kaplan'-a naaa. 

That night, Calaio phonad Patti to raport thay "alaoat had It." But alwoaan 
on tha council kapti aaklng aJMUt Glann Calao 'a tia to tha pro j act. Sha alio 
rantod on about Kapjlan not baing tharo in paraon. I 

"How do wa know |thia man raally axiata?" aha aakad. "Ha could ba aoaa nama 
you took off a toati|atona . " I 

Patti wanta tei knowi Nho'a aaking all tha troubla? 

It was Glann's cousin, Ituth Calae. Sha waa vary auapieioua. | 

Ruth vaa not aoaally opposad to gambling, but waa appallad by tha proaotars 
who approaohad tha jtriba. On* of farad a starao aystam aa a "gratuity." Anathar 
proBisad "undar th^ tabla" payaanta. A third aakad if ha could aat up priWata 
rooms for "hoataaa«|a . " 

Sha haard atoriaa from othar California raaarvationa aa vail, including how 
tribal laadars at two of tham had baan murdarad aftar complaining that Indiana 
waran't gatting a ^air ahara of gambling profits. And down at Barona, a binge 
aanagar nanad Stavart Siagal had juat baan caught rigging gaaaa, planting! 
"shilla" in tha audianoa to play praarrangad winning nuabara. j 

So whan Clann aurfaoad in Rinoon'a oard room — aha'd known him for yaara — 
Ruth bagan "raiaing hallelujah." I 

But ha had folldwara, particularly among three clana of Calaoa. { 

"He'a juat Glarai ... he wheela and daala," shrugged another cousin, Doug 
Calao. "Ha talka smart. . . . He'a collected from insurance coaqpanlaa fen people 
who have got hurt in auto aooidanta." 



210 

PAGE 29 

1991 Loi Angtlei TIms, OctobM: 7, 1991 

Dou9 and othars llatmcd vhwi Glenn told Uira "I )uv« p«opla" vlth rtlOUrces 
to Baka tba gaablin« vork. With Rutb sohadulad to com up tor raalaetlen, aany 
Calaoa jolnad tha oaaipaign to dafaat har. 

Mtti conlaaratad witb Glann. othar Indiana ahould appraolata bia, Pattl 
aaid. Wasn't ba bringing tba baat bid? And ba navar took aonay froa tb« triba — 
ba only took trom tba "otbar aida." 

* Dae. 17 1 In Cbioago, Caracal la naxvoua. Ba and Angallnl ara going to aaa 
•Nlnga' carllal, tba acting criaa boaa tbara, for tba "final aay." 

Ha 'a not aura bev to advlaa Carllal on off -track batting. Mbat if tbay'ra 
raldad? 

Pattl I "If thay plnob you, you put a raatrainlng ordar agalnat 'aa." 

Caracal agraas. Tbay could hlra aoaa hotahot lavyor to ralaa civil 
rlghta clalsa on babalf of tha Indiana. Soaaono lika Alan OarshowitB frea 
Harvard. Of couraa, "tbaaa lawyara faas, tbay kill you." 

* Dae. 20 1 In tba aoviaa, aucb aaatlngs taka placa at rotuid tablaa ovar bovla 
of paata. In raal Ufa, It vaa braakfaat at NoOonald'a. 

At 9130 a. a., aganta froa tba cbioago offica of tba TBX vatcbad Angallnl and 
Caracel arrlvo at tba fast food raataurant on Zdka Straat in Addison, 111. 

aeon after oaaa tba chauffaurad car of 8«b Carllal. 

Tbay aat for an bour, tban left. 

* Dao. 221 8132 a.B. Caracci oalla Patti and aaka if ba naada to talk. Xt'a 
tbalr signal. Pattl aakaa bis way to tba 7-Blavan and calls a Cbioago pay 
pbona, at a oar auotlen businass. Caracci fills bia Ini 

Tba boaa hadn't avan looked at the contract. "Do it," ha aaid. Just lika 
that, approved a 9500,000 invaataent. Nov thay have to find ways to get the ekla 
back to Chicago, "filter the aeney." caracci can't aapbaalte enough the need for 
prasaution. 

"You gotta be in the background, oauae you know they're gonna hook you right 
up baok through here. . . . Tben that 'a gonna be the (expletive) end of it." 

pettii "Z don't dlsouaa nothing with nobody." 

* Jan. 16, I9«ti Caraocl aaya Angelini baa selected a 71orlda aan to run tha 

ball. 

"This guy is supi>osed to be a helluva (expletive) promoter . . . and he's 
with the (bleeplna) Indians already, he's got bis naae down there ah, the Bureau 
(BIA), in Hlaconaln, he'a got one of these joints." 

They'll have to conault the New York aeb, however, beeause the guy la "with 
New York." 



211 

PACI 30 

1991 Lm An9ele8 Tiies, October 7, 1991 

• Jw». X9: P«ttl not«« that any oontraet with tha trlba will hava to go 
throu9b tha BZA. 

Caraccl: "That's just a atamp, ian't it?" 

Savaral yaara age, aaid tba rapid growth in Indian gaabling, BZA officials 
aakad tha fBI to oonduet baoJcground ohaoka on propoaad finaneiara and Managara. 

"Ttiaia aaaaa ♦;» lia ■naa— nrTilarirT^onfrnnra) don't naaa tha raal lovaatora."^ 
aald Tea oowall, rorsor auparintandant o£ tha BZA' a Soutbom California office. 

Although tha chaoka occasionally found a falony oonvlotlon — tha on* ground 
to disqualify an Invaator — th«y did not leava Devall with meh eonfidanca. 

■You'd hava to hava a hall of a baolcground tc gat notiead," ha aaid. "Tha guy 
who atopa you on tha highway dooa a battar chacic. " 



"Thay caaa cloaa," tribal eldar Masaatti said latar of Pattl 
friands. "Wa wara lucJcy." 

Xndaad, nawa froa tha "raa" aaaaad upbaat for tha Chicago crowd. 'Tha 
alactiona eaaa out pratty good," Calao glaafully told Patti ona night. 

Pattit "Tha alactiona?" 

Calaoi "Ruth lost, bar big fat ass is out. Bo you guys ara gonna gat it." 

Utar, ha confiraad it: "Svarything'a a go," tha tribe had votad. 

Than tha folks at Rincen started aquabbling again. Bonaone wondered if they 
could get a better deal by splitting the gaabllng in two. Keybe get $35,000 a 
■enth for the cards alone, extre for binge. 

Petti blew up when Calao told his. He waan't going baok to Chicago and make 
a fool of hiasalf. 

• March St AngeLini la having aeoond thoughts. "Re's heaming and hawing," 
Caracci tells Pstti. 

It' a not Barely the unpredictable Indians. He's wary of the Florida bingo 
manager, who's an agoaaniac and spread thin alrsady. And he doesn't like the 
perfonanoe of another "joint" they hava, a non-Indian bingo hall outside 
Baltiaora. 

With Rlncon, he has the middle manager's worry — that he'll look bad to hia 
bosses. "He don't went to go to these people and get that kind of eoney," 
caracci explains, "end then come up abort." 

• March 17: The Chicago boya are backing out. Angelini simply isn't 
comfortable investing the orgenitation's cash at Klncon. 

"It'a a shame," Caracci conaoles Petti. "... You got the <expletive) door 
open." 



212 



PAGX 31 

1991 Los Ang«les Times, October 7, 1991 

Of coursa, ir Pstti can put to9«th«r a deal with othar inveatora, Chloago 
will taka a placa of tha profits. 

Pattl isn't fasad. It ao bappana, ha ]cnotra a guy who alght ba intaraatad. 

Banjaaln had baan telling bia about a Naw Jarsey nan who laundarad fundi for 
Coloablan drug lord*. 

It WBB a covar ^tory to Introduca an undarcover FBI agant. Pattl had nevar 
takan tha bait bafqra. Nov ba did. 

on April S, ha aat "Pata Canuaal" — actually Aaant Patar Ahaam — and they 
drove to Rincon for a tour. Glenn Calao said ha vould need 913,000 to "loeX in" 
the council, the agent reported later. 

This time, thay would put Calao 'a na»a atop the proapectua. If anyone 
wondered how ha got money to open a gambling hall, he could aay It traa 
inherltanoe from a "Couain Red Cloud." 

But it waa a doomad plan. Tha tribe's attorney reminded Calao hia name 
couldn't be usad because of his criminal record. The FBI's interest was soon 
detoured. 

I 

The foous shifted the moment Petti told "Pete," the undercover agent, that 
he ]cnew a prominant San Diego buainasssan who could help get money out of the 
country. It was no iless than Richard T. Silberman, onetime chief of staff to 
S ev . Edm und S. Brown Jr. 

' In February, 1989, the Senate Select Committee on Indian Affairs held 

'hearings on tha "Federal Government 'a Relationship Kith American Indians." / 

During a brief portion on gambling, three witnaases gave varying appraiaala of / 

tha threat of organized crime. / 

FBI Deputy Assistant Director Anthony E. Daniels said there waa mob ! 

involvement at the etart of Indian bingo In Florida, but didn't see it as a 
"major problem" at the moment. Of courae, penetrating "fronted businesses" was 
difficult, and "greater infiltration" was likely If tribes opened full oaalnoa. 

Callfcmia Deputy Atty. Gen. Robert Morehouse said mob figures had been 
spotted on at least two reservations in hie state i In 1980, Palm Springs-based I 
Rocco Zangarl opened ■ card room at tha Cabazon Rassrvatlon. In 1985, Jamee L. ! 
Williams of Florida took over bingo on the remote Jackson Rancherla in Amador I 
County. 

Then came a third, mystery witness. He said the officials underestimsted 
organised crime. 

Identified only as "Harty," he testified behind a screen, his voice n 

V y^llstorted . v\ 

"Marty" said be ihad run an Indian bingo hall as a mob front. Hs had cheated > 
tribe out of $eoo,000 a year, he eaid, but kept peace by paying the chief $1,000 
a week as a "consultant." 



213 



ig»l Let Xnqtlu TIms, Octobur 7, 1991 



PAOS 32 



Km Claimed knowXAdgs of 13 Indian halls arotind tha country Inflltratadl by aob 
faalliaa. Tbay alclaatd aonay "through tha purchaaa of auppllas, which trara 
nonaxiatant and ov^rpriead," by padding payrolls and through fixad gaaaa K- 
vaighting aoas balls In tha bingo mixar, for instanoa, vhila llghtaning othars 
with baliuB. I ^_^^ I 

But-his^laias wars brusbad off by Indian laadars. R«~w»«~AnanonyBous| 
lou^buth, a guy with a bag ovar his haad tarnishing thaa all wl%lr-tt~te»«d 
^rush. I 

indaad, thara wis oaraly bis word for all this at tha tiaa. Only auoh iater 
would an Bssooiata of Naw YorX aob ohiaf John cotti ba arrastad for shippflng 
alet aaohinas to tha fit. Ragis Kobawx Raaarvatien. only latar would tha slneon 
~ wirataps ba filad sway in a San Oiago oourtuous*. 

So fsv baIiavad-f"Marty«-orJiis axplanatlon of why ha was talkingi "I gjot 
raligion." 



But that wasn't 



tha whola story. After ha'd basn caught stealing, ha eaae 



down with cancsr. $oan aftar his tastiaony, ha diad. 



^ "Karty" was Stayart Siagal, foraar aanagar of Barona Indian Bingo, 45 tainutas 
south of Rineen. 




TWO Bonths aftar tha Sanata haaring, Chris Patti ws under arrest. So was 
Riehard silbaraan. ] It was a splashy aoney-laundaring ease, with Petti 
eventually santanoed to 30 aenths in prison, the foraer politician to 46 laonths. 

The indictaant iade no aantion of Rinoon. That plot bad never been easriad to 
conclusion, after all. I 

A aonth aftar their arrests, the bingo hall reopened. I 

The Rineen council finally awarded the contract to a group of buainaaaaan 
froa Los Angelas ahd Phoenix. Taking no chances this tiae, the tribe's ehairaan 
insisted on a seoujrity deposit of sorts: "9130,000 up front, held by ue.^ 

aove. 



It was a good 



The new aanagers quiclely began fighting aaeng thaaselvea 



Whan they couldn't! open tha hall the fourth day, the tribe padloelced the doors 
— and kept tha $180,000. Six years after the bingo began, it's the only aenay 
Rineon has gottsn froa gaobling. 

The red, whits ind blue Rlncon Indian Bingo sign still stands along county 
Route «, the space! to list ths daily jackpot vacant. Orass grows through !the 
parking lot. Cows occaaionally wander onto the road. 



For the Indians^ it's little consolation that gaabling halla sit vaeaht on 
other California reservatiena. They are aware, aa well, of how a few hav4 
flourished. Not fab away, Sycuan has new housing, an aabulanoe eervice aiid acre. 

Alternative devllopaent proposals are not attractive. Three San Diego {area 
tribes have weighed offers to put duaps on their land. 



So Rineon is considering new gaabling proposala. "Can you believe it?4 asked 
Ruth Calao. 



214 



PACl 33 

j 1991 LOI AngolM TlBM, octobtr 7, 1991 I 

But you can. On la qulat aftamoon, waiting for a rain oloud to roll ev«r Mt. 
Paloaar, it'a hard ito iaagina that a Mafia family 2,000 ailaa away cvor vaa 
intaraatad in this maglaotad turf. Many on tha "raa" atill don't think iti 
happanad, including Ruth'a own aotbar. I 

■That'a juat a lot of ruaora and balonay,* aha said. I 

"I hava a friand who'a organiaad oris*, aura," Glann Calae aaid during! a 
briaf anoountar witfti a raportar, bruahing aaida all quoationa. "Chria Patti. 
Ha'a a good friand. I Ba'a alao vary poor. I'a peer. Tha band's poor." j 

Calao haa not baian aaan around Rincon such lataly, triba officials aayi 

Ha'a up at tha tiny Twantynina Palas Rasarvation in San Bamardino County. 
Serving aa ita buainaaa aanagar. in fact. 

Currantly pending before California offleiala is a request froB Tventynine 
Palas for a tribal-state "compact" under terms of the new Indian Gaming 
Regulatory Act. It would allow off -track batting on tha reservation in the 
dasart vast of Palai Springe. I 

Chicago Hob's Role: I The Key Players I 

The Chicago organized crime family acted much like any large business I 
organliation aa it moved to infiltrate gambling on the Rincon Raaervationd A 
proposal waa packagiad for a decision by tha top boss, then carried out by middle 
nanagera. Bare warai tha four key players, aooording to rsX wiratapai 
* CHRIS PSnii Bel waa the crime family'a contaet in Southern California. 
Looking to "grab aova money," he proposed taking over the Indian gambling 
operation north of $an Diego uaing a "front man." 

I J 

"I guarantee you^ you'll handle two or three hundred thousand a (expletive) 
day," ha told Chicago higher-ups. It would be easy to skim profits, ha aaid, 
beoauae the Indians i would have a minimal role: "No counting of tha money, |no 
nothing." I 

• MICHAEL C. CARXccI: He was Petti' s contact in Chicago, and was assijgnad 
by the family'a boasas to raaaaert their influence on tha West Coaat. , 
Enthuaiaatio about the Rinoon venture, he told Petti, "I juat want to make 
aura wa gat it, if anybody's gonna get it. I wanna get it firat." I 

Later, fruatratad by tha Indians' squabbling and changing demands, he amid, 
"It'a a ahame . . .JThey got an opportunity bare to finally get aome aoney| out 
of the (bingo hall) i . . . and t^.ay end up (expletive) around." Patti'a 
raaponsa: "You need I to stay on these (expletive) Indiana a little more." I 
I 1 

* SAM CARLISI: He waa acting mob boaa in Chicago, and ha endorsed thai 
Rincon project. A burly, docislve man, he approved a $500,000 investment without 
even reviewing the aambling contract aubmittad to the Indians. '■ 

"Ha didn't even )^t an aye that guy, you know," Caracoi later told Petti. 
■Ha aaid ' (expletive) it let's go, do it, do it. . . . Don't even tell me about 
it. . . . What tha (expletive) do I know about a contract?' ■ i 



215 



I PACK 34 

I 1991 Los An««lM TImb, October 7, 1991 

Th« $500,000 l«|"llk« piddling cant* to thM* 9uy«« you know," Caraooi notad. 
I 

* DONALD AN6ELZSX: A mob li*ut*nant and tho cria* family' ■ gaoblinf axpart — 
and also Caraooi' • I brothar-in-lav ~ ho vas •mmigttad to ovaraoa tho vantttra. Ha 
vowad to Pattii Tha operation ia going to ba run "our way." 

La tar, howavar, |ha had sacond thouohts about risking tha top boaaaa' nonay 
and pullad out. AaiCaracei axplainad it: 'All thaa* (axplotivo) yaars ha haa 
always usad hia owtt BR (bankroll) and whan you usa your own BR, if you blow it, 
(it) doaan't aaan Anything, you undaratand? You taka tha leaa. But ha don't want 
to go into thaaa guys and . . . blow (thair nonay) .... Ha' s afraid, ha 
doasn't know what tha (axplativa) thay'ra gonna do." 

ORAPHZC: Photo, Sidin advartisss gambling at Rinoon Rasarvation, but oparatien 
has long baan out of businasa. ; I>heto, Ruth Calse, laft, rasistad sob takaover 
at Rincon. DON BOOKER / Los Angalas Tinas Assooistad Prassr Photo, Tha lata 
Stawart Slagal admitting staaling as bingo managar for Barona Raaatvation. 
Aaaociatad Prasar fhoco. Chairs on tablaa of closad Rinco n bi ngo hall in 1986 
photo. DON BXRTLBTTZ / Los Angelas Timas; Photo, CSRZB tettz ; Photo, mzchaxl 
c. CARACCZ : Photo J SAN CARLZSZ ; Photo, OOKALD AM6ZLZNZ I Nap, Rincon 
Rasarvation, Los Attgslas Timsa 

TYPEi sariasr infobox 

I 
SUBJECT: PETTI, $KRZ8; CARACCZ, MICHAEL C; CARLISI, SAM; AN6ELINI, DONALD 
(THE WIZARD OP ODDS) ; RINCON INDIAN RESERVATION; KAFIA; AMERICAN INDIANS — SAM 
DIEGO CODNTY; GAMBtlNC — SAM DZEOO COSNTY; ORCAMIZEO CRIXB — SAM DIS60 COaMTY 



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219 



NFW JEBSCY LAW JOUKHAL SEFTEMBE» 13. 1993 



Was Mob Behind Tribe's Casino? 



FHMd flf te Tribe 

S«yi Vm tPomt: •'We k« aU at 
w«b Bob Pnnk bwwne be )W n 
on ol anKy. He left on sood Km 
aad be ■ > food fneod. We cipna i 



Win kU of Bfit> Pruk s Omiaft 
w«h wUtsKB. Acd ttsi Wiliiua a 
cuMi d ciwt by takni jieeM Boao fi id 

Vas D<nk tatd. "I'm gtad we hwad 
ttM fltt. Tftkc my wwti for n. He tau 
ao Mwi ty uMtJ B at aU Nooe Nothaos 
■1 all. The BlA fBomu of tDdaao 



58. 



nsidai aad twt - *U D t uoomI atf- 
veniM« ^na^cr for Tht Dath 

rtrft an uu o fc nai ttai hu offiaal rote 
wtfi me mbc coded m 1991. Bia toe 



Fnak. addmg. 



c 10 die nbc. lays 
"If tt»cy were fong lo 

1 New ieney. Id bk£ 

dttcf Van Dunk and the tnbe's 
DC. lotobyM. Albcn 
o. ali deacnbe Fra 
satuf ai totncww wamig in Uie 
waft iboald dK cian receive mbal 



A 1979 Nortel iwganar anicte 

WO- 
Wil- 

Insa wed Forhea b« wi didii * bs 

Bin vohoBVity after be ' 




duod bofo tiipT**" *^ WillttBa 
hetpnt Accanno «mh die purdaae 



wont) wu pc0cd by dv FBI u mrk 

S3S miUioa dunsf die cmilv i980i 

Accordiag lo Uw-«siiuiicjneoi of- 
fiaab m dK cax evasion case tod 
eiiewtaere. Wtlhaira bas a bunw of 
ow ao it and nioBinf busmesacs. hovn 
bago pahon to «np chtba. wiUi 
adKfi fraDOBf for bnn. Aad in •( 
kan dne caxs. Fraak appewi lo be 
fmn^ for WiUiaim 

Id die fini cue. Fraak. aocordai 
u New Mcuco i 

■ 1981 B «i I 



pro>ecuior\ 

Savi Frank aooui HuleaA 
"Jtiiwnv Williams buili n and 1 o- 
II The buikliDf wai tcaicd 
charwy w 1 was msi uk tandWrd 

The New Mcaico repon sau 
the Hialeah business wu cuec 
vtotMioRS of Fkmda s ^aimnf 
IOCS. Fnak wys. 'That i mtc. 
jua owned dK buUdm; 

/Utqied Skinny of fii^io Pr 

In die durd eumptc cned b< 
thor««s. Frank., a 1937 fradua 
ScMsi Kail Un'vcrsny. wu bi 
atcng with Williana 



Wiltanas. Accordmg to a 1912 repon 
issued by The Governor a Orfmad 
Crime Piev eiEM ii Comrmsmi laled. 
"InAtoKBoa of Orfanoed Cnms bao 
Bago n New Mctko. Frank tailed 
to dadoae both hu and wmams 
hall 

Ffank. wAJU f Omg aj u»e rcpon. uaed 

iiw nne ol en aup toyee of tes trom 

Hok^ Hsil. a biago putor a Flor- 

n reilirv 

I WUlMarv Mu «:> baakroU ds pctemal 

I Weill 



, JackMO. Ca 

The accusation was bnaft ■» 
earty 1986. a lew momhs ahc 
Rampoufhs chief. Van Omk 
latraducBf Frank lo the New t 
pteas at die mbe > new msiiaft 
coonlaat- Frank's New Jcrsrv 
paay. Rory Man a y e me m Corp 
upMd a coairact with die cl 
I9S5 (o betp m the eflon to t 



Odioi. paracttlarly law enfone- 
mem oAienb. charaocnze Fnak as • 
fnn for Williams and WUlwm' 
Idafia iiiiiiiiaiii And Wilbams. uy 
federal proaeaaors. has been mvotved 
in bngv VBot he ran an AlcroQ bago 
hall B 1973 for Joacpb Merto. de- 
icrdied by audionaea as an Ohio 
btmo kmi coDVKUd m 1979 of 
ducoBg an tUefai brago 
grand dieft and garablBg. 

Frank s mvotvcmem with Wiltiaras 
goes back to 1978 when, acc otd rng to 
coun papers Filed by the federal 
Mami Smkc Force tn I9S7. Frank 

Wiiltams and others lo bribe a Flondi 

tegMlaooB favorable lo diem. 



hjfh-satas bmgo hall (or 49 p 

the fUmap 

■9 get SI perccn. The co 

the mbe S29 millior 

15 yean, accovdag w Fraak aik 

Dunk. 

Abom anrcn momhs after du 

by Frank. William^ 

acomdag lo lederal prpaecmort. 

Jackson - 

SO mki Borthcas of Sacrainer 

as chxf financial backc 

SI5.000 a Bighi. After ye 



of &SM.O0( 

and anoraeys' fees to 

1991 Though about ha 




of action included 



n die I9T0I lo »vo«l 
; die New ieney Sale 
I LovcMigaiiaa. Fraak 
' AMtaoay. Yean ago 1 



am fvlilad for 




c oncoc te d, wnh man of dK profn 
goi^. lUegally. to Willwns cora- 
pattBS rather than the charmcs 
WUlMBS. for 

Nathvdie 




Frank acknowledges pUnag t rote 
m tryag lo set up the bmgo operation 
for Williams m Albuquerque b 1981- 
S2. aad fur 



oamad prmc^als m the propoaed 

venaae worked ai Hialeah Hali. 

After bca« i which he ownsd. But he wys. "1 was 

of . on my way lo California and Janmy 

Hp by WUUmbs. dK . askad me so nop by and check a out 

He vataMd by opouon. and tor paid 



ciiBrsabte sobc- i Hale^ Hall 

a 1 i ■ The I eunpte of FraiA allegedly frommg 

I Fnak Qefillo. | for Williaim. While Frank admas he 
. and while Flonda 



wah tte mob bom m 190 for fisaig i 
B Fteida. GehUo was coa- I 
m I9tl. 



I oAioer of the buu 
dK WBlMrni 
1997 dM "dttfe I 
dw rWillBna) \ 
iHaU.' 



•ay. though, that the Wtlliams/ 

gnNp. after securing an empio 

h the Mi-Wuk Ir 

told 90 perccm of the comr 

group tor S7SO.O0O 



of the New 
corporation. Rory Manage 
Fraak was die prcudOM of 
Services. Inc.. 

nself as a business cipert m n 
bingo halls on reservatioas- 
Fraak. however, says he le 

Nov 29. 1985. "before die « 
lions suned" He says he w 
comftmable with die team b 
in by Willinms. ipeciricallv 
direc peoptc he says be laser l 
end were conv g Bd fdcas Iran 
England 

He produced a lener fro- 
Flonda aoomey represemmg W 
wlucit ackiKVwledgcs that Frai 
ugMd on Nov 29. I9K5. ana 
fore tfuukl not have been mdu 
an laaial plauaiff or a subs 
cross-dcfcadaai . Inuially . 
WUlBms and Arraw Maau 
sued Awbry for u a er fc na g wa. 
coaoaa. aad Awbry camei 
The lawyer. Brace RaadaU o 



220 



IMS kno. "Wc m uplom* *« 
pouMnes « eanan«l y" t™" 

OiulmBii" 

<p9«RS>r BO iudi ■eooo "» <*■ 
nimd. u Fmk renaMOl • ™*- 
dcf^Aul od ts oaaul on OK ^lot- 
mK. Frank uliiuo » «" «^^T, 
,9r7. BrX Oc re^ <*• "^ 
CO, it>ou(B RudiU ra on BO 
1„^. RioMI Imi HOC ami. "U^ 
nl you ]UB Did me. 1 """"SV 3id 
extncBol trom 0>" """^ ""ILZT ' 
. Law laumai reponn i« •'*" 

l|0. 

Fraok pioduod • "'"'■"• Sf"^ 

.«,h.tooo^t'».fr^y-,J 

lua BtiMfii out becme l oMia i »■* 
the bKkfrcKHih of thoM pn^ ^U- 
luiM tPTOUfW B. ud I ne«r e*« |« 

Eifhiaai diyi after 
nanon ' from Aiiu"* 
C^Uforma. Fnak 

SSw « p™— ot R«r M- 



•n« fcdcnl proKaon m Ftondi 
uier cooclodo) Ou. Ok mo of New 
EoitlMd felooj •cmiUy broupB Pra«« ! 
^J^lunu iou> 0. M>-WBk ladao i 

TVpraMcnon mOwrlWTpre- 
,cmmi mion. lo>k Frank » w,^ 

Frank puvo) • omU roie m •» u- 
K„^ 9, WUluUM "mJ ha imoquo 
lo bnfce m unaainK) ^^**"^V^*** 
jouujr 10 imi lejalKW favorable lo 
Willmns ind hi» umm i n - 

xca>nlm( lo OK mtrntnirtmi. 
Frank pickoO w ""^ *'"°„^2' 
meal from • lo«7r>» '»' WiUBini 



^g>» 



i,,l de»eio(>ci AwBi y loa i». 
•Frank wu mere m OK "kP"^; 
ukj he «mi OK pranoea. bu •Ml 
ever aw wis WUlaim. who ran ok 
place. 1 oe«f aw Fra»k bui OKe ot 

In |9»5 Fraak lold lepooen n 

, leney Oai ba boeter wa prt- 

punj lo o.« .p lo $4 rmUKD ^ 

htjaK of OK »nmpra i t» enon. fct 

he itfueol «> «»«rfy "^ t"*" 

19S5, be OeKnbol 

New Jeney ««». •» nii nnrtmi i 
,a> of die LU i nm ii O )'." eceoedat 
TV A*rw rort 7i«ei. On Se»». 3. >k 



Fr»Bk Rimtpough iiioree^ 
Sdaeaei. lod Cluef Vm Dunk «l 
uv Frank's fineJ cobobh eipuH 
ihoa iwo yon efo Howe»a. ex 
,.«nui> fonsed ui I9»5. Ror 




> recorts w«r 
oie'Seaearr of SMe m T>eaoo_^T)i. 
OTporauoo • rer«a=> «»«"■ *^ 
MiTO of New Bnaiwick i M«»o en 
McdiKbeoo. "n of Rofy » 
Frank ■ effaro on bdmlf of Ok li*t 

■They i« . 

u far u 1 know 

Meyo am Roey i 

TlBodOfe Cobn of Livinfaoo- 



a nic . 

C^a. a weil 
u Eduon 
_ Joel Milto. will MX < 
She lefemd ill il«no "> *;,?*' ' 
lo *i lawya. Sdonder MuKi o 
dmed a lamn averal pboee enU». 
Ai foe Fraok adiy. he By». 
wa wortat for > molical lib fan 
didnl wort OB md now Im r 
but I'll 
i| (el Ok tetcni 



(far wmana 

on of I St.OOO fee 

bea«e OK propoeed kfnfaooB 

I I OK oae Senae. While Ok 

poravyed Ok iiiB aiii rd 
I pnnia^ajx B da bribe 

Frenk " '"^ 

oely a Oai of 

labbyn end i waimii 

umed ChkrteJ Bofus. wtio h«l 
owned Ok SouBi Ftondi bmto 
Om were l»er nken o«et by WiUami 
,al ikmaKd by Aciemiro a "> 
lUejed acra pam er of Boi». 

ICO aioanues. h«> pleaded gmlly a > 
biato relaed bnbery chirje o «K 
19701 



Learntheanswerim 
— ' ! youenterthecouktroom, 



Limits of Speech 



In Sale v iimpU. J43 N J Su- 
per 98 (1993). en tvaii axm nijed 
ihit 1 tener coottnung a cooieswoo 



pnea The Sopmne Coun wUI re- 
vKw bodi holdings. 



his 



nfe 



adnuaible ((aas Ok del uidaa ine 
lener wa oinKd o»er lo proeeraor i 
by Ok wife 1 fiOier. wt» foua) a 
amit ho daiifaefs^Po^f",^ 
ne helped her move The wife da no 
Um her faOKt Dad found Ok leBer 
The (mel ruled 0«M Ok oiaimal 
ammmcam prmleje m Ok rula 
of ev«teM does m apply >o • wrn- 
m Biiemea oiai falls lao ok hands 
of a Oitfd pany 



And a • case Oial could provide I 

peranal «|ury lawyers wMh a whole I 

jKw lei ol pUauAs. Ok Coun will I 
rcvaw an appeals coun l ruling OKI r 



The* 



sof I 



oeah of her fiance has a doa eaaifh i 
rdauoaafav a Ok vkubi a sue for 1 
emoooal disnea. Prevausly. couns 
have allowal sue* suai when Ok 
plaiaiff ha a •■inarwal or nainae. 
fanulal lelauonah^' wnh Ok vKiim 
TlK opaan a Oa»*» v Crrjor. 
261 NJ Super. 110 (19921. wnoen 
by Afpeilaa DivtsMa ludce Howard 

, 'fanaty' IS not a be ikiuiiiacd by 
applieaica of • vertal (om ala fan 
rather by paiticulaneed s nfiM a wi a 
I Ok aalaes of Ok aciual lelauooshsx 
, ai t™* a OK csxxezi of Ok gals 
, aoi^H a be served by Ok legal 

"or.»or. No. 36ja. 
coua be Ok laea na o( ibe OanJ 




The FUCTEVER COMPLATON OF lUIXH PREiBENCES 
ANDPROCEDUPiSINTHESTATCSTmCOUKR- 
AVmSOURCEOF INFORMATION FOR EVERY ATTORNEY 

AvUUBliNOWFORONUm DiSCOUVRTONCTmOINm 
B00tCAliNEWJE»SEYUWJ0l)INALI00B*rai)MJ«5- 



221 



1U.S.NEWS 



Gambling with the mob? 

Wise guys have set their sights on the booming Indian casino business 



Seatea in the largest Sen- 
ate heanne room v/ith a 
hood over his nead to 
protect his identity, tne witness 
identified oniv as "Marty ' had 
some coniessions to maxe. Not 
oniv had he helped the moo set 
uD ana run a hieh-staKes bingo 
nail on an Indian reservation. 
he testilled. but be haa oadded 
;;xDenses ana robbea tne inbe 
01 over i600,000 a year. 

But even Martv s sensational 
:3les 01 flllinE bingo calls wiin 
;eiium and awarainc 16O.OOO 
:ars to oaid shills paiea m com- 
ranson 10 nis next news ilasn. 
Marty told members or the 
Senate Select Committee on 
Indian Affairs mat 12 otner in- 
Jian bingo nails also were con- 
trolled by the mot). "Organized 
cnme is destroving tne Indian 
reservation, he said in a slow. 
.Tiechanical banione. nis voice 
jeliberatelv aiiereo througn 
the use ot a special macnine. 

Four vears later, tne leaaers 
ot the Indian gamoling inaus- 
•,r\ are still smaning. Martv s 
jDOcaivpiic visions 01 Mafia 
aominaiion nave oeen proven 
wrong, thev argue, aading tnat 
InOian-owned casinos ana bineo halls 1 
jre more heavijv reguiatea than tne I 
Liutz palaces in Atlantic Cir\ and Las 1 
Veeas. But wnile it s true that the in- 
dustry has grown mucn more sopnisti- I 
cated and has weeded out tne most ve- 1 
nal operators, many questionable 1 
cnaracters remain. From dozens of in- t 
lerviews with federal, state and local I 
law-eniorcement oilicials and from doc- 1 
uments obtained througn the Freeaom 1 
01 Intormaiion Act. L'.S. Sews nas 1 
leamea of a number of cases mat raise 1 
senous doubts about the integnry ana 1 
inviolabilitv of Indian casinos. 

The new oirtfalo. Devastated bv unem- < 
ployment. substandard nousing and I 
scnools and cnppung aiconoUsm. manv 1 
Indians nave come to see eamoiina as \ 
•:he new buffalo" -the first true eco- 1 
nomic opportunitv in two centuries. But 1 
buflalo never paid dividends like a one- 
armed bandit, in Connecticut, the I 
sprawiicg Foxwooos Casmo owned bv 1 




Bie-tinic entennise. The huge, new mancet in Indian-owned casinos is a araw tor venaon. 



the MashantucKet Pequots could con- 
ceivablv gross il billion tnis vear and 
net half that amount. On the Shakopee 
Mdewaxanton Dakota reservation near 
Minneapolis, the Mvstic Lake casino 
takes in so mucn casn that tnbal mem- 
bers sometimes receive dividend checks 
for up to S20.000 a person per month. 
one official with the Bureau of Indian 
Affairs says. And lust last month near 
Syracuse. N.Y.. the Oneida Indians 
opened the SIO million Turning Stone 
Casino, exoected to rake m well over 
SlOO million a vear. 

Now that 73 tnbes in 19 states offer or 
will soon offer full-scale casino gam- 
bling, tne big ooys nave laxen notice. 
Atlantic Citv casino owner Donald 
Trump recentiv sueo the U.S. govern- 
ment lor allegedly giving an untair ad- 
■. antage to tnbes settine up casinos. And 
he s out to prove tne Ifedgling industry is 
comiDt. ".\ lot 01 the reservations are 
being, at least to a cenain extent, run bv 



I oreanized cnme. says Trump. "There s 
I no protection. It s become a lOKe. " 
Mobsters did. in tact, prey uoon Inai- 
an eamoiine dunng the lysOs. Besiaes 
Martv. wnose real name was Stewart 
Siegel and who managed a California 
bingo nail for the Barona Indians be- 
fore he died ot cancer. Indian gam- 
blings oist 01 characters was like some- 
thing out of an Edward G. Robinson 
movie. Just this spring. lor example, re- 
puted Chicago mob boss John "No 
.Nose DiFronzo and his gambling ex- 
pen. Donald "The Wizard of Odds" 
Angeiini. were convicted of conspiracy 
ana fraud in a failed attempt to take 
over gamoling operations at the Rincon 
Reservation near San Diego in the late 
'?0s. The Chicagoans nad hopea to 
skim protits ana launaer moo monev. 
FBI wiretaps snow in 1980. California s 
Cabazon incian irioe nired as ineir 
poKer-room manager one Rocco Zan- 
gari. identified as a mooster in Senate 



3) 



. S..NEWS St WORLD REPORT. AUGUST 21 1993 




84-760 0-94-8 



222 



tesiimonv. He was subsequentiv tired, i The Pennsvivania Cnme Commission 
Later, after inoal Vice Chairman AJ- i savs that Henrv' "Zebo ' Zottola. ;". 
trea .-Mvarez comolainea to local news- i was presioent oi Rocca s Italian Fooas 
Dapers aoout ooiter-room sKimmine. i ano that Louis Raucci St.. 65. was an 
.\Jvarez ana two otners were snot aeaa; i investor and employee. Zottola hems 
;ne case nas never been solvea. collect payments lor the Michael Geno- 

There s orooablv been a ieamme | vese crime tamilv from local loan 



curve, ana oeODie have been oumed." 
^avs Rick Hill ot the National Indian 
Gaming Association. But Las Vegas 



sharks, bookies and arug aealers. tne 
coranussion says. Raucci was convicted 
m 1990 on racketeenne. narcotics and 



In an interview. Medure initially de- 
nied knowine Raucci or Zottola. Later. 



was an open town tor mobsters m the I tax violations ana is serving a 27-ycar 
1930s, he adds, policed only bv a sheriff. | jaii sentence 
"You aiwavs have to look at things rrom i 
a tusioncai persoective." 

TrumD s hyperbole not- 
withstanaing, me vast ma- 
iontv 01 the 175 total Indian 
casinos ana bingo balls are 
honest and clean. Many em- 
ploy Las Veeas or Atlantic 
Citv pros and have vieiianl 
n-nouse security teams. 
Several management com- 
panies are pubucly traded 
jnd have passea overlapping 
layers oi government scruti- 
ny. The FBI do. not see a 
cooramated. cc.;cened ei- 
!ort" bv orEanized-crime 
lamthes to raid the Indian 
2ambling mausin'. says Jim 
Moodv. cnief ol the FBI's 
oreanized-crime section. 
There are no 'publicly 
known ' cases oi current 
mob inllltration 

3ut ihe threat remams. 
T.ie bureau nas six ongoing 
i.Tvestieations — one more 
;han wnen Mooay testified 
^n Caoitoi Hill lUst a tew 
Tiontns aeo. And when asked 
.vnich cnme lamuies are in- 
terested m Indian gamblmg. Moody re- 
plied: "I don t know any that arm I." 

The PmstnirOi road paver. The FBI is 
.nvestieating a Pennsylvania asphalt- 
companv owner wno manages a maior 
casino in Minnesota and is expanding 
nto tribal gambling in California. Okla- 
.loma ana Ontano. Canada. L.S /^ews 
nas leamea. .-Kngeio Medure. o4 oresi- 
jent 01 Gaming World Iniemaiional. 
has no cnminal record and 
nas oassea the background 
cnecKS reauirea lo manage 
tne Shooting Star Casmo in 
.Mahnomen. Mmn.. owned 
pv tne White Eanh Band oi 
Chippewa. No charges have 
^een tiled agamsi him. But 
•ne FBI became susoiaous 
vhen 11 learnea Medure 
eases a .New Castle. Pa., 
^arenouse to a oasta lirm 
;nat was run m tne 1980s bv 
-:Dutea moosters. 



called Medure s condominium in Pom- 
pano Beach. Fla.. and Medure s con- 
struction comoanv. Medure savs ne nas 
no organizea-crime linKS ana claims 
Zottola simpiv called to aiscuss ware- 
house remodeling plans. 

Zottola acKnowiedged last weeK that 
he called Medure repeatedly in 198b to 
discuss the warenouse. He admits oeing 
fnenas with men wno the cnme com- 
mission says are Pittsburgh moosters 
but clauns he has no link to the Mafia 
and IS just an honest carpet salesman. 

Althouen Zottola never aamitted it to 




In the 



MohawK Bineo Falace in Hogansour^. A. >'.. can seal up w 1. 700 plaven ai once. 

he said he had met Zottola at the pasta I local FBI agents when they questioned 
plant several times but claims ne was I him three months ago about Medure. 
unaware oi Zottola s backeround. Con- I the calls did not stop in 1986. Zottola 
iidential teleohone recoros obtained by | called Medure about eight months ago 
U.S. i\ews confirm their reiaiionsnip. A I to discuss selling nim video-poker ma- 
24-Dage summarv oi calls made in 1986 I chines to be usea at the Minnesota casi- 
trom Zottola s Pittsburgh home reveals i no. Medure confirmed the call but savs 
that Zottola called Medure s house and I he told Zottola he was not interested. 
his trailer home in New Castle slx times i "IMedurel told me that anvtning he put 
on March 21. 1986. On Mav v. Zottola i on that reservation had to be approved 

by the state of Minnesota. 
And 1 lust forgot about it al- 
ter that.' Zottola adds. 

The White Eanh tnbe has 
had some cunous business 
dealings in the past. In 1987. 
before Medure became in- 
solved. Carmen Ricci sold 
30 video-poKer machines to 
the trine. New Jersey otfi- 
cials descnbe Ricci as an as- 
sociate of the NIcodemo 
Scanocnme family. .At that 
time iney were ieettimate 



3^ . T--.V.. 

'J Witfiiir^^w^iiidiMipiiibHiiK . i.to^ 

..." WBBJpi^'il^ g'^opP'"''''" ^^ boomed: _^ . . '' 

f^irtlWiBi ■nil ■ li r m~ gamblers bet between S7.5 billkxi end'' 
yjriUBMyiltfrlndian-owneO casinos, omgo nails ana cam moms. ' 

^tlibes Si 19 states offer or are about to begin . ' ~l[ 
;Aill^scale casino eamt>iing. ," 

.'sMashantucHet Pequot tnbe will enoand . 

•tootcasino nexttmntn - 225 same tables. . 

.jj^j^adkbexsmi ana a bingo nan ror L900 olayers. . 




i. SMEWS i WORLD RETOBT. AUC15T Z3. 19S3 



223 



■ I.S.NEWS 

businessmen. mbaJ Chairman DarreiJ 
"Chip" Wadena savs. 

Medure profits handsomelv from his 
casino deal. His tirm eeis 35 percent of 
:asino proiits - ai least S3 million a vear. 
Chairman Wadena lought to increase 
Medure s taxe bv 5 percent, at his own 
moe s exDense. out a lederaJ mediator 
rerused. .Medure nas plans to manage 
casinos lor ine Hopland Band of Pomo 
Indians and the Cloveraale Pomo Indi- 
ans in Nonhem Califorma. ana the Rat- 
ponage First Nation near Kenora m On- 
tano. His firm also plans to manage a 
bingo hall, set to open this weeK. for the 
Seneca-Cavuga tnbe in Mi- 
ami. Okla. 

The stn|>-4iar owner. Res- 
taurant owner Robert Sabes 
was well known in Minne- 
iDolis as a millionaire busi- 
nessman. So locals were 
narolv suronsea wnen ne cre- 
-jiea a successnii casmo man- 
^eement iirm called Gaming 
Corp. 01 America. But trou- 
oles began inis spring wnen 
Mississiopi earning regula- 
lOrs leameo tnat Sabes owns 
J topless Bar m Minneapohs 
where the entertainment was 
managed bv Michael Peter, a 
flashv South Honda million- 
aire with a nationwide chain 
ot stnp-tease oars called Sol- 
id Gold. Peter was indicted m 
1991 on exionion and Icidnap- 
pme charges, and the case is 
pending m state coun. Fed- 
eral agents seized thousands 
01 Peter s documents at 
.iDOut the same time, citing 
concern over txjssibie orga- 
nizea-cnme ties. No federal 
charges nave oeen filed. 

Sabes denies anv mob links and says 
he had "an arm s length" relationship 
with Peter. But the embarrassment and 
the licensing delays to come persuaded 
Sabes to sell his Gammg Cort3. stock 
last April and leave the publiciv traded 
firm. Althougn one tnbe quicklv cut all 
lies to the restaurateur, others contmue 
to seek his busme&s. Earlv last month. 
Saties won prelimmarv approval from 
.Arizona s Vavapai-Apacnes to manage 
their proposed casmo nonn of Phoenut. 

New evidence oi a more troubling rcla- 
tionshiD mav jeopardize those oians. too. 
1 In testimonv 10 the Wisconsin Wjnneba- 
; \ go gaming commission released this 
month. Sabes admits also doing business 
with James Williams, a partner m Peter s 
stno-oar emoire ana once a major bingo 
hall operator tor Indian tnbes and chan- 



ties from California to Flonda. Williams 
was convicted in 1987 ot failing to pay 
taxes on some $300,000 he earned from 
bingo halls. Flonda police records call 
him a "close associate" of Anthonv Ac- 
cctturo s. whom the FBI has identified as 
a capo, or boss, of the Thomas Luchese 
crime lamily of New York. Williams, who 
did not return phone calls, admits m the 
police files only to meeting Accetturo 
three times in the 1970s. 

In a recent mterview, Sabes admined 
that he siened papers with Williams as 
early as Nov. 9. 1988. That was just 
four months before Williams was 
locked up, prison officials sav. But he 
savs he did not learn of Williams s con- 



cominission report claims cenain bingo 
operations m the ^oungsiown. Ohio. 
area "are obbgated to purcnase bingo 
supplies from Nannicola. ' 

Nannicola says his firm sells supplies in 
25 sutes and got the Tamiami contract 
because of supenor service and pnce. He 
demes that his father-in-law or his busi- 
ness has mob ties: "The Pennsylvania 
Crime Commission should get some new 
employees and some new mformation. 

Despite the allegauons. the National 
Indian Gammg Commission has never 
done a background check on Nanmcola 
Wholesale or Tanaatni Partners. One 
reason: Although Congress created the 
commission five years ago to regulate 




Mlnaeiou l«t». Mvstic Lake casino rtponedty earns each mbal memoer up to $20,000 a morun. 



viction or alleged Mafia ties until 1990. 

Tha btaso papw sappttir. When Flon- 
da's Miccosukee Indians opened a 2.000- 
seat bingo hall west of Miami m 1991, they 
hired Tamiami Panners to run it. Two 
years later the tnbe kicked the firm out. 
allegmg mob ties. Tamiami parmer Cye 
Mandel denies the charges and has sued 
the tnbe for cuttmg hun out of the ven- 
ture, which last year grossed S35 million. 
One ihmg is sure: Tamiami did sign a 
contraa with a bingo paper supplier au- 
ihonties have linked to the mob. 

After a bidding process, Tanuami be- 
gan buving supplies from Frank Nanni- 
cola of Warren, Ohio. Nannicola is the 
son-in-law of Charles Imburgia, who, ac- 
cording to the Pennsylvania Crime Com- 
mission, IS a member of the Genovese 
crime family in Pittsbureh, A 1992 crime 



Indian gaming, its rules didn't take effect 
until six months ago. The commission has 
a massive backlog of old and new man- 
agement contracts to review. 

Just such snags prompted members of 
Congress to meet this summer to discuss 
tightenmg Indian gamblmg laws, and a 
new Senate bill likely will be introduced 
next month. National Indian Gammg As- 
soaation Chairman Rick Hill says the 
tnbes want the cleanest industry possi- 
ble. But thev also want to ensure that a 
few questionable charaaers do not bnng 
rum to an industry that employs thou- 
sands and has nelped tnbes build mucn- 
needed scnools. hospitals and homes. 
"It's a bread-and-butter issue, ' Hill savs. 
"We need Indian gammg to survive. " a 

BY James PcPMN 

USNEWS & WORLD RITOFT. AUJUST a 199B 



224 



^:S:N6=^2;«/5 



?AGS i 
:rd story oi LavsX 1 printed in FULL fomat. 

i>roprl*tary ro the anitsd Praas International 1993 

January 37, :.992, Monday, 3C cycle 

JECTIONi :ieqional Neva 

OZSTKIBUTION: Illlnola 

LSNGTH: SSO worda 

:{SXDLZNSi Jleputad Ctiicacre veto boaaea arraigned 

3YUNE: 3y HILMER ANDSIUOM 

3ATELZin:: SAK DIEGO 

.BYWORD: CA-KOB 

300YX 
Saa "Winga" Carliai, ^he reputed acting boaa of CHlcage'a Mafia accused 
oi trying to take over gambling operatlona on an Indian reaervation, pleaded 
innocent to racketeering cAargea Monday along with a group of alleged 
Ileutenanta and aaaooiatea. 

carliai appeared before U.S. Slatrict Judge Willlew £. 2nrlght for the 
firat tiae aince be vaa indicted Jan. lO with eight other defendanta, including 
alleged aobstera John OiFronxo, 2on Angellni and Michael Caracci. 

The nine defendanta aat quietly aaong the handful of apectatsra in Enright'a 
sourtrooa until it vaa their turn to crowd around the podiua with an equal 
nuBber of attorney a. 

Zlght pleaded Innocent, rhe ninth, Chria ?etti, ^sleaded innocent laat vaak 
ind vaa in court for a oail hearing. 

'It vaa kind of nice co aee seme of ay old acquaintancaa up there," said 
Art ?hlzenaayer, the head of the FBI 'a organized crime unit in San Diego vho 
larliar had worked in Chicago. 

3«cauee the caae la baaed primarily on several thouaand pages of wiretaps 
ind supporting documenta, It ia expected to take several months to reach trial. 

A motion hearing vaa scheduled for June a. 

carliai ia the lead defendant in a 15-count indictment that accuaea the 
sob of trying to gain control over gaabling operatlona at a planned caaino on an 
Indian reservation easi of San oiego. 

.ia was described in the indictment aa a ''':rew cnief' vho ran iihinqs on 
Chicaqe''a West Side for the organization, fsundad by Al Capone, untiil 1987 vnen 
le was anointed aoting boss after Joaaph Aluppa and undarboss Jack Cerone war* 
sent to prison and heir-apparent Joeepn Famola's health deterierataa. 

rhe alleged plan to take over gambling at the Rincon Indian Reaervation vaa 
-^resented to the moo leaoerahlp througn Caracci by ?etti, i Cicero, :il.. 



225 

jgi^r by: : b- 4-93 ;n:33AI« ; LAW C=Fi:£5-' CLAP? EIScNBER3;827 



PACE 7 
Proprietary to the unltsd press International, January 27. 1992 

tiv« whom authorltisa b«li«v* has bawi tba faaily'a man in San Dlago alnea tha 
70a. 

Patti allaqadly oenaplrad to win tha aanageaant contract with Glan Calac, 
s contaot on tha raaarvatlon, and Nlcholaa Da Panto, a San Oiago lawyar who 
alt with tha Sincon Tribal Cotinoil on Fatti's bahal£. 

Patti'a alla^ad uanatrvaringa , howavar, wara aonitorad by tha FBI and San 
age lav enf oroaaant of f icars who wara authorizad to conduct ' ' roving 
rataps" that allowad thaa to liatan in on phona calls sada at pay pbonas and 
OB 0« Panto's offioa. 

"Tha dafandant ( Pattl) usas tha phona to coaait hia criaaa," Asaiataat 
B. Attomay Carol Laa told Enright. 

Carlisi, OlFronso and Angalini allagadly vara villing to put up aenay for 
• allagad takaovar atteapt and bad a Florida aan pickad out to act aa aanagar, 
t thay pullad out latar bacauaa thay vara loaing aonay on a siailar 
sarvation caalno in Baltiaora. 

Tha vhite-halrad Angalini, in court on tha day aftar tha Supar Bovl, is 
etar known in lav antorcaaant cirolas as ''Tha Nicard of Odda," tha aan who 
La tha vital sports batting linas that are used by bookaakcrs acroaa the 
intry. 

Tha indietaant also oontaina extortion charges steaaing froa Petti 'a 
Lagad efforts to collect aoney froa gaablers with the help of co- defendants 
raen and Anthony Di Nunzio of Los Angeles and John Spilotro. 

Spilotro, identified as a aob aaaooiate froa Laa Vegas and brother of tha 
:a Tony "The Ant" Spilotro, the aob's reputed overseer in Las Vegas vho was 
rdared in 1»86. 

All of the defendanta except carraoi, Petti and Anthony DiNunzio have been 
le on bond. Caraen Di Nunslo reaalns a fugitive. 



226 



PAGE 

1ST STORY of Level 2 printed in FULL format. 

Copyright 1993 Star Tribune 
Star Tribune 

July 4, 1993, Metro Edition 

SECTION: News; Pg. lA 

LENGTH: 27 3 3 words 

HEADLINE: Winnebago case illustrates casino business gone awry 

BYLINE: Pat Doyle; Staff Writer 

DATELINE: Madison, Wis. 

BODY: 

Tribal tensions, shootings and arson erupted while Glenn Corrie managed a 
Wisconsin Winnebago Nation casino. His guilty plea to bribery closed a phase o 
a case that offers a rare look at a business gone awry. 

Two dozen American Indians sat on benches in the courtroom, silent spectato. 
in one of the last acts of a drama about temptation and corruption. 

They watched Chicagoan Glenn Corrie, burly and bearded in a gray shirt, tii 
and sport coat, sitting at the defense table. Was it true he once controlled 
lucrative Indian casinos by paying some tribal officials up to $ 120,000 in 
bribes? 

"No doubt it was more, your honor," Corrie said. 

In pleading guilty last month in federal court to bribery, Corrie closed a 
crucial phase of a case that offers a rare look at a casino business gone awry 

For nearly two years the Wisconsin Winnebago Nation lost control of a 
fledgling business born of tribal sovereignty. Longstanding tribal tensions 
erupted under Corrie' s management, climaxing with shootings and arson at the 
tribe's casino near the Wisconsin Dells. - 

While other tribes were parlaying casino profits into public-works project: 
or monthly revenue-sharing checks, the Winnebago were paralyzed by turmoil. Tht 
ramifications continue even as the tribe today reports success under new casinc 
management. 

The Indians are still trying to recover the $ 2 million Corrie was paid ~^ 
while illegally managing the casinos. Federal and tribal officials say they 



can't account for another S 3.7 million in casino revenue intended for the 

tribe. 

And prosecutors expect to charge tribal members this summer with taking 
bribes from Corrie. 



/ 



r 



In Indian communities where one in four adults was jobless, the temptation 
of casino money was powerful, said tribal member Orbert Goodbear. 



227 



star Tribune, July 4, 1993 

"When I was a kid, my grandparents used to sell baskets along the highway,' 
Goodbear said. "Our people don't come from a prosperous background, and for tht 
reason, money sways people. I don't approve of it, but I understand it." 

The Winnebago experience is perhaps the clearest illustration yet of the 
challenge facing the federal government. It must regulate casinos to protect 
Indians without violating the autonomy of Indian tribes. 

The Wisconsin Winnebago have 4,700 members, about half of them living in 
western and central Wisconsin. Other members settled mainly in southeastern 
Minnesota, the Twin Cities, Madison and Milwaukee. 

Their legacy is tragic even in the context of American Indian history. In 

the iseos the federal government forcibly moved the Winnebago people from 

Minnesota to the Dakota territory and later sent other members from Wisconsin • 

Nebraska. Many starved or froze to death. 

"The case of these Winnebago Indians is one of peculiar hardship," a feder. 
official for Indian affairs wrote in 1863. 

Some among the Winnebago returned to Wisconsin, where today their 
descendants live on parcels of land held in trust by the Department of the 
Interior. In the 1980s the Winnebago were running successful bingo games on so: 
of that land when the Supreme Court and Congress allowed tribes to start a mor. 
lucrative and tantalizing business: Vegas-style casino gambling. The ventures 
promised to reduce poverty in Indian communities. 

But the new opportunity also stimulated the appetite of outsiders looking 
for a piece of the action. 

One of those was Corrie. He is 48 years old with a formal education that 
ended in his freshman year of high school. For years he had operated out of 
suburban Chicago, supplying gambling equipment to Illinois charities. In early 
1990, as tribes ventured into casino gambling, Corrie headed to Wisconsin. 

He checked out several tribal casinos before getting involved with the 
Winnebago. He learned that some tribes were sophisticated, while others were 
struggling with the basics. 

At the Menominee Reservation, "The dealers were running into a room watchi: 
a videotape trying to learn what they were supposed to be doing," Susan Kelled- 
a Corrie associate, said in a deposition. "Glenn had mentioned that they reall 
didn't know what they were doing . . . were probably losing a lot of money." 

Corrie, through his lawyer, declined to comment last week about his 
operations. In court proceedings he cited Fifth Amendment privileges against 
self-incrimination to deflect questions about his operation, his past employraer 
and other issues. 

But sworn depositions and interviews with his associates, casino employees, 
prosecutors, police and tribal officials offer a look at how the Winnebago 
casinos worked - and didn't work. 

Corrie, operating as the Jenna Corp., began managing casinos near Wisconsii 
Dells, Nekoosa and Black River Falls for the Winnebago in May 1990. His 



228 



star Tribune, July 4, 1993 

contract for up to 40 percent of the profit was more than typically allowed 
under federal law. The Interior Department later said the cut was too generous 
and criticized other provisions beneficial to Corrie. 

But Corrie would manage the casinos for the next 2 months without the 
necessary federal approval. 

Jeffrey Behnke worked in construction and waited tables before landing a jc 
as a security officer at the Ho-Chunk casino near Wisconsin Dells. Within three 
months, Corrie promoted Behnke, who is not a tribal member, to be a manager of 
the casino, the tribe's largest. 

"You went from no experience to management?" Assistant U.S. Attorney Mark 
Cameli asked him during a deposition. 

"It was a moron's job," Behnke replied. 

In any case, the management of the Ho-Chunk ran into problems. 

Samantha Day, a tribal member who worked at the Ho-Chunk, said money eraptit 
from gambling machines sometimes didn't jibe with the machines' meters. On at 
least one occasion, Corrie associates from Las Vegas told employees not to mine 
the discrepancy; they'd sort it out. 

Tribal representatives were on hand to monitor the money, but, "They were 
more confused than I was," Day testified. "They never knew how to do the 
paperwork at all. They never saw it." 

Cameli asked Day, "What kind of check and balance did the tribal employees 
have?" 

"The representatives never really did," Day replied. 

She also said the casino lent money to bettors without a clear policy. 
"Sometimes they took chips right off the table," Day said. "Sometimes they got 
the money from the cashiers." 

She recalled a businessman from the Wisconsin Dells receiving S 1,300 in 
credit. Another person "would go right into the office and get chips and play. 

"We were told if we didn't treat these people good, we would get fired. It 
was mostly people [the management] thought spent a lot of money. It didn't 
matter how much credit they wanted, you were to give it to them." 

Corrie paid the motel bill for a regular customer who stayed overnight, anc 
handed out cards allowing others to bill him for meals at local restaurants. Da 
said. 

A woman who joined Corrie on a trip to Las Vegas "came in and wrote out a 
check for their expenses. She cashed it right there at the casino. No one 
questioned her." 

Day told of times when an influential tribal member "would be really angry 
. . and call [Corrie] up and say, 'You will lose my support.' Half an hour late 
a check would come in to him . . . and they cashed it right there." 



229 



star Tribune, July 4, 1993 

The rewards for backing Corrie were sometimes visible. Tribal members still 
talk about favored Indians being allowed to drive Corrie' s Cadillac around tne 
reservation. 

"There was an atmosphere of corruption," Goodbear said. "It's common 
knowledge that if someone is a [tribal] area representative, his friends get a 
job. " 

Tribal members who didn't support Corrie say they saw few benefits from the 
casino. Instead, they saw basic tribal services decline. 

Helen Cloud, 58, said her federally subsidized payments for diabetes 
medication, funneled through a tribal health clinic, were interrupted. 

"We're poor as it is," said her husband, Jake, 66. "They couldn't buy me fo 
any amount of money. I'm glad I was on the other side. He paid the boys off." 

Turmoil among the Winnebago didn't begin with Corrie. But Gome's 
management of the casinos fanned tensions to a flashpoint. 

It wasn't long before allegations surfaced that he used patronage ]obs, 
kickbacks of cash and gifts and other favors to maintain political support from 
some Winnebago. 

"When Glenn Corrie came into our midst and began to influence some of the 
tribal members, he began the process of corrupting our whole tribal government, 
said JoAnn Jones, who won election in 1991 to tribal chair on a campaign to 
evict Corrie. 

Soon the Winnebago Nation became so divided over Corrie that its government 
disintegrated, failing to muster a quorum to conduct tribal council meetings. 

Without a tribal government it could recognize, the U.S. Bureau of Indian 
Affairs (BIA) slowed S 1 million in federal money intended for Winnebago 
members. The BIA said the disintegration of tribal government also made it 
impossible to approve a casino management contract - even if one existed with 
terms more favorable to the tribe. 

But Corrie didn't stop for lack of BIA approval. He had enough support amon 
some tribal officials and a security force to stay in business. 

Tension erupted a year into his tenure when tribal chair Jones led 100 
followers to the Ho-Chunk in the first of a series of confrontations. During th 
next six months, combatants brandished ax handles, blockaded entrances, fired 
guns and hauled a hangman's noose to the casino. 

"I could see bloodshed coming," said Sauk County Sheriff Virgil (Butch) 
Steinhorst, who lacked authority to investigate tribal complaints. 

At first, the BIA, unsure of who really represented the Winnebago, avoided 
moving against Corrie. His c-ponents converged on the BIA offices in Minneapoli 
in protest. 

Jones kept up the pressure and after months of turmoil the BIA asked the 
Justice Department to intervene. The Justice Department moved to evict Corrie, 



230 



star Tribune, July 4, 1993 

the first time it had taken such action against the manager of a tribal casino 
in the Upper Midwest. 

The U.S. attorney in Madison declared that Corrie "threatens the economic 
security and well-being of the tribe" by operating without a federally approvec 
contract. Corrie's lawyers pitched a federal judge a remarkable defense: Becaui 
the Winnebago no longer had a functioning government, they couldn't enter into 
contract. Therefore, there was nothing for the BIA to approve or reject. 

U.S. District Judge John Shabaz was having none of it. Calling the tactic 
"sopnistry" and a "ridiculous argument," Shabaz kicked Corrie out of the 
Winnebago casinos and ordered him to return S 2 million in management fees to 
the Winnebago. 

The two sides had a final standoff at the Ho-Chunk. Corrie allies barricaat 
themselves inside the casino with chairs and cigarette machines. Two tribal 
members were wounded by gunfire, allegedly from a Jones supporter. Another Jont 
supporter, Steve Funmaker, filled juice bottles with gasoline and started a 
fire. 

"I did [it] ... so Corrie couldn't get ahold of it again," saia FunnaKer 
who is serving a 33-raonth prison term for the arson, which caused minor aamage 
and no injuries. "Why should he have the benefit of the proceeds from that at 
the expense of tribal people?" 

The court order ended casino business for Corrie. Today, the tribal 
government is running again, and the tribe reports that its casino business ha; 
expanded, tripling the number of ]obs that existed two years ago and financing 
new tribal enterprises. 

The BIA's area director Earl Barlow and Wisconsin area super intenaent Robe; 
Jaeger recently visited Winnebago communities. "We were both quite inpressed a" 
the progress they were making," Jaeger said. He said the casinos, now managed . 
firms that receive a lower cut than Corrie, are succeeding. 

"We have not fully recovered, but we have made progress and we nave 
learned," Jones told a U.S. House subcommittee last week ac a hearing on India, 
casino gambling in Oneida, Wis. 

One thing the Winnebago haven't recovered: the $ 2 million. Corrie hid his 
assets in bankruptcy proceedings, a bankruptcy trustee said. 

In the living room of Helen and Jake Cloud's home near Lake Delton, tomahawi 
and eagle feathers hang near a display of American flags on pedestals, a fitti; 
arrangement for citizens of two nations. 

The Clouds and other Winnebago watched their tribal government cisintegratc 
into anarchy in the dispute over Corrie. They waited for their other nation to 
intervene. 

Just .how much regulation the federal government should exercise over India; 
casinos is a matter of debate in Congress and among tribal memDers. -auaaole di 
sometimes competing goals collide: respecting tribal independence while 
preventing exploitation. 



231 



star Tribune, July 4, 1993 

"There's a difficult balance the government has to reach between recognizir. 
autonomy within Indian nations and regulating gaming operations so the tribes 
benefit the most," Cameli said. 

Federal prosecutors haven't intervened in every instance in which casino 
management firms operated without first obtaining BIA approval. The Justice 
Departmem: took action with the Winnebago case because the potential for trouDl 
vas greater. 

"You look at the cases that present the greatest threat," Assistant U.S. 
Attorney Cameli said. "Unlike the other tribes, where at least the governing 
bodies agreed to hire a company, you had the tribe sharply diviaed over the 
presence" of Corrie. 

The tribe's experience with Come occurred while Indian gaming was under 
the jurisdiction of the BIA, wnich complained it had limited powers co regulate 
casinos. Recently the National Indian Gaming Commission has taken over the tod. 

"I think oefore it becomes a smooth ooeration it will go c.nrougn r.any 
refinements," Cameli said. "It's different than anyt.^iinq else the government's 
oeen involved in." 

The commission was designed to regulate tribal gaming. It has powers the 51 
lacked and should do better, said Jaeger, the BIA's Wisconsin superincenaent . 

Many tribal members are ambivalent about federal regulation of casinos. 
When asked what he thought, Goodbear said, "I think the federal government 
should let the tribes operate indeoendently . " Then he paused, and added, "But c 
the other hand, I think the federal government has a responsibility to make sur 
these tribes don't get into messes. I think there should be close accounting 
done on these casinos." 

Corrie faces the prosoect or following his adversary, FunmaKer, to prison. . 
^las agreed to cooperate with federal prosecutors in their investigation or 
tribal orficiais wno toox illegal payments. He also will reveal assets m t.ne 
oankruptcv case. He wasn't always so talkative. Cameii once oegan a deposition 
by posing' a seemingly simple question: How long had Corrie livea m Wisconsin? 

"I respectfully refuse to answer that questi^^n on the grounds it may tena t 
incriminate me," Corrie replied. 

Said Goodbear' s wife, Barbara: "I think Glenn Corrie is going to bargain 
vith the federal government, turn in a bunch of names and get less time." 

Corrie's attorney, Jeffrey Steinoack, said that his client doesn't deserve 
all of the blame for the fiasco and that he tried to help the tribe manage the 
new business. "I always thougnt bribery was the other side of the com from 
axtortion," Steinback said. 

In the courtroom in Madison last month, Jones and otners vno rougnt to oust 
Tome listened as Assistant U.S. Attorney John Vaudreuil described the 
corruption. There were envelopes of cash for tribal officials, cnecks issuea tc 
-he sister of one tribal official. A $ 1,000 check was made out for the 
fictitious purchase of a trailer. Corrie handed out S 300 to S 500 when tribal 
.-Tiemoers asKed for "a pack of cigarettes." 



232 



star Tribune, July 4, 1993 

Out in the hall, Dallas Whitewing said Corrie offered him money and a job 
after he won a seat on the trioal council. Whitewing said he took the money, 
gave it to a charity and went to work for Jones. "All the influence Corrie 
thought he had," Whitewing said, "it's gone." 

GRAPHIC: Photograph; Map 

SUBJECT: bribery; investigation; Indian; gambling; finance 



233 

Mr. Richardson. The gentleman from Wyoming. 

Mr. Thomas. Thank you, Mr. Chairman. 

I have just some brief questions, and if you have brief answers, 
that could be nice. 

Mr. Torricelli, I am pleased that you are as interested in the 
States' role. That is not always the case here in the Congress. 

Many of the compacts have included agreements on taxes, on 
regulation. Why didn't New Jersey enter into one of those? 

Mr. Torricelli. Well, in fact, New Jersey has not yet been sued. 
My guess is, we are going to have a problem in New Jersey if the 
Ramapough Indians are able to establish themselves as a legiti- 
mate tribe. They will go to court, and, under the current state of 
Federal law, have a very good chance of succeeding, in which case 
New Jersey will have an unregulated casino, untaxed, to compete 
with our other 18 casinos — 12 casinos. 

Mr. Thomas. So you don't have any tribes that qualify under the 
law now? 

Mr. Torricelli. No, but unfortunately we are getting very close 
in what, in my judgment, is an aberration. We do not actually have 
any legitimate Indian tribes in New Jersey, in my judgment. 

Mr. Thomas. Mr. Trump, you have not concealed your concern 
about competition with your investments, and I understand that. 
Would you be satisfied if the State regulated these other casinos? 

Mr. Trump. Well, I think that it is a very sad thing for the 
States. I can tell you that I believe it is 49 out of 50 governors are 
totally against what has taken place. 

I know that for a fact Governor Cuomo was forced to sign a pact 
that he totally didn't want to sign. The communities are up in arms 
in upstate New York, totally up in arms, and it has just gotten out 
of control. 

You see, I have a very big psychological problem here. I really 
don't know if it is possible to protect all of the people from all of 
these reservations. You have too many sources in terms of orga- 
nized crime, you have just too many places, and so we can say, 
well, we will put 500 FBI agents on each reservation. But from a 
practical standpoint you can't do that. 

So with all of these reservations opening up, and literally open- 
ing up on a daily basis, it seems to me, I don't know if it is phys- 
ically possible, physically possible, for law enforcement to any 
longer protect. 

Before, you had Las Vegas and you had Atlantic City, and I used 
to hear stories that there were more agents assigned to Las Vegas 
and Atlantic City than to any other major city in the United 
States. Now I don't know if that is correct or not, but I believe it 
was very correct. In fact, it was even a substantial amount more. 

I don't believe that you have enough people when you start get- 
ting into this many reservations. The money is too much, and it is 
there, and it is too easy. It is too easy to skim if you don't have 
the right law enforcement. It is too easy to skim if you don't have 
the right procedures. It is too easy to launder money if you don't 
have the right procedures and the right law enforcement. 

So I think you folks have a real problem. I'll be honest. I think 
you have a real problem. You created a monster. When you were 
in Las Vegas and when you were in Atlantic City, you had two 



234 

places, and you can have 500 agents in each place, and you can do 
your number. But when you start having 100 and 150 locations all 
over the place, I think you have created yourself a real mess. 

Mr. Thomas. So you have basically opposed to gambling outside 
of Atlantic City and Las Vegas? 

Mr. Trump. I am opposed to gambling when it can't be policed, 
and I don't believe the Indian reservations can be policed, there's 
too many of them, and especially when people claim sovereignty 
when, in fact, there is nothing sovereign. It is only sovereign in 
that they don't pay taxes. 

Mr. Thomas. Someone indicated — ^it wasn't you, obviously — that 
casinos were very concerned about their image; if it became known, 
as you say it is generally known, that organized crime is there, 
they wouldn't patronize them. Wouldn't that be the case? Why are 
you concerned? 

Mr. TllUMP. Well, I am very concerned about the Indians' image 
in terms of gaming because when it blows — and, as I said before, 
it will blow — that is going to taint the entire industry, including 
Atlantic City and including Las Vegas. 

When it is learned about the laundering and all of the skimming 
and all of the cheating and everything else that can go on unabated 
at the Indian reservations, people aren't going to say that is just 
Indian reservations, they are going to say that is Atlantic City, 
that is Las Vegas, despite the fact that Trump has hundreds and 
hundreds of people in each casino policing and making sure every- 
thing is legit, they are not going to say that. They are going to say 
that gaming is a dirty business, look what happened at this par- 
ticular casino. 

So when it blows, it is going to be a huge story. There is no doubt 
about the fact it is going to blow. It is just a question of time. But 
that is going to taint the whole industry, including the legitimate 
industry. 

Mr. Thomas. Thank you, Mr. Chairman. 

Mr. Trump. Thank you, sir. 

Mr. Richardson. The chair recognizes the gentleman from Ha- 
waii. 

Mr. Abercrombie. Mr. Trump, you said you don't have any prob- 
lem with competition. 

Mr. Trump. That is absolutely correct, sir. 

Mr. Abercrombie. There have been suggestions by the Internal 
Revenue Service and other governmental agencies' representatives 
this morning that, with some modification of the 1988 gaming laws, 
that regulation — administrative oversight could be put into place. 
Now do I understand you to say that if that is the case, then you 
are perfectly willing to compete? 

Mr. Trump. I can get other representatives of the Internal Reve- 
nue, I believe, to say the exact opposite. I can get representatives 
of the FBI, I believe, to say the exact opposite. 

Mr. Abercrombie. That is not my question. 

Mr. Trump. I do not believe that you can correct this situation. 
I do not believe 

Mr. Abercrombie. Why do you not believe that? 

Mr. Trump. I do not believe that by just 

Mr. Abercrombie. Does that have something to do with Indians? 



235 

Mr. Trump. No. It has something to do with organized crime. 

Mr. Abercrombie. Organized crime can get the Indians but not 
to you? 

Mr. Trump. No. I don't beUeve that organized crime can stay 
with us for a very long period; they will be caught. I do not believe 
they can be caught on an Indian reservation. I am not saying that 
we can't have individual transactions go wrong, but they will be 
caught. We have every check and balance. I am talking beyond law 
enforcement. We have every check and balance. 

But do you know what is nice about us? We can say, "Hey, the 
bad guys are on here; call the FBI; call the Casino Control Com- 
mission, call the sheriff, call the U.S. attorney." The Indians can't 
do that to the same extent. They don't have the checks and bal- 
ances. 

Mr. Abercrombie. Why are the Indians incapable of doing that? 

Mr. Trump. If you look at their security systems, if you look at 
what they have installed in their casinos 

Mr. Abercrombie. Try answering my question. 

Mr. Trump. If you look — I am not saying anything 

Mr. Abercrombie. Try answering my question. 

Mr. Trump. I am answering your question very nicely, sir. 

Mr. Abercrombie. No, you are not. You are avoiding answering 
the question. 

Mr. Trump. I mean I don't think you want to hear the real an- 
swer. That is the problem. If you look 

Mr. Abercrombie. The real answer is, you don't believe that if 
the same regulations with respect to the IRS, the same kind of 
Banking Security Act, the same kind of vigilance is put forward on 
Indian reservations and with respect to gambling and gaming 
where Indian tribes are concerned, your contention is, they will not 
be able to exercise the same vigilance that takes place in Atlantic 
City at your casinos or in Nevada. 

Mr. Trump. My contention is that there are too many places, and 
if they are going to go under the cry of sovereignty where they 
don't have the same powers — where this Government doesn't have 
the same police powers over them, I say that there is absolutely no 
way that you are going to keep the mob out of the Indian reserva- 
tions, and therefore 

Mr. Abercrombie. Let's move to the question of sovereignty. 

Mr. Trump. And therefore that cannot be met. 

Mr. Abercrombie. Let's move to the question of sovereignty 
then. You indicate that they don't pay taxes. 

Mr. Trump. I didn't indicate they don't pay taxes. I said they are 
not paying taxes on casinos, and they are not paying taxes on 

Mr. Abercrombie. That is because the profits from it are to go 
to the reservations. 

Mr. Trump. Oh really? What about the $400 million profit 

Mr. Abercrombie. Yes, the profits by law. 

Mr. Trump. What about the $400 million profit that they get, the 
300 Indians? 

Mr. Abercrombie. If you would — ^Mr. Trump, if you would get 
less rhetorical and more back to the facts, I think we could get 
somewhere with this testimony. 



236 

The profits go back to the reservation, go back for expenditures 
on behalf of Indians. Therefore, a logical person — ^you are the one 
who has brought up the question of, it stands to reason, and we 
have to use common sense — it is common sense that it is in the in- 
terests of Indian tribes to see that the games are run honestly, be- 
cause the more money that comes into the tribe, the more that can 
be spent on the reservation on behalf of Indian children, on behalf 
of elderly people, the same people that you have expressed an in- 
terest in. 

Mr. Trump. Respectfully, sir, I really don't believe you under- 
stand, and if you do, then we have a bigger problem. 

What we have is, when the tough guys, the bad guys, walk on 
to that reservation, I really don't believe that an Indian leader will 
be able to tell that gentleman to get the hell off. 

Mr. Abercrombie. Like you can, 

Mr. Trump. Like I can. You know why? Because I have a lot of 
backup. I have the United States Government, I have FBI, I have 
U.S. attorneys, I have all of these people as my backup. They don't 
have the backup. They want to be sovereign. 

Mr. Abercrombie. Have you read the gaming law? 

Mr. Trump. Yes, I have read the gaming law. 

Mr. Abercrombie. Then you know perfectly well that the tribes 
have at their ability to come in, the Department of the Interior, the 
gaming commissions, the States themselves under the compact reg- 
ulations. What you are sa3ang is 

Mr. Trump. Have thev ever done it? 

Mr. Abercrombie [continuing]. Is that they will not be able 
to — they certainly won't be able to do it if they don't get the co- 
operation of the States or of the Federal Government, and what we 
are here to see happens is that Indian tribes that have had their 
rights violated in every single instance with every single treaty, at 
least as far as this Member is concerned and I think this commit- 
tee is concerned and Members of this Congress are concerned, is 
not going to happen again. 

If you want competition, and you say you do, I think you are 
going to be able to get it, and they will come under the same kind 
of competition, under the same kind of regulations and vigilance as 
you are calling for. 

Mr. Trump. Sir, I think you are kidding yourself, respectfully, 
and I would just like to add, you have in Connecticut a tribe that 
is going to make, I think, $500 million profit — profit — ^this year. I 
believe that tribe has 300 members, maybe it has 400, but it has 
a very small number of members. 

I would like to know, when you say they go back and they give 
the money to themselves and they reinvest, do you think it is ap- 
propriate that the 300 people who happen to have lucked out in a 
sense by having a reservation between Manhattan and Boston — do 
you think it is appropriate that that money be spent on those 300 
people, or do you think maybe, now maybe, that money should be 
spread for all Indians all over the Nation, many of which don't 
have the luck of being next to Boston or New York City? 

Mr. Abercrombie. It is probably at least as appropriate as all 
the money that was taken in all the leveraged buyouts and the 
mergers and all the other kind of activity that took place 



237 

Mr. Trump. Right, and put a lot of people to work. 

Mr. Abercrombie [continuing]. Among the two or 300 people in 
New York City over the last decade and a half. 

Mr. Trump. And put a lot of people to work, sir. 

Mr. Abercrombie. So do the casinos. 

Mr. TORRICELLI. Mr. Abercrombie, may I respond to your points? 

Mr. Abercrombie. Certainly. 

Mr. Torricelli. I think that as you seek answers to your own 
questions. 

Mr. Abercrombie. I beg your pardon? I am sorry. 

Mr. Torricelli. As you seek answers in your mind to your own 
questions, I think there are several things you should keep in 
mind. 

First, we have the reality of an inspector general's report which 
cites not the theory but fact that Indians themselves are being 
cheated by management companies and sometimes their own lead- 
ership to the tune of millions of dollars. 

Second, the principal problem of keeping organized crime off 
these reservations isn't only one of law enforcement agencies find- 
ing them, but in many of these instances it isn't even against the 
law. There is nothing, per se, against the law for an Indian tribe 
to go to a company to manage its casinos which has organized 
crime figures in it; no law is violated, no regulation. 

Third, on the question of the compacts, your point would be well 
taken on the question of the State compacts if everybody had a 
State compact and those State compacts all provided for what you 
cited. A third of the reservations have no compacts. Many of the 
remainder, as in the State of New York, as Mr. Trump cited, 
reached compacts under the pressure of Federal courts, they did 
not want to do so, and all of them do not provide for the provisions 
that you cited. 

Therefore, the kind of agreements that you would hope would be 
in place, on money laundering, on background checks simply, trag- 
ically, do not exist. 

Mr. Abercrombie. Thank you, Mr. Torricelli. I think that is the 
reason that we are holding the hesirings. I can assure you that this 
Member is paying close attention to what you are suggesting, is 
paying close attention to the suggestions from the IRS and the 
other law enforcement individuals that have appeared before us, 
and as far as I am concerned, I think if we can address those prob- 
lems, then maybe many of the contentions now being made will be 
taken care of. 

Finally, let me say for the record that I think that while the pas- 
sion involved in this discussion to this point is understandable, I 
think it is a disservice, at a minimum, to the Indian tribes which 
have come under the gaming law as passed in 1988 to indicate that 
they would be any less interested in keeping organized crime out, 
any less capable of making that kind of commitment, and that it 
is a vestige of a patronizing attitude, not from you, Mr. Torricelli, 
but a vestige of a patronizing attitude on the part of the general 
public should they accept Mr, Trump's contention that they are in- 
capable of dealing with this situation, of presumably even wanting 
to deal with this situation. That I do not think will succeed with 
this committee, and as far as that is concerned, Mr. Trump 



238 

Mr. Trump. I never said that, sir, and I think you know I never 
said that. 

Mr. Abercrombie. If you want to pursue that line of reasoning, 
if you want to pursue that line of argument with the public, I can 
guarantee you that it is not going to succeed in this Congress. 

Mr. TORRICELLI. I don't think, Mr. Abercrombie, that anybody be- 
lieves the Indian tribes do not want to keep organized crime off the 
reservations. They have a greater incentive to keep them off the 
reservations than any of us have. We understand that. I think it 
is Mr. Trump's testimony that, given the use of force and intimida- 
tion, it is very difficult that, even if known, but largely the problem 
is that it is not known. 

I spoke of the insidious ways that organized crime tried to work 
its way into Atlantic City. It took an extraordinary effort to expose 
it. I think it is our combined belief that that is just very hard to 
do without the resources. 

Finally, Mr. Abercrombie, I want to note to you that in what I 
think is the only bill before the committee dealing generally with 
the problem of corruption in Indian gaming, my legislation calls 
completely for equity. I do not eliminate opportunities for Indians, 
only put all citizens on the same basis with the same regulatory 
responsibilities and rights, no special advantages, but certainly no 
discrimination. I would not be a part of discrimination against any- 
one, and I would invite you to review my legislation. I think you 
will see it is fair from that perspective. 

Mr. Abercrombie. As I indicated, in conclusion, Mr. Chairman 
and Mr. Torricelli, I am paying close attention to your legislation 
and will fully take it into account, I can assure you. 

Mr. Torricelli. Thank you. 

Mr. Richardson. The chair recognizes the Minority Member 
from California, and I would ask that the gentleman from Hawaii 
chair briefly. 

Mr. Calvert. Thank you, Mr. Chairman. 

Mr. Torricelli, as you know, I am from California. We are near 
another gambling area that is even larger than Atlantic City, Las 
Vegas. There are lots of people who would like to own a casino in 
Southern California. I believe 50 cents out of every gambling dollar 
that goes to Las Vegas, I have been told, come out of Southern 
California or California. So there is a lot of pressure in California 
to put Class 3 gaming. At the present time in California we only 
have Class 1 and Class 2 gaming. 

As I understand it, the National Indian Gaming Commission can 
only regulate Class 2 gaming in California, yet in San Diego we 
have reservations involved in what anyone would define as Class 
3 gaming. 

I also understand that no regulation of any kind is taking place 
on the revenue that is being generated out of that Class 3 gaming. 
The sourcing for the slot machines, the revenue that is generated 
from those machine, it is not under the purview of the National In- 
dian Gaming Commission to regulate Class 3 gaming because Class 
3 gaming is not allowed in California. So we have a significant 
problem. 

In California also, near my district, in Palm Springs, the 
Caliente Indians have entered into an agreement with Caesar's 



239 

would to build an 80,000-square-foot casino in downtown Palm 
Springs. There are other major casino operators who are now ac- 
tively looking around Southern California to get involved in casinos 
in Southern California believing that they can get into Class 3 
gaming. 

I am hopeful, because I have talked to the district attorney, and 
I know our chairman has, and to the governor of the State of Cali- 
fornia, who is very concerned about Class 3 gaming coming to Cali- 
fornia, and we want to stop that, and that is one of the reasons 
that I am supportive of your legislation. 

But do you have any comment on that? Why isn't the Federal 
Government, the FBI, the Justice Department, stopping Class 3 
gaming in California if, in fact, it is not allowed? 

Mr. TORRICELLI. I think largely, Mr. Calvert, in defense of the 
FBI, they haven't been given the mandate or even the authority. 

It was never the intention of this Congress, in my judgment, it 
certainly was not the intention of this Member, in an attempt in 
the Indian Gaming Act to restore equity to Native Americans, to 
allow them to have the special advantage of operated casinos out- 
side the purview of the law, but indeed that is largely what has 
happened. 

This is something almost unique in American economic history. 
We created an industry which now we must return to regulate, 
rather than at its inception devising a regulatory scheme. Whether 
or not we can do it, I do not know, but it is largely, I think, out 
of control. 

Mr. Calvert. The big guest problem in Csdifomia, I think, we 
have 94-plus Federally-recognized tribes in the State of California, 
more than any other State in the Nation by a wide, wide margin. 

I have listened to the testimony on enforcement. If, in fact. Class 
3 gaming to California, which some argue may happen, how are we 
going to regulate Class 3 gaming in the State of California with 94 
Federally-recognized tribes spread throughout the State of Califor- 
nia from urban areas to rursd areas, with the limited manpower of 
law enforcement that we have today? 

We have a crime bill that is up; we are arguing over dollars to 
fund that. How are we going to fund regulating 94 Federally-recog- 
nized tribes? And, in fact, could that even occur? 

Mr. TORRICELLI. Mr. Calvert, the fact is, you are not. The re- 
sources would be so vast, the manpower so enormous, it probably 
is not possible. I think that is part of the testimony that was pre- 
viously given. In Atlantic City and Las Vegas, we had the advan- 
tage of defined geographic areas and a limited number of partici- 
pants. 

We are now, today, discussing 125 Indian gaming establish- 
ments. We could well in the next century have a thousand, based 
on the number of tribes and the applications. The kind of control 
we have seen in the past simply will not exist in the future. 

Mr. Calvert. Thank you, Mr. Chairman. 

Mr. Abercrombie [presiding]. Mr. Miller. 

Mr. Miller. Thank you, Mr. Chairman. 

In my 19 years on this committee, I don't know when I have 
heard more irresponsible testimony than I just heard from this 
panel. You have cast upon the Indian nations of this country a 



240 

blanket indictment that organized crime is rampant on their res- 
ervations. You have suggested that the corollary to that is that 
where there are compacts somehow State governments are party to 
that without their knowledge, in spite of the FBI testimony that 
this is not a significant problem. 

Mr. Trump, in one sentence you say, "They are the most capable 
of agencies," and that you are not a law enforcement expert, and 
then you tell us that you have superior knowledge to their knowl- 
edge about the extent of organized crime on Indian reservations. 

I just find it incredible. This hearing is held for the purposes of 
recognizing that Indian gaming does present an opportunity to or- 
ganized crime, to members of the tribe who have larceny in their 
heart, and to people who do business with them who want to take 
advantage of them however, and everybody recognizes that. 

So to come here and to suggest that you have some additional 
knowledge of the extent of organized crime beyond what the FBI, 
the IRS, the Treasury, and others have suggested, and then to sug- 
gest the reason you have that is because you know this — ^you don't 
know this; you suspect this perhaps, you don't know this, because 
it is just — ^you know, it is just not there; it is just not there. 

The list of cases that you hold up, a substantial portion, because 
I can't tell because they come from newspaper reports, are previous 
to this law when many of these activities were illegal in and of 
themselves, they were being challenged in court — 1985, 1984, 1981. 

You tell us that somebody had somebody run their gaming oper- 
ation on the Barona Rancheria but he couldn't get a license from 
the Nevada Gaming. We don't know why. We don't know why he 
was disqualified in Nevada or whether that is grounds for disquali- 
fication. It may be. I am not presenting the evidence, you are pre- 
senting the evidence. 

But you are suggesting that each an every one of these cases in- 
dicate organized crime, that they indicate a lack of sophistication. 
In fact, many of these cases were brought because the Indian tribes 
themselves went to law enforcement agencies. They discovered they 
were being duped, you know, and to equate them — to equate them 
now with an industry in New Jersey or Nevada, you know, to the 
tune of hundreds of millions of dollars in the month — what did you 
take in September, $200 and some million in New Jersey? We are 
all aware of this. 

Mr. Trump, you are quite wrong. They have every right to go to 
the FBI, the U.S. attorney, the Treasury Department. We have 
Federal trust relationships which give them direct access. 

Mr. Trump. They didn't in these cases, sir. 

Mr. Miller. You don't know that. 

Mr. Trump. Well, they are cases, they are convictions. You can 
go and get the case number. 

Mr. Miller. The Rincon case was brought by the tribe, one fac- 
tion of the tribe that said, "We are being ripped off by another fac- 
tion of the tribe, and they are trying to get organized crime in 
here." They went. 

Mr. Trump. We have got many cases. Sir, we have got many 
cases in here. I don't think you have seen them. 

Mr. Miller. I am sure you do. There are many cases in your in- 
dustry where you didn't go, law enforcement came through the door 



241 

before you went through their door. But are we going to have a 
blanket indictment of all casino owners? As a politician, you know, 
I am kind of sensitive to the word "all," 

Mr. Trump. I certainly never said that, and I certainly don't ap- 
preciate the fact that you are putting words in my mouth because 
it is incorrect, and I have great respect for the Indians, and if I 
were — and if I were running a reservation and was under the aus- 
pices of this ridiculous Act that was passed, I would have the same 
difficulty as the Indians keeping organized crime out, I, me. So that 
is not a blanket 

Mr. Miller. When you don't know — ^you don't know. 

Mr. Trump. Excuse me, sir. That is not a blanket indictment of 
anybody. 

Mr. Miller. You don't know that they are having a difficulty. 

Mr. Trump. Well, you can't know when you have no FBI agents 
assigned to the Indian reservations, sir. 

Mr. Miller, You don't have any FBI agents assigned to you. 

Mr. Trump. Oh really? How many FBI agents are in Las Vegas 
right now? How many FBI agents are assigned to Atlantic City? 
Why didn't you ask that question? 

Mr. Miller. Why are they there, Mr. Trump? They are there be- 
cause they think there is organized crime, 

Mr. Trump. They are there to stop crime. So why aren't they 
there with respect to the Indian reservations? 

Mr. Miller. Because they believe that your industry is attractive 
to organized crime. 

Mr. Trump. Look, you have got a totally closed mind on the sub- 
ject, sir. 

Mr. Miller, No, no, no, I don't, Mr, Trump. 

Mr. Trump. We could walk in here with the greatest proof in the 
history of the world, and frankly, your mind is so closed, for what- 
ever reason, that I can't believe it. 

Mr. Miller. But you don't have them? You don't have them? 

Mr. Trump. If you really want to study this, when you tell me 
that there are no FBI agents assigned to the Indian reservations 
and yet you have tremendous numbers in Las Vegas and Atlantic 
City — tremendous numbers, in fact, two of their largest places — I 
want to tell you something, you have a long way to go, and, for 
whatever reason, you have a closed mind, I don't know why. Per- 
haps you could tell me. 

Mr. Miller. No, Mr. Trump. I have a closed mind aga'nst evi- 
dence that is not substantiated. I have a closed mind against state- 
ments that are made about other people in generalities. 

Mr. Trump. You are going to be very embarrassed in two years, 
sir. 

Mr. Miller. I have a closed mind if you go on a radio show and 
you say, "Now some drunken Indians want to come down here an 
open a reservation." 

Mr. Trump. I didn't say that, sir. Quote it, I didn't say that. Who 
said that? Who said that? I would like an apology right now, be- 
cause I didn't say that, 

Mr, Miller, Imus opened the broadcast — excuse me, Mr, Imus 
said that, 

Mr, Trump, Okay, Could I please have an apology? 



242 

Mr. Miller. You can have an apology. 

Mr. Trump. Thank you, sir. 

Mr. Miller. Is this you discussing Indian blood: "We are going 
to judge people by whether they have Indian blood," whether they 
are qualified to run a gaming casino or not? 

Mr. Trump. That probably is me, absolutely, because I'll tell you 
what, if you look — if you look at some of the reservations that you 
have approved — you, sir, in your great wisdom, have approved — I 
will tell you right now, they don't look like Indians to me, and they 
don't look like Indians. Now maybe we say politically correct or not 
politically correct. They don't look like Indians to me, and they 
don't look like Indians to Indians, and a lot of people are laughing 
at it, and you are telling how tough it is, how rough it is, to get 
approved. Well, you go up to Connecticut, and you look. Now, they 
don't look like Indians to me, sir. 

Mr. Miller. Thank Grod that is not the test of whether or not 
people have rights in this country or not, whether or not they pass 
your look test. 

Mr. Trump. Yes. It depends whether or not you are approving it, 
sir. 

Mr. Miller. No, no, it is not a question of whether I am approv- 
ing it. It is not a question of whether I am approving it. 

Mr. Trump, do you know in the history of this country where we 
have heard this discussion before: "They don't look Jewish to me." 

Mr. Trump. Oh really? 

Mr. Miller. "They don't look Indian to me." "They don't look 
Italian to me." And that was the test for whether people could go 
into business or not go into business, whether they could get a 
bank loan: You are too black; you are not black enough. 

[Transcript of Imus broadcast follows:] 



243 



JtADlC 
TVREPORTS 




imifir-""""'"'^-'"^''-'^ C!;:;:r:r>t^i: 

1KAM3CMPT mm rix&3S^3iS3 

5T«»0H WPAN-AM 

pftOOtAM jj^g jjj ,j.jjg MORHING °"' NBW YORK 

OAlE 06/18/93 08:30AM ,„;o«« 

DONALD TRDMP 
SUBJECT 

BROADCAST EXCERPT 

DON IMDS: It's 8:30 exactly here at WPAK in New 

York, and here with us now, Donald Truc^. Good moraing, Donald. 

DONALD TROHP: How you doing, Don? 

IMUS: I'm fiaa. How are you? 

TROMP: I'm very oood. ThanJca. 

IMUS: So what is this now? A bunch of these 
drunken Injuns want to open a casino down there in New Jersey? 

TROMP: Well, it'3 a battle that we're fighting and 
I think it'3 being suceeBsfully fought. A lot of the reservations 
are being, in some people's opinion, at least to a certain extent 
run by organized crime and organized crime elements, as you can 
imagine. There's no protection. There's no' smythij^. And it's 
become a joke. It's become a laughing joke. And the politicians 
around 1987 passed a law where the Indians can have virt\jally 
unsupervised casino gaming. So we're in there fitting it 
and I think we're maOcing a lot of progress. I think you'll see 
some very major things happenictg over the next couple of months. 

IMOS: In yoMT mind, is there any legitimacy in them 
being allowed to have casinos in states where there aren't now 
casino, like say Connecticut? 

TRXJMPs I think it'e up to chcstates. I mean, one 
of Che things we did is bring a lawsuit and say it's scates' 
rights. As an example. Governor Cuoao in New York didn't want to 
have the Indians having casinos. The churches didn't want it. It 
knocks out the bingo. It knocks out the charities, it knocks out 
a lot of other things. So what they did ia they filed suits ai d 
they filed everything else. Oltiwately, the Governor of New York 
was forced to pass this horrendous situation that's taking place ia 
upstate New York. I think it's going to be r-Vi^nged and I think 



244 

- 2 - 

it's going to be changed fairly quickly, Don, 

I>fOS: So will Indians be allowed co open casinos 
here in New York? 



I think it's going to be unlikely within the 



next year. 



IMDS: Okay. This is just niy opinion, but I don't 
think it makes sense to anybody to have Indians operate casinos in 
New Jersey. 

TRt3MP: General George Custer was against it also 
and looked what happened to him. 

IMUS: But in New Jersey -- obviously you have three 
casinos -- you already have casinos. 

TRDMP; Right, but the difference is I pay taxes. 
The Indiems aren't paying any tajces. The Indians aren't putting 
anything back into what's happening. The funny thing is Caomo was 
forced to put -- and now ail of a sudden they send hire certified 
letters, "We want bridges." 

They call it the sovereign nation. They call it a nation/ 
this great sovereign nation, the Indian tribes. All of a sudden, 
it's nations. 

Before it wasn't a nation, before gajak?ling. Now it's this 
greac sovereign nation. We protect, we do this, we do that, but 
when it comes to gambling, it's a sovereign r^aticn. 

So it's really a double standard and no taxes are paid. No 
supervision's there, tremendous crime, and most of the Indiana 
don't want it themselves. The leaders -- you know, all chiefs and 
no Indians, and the leaders want it for the qbvious reason, but I 
think it's something that's going to end or is certainly going to 
be supervised very, very stringently. 

IMOS: Would there be any reason, if push comes to 
shove, for you to become a meinfaer of these tribes? 

TRDMP; Hell, I think if we Ipst various things, I 
'yculd perhaps become an Indian myself. 

IMOS: Tou know, do one of thqse Robert Bly deals. 

TRUMP: Well, I think I might h^ve more Indian blood 
than a lot of the so-called Indiana that are trying to open up the 
reservations. 

I looked at one of them -- well, I won't go into the whole 



245 



- 3 



story, but I can tell you, I said to him, fj thirJc I have more 
Indian blood in me thsin you have in you." And he laughed at rae and 
he sort of acknowledged that I was right, but it's a joke. It' a 
really a joke. 

INUS: A couple of these Indiams up in Concectioit 
look, like Michael Jordan, frankly. 

TRUWP: I think if you've eve¥ been up there, you 
would truly say that these are not Indiana. One of thera was 
telling me his name is Chief Running Water • Sitting Bull, and I 
said, "That's a long nauie." He said, "Well, just call me Ricky 
Sanders." So this is one of the Indians. 

I'll tell you, they got duped in Washington and it's jixst one 
of those thingc that we have to straighten out. It's the 
neverending problem of -- 

IMOS: having to straightep things out. 

TRtMP: One of the big things that I'm working on is 
sports betting in New Jersey and we have a sian over there nained 
Chuck Hytian who turns out to be a disaster for the people of New 
Jersey because this would mean treroendoxis taj^es and tax revenues. 
1 don't know what happened with the bookies or whoever. I don't 
know who spoke to Hytian. I have no idea, buthe's single-hamdedly 
-- he's a Speaker and he's got some power over there, at least now, 
and he's single-handedly stopping sports betting, and everybody in 
New Jersey wants it and it's disgraceful and it's a great 
opportunity for Atlajitic City. It's a greaf opportunity for New 
Jersey. 

And the senior citizens and New Jersey will get tremendous tax 
revenues from it. So for all of you folks that know Speaker Chuck 
Hytiem, call him up and blast the hell out of hira. 

IMTJS: Kell, our opposition on' sports betting is as 
long as the players get to bet, they might as well let the fans, 
you know? 

TROMP: Well, the players bet;. That's abcolutftly 
true. And I'm sure it'll probably increase the ratings of your 
particular station quite a bit if they had sports betting in New 
Jersey. 

IMOS: It's not that I want tq be like Mike. It's 
I want to bet like Mike. 

TRUMP: Yeah, right. Maybe ypu don't want to bet 
like Mike. 



246 



IM0S: Maybe I can win once in a while. What else 
is new with you? 

TRDMP: Nothing. Things are going great. We're 
just in the process of doing eooe incredible things. Tniatp Plaza's 
doing something great and the hotels in Atlantic City have done 
record- setting business. The Taj Mahal, when they thought Trump 
wae finishftd, "Trump is over. He's history," and everything, I was 
opening up the Taj Mahal and they said it could never do the kind 
of numbers projected, and it's doing substantially greater than 
anything ever projected. So it's really become the success of 
the industry. 

IMUS: You sound like a Truap P.R. guy, but you 
netted 14 million dollare or sowething last month. 

TREMP: We made a grosa operating profit of 14 
million dollars, which was twice what the projections were at their 
highest, and they won 41 million dollars last month at the Taj 
Mahal. And the other casinos are doing proportionately -- they're 
much smaller, but proportionately equally as well. 

IMtrSi what's the status with- your marriage? Are 
you still getting married? 

TRUMP: Oh, I ' m doing great . If s really fantastic. 

IMUS: Yeah, but are you getting married? 

TROMP: That might be the oost difficult question 
you've asked me so far. See, the Indian problem is a much sic:5>ler 
problem. That can be solved. 

IMUS: Maybe you can have one of those traditional 
tribal ceremonies. 

TRDMP; That's right. Maybe that would be the best 
way to do it. That way, it wouldn't be an authorized marriage. 
Therefore, I could claim marriage without any of the liabilities, 
right? 

IMOS: That's what I was going to say. 

TRUMP: "What are you tailkiag' about? I ne-.-wr got 



Tcarried. ' 
about it . " 



IMUS: "I gave her some beads a|id that was basically 



TRUMP: "I can get s\ied for nine billion dollars, but 
what do you mean? The marriage is forget it. I have a great 
relationship. 



247 



IMtTS: It's a work, in progress. 

TRUMP : Huh? 

IMOS: It's a work in progress. 

TRUMP: It's a work of art in progress. 

IMOS: That's right, a work of arc in progress. 

TROMP; That's exactly correct, how are you doing 

on your social front? Vo you have a new beaut:iful girlfriend yet? 

iMaS: Well, you toow, they come and they go. 

TRT3MPr At least with you, I laaovr it's definitely a 
girlfriend, okay? 

IMUS: At this point, yeah. 

TRDMP: With a lot Of people, we don't ]ctiow. 

IMOS: Donald, always nice to talk with you. Good 
luck and many moon coma CSaoctaw. 

TRUMP: Thank you very much. Bye. 

IMOS: It's 8:36, 24 till 9:00/ Imus in the Morning. 



roTou p. 06 



248 



Torricelli gambling bill 
a prize-winning insult 



ith Father's Day almost 
upon m, the judges are 
taking nominations for 
Father of the Year. 
Benevolent Great Whit* Father 
of the Year, that ia. 

I euggest Rep. Robert 
TorricellL 

The Englewood Democrat on 
Wednesday introduced a bill 
aimed at (rlvirg elates more 
power to limit gambling 
operations run by American 
Indian tribes. It was immediately 
denounced by the head 
of the National Indian 
Gaming Association as 
"economic racism." 

But racism, 
economic or otherwise, 
by itself is not enough 
to get you the 
BGWFOTY Award. For 
that, you must include 
patronizing and 
paternalistic 
justifications. You have 
to literally add insult to 
injury. 

And BO, beyond worrying about 
competition for Atlantic City 
and being concerned about 
organized crime (non-benevolent 
white fathers) using the tribal 
casinos as money-laundering 
fronU, Great White Father- 
nominee Bob, end the Nevadans 
sponsoring the Senate version of 
the bill, are motivated by 
concern for the Indian people 
themselves. 

"Casino gambling is the 
cultural genocide of Native • ' 
Americans," Torricelli said in 
announcing the bilL 'This. will • 
destroy what remains of the 
Native American culture." 

On what authority does he say 
this? I asked Torricelli on 
Friday. 

"We are repeating what we are 
getting from Indiana themselves" 

— Indians who work ir. 
reservation schools and health- 
care clinics — he responded. 

The reser.ations were 
established by the U.S. 
government to preserve the , . 
Indianfwaiy of ^ei Torricelli Said, V 
not "to become islands of casino' ' 
gtmbUiig free of iaXE« or';"-j' ■ -: 
government regulation 6t.l«w ■ ; 
enforcement" . 'r;^^ 

"This isn't an answer for the 
economic problems of the 
Indians," he told me. 

Does anytjne second the 
nomination? 

"It's the back-door approach 

— you know, killing with 




Chief Ronald "Red Bone" Van 
Dunk. The chief is trying to 
steer clear of the gambling 
question as his tribe, whose 
members live In North Jersey 
and southern New York, pursues 
its quest for federal recognition. 
But he was so moved by the 
congressman's concern for his 
people and their culture that he 
had tc rtspond. 

"Ihe/re going to help the 
poor Indians — by not 
letting them do 
anything to enhance 
their livelihoods," the 
chief said. "Like they 
helped them out there 
in Arizona, when they 
found gold. Helped 
them right off the 
land." 

"That is probably 
one of the most 
ridiculous things I've 
ever heard," says Tim 
Giago, an Oglala Sioux 
who is publisher of Indian 
Country Today, a national 
newspaper baied in Rapid City, 
S.D., near the Pine Rioge 
reservation, where tribal 
business, worship, and the like 
are conducted in the native 
language and where the culture is 
holding its own despite centuries 
of help from Greats White 
Fathers. 

"Just the opposite is true," 
Giago says. "Where does the 
money from tribal casinos go? It 
goes into scholarships for our 
students, retirement funds for 
OUT elderly people. It goes into 
buying back the land, to support 
the Indian colleges — which is 
where the language and the 
culture is tau^U" 



make Indian- run gaming 
subject to the control of 
individual governors, 
Giago says, is lik» "putting 
the fox in charge of the 
henhouse." '■.■9;i^;''. ■ '-^ ■■■•,■ 

t i'-"'' ■ •• ■, . ^ 

^. , Who's right about tribal .■■ 
I' casinos? Seems like that should 
'. be up iOj the .tribal councils to 
decide. 

Anyway, back to the) ' 
nomination. TorricelK's 
statement, Giago says, "is very 
paternalistic." 

■ Exactly what the BGWFOTY 
iuHc^s (.re Wilcinc for. 



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Mr. Trump. I want to find out — well, then, why are you approv- 
ing — ^you are approving for Indian. Why don't you approve it for ev- 
erybody then, sir? If your case is nondiscriminatory, why don't you 
approve for everybody? You are saying only Indians — wait a 
minute, sir. You are sajdng only Indians can have the reservations, 
only Indians can have the gaming. So why aren't you approving it 
for everybody? Why are you being discriminatory? Why is it that 
the Indians don't pay tax but everybody else does? I do. Why is it 
that I pay tax? Why is it that senior citizens get tremendous bene- 
fits from the taxes that a certain industry does but the Indians 
aren't contributing to that? Why aren't the Indians — excuse me, sir. 
Why aren't the Indians that are making all the money in Connecti- 
cut, which is the most successful of the Indian reservations — why 
aren't they spreading the wealth with the other Indians, sir? Why 
don't you do something for the other Indians that are living in total 
poverty? Because — ^you know why? Because their reservation is too 
far away 

Mr. Abercrombie. Mr, Trump, if you will give the chairman a 
chance to 2inswer your questions, I am sure he will. 

Mr. Trump. I am sure he will, absolutely. 

Mr. Abercrombie. Well, don't ask the questions if you don't 
want an answer. 

Mr. Trump. I think I know the answer from him. 

Mr. Miller. Well, no, no. Let's go through it. 

Mr. Trump. Why don't they spread the wealth? That is the ques- 
tion. 

Mr. Miller. Mr. Trump 

Mr. Trump. Why don't they spread the wealth? 

Mr. Miller. Mr. Trump — ^Mr. Trump, it is my time. 

Mr. Abercrombie. Mr. Trump, the chairman has the time now. 

Mr. Miller. Mr. Trump, why don't the Indians spread the 
wealth to the other Indian nations that don't have gambling when 
they don't have a responsibility to? You cite that one of the great 
benefits is that New Jersey senior citizens can get prescription 
drugs at $5. What about the Pennsylvania senior citizens that 
leave their money in New Jersey? What about the Washington, 
D.C., senior citizens that leave their money in New Jersey, the peo- 
ple from New York and Connecticut, the people you are there to 
attract? What about all of our constituents from California that go 
to Nevada and leave their money there? Why don't they get $5 pre- 
scriptions? 

Because you don't have a legal obligation to do so. You did so be- 
cause you wanted gaming to come to New Jersey. This was a nego- 
tiated agreement. The Connecticut agreement is a negotiated 
agreement between the State of Connecticut and the tribe in Con- 
necticut. 

Mr. Trump. Hardly negotiated, sir. It was really forced down peo- 
ple's throats, wouldn't you say? 

Mr. Miller. Okay, now, let's 

Mr. Trump. Do you think Governor Weicker — do you think Gov- 
ernor Weicker — do you think Governor Weicker considers that a 
negotiated agreement, sir? 



251 

Mr. Abercrombie. Mr. Trump, let 

Mr, Trump. Wasn't that forced down his throat? 

Mr. Abercrombie. Mr. Trump 

Mr. Miller. Mr. Trump 

Mr. Abercrombie. Mr. Chairman and Mr, Trump, you asked a 
series of questions. The chairman is going to give you the answers. 
If you would kindly let him complete the answer, then you can go 
on. After this colloquy, then I am going to move ahead. We have 
other panels here, 

Mr, Miller, You asked the other question, why did the Indians 
get the reservations? 

Mr, Trump, I didn't ask that question. 

Mr, Miller, Well, you said why do we discriminate? 

Mr. Trump, No. I said — I didn't ask that question. 

Mr, Miller, Okay, You ask the question again. 

Mr, Trump. Do you want me to ask another question? 

Mr. Miller. No. Ask that question you asked. 

Mr. Trump. I said to you, you have a group of Indians, I think, 
that has a reservation in Connecticut that is making, I believe, per- 
haps in excess of $500 million. There are a total of 400 people or 
300 people, or a very small amount of people in that particular 
tribe. To make $500 million for 300 people, I ask you — and this is 
a Federal pact, this is done with the auspices of your office and al- 
lowed through the auspices of your office — ^why isn't that wealth, 
if you are so concerned, sir, about the Indians, which I think you 
should be, and I think it is a great concern — if you are so concerned 
with the impact and the welfare of the Indians, why do you allow 
300 people to make $500 million? Why don't you say that that 
money has to be distributed around so that other people can be 
helped, so that medical care in other locations in the United States, 
where you have Indians that are truly living in poverty, so that 
they can be taken care of? How can you allow this to happen? 

And what we are really doing, and getting off the subject — ^you 
know and I know that this is going to blow. 

Mr, Miller. No, Mr. Trump, I don't know that. 

Mr. Trump. Oh, you don't know it? 

Mr. Miller. No. 

Mr, Trump, Well, I'll tell you what, I'll see you in about two 
years, and we will see who is right, sir. 

Mr. Miller. Well, let's go down that— just for a second, Mr. 
Chairman. 

Mr. Calvert said — what did you say, Caesar's, is looking for a 
management agreement? You have tried to get a management 
agreement 

Mr. Trump. I have not. 

Mr. Miller. You have not? 

Mr, Trump. I have not. 

Mr. Miller. Your corporation hasn't- 



Mr. Trump. I have not, sir. That will be your second apology, I 
hope. I have not tried. 

Mr, Miller. Well, I have a letter here from Mr. Bunce who talks 
about your various contacts regarding the possibility of your in- 
volvement in a venture, the Agua Caliente, and I will 



] 252 

(' 
Mr. Trump. Mr. Who? 

Mr. Miller. Mr. Bunce, in his capacity as legal counsel. I will 
enter this into record. 

[The information follows:] ^ 



253 



AFFIDAVIT 

STATE OF CALIFORNIA ) 

) 
COUNTY OF RIVERSIDE ) 

Richard M. Milanovich, being first duly sworn on his oath, 

deposes and states as follows: 

1. I eiin now, and at all relevant times mentioned herein have 
been, the duly-elected and serving Chairman of the Tribal council 
of the Agua Caliente Band of Cahuilla Indians (hereinafter, the 
"Tribe"). The Tribe is a federally-recognized Indian tribe whose 
federal Indian reservation is located in and around Palm Springs in 
Riverside County, California. 

2. This Tribe has not yet offered or engaged in any form of 
gaming (other than Class I traditional gaming) . The membership of 
the Tribe voted in January of 1992 to direct the Tribal Council to 
enact an ordinance for the conduct of Class II and Class III gaming 
for the benefit of all Tribal Members. The Tribal Council 
solicited proposal for this purpose in mid-1992, screened them, 
interviewed prospective operators, and selected a subsidiaxry of 
Caesars World, Inc. for this purpose in August of 1992. After 
considerable negotiation, the Tribe entered into a management 
agreement with this subsidiary in July of 1993, and has submitted 
it to the National Indian Gaming Commission in August of 1993, 
along with a gaming ordinance, for its approval. 

3. Prior to early February of 1993, I had had no dealings or 
contact of any kind with Donald Trump or his organization. 

4. In early February of 199 3, I received one or more 
telephone calls from Mr. Donald TrUmp at the Tribal Office. I have 



84-760 O - 94 - 9 



254 



no record of them because I was in and took the call, rather than •^.rv\-'« 
receiving a written message. Mr. Trump told me that he was^in town 
for the Bob Hope Desert Classic Golf Tournament, and that he wanted 
to stop by the Tribal Office to see me. I agreed to such a 
meeting . 

5. Mr. Trump appeared at the Tribal Office at about 5:00 p.m. 
on a day which I believe was probably February 11 or 12, 1993. He 
met with me, then Vice-Chairman Mildred Browne, and then Secretary 
Ray L. Patencio. The meeting lasted 30-45 minutes. 

6. At this meeting, Mr. Trump stated to us that he was well 
aware of this Tribe's previous announcement that it was negotiating 
a management agreement with Caesars World, Inc. for a tribal gaming 
facility to be located on the Agua Caliente Indian Reseirvation in 
or near Palm Springs, California. He asked if any final agreement 
had been reached because, if none had been reached, then he would 
like to discuss the possibility of such a venture between the Agua 
Caliente Band and his organization. He described his and his 
organization's experience in gaming, and told us how his political 
and other connections could cut through bureaucratic red tape to 
gain the necessary approvals quickly for such a venture. 

7. Our answer to him was essentially thanks, but no thanks. 
We explained that, although no such final agreement between the 
Agua Caliente Band and Caesars World, Inc. had been reached, such 
an agreement was currently being negotiated. As long as we vrere 
bargaining with Caesars World, Inc. we felt we were obligated to 
see that process through, rather than considering any other 
operator, although we might be willing to discuss such a 



255 



relationship with others if and when negotiations with Caesars 
World, Inc. fell through. 

8. Mr. Trump's response was cordial. He said he understood 
our position and asked us to keep him in mind if our dealings with 
Caesars World, Inc. reached an impasse. We told him that we would. 
He then left. 

9. On February 22, 1993, at 3:40 p.m., at the Tribal Office, 
Mr. Trump called me. I was not in at the time. My secretary took 
a telephone message, asking me to return Mr. Trump's call at 212- 
308-7868 or 212-832-2000, and to ask for Rona. A copy of this 
telephone message is attached as Exhibit A. 

10. During March of 1993 there was at least one other 
telephone conversation to me at my home in Palm Springs from Mr. 
Trump in New York, but I cannot locate any confirming documentation 
regarding it at this time. 

11. On March 25, 1993, at 11:12 a.m., Mr. Scott Kasen, 
Director of Special Projects for the Trump Organization, called me 
at the Tribal Office. I was not in, but my secretary took a 
message to the effect that Mr. Trump had asked him to call me. A 
copy of this telephone message is attached as Exhibit B. 

12. As an apparent follow-up to this call, Mr. Kasen wrote a 

letter to Tribal Secretary Ray L. Patencio, dated March 26, 1993. 

It arrived on March 29, 1993 by DHL Courier Service. Copies of the 

letter and the shipping label are attached as Exhibits C and D. 

The point of this letter was, as it states in its third paragraph: 

It is no secret as to why I telephoned. I 
called you to express Mr. Trump's interest in 
working with the Agua Caliente Band of Cahuilla 
Indians to construct and operate a first class 
casino on the tribe's reservation. 



256 



13. I returned this call by calling Mr. Kasen at 212-832-2000 
at 1:59 p.m. on March 30, 1993. A copy of the Tribe's telephone 
bill for this call is attached as Exhibit E. The call was short, 
because I just repeated our previous position. 

14. Mr. Kasen followed up this call by a letter to me, dated 
March 31, 1993. A copy of it is attached as Exhibit F. In it, Mr. 
Kasen repeats the desire of the Trump Organization to discuss a 
gaming project on the Agua Caliente Indian Reservation if our 
negotiations with Caesars World, Inc. fail. He also asked for the 
names of other tribes that might be interested in such a venture. 
We did not reply to this letter. 

15. On April 8, 1993 Mr. Kasen sent a message to me by FAX. 
A copy of it is attached as Exhibit G. The message was, "Please 
call me when the negotiations stall." 

16. On April 21, 1993, at 3sl5 p.m., I received another call 
from Mr. Kasen. I was not in, but my secretary took a message to 
"Call next week." A copy of this telephone message is attached as 
Exhibit H. That was the last contact that I had with Mr. Trump or 



his representatives . 



Richard M. Milanovich, Chairman 



Subscribed and sworn before me on October [^ , 1993 at 
, California. 



Vo^lm ^prin^ 



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THIS CERTIFICATE MUST BE ATTACHED TO 
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□ INDIVIDUAL 

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26 March 1993 



Mr. Ray Leonard Patencio 
Agua Caliente Band of Cahuilla Indians 
960 East Tahquitz Canyon Way, #106 
Palm Springs, California 92262 

Dear Ray: 

Mr. Trump asked me to telephone you and introduce myself. 

I am sorry that we did not have a chance to talk, however, I 
understand you desire to avoid any potential conflicts of interest 
since you are no longer on the Tribal Council. 

It is no secret as to why I telephoned. I called you to 
express Mr. Trump's interest in working with the Agua Caliente Band 
of Cahuilla Indians to construct and operate a first class casino 
on the tribe's reservation. 

The Trump Organization is the largest company in the gaming 
industry, and we are the only hotel and casino operator to achieve 
a four-star property rating. Not only are we the only company to 
achieve a four-star rating, we were able to achieve this rating at 
each one of our three hotel and casino properties. 

I would like to invite you, Richard Milanovich and Mildred 
Browne to New York and Atlantic City so that you can experience 
first-hand why Mr. Trump and The Trump Organization possess the 
skills, experience and resources necessary to make the Agua 
Caliente's casino the West Coast's finest. 

I will call you to make the appropriate arrangements for your 
visit. 




Kasen 
Directof of Special 
Projects 



THE TRUMP ORGANIZATION 

<VVENUE NEW YORK N Y 10022 212-832-2000 TELEX -427715 



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REF • «19 iZS 567S 



Detail of Long Distance Charges 



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Area/Number Mini 



Call Rate 
Typa Period 



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1 


3/ZS 


9aSA 


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CA 


2 


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310 553- 
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909 <58- 
619 742- 

212 832- 
916 482- 
619 494- 

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5227 
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3771 
2000 
0428 
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1411 
7203 



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15 3/25 10i46A 

16 5/25 lilSP 



17 4/02 12:2SP 

18 4/02 I2i43P 



OPERATOR HANDLED CALLS 
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CA 619 32S-5673 

NV 702 798-9908 

CA 619 325-5673 

CA 916 756-9843 

619 325-5673 

619 446-9816 

619 525-5673 

202 863-9834 

619 325-5673 

202 488-9100 



DOC DAY 

DOC DAY 

DOC DAY 

DOC DAY 

DDC DAY 

DDC EVE 

DDC DAY 

DDC DAY 

DDC DAY 

DDC DAY 

DOC DAY 

DDC DAY 

DDC DAY 
SUBTOTAL 
TOTAL 



FR LAS VEGAS 
TO PALM SPO CA 
FR DAVIS CA 
TO PALM SPO CA 
FR RIDGECREST CA 
TO PALM SPG CA 
FR WASHINGTON DC 
TO PALM SPG CA 
FR WASHINGTON DC 



QCS 
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DAY 
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1.00 
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2.07 

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1.53 

1.92 

3.76 

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263 




March 31. 1993 



Mr. Richard M. Mllanovlch 

Chairman 

Tribal Council 

Agua Caliente Band of Cahuilla Indians 

960 Last Tahquiu Canyon Way, # 1 06 

Paim Springs, CA 92262 

Dear Richard, 

Thanl( you for returning my phone cail. 

1 was disappointed to learn that we can not fomially begin discussions until your negotiations 
with Caesars have concluded. However, while I do not enjoy playing the role of Brutus, if 
negotiations with Caesars should not progress as planned, please call me immediately so we 
can begin our dialogue. The faster that we can start worldng together, the sooner the casino 
will be up and running. 

Also, I would like to learn more about those tribes that you mentioned which are interested 
in seeking partners for casino development. I look forward to hearing from you soon - please 
keep in touch. 




^asen 
Director of Special Projects 



THE TRUMP ORGANIZATION 

785 FIFTH AVENUE • NEW YORK. N. Y. 10022 212 832 • 20O0 TELEX • 427715 



264 



flPR-0e-1993 148 53 FROM TRUtF TOWER 26 



16193250593 P. 001 




OMUUIOUDlOll 

728 FIFTH AVENUE 
NEW TOTK.N.Y. 10023 
(212)833-3929 



FACSIMILE TRAMSHISBION 



April 8. 199 3 



DATE: 



NUr4BER OF PAGBS 
(INCLUDING COVER) 

8cott Kasen 
FROM: 



212-935-0141 
FACSIMILE NUMBER: 

If you did not reoelve oloar copies 
a t (212) 832-2000 



MESSAGE : 



Dear RlchTd, 



Mr. Richard Kjlanovic 
SENT TO: 



619-325-0393 



FACSIMILE NUMBER: 



}f all pages contact sencer 



A quick fax to aajr hello. 'lease call ma when cha 



pegotiatlone atall 



Happy Easter I 




The Information contained in ttiib teleoopy tranemlssioi 
privileged and confidential, and inianded only £or the use oi 
individual ( e ) and/or entlty(ies) narod eJt>ove. If you are not 
intended recipient, you are hereby notified that any unauthoi i^ed 
disclofiure, copying, distribution pr taking on any aotlon 
reliance on the contents of the telecopied materials is 
prohibited. Materials transralttgt!. which is protected by 
attorney-client privilege which is noviewed in error by other 
the individual intended for receipt shall not constitute a 
of the attorney-client privilege, j If you have received 
transnieeion in error, please lmm>?silately notify the sendetr 
telephone to arrange for the return ipt the materials. 



iis 

the 

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266 

Mr. Trump. Legal counsel of who? 

Mr. Miller. The Agua Calientes. 

Mr. Trump. Oh, you mean somebody wrote to me asking for — 
that is not my people writing, sir. 

Mr. Miller. No. He says, "I am writing at your request." 

Mr. Trump. At my request? 

Mr. Miller [continuing]. "Concerning your various contacts re- 
garding the possibility of your involvement" 

Mr. Trump. Sir, that is somebody writing a letter to me, I am 
not writing a letter to them. I don't blame them for wanting 

Mr. Miller. Caesar's has asked? Is that your information? Oth- 
ers in your industry are seeking management contracts with var- 
ious Indian gaming operations either existing or in future. Is that 
correct? 

Mr. Trump. That is true. I think that is true, yes. 

Mr. Miller. So what is the conclusion to be drawn from that? 
That they, too, will have no ability 

Mr. Trump. No, the conclusion is, hey, this thing is running 
rampant, they are running public companies for the most part, 
they might as well get on the ship. But they know, and if they were 
down here testifying, they know that when you have this many en- 
tities, this many — they know, they are professionals — that you can- 
not control the mob, you cannot control the organized crime, you 
are not going to do it. 

Willy Sutton 

Mr. Miller. So they are making this decision 

Mr. Trump. Willy Sutton — excuse me, sir — ^Willy Sutton said he 
robbed banks, he said that is where the money is. Well, the mob 
is going into the casinos, and what they are doing is, they are going 
into the Indian casinos because, sir, that is where the money is, 
but also that is where the lack of enforcement is. 

Mr. Miller. Why is your industry- 

Mr. Trump. Sir, that is where the lack of enforcement is. 

Mr. Miller. Why are members of your industry going there 
when obviously 

Mr. Trump. Because they want to make money. 

Mr. Miller. Wait a minute. If they were to be involved with or- 
ganized crime or any kind of criminal activity, it would, I assume, 
under both Nevada's law and New Jersey's, would reflect on your 
ability to continue to hold a license, would it not? 

Mr. Trump. Because they want to make money, sir, because they 
really want to make money, and I have — ^you know, I have a great 
love for this country. I happen to be 

Mr. Miller. It is quite possible for a reservation to enter into a 
gaming contract, management contract, with somebody in your in- 
dustry — I don't know about other people on the outside, these com- 
panies that are being formed — ^but in terms of your industry, to 
enter in with the Mirage or with Caesar's or former executives of 
those people who have their own private operations. An Indian 
tribe could enter into that and have a great bulwark against orga- 
nized crime because that operator would have to say, "I cannot do 
business with you people, I cannot let this go on, because my li- 
cense is at risk." 



267 

Mr. Trump. I didn't say the companies are honest. I said the reg- 
ulatory process is honest. The regulatory process is a huge and 
cumbersome thing that, in the end 

Mr. Miller. But there clearly is a way — there clearly is a 
way 

Mr. Trump. Do you want me to answer the question? 

Mr. Miller. There clearly is way for those casinos to do business 
outside of organized crime because they are doing business with 
people who have a great stake 

Mr. Trump. The regulatory 

Mr. Miller. Is that not true? 

Mr. Trump. The regulatory process- 



Mr. Miller. I understand the regulatory process. 

Mr. Trump. The regulatory process, in a limited number of loca- 
tions, can keep casino gaming honest. When you open up hundreds 
of locations randomly without even State control — I am not saying 
State or anything, but without any control — ^there is no way to keep 
that honest, whether I run it, whether Caesar's runs, whether the 
Indians are running it. There is no way. You have too many places, 
you have too much money involved. The mob is going to take over 
it. It is starting to come out. It will start coming out a lot more, 
and in two years, sir, you are going to be a very embarrassed man. 

Mr. Abercrombie. Mr. Trump and Mr. Miller — Mr. Miller you 
will have the concluding remark. 

Mr. Miller. Let's just understand one thing. 

Mr. Trump. Thank you, sir. 

Mr. Abercrombie. Speaking of running things, I am running the 
committee. So Mr. Miller will conclude in as much as he is the 
chairman. 

Mr. Miller. You want to keep suggesting that somehow there is 
no regulatory scheme for these reservation gaming sites. The fact 
is, there is in almost every instance. Obviously, where you have 
compacts the governors are concerned about their citizens as you 
are, and we now have, I don't know, what, 26 governors that have 
entered into compacts with various tribes. 

Mr. Trump. They have had no choice, sir. 

Mr. Miller. You have the whole regulatory scheme of the Gam- 
ing Commission. Most of the cases you cite were before the Gaming 
Commission. They have the memorandum of understanding with 
the FBI. The tribes have under the trust relationship a direct ac- 
cess to the FBI, to the Treasury Department, to the Attorney Gen- 
eral of the United States, 

You keep wanting to paint this picture as somehow these people 
are off just willy-nilly doing business. The fact is, that isn't. Many 
of the contracts that were cited in the evidence you presented — to 
date, when they were signed they weren't under the scrutiny. The 
Secretary didn't have to approve them. Today the Secretary does. 
The arrangement in New Jersey, as I think you pointed out, isn't 
allowed, the potential arrangement isn't allowed under the existing 
law, as Senator Inouye testified. I appreciate the theory, but it isn't 
allowed under the existing law. 

The fact is, if they entered into a management agreement, that 
management agreement would have to be signed off by this Sec- 
retary of the Interior. So the suggestion you have painted is that 



268 

somehow these people are doing — you used the term "deregulated" 
or "unregulated," completely outside the scheme of regulation, com- 
mensurate with this industry, and the fact is, they are not. 

Mr. Trump. Sir, I will just give you a quick answer, and then the 
Congressman will give you a much more appropriate answer to 
something else. I will tell you that, you asked me about governors, 
and you said the governors are routinely signed. The governors are 

being forced 

Mr. Miller. These are hard bargainers. 

Mr. Trump. Sir, they are not hard bargaining, because if Mario 
Cuomo didn't sign his pact in Syracuse, the Indians were going to 
court, and they would have won on summary judgment based on 
the ridiculous law that was passed, okay? So it is not hard bargain- 
ing. He sat there and he had absolutely no choice. 

Lowell Weicker, who I have great respect for, fought and fought 
and fought and ultimately was bludgeoned into having to accept 
this, and he is not happy about it, and Connecticut is not happy 
about it, and Connecticut is a total disaster over Indian gaming. 
Mr. Abercrombie. Thank you, Mr. Trump. 
Mr. Trump. They have created a monster. 
Mr. Abercrombie. Thank you, Mr. Trump. 

Mr. Torricelli, in as much as you are also a part of the panel, 
we will conclude this panel with your remarks. 
Mr. Torricelli. Thank you. 

Hesitant though I am to engage in this conversation 

Mr. Abercrombie. And then we will move on to our next exciting 
panel. 

Mr. Torricelli. Allow me just to conclude for a moment simply 
with this. There is much that is not known on the problems of In- 
dian gaming. The intention here today was to reflect simply on a 
few things that we do know. 

The inspector general has concluded that there is fraud and 
abuse that is costing Indian tribes millions of dollars. We have at- 
tempted to establish that there are not sufficient Federal resources, 
indeed an absence of FBI and IRS presence, to deal with the prob- 
lem of money laundering and the presence of organized crime. 

We cannot, we could never, come before you, Mr. Chairman, to 
the degree that you would like with evidence to establish this fact. 
That was not our intention. It was not our intention to prove every- 
thing that has taken place, simply the absence of what we know. 
But in all fairness, I think we are approaching this in a reverse 
fashion. To cite that Caesar's or other legitimate institutions have 
management contracts or will be involved in the industry hardly is 
the way to approach the problem. It is not enough that there are 
some legitimate people in the industry, the problem is that there 
are illegitimate people in the industry. We can't be satisfied be- 
cause there are a few good participants, even that most are good 
participants. The fact that some are not, I think that is how the 
issue should be approached. 

The legislation I have submitted to this committee for its review 
is simply this. That the negotiating process is not working. 

Yes, Mr. Miller, if there were compacts in all States legitimately 
and honestly agreed to on an equal basis, we would not have a 



269 

problem. Forty of these casinos are operating with no compacts, no 
State agreements whatsoever. 

As has been testified, many of them, as in the States of New 
York and Connecticut, were against the wishes of the States be- 
cause they were going to be compelled by Federal courts. 

I have submitted legislation that is simple on its face. I do not 
believe any industry in this country should be the reserve of any 
group. I know one person who has come here today testifjdng 
against any discrimination, me. Any citizen of this country that 
wants to operate casino gaming should be able to do so on an equal 
basis, same law, same taxes, same investigations, same regula- 
tions, period, no distinctions. You make the grade, or you do not. 
That is the legislation that I have given you, that it be regulated 
and done fairly with revenues returned. That is the suggestion I 
give to you. I hope we have made a contribution. We have tried to 
do so. I leave it to you for your review. 

Mr. Abercrombie. Thank you very much, Mr. Torricelli. 

Thank you very much, Mr. Trump. 

Mr. Trump. Thank you, sir. 

PANEL CONSISTING OF HON. ADA E. DEER, ASSISTANT SEC- 
RETARY OF INDIAN AFFAIRS, BUREAU OF INDIAN AFFAIRS, 
U.S. DEPARTMENT OF THE INTERIOR, ACCOMPANIED BY 
HILDA A. MANUEL, DIRECTOR, INDIAN GAMING MANAGE- 
MENT STAFF, AND THEODORE R. QUASULA, CHIEF, DIVISION 
OF LAW ENFORCEMENT; HON. ANTHONY J. HOPE, CHAIR- 
MAN, NATIONAL INDIAN GAMING COMMISSION; HON. JOEL 
FRANK, COMMISSIONER, NATIONAL INDIAN GAMING COM- 
MISSION; AND MICHAEL D. COX, GENERAL COUNSEL, NA- 
TIONAL INDIAN GAMING COMMISSION, ACCOMPANIED BY 
HON. JANA McKEAG, COMMISSIONER 

Mr. Abercrombie. Now we will move on to our third panel, and 
I think that some of the questions that have been raised during the 
first two panels can be addressed and probably will be addressed 
both in the testimony and subsequent discussion: The Honorable 
Ada Deer, assistant secretary for Indian affairs in the Bureau of 
Indian Affairs of the Department of the Interior. The assistant sec- 
retary will be accompanied by the director for the Indian gaming 
management staff, the chief of the Division of Law Enforcement for 
the Indian gaming management staff; the chairman and commis- 
sioners of the National Indian Gaming Commission, as well as 
their general counsel, Mr. Cox. 

I trust that at least some of the media will remain to get some 
of the answers that could be forthcoming as opposed to some of the 
celebrity "Family Feud" activity that they seem more interested in. 

Secretary Deer, I commend you for your patience. I notice that 
you were more than anxious on several occasions to want to re- 
spond, and those accompanying you, I think, were anxious to do so 
as well. So I won't hold up that opportunity any longer, and I 
would ask you to go ahead with your testimony. The full sum of 
it, of course, is in the record. You can summarize if you wish, and 
then we will move on to questions and/or commentary from you 
and those accompanying you, and if during the course of your testi- 



270 

mony you would like to defer momentarily to anyone accompanying 
you, feel free to do so, and I forgot to say Aloha and welcome. 

STATEMENT OF HON. ADA E. DEER 

Ms. Deer. Thank you very much, Mr, Chairman and Members 
of the Committee. I am delighted to be here and to offer testimony 
on the implementation of the Indian Gaming Regulatory Act, with 
special emphasis on law enforcement issues. 

I have two members of my staff with me today who can answer 
specific questions on technical or program issues if necessary. We 
have Ms. Hilda Manuel, Director of the Indian Gaming Manage- 
ment staff, and Mr. Ted Quasula, Chief of the Division of Law En- 
forcement. 

I would like to present a summary of my statement and to re- 
quest that the full text of my prepared statement be made a part 
of the record. I am very conscious of the time, and I want to note 
that. 

Mr. Abercrombie. It will be. 

Ms. Deer. As many of you know, I have devoted my life to being 
an advocate for change, change that provides for accountability. My 
efforts in holding the U.S. Government accountable for terminating 
the Menominee Tribe of Wisconsin are a prime example. 

Today, my concern lies with ensuring that Indian gaming oper- 
ations are successful and that these operations comply with the let- 
ter and spirit of the Indian Gaming Regulatory Act. 

As a social worker, I measure the success of gaming in very basic 
terms. Does it provide housing, education, and employment oppor- 
tunities for tribal members? The answer is a resounding yes. As a 
matter of policy, the Department supports Indian gaming and is 
committed to the goals and objectives of the Indian Gaming Regu- 
latory Act. 

We have all heard about the successes of Indian gaming on In- 
dian lands. There is no doubt, Indian gaming has become a major 
economic development activity for Indian tribes. Many Indian 
tribes now provide better governmental services, better health care, 
higher quality educational benefits, employment, and have a source 
of capital for other economic development investments. 

In States such as Minnesota, Wisconsin, and Michigan, poverty, 
alcoholism, unemployment, juvenile delinquency, and other social 
problems have been significantly reduced and positively addressed 
by the economic benefits brought by gaming to the tribes. Regret- 
tably, tribal efforts to better not only the economic conditions of 
their own communities but also that of neighboring communities 
have been met with contentious debate and opposition. 

A focal point of this ongoing debate is a perception by Indian 
gaming opponents that Indian tribes have been provided an unfair 
advantage over other citizens. Congress intended to allow Indian 
tribes a comparative edge because of the economic reality on Indian 
reservations. Congress correctly perceived that this is the result of 
centuries of advantage that have been granted to non-Indian com- 
munities and continues, in many respects, today. This reality is 
characterized by few natural resources, limited finances, lack of a 
tax base, shortage of business capital and equity, underdeveloped 
infrastructures, geographic remoteness from sizable markets, inad- 



271 

equate roads and transportation systems, and a lack of trained, 
educated, or skilled workforces. 

But Indian nations and peoples have survived these and other 
disadvantages because of our innate intelligence, courage, pride 
and tenacity. We are continually searching for a means to engender 
self-reliance that are compatible with our cultures, values, and the 
environment. 

Concerns about the integrity of Indian gaming, its scope and 
scale, the need for acceptable licensing and law enforcement capa- 
bilities to keep out criminal elements have dominated the agendas 
of national meetings, conferences at all levels of Federal, State, and 
Tribal Governments. 

The Department does not discount the potential for law enforce- 
ment problems, especially in an industry with large cash trans- 
actions. We have no reason to believe that Indian gaming oper- 
ations are any more susceptible than any other gaming operation, 
nor do we think that Indian gaming is in any way immune from 
such criminal elements. 

The Department believes that, on the average, the regulatory 
and enforcement efforts of all parties. Federal, State, local, and 
tribal law enforcement agencies, have done a commendable job to 
keep Indian gaming free of law enforcement problems. We also be- 
lieve that Indian tribes themselves have undertaken notable efforts 
to ensure that Indian gaming activities are clean, honest, and free 
of criminal elements. 

Tribal gaming enterprises have installed sophisticated video sur- 
veillance systems in their establishments which match or exceed 
those found in non-Indian gaming establishments. Videotapes of 
criminal activity gathered by these systems is used as evidence in 
the prosecution of suspects. 

Many gaming operations employ off-duty police officers who, be- 
cause of their certification, can take immediate action when con- 
fronted with criminal activity. Cooperative and ongoing coordina- 
tion among all law enforcement agencies has become the mainstay 
in ferreting out criminal elements. 

In closing, I want to say that while we cannot guarantee that In- 
dian gaming is free of criminal influences or that nothing will go 
wrong, we do believe that there is sufficient law enforcement pres- 
ence and oversight to discourage and deter criminal elements. 

Indian nations and peoples have survived these and other dis- 
advantages because of our intelligence, courage, pride, and tenac- 
ity. We are continually searching for means of self-reliance that are 
compatible with our culture, our values, and our environment. 

This concludes my summary, and I will be happy to answer fur- 
ther questions. 

[Prepared statement of Ms. Deer follows:! 



272 



STATEMENT OF ADA E. DEER, ASSISTANT SECRETARY - INDIAN 
AFFAIRS, DEPARTMENT OF THE INTERIOR, BEFORE THE SUBCOMMITTEE 
ON NATIVE AMERICAN AFFAIRS OF THE COMMITTEE ON NATURAL 
RESOURCES, U.S. HOUSE OF REPRESENTATIVES, ON THE OVERSIGHT 
HEARING ON THE IMPLEMENTATION OF THE INDIAN GAMING 
REGULATORY ACT WITH REGARD TO LAW ENFORCEMENT ISSUES. 

October 5, 1993 



Good morning Mr. Chairmem emd members of the Committee, I eun 
pleased to present the views of the Department of the 
Interior on the implementation of the Indiem Geuning 
Regulatory Act (IGRA), with particular emphasis on law 
enforcement issues. This hearing on Indian Gaming is timely 
in view of the current effort by state emd tribal 
representatives to reach consensus on possible eunendments to 
the IGRA. 

I will begin with some general remarks on Indieui gaming as 
an economic development activity, followed by specific 
remarks on law enforcement issues. 

As we all know, geuning on Indian lands has become a major 
economic development activity for Indiem tribes, eind we eure 
witnessing em iinprecedented growth in Indicui gambling 
operations. However, this growth has not been without 
controversy emd criticism. Concerns about the integrity of 
Indian geuning, its scope and scale, the need for accepteUale 
licensing, emd law enforcement capedsilities to keep out 
criminal elements have dominated the agendas of meetings 
and conferences at all levels of Federal, state emd tribal 
governments. Voices from all sides have offered their 
opinions on the pros and cons of Indiem geuning. As a matter 
of Federal policy, we support Indiem geuning emd are 
committed to the goals emd objectives of IGRA. 



-1- 



273 



The principal goals of the IGRA are to promote tribal 
economic development, self-sufficiency amd strong tribal 
governments. A majority of the gaming tribes will tell you 
unequivocally that Indiein gaming has greatly enhemced their 
economic sufficiency. These tribes now provide better 
governmental services, better health care, higher quality 
education benefits, and employment and housing for tribal 
members. They also have a source of capital for other 
economic development investments. Geuning revenues have 
provided a reliable source of fvmds to support tribal 
government operations emd, in several instances, tribes have 
also made contributions to local governments for roads, 
schools, police protection cind social service progreuns to 
help mitigate the impacts expected from Indiem gaming. 

Indian nations emd peoples have survived memy disadvantages 
because of our innate intelligence, courage, pride, and 
tenacity. We are continually searching for meems of self- 
reliance that are compatible with our cultures, values, and 
our environment. The economic benefits brought by gaming to 
the tribes have significantly reduced and positively 
addressed, poverty, alcoholism, unemployment, juvenile 
delinquency and other social problems. 

Some of these tribal efforts to better not only the economic 
conditions of their own communities but also that of 
neighboring communities, have been met with contentious 
debate and opposition. 

A focal point of this ongoing debate is a perception by 
Indian gaming opponents that Indicin tribes have been 
provided an unfair advantage over other citizens. 



-2- 



274 



Congress intended, however, to allow Indian tribes a 
comparative edge because of the economic reality on Indian 
resezrvations . 

Indiem tribes are governments and as governments, they need 
to provide essential services to their constituencies. Like 
any government, they need revenue. Thirty-five of the 50 
state governments have chosen to operate lotteries for 
public finamce. Like states that operate lotteries, Indian 
tribes operate gaming enterprises for public or governmental 
finamce, not for private business profit. 

The success of Indian gaming has, however, been subject to 
specific limitations and requirements. Of all the gaming in 
this Country, only Indian gaming is subject to Federal 
regulation amd oversight. Only Indiam tribes are mandated 
by Federal law to dedicate gaming revenues to statutorily 
defined uses and purposes. If an Indian tribe wcints to 
share gaming revenues with tribal members by making per 
capita payments, the tribe is required to prepare a Revenue 
Allocation Plan indicating how all the geuning revenues will 
be used and must include the per capita distribution plan. 
This Plan cemnot be implemented until it is approved by the 
Secretary of the Interior. 

Indian tribes are striving to be better neighbors than their 
neighbors have been to them. Although not memdated, Indian 
tribes are mindful of the potential negative effects that 
gambling may have on society and, in memy cases, undeninrite 
a large share, if not all, of the costs for reducing or 
alleviating such negative social effects eind impacts of 
gaming. Meiny Indian tribes contribute to local charities 
and help fund local education projects ernd government 
agencies whose services extend across the spectrum of 



275 



community need. And for the first time in history, Indian 

gaming has proven to be a win-win situation. Mamy Indiem 

tribes now stand poised to achieve economic self- 
sufficiency. 

Unfortunately, the right of Indiein tribes to geune is 
expected to be revisited by Congress as a result of the 
continuing conflicts between some tribes emd some states 
over the scope of gaming and related regulatory emd 
operational issues. Highly publicized claims by Indian 
gaming opponents that tribal gaming operations are 
unregulated and highly susceptible to infiltration by 
criminal elements have also contributed to the decision to 
reopen the IGRA for amendments. 

The Department is keenly aware that the geuning industry with 
its large cash transactions has always been an attractive 
target for criminal elements. We have no reason to believe 
that Indian gaming operations are emy more susceptible than 
any other geuning operation nor do we think that Indian 
gaming is in any way immune from such criminal elements. In 
fact, some law enforcement problems have occurred. From a 
law enforcement perspective, our greatest concern is that 
the integrity of Indian gaming could be compromised through 
criminal infiltration. In this regard, the BIA Division of 
Law Enforcement Services (DLES), maintains close 
communication with other law enforcement agencies to help 
prevent orgemized crime involvement, to help keep 
undesirables out of Indian geuning, suid to help maintain 
public order. 

Criminal activities known to be inherent to the gambling 
industry reuige from sophisticated skimming and money 
laundering operations to crude schemes to cheat at card 
games or to rig gambling devices. Ovir involvement in cases 



-4- 



276 



associated with traditional Orgemized Crime activities has 
been secondary and limited. The lead agency with authority 
to investigate traditional Orgemized Crime is the Federal 
Bureau of Investigation ( FBI ) . To our knowledge , the FBI 
has had only one orgcinized crime infiltration case that 
involved Indian geuning. This case was successfully 
prosecuted and resulted in imprisonment of ]cnown orgemized 
crime figiires. 

The DLES plays a more active role in cases which may be 
referred to as non-traditional orgemized crime. For 
excimple, small groups of individuals will band together 
with the specific purpose to prey on gaming estciblishments. 
These individuals conduct their illegal scams and cheating 
for short periods of time before moving to another gaming 
establishment. These criminals do not discriminate and have 
targeted Indian emd non-Indian gaming operations . The 
losses attributed to individuals in these groups may 
constitute several thousand dollars a day. There have been 
isolated cases of this type of criminal activity. Through a 
coordinated and cooperative effort among the BIA and tribal, 
state, and county law enforcement agencies these cases have 
been successfully investigated cind prosecuted. 

It is noteworthy to mention that in many instances, tribes 
have provided valucJjle support in the successful 
apprehension of these types of criminals. Most tribal 
gaming enterprises have installed sophisticated video 
surveillance systems which capture the criminals on tape. 
The videotapes are later used as evidence in the prosecution 
of these criminal cases. Moreover, many gaming operations 
employ off-duty certified police officers who, because of 
their certification status, Cein take immediate action when 
confronted with criminal activity. We also have learned 
that many tribal geiming operations employ retired police 



277 



officers in their security programs. 

The DliES has also been instrumental in assisting our Office 
of the Inspector General, Department of the Interior, with 
the investigation of crimes involving theft or embezzlement. 
These types of crimes may be committed by tribal officials, 
gaming management personnel or employees. We have found in 
these types of cases that the geuning operation often lacked 
good internal controls and security procedures. In some 
cases, an inadequate background investigation of gauning 
employees also was a contributing factor to the criminal 
activity. 

Although the DLES does not always lead the investigation of 
geuning offenses, it has been involved in every major case in 
some meinner. The relationship that is maintained with the 
various federal, state, local eind tribal law enforcement 
agencies has proven to be a valucible tool for sharing 
information and for monitoring the movement of suspected or 
known criminal. On the national level, BIA law enforcement 
officials along with tribal law enforcement officials work 
closely with the top leadership of the International 
Association of Chiefs of Police to keep the lines of 
communication open on law enforcement issues related to 
gaming . 

In closing, I want to say that while we ceinnot guarantee 
that Indiem gaming is free of criminal influences or that 
nothing will go wrong, we do believe that there is 
sufficient law enforcement presence amd oversight to 
discourage and deter criminal elements. Inasmuch as Indian 
gaming is the only gaming subject to Federal regulation, 
every level of the nation's law enforcement structure has an 
opportunity to become involved. Cooperative and ongoing 
coordination among all law enforcement agencies including 



-6- 



278 



the BIA has become the mainstay of ferreting out criminal 
problems. In the States of Arizona, South Dakota, Minnesota 
and Wisconsin, the various Federal, state, local emd tribal 
law enforcement agencies have orgemized formal task forces 
under the auspices of the U.S. Attorney's Office to review 
and address difficult or peculiar law enforcement problems 
related to gaming. It seems appropriate then that these 
States have become models of a new cooperative approach to 
resolving law enforcement problems associated with all types 
of gaming. 

This concludes my prepared statement. I will be happy to 
answer any questions that you or members of the Committee 
may have. 



-7- 




279 



United States Department of the Interior 

OKFICE OF THE SECRETARY 
WASHINGTON, DC. 20240 

Honorable Bill Richardson ' -^ • ' i^'vj 

Chairman, Subcommittee on Native American Affairs 

Committee on Natural Resources ' >■■'■: 

House of Representatives 

Washington, DC 20515 

Dear Mr. Richardson: 

On October 5, 1993, the Department of the Interior and the Bureau of Indian 
Affairs (BIA) provided testimony regarding law enforcement issues 
associated with Indian gaming operations before the Subcommittee on 
Native American Affairs House Committee on Natural Resources. The 
Division of Law Enforcement was requested by the Honorable Neil 
Abercrombie to provide comment on testimony provided by Mr. David B. 
Palmer, Deputy Assistant Commissioner (Criminal Investigation), Internal 
Revenue Service (IRS). 

Mr. Palmer provided a general overview of various federal laws, including the 
Bank Secrecy Act, designed to safeguard against money laundering and to 
provide assistance to the IRS in its anti-money laundering enforcement and 
tax administration. Mr. Palmer explained the limitations of these statutes as 
they apply to tracking money transactions in Indian gaming operations. 

The integrity of gaming operations must be safeguarded against incursions 
by organized crime to ensure that Indian gaming remains a viable source of 
economic development for Indian communities. To this end, the law 
enforcement community needs to have available all of the tools and 
resources to adequately protect the Indian community and to prevent illegal 
activity from siphoning off much needed funds. 

The Department of the Interior and the BIA concur with the recommendation 
by the IRS that the Indian Gaming Regulatory Act (IGRA) and the Bank 
Secrecy Act be amended to specify that Indian gaming operations be subject 
to the Bank Secrecy Act rather than to Section 60501. Such an amendment 
would ensure a more complete reporting and tracking process for cash 
transactions over the threshold figure. 



280 



We thank the subcommittee for the opportunity to provide a response to 
Mr. Palmer's testimony. Please contact this office if there are any further 
questions regarding law enforcement issues related to Indian gaming 
operations. 

Sincerely, 



^ . Ada Deer / 

"'"^' V Assistant Secretary - Indian Affairs 



281 

Mr. Abercrombie. Thank you very much. 

Would you care to have any of your associates comment? Or may 
I just ask them directly? What is your pleasure? Obviously, they 
have heard testimony all the way from the IRS to Mr. Trump's — 
I guess you could call them contentions. 

Ms. Deer. Let me say his selective interpretation of the facts. 

Mr. Abercrombie. Yes, as you say. 

In any event, would you care to call anyone in particular? Other- 
wise, I have some 

Ms. Deer. We are here at the committee's pleasure to answer 
your questions. 

Mr. Abercrombie. Okay. 

Commissioner McKeag, am I pronouncing your name correctly? 

Ms. McKeag. Correct. 

Mr. Abercrombie. You are a Commissioner on the National In- 
dian Gaming Commission, correct? 

Ms. McKeag. That is correct. 

Mr. Abercrombie. Do you have any comment on the contentions 
that were made with respect to the ability of the Commission and/ 
or any of its affiliates, the Indian Gaming management staff, your 
relationship to the Department of the Interior or other Federal De- 
partments with respect to law enforcement, as to your ability to 
oversee the gaming operations? 

I am not speaking in the context of law enforcement, criminal ac- 
tivity and penetration of gaming activities, 

Ms. McKeag. I believe our chairman, Tony Hope, has a state- 
ment which addresses the Commission's responsibilities in the area 
of enforcement. I think he would like to summarize that statement, 
and then we could discuss 

Mr. Abercrombie. Oh, I'm soriy. 

Mr. Hope, I didn't see your sign there, I beg your pardon. The 
transcriber was in the way. I didn't recognize that you were there. 
I beg your pardon. 

Did you hear my question to the other commissioner? 

Mr. Hope. Yes, I did. 

Mr. Abercrombie. Would you care to comment? My question has 
to do with your observations or commentary with respect to the 
ability of existing institutions under the existing law to deal with 
the penetration of Indian gaming by organized crime elements. 

STATEMENT OF HON. ANTHONY J. HOPE 

Mr. Hope. Yes, I would like to address that question, but would 
you like my prepared remarks first? 

Mr. Abercrombie. No. We will get to that. 

Mr. Hope. The question has been raised as to how many people 
are available for the enforcement of Indian gaming as compared to, 
say New Jersey. Grenerally, New Jersey has 905 people. They have 
adopted a particular system of gaming enforcement which includes 
regulating paper napkins in the bars and includes personnel whose 
job it is to go around and count the number of bar stools to make 
sure that they conform to the square foot area of the casinos in 
terms of permissible numbers of bar stools. 

We do not feel that that is the regulatory scheme that Indian 
gaming needs or that should be followed. We prefer the Nevada 



282 

concept more as embodied in the Act which essentially provides 
that the tribes, as owners, are the primary regulators in Class II 
gaming and work with the States to determine jurisdiction in Class 

II gaming. 

As backup, in terms of enforcement or regulation, we have avail- 
able approximately 10,000 people to regulate gaming nationwide. 
We have 87 U.S. attorneys and their forces. We have all of the FBI 
that we need. We have the State groups in those 18 States with 
compacts which are generally run out of their attorney generals' of- 
fice. We have those staffs available. We have different staffs that 
do background investigations. 

Within my own Department, we have very few people. As here 
before you, you see myself, Commissioner McKeag; Commissioner 
Joel Frank; and my General Counsel, Michael Cox. 

We have a total of 27 people, but we have the ability and the au- 
thority to farm out to the private sector or to tribes or to other Fed- 
eral agencies and to hire for anything that we need done. There is 
a vast array of people available for regulation. 

The regulatory responsibilities are divided into two groups. Class 

III and Class II. We fully recognize that casinos need a greater 
amount of regulation than do bingo halls. My personnel have the 
responsibility for the oversight of the day-to-day operation of the 
bingo halls. These are places where it would be very difficult to 
launder money. A $10,000 transaction would buy you a whole stack 
of bingo pads but they couldn't be converted back into money. 

The casinos are regulated under a tribal-State compact where 
the State, contrary to what I have heard in prior panels, has the 
right to negotiate for reimbursement of any expenses that are going 
to be incurred for regulation of these casinos. They can get the 
money back through the compact process from the tribes. They can 
insist on all reasonable regulatory requirements. The Commission 
performs background investigations on people going into Class II 
insofar as they are owners of management contracts. As such, we 
have our own screening processes, some of which carries over into 
Class III, because a lot of the Class III contracts have Class II ele- 
ments within them and so will be conducting 

Mr. Abercrombie. Commissioner Hope, many people who are as- 
sociated with the law and the passage of the law understand the 
differences between Class I, Class II, and Class III, but for pur- 
poses of clarification and the record, would you differentiate the 
three classes? I know you do that in your testimony. 

Why don't we just have your testimony submitted for the record, 
and you can concentrate just on the final page of conclusions and 
the differentiation in the classes. 

Mr. Hope. Please, if you would submit for the record. Thank you. 

[Prepared statement of Mr. Hope follows:] 



283 



TESTIMONY OF 

ANTHONY J. HOPE 

CHAIRMAN, NATIONAL INDIAN GAMING COMMISSION 

BEFORE 

THE HOUSE COMMITTEE ON NATURAL RESOURCES 
SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

OCTOBER 5, 199 3 



Mr. Chairman, Members of the Committee, thank you for the 
opportunity to appear before you today. My name is Tony Hope. I 
am the Chairman of the National Indian Gaming Commission. With me 
today are Commissioner Jana McKeag of the Cherokee Nation of 
Oklahoma, Commissioner Joel M. Frank, Sr. of the Seminole Tribe of 
Florida and General Counsel Michael D. Cox. 

The Indian Gaming Regulatory Act of 1988 (IGRA) was enacted as 
a response to the proliferation of tribal gaming establishments in 
Indian country operating without regulatory oversight by either the 
federal government or the states. The IGRA provides a regulatory 
framework for regulating Indian gaming by dividing gaming into 
three (3) classes, establishing the National Indian Gaming 
Commission to oversee the regulation of class II gaming, and 
authorizing Indian tribes and states to enter into compacts for the 
regulation of class III gaming. 

Class I gaming (social games or traditional tribal games 
played in connections with tribal ceremonies) is regulated under 
the exclusive jurisdiction of the tribes. Class II gaming (bingo, 
pull-tabs and related games) is regulated by the tribes, but with 
oversight by the National Indian Gaming Commission. Class III 
gaming (all other gaming, including horse racing, blackjack, 
roulette, slot machines, lotteries and craps) is regulated under 
the terms of a compact between the tribe and the state. 

The Commission is an independent regulatory agency 
administratively located within the Department of the Interior. 
Under the IGRA, the Commission's primary role is to monitor and 
oversee the regulation of class II gaming operations. The 
Commission also approves class II and class III tribal gaming 
ordinances and management contracts. It has the authority to 
impose civil penalties or to close a gaming establishment for 
substantial violations of the IGRA, the regulations promulgated by 
the Commission, or tribal gaming ordinances. 



284 



Under the IGRA, the day-to-day regulation of class II gaming 
is primarily the responsibility of the tribe, while the day-to-day 
regulation of class III gaming is as negotiated and set forth in 
the compact between the tribe and the state. 

Although law enforcement is a vital tool in the regulatory 
process, the regulatory structure of the IGRA divides enforcement 
among several different entities. For example, the U. S. Attorneys 
are charged with enforcement of the Johnson Act (15 U.S.C. §1175), 
theft from Indian gaming establishments (18 U.S.C. §1167 and 1168) 
and state gambling laws in the absence of a tribal-state compact 
(18 U.S.C. §1166); the FBI is charged with investigating crimes on 
Indian reservations; the tribes and the states can agree that the 
states and/or the tribes will investigate and prosecute crimes 
involving class III gaming. Fraud could be under the jurisdiction 
of the federal, state and tribal governments. 

The Commission has civil enforcement authority for violations 
of the IGRA, tribal ordinances, management contracts, and 
Commission regulations. Additionally, it conducts background 
investigations on entities and individuals with a financial 
interest in, or management responsibility for class II management 
contracts, but not for class III management contracts. 

We have in the past and will continue to work with the FBI, 
the IRS, the U.S. Attorneys, and others to develop and improve 
procedures for information sharing, the conduct of background 
investigations, and the coordination of enforcement procedures. As 
regulators, we meet regularly with individuals and organizations to 
discuss our respective roles and responsibilities in Indian gaming. 
These include the numerous gaming tribes and associations, as well 
as the Conference of Western Attorneys General, the National 
Association of Attorneys General, the National Governor's 
Association, the Attorney General's Advisory Committee on Indian 
Affairs, and the Indian Section of the American Bar Association. 

The Commission is charged with approving all class II and 
class III management contracts, and with determining the 
suitability of owners of management contracts for all class II 
gaming operations. Some of these background investigations will be 
done quite rapidly while others may take six months or more to 
complete. Determinations of unsuitability and the consequent 
banning of individuals from significant roles in Indian gaming is 
perhaps the most important "law enforcement" role of the 
Commission. These determinations include such investigative 
procedures as: 

o Verifying the information submitted by the applicant by 
written or oral communications. 



285 



o Inquiring into the applicant's prior activities, criminal 
record, if any, and reputation, habits and associations; 
conducting interviews with knowledgeable people familiar with 
the applicant such as former employers, personal references, 
business associates, and others. 

o Documenting the disposition of all potential problem areas 
noted and disqualifying information obtained. 

The Chairman may approve a management contract only if, among 
other things, it meets the standards of part 531 and §533.3 of the 
Commission's regulations. However, the Chairman shall disapprove 
a management contract for class II gaming if he or she determines 
that — 

o any person with a direct or indirect financial interest in, or 
having management responsibility for, a management contract: 

is an elected member of the governing body of the tribe 
that is party to the management contract; 

has been convicted of any felony or any misdemeanor 
gaming offense; 

has knowingly and willfully provided materially false 
statements or information to the Commission or to a 
tribe; 

has refused to respond to questions asked by the Chairman 
in accordance with his responsibilities under this part; 
or 

is determined by the Chairman to be a person whose prior 
activities, criminal record, if any, or reputation, 
habits, and associations pose a threat to the public 
interest or to the effective regulation and control of 
gaming, or create or enhance the dangers of unsuitable, 
unfair, or illegal practices, methods, and activities in 
the conduct of gaming or the carrying on of related 
business and financial arrangements; 

o The management contractor or its agents have unduly interfered 
with or influenced for advantage, or have tried to unduly 
interfere with or influence for advantage, any decision or 
process of tribal government relating to the gaming operation; 
or 

o The management contractor or its agents has deliberately or 
substantially failed to follow the terms of the management 
contract or the tribal gaming ordinance or resolution adopted 
and approved pursuant to this Act; or 



84-760 O - 94 - 1 n 



286 



o A trustee, exercising the skill and diligence to which a 
trustee is commonly held, would not approve the contract. 

The Chairman may disapprove a management contract for class III 
gaming if he or she determines that a person with a financial 
interest in, or management responsibility for, a management 
contract is a person whose prior activities, criminal record, if 
any, or reputation, habits, and associations pose a threat to the 
public interest or to the effective regulation and control of 
gaming, or create or enhance the dangers of unsuitable, unfair, or 
illegal practices, methods, and activities in the conduct of gaming 
or the carrying on of related business and financial arrangements. 

On February 22 of this year regulations covering the review 
and approval of tribal gaming ordinances and management contracts 
and compliance and enforcement procedures took effect. This has 
allowed the Commission to begin the operational phase of its work. 
Among other things, the Commission is in the process of initiating 
civil enforcement actions. However, it would be inappropriate for 
me to identify particular targets. 

During this period the Commission has: 

hired and trained six field representatives; 

entered into a Memorandum of Understanding with the FBI 

concerning criminal records checks; 

made site visits to substantially all gaming tribes and 

tribal gaming operations to — 

inform them of the regulatory requirements to which 

they are now subject, and 
- gather information needed by the Commission for 

regulatory purposes; 
hired financial analysts; 

processed hundreds of fingerprint cards for the tribes 
pursuant to a new FBI policy statement; 
begun reviewing and approving — 

tribal gaming ordinances, and 

management contracts; 
- begun conducting background investigations; 

developed and issued guidance to the tribes in the form 
of Tribal Bulletins (copies being furnished for the 
record) ; and 
developed a model gaming ordinance for the tribes. 

It is the stated policy of the Commission to work with the 
tribes to obtain compliance with the IGRA, the Commission's 
regulations, and the tribal ordinances. We believe that this 
approach is in the best long term economic interest of the tribes, 
and vital to achievement of tribal self-sufficiency. We will be 
happy to answer any questions. 

Thank you. 



287 



NATIONAL INDIAN GAMING COMMISSION 
BULLETIN 



No. 93-2 June 22, 1993 



Subject: Procedures for Processing Fingerprint Cards 



The National Indian Gaming Commission (NIGC) is currently implementing procedures to 
process fingerprint cards submitted by tribes as part of their employee background 
investigations. This bulletin is intended to provide you witli information concerning the steps 
to be followed to ensure the prompt processing of all submitted fingerprint cards. 



Under the NIGC's ordinance regulations, prior to the issuance of a license, a tribe is 
required to perform a fingerprint check, through the FBI records system, as part of the 
background investigation on each individual who has applied for a position as a key 
employee or primary management official in its .aming opcration[s]. The information 
obtained as a result of this fingerprint check will assist the tribe in determining the 
applicant's suitability for employment. 



The FBI has recently issued a policy statement concerning access to criminal history record 
information (CHRI) by the NIGC, slate agencies and tribal governments. A copy of this 
policy statement is enclosed for your information. As you will note, under this policy the 
NIGC is authorized to process fingerprint cards and issue copies of the reports of the 
fingerprint checks directly to the requesting tribes. Because of the highly sensitive nature of 
the reports, the FBI has required the NIGC to take steps to ensure that there is no improper 
dissemination of CHRI, that liie information is used only for authorized purposes, and that 
the CHRI is securely maintained. 



In order to ensure compliance with these FBI requirements, it is necessary for each tribe 
receiving CHRI to execute the enclosed Memorandum of Understanding (MOU). The MOU 
also places certain restrictions on the use of CHRI in administrative and judicial proceedings, 
reserves NIGC's right to furnish the tribe CHRI in the form of summary memoranda, 
restricts the availability of NIGC employees to testify relative to CHRI, reserves NIGC's 
right to discontinue providing CHRI where a tribe has failed to comply with the terms of the 
MOU, and acknowledges the FBI's rigiit to impose additional restrictions on the release of 
CHRI. 



288 



FBI policy also authorizes CHRI access by state regulatory agencies and tribal governments 
under certain specified conditions (jeg Policy Statement at pages 4-5). Tribes should 
determine if the conditions exist which would permit them to process fingerprint cards 
directly or through a sUte agency. Where the qualifying conditions have been met, the tribe 
may elect to use such agencies to process its fingerprint cards. It should be noted, however, 
that under current FBI policy, such requests will not routinely be processed through Bureau 
of Indian Affairs (BIA) law enforcement offices. The language contained in the Preamble to 
the NIGC's final ordinance regulations indicating that the BIA is available for such purposes 
is inaccurate and shpuld be disregarded. BIA law enforcement offices may, however, 
continue to take the fingerprints of applicants for key employee and primary management 
official positions and forward the subject fingerprint cards to the NIGC for processing. 



Set forth below are the steps to be followed whenever a tribe elects to use the NIGC to 
process the fingerprints cards of applicants for employment in its gaming operations: 

1. A duly authorized official of the tribe should execute the enclosed MOU and return it to 
the NIGC at the earliest possible date. No copies of criminal h istory reports will be 
forwarded to a tribe until the NIGC has received a properly executed MOU. 

2. The tribe should notify the NIGC which law enforcement agency/office(s) will be 
taking the fingerprints for the tribe and designate a contact person at the identified 
agency/of fice(s). In addition, the tribe should indicate the number of cards which the NIGC 
should send to this agency/office making allowances for lost or damaged cards. The 
forwarded cards will refiect the Originating Agency Identifier (ORI) number assigned to the 
NIGC by the FBI. 

3. The tribe should provide NIGC with a list of individuals whose fingerprint cards the 
NIGC will be receiving from the law enforcement agency/office and a check to the National 
Indian Gaming Commission to cover the cost of processing those cards (number of cards X 
$35.00). The list should also contain the social security number and date of birth of each 
listed individual and the name of tlie law enforcement agency/office taking the fingerprints. 
The $35.00 per card charge for processing consists of a $17.00 fee charged by the FBI and 
$18.00 to cover NIGC's costs, including personnel, postage and telephone. 

4. Once fingerprints have been taken, the agency taking the prints should forward the 
completed cards directly to the NIGC. The NIGC will process only those cards received 
directly from a law enforcement agency. 



289 



5. Once the NIGC receives: I) the completed fingerprint card: 2) the required list of the 
individuals whose fingerprint cards the NIGC will be receiving and 3^ a check to cover costs. 
it will forward the fingerprint cards to the FBI for processing. The FBI is currently 
averaging 21 working days to process a fingerprint card. 



6. Upon completion of the fingerprint check, the FBI will forward a report of the findings 
to the NIGC. Subject to compliance with the conditions set fortli in the enclosed 
Memorandum of Understanding (MOU), NIGC will forward a copy of this report to the 
submitting tribe to be used in determining of the suitability of Uie applicant for employment 
in the tribe's gaming operation. 

7. The NIGC will retain the original reports and the processed fingerprint cards and will 
incorporate them into the Indian Gaming Individual Records System. This system will be 
subject to the Commission's Privacy Act Procedures, see 25 CFR Sections 515.1-12 (58 FR 
5814-5818, January 22, 1993). 



NIGC regulations require a tribe to perform a background check on applicants for key 
employee or management official positions following approval of a tribal ordinance by the 
Chairman. In order to facilitate the prompt distribution of CHRI, however, the NIGC will 
process fingerprint card submissions which meet the requirements of Paragraph 5 prior the 
approval of a gaming ordinance. 



It is important to note, however, that until such time a tribe's gaming ordinance has been 
approved by the Chairman, the procedures for forwarding employee applications and 
investigative reports set forth in Sections 558.3 and 558.4 cannot be initiated by tlie tribe 
and the time periods contained in those provisions do not begin to run. It should be further 
noted that if the tribe is conducting a background investigation consistent with the 
requirements of Part 556, the CHRI constitutes only one of a number of sources of 
information which the tribe must consider in making eligibility' determinations for 
employment in its gaming operation. 



These procedures are effective immediately. 

For additional information contact Fingerprint Processing at (202) 632-7003. 



290 



EBI POLICY ON INDIAN GAMING REGULATORY ACT SUBMISSIONS BY THE 
NATIONAL INDIAN GAMING COMMISSION (NIGC), STATE 
IDENTIFICATION BUREAUS, AND TRIBAL GOVERNMENTS 

Pursuant to the Indian Gaming Regulatory Act (codified 
at Title 25, United States Code, Section 2701 et.seq. ) . the NIGC 
promulgated regulations defining various NIGC gaming 
responsibilities (25 Code of Federal Regulations, Part 501 
et.seq. , published January 22, 1993 in the Federal Register) . 
NIGC contacted the Access Integrity Unit (AIU), Audit Section, 
Criminal Justice Information Services Division (CJIS), and the 
Identification Division (ID), with respect to access to FBI 
criminal history record information under the Act and NIGC 

regulations. AIU has also been contacted by several state 

Identification bureaus on the same subject. This statement of 
policy, intended for distribution to the NIGC, Indian tribal 
governments, and state bureaus, sets out FBI policy and 
procedures with respect to requests for access to FBI criminal 
liistory records under the Act, the NIGC regulations, state/tribal 
compacts, and state law. 

1 ) Requests from the NIGC - 

The Indian Gaming Regulatory Act does not specifically 
authorize NIGC access to FBI criminal history record Information 
(CHRI) for baclcground screening purposes. Section 2708 of Title 
25 of the United States Code (U.S.C. ) (which is part of the Indian 
Gaming Regulatory Act, as codified) reads as follows: 

"The Commission may secure from any department' 
or agency of the United States information 
necessary to carry out this Act. Upon the 
request of the Chairman, the head of such 
department or agency shall furnish such 
information to the Commission, unless otherwise 
prohibited by law." 

We believe that Section 2708 itself provides sufficient basis for 
providing FBI CHRI to NIGC "unless otherwise prohibited by law." 
The Menard case effectively prohibited dissemination of CHRI to 
state and local agencies for licensing and employment purposes. 
Menard did not impose a similar prohibition on dissemination of 
CHRI to Federal agencies. 28 C.F.R., Section 20.33 explicitly 
•authorizes dissemination to Federal agencies authorized by 
Federal statute or executive order. It is our opinion that 
Section 2708 authorizes direct dissemination of CHRI to NIGC for, 
under the standard established by 28 U.S.C, Section 534, its 
"official use. " 



291 



The extent to which "official use" encompasses access 
to CHRI by NIGC is determined by NIGC's duties as defined by the 
Act. NIGC has direct authority to approve management contracts 
for both Class II (bingo and related activities) and Class III 
(casino-type operations) activities. 25 U.S.C., Section 
2705(a)(4). The nature of the bac)cground screening to be 
undertaken, at least as to Class II management contracts and 
particular persons stated therein, is defined by Section 2711 
(a)(1) and (e). Clearly Class II management contract approvals 
require criminal history screening of persons intimately 
connected to the management contractor (such as directors of a 
corporate contractor). Submissions to the FBI by NIGC for this 
purpose are authorized. 

NIGC'S responsibility with respect to approval of Class 
III management contracts does not appear to include screening 
based on criminal history information. Authority for Class -III 
screening is found in Section 2710(d)(9), which specifically 
excludes the reviews in Section 2711(a) and (e), which establish 
criminal history record screening. NIGC's own Interpretation in 
its commentary to 25 C.F.R., Parts 531, 533, 535, 537, and 539 is 
consistent with this interpretation, insofar as this exclusion 
assigns responsibility to the tribes for performance of 
preapproval criminal history screening. NIGC's regulations (and 
commentary), however, express its determination, under NIGC's 
general authority to protect tribes from organized crime and 
corrupting influences, to disapprove or revoke management 
contracts, including Class III contracts, if management personnel 
have disqualifying criminal records. See 25 C.F.R., Sections 
533.6 and 533.1. This interpretation is entirely consistent with 
the purposes of the Act, and therefore, submissions by NIGC 
relating to approval, disapproval, or revocation of Class III 
management contracts will also be accepted and processed by the 
FBI. 

NIGC, in its regulations, also asserts authority to 
conduct background screening of primary management officials and 
key employees for gaming conducted by tribes without third-party 
management contracts. Under Section 2710(c)(1) and (2), NIGC is 
authorized to consult with law enforcement officials concerning 
Class II gaming licenses issued by a tribe, and to facilitate 
license suspension if "primary management official(s) or key 
employee(s)" fails to meet standards set out in Section 
2710(b) (2) (F) (ii) (II) . That subparagraph provides for 
disqualification of primary management officials or key employees 
for, among other reasons, "criminal record .. .pose(s) a threat to 
the public interest or to the effective regulation of gaming." 
Based on the combination of these provisions, NIGC's official use 
of CHRI extends to background screening of Class II primary 
management officials and key employees. 



292 



NIGC's authority as to Class III primary management 
officials and key employees is less clear, but in our view, valid 
nonetheless. Parts 556 and 558 of the NIGC regulations assert 
this authority unless a tribal-state compact has allocated this 
responsibility exclusively to the state or state agencies. As 
the agency charged with effectuation of the IGRA, NIGC's 
Interpretation of its provisions must be viewed as authoritative. 
As such, NIGC fingerprint submissions for Class III primary 
management officials and key employees, absent a preemptive 
tribal-state compact, are within NIGC's "official use" and will 
be processed by the FBI. 

Our review of the Act reveals no explicit authority for 
direct access to FBI CHRI by Indian tribal governments. As 
previously stated. Section 2708 does not constitute, in our view, 
such an authorization because of the ending phrase "unless 
otherwise prohibited by law." The Menard case is such a -. - 
prohibition. This prohibition is now set out in 28 C.F.R. , 
Section 20.33. The only exception by which state and local 
agencies may access FBI CHRI is through state enactment of Pub.L. 
92-544 statutes or an express Federal statute. As stated. 
Section 2708 by its own terms is not such a Federal statute. 

We also do not believe that language in the Act 
requiring criminal background checks or defining eligibility in 
relation to the existence or nonexistence of criminal records 
constitutes such an express Federal statute. Our longstanding 
policy has been that Congress must clearly define an exception to 
the Menard prohibition authorizing access to CHRI for non-Federal 
licensing purposes. The FBI has never recognized such an 
exception solely from language indicating that background 
screening should be undertaken, nor from language indicating that 
some form of criminal record is a disqualification from licensing 
or employment. We have reviewed the statutory history of the Act 
and can find no indication that Congress intended for tribal 
governments to access FBI CHRI. In fact, we believe Section 2708 
.to state the contrary intent. 

Access by the tribes may be claimed based on Section 
2710(c)(3) and (4) of the Act. Under that Section, NIGC may 
issue a certificate of self regulation to a tribe operating Class 
II games, based on, inter alia , the implementation of an adequate 
system for " investigation ... of all employees." Perhaps more 
importantly, NIGC must review tribal ordinances authorizing Class 
II gaming to ensure, inter alia , that the ordinance ensures that 
background investigations are conducted in primary management 
officials and key employees. Section 2710 ( b) 2 ) (F) . This 
ordinance must also establish a standard for disqualification of 
such officials or key employees, which includes "criminal record" 
which would "pose a threat to the public interests or to the 
effective regulation of gaming." Section 2710 ( b) ( 2 ) ( F) ( ii ) ( II ) . 



293 



These provisions discussed are not similar to nor do 
they approach the explicitness of previous Federally legislated 
authorizations for non-Federal agency access to CHRI. See for 
example 15 U.S.C., Section 78q ("Notwithstanding any other 
provision of law, in providing identification and processing 
functions, the Attorney General shall provide the Commission and 
self-regulatory organizations designated by the Commission with 
access to all criminal history record information."). An 
assertion by a tribe of direct access to FBI CHRI under these 
provisions would be, in our view, erroneous. 

Secondary dissemination of CHRI by NIGC is controlled by 
28 C.F.R., Section 20.33(b) and 28 U.S.C, Section 534(b). Both 
provisions authorize sanctions for secondary dissemination 
outside the receiving department or "related agencies." A 
related agency logically could be a tribal government or 

subdivision thereof which is participating with NIGC in 

background screening or activity related to official NIGC use of 
CHRI as described above. The requirement of Section 534(a) that 
the related agency must be a "governmental agency" must also be 
met, so that secondary dissemination of CHRI to a tribal 
government could only occur to a tribe recognized by the U.S. or 
•a state as a valid tribal government. 

The FBI has traditionally defined the boundaries of 
authority for access to CHRI ( in the absence of a more 
authoritative definition, such as by the Courts), and then allows 
the accessing agency to screen its requests to ensure those 
boundaries are respected. NIGC will be provided with an 
Originating Agency Identifier (ORI) to allow for proper 
submissions under its authority and should be informed of the 
extent of that authority. Thereafter, submissions would not be 
reviewed by the FBI for compliance, except to the extent that any 
future audit program will review submissions and dissemination 
logs. 

2) Requests from State Regulatory Agencies - 

Responsibility for regulation of Class III gaming is 
joint between states and tribes. There is no language in the Act 
authorizing states or tribes to receive FBI criminal history for 
baclcground screening, and as discussed. Section 2708 does not 
authorize access to CHRI by the tribes or state agencies. For 
this reason Pub.L. 92-544 can be the only avenue by which 
authorization can be established for access to FBI CHRI. If a 
state enacts or has enacted a law pursuant to Pub.L. 92-544 for 
bacJcground screening for gambling purposes and a state agency 
designated thereunder has assumed responsibility for Indian 
gaming (by state- tribal compact, for example), access to FBI CHRI 
is authorized. 



294 



Note that the existence of a tribal-state compact 
alpne does not authorize access to FBI records. Pub.L. 92-544 
requires a state "statute." Our interpretation, supported by OLC 
opinions, is that any law authorizing access under Pub.L. 92-544 
must be legislatively enacted (or the equivalent to legislative 
enactment). A state executive order or administrative 
regulations cannot create a Pub.L. 92-544 authorization. The 
compact we have previously reviewed, between the State of 
Connecticut and the Mashantucket Tribe has been legislatively 
recognized and is, therefore, a "state statute" under Pub.L. 
92-544. Submissions will be accepted thereunder by the terms 
created in that Compact. 

Secondary dissemination to tribal governments would be 
permissible under the same conditions specified in section one 
(1) above. Such dissemination could occur to a lawfully 
recognized tribal government which is assisting the designated 
state agency with a background investigation and therefore has 
need for such information. 

3) Requests from Tribal governments - 

As previously stated, the Act contains no language 
purporting to authorize access to FBI records by tribal 
governments and therefore, Pub.L. 92-544 is the only avenue for 
such access. Pub.L. 92-544 authorizes such exchanges with state 
and local governments' for noncriminal justice purposes pursuant 
to a state statute. We believe that a recognized tribal 
government can be an eligible governmental entity under Pub.L. 
92-544, and therefore, can receive FBI records directly if 
authorized by state statute (approved by AIU). A tribal 
ordinance could not effect that authorization. A tribal-state 
compact, as previously discussed, can effect such authorization 
only if enacted (or the equivalent thereof) by a state 
legislature. 

No secondary dissemination would be permitted outside 
the tribal government in any case, except to governmental 
agencies assisting in any authorized background screening 
activity. 

As to both state and tribal requests, our mission will 
be to review and approve the authorization requests by reviewing 
statutes submitted under Pub.L. 92-544 and 28 C.F.R., Section 
0.85(j). Once approved, the burden, as with all Pub.L. 92-544 
submissions, then falls on the state bureaus to screen 
submissions to ensure that any submission falls appropriately 
under the authorized purpose. 



295 



Our analysis above reconciles existing law and 
regulations concerning the FBI's authority to exchange criminal 
history information with Federal, state, and local governmental 
agencies and the IGRA and NIGC's regulations. As noted, the Act, 
in distinguishing Class II and Class III gaming, creates somewhat 
different regulatory schemes and, therefore, may impose different 
duties on NIGC. Bingo (Class II) is widely legal for both 
charitable and noncharitable purposes in most states. Thus, as 
to Class II gaming, the Act clearly establishes NIGC 
responsibility for screening of management contractors and 
associated individuals, when gaming is contracted out by a tribe, 
and primary management officials and key employees, when the 
gaming is conducted by a tribe itself. 

NIGC's role is more limited in Class III gaming under 
the IGRA, especially when tribal-state compacts are in existence. 

NIGC will be able to submit fingerprints for management . 

contractors and associated individuals. In all other areas, the 
high degree of regulation accorded to Class III gaming is 
generally to be accomplished jointly by tribes and states. 
Background screening of primary management officials and key 
employees may be conducted by NIGC, unless preempted by a tribal- 
state compact which places this responsibility elsewhere. It 
should be noted that background screening on gaming employees who 
do not fall within the definition of "primary management 
•official" or "key employee" is within the exclusive province of 
Pub.L. 92-544 approved statutory enactments. 

Submission Procedures 

1 ) NIGC will be informed of the interpretation 
contained herein, along with the following information: 

a) That NIGC will be assigned an appropriate OKI and 
given fingerprint cards for its submissions as authorized; 

b) That NIGC submissions will be bille-J to NIGC at the 
existing governmental rate of $17.00. 

2) That state identification bureaus will be informed 
of the interpretation contained herein, along with the following 
information: 

a) That state statutes and supporting materials will 
require review under 28 C.F.R. , Section 0.85(j) and Pub.L. 
92-544 by the Access Integrity Unit; 



296 



b) That where such processes are in existence the 
processing of fingerprint cards for authorized state 
agencies will be subject to the existing Federal user fee 
of $23.00. 

c) That authorized tribal governments may submit through 
the appropriate state identification bureau on a tribal 
ORI to be paid at $23.00. 



297 



MEMORANDUM OF UNDERSTANDING 
REGARDING THE DISSEMINATION OF CRIMINAL HISTORY RECORD 
INFORMATION BY THE NATIONAL INDIAN GAMING COMMISSION 



In order to facilitate the undersigned tribe (Tribe) in determining the suitability of 
individuals who have applied for employment as key employees and primary management 
officials in its gaming operations, the National Indian Gaming Commission (NIGC) will be 
obtaining criminal history record information (CHRI) from the Federal Bureau of Investigation 
(FBI) on these individuals and disseminating such information to the Tribe. 



This memorandum sets forth the following conditions under which the NIGC will provide 
CHRI to the Tribe: 



1. The FBI has retained the right to approve the dissemination of CHRI and may at some 
future date prohibit the NIGC from disseminating CHRI. It is understood by the Tribe that the 
NIGC will not release any information without having received all required prior approvals from 
the FBI and will not release any information where prohibited from doing so by the FBI. It is 
further understood that the FBI may impose restrictions on the release and use of the CHRI in 
addition to those imposed by the NIGC and that the Tribe will be subject to all such additional 
restrictions. 



2. The CHRI provided by the NIGC may be used by the Tribe solely for the purpose of 
determining a particular applicant's suitability for employment in the Tribe's gaming 
operation(s). 



3. NIGC responses will only contain CHRI information on a particular applicant and will 
not contain recommendations or conclusions of the NIGC. The NIGC reserves the right to 
furnish to the Tribe summary memoranda containing the results of the information search of the 
criminal history records maintained by the FBI. 



4. CHRI provided to the Tribe shall be afforded proper security. The Tribe shall ensure 
that access to all CHRI furnished by the NIGC, including all summary memoranda, is restricted 
to personnel directly involved in licensing deliberations. The Tribe shall maintain records of 
the identities of all persons receiving access to the CHRI and such records shall be furnished to 
the NIGC upon request. 



298 



5. Except in connection with proceedings related to the Tribe's licensing determinations for 
gaming employees, neither the CHRI nor any summary memoranda furnished by the NIGC shall 
be reproduced, disseminated, or introduced in a court of law or administrative hearing, without 
the prior written consent of the NIGC. 



6. Employees, past and present, of the NIGC will not be called as witnesses to testify 
relative to CHRI disseminated to the Tribe before any Tribal court or in any Tribal 
administrative hearings, except in extraordinary circumstances to be determined by the NIGC. 



7. Any request for access to the provided CHRI-by the-individual who is the subject of the 
CHRI shall be referred to the NIGC for processing and an appropriate response pursuant to the 
Freedom of Information and Privacy Acts (Title 5, USC, Section 552 and 552a). 



8. Tribal authorities will be promptly notified in the event that the NIGC determines that 
it is necessary to discontinue providing CHRI information to the Tribe (either in whole or in 
part) due to the Tribe's failure to comply with the conditions set forth in this memorandum. 



The Tribe acknowledges and consents to the above-stated conditions on this . 
day of , 199_. 



Tribe 



Authorized Tribal OfHcial 



299 

Mr, Hope. Class I is traditional tribal games generally played by 
tribal members in conjunction with tribal ceremonies; that is com- 
pletely regulated by the tribes. Class II gaming is essentially bingo, 
pull tabs and associated games. Those are regulated primarily by 
the tribes with oversight by the Commission. Class III is all other 
gaming, including electronic, electromagnetic machine games, 
poker, jai alai, horse racing, craps, everything else — lotteries, ev- 
er3rthing else that you can gamble on. 

Mr. Abercrombie. And Class III is generally the bone of conten- 
tion with respect to the publicity and the confrontations. Is that not 
the case? 

Mr. Hope. That is true. Class 3 competes with Nevada and At- 
lantic City. 

Mr. Abercrombie. Okay. Continue. 

Mr. Hope. In most of the examples that were cited by Mr. 
Torricelli and Mr. Trump as to organized — their alleged 22 orga- 
nized crime incidents, occurred prior to the passage of the Act. 
Some of these incidents I am familiar with. Some of them do not 
involve indication of organized crime. I do not have the whole list, 
I just heard them mention seven or eight of them. 

There are a couple of issues as to whether or not various people 
are members of organized crime. In several cases I have ongoing 
investigations the contents of which I am not able to divulge at this 
time. 

In terms of whether or not organized crime is engaged in Indian 
gaming, I don't know. We have not found it. I have had many con- 
versations with Mr. Maloney both before and after his testimony 
last year. In fact, I was on that panel when he gave his testimony, 
and we will be vigilant in looking for it, and when we find it, we 
will take our regulatory action 

Mr. Abercrombie. Excuse me, Mr. Hope. Mr. Maloney, for pur- 
poses of the record, is a member of the Department of Justice? 

Mr. Hope. Yes. 

Mr. Abercrombie. Okay. Thank you. 

Mr. Hope. His testimony has been included in this record. 

When I find organized crime, I will take my regulatory action, 
which is twofold, to get the people out of Indian gaming, and, if I 
know of a crime or evidence of a crime, to turn it over to the appro- 
priate authorities. 

Enforcement in our organization is civil. We can issue fines for 
the violation of our regulations, tribal regulations, and the Act, and 
we can issue orders of closure, but criminal prosecution and crimi- 
nal enforcement lies with the Justice Department with whom we 
coordinate. 

I think that the regulatory structure that was enacted in 1988 
is becoming sufficient. It is not yet sufficient because there is still 
a certain amount of litigation going on as to the meaning of dif- 
ferent parts of the law, particularly machine games. We thought 
the litigation had been put to bed in May with the decision in the 
D.C. Court. But it was resurrected last week in an appeal where 
a stay was granted by the D.C. Circuit Court. If you have any ques- 
tions about the stay, I direct them to my General Counsel, Mr. Cox. 

But it is my feeling, and it is my experience, that there are suffi- 
cient controls and there is sufficient authority to carry out the ef- 



300 

fective regulation of gaming. It is just that the perception of some 
of the people on the prior panels is that it is not here yet. And that 
perception is probably accurate because, as Mr. Torricelli said, we 
did let gaming run loose for about 12 or 14 years before the Act 
became imposed upon it and we are playing catchup. It will take 
some time to weed out the people that need to be weeded out. But 
the process is under way, and I feel that the tools are adequate to 
the job. 

Mr. Abercrombie. Mr. Calvert, would you care to make any com- 
mentary or questions at this point? 

Mr. Calvert. Thank you, Mr. Chairman. I just, as you know, 
just walked back into the hearing. 

Mr. Abercrombie. Would you like a moment to gather your 
thoughts? 

Mr. Calvert. Just a few more minutes, if you wouldn't mind. 

Mr. Abercrombie. Sure. 

Mr. Quasula, you are in charge of the Division of Law Enforce- 
ment; is that correct? 

Mr. Quasula. For the Bureau of Indian Affairs, yes, sir. 

Mr. Abercrombie. Well, you just heard Commissioner Hope, 
Chairman Hope's remarks. Would you care to amplify on those re- 
marks in the context of the question I asked about the ability of 
those engaged — those tribes engaged in gaming, to forestall pene- 
tration by organized crime? 

Mr. Quasula. I would have to agree that there has been a con- 
certed effort by tribal leadership and others in Indian gaming to 
ferret out what is there. Going back to Mr. Trump's statement, I 
have got to disagree in that we have a strong relationship amongst 
BIA law enforcement people, tribal law enforcement people. States, 
counties, the FBI, the Office of Inspector General, not only with 
law enforcement issues that come up with Indian gaming, but with 
any law enforcement matters that arise on Indian reservations. 

I think it is fair to say that we believe that we always could do 
with more people, and it behooves us to establish lines of commu- 
nication and have a cooperative working relationship with any law 
enforcement agency. 

Mr. Abercrombie. Have you ever had a request made of you by 
a State or any other regulatory agency, authorized regulatory agen- 
cy under a compact agreement, which you refused or which you ar- 
gued with? 

Mr. Quasula. No. I think that we have cooperated to the hilt. 
We have made a deliberate effort to share names with State law 
enforcement people, with county law enforcement people, with the 
FBI. In fact, we have a written Memorandum of Understanding 
with the FBI to check, name check, fingerprint check, for anybody 
that wants to get into Indian gaming. And we have been more than 
cooperative with anybody that is interested in making sure that 
people who are involved in Indian gaming are on the up and up. 

Mr. Abercrombie. Has any agency within which there is an 
agreement under compact arrangements, ever registered a formal 
complaint with your division as to a lack of cooperation with re- 
spect to law enforcement? 
Mr. Quasula. Not to my knowledge, no. 
Mr. Abercrombie. How long have you been on the job? 



301 

Mr. QUASULA. With the Bureau of Indian Affairs, a little over 19 
years; here at headquarters, a little less than three years. 

Mr. Abercrombie. So you have actually been in the law enforce- 
ment end of this for the majority of the time the law has been in 
existence? 

Mr. QuASULA. That is correct. 

Mr. Abercrombie. You have heard the testimony of Commis- 
sioner Hope and Secretary Deer of the IRS. Now, they didn't go 
into, Mr. Palmer didn't go into necessarily all of the testimony, you 
may not have had a chance to read it yet. I commend it to your 
attention. But from what you heard, could you comment on the 
suggestions of the IRS with respect to improvements that might be 
made under the law in the area of the Bank Secrecy Act, et cetera, 
in the context of improving the capacity of Indian gaming to fore- 
stall criminal activity? 

Mr. QuASULA. You know, personally, I am not totally familiar 
with the statutes they are talking about because that is not some- 
thing we do every day. We rely on IRS and others to have the ex- 
pertise. But I would think that across the board, if it is going to 
ensure just that much more that Indian gaming is on the up and 
up, then I would think that anybody would welcome that. 

Mr. Abercrombie. Well, I think the thrust, just so I make sure 
that my questions to you are clear, the thrust of the IRS testimony 
and the Department of Justice testimony was not that the casinos 
were acting in a derelict manner, but rather that those individuals 
and groups who might want to take advantage of the casino oper- 
ations for their criminal activity could be more thwarted than they 
are now, should their recommendations be put into place. 

Mr. Ajbercrombie. Secretary Deer, do you have a comment on 
that testimony? 

Ms. Deer. I have not had an opportunity to read it, but I believe 
that the Indian tribes are open for ideas to improve operations and 
to keep the operations accountable, honest and efficient, and so it 
would be my assumption that there would be a discussion and 
study of this, and if this was determined to improve the operations, 
then it probably should be. 

Mr. Abercrombie. Chairman Hope? 

Mr. Hope. Mr. Chairman, we serve on the committee with the 
Treasury, working on this issue, and to my knowledge, there is no 
Indian tribe which has an objection to this being incorporated in 
the process. 

Mr. Abercrombie. What I would ask you to do, then, is take a 
look at the IRS testimony. Perhaps over the next two weeks while 
the record is open, you might want to submit some commentary on 
it or some observations on that testimony for the record. Could I 
ask you to do that? I think it would prove very helpful to us. 

Commissioner McKeag, I started with you, and you didn't get an 
opportunity to speak. Would you care to comment on an3rthing that 
has been said to this point or amplify any other — I would like you 
to answer, if you could, in a further context — Mr. Trump made, 
from my point of view, some rather unfortunate observations with 
respect to the capacity or desire of Indians to address some of the 
questions that he raised. I presume as a member of the Indian 
Gaming Commission you have a view on that? 



302 

Ms. McKeag. Well, quite frankly, I wish one of the Members of 
the committee had asked Mr. Trump if he ever visited an Indian 
casino or an Indian bingo operation, but be that as it may, I do 
want to emphasize what the Commission's role is as part of this 
Act. Mr. Hope said we have civil enforcement responsibility. We are 
the preventive medicine arm of the Act. We do the background in- 
vestigations which assure that the criminal element does not be- 
come involved in Indian gaming. 

In the existing operations, we can call in any contract where we 
suspect there may be some problem. We have hired field staff 
which have visited substantially all gaming operation in the entire 
country, since becoming operational on February 22nd of this year. 

In the testimony, there is a list of what we have done, including 
working with the FBI, with our memorandums of understanding, 
so that we can process fingerprints. We can have access to the 
FBI's criminal records that are available to us, so that we can find 
out whether or not there may be some criminal element. When it 
comes to actually enforcing that, we have to turn to the FBI, and 
they do the actual enforcement of the criminal problems on the res- 
ervation. 

Mr. Abercrombie. Thank you. 

Commissioner Frank, would you care to comment at this junc- 
ture? 

STATEMENT OF HON. JOEL FRANK 

Mr. Frank. Thank you, Mr. Chairman. 

One of the things I would also like to point out is that the act 
does say that we are oversight, and that we have oversight respon- 
sibility when it comes to the regulating of Indian gaming, and that 
the primary responsibility of regulating lies with the tribes. And to 
that end, I think that some of the earlier comments that were 
made by earlier panels suggested that there was no regulation 
whatsoever, that, I could point out, that there are tribes out there 
that do have the sophistication and the capability of regulating 
maybe far superior than maybe some other States or organizations 
in law enforcement may have or may not have, and that they have 
demonstrated that. 

I think there is one group down in Florida that have exercised 
their governmental regulatory responsibilities in trying to make 
sure that there are no criminsd elements in their gaming operation, 
and that is still going on as an ongoing review. 

I think that as far as a review is concerned, that is something 
that is never going to cease, and I think that as more tribes expand 
their regulatory enforcement capabilities, we are going to see even 
greater scrutiny than what the current law in which Indian gaming 
is now currently regulated. So I just wanted to point that out. 

Mr. Abercrombie. Thank you. 

I don't want to anticipate Mr. Calvert's question, but he did raise 
some questions before about possible management contracts with 
existing casino operations and Class III operations in California 
and some of the questions that that might raise. 

If you are ready, Mr. Calvert, having established that context, 
which I found very interesting and informative, I would defer to 
you at this juncture. 



303 

Mr. Calvert. Thank you, Mr. Chairman. 

As I stated in my opening statement, I am supportive of Class 
I and Class II gaming in the State of California. And in my mind's 
eye, that is not the issue today, as far as it relates to California. 
It is the issue of Class III gaming that is presently taking place 
in California, which, as you know, we have no law in California 
that allows Class III gaming. 

There are several reservations that have slot machines in San 
Diego County, I believe all of those operations are in San Diego 
County, approximately 700 slot machines. And as I understand the 
limits of your responsibilities in the — as far as your regulatory lim- 
itations, that you can only regulate Class I and Class II gaming; 
is that correct, in California? 

Mr. Hope. Well, most of those machine games are in Class II op- 
erations. And insofar as we regulate Class II operations, we forbid 
the operation of Class III gaming without a compact. TTie current 
situation is — and this is not limited to San Diego County but, in 
fact pandemic throughout the State of California — that the tribes 
have taken the position that the act includes "electronic devices" as 
bingo or pull-tabs. 

They have sued us to prevent our enforcing the Act. And we have 
won in court, in a 25-page opinion by the judge in the district 
court. And they have appealed. And as part of the appeal, they re- 
quested that the Court of Appeals grant them a stay, pending the 
appeal, and that was granted by the Court about two weeks ago. 

It is very difficult to marshal the forces of the U.S. Attorneys and 
to convince them that it is a useful expenditure of their money to 
prosecute these machine games at a time when some of the Califor- 
nia tribes have sued us over the machine games. TTiree of those 
tribes are from California and have a "stay" against our enforcing 
the law. Coupled with this, is the possibility that these may become 
legal by another decision in California by Judge Burrell, which is 
being appealed by the State on the question of whether or not the 
State is required to negotiate for this form of gaming. So it is the 
courts that are slowing us down, at this point. 

Mr. Calvert. The point that I am trying to arrive at in the in- 
terim, while this stay is in effect, is there any regulation at all on 
those slot machines? 

Mr. Hope. The tribes 

Mr. Calvert. Since that is Class III gaming? 

Mr. Hope. The tribes consider them to be Class II and are regu- 
lating them as though they were Class II gaming. 

Mr. Calvert. So they are self-enforcing their own machines? 

Are you involved in regulating the — let me ask this question 

Mr. Hope. No, we are not involved in regulating machine games. 

Mr. Calvert. Do you know what the source of money, where the 
source of money came from to acquire those machines? 

Mr. Hope. My understanding is generally that they came from 
the profits of the other Class II operations. 

Mr. Calvert. But again, that is from listening to those individ- 
uals who are operating the casino themselves as a Class II casino, 
the Indian tribe itself? 

Mr. Hope. Yes. 



304 

Mr. Calvert. The revenue, then, there is no trace or no track on 
that revenue that is being generated by those slot machines, at the 
present time, because there is no compact with the State of Cahfor- 
nia? 

Mr. Hope. We do not regulate them, that is correct. And I don't 
think it is anyone else's jurisdiction other than the tribes to regu- 
late, I don't think there is a claim of jurisdiction elsewhere. 

Michael, would you 

STATEMENT OF MICHAEL COX 

Mr. Cox. My name is Michael Cox, I am the Greneral Counsel to 
the National Indian Gaming Commission. The way the Commission 
regulates the revenues would be through the review and approval 
of the management contracts the tribes may have entered into with 
their management company which would include the operation of 
their bingo games and those machines. So the Commission, in some 
instances, has called in some of the contracts in California for re- 
view of those contracts, and also to conduct background investiga- 
tions on those persons that have a financial interest in the con- 
tract. 

So the Commission does have the capability and is going to be 
looking at the source of and where the revenues are going, and how 
they are being used. That is part of the Commission's responsibility 
under our management contract review and also the ordinance re- 
view, tribal — Indian tribes have to have tribal gaming ordinances 
which are approved by the Commission. And one of the require- 
ments of those ordinances, is the tribes have done annually an 
independent audit of their gaming revenues, and that has to be 
submitted to the Commission. 

Mr. Calvert. I understand, at the present time, we do not know 
what the source of funds were for those slot machines nor do we 
know where those dollars are going to from the slot machines; is 
that accurate to say? 

Mr. Cox. At the present time, we do not know where — how the 
revenues are being used or where the tribes obtained the money to 
acquire the machines. In some cases, as the Chairman pointed out, 
they were through the revenues from their bingo operations. In 
other cases, they are leased from leasing companies who come into 
the State of California and who share the profits with the tribe, 
and those monies are leaving the State, going into the pocket of 
those vendors. 

Ms. McKeag. Excuse me, if I could just add to that, Mr. Calvert, 
that does not mean that we will not be able to know. As indicated 
in our testimony, we became operational on February 22nd. There- 
fore, only recently have we had review management contracts. 

Before February 22, 23 did not have authority to review audits 
or call in and review existing management contracts where there 
were questionable operations or use of the funds or the source of 
the funds. In addition, our field staff could not go out and collect 
that kind of information. We do now, and we intend to do our job. 

Mr. Calvert. Let me ask a — I don't want to ask speculative 
questions, but we have heard a lot of that today, so I will carry 
that on. The stay that is in place now, we have a case in California, 
you mentioned earlier, Mr. Hope, which may allow Class III gam- 



305 

ing to take place in California. And at the present time, there isn't 
a compact with California, obviously, because we don't allow Class 
III gaming in the State of California. 

We have 94, I believe is it 94 federally recognized Indian tribes 
in California. I think it is also accurate to say that many legitimate 
casino operators, such as Caesars World, are coming into California 
looking for management agreements to operate on tribe property, 
based upon the fact, I think, that they want to operate Class III 
gaming, not Class I and Class II gaming. 

Mr. Hope. I am sure that they have negotiated these agreements 
in anticipation that Class III gaming would become legal. I know 
that they would never risk losing their Nevada licenses by operat- 
ing in a gray area in some other State. 

Mr. Calvert. So in anticipation that Class III gaming will come 
to California, many legitimate operators from Nevada and else- 
where are coming into California looking for management agree- 
ments? 

Mr. Hope. The Agua Caliente Agreement, to which you referred, 
has not been submitted to us yet. They have not finished their 
agreement. But my understanding is that it provides only for Class 
II and specifically for bingo and pull tabs, although they expect 
that if Class III becomes legal that they will manage that also. 

The casino in California is a word that should not be used syn- 
onjrmously with Class III. There are a number of compacts in the 
State of California for Class III gaming, but that is only for off- 
track betting, at the present time. They are called casinos by a lot 
of people. 

When you heard testimony earlier today about some number of 
casinos operating, that would include the five California off-track 
betting operations as casinos. "Casino" is generally used as any- 
thing other than Class II. 

The compact with the State, whether or not there is one in Cali- 
fornia, probably will have to do with the lottery definition in Cali- 
fornia, as to who is allowed to do what. 

Mr. Calvert. The concern that I have here is that you have a 
relatively small stafi", obviously your jurisdiction is a Class I, Class 

II gaming? 

Mr. Hope. Yes. 

Mr. Calvert. California could conceivably be the largest gam- 
bling State in the United States, certainly Las Vegas accounts for 
the majority of all gambling dollars expended in this country. 
There is tremendous, as you know, tremendous interest in locating 
casinos in California. 

Mr. Hope. Yes. 

Mr. Calvert. Do you believe, does it matter whether it was In- 
dian reservations or legitimate casino operations that are presently 
located in Nevada? If you had 100 casinos in Nevada spread all 
over the place, do you believe that presently with your staff, with 
reasonable changes within the Indian Gaming Regulation Act that 
is being proposed, that we could monitor and make sure that crime 
S5aidicates are not involved in California? 

Mr. Hope. Yes. Not through my staff, but under the Act. If Class 

III gaming were allowed, there would be a compact with the tribe, 
among the tribes in the State of California, which would call for 



306 

regulation by the agency that the tribe and the State agreed upon, 
whether that was the State PoUce or, in some cases, tribal police 
or some combination or some new entity. 

California recently tried to create a gaming commission through 
its legislature, which I understand has not yet been passed. It 
failed once and is up again. There would be some sort of vehicle 
within the State which would be financed most likely from the rev- 
enues of these casinos, so that it would not be a drain on the re- 
sources of the State of California, and would, in fact, probably pro- 
vide jobs and revenue and a tax base for the State. 

To say, as has been said before, that Indians don't pay taxes, is 
simply wrong. The tribe does not pay taxes on some income. But 
when that money is distributed to tribal members, that gaming in- 
come is taxed the same way as anyone else. 

It is very similar to a charity, a 501 (C)(3). The charity does not 
pay taxes, but its employees do. And the tribe in Connecticut, you 
will hear on the next panel, provide a tremendous tax base for the 
State of Connecticut. 

Mr. Calvert. I guess the concern is that if we don't amend the 
Indian Gaming Regulation Act and the courts decide the Class III 
gaming could come to California, which is conceivable, then the 
concern at that point is going to be regulating gambling in Califor- 
nia, large-scale gambling. And I just want to hear from you that 
you are comfortable, and from the BIA's opinion, that they are com- 
fortable that that type of major gambling, gaming in California 
could be regulated and make sure that organized crime does not 
enter the State of California. 

Mr. Hope. I am sure that California and the tribes can come up 
with an adequate system, yes. 

Mr. Calvert. If I could continue. 

There was one question that I asked the last panel, and I would 
like to ask this panel. It is common knowledge that Class III gam- 
ing is being conducted today, of course, as I mentioned earlier, on 
many California, New Mexico, and Washington State Indian res- 
ervations, without a tribal-state compact, including electronic 
games of chance, video poker, slot machines, and video blackjack. 
Is it not a violation of State and Federal law to conduct such gam- 
ing without a compact, assuming the States can compact the games 
in the first place. That is being a little redundant, I am asking that 
again. 

Mr. Hope. I think most of the Washington State tribes have com- 
pacts. I know there are one or two that do not in the Eastern side, 
but there are many compacts in place. 

I would like my General Counsel, though, to answer this ques- 
tion, if it is all right? 

Mr. Cox. It is a violation of Federal law, it is certainly a viola- 
tion of the Indian Gaming Regulatory Act to operate electronic 
games without a tribal-state compact, and it is also a violation of 
another Federal law, the Johnson Act, which prohibits gambling 
devices in Indian country. 

Again, as has been pointed out, some of the tribes argue that cer- 
tain kinds of games, they believe, fall within Class II gaming. The 
Commission rejected that, and as we have mentioned, we are in 



307 

court with the tribes on that, and we have been enjoined from con- 
ducting any enforcement with respect to those kinds of games. 

With respect to other kinds of games, which clearly — machine 
games, which clearly fall within Class III, the recent decision by 
Judge Burrell in Sacramento certainly is going to cause the United 
States attorneys in California, who have ultimately the discretion 
to decide what to do about the gambling in the State by the tribes, 
they have to consider that decision. The judge has indicated that 
California does not prohibit gambling devices as a matter of public 
policy, believing that certain types of gambling equipment used as 
part of the State lottery are similar, if not identical, to the types 
of electronic games the tribes have requested the State to negotiate 
a compact for. That kind of a decision certainly requires the United 
States attorneys to determine whether their resources are best 
used on prosecuting or seizing devices which may later turn out to 
be the subject of tribal-state compacts. 

It is a difficult kind of complex problem when you have courts 
that have ruled that a State is obligated to negotiate over that type 
of gambling while, at the same time, it is certainly not legal to op- 
erate with those machines while you are attempting to get a com- 
pact. 

Mr. Abercrombie. Does that satisfy the question? 

Mr. Calvert. Yes, Mr. Chairman, thank you. 

Mr. Abercrombie. I have nothing further at this point, then, for 
the panel other than to say thank you very much, and to indicate 
that I don't want to gamble on the endurance level of my kidneys 
any longer, so I will declare a five-minute recess before our fourth 
and final panel comes up. I trust that everyone will take advantage 
of it. 

[Recess.] 

PANEL CONSISTING OF TIMOTHY WAPATO, EXECUTIVE DIREC- 
TOR, NATIONAL INDIAN GAMING ASSOCIATION; RICHARD 
JAMES ELROY, RETIRED SPECIAL AGENT, FEDERAL BUREAU 
OF INVESTIGATION; G. MICHAEL BROWN, PRESIDENT AND 
CEO, MASHANTUCKET PEQUOT NATION'S FOXWOODS CA- 
SINO AND HIGH STAKES BINGO, LEDYARD, CT, ACCOM- 
PANIED BY LT. COL. ROBERT ROOT, CONNECTICUT STATE 
POLICE; F. WILLIAM JOHNSON, CEO, MYSTIC LAKE CASINO, 
SHAKOPEE SIOUX TRIBE, PRIOR LAKE, MN ACCOMPANIED 
BY POLICE CHIEF DICK POWELL, CITY OF PRIOR LAKE PO- 
LICE DEPARTMENT 

Mr. Abercrombie. As is often the case with an issue that has 
high visibility and interest when we have a panel — ^we have several 
panels, and, unfortunately, it takes some time to get to them. 

I want to thank the members of our fourth panel, Mr. Elroy, Mr. 
Wapato, Mr. Brown, and Mr. Root, Johnson, and Powell for their 
patience, and I genuinely mean that. Aloha, and welcome to all of 
you, we are anxious to hear what you have to say. 

We will move right to it with Mr. Elroy, who is a retired special 
agent of the Federal Bureau of Investigation. 

Mr. Brown. He is not here, sir. 

Mr. Abercrombie. Oh, he is not here? 

Mr. Brown. He is here, but I think he is in the men's room. 



308 

Mr. Abercrombie. Is his testimony submitted? 
Mr. Brown. I don't know. 

STATEMENT OF TIMOTHY WAPATO 

Mr. Abercrombie. Mr. Wapato? 

I may have mispronounced your name. 

It is Wapato, is that correct? 

Mr. Wapato. That is correct. 

Mr. Abercrombie. I beg your pardon. 

Mr. Wapato. Mr. Chairman, my name is Tim Wapato. Before I 
get into my testimony I have some people I would like to introduce. 
They have been sitting very patiently in the audience also. 

Mr. Abercrombie. Please. 

Mr. Wapato. Last month, the Mille Lacs Band of Ojibway in 
northern Minnesota dedicated the first permanent primary and 
secondary school buildings on its reservation. These schools were 
not built with Federal tax dollars or with State funds, but were fi- 
nanced entirely by revenues generated from the tribe's own casino. 

I would like to welcome and introduce the Mille Lacs chair- 
person, Marge Anderson, along with the delegation of tribal elders 
and five young members from the Nay-Ah-Shing school, in the first 
student class. And we are very honored to have them here. I won- 
der 

Mr. Abercrombie. Could you folks kindly stand so that we can 
recognize you. 

Are they out in the hallway now? 

They probably had the same kind of endurance problem I had. 

Mr. Wapato. Mr. Chairman, we had four elders accompany us to 
learn a little bit what passes for process in this hearing, and 

Mr. Abercrombie. As you can tell from the previous panel, free 
speech reigns. 

Mr. Wapato. And I appreciate that. 

Mr. Abercrombie. No matter how idiotic. 

Mr. Wapato. Like they say, that is what made America great. 

Mr. Chairman, my name is Tim Wapato, I am the Executive Di- 
rector of the National Indian Gaming Association. As you may be 
aware, prior to serving as the Executive Director with the National 
Indian Gaming Association, I spent some time as the Commissioner 
at the Administration for Native Americans, which is charged with 
the responsibility for developing and providing grants to Indian 
tribes for economic development. 

I also spent a considerable amount of time as a police officer. I 
retired from the Los Angeles Police Department as a lieutenant of 
detectives. During that time, I served as a lieutenant of a special 
investigation team investigating robberies, homicides, vice and nar- 
cotics. During that time, I had been loaned to the Bureau of Indian 
Affairs to assist in setting up a poUce department on the Colville 
Confederated Tribes Reservation, which is also my tribe in the 
State of Washington. 

I have also worked as a consultant in the gaming, Indian gaming 
and have worked with the Sycuan Tribe of California and its gam- 
ing Commission to bring the police department and the gaming se- 
curity and surveillance into compliance with the Indian Gaming 
Regulatory Act. I mention that because I believe with my varied 



309 

background I have some experience and knowledge to provide the 
subcommittee with an overview of law enforcement, of regulation, 
and security status in the Indian gaming industry. 

I can tell you that no other economic activity in this country has 
more layers of regulation specifically devoted to protecting against 
the influence of organized crime. NIGA, as you may be aware, is 
an association of Indian tribes, it is a nonprofit organization work- 
ing to protect tribal sovereignty and to promote tribal economic de- 
velopment through gaming enterprises. 

It also serves to provide technical assistance to its member 
tribes, including law enforcement and security. Selected officers, 
and we have — our Chairman is in the audience, Richard G. Hill is 
Chairman from the Oneida Tribe. Our Vice Chairman is Dan Tuck- 
er who is from California, Sycuan Tribe. Jacob Viarrial was in the 
audience, I don't know if he is still here, and Nathan Small. 

Mr. Chairman, in 1988, against the wishes of tribes across the 
Nation, and the non-Indian gaming industry with active support of 
State government officials fought for and secured the enactment of 
the Indian Gaming Regulatory Act, IGRA. This act not only did not 
authorize or permit Indian tribes to engage in gaming, but it, in 
fact, limited tribal sovereignty in this area as confirmed in the Su- 
preme Court's decision in the Cabazon case. 

Despite this loss of tribal sovereignty and control over economic 
operations, tribes were successful in making gaming a significant 
economic development tool. While Indian gaming amounts to only 
3 percent, 3 to 4 percent of the total gaming proceeds in the United 
States, that 3 to 4 percent by law must be dedicated to govern- 
mental activities and governmental services. 

The tribes use them, as you have heard, for such things as the 
school that I just spoke about, at Mille Lacs, but they also build 
sewer and water systems, roads, medical facilities, senior citizen fa- 
cilities, and similar services. Even with this documented beneficial 
impact of Indian gaming on Indian and non-Indian people, we once 
again are faced with the threat from a small number of individuals, 
most of whom you heard here today, on the Federal and State 
level, in concert with representatives of the non-Indian gaming in- 
dustry, to further erode tribal sovereignty by anti-Indian amend- 
ments to IGRA. 

These individuals who you have heard have made allegations 
that Indian gaming is largely unregulated and is crime ridden. As 
you heard from a number of agencies in the previous panels, there 
are four or five areas of regulation that exist in Indian gaming. 

The first is the Indian tribe itself, and the Indian tribe as a sov- 
ereign has the right and the duty and the responsibility to protect 
their membership. I would like to provide just a very brief outline 
of those levels of regulation that exist. 

Mr. Abercrombie. Mr. Wapato, your testimony will be entered 
in full. I have gone over it, I think it is quite detailed and to the 
point. 

Perhaps you could summarize for us. 

Mr. Wapato. We have the four levels of regulation, the tribal 
regulation, you are going to hear some people on this panel, the 
specifics that goes into. You have the Bureau of Indian Affairs that 
is responsible for review and the approval of contracts; you have 



310 

the National Indian Gaming Commission who has testified, that 
also has the review and the oversight; you have the Federal Bu- 
reau of Investigation; you have the U.S. Attorney. All of these lev- 
els of enforcement and regulation come into play on an Indian res- 
ervation and an Indian casino. And I think that to the contrary of 
being unregulated or nonregulated, there are layer upon layer of 
regulatory authorities that are and must be exercised in Indian 
gaming. 

I think one of the things that must be pointed out, the list of sup- 
posed infiltration by organized crime of 22 instances documented 
by news media and news clips are in the most part, for the large 
part, pre-IGRA, or passage of the law in 1988. And that we will 
provide to this committee in the time that the record is open, docu- 
mentation of what each and every one of those so-called allegations 
is. I think one of the most notable cases is the Rincon case which 
several people spoke to. 

A specific response was not given to a question that was asked 
of the gentleman from the FBI. That case was brought to the atten- 
tion of the Federal Bureau of Investigation by the Indian tribe it- 
self. 

The overture in that case was made to an individual tribal mem- 
ber, not to the tribal government. The tribal government identified 
that, they went to the Federal authorities on several occasions be- 
fore they were successful in having the Federal authorities proceed 
in a prosecution. 

There is another alleged incident of organized crime, where 
somebody was supposedly hired as a hit man on the Cabazon Res- 
ervation. In that case, there was, in fact, an overture made, a per- 
son was supposedly hired to be a hit man, a person was later con- 
victed, but it had nothing to do with Indian gaming. That was a 
private domestic dispute, where a hit man was hired to supposedly 
hit somebody. That person was convicted, served his time, and is 
now back out. But it had nothing to do with Indian ganiing. But 
we will provide the documentation on that for this committee lest 
this committee take at face value the list of things that are on the 
list of 22. 

[The information follows:] 



311 



.*A^-. 




October 14, 1993 



The Honorable Bill Richardson 

Chairman 

Subcommittee on Native American Affairs 

Committee on Natural Resources 

1522 Longworth Building 

U.S. House of Representatives 

Washington, DC 20515 

Dear Mr. Chairman: 

On October 5, 1993, Representative Robert Torricelli appeared before 
the Subcommittee on Native American Affairs to introduce and laud Donald 
Tnjmp. In his prepared statement, Representative Torricelli slandered and de- 
famed the entire Indian gaming industry by alleging widespread fraud, abuse 
and organized crime infiltration. Despite the testimony of the United States 
Department of Justice that 

the belief held by some that Indian gaming operations are rife with 
serious criminality is not established by the data currently available, 

and that 

The Department of Justice believes that to date there has not been a 
widespread or successful effort by organized crime to infiltrate Indian 
gaming operations, 

Mr. Torricelli attached to his statement a list of newspaper reports that he de- 
scribed as "22 specific examples of organized crime infiltration or cornjption in 
tribal gaming that have been reported in the media." 

Because three of these "examples" referred to the Cabazon Band of 
Mission Indians, we feel obligated to respond to Representative Torricelli's 
statement, and repectfully request that this letter be included as part of the 
official hearing record. 

First, the statement alleges that the "Cabazon tribe (sic) in California 
hired a member of a local crime syndicate to run its casino." This statement is 



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84-245 INDIO SPRINGS DRIVE □ INDIO, CALIFORNIA 92201-3405 □ (619) 342-2593 o FAX (619) 347-7880 



312 



false. In 1980, when the Cabazon Band originally opened its first card room, it 
sought recommendations for a manager from a variety of sources. Leo 
Durocher, the famous baseball player and manager, recommended Rocco 
Zangari to the Cabazon Band and Mr. Zangari was hired for that position. Less 
than a year later, in 1981, newspaper stories appeared alleging that Mr. 
Zangari's brother, a prominent Palm Springs restaurateur, had some connec- 
tion with persons reported to be associated with organized crime in 
Philadelphia. As the result of these allegations, Mr. Zangari was summarily 
fired by the Cabazon Band and has had nothing to do with the Cabazon Band 
or its gaming activities for more than 12 years. 

Next, the Torricelli statement claims that "a tribal official who accused the 
manager of skimming profits later was forced out of office and found dead two 
months later. While the case has not been solved, investigators believe that the 
murder was mob related." Once again, Mr. Torricelli's sensationalized account 
bears little resemblance to the truth. Fred Alvarez, the tribal member referred to, 
served one four-year term on the Cabazon Business Committee. However, in 
June, 1981, Mr. Alvarez was defeated for reelection (not "forced out of office") 
because of his increasingly erratic behavior. This behavior included seeking 
tribal permission to grow marijuana on his tribal allotment and his increasing 
association with local motorcycle gangs. A month later, Mr. Alvarez and two 
non-Indian Companions were shot to death in his home some distance from the 
Cabazon Reservation. Despite the full cooperation of the Cabazon Band, the 
murders have never been solved and we are unaware of any evidence that they 
were either "mob-related" or in any way related to his tribal affiliation. 

Finally, Mr. Torricelli makes reference to the fact that in 1985, a non-tribal 
employee pleaded guilty and was sentenced to four years in prison for attempt- 
ing to hire a person to murder the people supplying drugs to his girifriend. This 
incident, while extremely unfortunate, was a personal matter and had nothing 
whatsoever to do with the Cabazon Band or its gaming activities. As a result, 
and contrary to Mr. Torricelli's allegations, this incident is not "an example of or- 
ganized crime infiltration or corruption in tribal gaming" and further demon- 
strates the lack of substance to the Torricelli statement. 

In summary, the Cabazon Band is proud of its gaming activities. They 
are well-run, honest, heavily regulated and have provided the tribe with a much- 
needed source of tribal revenues and employment. Virtually all of the progress 
we have made over the last thirteen years is directly attributable to our tribal 
gaming enterprise. 

Finally, we would remind the Subcommittee and Mr. Torricelli that the 
Cabazon Band fought for seven years, all the way to the United States 
Supreme Court, to establish the right of Indian tribes to conduct gaming activi- 
ties on their reservations. Throughout that long fight, the State of California 
never once alleged any organized crime infiltration on the Cabazon 
Reservation. 

Not only were there no such allegations in the Cabazon litigation, the 
Ninth Circuit Court of Appeals specifically noted that while keeping criminals out 
of Indian gaming was a legitimate concern, "there is no evidence whatsoever 
that organized crime exists on these [Cabazon and Morongo] Indian reserva- 
tions." Cabazon Band of Mission Indians v. Countv of Riverside , 783 F.2d 900, 
904 (9th Cir, 1986). The United States Supreme Court reached the same con- 



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313 



elusion: "California does not allege any present criminal involvement in the 
Cabazon or Morongo enterprises, and the Ninth Circuit discerned none." 
California v. Cabazon Band of Mission Indians. 480 U.S. 202. 221 (1987) . 

In light of these facts and the recent Justice Department testimony, Mr. 
Torricelli's statement should be seen for what it is: a shameless attempt by the 
sponsor of the "Donald Trump Protection Act" to eliminate competition and to 
deprive tribal governments of the only economic development tool ever to suc- 
ceed in creating tribal self-sufficiency. 



Sincerely, 

John A. James (y 
Tribal Chairperson 



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314 

Mr. Wapato. I would also like to indicate, I think it is very clear 
and I think it came out very quickly, Mr. Trump cut to the chase. 
The real issue here is economic competition. It is not organized 
crime. It is not infiltration. 

There has been only one documented case of organized crime, 
and that one resulted in a successful prosecution. It is very clear 
that what is being proposed would restrict Indian gaming, it would 
propose to treat Indian gaming as New Jersey gaming, commercial 
gaming. 

Indian gaming is not commercial gaming, it is governmental 
gaming. If it is to be equated with any gaming it has to be equated 
with a State lottery, 40 States of which now have State lottery. 

It is a revenue-producing mechanism for Indian tribes as opposed 
to a profit-making enterprise by Indian tribes. There is a big dif- 
ference between revenue production and profit. 

Nobody on this committee or elsewhere suggests that State lot- 
teries should be taxed because they are governmental. And it is the 
same thing that Indian gaming is, I think it is very clear 

Mr. Abercrombie. Mr. Wapato 

Mr. Wapato. May I finish my thought? 

Mr. Abercrombie. Very well. 

Mr. Wapato. The organized crime allegations that organized 
crime is going to lead to the destruction of the culture on Indian 
reservations, that tribes will be victimized by organized crime are 
the furthest from the truth. Marge Anderson and the people that 
built the school in Mille Lacs with their gaming proceeds, have at 
the heart of their matter, the utmost concern for the tribal mem- 
bers and for the future. 

If we will be victimized by anjrthing, we will be victimized if the 
Donald Trump Protection Act is passed. 

Thank you. 

[Prepared statement of Mr. Wapato follows:! 



315 



STATEMENT 
OF 

TIMOTHY WAPATO 



EXECxrrivE director 

NATIONAL INDIAN GAMING ASSOCIATION 



BEFORE 

THE 

HOUSE NATURAL RESOURCES COMMITTEE 
SXreCOMMITTEE ON NATIVE AMERICAN AFFAIRS 
CONCERNING 
THE 
INDIAN GAMING REGULATORY ACT 



ON 



OCTOBER 5, 1993 



316 



STATEMENT OF TIMOTHY WAPATO 
EXECUTIVE DIRECTOR 
NATIONAL INDIAN GAMING ASSOCIATION 
BEFORE THE SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 
COMMITTEE ON NATURAL RESOtTOCES 
U.S. HOUSE OF REPRESENTATIVES 

October 5, 1993 



Mr. Chairman, my name is Tim Wapato, Executive Director of 
the National Indian Gaming Association. I appreciate the 
opportunity to appear before this Subcommittee to testify on the 
issue of law enforcement regarding Indian gaming. 

As you may be aware, prior to serving as the Executive 
Director of the National Indian Gaming Association, I have worked 
in various high-level positions with the Los Angeles Police 
Department, including Lieutenant-in-Charge of a special 
investigative team, investigating robbery, homicide, vice, and 
narcotics. I retired in 1979 after 21 years of service. LAPD 
loaned my services to the Colville Tribe of Washington to assist 
them in establishing its police department in Nespelem, 
Washington. Recently, I have worked with the Sycuan Tribe of 
California and its Gaming Commission to bring its police 
department and gaming security into compliance with the Indian 
Gaming Regulatory Act. 

I mention all of this because I believe that my past 
experience in law enforcement and my recent experience in Indian 
gaming gives me the background and knowledge to provide the 
subcommittee with a professional opinion of the Indian gaming 
industry's law enforcement and security status. I can tell you 
that no other economic activity in this country has more layers 
of regulation specifically devoted to protecting against the 
influence of organized crime. 

NIGA is a nonprofit organization working to protect tribal 
sovereignty and to promote tribal economic development through 
gaming enterprises. It also serves to provide technical 
assistance to its member tribes on gaming issues, including law 
enforcement and security. The elected officers are Richard G. 
Hill, Chairman; Daniel Tucker, Vice Chairman; Jacob Viarrial, 
Secretary; and Nathan Small, Treasurer. I am pleased to be here 
on behalf of our membership which represents 95 sovereign 
governments . 

Mr. Chairman, in 1988, against the wishes of tribes across 
the nation, the non-Indian gaming industry with the active 
support of state government officials fought for, and secured, 
the enactment of the Indian Gaming Regulatory Act. This Act not 
only did not authorize or permit Indian tribes to engage in 
gaming, but, in fact, limited tribal sovereignty in this area as 



317 



confirmed in the Supreme Court's decision in the Cabazon case. 

Despite this loss in tribal sovereignty and control over 
economic operations, tribes were successful in making gaming a 
significant economic development tool. While Indian gaming is 
only about 3% of the United States gaming market, net tribal 
proceeds from such activity have been used for tribal government 
services such as sewer and water systems, schools, roads, 
medical facilities, and similar services. Even with the 
documented beneficial impact of Indian gaming on Indian and 
non-Indian people, we once again are faced with the threat from a 
small nximber of individuals on the Federal and state level, in 
concert with representatives of the non-Indian gaming industry, 
to further erode tribal sovereignty by anti-Indian amendments to 
IGRA. 

These individuals have asserted, but never supported with 
facts, that the Indian gaming industry is largely unregulated, 
and is crime ridden. I am here to discuss the tribal gaming 
regulatory mechanisms currently in force under the 1988 Indian 
Gaming Regulatory Act. I would like to emphasize two points. 
First, I would like to point out the sovereign right and duty of 
Indian tribes to protect their membership. Second, I will 
provide an outline of the levels of enforcement and regulations 
by which tribal gaming operations must abide. I believe that you 
will see that not only is the Indian gaming industry well run and 
well regulated, but that it is more heavily regulated and more 
closely watched than e'ither the state or charitable gaming 
industries combined. 

I. TRIBAL SOVEREIGNTY AMD THE PROTECTION OF TRIBAL MEMBERS 

The significance of the powers held by federally recognized 
tribes was set out in the 1831 Supreme Court case, Cherokee 
Nation v. Georgia . In that case. Chief Justice Marshall described 
the status of Native American tribes as "...domestic 
dependent nations...". This status gives rise to the existence 
of a government-to-government relationship between the tribal 
governments of American Indians and the federal government of the 
United States. This relationship has been recognized at the 
conception of the United States, and continues to be recognized 
today. Tribes are recognized as sovereign entities, with powers 
of self-government over their members and over activities taking 
place within their territory. Included within these powers is the 
right to initiate economic development programs, like gaming 
operations, to protect their membership from poverty and economic 
devastation. 

In California v. Cabazon (1987), the Supreme Court upheld 
the right of tribes as sovereign nations to conduct gaming on 
Indian lands free of state control as long as similar gaming was 
permitted by the state outside the reservation for any purpose. 
This sovereignty was further recognized - while at the same time 
infringed upon - by the Indian Gaming Regulatory Act passed by 



84-760 O - 94 - 1 1 



318 



Congress in 1988. The Act affirms that tribes has the power to 
conduct gaining on Indian lands but it gives states the ability to 
regulate the gaming through the signing of tribal/state compacts. 

Within the scope of IGRA, tribes have the opportunity and 
right to generate revenue for tribal government operations and 
programs for gaming operations, just as state governments have 
the right to conduct state lotteries to generate revenue for 
their operations and programs. Proposed amendments to IGRA from 
anti-Indian gaming forces would further reduce tribal powers of 
self-government and proposed amendments would lessen and cheapen 
the government-to-government relationship between tribes and the 
Federal government . 

II. Regulatory Powers Governing the Inditui Gaming Industry 

The Indian gaming industry is subject to regulation and 
enforcement at four levels of government. The first and most 
important, is the regulatory powers of the tribes themselves. 

Tribal Government Regulation: 

The tribes, as domestic sovereigns, adopt and enforce their 
own laws, ordinances, policies and codes for gaming operations on 
their lands. Under those regulatory schemes, tribes have 
established their own gaming boards or commissions to enforce 
gaming laws; developed and directed tribal police departments; 
and employed their own surveillance and security systems for 
their casinos and other gaming facilities. Training for key 
tribal gaming employees is contracted or provided through college 
courses. State-of-the-art security cameras, surveilleince, 
controls, cuinual outside audits, and accounting systems are 
utilized by the tribes. 

Many of the regulatory requirements adopted by the tribes as 
a part of their own code are memdated by IGRA itself. And because 
gcuning tribes rely heavily upon gaming revenues, they 
have an added incentive to keep operations running smoothly and 
crime free. The Sycuan tribe of California, for instance, has 
ordinances imposing such thorough application process, that the 
application for employment is 16 pages long. [See Attached] As 
noted, the tribal regulatory system includes extensive 
surveillance and security measures. For instance, in fiscal year 
1993, the Oneida Tribe of Wisconsin spent $6,166,451 on its 
surveillance and security system, with another $2,000,000 for 
security equipment. In addition, under the IGRA, all key 
employees are subject to extensive background checks, including 
fingerprinting, prior employment and criminal record checks. 
Please note, most tribes have chosen to fingerprint 100% of their 
personnel . 



319 



Tribal/state Compacts: 

The second level of law enforcement and regulation of Indian 
Class III gaining is imposed through the Compact between a Tribe 
and a State. Because of IGRA requirements, Class III Indian 
gaming may only be conducted under a compact negotiated between 
the tribe and the state. Through these contracts, states are 
able to impose a considerable portion of their own regulatory 
requirements on Indian gaming. These provisions may include the 
allocation of criminal and civil jurisdiction over such 
operations between the tribe and the state; imposition of state 
licensing and permitting requirements; state regulatory and 
inspection; state employment requirements; and cost-sharing to 
defray regulatory costs. Such state regulatory oversight is 
often an addition to stringent tribal regulation imposed by 
tribal gaming authorities. In Arizona, for example, which has 
thirteen compacts approved by the Secretary of the Interior, the 
compacts allow the state extensive law enforcement regulatory 
powers over tribes. In Arizona, the state must, among other 
things, certify all non-tribal applicants for employment, all 
providers of gaming services, all management contractors and/or 
financiers, and all individuals or entities which have any 
connection to a gaming facility. The standards for state 
certification are extremely rigorous, including thirteen separate 
criteria specifically designed to root out organized crime 
affiliations or connections. As long as the states bargain in 
good faith, they are able, through the compacting process, to 
impose significant parts of their own laws upon Indian gaming. 
You can see, Mr. Chairman, why the tribes have always asserted 
that IGRA was an erosion of tribal sovereignty. 

National Indian Gaming Commission: 

The third level of regulation over Indian gaming is through 
the National Indian Gaming Commission. The Commission, in 
carrying out its regulatory responsibilities under IGRA, oversees 
Class II gaming and, to some extent, Class III gaming and 
implements its duties through regional regulators and management 
contractor monitoring. The regulatory requirements of IGRA which 
the Commission must implement, particularly over Class II gaming, 
are extensive. They include annual outside audits on all gaming 
activities including contracts for supplies, services, and 
concessions; requirements for provisions to protect the 
environment and public health and safety; extensive requirements 
for background investigations of key officials and employees 
involved in gaming operations and the oversight of such officials 
and employees on a continuing basis; and licensing requirements. 

The tribes are also regulated as to how the net revenues 
from gaming operations may be spent. Net revenues may not be 
spent for any other purpose than to fund tribal governmental 
operations or programs; to provide for the general welfare of the 
tribe and its members; to promote tribal economic development; to 
donate to charitable organizations; or to fund local government 
agencies . 



320 



Even where tribes are eligible for self-regulation under a 
Class II operation, they are still subject to strict scrutiny by 
the Commission. Before being granted that status, they must 
demonstrate that they are conducting their activities in a manner 
which has resulted in an effective and honest accounting of all 
revenues; a reputation for safe, fair, and honest operations; and 
evidence that their operation has been generally free of criminal 
or dishonest activity. They must also show that they have 
adopted and are implementing adequate systems for the 
investigation, licensing, and monitoring of all employees of the 
operation, as well as the investigation, enforcement and 
prosecution of violations of its gaming ordinances and 
regulations. They also must show that they have conducted the 
operations on a fiscally and economically sound basis. Even 
under self -regulation, the tribal audit, employment checks, and 
other regulations remain subject to Commission oversight. 

Federal Entitles: 

The fourth level of regulation of Indian gaming comes from 
several other Federal agencies. The FBI continues to have its 
duty and authority to investigate crimes on Indian reservations 
in those states which do not have criminal jurisdiction over 
Indian reservation under P.L. 83-280. These include the 
responsibility to investigate general crimes in non-280 states 
and, in all states, criminal violations of gaming laws under 
IGRA. The Bureau of Indian Affairs also has the capability and 
authority to investigate crimes on Indian reservations and 
maintains a force of police officers on many Indian reservations 
and in regional offices. In addition, the BIA has specific 
regulatory responsibilities under IGRA, such as approval of 
Tribal-State Compacts. The Internal Revenue Service also plays a 
role in applying Federal income and other tax laws to tribal 
gaming operations. Finally, the Justice Department, acting in 
most cases through the several offices of the U. S. Attorney, has 
the responsibility for the enforcement and prosecution of crimes 
on Indian reservations, including general and specific crimes 
arising out of Indian gaming. 

Mr. Chairman, it is the position of the National Indian 
Gaming Association, that the Indian gaming industry is well, if 
not overly, regulated through these four levels of government. 
Allegations coming forth from individuals asserting that Indian 
casinos are "fronts" for organized crime are simply a smoke- 
screen to cover their real aim - which is to eliminate Indian 
gaming as competition to commercial non-Indian gaming. Such 
opposition is clearly economic racism and Congress must not allow 
itself to be used to implement the racist agenda of a few greedy 
commercial gaming tycoons. We urge you to protect our remaining 
tribal sovereignty in this area, and our economic well-being, by 
strongly opposing the anti-Indian gaming cimendment to IGRA 
emanating from those sources. 

This completes my testimony, Mr. Chairman, and I am 
available for any questions the Subcommittee members may have. 



321 



aij^i^^^!" 



Sycuan ^ and of Mission Indians 



AUTHORIZATION TO RELEASE INFORMATION 
NAME: 

Last First Middle 

OTHER NAMES; 

(Aka's, prior marriages, maiden names) 

DATE OF BIRTH: SOCIAL SECURITY § 



POSITION APPLYING FOR: 



To Whom It May Concern: 

I respectfully request and authorize you to permit the Sycuan Band 
of Mission Indians, Sycuan Tribal Police and their agents to review 
my credit record, juvenile or adult probation record, medical 
record, military, academic, financial records and employment 
record; including but not limited to personnel files, background 
files, internal investigation files and training files. They are 
also authorized to copy any material contained therein. 

I hereby release you, your organization, or others from any 
liability or damage which may result from furnishing the requested 
information. 

A photocopy or facsimile of this release form will be valid as an 
original thereof, even though said copy does not contain an 
original writing of my signature. The original of this form is 
maintained at the Sycuan Human Resources Department and will be 
made available upon request. 

The information is to be used to assist the Sycuan Band of Mission 
Indians in determining my fitness and qualifications for a position 
of trust and responsibility. 

This release will expire one year after the date signed. 

Signature: 

Date : 



5459 DEHESA ROAD • EL CAJON, CALIFORNIA 92019 • (619) 445-0109/0118 • FAX (619) 445-1927 



322 



F.B.I. INFORMATION AND 
CONSENT FOR DRUG TESTING 



1. NAME: OTHER NAMES USED: 

2. PRESENT STREET ADDRESS: 



CITY: STATE: ZIP CODE: 

3. DATE OF BIRTH: SEX: 

4. PLACE OF BIRTH (CITY, STATE): 



5. RACE: TRIBAL AFFILIATION/NUMBER:. 

6. PREVIOUS ADDRESS: 



7. DRIVER'S LICENSE: SOCIAL SECURITY: 



8. HAVE YOU EVER BEEN ARRESTED OR CONVICTED OR ANY OFFENSE OTHER 
THAN A MINOR TRAFFIC VIOLATION? YES NO 

IF YOU HAVE ANSWERED YES TO QUESTION #8, FILL IN THE FOLLOWING 
INFORMATION FOR EACH OFFENSE. (USE OTHER SIDE OF THIS PAGE IF 
NECESSARY) . 

DATE OFFENSE LOCATION DISPOSITION 



(A) I, HEREBY AUTHORIZE THE SYCUAN BAND OF 

MISSION INDIANS HUMAN RESOURCES DIRECTOR OR DESIGNEE TO SEEK 
INFORMATION ABOUT ME FROM THE FEDERAL BUREAU OF INVESTIGATIONS OR 
OTHER SUCH CLEARANCE AGENCIES, AND I GIVE THEM THE RIGHT TO ACCESS 
ANY AND ALL OF MY FILES AND/OR RECORDS MAINTAINED BY THESE 
AGENCIES. 

(B) I,_ HEREBY AUTHORIZE AND GIVE MY CONSENT 

TO BE GIVEN A DRUG TEST AT ANY TIME THE TRIBE DEEMS IT TO BE 
NECESSARY. I AGREE TO BE TESTED BY THE DOCTOR APPOINTED BY THE 
TRIBE AND I FURTHER AUTHORIZE THE DRUG TEST RESULTS TO BE 
DISSEMINATED TO THE TRIBAL COUNCIL AND/OR IT'S DESIGNATES FOR 
ADMINISTRATIVE USE AS THEY DEEM NECESSARY. 

(C) I, FURTHER UNDERSTAND THAT SHOULD THESE 

CLEARANCE CHECKS REVEAL ANY NEGATIVE INFORMATION AND/OR IF I DO NOT 
CONSENT TO THE DRUG TESTING, I SHALL BE SUBJECT TO IMMEDIATE 
DISMISSAL AS AN EMPLOYEE OF THE TRIBE AND IT'S ENTERPRISES. 



SIGNATURE: DATE: 



323 



PRIVACY ACT 



In compliance with the Privacy Act of 1974, the following 
information is provided: 

Solicitation of the information on this form is authorized by 25 
use. 2701 et seq. The purpose of the requested information is to 
determine the eligibility of individuals to be employed in a gaming 
operation. The information will be used by National Indian Gaming 
Commission members and staff who have need for the information in 
the performance of their official duties. The information may be 
disclosed to appropriate federal. Tribal, State, local, or foreign 
law enforcement and regulatory agencies when relevant to civil, 
criminal or regulatory investigations or prosecutions or when 
pursuant to a requirement by a tribe of National Indian Gaming 
Commission in connection with hiring or firing of an employee, the 
issuance or revocation of a gaming license, or investigations of 
activities while associated with a tribe or a gaming operation. 
Failure to consent to the disclosures indicated in this notice will 
result in a tribe's being unable to hire you in a primary 
management official or key employee position. 

The disclosure of you Social Security Number(SSN) is voluntary. 
However, failure to supply a SSN may result in errors in processing 
your application. 



Applicant name (first middle last) Please Print 


Applicant Signature 


Date 


Witness name (first middle last) Please Print 


Witness Signature 


Date 



324 



$^m^^ 



Personal History Statement 



Tht foUo'*->nfi 1 


formouon is rtq 


uejied of you for vtnficonon and contact purpose 














1 Your Name (Ple»sepnm or tvpe) 1 


Ust 


Fnt Middle 


Other ntmcs (including njcknamet) you hive ui«d or been known by: 


2 Pleue list sour curreni residence address 


Number Street 


Clly 


^ 


Zip Code 


3 Pleau lilt your rcsidmcc telephone numbertt) at 
which you can be conucied . 


( ) 


( ) 

Hn you can be contacted 


4 Birthdiie 


: PltuofBmh 


6 Cituenihip 


7 Sex 


Month 


D.) 


Yeir 






Mile □ Female Q 


8 Soaj] Secunr\ SumScr 


(In Accordance wrth the Ttdenl Pnvtcy Ad of 1974, disclo«UR a vohjntiry. Tlw SSN wiJI be \aed for 
identification purpoici to ensure IhAt proper ivcorda art obtained) 








9 For ibe purpoies of identificaiion. please proMde the followmR 1 


Height 


Weight 


Hair Color 


Eye Color 


%c»n, Uioot, or other distinguishing marks 


All languages (spoken or wnnenj 





Relatives and References 

t 



Dunng tht course of the background invejngonon. per tons whohtovyoti wiU b* aikdd to comment upon yotir tuitabttity for the position for 
M^tch \-ou have applied hpuines will be confirmed to lob-relevani moflers 


10 Please iuppl> the appropriate information in the spaces provided below Ifacalegory btMappbcsble, writcio"N/A.' 1 


If li\inR.nameofvour 


AJdrctt where pcnon can be oonadcd 
flnclude Cttv. Suu and Zin Code) 


Telephone aivrfiich 
Deraoncanbe contacted 


Father 








OHome () Work () Other 


OHome () Work () Other 


Mother 








OHoraeOWoAO Other 


( JHome () Work () Other 


FathcT'in-Liw 








(IHotne () Work () Other 


OHome OWoAO Other 


Mothcr-UHLaw 








OHane () Work () Other 


OHome O Work O Other 


Sfttue 








( Wont. () Work () Other 


OHoii»0 Work O Other 


Fwrner Spous<<i) 








OHotiK OWoikOOther 


OHome OWorkOOllier 









325 



Personal History Statement 



sKekfrves and References Continued 



11. PiMW fiipply tlM appropritu infonniiion in tbe sp» 
If livwB. nime of your 


ce» provided below. If a category is not applicable, wntt l 
Address where person can be c«citacled 
(Include Citv. Stale and Zio Codel 


n-N/A." 

Telephone at which 


Br<ilha<i)anlSiaa<>) 


OHome OWorkOOther 


OHome OWorkOOther 




()Ho« () Wort {) Other 


OHome OWorkOOther 




OHome OWoritOOlher 


OHome OWorkOOther 


Sup-mothcr 


OHome OWcHtOOaiei 


OHome OWorkOOther 


SUftubcr 


OHome OWofltOOlher 


OHome OWorkOOther 


Sl«p-liroUia(s) and atp-5ina<s) 


OHome OWorVOOlher 


OHoim OWorkOOther 




OHome O Work O Other 


OHome OWorkOOther 


Other relatives with whom vou have a close personal relationship (iiKluduiK children) I 




Relationship 


OHome OWoikOOther 


OHome OWorkOOther 






OHome O Work O Other 


OHome OWorkOOther 






OHome O Work O Other 


OHome OWorkOOther 






OHome O Work O Other 


OHome OWorkOOther 


12. Below, please list those indiMdui 


Is with whom you have resided during the Us 10 yean (list no infonnalion prior to your 15thbinhday). j 




OHome () Week OOttKT 


OHome OWorkOOther 










OHome OWorttO Other 


OHome OWotkO Other 




OHome () Work () Other 


OHome OWorkOOther 






riHom, MWnAriOlher 




OHome OWorkOOther 


OHome OWorkOOther 



326 



Personal History Statement 



.Rektives and References Continued 




13 In the ipice below, plfcise lifl M feterenctt 3-5 tnd 
cmploym Includt <m« pmoMi referoica for M£ 

Name 


viduilj who hive knowledge ol you in) your quuaicMiom txciuoe reiiuvei aou lornio 
h period ofrttidCTa lined in uction HU. 

Addreuwtierepenoocmliecoouaed Telephone il which 
(Include Citv.Suleind 7.10 Codel oenon c«n be conuaed 




OHom. () Wo* () Other 


OHomeOWofcO Olher 




()Horne()WoA()Olher 


OHomeOWoikOOllier 




OHon^OWortiO Other 


OHome {)Wo»k()Olher 




OHome ( ) Worlc ( ) Olher 


OHonK OWottcOOlher 




OHome OWorkOOlher 


OHotne () Work () Olher 



liUC3tUHl 



14. Indicale your cufTcru educjtion tchievemem level 

n I possess 1 high school diploma from a U.S insunAion. 

Q I passed the GEO. (General Mucauonal Developmenl) lea. 

n 1 passed the California High School Profiaency Examinatioa 

n I possess a two-year college dcpcc 

Q 1 poaseB a four-year college or university depn 

[~| I do not csmwaly have a high school diplonu or lU enuivalera, bu I plan to achieve one 

When 


How: 






you in a learning environment wiU be coi«acl«d Armiewof youradiooliacordaoiay bemadeiooopiuaaknwithlhoaeconlactl. 


Namt of School 


Locanoo of School 
(CilyASliU) 


DauAncsdad 


SdnolRcfaona 
rTaaciMn,Coiaahn.e>c) 


From 
MonthTear 


To 
Month/Year 





















































327 



Personal History Statement 



JXiCation : continued 



16 Hive you ever been mspendtd or expelled from hi^'tc^ool or pofi-iecondiry ichooP (PoC-secondao' schools include two and four-ycir 
colleges, umversriies. and business ind vocalional tchools • tny fomul education beyond the high school level ) 



If "yes," please explain {include school, date, and circumsunccs). 



iJReridwjce, 



!ndiwduob M'>io havt become acquainted wtihyou by reason of your re 
backeound mvesngaliom 


siding in differen 


I locotioni. ore a 


ften helpful in providing useftil information for the 


17 Please list all of your residence? during the last 10 yean (list no infonnaiion prior to your 1 5lh birthday). Begin with your mod currem residence. 


Address of Residence 


City. Sute &Zip Code 


E>ates 


If rented, give name & address of the penon 
responsible for the collection of rent 


From 
Monlh^ear 


To 
MoniWear 

















































































































Personal History Statement 



^Experience imd Employment 



IS Beginnmg with yourmosi oirrcni anplo>TTwnt or bustnns poi tiioa held, plusc Itst til jobt (including pan-Umctemponry, uid volunurv positions) 
you Kive held intheptst 10 ycATs (For the purposo of thu penona! hjnory suumenL, volunteer w(xk should be UKluded u eniployrnenL) for 
idneiificition vtd venfi&thon, pleue indicate the nature of (he activity, i e.. fut1>tm>e. pan-tune, or votuntar> If you have had intervening periods or 
Rulitam service or unemployment, pleau list those pcnods in sequence tn the spaces provided Also include all ownership mtertfis in those 
businesses 



n«l«Kftffmnlo^-mwi1 



K»mf »r^ %AAr^^ »f ^mplnvw 



\«mgnfmpw-n<ftf 



Naines(s) of c(KworkeT<s) 



Title or duties (for idemificauon purposes) 



Reason for leaving 



,yYr |t„ I MoyVr 



nmnnfrmnlroTTimi 



Nnmr anil fliirtrra nf rmnlnir 



N«mf nf;irp>rvi.nr 



N*nies<s) of co-worlterls) 



TiUe or dunes (for idenuficalion purposes) 



Reason for Iej\-ing 



' /^' I To I '^V' 



Half^nf rmplni.Tnfni 



r^'jimf «fi.j \^(*r^^ nf ^mplrtytT 



\xmfnffiupfT\-,i.r,r 



Reason for leavmg 



n.t^ ,^f -mplovmfni 



Mo Yr 



Names(s) of ctywortter^s) 



Title or duties (for identificalion purposes) 



,/Yr |t, I MTyY 



N>"^ ^p^ r,^'*'^^ "^■•^TT'iyn 



N»m/-nfcip<.TVi«/^r 



N«dm(s) ofc^-wcrkeits) 



Title or duties (for ideniificaiion pwpoKs) 



n vo 



Reason for leaving 



|Fn„.| ""V" |to j Mo 77 



329 

Personal Histoiy Statement 
Sxperienc^ and Employment ,_ Conunued 



19 Would Any problem rcwtiifyourpr«Mracntp)oyawuconUcleddunng the counc of the background investigition? 
If *no' when ihould such conlict be mide'^ 



20. If you hive h*d oo prior emptoymem, pleue cxpltin in the ip«cc below. 



2 1 - Have you hid tny extended work ibsencet for reisons other than eanted vacaiioni? Q y PI 

lf"yci,' Please eiqilain (include wtKn, name of empoyer. why). 



33. Have you ever been fired or asked to resign firom any place of employmeni'' n „ n 

If "yea," picaac give deuiU (include when, where, circunmanccs) 



33. Have you cw been a tuoccssful or unsucccnfiil candidate for another positioo tn mdiao gaming or the gaining induttry in gOMnt? n 
If 'yti.* pkax give detub (include wfwn, name of tn*bc or butmeaa, cvcumiuaoca). 



330 



Personal Histoiy Statement 



Pxperi«nc« «t)d Enfiloyment _ 



24. Bepnniiig with Ihe mofl cuirenl, list my exifiing ind previous businea rtUtionhipi with Indian thba. including ownenhip imerat in thoie buiincncs. 



N.m.ofj 



n.i^nf^mnto^intnl 



Ki.n.. ..vH .Mr^ nt .trnilfJ^T* 



From To 

Mo. Yr Mo. Yr. 



Titk or duties (for idcnuioauon puipoMi) 



Ntina(s) orocMworkcf<i) 



,/Yr [to I MoyYr 



n.i><nf,.mr.lnvTTi«il 



^■■.^* .^ .A4r«. f,f ^mplnv>T 



Title or duties (for idenuficaljon purposes) 



NuMS(t) of co>workef<s) 



Reuon for leaving 



>/"" I To I '^V^' 



n.t«^f-mplnvw^l 



^^^» ,r^ ,AAr^ ^f ^mr.lnv>T 



Tiik or duties (for identificuion purptnes) 



Nama<i) of ccKwortcer<t) 



Ifh^I M0./Y,. |t„ I Mo/yT 



n.l-nf.mplm»n.nl 



M.~ .~< .A4~. „f-^lnv» 



M.m. Af ^,p.rv.cnf 



Title or dutio (for idemScaucn pupoMt) 



NBniei<i) of oo-woriteKs) 



./Yr It, I ^^ 



331 



Personal History Statement 



:Experienc« and Employment 



35. Bcgiming with the nwa recent, lid any tnd all pervious busincs reUlionshjps wnh the gamijig industry genermlly. iiKluding mlcrtMs m those businesses- 



Mmin» .n/< .HA^. nf .mplnvrr 



n.i>.nf>tnnln%Tiin 



^ FuU-linie 
^ Psn-time 
'-' Volm««y 



Title or duties (for idcittificaliori puposa) 



Ntinei(s) of co-workerts) 



Reason for leaving 



iFro- I M°/Y' |To I M<^77 



n.1^ Af ..^Invm.^ 



V..~ .~< ./M,^ nf ..rmlnv^ 



V.m.nfn.n.,^To, 



tJ FulUime 
*— ' Part-time 
D Voluntary 



Title or duties (for Hjcmification pwposcs) 



Naines(s) of co-wQrlcef<s) 



Reason lor leaving 



[From I >*'/'<' |to | Mo. yvT 



n.1- ,.f-,^lnVTn«.il 



M.~ .~< .Ah.^ .sf-^lA.-. 



Mo Vr. Mo Yr 



Title or duties (for identifictfioo purpoacs) 



NaiiMS(s) of co-workcr(s) 



|Fn» I ^ /" |to I >^/~ 



J^BauUDBlOBBIL. 



.^iMDLJB^tUtautapJflasL. 



Yr. Mo. Yr. 



Rmmq far leaving 



Tak or duiiaa ((or idoaifialica pupoiaa) 



NaD(i(t) orc<Hinr<ur(s) 



V^' |To I "iS^ 



332 



Personal History Statement 



!xp<drtenc« «nd Employment 



26 Lixl the fume ind ■ddress of any licensing or regulalvy agency with which you have filed an appliouon Tor a Uccme or peniul rclal«d to gaming whether or 
fMt Mich licerac or permit was granted Also include the dau the KfpUaCMa was filed. 



^Z^^SSS^S^jj^^^ 



M.mf nfti 



""" "' """I" 



Title or duties (for identifecftioo putpoMS) 



NaiBa(s) of cD-worfcott) 



|Fn«. I ^oy^' I To I "°7^ 



g v^.i.- 



n.t><»f^TT^plovmwit 



W.»^ »rA ^Mr^, nf i^Tipl«v>r / «fTVV 



N.fTW nf «i|w^-io^ 



Title or dunes (for idenuCcUion pufpota) 



Niffles(t) of a>-workcr(s) 



Retsoo for leaving 



' /"" I To I "°/^ 



"■'""''"T'"""" 



U..~. .-H .Mr^ nf .-^Inv^ / .i.^,-.. 



D 



Title or dulia (for tdcnuficuioii puipoMs) 



NiiDei(>) of co-workei(i) 



1f,«,| >«"/y' |to I ^°7^ 



rW_ nf-^lnyiTW^ 



Uo. Yr. 



Raaaoofor leaving 



M.». .~< .Atr^ ,rf.^/~- / .p.^^ 



M.m>nf«ir>.vi.,» 



NaoM^i) of oo>woricci<s) 



Title cr itoxs (for ideaificMico purpoaca) 



I ^' /^' It. I "°/^ 



333 



Personal History Statement 



IBxperience and Employment 



37 Lisi the nuna >nd iddresses of uiy licncsing or regulatory agency with which the penoD has filed ui application for a 
or not such lictnsc or permit wras granied and the dale nich request was filed 



upaiiona] liccrae or pennit, whether 



N.m^ .nrf mHrtri^ nf wnnlnvw / totne^ 



Nitmf nfM.pCT^^^n^ 



n.t^nfwtinlftvmwil 



To 



Title or duties (for idcniiiicalion purposes) 



N«nia(i) of co-worket<i) 



Reason for leaving 



Ift^ I **'/•" |to I mo/yT 



n.l^rtffmplr.v^WdTil 



VJ.fpi. .nH .H^r^ »f i^npl^v^r / .y^txrv 



Title or duties (for idenUflcation purposes) 



Nanies(s) of co-worker(s) 



Reason for leaving 



|F„n.| **"/'" I To I M°/Y 



niinnfrmrlnjTnmi 



K.m^ .n^ .f4Hr^t ^f ^rnnlnvw ' .yw^-v 



Title or duties (for identification purposes) 



Naines<s) of co-worka<s) 



IZI 



r>.i^.>f.myiln^m>n< 



M..-. .~< .AWn nf >«.pln>w ; .f~^ 



Mmo nf nip.>v..n. 



THlc or dutia (for idntificalioB pupoMt} 



NaiMl(t) of oo-w«ka(i) 



|Fn«. I Mo/Yr | ,.„ [ Mp-yTT 



334 



Personal History Statement 



^loaaciai 



J«. Tlitm»Mgonmofper>onilfiMncaUrtlev»nlloinindividu»ri<fuliricai<mforlliepo«il» Thcrtfort, pteMt ai m Ihc 
ruuma.1 MlOTcnu belo» Be compUu md iccumt Th« inKxiB of aidatrfnea in ilidf wH na be UMd in evtluMiig your qu»lific«ion». 
but ralher th« bcluvior exhibiled in meeting ytxir finmcia) obligitions- 


CuiTcm Monthly Income ] 


Cteren MoMhly Expendinires | 


Monthly ubry 
Spouie'l laUiy 
Other monthly incone - describe: 


S 




Real Emu (montaite) f,ytaaMf) 


S 








RO, 










Other moolhly paymctti - 


































































TOTAL MONTHLY INCOME 






Eoinuud monthly cca ofliving (inchide utOilies, 
auminnea. etc) nd ny ocbcr ol>li|iticn.. 
TOTAL MONTHLY EXPENDITURES 






s 




S 




CuiTtnt AiKls 1 


Cunen Lubilitiei 1 


ChKking 
RedEoale 


% 






s 








Lon-UrraLom 














Slodu ind Bondi 






Ofeer Liibililiel - dacnbe: 






Lifc inurance (caih vmlue of whole 

life polity) 

ABM - - 

OdicrAaeii-dacribe: 




















































































































TOTAL ASSETS 


i 




TOTAL LIABOJIIES 


i 





335 



iFmanCf al Conu nued 



Persona] History Statement 



29 Plc*s« tupply more dcuiltd information tboui your ch»fg< 



corttricu. or other financial li»bilit>«. 



Acooum Number 



30 Have you ever filed for at declared banknipicy? 

If '*ves.~ please give demis (include when, wtwft. why). 



D 



3 1 . Have any of your bills ever been turned over to a collection agency? Q] 
if "yes." please give deuils (include when, firms involved, circumsUnoes) 



32. Have you ever had pudiascd goodk repoaacoed? 
If "yea." please give detaib (include when, finni t 



D 



336 



Personal History Statement 



jlitaiy Service 



33 If you tn » mak under ■ge 36. pittat pnavKk the following 



Sdcdivc Service Number 



Approxiiniu Dele of Rcpflntion 



Ail^eH el Tnc ofRcgiitntiaii 



34. Have ycu «vtr tcrved b the vmcd forces, Neboial Guwd or miliury n 
tf >ei,' flntr supply tJM following infaniwtian: 



Bnnch of Service 



Service Number 



Due of Service 



35 Are you cufTently participeiing m eny milrtarv rnervc or Nibonal Ouird progim? 11 Yw 



D No 



36. Have you ever been the nibjed of any judicial or ooa -judicial ductpltnary aciioa wiiile in the nulitary. National Guard or miliiaiy n 



If "yo," plcMe five deuib (include branch of service, when, where, circuniaanco> 



37 Pail convnanding officers or mi)iuj>icquiimanccs are poUflialaourceiorrclcvviitnforiBBtion pertaining to yo^ Plcsae list tboee 

mdividuaU who know you well enough lo provide iccunu mfonnation about you. 



M. tfyouhiwrwbMnafnsudvcsxivicudforinyanniCcidudait nScvKlalkmt\pl€atpyit«>tfoa<rmgiB!amaiaa: (Da &a Dm ynur 
fW0>4 may bvc been tfiecud by i mlnit m cipuit<n««. • rdoe. or • pBdoc hxl qaciSc ks>l raplicalxn ■• u> bow )« ■hoiild ■»»« Dm 
quiOHai FtaM mc the INSTRUCTION ftpi f<* > deuiM piiik.) Lis ill on e-an (nHCUtiom. fdcoy or mbdemoaor or ranviaioa tmtct. 
IIk div^ . anic nd addrai of Ok c>iun invoked, Ihe aiTMiBf •cmcy. iDd tka <tu <tf«iM nd du of «qiaa» 


Apfn»LDac 


MkaA«BKy 


CmnWM 





















337 



Persona] History Statement 



39 Hive you ever been pUccd on court probftlion u ui aduh** 
Vya.' ple4se pve deuils (include wriwn. wtierc, wbv). 








40 Lifl each cnmmil charge, (excluding minor traffic duvgesX wtiether or oot there b a cxmvicijon. if witch crimina] charge b within 10 yean of the 
dau ofthu application and t> not otherwise listed above, the cnminaJ charfe, the name and addrca of the arreting agency, the oourl involved 
and the date and dupociUon: 


Violation(s) 


Convicted 


Approx.Datc 


Pt^ce Accncy 


Court 




□ Y» □ No 










□ Y= □ N. 










□ Y= □ No 










□ Y« □ No 










□ Y- □ No 










□ Y« □ No 








41. Are you now or haw you ever been involved as a plamiff or defendaol many civil action'' 
If "yei," plese give deuils (include when, where, name and location of court, circumstancca). 











I^EOT VdUclc Operation 



An invcttipiicn of your driving history will be made through a recordi check. To expedite this procedure, plcaae nipply the following infbrmitiaa: 



42. Drwtr^ license number 


Sutt 


Ei^mlModau 


Name under which licenK wu gnxaed 


43. Please list other stales where you have b 


een licensed to operate a BioCor vehicle. 
Sutc 


Slate 


Suu 


Name under whid) license was 
granted 


Name under which liccDK was 
granted 


Name under which license was 
piAed 


Nme under wbidl lioensc wis 



338 



Personal History Statement 



Motor Vehi«leOp«Tfltio^^ Continued 



44 H»v. you eve. bten refilled •dnvo'ilioitK by my lUU? 
If -yev- pleM« e«pliiii (incKide *(ien. where, why) 








45 Cilifomii l»w requires lh»l operuor ind ownen of mMo. vthiclei be covered by eiaomobile lUbilily imunnce or bond or dtjimrl of $35,000 wilh 
die Deptnmert of Moloc Vehicles Therefore, pleeje lia the cmrenl liebibly insurance you htvt with your motee vehicles. 


Company 


Address 


Policy Number 


Date of Expiration 


























If vou ire bonded or hive depoiiled $35,000 lo meet your motor vehicle finincul rtsonribaity. please mdinle 

DBond 1—' $35,000 


4< Ple.se list til traffic ciulioiu (exclude pMkingciluiora) you hive received withia the Un 5 yem 


Nattireofviotition 




Appronniate Date 


Indicate whether fined or action 
taken on irivtt't license 


































47. Have you ever been involved as • dnver m a motor vehicle accident withm the last 5 yean7 


Date 


Location 




Police mvcstigalioo? 


PoUcc Agency 


Doe 


Location 




Polia investigtlioa? 


Police Agency 


DM< 


Location 




Police inveoiislioa? 


Polioe Agency 


Dat 


Location 




Police invcsugauon? 


Police Agency 


Du 


Location 






PoUceAccncy 1 



339 



Personal History' Statement 
*^Y*K''*^*P^*'<". Continued 



48 If there u ui>ihing you wish lo discuss ibout your dnvmg record, pluse use the tpace below. 



49. Has your license ever been suspended, revoked^ or plkoed on negligent operalor's probation? PH 
If "yes." please give deuils (include whil, when, where, why). 



D 



iGcnerai Information 



50 Hive you ever been refused insurance for any reason other than failure to pay a premium? 
If 'yes,' please explain (include company name and addrest, dale, «nd reason) 



D 



31. Have you ever applied for a permit to carry a ooooealed weapon? 
Ifyo.' pleaie provide the following mfomnion: 



□ Y- 



I hereby ocrtJiy thai all oaiements nude in this penooal Ufiory 
BMloial facti will iub)ect me to diaqualificalion or d*imi»al 



•re true and cocnplete, and I unkntand thit my minutancnu of 



Dale oonplded 



340 



National Indian Gaming Association 

904 Pennsylvania Avenue. S.E., Washingion. D.C. 20003 
Phone: (202) 546-7711 FAX: (202) 546-1755 



August 11, 1993 

Dear Members of the Native American Affairs Subcommittee: 

By letter dated August 3, 1993, Rep. Robert G. Torricelli of New Jersey wrote to you 
urging your co-sponsorship of his bill, H.R. 2287, entitled "The Gaming Regulatory and State 
Law Enforcement Act of 1993". Regrettably, Mr. Torricelli's letter is shot through with 
inaccuracies, distortions and outright misrepresentations with respect to the operation and 
regulation of Gaming on Indian reservations, and the Congressional and Administrative oversight 
that has been devoted to these gaming operations. 

The initial distortion begins with the capitalized title in which he asserts that gaming 
operations on Indian resei"vations are "dangerous" and "unregulated". No evidence is offered to 
support either of these allegations. 

In his statement to accompany the mtroduction of H.R. 2287, Mr. Torricelb stated: 



"When IGRA [The Indian Gaming Regulatory Act] was first passed there was 
little indication that organized ciime was infiltrating gaming on reservations. 
However, over the last five years this has become a significant problem." (Cong. 
Rec. pp E 1367-68 - May 26, 1993). 



On July 27, 1993, in a letter to the Chairman of the United South and Eastern Tribes Gaming 
Association, ms. Mary C. Spearing, Chief of the General Litigation and Legal Advice Section, 
Criminal Decision, Department of Justice, wrote as follows: 

"As alluded to in USET Gaming Association Resolution UGA 93-04 ... 
representatives of the Department's Criminal Division and the FBI testified before 
a Senate Committee that very httle evidence of attempts by the organized crime 
"families" to infiltrate Indian gaming had been detected. We have no reason to 
modify that evaluation at this time." 



A copy of Ms. Spearing' s letter is attached. 



341 



U.S. House of Representatives 
Native American Affairs Subcommittee 
August 11, 1993 
Page Two 



Mr. Torricelli asserts that Indian gaming is "unregulated." Nothing could be further from 
the truth. It is in fact regulated first by the Tribes themselves; second by oversight from the 
National Indian Gaming Commission established under the Act; third by the Department of 
Interior and the Department of Justice; and finally, with regard to those tribes operating games 
that are subject to compact with states, the states themselves. The integrity of the games 
operated by the Indian tribes is attested to by the small number of criminal complaints that have 
arisen from Indian gaming operations. These statistics will certainly compare favorably with the 
criminal complaints arising from gaming operations in any other part of the country. 

Mr. ToiTicelli refers to a report of the Inspector General of the Department of the Interior 
issued in December of 1992. This report was critical of the oversight that had been exercised 
by Federal agencies over Indian gaming operations in years past and concluded that certain 
leasing agreements of gaming equipment had resulted in significant losses of income to the tribes. 
At no place in this report was the integrity of the gaming operations questioned. Since this report 
was issued, the National Indian Gaming Regulatory Commission has promulgated its initial 
regulations and the Commission is now moving into full operation. 

At the heart of Mr. Torricelh's bill is a concern expressed both in his introductory 
remarks and in his recent "Dear Colleague" letter, i.e., that Interior Department regulations allow 
"the establishment of 'gaming enclaves' far away from existing tribal reservations" and that 
'[T]hese rules have encouraged several groups with dubious claims to apply for federal 
recognition for the sole purpose of operating casinos free from state regulations." 

In fact, only twice in the five years since the Indian Gaming Regulatory Act was enacted 
has the Department of the Interior accepted lands into trust that were not inside of or adjacent 
to an existing Indian reservation, and in each of theses cases the Governor of the State where 
such lands were located approved of this action. Existing law and regulations governing this 
subject arc cleaily already restrictive. 

Mr. Torricelli expresses concern for non-federally recognized tribes or groups petitioning 
the Secretary of the Interior for recognition as a "federally recognized tribe".. First, he assumes 
without examination that the claims of such groups are "dubious" and are made for the "sole 
purpose" of operating casinos free of state regulation. In fact, the Interior Depaitment regulations 
governing petitions for Federal recognition were promulgated in 1978 in order to address long 
standing efforts of non-federally recognized tribes and groups to achieve Federal recognition, 
some of which date to the turn of the centuiy. It is worthy of note that one such petitioning tribe 
exists within the State of New Jersey. 

The bottom line of the TorriceUi bill is that it would destroy gaming on Indian 
reservations and all of the jobs and economic benefits that flow not only to the Indian tribes and 



342 



U.S. House of Representatives 
Native American Affairs Subcommittee 
August 11. 1993 
Page Three 



their members but also to the surrounding non-Indian communities. The "competitive advantage" 
that exists for tribal games exists only because of the more restrictive laws of the states that 
surround the reservation. If the restrictive laws of the states are made applicable to the tribes, 
the tribes will be unable to attract business to their lands. 

The principal purpose of the Torricelli bill is to protect an industry in Atlantic City and 
Nevada and to deny tribes an opportunity to compete. The bill does not seek to establish a 
"level playing field". It seek to limit the players on the field to one team only. 

Sincarely 



Smcarely, /^ 

Rirhar/t r. Hill I 



Richard G. HUl 
Chairman 



Attachment 



343 




U.S. Dcptirtnient of Justic^ 



Wlt'iKUttNi. D.C iCSiO iff _ 




^JUL 2 7 1993 



Phillip Martin, Chairman 

United South and Ea8t«rn Tribes Gaming Association 

400 N. Capitol Strest, N.H. 

Washington, D.C. 20001 

Dear Kr. Chaiman: 

This is in response to your latter to the Attorney General 
suggesting that the Department conduct an Investigation of Indian 
gaming operations to determine whether or not there is a basis for 
allegations of organized crime involvement. 

The investigative am of the Department of Justice is the 
Federal Bureau of Investigation. One of its highest priorities is 
the detection and investigation of organized criminal attempts to 
infiltrate or exploit legitimate enterprises. The Bureau's 
authority stems from a number of federal criminal statutes, 
especially those contained in Chapter 95 (Racketeering) and 
Chapter 96 (Racketeer Influenced and Corrupt Organizations) of 
title 18 of the united states Code. when evidence of criminal 
violations is developed the matter is referred to the appropriate 
United States Attorney for prosecution. We are confident that the 
Bureau is carrying out its responsibilities with diligence and 
vigilance and that no investigation focussing on Indian gaming 
operations in general is warranted. 

As alluded to in USET Gaming Association Resolution uga 93-04, 
which you included in your letter, representatives of the 
Department's Criminal Division and the FBI testified before a 
Senate Committee that very little evidence of attempts by the 
organized crime "families" to infiltrate Indian gaming had been 
detected. We have no reason to modify that evaluation at this 
time. 

The Department fully appreciates the importance of crime-free 
gaming to tribal economic development and the congressional 
policies in that regard. I assure you of our continued interest in 
achieving and maintaining that goal. We hope we can count on your 



344 



support for efforts to strengthen the regulatory mechanisms 
currently provided in the Indian Gaining Regulatory Act. 

Sincerely, 

John C. Keeney 

Acting Assistant Attorney General 

Criminal Division 



\L " 



MaAr Cj Shearing, /Chief 
General Dltigatioh and 
Legal Aavice Section 
Criminal Division 



345 

Mr. Abercrombie. Thank you. 

Mr. Wapato, I wanted to merely indicate that I quite agree. The 
lotteries are not taxed, individuals who profit from the lottery are 
taxed on their individual income, and so you would be in agree- 
ment with the previous testimony, would you not, that tribal bene- 
fits which may accrue in the form of a school are not taxed, but 
if an individual within the tribe receives an income that individual 
indeed pays taxes? 

Mr. Wapato. The individual indeed does pay Federal income tax. 
State income tax. Many of the employees are non-Indian employ- 
ees, they pay Federal taxes. State taxes. 

Mr. Abercrombie. So the implication from previous panels that 
Indians are not pajdng taxes as opposed to a nonprofit tribal entity 
are at least, if not incorrect, misleading? 

Mr. Wapato. They are misleading, they are incorrect and grossly 
inaccurate. Anybody that works at the casinos, Indian or non-In- 
dian, does pay taxes, both Federal, and if there are State taxes, 
pays those. 

Mr. Abercrombie. Very well. I have no questions at this point. 

Mr. Abercrombie. Mr. Calvert. 

Mr. Calvert. Thank you. 

I just wanted to point out from California's perspective, I know 
I keep coming back to California and there is reason for it. Of the 
200 or so federally recognized tribes in the United States, approxi- 
mately half are in one State, and that is California. So, obviously, 
we have great concern, not so much for economic competition, but 
because of problems that could possibly exist when you have large 
numbers and possibly large numbers of reservations starting to op- 
erate casinos, as they presently legitimately do with Class I and 
Class II gaming, which is allowed in the State of California. 

As you know, Class III gaming is not allowed in the State of 
California presently, and we are quite concerned that some res- 
ervations have taken advantage and are operating certain Class III 
functions without proper permission. 

Now, there is only one federally recognized tribe in the entire 
State of Connecticut, I believe, is that correct? 

Mr. Wapato. At the present time, yes. 

Mr. Calvert. And so it obviously makes enforcement of that par- 
ticular casino much simpler. In California's instance, if we had 
Class III gaming, wouldn't you agree that the complexity in Cali- 
fornia, you have some experience in California, understand Califor- 
nia, would be tremendously more complex? 

Mr. Wapato. Well, the complexity can be made simple, though. 
In this matter, the compact that we negotiated between the State 
and the tribe, and so whatever layers of regulation and enforce- 
ment that need to come into play can come into play between the 
State and each individual tribe. 

At the present time, there are only 16 tribes in negotiation for 
Class III in the State of California. Aiid I think it might be a little 
bit inaccurate to say that there is no Class III in California. The 
court decision, the Burrell decision has indicated that elements of 
the California lottery are, in fact, Class III t3T)e of gaming, and 
therefore the tribes can negotiate for those. 



346 

And having said that, they can negotiate for them doesn't nec- 
essarily mean that all 94 tribes will end up with Class Ills. As you 
are well aware, the geography of California, many of those 94 
tribes are in very remote areas and would have very small likeli- 
hood of developing large-scale or meaningful Class III type of oper- 
ations, and so I think the very fact that that decision — I think 
there is some confusion also if there is a video machine or the video 
device of any type, that somehow that is a slot machine. 

There are, in fact, electronic pull-tab machines that are Class II 
machines — and you asked a question of the national Indian Gam- 
ing Commission earlier. It is our opinion that — and the tribe's opin- 
ion that those machines are clearly Class 11. And if they are clearly 
Class II, they are clearly under the purview and regulation of the 
National Indian Gaming Commission and could be subject to any 
of those regulations. So it is not unregulated. 

I think one of the other questions that came up was who docu- 
ments, and who accounts, and how do you follow through the 
money that might be going into those maclunes? And that is clearly 
a tribal regulatory matter. The tribes have passed regulations 
under the National Indian Gaming Commission regulations of Jan- 
uary 22nd. 

There are certain audits, certain things that they must have in 
place, and they are in place. And those, in our opinion, are also 
clearly under the National Indian Gaming Commission's purview 
and regulation. 

But as several people have said before, the tribes need to assure 
the integrity of their own game. They have to have a game that has 
integrity or their patrons won't come. And if their patrons won't 
come, then it doesn't make much sense for them to — I mean, it is 
only in their best interests to make sure that regulations are 

Mr. Calvert. Obviously, there is a difference of opinion with var- 
ious Federal agencies on what is Class II and Class III, certainly 
in the State of California. The problem exists as far as what some 
people believe was the intent of the Indian Gaming Regulation Act 
was only to allow gambling which was consistent with what was 
legal within a particular State. 

Then we get into definitions of what is Class III and what is 
Class II. So there is some confusion. And wouldn't you agree that 
we need to clarify where everyone understands clearly what is 
Class II gaming and what goes into Class III gaming? 

Mr. Wapato. If all 50 States had similar regulations regarding 
gaming, then maybe you could do that on a national basis. It would 
be impossible to do that on a national basis because each State has 
different regulatory schemes on gaming and has different games 
that are legal in that State. 

What the State of California has been unable to understand at 
its negotiating level is that they have quite a broad public policy 
on which games are in their State. And in the lottery itself, there 
are probably between 30 and 40 variations of the games that are 
within the State lottery. 

The court, the Federal court did not lightly look at that public 
policy of the State of California. They tested it back against the 
findings in the Cabazon case and then they tested it back against 
the requirements of IGRA, and then they came up with their deci- 



347 

sion. And within their decision, they indicated that certain of those 
games in the lottery are Class III. 

The State of California, negotiating at the highest negotiating 
level, I should say, the governor's level has been, I guess, unable 
to see that public policy distinction. I don't think that the charac- 
terization that the IGRA permitted certain types of gaming is to- 
tally accurate. I think IGRA restricted what the tribes could do be- 
fore the act. 

It didn't permit tribes to engage in gaming. It restricted their 
ability to engage in gaming. And it gave the State an inroad on to 
the tribal sovereign turf by requiring the compact to be negotiated 
between a tribe and a State for the Class III. 

Mr. Calvert. Now, going beyond slot machines, as you probably 
are aware, there are casino ships docking in California, large tour- 
ist industry in the State of California. And there were reservations 
saying, well, California allows those ships to dock, so by definition, 
they are allowing craps and roulette and all those other kinds of 
games that take place in Las Vegas to take place, so we should 
allow that to take place conceivably on all 94 reservations. That, 
obviously, made the State of California very concerned that once 
we step into slot machines or whatever we are going to define those 
as, that we are going to go into full-scale gambling. And in the 
State of California, obviously, when we have half of the Indian res- 
ervations in the State, even though you mentioned there is only 16 
negotiating, that is 16 times more than Connecticut, at the present 
time, it becomes a very, very tough issue. 

One of the consequences of that, I think, and I would think that 
the various tribes thought of this, is if Class III gaming comes to 
California on the reservations, don't you believe that it is conceiv- 
able that the State, at that point, wiU just throw in the towel and 
legalize gambling in California? 

Mr. Wapato. I am a little hesitant to predict what the State of 
California might do in any case, but 

Mr. Calvert. I will share that opinion. 

Mr. Wapato. That could be a possibility. And I understand they 
may be under some pressure to do that. 

Mr. Calvert. What I am getting at is the advantage that Class 
I and Class II gaming in California now with the reservations that 
they have, they are getting considerable revenue from those res- 
ervations. I don't detract the fact that it is going into good works 
with those reservations in California. 

What I am thinking is sometimes too much of a good thing is 
going to kind of kill the goose that is laying the golden eggs here. 
If that happens in California, what happens to the competitive ad- 
vantage that the reservations presently have and having an effec- 
tive monopoly on Class II gaming in California? 

Mr. Wapato. I guess they would be in the same predicament 
that 483 casinos are in the State of Nevada, they would have to 
compete with each other. 

Mr. Calvert. And at the same time, we would possibly be put- 
ting something on our society in California that a majority of peo- 
ple in California don't want. 

Mr. Wapato. Well, I think it is clear that the majority of the peo- 
ple in California don't want non-Indian casino gaming. I think it 



348 

is equally clear from a public opinion poll conducted by the Field 
Public Polling, that an3rwhere from 64 to 76 percent of the citizens 
of California support Indian gaming and Indian casinos on a res- 
ervation. They support it for two reasons, which I think are the 
right reasons: 

Number one, they support it because it would be beneficial to the 
Indian tribe as an economic development venture. Number two, 
they support it because they see it as an entertainment option, and 
they would use it for that reason. Those same people in that same 
poll would oppose non-Indian gaming. 

Mr. Calvert. That is what I was going to bring up. One last 
comment. As a consequence of Class III gaming coming to Califor- 
nia on Indian reservations, if those same individuals were asked, 
as a consequence, the possibility exists that gaming will come to 
California statewide, non-Indian gaming statewide, in L.A., in San 
Francisco, in San Diego, all the urban areas, do you believe that 
those same individuals would be in favor of it? 

Mr. Wapato. I think if those individuals are the citizens of Cali- 
fornia that, yes, they would. I think if those individuals are the ad- 
ministration, they would say no. They would say no, I think, for 
the same reason, partly the same reason that we heard from Don- 
ald Trump and Congressman Torricelli, and it would be for eco- 
nomic reasons, that it was the tribe's 

Mr. Calvert. In our case in California, we are not — I don't care 
what Las Vegas does or what New Jersey does, I care about the 
State of California, and what I am concerned about is gambling. 
Unfortunately, we can get into the societal ills of gambling, and 
once we bring that into an urban setting, the problems that could 
exist from gambling on poor people who use up their paychecks to 
gamble, and so forth, and so on, I don't want to preach that — what 
I am stating, that I believe a different view, that most people in 
California would not want to see statewide gambling. Class III 
gaming in the State. 

I do agree with that the people in the State agree that Indian 
gaming should be allowed, Class I and Class II gaming, and if, in 
fact. Class III gaming came to the reservations, I think the unin- 
tended consequence of that would be is that gaming would go state- 
wide, and I believe that most people in the State would be opposed 
to it. Now, that is my opinion. 

Mr. Abercrombie. I am going to exercise a prerogative of the 
Chair because I think this has been stated adequately by both 
sides, and we have others who have been patiently waiting. 

Mr. Elroy, I apologize, I think you were out of the room at the 
time I called your name, so I will ask you to take up your testi- 
mony at this point, if you would be so kind. 

STATEMENT OF RICHARD JAMES ELROY 

Mr. Elroy. Okay. 

Thank you, Mr. Chairman. 

Mr. Abercrombie. Aloha and welcome. 

Mr. Elroy. I am a retired special agent of the FBI, recently re- 
tired. For 16 years I investigated matters involving Native Ameri- 
cans in Oklahoma. Oklahoma has the largest concentration of Na- 
tive Americans in the United States. 



349 

In 1989, I was assigned to the United States Senate, Committee 
on Investigations, Select Committee on Indian Affairs. During this 
assignment, I reviewed gambling activities on approximately 100 
reservations in 24 States. 

In the course of my U.S. Senate assignment, I have found a pat- 
tern of activity relating to Indian gaming operations. Almost with- 
out exception, Indian tribal officials contract with non-Indian out- 
side companies to build and operate their gambling operations. 

In the majority of these cases, these non-Indian companies prom- 
ise much but deliver little to the tribe. The corrupt tribal leaders 
end up doing well, and the contractor ends up doing well, but the 
rank-and-file Indians weren't ending up with very much. 

Most of the contracts dealt with a division of the profits or net 
profits to the tribe. The problem is that, in many cases, the skim- 
ming and other activities left no net. 

Connecting Indian management directly to traditional organized 
crime, such as La Cosa Nostra, the LCN, is very difficult. The LCN 
members are very sophisticated and effective in being able to dis- 
guise their direct involvement and influence in these areas. 

They use a myriad of methods which camouflage them from the 
public view. They hide their interests through layers of fronted 
businesses. In most cases, what we see are front men. These seem- 
ingly legitimate management companies, working at the behest of 
the LCN figures, are usually disguised within a host of professional 
sounding corporations. 

These front men will in turn employ others who may not even 
be aware of the LCN involvement, but who willingly participate in 
the scheme or fraud which is contrary to the tribal interests. 

These management companies utilize a number of schemes 
aimed at skimming profits. These schemes and devices include 
management fees, shills, rigged games, and a host of other scams. 
In the end, the management firms end up with a profit and the In- 
dians end up holding the bag. 

My observations were shared by Tony Daniels, Assistant Director 
of the Criminal Investigative Division of the Federal Bureau of In- 
vestigation in his testimony before the U.S. Senate in 1989. 

One example is an LCN group in Florida. This group became in- 
volved in the control of bingo operations on the Seminole Indian 
Reservation in the 1980s. The LCN used front men, utilizing a 
group of management companies. 

This Miami-based LCN found willing participants in their 
schemes among corrupt tribal leaders. This LCN group also ac- 
quired direct interest in the manufacturing and sales of Indian 
gaming supplies. 

In 1989, I interviewed a connected member of the LCN who oper- 
ated gaming facilities on Indian reservations for the mob. He ad- 
vised that certain Indian gaming operations were financed and con- 
trolled by Anthony Acceturo. 

Mr. Acceturo, I don't think I need to describe who he is. He stat- 
ed that in order for the mob to hold their control over Indians, and 
this is the California case, that three tribal leaders were killed. 
Subsequently, they didn't have anymore problems. 

In testimony before the U.S. Senate on February 8, 1989, a wit- 
ness under the Witness Protection Program testified that he 



84-760 O - 94 - 1 2 



350 

skimmed money for the Luchese family on the Barona Reservation. 
He testified as an example that a $5,800 jackpot on the Barona 
Reservation was won by an employee of the paper supplier to the 
Indian reservation in a rigged game. 

He testified that Indian bingo is open territory for the mob. He 
stated that the mob is involved in laundering money through In- 
dian reservations. He also stated that he had personal knowledge 
of 12 Indian gaming operations directly controlled by the mob. 

ABC's Morton Dean recently filmed Eddie Somuna as he was 
managing the Viejas tribal gaming hall in California. Somuna was 
convicted of felony gaming charges in Detroit and is an alleged mob 
connection. 

In the meantime, there doesn't seem to be any Federal control 
of Indian gaming operations. My sources in Indian reservations in- 
dicate nothing has changed. The Indian gaming industry is wide 
open, with no control, "business as usual," the mob and corrupt of- 
ficial get the gold mine, the tribe gets the shaft. 

The theme of my testimony is we hear about these layers of Fed- 
eral people that are looking at Indian gaming. That simply just 
isn't true. You talk about the United States Attorney's office. They 
are prosecutors. They act on information given to them by the Fed- 
eral Bureau of Investigation. 

The Federal Bureau of Investigation acts on information it re- 
ceives alleging violations within their jurisdiction. But the FBI and 
U.S. Attorney's office do not act as regulators or oversight on these 
Indian gaming operations. 

Now, we have an Indian Gaming Commission that is supposed 
to do that. That is their job. I don't see how you could possibly do 
that job with less than 30 people. That would require a vast ex- 
panse of their staff, a few hundred investigators and some account- 
ants to determine what exactly is going on, where is the money 
coming from, where is it going to. You have to know this. 

If you have a management company operating an Indian gaming 
operation and they are billing out $5 million for purchases of slot 
machines, unless you go out to the reservation, count those slot 
machines, compare the serial numbers with the numbers on the in- 
voices and determine they actually spent that money, and the ma- 
chines are in place, you have no idea where the money went. 

[Prepared statement of Mr. Elroy follows:! 



351 



TESTIMONY OF RICHARD JAMES ELROY 

RETIRED SPECIAL AGENT — FBI 

BEFORE THE HOUSE SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

OCTOBER 5, 199 3 



My name is Richard James Elroy. I am a retired special agent with 
the FBI. For 16 years, I investigated matters involving Native 
Americans in Oklahoma. Oklahoma has the largest concentration of 
Native Americans in the United States. In 1989, I was assigned to the 
United States Senate, Committee on Investigations, Select Committee on 
Indian Affairs. During this assignment, I reviewed gambling activities 
on approximately 100 reservations in 24 states. 

In the course of my U.S. Senate assignment, I have found a 
pattern of activity relating to Indian Gaming operations. Almost 
without exception, Indian Tribal Officials contract with Non-Indian 
outside companies to build and operate their gambling operations. In 
the majority of cases these Non-Indian companies promise much but 
deliver little to the tribe. The corrupt tribal leader will do well, 
but the rank and file Indians get nothing. The contracts look good. 
They promise 50% of the net profits. There are no net profits. The 
profit is "skimmed" off. 

Connecting Indian management directly to traditional organized 
crime, such as La Cosa Nostra (LCN) is very difficult. The LCN 
members are very sophisticated and effective in being able to disguise 
their direct involvement and influence in these areas. They use a 
myriad of methods which camouflage them from public view. They hide 
their interests through layers of fronted businesses. In most cases 
what we see are front men. These seemingly legitimate management 
companies, working at the behest of the LCN figures, are usually 
disguised within a host of professional sounding corporations. 

These frontmen will in turn employ others who may not even be 
aware of the LCN involvement, but who willingly participate in the 
scheme or fraud which is contrary to the tribal interests. 

These management companies utilize a number of schemes aimed at 
skimming profits. Th^se schemes and devices include managei^pnt fees, 
shill players, rigged contests, and a host of other scams. In the end 
the management firms end up with the profit and the Indians end up 
holding the bag. My observations were shared by Tony Daniels, 
Assistant Director, Criminal Investigative Division of the FBI in his 
testimony before the U.S. Senate in 1989. 

One example is an LCN group in Florida. This group became 
involved in the control of bingo operations on the Seminole Indian 
Reservation in the 1980s. The LCN used front men utilizing a group of 
management companies. This Miami-based LCN found willing participants 
in their schemes among corrupt tribal leaders. This LCN group also 
acquired direct interest in the manufacturing and sales of Indian 
gaming supplies. 



352 



In 1989, I interviewed a connected member of the LCN who operated 
gaming facilities on Indian reservations for the mob. He advised that 
certain Indian gaming operations were financed and controlled by 
Anthony Acceturo, a made member of the LCN. He stated that in order 
for the mob to nold their control over the Indians, three dissenting 
tribal leaders were killed. Subsequently, the mob had no problems 
getting the tribal leadership to fall in line. 

In testimony before the US Senate on February 8, 1989, a witness, 
under the Witness Protection Program, testified that he skimmed money 
for the Luchese family on the Barona reservations. He testified as an 
example that a $5800 jackpot on the Barona reservation was "won" by an 
employee of the paper supplier to the reservation in a rigged game. 
He testified that Indian Bingo is open territory for the mob. He 
stated the mob is involved in laundering money through Indian 
Reservations. He stated he had personal knowledge of twelve Indian 
Gaming operations directly controlled by the mob. 

ABC's Morton Dean recently filmed Eddie Somuna as he was managing 
the Viejas tribal gambling hall in California. Somuna was convicted 
of felony gambling crimes in Detroit and is an alleged mob associate. 

In the meantime, there is no federal control of Indian Gaming 
operations. My sources on Indian reservations state that nothing has 
changed. The Indian Gaming Industry is wide open, with no control. 
Business as usual, the mob and corrupt tribal leaders get the gold 
mine and the tribal members get the shaft. 

#### 



353 

Mr. Abercrombie. Thank you very much. 

Mr. Elroy, you mentioned in your testimony that you worked for 
the Select Committee on Indian affairs. Inasmuch as the law was 
passed in 1988, and in effect, came into being in — for effective oper- 
ation in 1989, did you — ^you mentioned here about what happened 
during the 1980s. Does most of your investigatory activity concern 
gaming activities prior to the passage of the act or the implementa- 
tion, is inadequate, as you characterize it? 

Mr. Elroy. I would say that is accurate. In 1989, we were look- 
ing at this, and the Indian Gaming Commission actually was cre- 
ated by law at that time, but they were not operational. But my 
point is that assuming that the Indian Gaming Commission desires 
to do the job, which I would have no reason to believe they 
wouldn't, I have some idea of what it takes to have oversight of 
those type of operations. 

Mr. Abercrombie. Did you say you are retired? 

Mr. Elroy. Yes, sir. 

Mr. Abercrombie. Well then, you might be available at this 
stage, at least, to consult or something of that nature? 

Mr. Elroy. I have done some 

Mr. Abercrombie. I don't mean that lightly, in other words, I get 
the thrust of your testimony. 

Mr. Elroy. You can't do it with 30 people, sir. 

Mr. Abercrombie. I understand that. Did you have an oppor- 
tunity to investigate, at that time, what the potential compact ar- 
rangements might be, or have you had an opportunity to look at 
the compact arrangements since then? 

Mr. Elroy. I have looked at some of them. However, the problem 
with the compact arrangements, as has been pointed out, is that 
there is very little uniformity. I think it is even for the State to get 
involved. There is a myriad of constitutional questions that deal 
with the State enforcing the law on these Indian reservations. 

Mr. Abercrombie. What about the point that was raised during 
the testimony of Mr. Palmer, the IRS, and the Department of Jus- 
tice, that the State of Nevada has at least what purports to be a 
parallel system of auditing and investigation upon which the Fed- 
eral Government relies, and more particularly, the IRS, and that 
they are now about to undergo at least some joint operations. 

I presume they will take selected, random audits and go over 
them jointly. What would you think about that kind of a proposal, 
that a similar kind of arrangement be put into effect with the var- 
ious — within the various compacts, within the various States that, 
at a minimum, the tribes — and it had also been suggested in other 
testimony — that the tribes would be willing to put together the 
tribal version of the Nevada arrangement and work with the Fed- 
eral Government? 

Mr. Elroy. I think that certainly the State could cooperate with 
the Federal Government, if there was an enabling legislation to 
allow them to do that, and in conjunction with sufficient Federal 
oversight that you might accomplish your task. 

Mr. Abercrombie. Would you agree that it is in the interests of 
the tribes to have a crime-free atmosphere, within their interests, 
certainly, to be able to address from a public perception point of 



354 

view, that they are attacking this issue vigorously and without any 
reservation? 

Mr. Elroy. It has been my experience in deaUng on the Indian 
reservations with the Indian people that they are absolutely op- 
posed to corruption and organized crime on the reservation. I don't 
remember anybody telling me they wanted that there. And they 
are — and we are talking about the rank-and-file Indian people, 
where they would be very supportive of any type of oversight that 
would keep that type of corruption out and would return the mon- 
ies to the benefit of the Indian people. 

This does not mean that there aren't some officials within the 
tribe that don't want to see any of this oversight. 

Mr. Abercrombie. That would be the case in almost any enter- 
prise; right? 

Mr. Elroy. Probably so. 

Mr. Abercrombie. What I am looking for here, for the purposes 
of our legislative activity, is solutions to these kinds ever difficul- 
ties, and so I would think — my conclusion from your testimony is 
that the route for us to pursue legislatively is to see that adequate 
enforcement personnel are made available and that the compacts 
are such that whatever State or whatever other agency is involved 
in the enforcement side is that they be coordinated in such a way 
as to see to it that the tribes are not disadvantaged? 

Mr. Elroy. Yes, sir. 

Mr. Abercrombie. Very good. Thank you very much. 

STATEMENT OF MICHAEL BROWN 

Mr. Abercrombie. Mr. Brown, you are president and CEO of a 
casino in Connecticut, right? 

Connecticut has been brought up so many times today, I am 
sorry that you are at the end of the testimony, but perhaps that 
is all to the good because you had an opportunity to hear a full 
range of discussion about Connecticut. 

I believe you are accompanied by Lieutenant Colonel Root of the 
State police. 

Mr. Brown. That is correct. 

Mr. Abercrombie. Then we will have Mr. Johnson and Mr. Pow- 
ell from Minnesota. 

But why don't we go to Connecticut then, Mr. Brown and Mr. 
Root, perhaps you might want to combine your testimony. 

Mr. Brown. I will give some comments, then Lieutenant Colonel 
Root will answer questions, if there are any. 

Mr. Abercrombie. Very good. Thank you very much for your pa- 
tience. 

Mr. Brown. Thank you for waiting to listen to us. 

Mr. Chairman, I serve as the President and Chief Executive Offi- 
cer of Foxwoods Casino, which is located in southeast Connecticut. 
It is owned and operated by the Mashantucket Pequot Tribe, and 
I emphasize "operated" because there is no management company. 
We are all employees of the tribe. 

I previously served as a prosecutor for the New Jersey Attorney 
Genersd's office for nine years, and before that, served for two years 
as a Director of the Division of Gaming Enforcement in New Jer- 
sey. And with the tribe, entered into the compact negotiation proc- 



355 

ess with the State of Connecticut in May of 1990, they hired me 
as an attorney to assist them in developing a strict regulatory coop- 
erative effort between the Mashantucket Pequot TYibe and the 
State of Connecticut. 

I will dispense with any prepared remarks and just try to sum- 
marize for you why we believe that although Foxwoods is the larg- 
est casino in the United States and it is probably the most finan- 
cially successful casino in the United States, it is also the most 
highly regulated casino in the United States. 

To my right is a chart which lists some of the regulations that 
are put in place under the compact that we agreed to with the 
State of Connecticut. We are regulated basically by four agencies: 
The first agency is the Mashantucket Pequot Tribal Gaming Com- 
mission, which supervises the on-site regulation and compliance 
with the internal controls in the casino. 

Behind me is George Henningsen, who is the Chairman of the 
Mashantucket Pequot Tribal Gaming Commission, and for five 
years before that, he served as the Deputy Director of Gaming En- 
forcement in the State of New Jersey. We imported a lot of help. 

The Division of Special Revenue is the agency, the State agency, 
which licenses all people who work in the gaming industry in the 
State of Connecticut, and by compact they must license every per- 
son before they can work in Foxwoods Casino. I am licensed by the 
State of Connecticut. 

Once we file a license application with the State of Connecticut, 
it is turned over to the Connecticut State Police that do a back- 
ground investigation on the applicant. They report back to Special 
Revenue, and the State of Connecticut Special Revenue determines 
whether or not to issue a gaming license. They have absolute au- 
thority over licensing gaming employees. 

The Connecticut State Police by compact have the authority to 
enforce all of the criminal statutes of the State of Connecticut in 
and around the casino. They also assign Connecticut State Police 
inside the facility 24 hours a day, something that does not exist in 
any other casino in the United States. 

Mr. Abercrombie. Mr. Brown. 

Mr. Brown. Yes. 

Mr. Abercrombie. I have something I have to take care of at a 
quarter to three, which is right now. If you would — and the rest of 
the panel, would excuse me for just a few minutes, that can be 
handled, and I will be right back. 

I am sorry there are no other Members to be able to shift to, so 
if we could call a recess for five minutes. 

Mr. Brown. Thank you. 

[Recess.] 

Mr. Abercrombie. Mr. Brown, please accept my apologies. We 
have been able to work things out. We did not anticipate the length 
of today's hearing, so a whole lot of adjustments had to be made, 
and I am sure, including you folks on the panel. I am very grateful 
for your patience. 

Please continue. 

Mr. Brown. I will be brief. 

After the employees are licensed by the Division of Special Reve- 
nue, they are allowed to go to work. We also had State liquor con- 



356 

trol agents on site during all hours of dispensing of alcohol in the 
facility. We pay the entire cost of the State regulatory efforts in our 
facility, which fiscal year 1994 is going to equal $3.8 million. 

With regard to the contributions that we make to the community, 
we employ, as of last Friday, we handed out paychecks for 7,150 
people. Eighty percent of those people live in the State of Connecti- 
cut. Those are jobs that did not exist before. 

We have an annualized payroll and benefit package cost of $202 
million a year. In January of this year, the State of Connecticut 
needed some additional money for their treasury, and the tribe 
wished to implement slot machines, which did not previously exist. 
By a two-page written agreement between the Governor of the 
State of Connecticut and the Chairman of the Mashantucket 
Pequot Tribe, we agreed to guarantee a contribution of $100 mil- 
lion a year to the State of Connecticut out of our slot revenues, or 
25 percent of our revenue, whichever is greater. There is no casino 
in the United States that gives $100 million a year off the top to 
the State in which that casino is located. 

We have — the tribe has utilized most of the revenue from the ca- 
sino to finish an expansion and pay for the original building and 
a second casino hotel entertainment complex which is going to open 
up between now and November 1st. It has also a state-of-the-art 
child development center. It is using funds to build a Native Amer- 
ican museum. It has a full health service for tribal members, hous- 
ing for tribal members, fire department, emergency medical serv- 
ices, which serves not only the reservation but the surrounding 
communities. It has a college tuition fund for any tribal men that 
wishes to advance themselves further in education. 

We think that the Indian Gaming Regulatory Act has been a suc- 
cess for the Mashantucket Pequot Tribe and the community sur- 
rounding that reservation and for the State of Connecticut. 

Thank you. 

Mr. Abercrombie. Thank you very much, 

[Prepared statement of Mr. Brown follows:] 



357 



TESTIMONY 

OF 

G. Michael Brown, Esquire 

President & Chief Executive Officer 

Foxwoods Casino, Mashantucket Pequot Nation 

on 

INDIAN GAMING LAW ENFORCEMENT 

before the 

SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

of the 

HOUSE COMMITTEE ON NATURAL RESOURCES 

on 

October 5, 1993 



358 



TESTIMONY 

of 

G. Michael Brown, Esquire 

President and Chief Executive Officer 

Foxwoods Casino, Mashantucket Pequot Nation 

on 

INDIAN GAMING LAW ENFORCEMENT 

before the 

SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

of the 

HOUSE COMMITTEE ON NATURAL RESOURCES 

on 

October 5, 1993 

GOOD MORNING MR. CHAIRMAN. I AM MICKEY BROWN, PRESIDENT 
AND CHIEF EXECUTIVE OFFICER FOR FOXWOODS CASINO, WHICH IS OWNED 
AND OPERATED BY THE MASHANTUCKET PEQUOT TRIBE IN LEDYARD, 
CONNECTICUT. THE PEQUOTS ARE A SMALL BUT AMBITIOUS TRIBE WITH 
APPROXIMATELY 280 MEMBERS, LOCATED IN SOUTHEASTERN 
CONNECTICUT. PREVIOUSLY, I SERVED AS A PROSECUTOR FOR NINE YEARS 
IN THE NEW JERSEY ATTORNEY GENERAL'S OFFICE, AND FOR TWO YEARS 
AS DIRECTOR OF THE DIVISION OF GAMING ENFORCEMENT IN NEW JERSEY, 
WHERE WE DEVELOPED WHAT WE BEUEVE IS A MODEL FOR REGULATING 
CASINO GAMBLING. I HAVE ALSO ASSISTED A NUMBER OF OTHER 
JURISDICTIONS IN SETTING UP REGULATORY SYSTEMS, MOSTLY IN 
AUSTRALIA. THE TRIBE ASKED ME TO SERVE AS HRST CHAIRMAN OF 
THEIR TRIBAL REGULATORY AGENCY, WHICH I DID UNTIL JANUARY OF 
1993 WHEN I BECAME FOXWOODS' PRESIDENT AND CHIEF EXECUTIVE 
OFHCER. THE TRIBE ALSO HIRED GEORGE HENNINGSEN, WHO FOR THE 
PREVIOUS FIVE YEARS HAD SERVED AS DEPUTY DIRECTOR OF THE 
DIVISION OF GAMING ENFORCEMENT IN NEW JERSEY. GEORGE SERVES AS 
THE FULL-TIME EXECUTIVE DIRECTOR OF OUR TRIBAL GAMING 
COMMISSION. ACCOMPANYING ME IS MR. GEORGE HENNINGSEN, 
EXECUTIVE DIRECTOR OF THE MASHANTUCKET PEQUOT TRIBAL GAMING 
COMMISSION AND LT. COLONEL ROBERT ROOT OF THE CONNECTICUT 
STATE POUCE. AT THE END OF THIS TESTIMONY, WE WILL BE HAPPY TO 
RESPOND TO ANY QUESTIONS YOU MAY HAVE. FOLLOWING IS MY 
TESTIMONY WHICH I SUBMIT ON BEHALF OF THE MASHANTUCKET PEQUOT 
TRIBE AND FOXWOODS CASINO. 

INDIAN GAMING REGULATORY ACT -IN SEPTEMBER, 1988. THE UNITED 



359 



STATES CONGRESS CONSIDERED AND PASSED THE INDIAN GAMING 
REGULATORY ACT ("ACT"). THE ACT DEFINES THE RIGHTS OF INDIAN 
TRIBAL GOVERNMENTS TO CONDUCT GAMING ACTIVITIES ON THEIR 
FEDERALLY RECOGNIZED RESERVATIONS. THE ACT WAS THE RESULT OF 
SEVERAL YEARS OF DISCUSSION AND NEGOTIATIONS BETWEEN INDIAN 
TRIBES, STATES, THE GAMING INDUSTRY, THE ADMINISTRATION, AND THE 
CONGRESS IN AN ATTEMPT TO FORMULATE A SYSTEM FOR REGULATING 
GAMING ON INDIAN LANDS. THE ACT SETS UP A SYSTEM OF JOINT 
REGULATION BY TRIBES AND THE FEDERAL GOVERNMENT FOR CERTAIN 
GAMING ON INDIAN LANDS AND A SYSTEM FOR COMPACTS BETWEEN 
TRIBES AND STATES FOR REGULATION OF CASINO GAMING. 

NUMEROUS INDIAN TRIBES THROUGHOUT THE UNITED STATES HAVE 
ENTERED INTO COMPACTS TO CONDUCT CLASS III TYPE GAMING 
ACTIVITIES. TO DATE, 78 TRIBAL STATE COMPACTS HAVE BEEN APPROVED 
BY THE SECRETARY OF THE INTERIOR TO ALLOW TRIBES SOME FORM OF 
CLASS III GAMING. ELEVEN SUCH COMPACTS HAVE BEEN APPROVED IN THE 
STATE OF MINNESOTA, FOUR IN CALIFORNIA, PLUS WASHINGTON, NEVADA, 
NEBRASKA, SOUTH DAKOTA AND CONNECTICUT. ADDITIONALLY, SEVEN (7) 
COMPACTS HAVE BEEN SIGNED BY THE GOVERNOR OF MICHIGAN AND ARE 
NOW PENDING LEGISLATIVE APPROVAL. 

AS YOU KNOW FROM PREVIOUS HEARINGS, MINNESOTA ALONE HAS 
A DOZEN TRIBES ENGAGED IN GAMING IN MOSTLY MID-SIZE CASINOS 
OFFERING ONLY BLACKJACK AND VIDEO MACHINES. RELATIONS BETWEEN 
THE VARIOUS TRIBES AND THE STATE OF MINNESOTA HAVE BEEN VERY 
COOPERATIVE RESULTING IN ENORMOUS FINANCL\L SUCCESS (ESTIMATED 
THAT GAMING REVENUES ON RESERVATIONS IN MINNESOTA HAVE 
REACHED IN EXCESS OF $300 MILUON ANNUALLY), THE EUMINATION OF 
UNEMPLOYMENT AND THE DEVELOPMENT OF COMMUNITY CENTERS, 
HEALTH CARE CENTERS AND SCHOOLS. MANY, MANY OTHER TRIBES 
THROUGHOUT THE UNITED STATES UMIT THEIR GAMING ACTIVITIES TO 
BINGO AND BINGO RELATED GAMES UNDER CLASS U AND THEREFORE DO 
NOT HAVE A NEED TO NEGOTIATE A TRIBAL STATE COMPACT. 

MASHANTUCKET PEOUOT NATION'S EXPERIENCE - LET ME OFFER 
SOME BACKGROUND ON HOW THE MASHANTUCKET PEQUOT TRIBE 
ENTERED INDIAN GAMING. THE TRIBE OCCUPIES A RESERVATION OF 
APPROXIMATELY 1200 ACRES IN THE ROLLING HILLS OF SOUTHEASTERN 
CONNECTICUT, ABOUT 45 MILES EAST OF HARTFORD AND 25 MILES SOUTH 
OF PROVIDENCE, RHODE ISLAND. THE TRIBE OPENED A HIGH STAKES 
BINGO HALL IN 1986 IN AN EFFORT TO SUPPLEMENT ITS STATE AND 
FEDERAL FUNDING AND INCOME FROM A SMALL SAND & GRAVEL 
OPERATION. THE TRIBE INITIALLY EMPLOYED ANOTHER INDIAN TRIBE TO 



360 



ASSIST IN MANAGING THE HALL, AND AFTER TWO YEARS, PEQUOT TRIBAL 
MEMBERS ASSUMED FULL RESPONSIBIUTY FOR MANAGEMENT. THE 
OPERATION WAS A FINANCIAL SUCCESS AND WON WIDESPREAD RESPECT 
IN CONNECTICUT FOR ITS STYLE AND PROFESSIONALISM. THE TRIBE 
STARTED THE BINGO HALL WITH ASSISTANCE FROM A LOAN GUARANTEE 
BY THE BUREAU OF INDIAN AFFAIRS. THAT LOAN WAS REPAID IN FULL IN 
1991, AHEAD OF TIME, AND THE GUARANTEE RETURNED TO THE BUREAU. 
(THE BINGO OPERATION NOW GROSSES $20 MILLION PER YEAR AND NETS 
ABOUT $4 MILLION ANNUALLY.) 

SHORTLY AFTER THE INDIAN GAMING REGULATORY ACT PASSED, 
THE TRIBE ASKED CONNECTICUT TO ENTER NEGOTIATIONS FOR A TRIBAL- 
STATE COMPACT. AS CONNECTICUT PERMITS GAMES OF CHANCE, ALBEIT 
IN A HIGHLY REGULATED FORM, SUCH GAMING IS NOT IN CONFLICT WITH 
THE STATE'S PUBLIC POLICY. CONNECTICUT PERMITS MANY FORMS OF 
GAMBLING. SUCH AS A STATE-OPERATED LOTTERY, BINGO, JAI ALAI AND 
VARIOUS FORMS OF PARI-MUTUEL BETTING ON HORSES AND DOG RACES. 
LARGE AMOUNTS MAY BE BET AND SUBSTANTIAL WINNINGS ARE 
PERMITTED. CONNECTICUT REGULATES, RATHER THAN PROHIBITS, 
GAMBLING IN GENERAL AND GAMES OF CHANCE IN PARTICULAR. 
CONNECTICUT PERMITS ANY NONPROFIT ORGANIZATION, ASSOCIATION OR 
CORPORATION TO PROMOTE AND OPERATE GAMES OF CHANCE, OR LAS 
VEGAS NIGHTS, TO RAISE FUNDS FOR THE PURPOSES OF SUCH 
ORGANIZATIONS, SUBJECT TO CERTAIN LIMITATIONS AND RESTRICTIONS, 
SUCH AS LIMITS ON THE SIZE OF WAGERS, CHARACTER OF PRIZES, AND 
FREQUENCY OF OPERATION. CONNECTICUT ANNOUNCED THAT IT WOULD 
NOT NEGOTIATE AT ALL ABOUT CASINO GAMES, EVEN THOUGH SUCH 
GAMES WERE PERMITTED AT CHARITABLE LAS VEGAS NIGHTS AND 
CARNIVALS, AND EVEN THOUGH CONNECTICUT REGULATES MORE THAN 
$1 BILUON ANNUALLY IN OTHER LEGAL WAGERING ACTIVITIES. THE TRIBE 
FILED SUIT IN 1989 TO FORCE THE STATE TO NEGOTIATE. THE U.S. DISTRICT 
COURT RULED IN MAY OF 1990 THAT CONNECTICUT WAS OBUGATED TO 
BARGAIN OVER ALL ISSUES, INCLUDING CASINO GAMES. 

FOLLOWING THAT INITIAL COURT DECISION, THE TWO SIDES SAT 
DOWN IN THE SUMMER OF 1990 TO WORK OUT A COMPACT. THE TRIBE 
ASKED ME TO ASSIST THEM IN THESE NEGOTIATIONS BECAUSE OF MY OWN 
EXPERIENCE IN LAW ENFORCEMENT AND GAMING REGULATION. 

DURING THE SUMMER OF 1990. WE ENGAGED IN INTENSIVE, EARNEST 
BARGAINING WITH CONNECTICUT STATE OFnCL\LS TO WORK OUT A 
COMPACT. THE TRIBE WAS WILLING TO ACCEPT, AND IN FACT 
ENCOURAGED, A SUBSTANTIAL STATE ROLE IN HELPING TO REGULATE 
GAMING ON THE RESERVATION. IN RETURN, WE ASKED THE STATE TO 



361 



ACCEPT THE TRIBE'S GOAL OF A COMPACT WHICH WOULD ALLOW FOR A 
SINGLE, SUBSTANTIAL ECONOMIC ENTERPRISE BASED ON CASINO GAMING. 
IN THE END, WE REACHED NEARLY COMPLETE AGREEMENT ON A COMPACT 
WHICH PERMITTED THE TRIBE TO ESTABLISH A FULL-SCALE CASINO, AND 
TRIBAL GAMING REGULATORY AGENCY, WHILE THE STATE RETAINED 
POWER TO LICENSE ALL CASINO EMPLOYEES AND GAMING SUPPLIERS, AND 
TO POLICE THE CASINO ITSELF. 

FOX WOODS' REGULATION/LAW ENFORCEMENT - PURSUANT TO THE 
COMPACT, THE CONNECTICUT STATE POLICE HAVE JURISDICTION TO 
ENFORCE ALL CONNECTICUT CRIMINAL LAWS ON THE RESERVATION, 
INCLUDING ENFORCEMENT WITHIN THE CASINO. THE STATE POLICE HAVE 
ACCESS TO ALL LOCKED AND SECURED AREAS OF THE GAMING FACILITY 
AND MAY STATION TROOPERS AT THE GAMING FACILITY TO COORDINATE 
LAW ENFORCEMENT IN AND AROUND THE CASINO. THE CONNECTICUT 
STATE POLICE MAY UNDERTAKE SUCH INVESTIGATION OF GAMING 
EMPLOYEES AND NON-GAMING EMPLOYEES AS IT DEEMS APPROPRIATE 
AND SHALL ALSO INVESTIGATE THE BACKGROUNDS OF GAMING SERVICE 
APPLICANTS. THEY ARE STATIONED ON PROPERTY 24 HOURS A DAY. THE 
COMPACT COMMITTED THE TRIBE TO FUNDING THE STATE COST OF 
REGULATION, FOLLOWING THE NEW JERSEY SYSTEM. THE STATE AND THE 
TRIBE AGREED TO SUBMIT NEARLY MATCHING PROPOSALS TO A COURT- 
APPOINTED MEDIATOR SO THAT THE COMPACT COULD BE IMPLEMENTED 
BY THE INTERIOR DEPARTMENT, WITHOUT LIMITING THE STATE'S RIGHT 
TO APPEAL THE ORIGINAL COURT DECISION. THE STATE DID APPEAL, BUT 
THE DISTRICT COURT WAS UPHELD BY A UNANIMOUS SECOND CIRCUIT 
DECISION, AND THE U.S. SUPREME COURT DENIED CERTIORARI IN APRIL OF 
1991. 

UNDER THE COMPACT, THE TRIBE AGREED TO ESTABLISH A 
REGULATORY COMMISSION TO ENFORCE A DETAILED SYSTEM OF 
MANAGEMENT CONTROLS AND OVERSIGHT. THE TRIBAL GAMING AGENCY, 
THE MASHANTUCKET PEQUOT GAMING COMMISSION, WAS CREATED BY 
TRIBAL ORDINANCE ON FEBRUARY 25, 1991. THE TRIBAL GAMING 
COMMISSION HAS THE PRIMARY RESPONSIBILITY FOR ON-SITE REGULATION 
OF THE GAMING OPERATION AND UTILIZES NON-UNIFORM INSPECTORS 
WHO ARE PRESENT IN THE GAMING FACILITY DURING ALL HOURS OF 
OPERATION AND WHO ARE ACCOUNTABLE ONLY TO THE TRIBAL GAMING 
AGENCY. TRIBAL GAMING INSPECTORS ARE LICENSED TO THE SAME 
STANDARD AS GAMING EMPLOYEES BY THE STATE GAMING AGENCY. THE 
TRIBAL GAMING AGENCY MUST DISCLOSE TO THE STATE GAMING AGENCY 
THE PROGRAM OF INSTRUCTIONAL AND ON-THE-JOB TRAINING, SYSTEM OF 
INTERNAL ORGANIZATION INCLUDING A COMPENDIUM OF ALL POSITIONS 
FOR DEALERS AND SUPERVISORY POSITIONS IN EACH TABLE GAME. THE 



362 



TRffiAL GAMING COMMISSION MUST ENSURE THE PROPER TRAINING AND 
QUALIFICATIONS FOR EACH PERSON OCCUPYING A DESIGNATED POSITION 
IN THE GAMING FACILITY. THE COMMISSION HAS APPROVED AND ADOPTED 
STANDARDS OF OPERATION AND MANAGEMENT. THE INITIAL STANDARDS 
OF OPERATION AND MANAGEMENT ARE INCLUDED IN THE COMPACT AS 
APPENDIX A. 

THE COMMISSION MAINTAINS SURVEILLANCE, SECURITY, CASHIER 
CAGE, CREDIT, AND COMPLIMENTARY SERVICES LOGS WHICH SHALL BE 
MADE AVAILABLE TO THE STATE GAMING AGENCY UPON REQUEST. THE 
COMMISSION MAINTAINS A LIST OF PERSONS BARRED FROM THE GAMING 
FACILITY BECAUSE OF THEIR CRIMINAL HISTORY OR ASSOCIATION WITH 
CAREER OFFENDERS, INCLUDING THE NEVADA AND NEW JERSEY BLACK 
LISTS. THE COMMISSION APPROVES RULES OF EACH GAME AND NOTIFIES 
THE STATE GAMING AGENCY OF ANY CHANGES. 

GEORGE HENNINGSEN AND I HAVE BEEN MEETING WITH THE STATE 
POLICE, THE F.B.I. , AND OTHER FEDERAL, STATE AND LOCAL LAW 
ENFORCEMENT AGENCIES TO COORDINATE A LAW ENFORCEMENT 
STRATEGY TO MAKE SURE THE CASINO IS AS RIGOROUSLY CONTROLLED 
AS ANY GAMING ENTERPRISE IN THE WORLD. THE COMMISSION HAS ALSO 
BEEN CONSULTING WITH THE STATE AGENCIES TO REACH CONSENSUS ON 
THE RESOURCES NEEDED BY THE STATE TO ADEQUATELY POLICE THE 
CASINO AND INVESTIGATE THE BACKGROUNDS OF CASINO EMPLOYEES. 

ON FEBRUARY 15, 1992 THE MASH ANTUCKET PEQUOT NATION OPENED 
THE LARGEST TRIBAL GAMING ENTERPRISE IN THE UNITED STATES 
ESTABUSHED UNDER THE ACT AND IT HAS NOT CLOSED SINCE OPENING 
DAY. THE FOXWOODS CASINO CURRENTLY EMPLOYS 6,720 PEOPLE, 80% OF 
WHOM ARE CONNECTICUT RESIDENTS. THE FOXWOODS CASINO HAS BEEN 
CONSTRUCTED AT A COST OF $210 MILLION WITH AN ADDITIONAL $37 
MILLION FOR FURNITURE, FIXTURES AND EQUIPMENT. BUILT ADJACENT 
TO THE EXISTING BINGO HALL, THE CASINO COMPLEX HAS TWO 
RESTAURANTS, A BUFFET, A TRIBAL GIFT SHOP, A 175 ROOM HOTEL AND A 
GAMING AREA OF 139,000 SQUARE FEET, IN WHICH 233 TABLE GAMES AND 
3,137 SLOT MACHINES ARE LOCATED. THE AVERAGE DAILY DROP IS $4.4 
MILLION WITH A WIN AVERAGING $1,625 MILLION PER DAY FOR ALL 
GAMING. 

WITH BROAD SUPPORT FROM LOCAL BUSINESS AND LABOR LEADERS, 
THE TRIBE HAS PLAYED A MAJOR ROLE IN REBUILDING THE SAGGING 
ECONOMY OF SOUTHEASTERN CONNECTICUT, WHICH HAS BEEN 
SUBSTANTIALLY DEPENDENT ON DEFENSE SPENDING IN RECENT YEARS. 
THIS GROWTH AND REBUILDING PROCESS WILL CONTINUE AS THE TRIBE 



363 



OPENS ITS NEW 312 ROOM HOTEL, TWO NEW RESTAURANTS, 15 RETAIL 
SHOPS, HEALTH CLUB, POOL, SPA, BEAUTY SALON, TURBO RIDE. 360 
THEATER AND 1,500 SEAT SHOWROOM THIS NOVEMBER. 

COVERING COSTS FOR TRIBAL/STATE REGULATION - THE CHAIRMAN 
OF THE TRIBE, RICHARD HAYWARD, AND CONNECTICUT GOVERNOR 
LOWELL P. WEICKER HAVE SIGNED A MEMORANDUM OF UNDERSTANDING 
WHICH COMMITS THE TRIBE TO FUND $1.3 MILLION IN STATE 
EXPENDITURES FOR CASINO REGULATION . DURING THE FIRST SIX MONTHS 
OF OPERATION. THE COST OF CONNECTICUT STATE POLICE ON-SITE 
SERVICES FOR THEIR FISCAL YEAR 1993 PAID BY THE TRIBE WAS $1,826,000. 
THIS IS IN ADDITION TO THE REGULATORY COST OF $535,879.00 PAID TO 
CONNECTICUT SPECIAL REVENUE DIVISION FOR FY 93 AND $344,000.00PAID 
TO THE CONNECTICUT LIQUOR CONTROL DIVISION FOR COSTS OF AGENTS 
WORKING ON-SITE DURING ALL HOURS THAT UQUOR IS SERVED. 

ANTICIPATED REGULATORY COSTS TO BE PAID BY THE TRIBE TO THE 
STATE IN FISCAL YEAR 1994 ARE AS FOLLOWS: 

CONNECTICUT STATE POLICE - $2,339,916; 

CONNECTICUT SPECIAL REVENUE DIVISION - $1,002,691 AND 

CONNECTICUT LIQUOR CONTROL -$623,529 

TOTAL -$3,966,136.00 

COSTS FOR TRAFFIC CONTROL ARE ALSO BORNE BY THE TRIBE. OFF 
DUTY CONNECTICUT STATE POLICE SERVE AS TRAFFIC CONTROL OFFICERS 
FOR FOXWOODS WHICH IS LOCATED ON ROUTE 2 IN LED YARD, 
CONNECTICUT. TRAFFIC CONTROL COSTS FOR THE STATE'S FISCAL YEAR 
1993 AMOUNTED TO $950,000. FISCAL YEAR 1994 ESTIMATES FOR THOSE 
EXPENSES ARE ANTICIPATED AT $1.5 MILLION. 

THE TRIBE WILL NOT EMPLOY ANY MANAGEMENT COMPANY TO 
OPERATE THE CASINO. FOLLOWING THE MODEL WHICH IT USED 
SUCCESSFULLY TO MANAGE ITS BINGO HALL, THE TRIBE'S CASINO 
EXECUTIVES WILL SERVE AS EMPLOYEES OF THE TRIBAL COUNCIL. THE 
TRIBE ORIGINALLY HIRED ALFRED LUCIANI TO SERVE AS CHIEF 
EXECUTIVE OF ITS GAMING PROJECT; MR. LUCIANI WAS IN THE NEW JERSEY 
ATTORNEY GENERAL'S OFFICE FOR TEN YEARS, AND HELPED WRITE THE 
CASINO CONTROL ACT IN NEW JERSEY. AFTER LEAVING GOVERNMENT, HE 
ENTERED GAMING MANAGEMENT AND SUCCESSFULLY MANAGED THE 
GOLDEN NUGGET IN NEW JERSEY AND NEVADA AND RESORTS 
INTERNATIONAL CASINO IN ATLANTIC CITY. THE TRIBE PICKED MR. 
LUCIANI BECAUSE OF HIS IMPECCABLE REPUTATION FOR INTEGRITY, AS 
WELL AS HIS EXPERTISE. HE ASSEMBLED A TALENTED EXECUTIVE TEAM 



364 



INCLUDING BOTH TRIBAL MEMBERS AND NON-MEMBERS, AND THE TRIBE 
HAS TRAINED LOCAL RESIDENTS TO FILL SKILLED POSITIONS IN THE CASINO 
AND HOTEL PROPERTIES. 

FOXWOODS' ECONOMIC IMPACT -THE PEQUOTS' SUCCESS IS A MODEL 
OF EFFECTIVE IMPLEMENTATION OF THE INDIAN GAMING REGULATORY 
ACT. WE HAVE A SOUND REGULATORY SYSTEM IN PLACE. INDEED, WE 
HAVE PERHAPS THE MOST HIGHLY REGULATED CASINO IN THE INDUSTRY, 
UTIUZING THE CONNECTICUT STATE POLICE, LIQUOR CONTROL AND 
SPECIAL REVENUE AGENTS. THIS IS A FIRST CLASS GAMING ENTERPRISE. 
IT HAS PRODUCED THOUSANDS OF JOBS IN THE SURROUNDING 
COMMUNITY, AND TENS OF MILLIONS IN PAYROLL AND SERVICES. IN THE 
MEMORANDUM OF UNDERSTANDING BETWEEN THE PEQUOTS AND THE 
STATE OF CONNECTICUT, SIGNED JANUARY 13, 1993, THE TRIBE AGREED TO 
PAY THE STATE $100,000,000 AND RECEIVED EXCLUSIVITY FOR THE RIGHT 
TO OPERATE SLOT MACHINES AT FOXWOODS. THE STATE IS FREE, AT ANY 
TIME, TO INTRODUCE SLOT MACHINES ELSEWHERE IN THE STATE BUT IF 
THAT HAPPENS, THE TRIBE DISCONTINUES THE SLOT REVENUE SHARING. 
ADDITIONALLY, WHEN THE STATE OF CONNECTICUT WAS SHORT $13,000,000 
TO BALANCE THEIR BUDGET THIS PAST YEAR, THE TRIBE KICKED IN THE 
NECESSARY AMOUNT IN ORDER TO ASSIST THE STATE GOVERNMENT. 
UNDOUBTEDLY, THE MASHANTUCKET PEQUOT TRIBE IS THE LARGEST 
CONTRIBUTOR TO THE STATE OF CONNECTICUT'S COFFERS AT THIS POINT 
IN TIME. FOXWOODS WILL ENABLE THE TRIBE TO BECOME AN ECONOMIC 
LEADER IN ITS REGION, AND TO REAUZE ITS OWN GOAL OF CREATING AN 
IMPORTANT RESORT CENTER, HIGHLIGHTED BY A MAJOR MUSEUM AND 
RESEARCH CENTER ON AMERICAN INDL^lN HISTORY AND CULTURE. 

A QUESTION FREQUENTLY ASKED IS IF TRIBES CANNOT PLEDGE 
ASSETS AS COLLATERAL, HOW CAN THEY OBTAIN CONSTRUCTION 
FINANCING. ALMOST ALL TRIBES HAVE TO LOOK OFF SHORE AS THE 
PEQUOTS DID. INDL\N TRIBES HAVE THE RIGHT TO ISSUE TAX FREE 
MUNICIPAL TYPE BONDS. ALTHOUGH A TRIBE CANNOT MORTGAGE LAND 
HELD IN FEDERAL TRUST, THEY CAN PLEDGE ASSETS, THE BUILDING FF&E 
AS SECURITY FOR A LOAN, AND THEY CAN PLEDGE A SUCCESS FEE IN 
ADDITION TO BASE INTEREST. DURING THE MASHANTUCKET PEQUOT 
SEARCH FOR HNANCING WHICH INCLUDED PRESENTATION TO MORE THAN 
23 BANKING INSTITUTIONS IN THE UNITED STATES, OUR ONLY OTHER 
POSSIBLE SOURCE FOR HNANCING WAS A FOREIGN LONG TERM CREDIT 
BANK. OUR RELATIONSHIP HAS BEEN FRUITFUL AND WAS BUILT ON TRUST. 
THE NEW CASINO EXPANSION WHICH OPENED SEPTEMBER 3, 1993, WAS 
BUILT PRIMARILY OUT OF CASH FLOW NEGATING THE NEED TO LOOK FOR 
ALTERNATIVE FINANCING. PROFITS FROM FOXWOODS PAY FULL COLLEGE 
TUITION FOR MASHANTUCKET PEQUOT TRIBAL MEMBERS, PROVIDE 



365 



QUAUTY HOUSING, A STATE OF THE ART CHILD DEVELOPMENT CENTER, 
A TRIBAL POLICE DEPARTMENT, EMERGENCY MEDICAL SERVICES 
DEPARTMENT, TRIBAL TORT COURT, PARKS AND RECREATION 
DEPARTMENT, TRIBAL LOAN PROGRAM, SUPPLEMENTS THE TRIBAL HEALTH 
AND SOCIAL SERVICES DIVISION AND PROVIDES A HOST OF OTHER 
SERVICES. 

FOR TRIBES ACROSS THE UNITED STATES THE ACT IS PROVIDING THE 
MOST EFFECTIVE BOOST TO TRIBAL ECONOMIC DEVELOPMENT OF ANY 
STRATEGY ATTEMPTED BY THE FEDERAL GOVERNMENT. 

IF YOU WISH TO EXPERIENCE FIRST HAND THE ULTIMATE SUCCESS 
STORY OF INDIAN GAMING AND THE BENEFITS ENJOYED BY THE TRIBE, 
THE COMMUNITY AND THE STATE, WE INVITE YOU TO VISIT FOXWOODS. 



366 



NEVADA FOXWOODS NEW JERSEY 

Mandatory licensure 

for all Casino employees NO YES YES 

Federal regulatory 

oversight NO YES NO 

Mandatory regulatory 
oversight during all 
hours of operation NO YES YES 

On site police presence 

during all hours of 

operation NO YES NO 

Liquor Control agents 

on site during all hours 

alcoholic beverages are 

served NO YES NO 

Exhaustive State back- 
ground investigation of 
all Casino executives NO YES YES 

Mandatory yearly audit 

by outside auditing firm NO YES YES 



367 

THE ECONOMIC IMPACTS 
OF THE FOXWOODS HIGH STAKES BINGO & CASIWO 
ON NEW LONDON COUNTY AND SURROUNDING AREAS 

by 

Arthur W. Wright & Associates! 



John M. Clapp 

Dennis R. Heffley 

Subhash C. Ray 

Jon Vilasuso 

Arthur W. Wright 



September 1993 



368 



TABLE OF CONTENTS 



(A) Key Findings and Executive Summary 

(B) The Economic Impact of Foxwoods High 
Stakes Bingo & Casino on New London 
County and Surrounding Areas 



Page ii 



INTRODUCTION 

I. Employment Effects 

II. Public Assistance (AFDC) 

III. Housing Prices 

IV. Summary and Conclusions 



Page 1 
Page 4 
Page 9 
Page 11 
Page 15 



(C) The Impact of a Change in Basic Employment 
Within One LMA on House Values in the Same 
and Surrounding LMA' s 

(D) Economic Base Analysis for New London 
County 

(E) Determinants of Welfare Dependence 

(F) Biographies of Principals 



Appendix 1 

Appendix 2 
Appendix 3 
Appendix 4 



369 



KEY FIHDIHGS AHP EXECUTIVE SUMMARY 



THE ECONOMIC IMPACTS OF THE FOXWOODS HIGH STAKES BINGO & CASINO 

ON NEW LONDON COUNTY AND SURROUNDING AREAS 

by 

Arthur W. Wright & Associates; 

John M. Clapp 

Dennis R. Heffley 

Subhash C. Ray 

Jon Vilasuso 

Arthur W. Wright 

September 1993 



KEY FINDINGS 

" Every new Foxwoods job supports 1.107 additional non- 
casino jobs in New London County. At Foxwoods' currently planned 
total employment, that will eventually mean more than 20,000 
total new jobs in the county, with an annual payroll of nearly 
$480 million. 

° Every new Foxwoods job supports 0.74 new jobs in the rest 
of Connecticut. That will eventually translate into more than 
7,000 new jobs, with an annual payroll of more than $214 million. 

*• Every new job trims 0.154-0.260 recipients from AFDC 
rolls. Thus, employment gains from Foxwoods' activities will 
save the State $9. 6-$ 16 million per year. 

° Each decline of 1 point in the unemployment rate in 
eastern Connecticut is accompanied by a 7.7 percent increase in 
the real prices of houses. Foxwoods employment alone could raise 
total residential real estate values by almost $1.2 billion by 
the end of 1994. Adding indirect employment, the total increase 
could come to more than $6 billion by the end of the decade. 



370 



ECONOMIC IMPACTS OF FOXWOODS 
KEY FINDINGS & EXECUTIVE SUMMARY 
-2- 



EXECUTIVE SUMMARY 



The rapid success of Foxwoods High Stakes Bingo & Casino has 
brought growing pains to southeastern Connecticut, but it has also 
provided new jobs paying an average of $25,000 per year and another 
$9,300 a year in fringes. That success has also afforded direct 
material benefits to the casino's owner (the Mashantucket Pequots), 
to the State of Connecticut, and to construction firms and workers. 
Indirectly, it has helped brighten regional prospects for tourism. 

This report deals with three more fundamental indirect impacts 
of Foxwoods : 

I. additional jobs and incomes in surrounding areas 

II. lower spending on public assistance (AFDC) 

III. higher real values of single-family houses. 



I. Employment and Earnings ; Applying economic base analysis, 
we estimate that every new Foxwoods job will eventually support 
1.107 additional non-casino jobs in New London County. The average 
job in the county pays nearly $23,000 (1993 dollars). The combined 
effect of the full 9,500 Foxwoods employees expected by early 1994 
is 20,017 new jobs in New London County. The total new payroll 
generated will be $478.5 million per year. 

Further, because county residents spend part of their incomes 
on "imports" from other Connecticut counties, we estimate that a 
new Foxwoods job ultimately generates as much as a further 0.74 new 
job in the rest of the state, where the average job pays about 
$30,500 a year. The full 9,500 Foxwoods employees, then, will 
support up to an added 7,030 jobs in the rest of the state, with 
added payroll of $214.4 million. "Leakages" to other states and 
countries will reduce these figures somewhat, but offsetting gains 
in those "foreign" areas (especially Rhode Island), in turn meaning 
added purchases from Connecticut, will make up much of the 
reduction. 



371 



ECONOMIC IMPACTS OF FOXWOODS 
KEZ FINDINGS & EXECUTIVE SUMMARY 
-3- 

II. Aid for Dependent Children ; Using econometric techniques 
on U.S. state data, we estimate that each additional job created 
trims 0.154-0.260 recipients from the rolls of Aid For Dependent 
Children (AFDC). The figure appears to be higher, the more robust 
the overall economy; conversely, a slacker economy tends to yield 
the lower figure. Assuming (to be conservative) an average AFDC 
payment of $200 per month per recipient and a total of 26,000 new 
jobs in Connecticut because of Foxwoods, the estimated savings 
would range from $9.61 million to $16.20 million per year, based on 
an estimated reduction in AFDC recipients of 4,004-6,760 people. 

III. House Prices ; Again using econometric techniques, we 
estimate that (over the long run) every 1 percentage-point 
reduction in the unemployment rate in the four easternmost Labor 
Market Areas (LMAs) in Connecticut is associated with a 7.7 percent 
increase in real housing prices (after inflation) in the four LMAs. 
Translating Foxwoods' employment impacts into reductions in LMA 
unemployment rates, we conclude that, just from the casino's hiring 
alone, real house prices in the 4 LMAs will rise by $1,177 billion 
by late 1994. Further, adding indirect employment effects raises 
the total increase in house prices to $6.1 billion by the end of 
the decade. 



372 



THE ECONOMIC IMPACTS OF THE FOXWOODS HIGH STAKES BINGO & CASINO 

ON NEW LONDON COUNTY AND SURROUNDING AREAS 

by 

Arthur W. Wright & Associates^ 

INTRODUCTION 

Foxwoods High Stakes Bingo & Casino, located near Ledyard, 
Connecticut, has enjoyed round-the-clock operations and financial 
success from the day its doors opened in early 1992. The venture 
has expanded steadily — the latest additions opened this month, 
with more to follow by year's end — and plans for further growth 
are underway. A recent New York Times article (September 1, 1993, 
p. B1+) characterized Foxwoods as "the region's clear center of 
gravity. " 

The casino's rapid success has brought growing pains, as a 
quiet, rural part of the state struggles to adapt to growing 
numbers of visitors and a burst of new economic activity. On the 
plus side, though, in an area hard hit by defense cuts, Foxwoods 
has already provided more than 6,000 new jobs, and total employment 
will exceed 9,500 once current plans are complete. The average 
gross pay of casino employees (including reported tips) is $25,000 
per year — about $2,100 more than the average job paid in New 
London County before February 1992 — and average fringe benefits 
add $9,300 a year to total employee compensation.^ The casino's 



^ John M. Clapp, Dennis R. Heffley, Subhash C. Ray, Jon 
Vilasuso, and Arthur W. Wright. We acknowledge with thanks the 
assistance of Peter Shapiro & Associates. Responsibility for any 
errors remains with us. 

^ Based on full-time equivalent employees, Foxwoods data for 
April 1, 1993, show yearly "salary & wages," inclusive of "tips and 
tokes" (dealers' tips) reported to management, of $25,043 on 
average, excluding paid leaves. Average fringes (including paid 
leaves, required social prograjns, group insurance programs, 
retirement matching contributions, and employee meals) come to 
$9,334. The sum of salary & wages plus fringes is $34,378. To the 
extent not all tips are reported, this figure understates total 



373 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-2- 

owner, the Mashantucket Pequot tribe, has been able to improve the 
living standards of its members, and to start new, ancillary 
businesses. The State of Connecticut has used revenue-sharing from 
slot-machine proceeds to increase its aid to the state's 169 cities 
and towns • Construction of the various phases of Foxwoods ' 
development has employed workers from across the state and around 
the region. 

The economic impacts of the casino do not end with the direct 
effects just listed. Like the ripples from a stone thrown into a 
pool of water, increased hiring and income are radiating from 
Foxwoods ' own activities to other economic sectors and to other 
areas (local, state and regional). Indirect spillovers from the 
casino's growth include not only brightened prospects for tourism 
in the region but also (more fundamentally) additional jobs and 
incomes, reduced unemployment, lower spending on public assistance, 
and higher real estate values in surrounding areas. 

This report focuses on three specific indirect impacts of 
Foxwoods: I. employment; II. public assistance (AFDC); and III. 
prices of single-feimily housing. While these three topics do not 
exhaust the indirect impacts of the casino's operations,^ they are 
likely to be the most significant ones. 

I. Employment ; Applying recognized tools of economic-impact 
analysis, we estimate that every new Foxwoods job supports roughly 
1.1 additional non-casino jobs in New London County. The average 
job in the county before the casino opened paid nearly $23,000 in 
1993 dollars. Further, because county residents spend part of 



average employee compensation. 

^ For instance, we have not explored the indirect effects of 
construction activity, which by nature takes place over a fixed 
period of time and then ends. Nor have we expressly studied the 
spillover effects from casino purchases of goods and services; to 
a considerable extent, however, our analysis of indirect job 
creation captures those effects. 



374 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-3- 

their incomes on "imports" from other Connecticut counties, a new 
Foxwoods job ultimately generates a further three-quarters of a new 
job in the rest of the state, where the average job paid about 
$30,500. Lesser but still noticeable employment spillovers occur 
in Rhode Island, by similar reasoning. 

II. Public Assistance (AFDC) ; With conventional econometric 
techniques we estimate that (by increasing employment in a multi- 
county region) an additional 1,000 jobs trims between 154 and 260 
recipients (adults and children) from the rolls of Aid For 
Dependent Children (AFDC) in that region. The figure appears to be 
higher, the more robust the overall economy; conversely, a slacker 
economy tends to yield the lower figure. Assuming a conservatively 
low average AFDC payment of $200 per month per recipient, the 
creation of 1,000 new jobs, directly at Foxwoods or indirectly by 
casino expansion, would save an estimated $30,800 to $52,000 per 
month, or $369,600 to $624,000 per year in AFDC payments. 

III. House Prices ; Again using econometric analysis, we 
estimate that (over the long run) every 1 percentage-point 
reduction in the unemployment rate in the four easternmost Labor 
Market Areas (LMAs) in Connecticut* is associated with a better 
than 7.7 percent increase in real housing prices (after inflation) 
in the four LMAs. Hence, if the employment stimulus (indirect as 
well as direct) from Foxwoods hiring reduced the regional 
unemployment rate by 4 points, the price of a representative house 
worth (say) $100,000 today would ultimately rise by more than 
$30,000. This is a gross effect: We do not take into account other 
economic forces ( such as Navy submarine procurement and force 
levels) that will also affect house prices. But the stout upward 
pressure on house prices from casino expansion should be welcome in 



* New London-Norwich, Danielson, Willimantic and Lower River. 



375 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-4- 



an area that has suffered steephouse-price declines — in New 
London-Norwich on the order of 36 percent — since the late 1980s. 

I. EMPLOYMENT EFFECTS 

A. Indirect Job Creation in New London County 

Why would we expect to find additional hiring in the local 
economy as a result of the expansion of employment at Foxwoods? 
Because the services provided by casino workers consist largely of 
"exports" outside the county: Most customers come from other parts 
of Connecticut and other states; their expenditures at Foxwoods 
represent an inflow of income to New London County. Thus, the 
casino jobs support additional local jobs directed to satisfying 
the day-to-day consumption needs of casino employees. In contrast, 
if Foxwoods customers came mainly from New London County, local 
purchasing power would simply be recirculating — and casino growth 
would create far fewer additional jobs. 

To get at the extent of indirect job creation arising from 
casino employment, we used a well-known technique called economic 
base analysis .^ This technique focuses on measuring how much of 
local economic activity is "basic" — that is, involved in 
exporting goods and services outside the locale — and therefore 
capable of supporting additional, "non-basic" (or local) 
employment. Combining information on the basic/non-basic mix for 
all local economic sectors,* we can calculate a multiplier that 



^ For the technical methodology and detailed calculations for 
our economic base analysis, see the separate document, "Economic 
Base Analysis for New London County," by Jon Vilasuso. 

* Excluding the military. We assume that the military 
employment at the Groton Submarine Base serves the entire United 
States and not just the residents of New London County. In other 
words, the county's consumption of Groton sub base services is no 
greater per capita than that of San Diego residents. 



376 



ECONOMIC IMPACTS OF FOXWOODS CASINO 

-5- 

expresses the extent to which additional basic employment will 
support additional non-basic employment in the locale. 

We estimate that creating one new basic job in New London 
County will lead to an additional 1.23 non-basic jobs there. Thus, 
the total new employment equals the new basic job plus 1.23 local 
jobs, or a total of 2.23 new jobs. If the new basic job was an 
average job at Foxwoods, it would generate additional income of 
some $25,000 in 1993 dollars (as noted earlier).' If the attendant 
1.23 non-basic jobs paid the average for New London County,^ the 
extra non-basic earnings would come to $28,173 (also in 1993 
dollars). The total gain in county earnings would then be $53,173. 

The foregoing analysis needs one adjustment. If some Foxwoods 
customers come from New London County, one new casino job would not 
equal a full basic job. In fact, company analyses of customers' 
license plates and special club members' addresses indicate that 
nearly all of Foxwoods' business comes from outside the county. To 
be conservative, let us assume that only 90 percent of casino 
revenues come from outside New London County. The multiplier would 
then decline from 1.23 to 1.107.' The Foxwoods addition to county 
earnings would remain the same ($25,500), but the extra non-basic 
earnings would decline to $25,355 in 1993 dollars, giving a 
somewhat smaller total earnings gain of $50,355. 

How does the foregoing analysis translate into a total impact 



' We ignore the average fringes of $9,300, which equal an 
added 27.1 percent of the salary- & -wages figure. 

^ According to data in the 1990 edition of County Business 
Patterns , adjusted to 1993 dollars by multiplying by the ratio of 
the 1993 to the 1990 Consumer Price Indexes. 

' The magnitude of the decline increases with the portion of 
revenues coming from within the locale. For the detailed 
calculation of the decline, see the Appendix to Vilasuso, op.cit. 



377 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-6- 

of Foxwoods on employment in New London County?^° Still asstiming 
that 90 percent of casino activity is basic, if the employment 
multiplier holds over the full range of Foxwoods ' hiring from its 
inception (February 1992) through the completion of current 
expansion plans, 9,500 casino jobs will ultimately generate an 
additional 10,517 jobs, or 20,017 in all, in New London County." 
If the new non-basic jobs pay the 1993 average figure, the 
additional earnings will come to $241 million (in 1993 dollars). 
Adding $237.5 million in direct Foxwoods payroll (9,500 times 
$25,000) gives a total county payroll increase of $478.5 million. 



B. Indirect Employment Effects in the Rest of Connecticut 

Why would gains in employment in New London County affect 
employment in the rest of the state? Because the county is linked 
economically with the other counties in Connecticut. When economic 
activity picks up in New London County, its residents resort to 
"imports" for a significant proportion of their increased 



^° That total impact, and the others discussed in this report, 
will occur gradually over time, not immediately. Economic base 
analysis provides no insight into the duration or time pattern of 
the lags in the estimated impacts. With the later regression 
analysis, we are able in one case to obtain some idea of the length 
of at least the initial lag following the event of interest — 
here, an increase in hiring at Foxwoods. 

" The range of validity of our estimated multiplier depends 
mainly on how large the casino's total hiring is in relation to 
total county employment. In 1993, total employment in the New 
London-Norwich LMA — roughly coterminous with New London County 
except for several small towns at the edge of the LMA — was about 
177,000 excluding Foxwoods' employees. Thus, the 9,500 workers at 
Foxwoods represent a 5.4 percent increase over the base excluding 
the casino. Note that not all of the indirect job creation from 
casino expansion will have occurred by the end of 1993. As noted 
in the preceding footnote, the full adjustment of the indirect jobs 
will probably extend over a number of years. 



378 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-7- 

consumption needs. *^ By extending our previous methodology, we can 
translate those imports into the added indirect employment in the 
rest of Connecticut that will flow from Foxwoods' expansion, 
coupled with its indirect impacts in New London County. 

For simplicity, and recognizing that we will be overstating 
the effect, let us assvune initially that residents of New London 
County obtain all of their imports — the portion of their 
consumption needs not produced within the county — from other 
parts of Connecticut. The first step is to translate the earlier 
total increase in New London County employment from casino hiring 
into an increase in basic jobs elsewhere in the state. Basic jobs 
will increase in the rest of Connecticut because it will be 
"exporting" goods to New London County. The second step is then to 
calculate the non-basic/basic multiplier for the rest of the state, 
just as we did in section A for the one county. We estimate that 
each new job created at Foxwoods translates into 0.74 additional 
job in the other counties of Connecticut taken as a whole. At the 
average 1990 pay per job in the rest of the state of $30,501 
(stated in 1993 dollars), the associated increase in earnings would 
come to $22,571. The eventual total of 9,500 casino jobs would 
yield 7,030 new jobs, and additional income of some $214.4 million, 
throughout the rest of Connecticut. 

These estimates overstate the employment and earnings impacts 
of Foxwoods' expansion in the rest of Connecticut for a simple 
reason: New London County residents in fact do "import" goods and 
services from other states, and even other countries. To the 
extent they do so, part of the Foxwoods impacts just exaunined will 
leak out of Connecticut, thus reducing the figures just reported. 
At the same time, we must recognize a countervailing effect that 
will offset the reduction. When New London County residents buy 



^^ Indeed, New London County is also linked with economies 
outside Connecticut as well. Below, we factor the additional links 
into the analysis. 



379 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-8- 



goods and services from outside Connecticut, the "foreigners" (in 
Rhode Island, France, and so on) enjoy some job creation and income 
growth of their own. The foreigners in turn will buy goods and 
services from Connecticut — with job-creating and income-enhancing 
effects there, too. We have not undertaken the major task of 
gauging the net result of the two opposing forces. But we can 
state that, even if the net leakage out of Connecticut were as high 
as one-half (which we doubt), the success of Foxwoods has had and 
will continue to have a major positive impact on jobs and earnings 
in Connecticut outside New London County. 

C. Direct and Indirect Employment Effects in Adjoining States 

Why would Foxwoods' rapid success affect Rhode Island and 
Massachusetts? For two reasons: First, not everyone working at 
the casino is a New London County or even a Connecticut resident. 
Second, some of the indirect effects of Foxwoods' hiring doubtless 
spill across the nearby borders with Rhode Island and 
Massachusetts.*^ To this point, we have tacitly assumed that all 
Foxwoods employees reside in Connecticut. In fact, nearly 20 
percent of the casino workforce in mid-1993 had addresses in Rhode 
Island or Massachusetts; most of those addresses were in the former 
state.** We have not attempted to estimate employment multipliers 
and their associated earnings impacts separately for Rhode Island 
and Massachusetts. However, given the near-lack of barriers to 
movements of people and goods across state lines, it is safe to say 



*^ We could include New York as well. However, the distance 
(100+ miles) between Foxwoods and the western boundary of 
Connecticut is a barrier to the direct hiring of New Yorkers and 
probeibly greatly weakens the indirect spillovers as well. 

" An analysis of employee address zip codes for mid-1993 
(4,476 total employees) shows 64.4 percent in the New London- 
Norwich LMA, and another 15.6 percent in other parts of 
Connecticut, giving a state total of 80.0 percent. Further, 17.8 
percent of the addresses are in Rhode Island, just under 1 percent 
in Massachusetts, and 0.2 percent in New York. 



380 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-9- 

that the results reported above for Connecticut apply qualitatively 
to Rhode Island and (to a much lesser extent) Massachusetts. At 
the same time, it is true that the force of our estimated impacts 
on Connecticut is less than stated earlier, to the extent that 
other states benefit from the increased economic activity at 
Foxwoods . 



II. PUBLIC ASSISTANCE (AFDC) 

Why would the rapid growth of Foxwoods affect public assist- 
ance programs? Because (as we have seen) casino employment creates 
additional jobs in both nearby towns and throughout the surrounding 
region. Economic theory suggests that new employment opportunities 
will attract some people currently on welfare and thus lower the 
numbers of people on public assistance. Hence, we would expect the 
addition of 9,500 jobs at Foxwoods to reduce the number of welfare 
recipients and the attendant fiscal burden on government. 

To test this proposition, we applied least-squares regression 
techniques to data on the numbers of recipients of Aid For 
Dependent Children (AFDC) and on total employment, adding (for 
control purposes) other explanatory factors such as population and 
the size of the average welfare payment per client.^* Clients 
include both adults and children; thus one household would 
typically have at least two recipients. We used statewide data for 
all 50 states;^* however, the results are robust, and we have not 



'* For the technical methodology and detailed calculations of 
our regression analysis of the relation between welfare and 
employment, see the separate document, "Determinants of Welfare 
Dependence: A Study of Caseloads," by Subhash C. Ray. 

'® A regression on time series data for the whole United 
States, 1960-1987, yielded a similar estimate of the relationship 
between employment and welfare rolls. We attempted to obtain data 
by town for Connecticut from the State Department of Income 



381 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-10- 

f ound any reason to think that Connecticut is fundamentally 
different from the national average, once one controls for 
population and payment levels. 

Estimates based on state data for 1987, 1988 and 1989 indicate 
a statistically significant negative relationship between 
employment and the number of welfare recipients. For 1987, the 
estimated coefficient suggests that 1,000 new jobs would reduce 
state AFDC rolls by an average of 260 people. The results for 1988 
and 1989, as individual years, show comparable but statistically 
weaker and smaller relationships; however, combining data for the 
two years yields a strongly significant, and smaller, relationship: 
1,000 new jobs would cut AFDC rolls by 154 recipients. What may 
explain these results is that 1987 was still a boom year for the 
national economy, whereas 1988 and 1989 saw the onset of recession. 
The smaller employment coefficient for 1988-89 suggests that new 
jobs have less of an impact on welfare recipient numbers when a 
recession is simultaneously adding new people to the rolls . 

Taken at full strength, these robust estimates imply that the 
start-up and success of Foxwoods have in all likelihood reduced 
noticeably both welfare rolls and total payments in Connecticut, 
and probably in Rhode Island, too (see section II. C. above). 
Assuming the average effect holds for all new employment created 
because of the casino's existence — say, 26,000 jobs^' — the total 
eventual associated decline in AFDC recipients ranges from 4,004 to 
6,760 — probably closer to the former than the latter, unless the 
weak performance of the southern New England economy in the early 
1990s improves soon. Assuming an average monthly benefit payment 



Maintenance, but to no avail in time for use in the present 
analysis. 

" I.e., 9,500 directly at Foxwoods, the further 10,500 or so 
jobs in New London County, and an added 6,000 (conservatively 
calculated at about 85 percent of the maximum figure) for 
associated job growth in the rest of the state. 



84-760 0-94-13 



382 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-11- 

per recipient of $200 (probably low), the monthly savings would 
range from $800,800 to $1.35 million; the yearly savings would run 
from $9.61 to $16.20 million. 

We cannot be sure about the distribution of these effects 
among the towns and cities in the region. Because (as noted above) 
a large part of the direct hiring at Foxwoods has occurred in the 
New London-Norwich LMA, much of the reduction in AFDC rolls and 
payments has likely occurred there. But we have found noticeable 
indirect hiring effects in the rest of Connecticut and (by 
inference) Rhode Island. Also, we cannot tell how many casino 
employees with local addresses have moved there to work. We are 
confident, though, that the 9,500 new Foxwoods jobs will ultimately 
lessen substantially the welfare burden in both Connecticut and 
Rhode Island. 



III. HOUSE PRICES 

Why would we expect to find a relationship between the success 
of Foxwoods and house prices in the surrounding area? Because it 
is a well known economic result that real estate prices generally, 
and single-family housing prices in particuleu:, move in the same 
direction as economic activity. During recessions, when 
unemployment rises and income growth slows, the demand for houses 
declines; given the supply, prices fall. Conversely, with the 
lower unen^loyment and rising incomes of a robust economy, the 
demand for houses, and (with it) their prices, rise. One of the 
members of the research team responsible for this report has 
contributed to the economics literature on this subject.^* We 



*® John M. Clapp auid Carmelo Giaccotto, "The Influence of 
Economic Variables on Local House Price Dynaunics," June 1993, 
forthcoming in Journal of Urban Econom iria. The regression analysis 
in this study used data for Hartford, Connecticut. 



383 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-12- 

replicated his analysis to exaimine the impact of casino hiring on 
house prices in the region that surrounds it.^® 

With least squares regression techniques and quarterly data, 
we estimated the statistical relation between unemployment rates 
and real house prices (after inflation) in the four easternmost 
LMAs in Connecticut. The data spanned the period 1981: IV (house 
sales prices) or 1982:1 (unemployment rates) through 1993:1. In 
keeping with previous studies, our hypothesis was that regional 
rather than strictly local unemployment rates would affect house 
prices in a given locale. Moreover, we expected moves in house 
prices to lag changes in the unemployment rate by some months. 

The results bear out the hypotheses: On average, every 1 
percentage point decline in the weighted-average regional (4-LMA) 
unemployment rate is associated, 9 months later, with a 7.7 percent 
increase in real house prices. The results also show that the 
impact on house prices is greater, the smaller the initial 
unemployment rate from which the 1-point decline occurs, and vice 
versa: 



Initial Unemoloy- 


Increase in Real House 


ment Rate 


Prices Per 1-Point Decline 


4 % 


10.9 % 


5 % 


8.6 % 


6 % 


6.3 % 


7 % 


4.0 % 



^' For the technical methodology and detailed calculations of 
our regression analysis of the relation between house prices and 
changes in the unemployment rate, see the separate document, "The 
Impact of a Change in Basic Employment within One LMA on House 
Values in the Same and Surrounding LMA's," by John M. Clapp. See 
footnote 4 above for a listing of the four LMA's. The New London- 
Norwich LMA includes two Rhode Island towns, Hopkinton and 
Westerly, which we exclude. Note that we had to switch from New 
London County (in analyzing employment impacts) to the four LMAs 
(in gauging effects on house prices) because of the way the 
relevant data are reported. LMA data for New London-Norwich were 
too scant in sectoral detail to use them in the employment-impact 
work; thus we turned to county- level data. 



384 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-13- 

In other words, the stronger the economy, the greater the boost in 
house prices associated with a 1-point reduction in the regional 
unemployment rate. 

To translate these results into effects on house prices in the 
region surrounding Foxwoods, we must first convert the employment 
effects discussed in section I above into changes in unemployment 
rates. The latter equals the number unemployed (not working and 
actively seeking work), divided by the labor force, which equals 
the number employed plus the number unemployed. Doubtless, some 
casino hiring has directly reduced the ranks of the unemployed, 
hence also nearby-LMA unemployment rates (as the labor force would 
not have changed). Other Foxwoods hires, however, likely are new 
entrants into the labor force in the 4 LMAs; the probability of 
this is greater, the larger is total employment at the casino. 
Moreover, many Foxwoods workers hired locally create job non-casino 
vacancies that attract job-seekers to the area. Lacking evidence 
on the local /in-migrant split, we assumed that 75 percent of the 
first tranche of 2,300 hires (early 1992) came from those 
unemployed and living in the 4 LMAs, while 25 percent were new 
labor-force entrants. For the second tranche of 1,900 workers 
(January 1993), we assumed a split of 65-35, and for the third 
tranche of 3,600 employees (the balcuice of 1993), 30-70. ^^ 

Note that, while new labor force entrants are not included 
directly in our analysis, their presence in the 4 LMAs will give a 
further stimulus to real house prices. Hence, our calculations 
based just on employment gains from existing labor force give 
conservatively low estimates for increases in house prices. 

Coupling these labor force assumptions with the regression 
results, and further recalling that the full indirect employment 



2° We limited the total additional employment to 7,800 workers 
in order to keep the scenarios within the present century. The 
full effects of casino employees added after 1994 will extend 
beyond the year 2000. 



385 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-14- 

gains discussed in section I will occur gradually over a number of 
years, enables us to construct a scenario for the impact of 
Foxwoods ' expansion on real house prices in the four LMAs over the 
course of the 1990s. We discuss first the direct effects from 
casino hiring only, and then the longer-term indirect effects of 
the additional hiring induced by Foxwoods' growth. 

Within 9 months of the first 2,300 casino hires (starting 
January 1992), real house prices rose by an estimated 2.6 percent, 
or some $439 million. ^^ The second tranche of 1,900 employees 
(starting February 1993) will have added another 1.9 percent, or 
$313 million, to real house prices, for a total increase of $752 
million by the end of 1993. Finally, by late 1994, assuming a 
third group of 3,600 new employees added during 1993, there should 
be a further boost in real house prices of 2.5 percent, or $425 
million, for a total of $1,177 billion just from Foxwoods' own 
hiring. 

Under the stated assumptions about labor force entry in the 4 
LMAs, the indirect as well as the direct employment effects of the 
casino's growth will steadily reduce unemployment in the region. 
As that happens, there will be further upward pressures on real 
house prices. Assuming total Foxwoods employment were to remain at 
7,800, by the end of the decade the estimated additional boost in 
house prices would total 29.1 percent, or $4,882 billion. 
Combining the indirect with the earlier direct effects, the 
estimated increase in real house prices would come to 36.1 percent, 
or $6,059. If casino hiring reached the full projected 9,500 
employees by early 1994, it would add another 8 percent, or $1,341 
billion, to the totals. 



^' This is gross upward pressure on house prices in the region 
from Foxwoods hiring, not a prediction of actual house-price 
changes. The regression results explain only some two-thirds of 
the variation in real house prices. Other variables, assumed 
constant in this discussion, could well have pushed house prices 
downward . 



386 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-15- 



To put the foregoing figures in perspective, an 18.4 percent 
increase in the real price of a representative house worth $100,000 
today would be $18,400. Remember that real prices are net of price 



inflation. 



IV. SUMMARY AND CONCLUSIONS 

We have examined the economic impacts of the rapid expansion 
of Foxwoods High-Stakes Bingo & Casino since early 1992, on three 
dimensions: I. employment; II. AFDC payments; and III. house 
prices. Our estimates provide strong evidence that those impacts, 
on the state as well as on the immediate locale around the casino, 
have been and will continue to be significant. 

I. Employment Impacts; Every new Foxwoods job will support an 
estimated 1.107 additional local jobs in New London County. The 
resulting total gain in local payroll (casino plus non-casino) 
equals $50,355 per Foxwood job. For the full complement of 9,500 
casino employees, total additional local employment will eventually 
come to 20,017. The increase in payroll for Foxwoods and non- 
Foxwoods workers combined will total $478.5 million. 

The employment and earnings gains in New London County will 
spur comparable, though smaller, gains in the rest of Connecticut, 
and in other states as well. The planned total of 9,500 Foxwoods 
workers will support up to 7,030 new jobs in the other Connecticut 
counties, with added payroll (at the 1990 average per job) of 
$214.4 million. "Leakages" to Rhode Island and other states will 
reduce those figures somewhat, but the gains in the other states 
(especially Rhode Island) will in turn offset the leakages as their 
residents buy goods and services in Connecticut. 



387 



ECONOMIC IMPACTS OF FOXWOODS CASINO 
-16- 



II. AFDC Payments; Every new job created reduces the AFDC 
rolls by an estimated 0.154 to 0.260 person. If those estimates 
hold for the total employment impact of Foxwoods, statewide, and 
assuming an estimated total impact of 26,000 jobs, total AFDC 
recipients will decline by 4,004-6,760 people, and total budgetary 
savings will run $9.61-16.20 million per year. 

III. House Prices; Each decline of 1 percentage point in the 
unemployment rate in the 4 easternmost LMAs in Connecticut is 
associated with a 7.7 percent increase in real house prices, on 
average. Translating the employment impacts of Foxwoods into 
reductions in LMA unemployment rates, under plausible labor force 
assumptions, and taking into account the short- and longer-term 
adjustment lags, we estimate that the existence of the casino will 
have increased real house prices in the 4 LMAs by some $1,177 
billion by the end of 1994, just from casino hiring alone. 
Incorporating the indirect employment effects, assumed to occur 
gradually over the rest of the decade, the total increase in real 
house prices will amount to fully $6,059 billion. 



388 



THE IMPACT OF A CHANGE IN BASIC EMPLOYMENT WITHIN ONE 
LMA ON HOUSE VALUES IN THE SAME AND SURROUNDING LMA'S 



by John M. Clapp 
September 24, 1993 

What is the impact of a change in basic employment in one local area on house values 
in the same and surrounding areas? Suppose that we start with the New London-Norwich labor 
market area (LMA), and that basic employment is added to that area. This causes a larger 
change in total employment because basic employees spend money on local goods and services. 
If unemployment is above normal, as it was in 1992-93, then the additional total employment 
should come largely from a reduction in unemployment. Alternately, discouraged workers 
should come back into the labor force; this has a similar effect in terms of increasing the 
employment of the local population. 

According to the research of Clapp and Giaccotto (forthcoming. Journal of Urban 
Economics, 1993) a reduction in unemployment will cause an increase in real house prices.' 
For each 1% decrease in unemployment, the increase in house prices should range from 2% to 
about 8%, with higher increases in communities with greater housing wealth and lower increases 
in communities with more modest housing. The Clapp and Giaccotto research shows that it is 
possible to measure point elasticities: that is, a 1% change in unemployment is associated with, 
for example, a 3% change in the value of a typical house in the opposite direction. Once this 
elasticity has been determined, it can be used to find the aggregate change in house values in the 
local area. 



'Unemployment is reduced by the change in lolal nnploymrat. not just the change in basic employment. CUpp and 
Giaccouo found that any change in unemployment, even one from the hiring of nonbasic employees, caused a change in real 
house prices. 



389 



BASIC EMPLOYMENT AND HOUSE VALUES 2 

It is plausible that the Clapp and Giaccotto approach can be extended to find changes in 
house values in surrounding LMA's. This would require running regressions with percent 
change in real price as a dependant variable and percentage unemployment in neighboring 
LMA's as explanatory variables. Lagged values of unemployment might be included in this 
regression. Again, the elasticities found for neighboring areas could be used to find the 
aggregate change in house values resulting from an increase in basic employment. 

Details of the Methodology for Finding Agg re gate Value Chang es 

Aggregate assessed value for single family residential property within the LMA can be 
used to find the effect of a change in unemployment on aggregate house values and on aggregate 
tax revenues. In order to do this, it is necessary to have the aggregate assessed value as of a 
given point in time (e.g., October 1, 1992) within the LMA. We would then use the 
transactions data from 0PM to fmd the average ratio of sales price to assessed value around this 
same time period. This average ratio would then be used to fmd total property value within the 
LMA. The elasticity calculated above together with the expected change in unemployment 
would be used to calculate the effect of the change of unemployment on aggregate single family 
residential property values. Note that this methodology underestimates the effect of the change 
in unemployment because the effect on multi-family properties and commercial properties has 
not been included. 

The data needed to implement this can be summarized as follows: 

1 . Expected (or historical) change in basic employment; 

2. The economic base multiplier; 



390 



BASIC EMPLOYMENT AND HOUSE VALUES 3 

3. The labor force and unemployment in the LMA; 

4. Indices of house prices in each LMA; 

5. The elasticity of house prices with unemployment, estimated by regression 
analysis; 

6. Aggregate assessed value for SFR property within the LMA; 

7. The ratio of SFR sales prices to assessed value. 

Items 3-6 would be needed for neighboring LMA's if estimates of spillover effects were 

required. 

p ^timating the Elasticity of Change in House Price s with Respect to Change in Unemplovment 

Regression analysis was used to estimate the percent change in real house prices with 
respect to a 1% change in the unemployment rate. An attempt was made to estimate two 
elasticities of this type: one with respect to a 1 % change in unemployment in the same LMA and 
second with respect to a 1 % change in unemployment in a neighboring LMA. 

To begin this process, we collected data on quarterly unemployment rates by town from 
the beginning of 1982 through the first quarter of 1993. This was done for each town within 
four LMAs (see M^ 1): 

Danielson 

Lower River 

New London/Norwich 

Willimantic 
The unemployment data are graphed as Figure 1 and Figure 2. 

The graph tells us that the unemployment rates in the four LMA's generally moved 



391 



BASIC EMPLOYMENT AND HOUSE VALUES 4 

together, even though the levels are somewhat different. Thus, the whole region was clearly 
influenced by very similar economic conditions over this time period. This suggests that it will 
be difficult or impossible to disentangle the effects of unemployment change in neighboring areas 
from unemployment change in the same area as the real price change. 

Indices of the value of a typical house in each LMA have been developed by the author 
(see Figure 3). These numbers measure the value of a typical, unchanged house in each area. 
The dollar values are an estimate of the most likely sales price obtained from repeatedly selling 
this unchanged house each quarter from the fourth quarter of 1981 through the first 
quarter of 1993. 

Since the population and income characteristics of each area differ, the typical house 
differs. For example, the typical house in the Lower River area is a better quality, on a better 
location, than the typical house in each of the other three area (Figure 3). New 
London/Norwich has a typical house in the middle of the value range whereas Danielson is at 
the low end. 

The movements of house prices are somewhat diffesent in the four LMAs. Lower River 
has had essentially constant house prices since the end of 1987 whereas the other areas 
experienced some decline, at least through the fourth quarter of 1992. The New 
London/Norwich LMA has been more negatively impacted over the last two years, probably by 
a decline in defense-related employment. 

The constant quality price indices are deflated by the Consumer Price Index (CPI) in 
order to find real house prices. We do this because we expect unemployment to have an 
influence on real house prices, not on the rate of inflation. 



392 



BASIC EMPLOYMENT AND HOUSE VALUES 5 

Finally, we take percentage change in real house prices. The percentage change 
transformation is used because we are trying to find an elasticity between house price change 
and change in unemployment. 

The four LMAs considered here define a region with the New London/Norwich LMA 
as its core. This research focuses on the change in basic employment within the New 
London/Norwich LMA. Since this is the core, we define the three other LMAs as the peripheral 
regions. We are interested in the impact of the change in unemployment within New 
London/Norwich on each of the three neighboring areas (see the arrows on Mi^) 2). Therefore, 
New London/Norwich is defined as the appropriate neighboring area for each of the other three. 
For New London/Norwich itself, the appropriate concept of neighboring area is 
an average of the other three areas. That is, we would like to know the impact of a change in 
unemployment within the entire peripheral region on the core area (New London/Norwich). 
When we average unemployment in these three areas, we weight the unemployment in each area 
by the total labor force within the area. This gives lower weight to the Lower River area and 
higher weight to Willimantic and Danielson. 

In order to implement the model efficiently, we stack the data. That is, we take the 
quarterly data for Danielson and put it at the top of the stack; under those data we put all of the 
quarterly data for Lower River and so for the four LMAs. 
Results of the Repression Analysis 

When unemployment in the same LMA ("own unemployment") is the only explanatory 
variable, then the estimated elasticity is between -3 and -4 (Table 1. regressions 1 and 2). This 
means that an increase in unemployment of 1 % will cause a decrease in real house prices of 



393 



BASIC EMPLOYMENT AND HOUSE VALUES 6 

between 3 and 4%. The higher elasticity (-4) is associated with a 3 quarter (9 month) lag on 
unemployment, and this lag increases the R^ significantly. A three quarter lag is plausible 
because it takes time for an increase in unemployment to have an effect on purchases of houses. 
Since a number of tests revealed that the three quarter lag is best, we retain that for the rest of 
this research. 

When neighboring unemployment is added to own unemployment in regressions 3-S of 
Table 1, the neighboring unemployment has an elasticity of between -6.9 and -7.4. Also, the 
addition of neighboring unemployment nearly doubles the R' to the vicinity of .65. 

The most surprising result is that the own unemployment elasticity is small and not 
statistically significant when the neighboring unemployment is included in the regression! The 
most likely explanation of this is the similarity of movement among all of the unemployment 
variables (Figure 1). Since neighboring unemployment is typically for much larger geographical 
areas (See Map 2 and discussion in text) it dominates own unemployment. 

Since New London/Norwich is the center of the region, we hypothesize that this elasticity 
might be different than those for the three peripheral LMAs. Regressions 4 and 5 test this 
possibility with negative results. 
The Impact of Unemployment in the Entire Region 

The five regressions presented so far (Table 1) are unable to distinguish between the 
impact of unemployment in the own LMA and unemployment in neighboring LMAs. Therefore, 
we did the analysis with unemployment in the entire metropolitan area as an explanatory 



394 



BASIC EMPLOYMENT AND HOUSE VALUES 7 

variable.' The result, regression 6 in Table 1, indicates an elasticity of -7,7, 

It is possible that unemployment has a nonlinear effect on percent change in house prices. 
It is reasonable to expect that a reduction in unemployment has less effect at high levels of 
unemployment than it does at low levels of unemployment. This is because some reduction in 
unemployment when the economy is very slack will have little effect on the demand for housing. 
But, when unemployment is low, demand for housing is pushing against a limited supply and 
prices will rise rapidly, after a 9 month lag. 

We tested this idea by including unemployment squared in regression # 7 in Table I. 
The positive sign on squared unemployment conforms to our expectation that the effect of 
unemployment on house price change is greater when the unemployment rates are low. 
Regression # 7 predicts the following elasticities of house prices with respect to unemployment: 



Unemployment 


Rate 


Elasticity 


.03 




-13.2 


.04 




-10.9 


.05 




-8.6 


.06 




-6.3 


.07 




-4.0 



These elasticities are the ones used to estimate the effect of the change in basic 
employment on house prices in the four labor market areas considered here. By measuring total 



'Because of the way that Ihe daU were collected for the study this variable is the weighted average of the four unemployment 
rates in each quarter The weighting factor is the labor force in each area ui 1990. This unemployment series ii an 
approximation to the rate of unemployment that would be aiuined if unemployed persons were added up for the four LMAi and 
divided by the sum of the labor force in the four LMA's. 



395 



BASIC EMPLOYMENT AND HOUSE VALUES 8 

house value in the four areas, we can estimate the aggregate dollar change in house value due 
to any change in basic employment. 

Our conclusion from this research is that the average elasticity of real house price change 
with respect to unemployment in the region is -7.7 over the time period firom 1982-1993.' 
This elasticity is higher when unemployment is low (e.g., 3%) than when it is high (e.g., 7%). 
The elasticity of real house price change with respect to unemployment in one's own area is 
approximately zero. 
The Impact of Unemploy ment on Aggregate Ho use Values in the Entire Region 

Our main finding from the previous section is that a change in unemployment in the 
region defmed by the four LMAs has a roughly the same effect on each of the LMAs within the 
region. This effect is measured by the elasticities based on regression 7, Table 1 (see discussion 
above). Since the effect is the same for all LMAs in the region, it is a simple matter to measure 
the impact of a reduction in unemployment in the broad region on house values in the region. 

To implement this idea, we calculated the following: 

1. Aggregate residential property values in the entire region as of April 1, 1991. 
This information came from the Equalized Net Grand List (ENGL) computed by 
the Office of Policy and Management. 

2. The change in unemployment caused by a change in basic employment. This is 
the basic employment change multiplied by the economic base multiplier and 
divided by the labor force in the region as of the second quarter, 1992. 



^is conclusion is undoubtedly specialized for the region being considered here The dominant position of the New 
London/Norwich LMA gives a very special inlcri-irctalion to the concept of neighboring unemployment. 



396 



BASIC EMPLOYMENT AND HOUSE VALUES 9 

3. Multiply the result from Step 2 by the elasticities calculated in the previous 
section/ This gives the percentage change in house values expected because of 
the new basic employment. 

4. Multiply the percentages in step 3 by the aggregate house value in step 1 to obtain 
the aggregate change in house value in the region because of the change in basic 
employment. 

When these steps were implemented with the data for the four LMAs, we found a change in 
aggregate value of $1.8 B (+10.8% for the typical house) over a 5 year period, from the 
February 1992 hiring of 2,300 employees. The January, 1993 hiring of an additional 1,900 
employees produces an additional $4. 1 B change in house values (+6.8% for the typical house). 
Finally, the hiring of an addition 5,200 employees by January, 1994 is estimated to produce an 
additional $4.4 B in house value (+26.4% for the typical house) within 5 years (by 1999). 

The grand total from hiring 9,400 employees is expected to be an increase of $7.4 B in 
house value (47.5% increase in the typical house). This scenario, which assumes no other 
changes in the economy (e.g., no major changes at electric boat), should be fully realized by 
1999. 



*Since ihe elasticity varies with the unemployment rale, steps 2 and 3 are done for each 1 % change in unemployment caused 
by the basic employment change 



397 



BASIC EMPLOYMENT AND HOUSE VALUES 10 

m. HOUSE PRICES 

A relationship between percent change in house prices and the rate of unemployment 
(unemployed persons divided by the labor force) was used to determine the effects of an increase 
in basic employment on house prices. It is reasonable to expect that economic recessions will 
cause unemployment to rise and to remain at a high levd; this reduces the demand for housing 
and causes house prices to decrease. Conversely, a robust economy Miill cause the 
unemployment rate to decline to low levels, exerting upward pressure on house prices. 
Therefore, we use regression analysis to find the percent change in house prices for every 1 % 
in the unemployment rate. This approach has been tested in the academic literature. 

Seventy-five percent of the direct plus indirect employment effects are assumed to come 
from the unemployed in the four labor market areas combined.* Twenty-five percent of the 
new employment is assumed to come from new entrants into the labor force: for example, 
discouraged workers or those hired from outside the four LMA's. We then divide the change 
in unemployment by the labor force to find the effect of new employment on unemployment in 
the area. 

In the current version of the model, twenty-five percent of the employees that come from 
new entrants into the labor market have no impact on house prices. In reality, they undoubtedly 
would bid for housing and cause house prices to increase. Thus, our model produces a 
conservative (low) estimate of the impact of new employment on house prices. 

Our regressions show that it takes at least 9 months for a change in the unemployment 



'The hypothesis is (hat the impact of unemployment on house prices in (he New London-Norwich LMA will depend on 
regional unemployment, not just local This hypothesis holds up well in the four adjoining LMAs. 



398 



BASIC EMPLOYMENT AND HOUSE VALUES 11 

rate to have an impact on house price changes. In addition, it takes time for a change in basic 
employment to cause changes in nonbasic employment. This time lag can be substantial because 
restaurants, retailers and other nonbasic employers respond slowly to new business opportunities 
in the area. Therefore, we estimate that it takes one to five years for the effects of new basic 
employment on house prices to be fiilly realized. 

Our estimates of the impact on house prices are quite large. 



399 




400 



Map 2 



RELATIONSHIP AMONG THE 
FOUR LABOR MARKET AREAS 
OF EASTERN CONNECTICUT 




The New London/Norwich LMA is the 
core employment market influencing 
each of the surrounding LMA's (radial 
arrows). New London/Norwich is 
influenced in turn by the ring of 
three surrounding LMA's (dashed ring 
and arrows). The influence of the 
ring LMA's is measured by the weighted 
(by resident labor force) average 
unemployment rate in the three LMA's. 




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406 



Economic Base Analysis for New London County 

Jon Vilasuso 

September 6, 1993 

Sunnary 

This study exeunines the employment and income effects of creating 
one additional job at Foxwoods High Stakes Bingo & Casino. 
Specifically, we address the following set of questions. 

1. Bow many additional jobs, not including the one job at Foxwoods 
High Stakes Bingo & Casino, will be created in New London County? 

2. What additional annual income is realized in New London County 
as a result? 

3. Will the rest of Connecticut (not including New London County) 
also experience job growth as a result of generating an additional 
job at Foxwoods High Stakes Bingo & Casino? 

4. What additional annual income is realized in the rest of 
Connecticut if job growth is present? 

Each question is addressed in turn. 

1 . Employment Effects in New London County Using employment data 
from the 1990 County Business Patterns and the 1987 Census of 
Governments, we find that the creation of one job at Foxwoods High 
Stakes Bingo & Casino supports an additional 1.23 jobs in New 
London County. For each new job created at the casino. New London 
County realizes a total increase in employment of 2.23 jobs 
inclusive.' 



' This assumes that the additional job created at the casino 
serves customers outside New London County. In this case, this 
assumption appears reasonable because this new job is placed 
under 70 SIC, which for New London County, is primarily directed 
at nonlocal consumption needs. 



407 



2. Income Effects in New London County Osing payroll data from the 
County Business Patterns and the 1987 Census of Governments, we 
find that the additional 1.23 jobs in New London County generates 
an annual income of $25,482 in 1990 dollars. In other words, the 
addition of one position at Foxwoods creates additional income of 
$25,482 per year in 1990 dollars for New London County beyond the 
annual income of the casino employee.^ 

3. Employment Effects in Connecticut Excluding New London County As 
a result of adding one additional eo^loyee to Foxwoods, the state 
of Connecticut, excluding New London County, realizes a gain in 
employment of 0.74 new jobs. 

4. Income Effects in Connecticut Excluding New London County The 
0.74 new jobs in Connecticut, excluding New London County, 
generates annual income of $20,415 measured in 1990 dollars. This 
figure does not include income changes in New London County. 

Methodology 

In this part, the methodology employed is described. Each question 
in examined in turn. 

1. Employment Effects in New London County Economic base analysis 
is used to address the question: what are the total employment 
effects of creating an additional job in New London County? To 
determine the total employment effects, we must first distinguish 
between employment that serves the consumption needs of the local 
economy — nonbasic employment — and employment that produces goods 
and services for nonlocal use — basic employment. If a basic job is 
newly created, then the total employment effects exceeds the one 



^ This works out to an annual income of $20,717 per worker 
in 1990 dollars for New London county. This is above average when 
compared to the average income of all U.S. workers; the Economic 
Indicators reports an average annual (52 weeks) gross income of 
$17,958 in 1990 dollars for all U.S. workers. 



408 



job because this new basic job supports additional jobs in the 
local economy's nonbasic sector. The total employment effect is 
then the sum of the one basic job and the additional nonbasic jobs 
that are created as a result. 

Total employment effects of expanding operations at Foxvoods 
High Stakes Bingo & Casino are determined by an average 
requirements approach. Under the average requirements approach, the 
average of employment per capita in each industry is used to 
determine the number of jobs that are needed to service local 
consumption. Basic and nonbasic employment for New London County 
are then identified by comparing New London County per capita 
employment with the average of per capita employment in all 
Connecticut counties excluding New London county for each 
industrial classification reported. That is, if New London County 
has a high level of employment in a given industry compared with 
the average of Connecticut's remaining counties, then part of New 
London County's employment in this industry must service nonlocal 
needs as well as satisfying the needs of local consumers. On the 
other hand, should New London County have less than its sheure of 
employment, then local production is directed primarily at local 
needs . 

The comparison between local per capita employment and average 
per capita employment is done for both private employment and 
public employment. Private employment encompasses 101 two or three 
digit industry classification. Although disaggregation to the three 
digit level is preferable, this is not always possible because 
employment figures are not reported if a particular industry 
includes only a small number of firms, which is the case for 
Electric Boat. For this reason, manufacturing employment is 
reported as an aggregate figure. Public employment includes 11 
categories such as teachers at public schools and parks and 
recreation employees. 

Three points deserve further mention. First, armed services 
employment is excluded. We have not included military personnel 
because it seems inappropriate to assume that military employment 



409 



in Connecticut serves Connecticut residents alone. It would be more 
appropriate to include military personnel if the benchmark econoiey 
were the United States rather that the state of Connecticut. 
Second, the counties used to compute average requirements do not 
include counties that fail to report a particular industry or 
report only a range of employment. In such cases, employment may be 
zero or an industry may have only one main employer. Rather than 
assume zero employment or use some median value of the range, we 
chose to exclude these entries when conqputing average requirements. 
Third, this study uses per capita enployment rather than employment 
relative to total employment in the local economy. The use of per 
capita figures does not assume that the demographic qualities of 
Connecticut's counties are uniform, and per capita data better 
portray local consumption needs. 

More formally, total employment in a local economy j, B^, is 
the sum of total basic employment, B^, and total nonbasic 
employment, N^; or Bj=Bj*lfj .^ The ratio of nonbasic to basic 
employment in economy j, kj-Nj/Bj, measures the number of additional 
local jobs supported as a result of creating one new basic job. 
Thus, the total employment effect, including the basic job, is just 
Jtj+1 . The ratio kj is calculated by determining the fraction of 
local employment needed to support local consumption, and the 
remaining (if any) that serves nonlocal needs. 

To determine k^, we begin by measuring total employment in 
industry i=l,...,n for County j«l,...,m denoted E^^j. Per capita 
employment in industry i is e^^^'B^^j/Pj where Pj is the population 
of County j. Next, the average per capita employment for all 
counties excluding county j in industry i, fi^ , is computed by 

^.'^ge,,, (1) 

This average per capita employment figure measures the per capita 



^ A list of all variables used in this study is shown on the 
last page. 



410 



employment needs to service local consumption needs. This 
calculation is done for all industries. 

Comparing Cij and 6^ determines whether employment in industry 
i for County j exceeds employment needed to serve local 
consumption. That is, if e^,^>5j then piu:^ of total local employment 
in industry i meets nonlocal demand as well as local demand. More 
formally, if ei,j>6i then nonbasic employment in industry i is 
D^^j'iSi) (Pj) , otherwise nj^-K^^j in which case only local needs are 
met. Simileurly, basic employment in industry i is bi^j'S^^j-a^jif 
positive, otherwise b^j'O. Finally, kj is given by the expression 






(2) 



For New London County, kj=l.23. 

2. Income Effects in New London County The total income effects 
realized in New London County include the one job created at 
Foxwoods High Stakes Bingo & Casino plus the annual incomes of the 
1.23 additional workers. The annual salaries of the 1.23 workers is 
of primary interest here. 

To compute this income, we begin by calculating the annual 
income per worker* in industry i for New London County, b^j. The 
annual income per worker in each industry is weighted by the 
percentage of nonbasic employment in that industry relative to 
total nonbasic employment. This weighing scheme uses only nonbasic 
because the 1.23 new job are nonbasic, and serve only the one new 
(basic) job created at the casino. The annual income attributed to 



* Income figures include salaries, wages, commissions, 
bonuses, vacation allowances, and the values of payments in kind 
(e.g. free food). Also included are tips and gratuities. Finally, 
income data is before social security, income tax, etc. Note that 
this definition coincides with that used by the IRS on Form 941. 



411 



the creation of kj nonbasic jobs is then given by 

*^5^ (3, 

In the case of New London County, the income effect, excluding the 
new job at Foxwoods High Stakes Bingo & Casino, is $25,482 annually 
in 1990 dollars. 

3. Employment Effects in Connecticut Excluding New London County By 
creating jobs in New London County, the rest of the state of 
Connecticut also realizes gains in eiif>loyiiient due to the linkages 
between New London County and the rest of the state. The first step 
in deteinnining the effects generated in Connecticut, excluding New 
London County, involves calculating iiiq>orts for New London County 
that arise from the creation of 2.23 new jobs. He assume that the 
imports needs of New London County eure met by the rest of the state 
of Connecticut. The amount of new employment in the rest of the 
state needed to meet the consumption needs of the new 2.23 workers 
in New London County is given by the expression 

a 
'^ x2.23-(0.121) (2.23)-0.27 ' 



which states that 0.27 basic jobs in Connecticut, excluding New 
London County, are newly created as a result of adding one job at 
Foxwoods High Stakes Bingo & Casino (which, in total, creates 2.23 
new jobs in New London County). The intuition behind expression (4) 
is that where local per capita employinent is not sufficient to 
meet the needs of the local economy, this enployaent must be 
imported (we have assumed that this iiq>orted en^loyment comes from 
the rest of the state of Connecticut). Thus, equation (4) measures 
inserted employment to New London County that arises as the result 
of creating a total of 2.23 new jobs in the local economy. This 
then corresponds to new (basic) jobs created in Connecticut, 
excluding New London County, attributed to changes in employment 
levels in the local economy (New London County). 



412 



The second step involves computing the nonbasic to basic ratio 
for the rest of Connecticut, Jc, . Let S^^j denotes the requireaent 
that determines basic employment in industry i, that is d^^jddj, e^^y . 
In other words, Stj represents the employment factor that 
calculates basic employment in county j, and assumes a value of 
employment per capita in county j or average employment per capita. 
To begin the second step, we note that the nonbasic to basic ratio 
for Hew London County, equation (2), can be rewritten as 

k,. ^rp^^^-i .^i—x (5) 

Solving expression (5) for ^^i.j yields 

If we isolate New London County emd the rest of Connecticut as the 
primary economies of concern, then the nonbasic to basic ratio for 
the rest of Connecticut is 

where p, and E^are the population and total employment in 
Connecticut excluding New London County, respectively. Expression 
(7) is just the counterpart to expression (5) for the rest of 
Connecticut once we model New London County and the rest of 
Connecticut as interdependent economies. Alternatively, the ratio 
of nonbasic to basic employment for the rest of Connecticut can be 
derived by treating the rest of Connecticut as the local economy 
and New London County as the benchmark economy. Substituting (6) 
into (7) yields the nonbasic to basic ratio for the rest of 
Connecticut, that is, 

^ _ Pj(JCj*l)g, ,_ (254,957) (1.23-*-!) (1,387,345) _, ., ^g ,«, 
' p^j (3,032,159) (94,678) ^ ' 

The final step calculates the total employment effects in the 

rest of Connecticut, 

AJ5;r«AB,(l+ic,)-(0.27) (1+1.75) =0.74 



413 



As a result of creating an additional job at Foxwoods High Stakes 
Bingo & Casino, the rest of the state of Connecticut enjoys an 
increase of 0.74 jobs.* 

4. Income Bffects in Connecticut Excluding New London County The 
income effect for the rest of the state is determined by first 
calculating the average private annual income for Connecticut 
excluding hew London County, and then multiplying this figure by 
the 0.74 jobs.* In 1990 dollars, we find that Connecticut, 
excluding New London County, realizes an increase in annual income 
of $20,415. 



* Assuming that all imported employment to New London County 
comes from the rest of Connecticut, appears at first glance to 
arrive at an overly optimistic estimate of employment growth in 
the rest of the state. This estimate, however, may not overstate 
employment growth in the rest of Connecticut. If, say, Rhode 
Island provides the extra employment needs of New London County 
then the state of Connecticut may still experience job growth. 
Even if labor is imported from Rhode Island, if Rhode Island in 
turn imports Icibor from Connecticut, then Connecticut may 
experience a comparable eunount of job growth in any case. 

* The average private annual income calculation is from the 
1990 County Business Patterns. 



84-760 0-94-14 



414 



Varlabl* List 



£j« total employment in county j 

£'^ j»» en^loyment in industry i for county j, where Bj-^B^j 

Bj" total basic employment in county j 

bi^j= basic employment in industry i for county j, where 

lfj= total nonbasic en^loyment in county j 

n^4^ nonbasic en^loyment in industry i for county j, where 

^i.j^ per capita eo^loyment in industry i for county j. 

Si" average per capita employment in Connecticut counties 
excluding New London County, see equation (1) 

Si^j^ employment per capita figure that is used to calculate 
basic employment in industry i for county j 

Pj" population of county j 

kj^ ratio of total nonbasic to total basic employment in 
county j, see equation (2) 

Si, J* annual income per worker in industry i for county j 



415 



APPENDIX 

What if only part of a given change in employment under 
study is basic? Suppose (for instance) that only 90 percent of 
Foxwoods Casino customers come from outside Mew London County. 
The effect would be to reduce the effective size of the economic- 
base multiplier, which translates a given change in basic 
employment into the attendant change in non-basic employment. 
What is the size of the reduction? 

From equation (2) above, the estimated multiplier (k) for a 
given area is equal to the ratio of non-basic (N) to basic 
employment ( B ) : 

k « N/B. (lA) 

Rewriting this, non-basic employment is equal to the multiplier 
times basic employment: 

M «> kB . (2A) 

In the present study, we are interested in the total 
increase in employment in New London County resulting from an 
increase in hiring at Foxwoods. The logic of economic base 
analysis requires that the former increase equal the latter 
increase multiplied by the multiplier. That is, the ratio of 
non-basic to basic employment after the changes should be the 
scune as it was before they occurred. Thus, we have (denoting 
changes by prefixing d to the variable): 

k " dN/dB (3A) 

Rewriting (3A) gives 

dN " kdB . (4A) 

In the present case, an increase in Foxwoods employment 
(call it dF) consists of two components, one basic (dF^) and the 
other non-basic (dF^): 

dF = dF^ + dF, (5A) 

= adF + (1 - a)dF , 

where a is the average proportion of Foxwoods workers who serve 
customers from outside New London County. 

10 



416 



The new casino employment will generate additional non-basic 
jobs in the county, some at the casino itself (dF,) and others 
outside it — call them dN, — as a result of the new basic 
Foxwoods jobs: 

dN„ - JcdF^ . (6A) 

From (4A), we have 

dN - kdB - dF, + dM, . (7A) 

Rewriting (7A), 

dN^ - kdB - dF, . (8A) 

- kadF - (l-a)dF 

- (ka - (1 - a)ldF 

- (ka - 1 + a)dF 

- Ia(k+1) - l]dF 

Thus, the special "Foxwoods multiplier", k', that treumxates an 
increase in casino e]q>loyment into new non-basic en^loyment 
outside the casino is equal to 

k' - dN^dF - a(k + 1) - 1 . (9A) 

This special multiplier is increasing in a (the proportion of 
Foxwoods employment that is basic ) and thus decreasing in ( 1 - 
a): The higher the proportion of non-basic workers at the casino, 
the smaller will be the multiplier k'. 

The total effect on employment of a given increase in 
Foxwoods hiring, given a, consists of three parts: 

(i) the non-basic jobs at the casino; 

(ii) the basic jobs there; and 

(iii) the non-basic jobs elsewhere created as a result 
of those basic jobs. 

Thus, 

dU = dF„ + dF^ + dU^ . (lOA) 

But we have shown that the last two terms on the right are equal 
to k'dF . Hence, 

dN - dF^ + k'dF (llA) 

" dF, + [a(k + 1) - IJdP . 

11 



417 



To illustrate, suppose that 900 of every 1,000 new Foxwoods 

employees serve customers from outside New London County; the 

rest serve county residents who come to the casino. The 900 

would be "basic," and the remaining 100 "non-basic," employees. 

Therefore, a - 0.9 and (1 - a) - 0.1 . We found that k - 1.23 . 

For dF - 1,000 and dF„ - 100, from (llA) we see that 

dM « 100 •«■ [0.9(2.23)-l]l,000 

- 100 ■»- [1.007]1,000 

~ 1,107 new non-basic jobs. 

Thus, the total employment increase is dN + dF. - 2.007 new jobs. 
Checking this result against (lOA), dF, - 100 , 

dF. - 900 

dN, - 1.007 
TOTAL: 2.007 . 



418 



DETERMINANTS OF WELFARE DEPENDENCE: A STUDY OF AFIX: CASELOADS 



Subhash C. Ray 
Department of Economics 
University of Connecticut 

Storrs CT 06269 



419 



Consider a population of P individuals in a society. Assume that Y of these P individuals are 
of working age and are potentially employable. The remaining R =P-y individuals are children, old 
people, or disabled and are not eligible for employment. Among the Y people eligible for employment 
some will decide to seek employment and participate in the labor force; others will not look for 
employment. Suppose that L persons participate in the labor force and H =Y-L sUy out of the 
labor force, there are E <L jobs available. Thus, E persons are employed and U =L-E people 
are unemployed. Those who are unemployed either depend on welfare or are self-supporting living on 
personal wealth. Let W^ be the numbers of persons who live on welfare while looking for employment. 
Similarly S, is the number of unemployed persons who are self-supporting. Of the W working age 
people not in the labor force S, are self-supporting and W^ are on welfare. 

Finally, out of the R people not eligible for employment W^ survive on welfare and S, 
are either self-supporting or supported by others not on welfare. Thus, the total number of persons on 
welfare is W = J^, + Wj * ''a • Similarly, the number of persons who are neither currently employed nor 
on welfare is S =S, tSj+S,. The tree diagram in Figure 1 shows the division of the population into 
the various categories defined above. 

It is possible to specify a relation 

W =f{P,E,r) 

where r is the welfare payment per recipient and the other variables are as defined above. We discuss 
below the marginal effect of a change in each of the three independent variables on the number of welfare 
recipients. 

Consider, first, an increase in population (P) holding employment {E) constant. Then 
the extra person must be one among the (U + W + i?) people not currently employed. The probabUity 
that this person will be on welfare is 

The marginal effect of an increase in P on W is »r, > . 

Next consider an increase in employment (E) due to an increase in the number of available 
jobs. If everything else remained unchanged, the new job employs a person currendy unemployed but 



420 



looking for a job. This person could be either self-supporting or currently on welfare. If the person is 
actually currently on welfare, the new job reduces the number of welfare recipients by one. The 
probability that theperson is being taken off the welfare rolls is 



h'.+S, 



Thus 



,-.*, 



l5-'.<° 



Finally consider an increase in the amount of welfare payment. Assuming that the change does 
not exceed average non-labor income. Hence, it does not become worthwhile to surrender one's property 
income and become eligible for welfare. 

An increase in welfare payments would alter the labor force participation decision for some 
people. This affects the distribution of working age persons (Y) betweoi participants (L) and 
non-participants (N) . If a person moves out of L to N, (s)he could currently be either in 

£ or in U. When the person makes a transition from £ to N the person would add to Sj 
This is because the individual's non-labor income has not changed. Hence, if (s)he decided to work 
before, an increase in welfare payment is not going to induce this individual to switch from employment 
to move out of labor force but stay self-supporting. As (s^e adds to Wj , total welfare dependence 
(W) would increase. We continue to assume here diat the number of jobs available has not changed. 
Hence, if an employed person quits, some one out of the cunently unemployed people still in the labor 
force would take the vacant job. If this newly employed person is currendy self-supporting (one from 
S^) there is no effect on W. If, on the other hand, the p^son is currently on welfare, transition 
from W^ to E would reduce welfare case load. It is possible, however, that a person previously 
looking for a job while surviving on welfare may now decide to drop out of the labor force and decide 
to suy on welfare after an increase in welfare payment. Thus, die probability diat a person filling diat 
newly vacant position would move out of wel^e is even less than iij defined earlier. In any case, an 
increase in welfare payment increases case load ceteris paribus. 

An indirect effect of such increase in welfare dependence is diat some people in die S, category 
(e.g., dependent children of workers) automatically move to the W^ category when their providers 
move out of employed status and become welfare dependent. Hence, die total effect of an increase in 
welfare payment would be even greater than what is measured by the direct impaa. 

Figures 2a-2b illustrate the labor force participation decision of a person currendy unemployed 
and surviving on non-labor (non-welfare) income. The horizontal axis measures die individual's leisure ( x ) 
and the vertical axis measure a composite consumption good ( / ) • Let Xq show die endowment 



421 



of time and Xf^y^ shows the person's non-labor income. The line z^y^ is the person's 'budget 
line", the slope of which corresponds to the wage rate. In figure 2a the point P, corresponding to the 
tangency of this budget line with one of the indifference curves of the individual is the optimal point. The 
indifference curve through P, is higher than the indifference curve through y^. Hence, the 
individual would be better off working rather than dropping out of the labor force and living on non-labor 
non-welfare income. 

Now if this person is not able to fiod a job, the individual will be force to move to the point 

Yq as the next best alternative; but (s)he would continue to look for employment. Assume that the 

amount of welfare payment is x^d^ < x^yo and that people with ind^endent income are not eligible 

for welfare. The individual is clearly better off as self supporting rather than as a welfare recipient with 

not other non-labor income. 

In Figure 2b, the individual's indifference curve through y^ is higher than die one tangent to 
the 'budget line' at P^ . This person is better off staying out of the labor force and remaining self- 
supporting on non-labor income. 

The individual considered in Figures 3a-3b has no non-labor income and has to either work or 
survive on welfare. The point d^ on the vertical line x^d^ shows the individual's consumption of 
leisure and the consumption good when on welfare. Note that the individual becomes ineligible for 
welfare if the person has a job. Hence the person's 'budget line' is XqZq. In figure 3a the tangency 
point P, corresponds to a higher indifference curve than the one through the point d^. Hence, the 
person would be better off by working by than remaining on welfare. If the person fails to get a job, 
(s)he would stay on welfare at the point d^ but would continue to look for a job and remain in the 
labor force. 

In Figure 3b, on the other hand, the indifference curve through dg is higher than the one at 
the point of tangency P^. Thus, this person would decide to remain on welfare and not look for ajob. 
This person is out of the labor force. 

Now suppose that the welfare payment (while still less than x^yo ) increased to x^d, . 
Clearly, the optimal choice of a person shown in figure 2a or 2b would not be affected by this change. 
Further, a person shown in figure 3b would have all the more reason to continue to stay out of the labor 
force and live on welfare. In figure 3c, however, we find a person, who would find that the consumption 
bundle at d, corresponding to the increased welfare payment is superior to the previous optimal bundle 
P^ , which was better than the bundle d^ corresponding to the previous lower rate of welfare 
payment. If this person was already employed, (s)he would drop out of the labor force and decided to 
live on welfare. If the person was unemployed and searching for a job, the individual will drop out of 
the labor force and would stay on welfare permanently. 



422 



When an employed person quits, the vacant job would be filled by some one currently 
unemployedbutlooklngforajob. However, as explained above, 5, has remained unchanged while ^f^ 
has declined (because some people have moved from W^ to ffj) . Hence, the probability that this 
job would take some person off welfare has become lower. Overall, the effect of an increase in wel^e 
payment is to put more working age people on welfare. Other persons (children and elderly) dependent 
on these people would also become welfare dependent. 



The Empirical Findings: 

We specified the model: 

CASE, = /3o ♦ |3i POP, ♦ 02 ^**Pi * ^i Pf*"^! *^i> 

where 

CASE = number of AFDC payment recipients, 

POP = population in year i or state i. , " 

EMP = number of persons employed, 

PMT = average payment per recipient per month in year or state i . 

The model was first estimated using annual time series dau for the entire United States covering the years 
1960-87. The resulting regression (corrected for first order autocorrelation) is reported in Table 1. The 
payment variable was deflated by the consumer price index to adjust for inflation. 

The estimated regression corrected for a first order autocorrelation of 0.66 shows a reasonable 
goodness-of-fit and all the coefficients are both of the right sign and statistically significant. The 
coefficient of POP implies that for every 100 unit increase in population holding employment and 
other variables constant, total AFDC case load would increase by about 241 additional recipients. 
Similarly, 1000 additional jobs would reduce AFDC cases loads by 192 persons. For $1 increase in real 
welfare payments per person per month total case loads would increase by 7,212 thousand people nation- 
wide. 

Separate r^essions were also run with cross section data for the years 1987, 1988. and 1989. 
In each of these regression, the SO states along with Washington DC were the units of observation. The 
year-specific regressions used welfare payments in current (rather than constant) dollars as the relevant 
explanatory variable. The results are reported in Tables 2-4. Several interesting points should be noted. 
First, the coefficient of employment in the cross section regressions is higher than what was found in the 



423 



time series regression. This agrees with the general view that cross section data reveal long run effects 
while short run effects are found from time series data. Second, the coefficient of BMP is smaller in 
absolute value in 1988 and 1989 than in 1987. Moreover, it is not quite so significant in the later years. 
It may be recalled that the unemployment rate was lower in 1987 than in 1988 or 1989. When U 
increases, its break down into 5, and W^ may change. If relatively more of the unemployed people 
are self-supporting, the probability that a vacant job is filled by a person previously on welfare becomes 
lower. Of course, when the data for 1988 and 1989 are pooled together, the coefficient of employment 
becomes significant although smaller in absolute value than in the 1987 regression. 

The population variable also had the anticipated positive sign and was significant in every 
regression. The measured marginal effect of an increase in the population by 1 ,000 would be between 
1 IS and 173 more persons on welfare (judging by the cross section regressions). The time series model 
implies 241 more persons on welfare. 

Finally, all regressions show that as welfare payments rise, welfare dependence also rises. The 
estimated coefficient from cross section regressions range between 975 and 1386. The large coefficient 
value (7212) from the time series regression actually shows the magnitude of nation-wide increase and 
should, in fact, be scaled by a factor of SO when comparing with the state-level effect measured from the 
cross section regressions. 

Practical IinpUcation 

The Foxwood High Stakes Bingo and Casino envisages creating 9,500 new full-time jobs. The 
various regr^sions reported in this paper show that 1,000 new jobs would reduce AFDC dependence by 
somewhere between 131 and 260 persons. Payment per recipient per month in Connecticut was around 
$200.00 in 1989. Even the low estimate would imply a reducti n of $2,986 millions in AFDC payment 
over a year. The actual saving would be even more if the current rates of payment are higher than the 
$200.00 per person per month rate assumed in these calculations. 

Finally, this study focussed only on AFDC payments. Changes in employment also affects other 
kinds on welfare payment like unemployment insurance, supplemenatl security income, food stamps and 
so on. When all these are accounted for the overall impact would be considerably greater in magnitude. 



424 



Table 1: Regression with Time Scries DaU (1960-87) 




Deoendent Variable: CASE 




independent 
variable 


coefficient 


't' ratio 


POP 


0.2413 


3.84 


EN(P 


-0.1921 


-2.14 


PNfr(real) 


7212.3250 


4.11 


Intercept 


-20380.5668 


-7.39 


P 


0.6653 




R' 


0.8483 





425 



Table 2: Regression nith SUte-Levd Cross Section Data (1987) 

Dependent Variable: CASE 


independent 
variable 


coefficient 


V ratio 


POP 


0.1733 


3.31 


EMP 


-0.2600 


-2.29 


PMT(current) 


1385.97 


3.77 


Intercept 


-196.557 


-♦.55 


R' 


0.9176 





426 



Table 3: Regression with SUte-Level Cross Section DaU (1988) 



independent 
variable 


coefficient 


*t* ratio 1 


POP 


0.1151 


2.63 


EMP 


-0.1312 


-1.42 


PMT(cuiTent) 


975.57 


3.05 


Intercept 


-156.870 


-♦.07 


R' 


0.9222 





427 



Table 4: Regression with State-Level Cross Section Data (1989) 

Dependent Variable: CASE 


independent 
variable 


coefficient 


'f ratio 


POP 


0.1435 


2.79 


EMP 


-0.1914 


-1.75 


PMT(curTent) 


995.116 


3.30 


Intercept 


-159.435 


-4.38 


R' 


0.9322 





428 



l>le S: Regression with State-Uvel Cross Section Data (1988-89) 

Dependent Variable: CASE 


independent 
variable 


coefficient 


't' ratio 


POP 


0.1260 


3.95 


EMP 


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434 



JOHN M. CLAPP 
Biographical Sketch 

John M. Clapp. Professor in the Department of Finance, University of Connecticut, 
teaches real estate njaAet analysis and ocber courses related to real estate and finance. He 
started teaching real estate at the University of California at Los Angeles in 1974. He has 
worked with the Brookings Institution, The Lincoln Institute of Land Policy, the U.S. General 
Accounting Office, Citibank, The Califomia Department of Savings & Loan, Liberty Savings 
& Loan, Peoples Bank and Society for Savings. His work for these organizations was on the 
location of office buildings, office market analysis, cycles in regional employment growth, the 
^praisal of special purpose properties, mortgage underwriting and the design of adjustable rate 
mortgages. 

In 1987-88, Professor Clapp was director of a task force formed by the Office of Policy 
and Management, State of ConnecticuL His team of seven professionals and two support 
persons evaluated Connecticut's system of property tax equalization across the 169 towns. Tbe 
task force proposed and helped implement numerous options for executive and legislative 
changes in the design of tax equalization. As part of this process. Professor Clapp built and 
analyzed an extensive data base — including employment, population, housing, and real estate 
price indices — for each of the 169 towns in Connecticut. His continuing work on real estate 
price indices has been cited in the New York Times, The Hartford Courant, The Commercial 
Register, and other publications. 

Professor Clapp has published extensively in the Journal of Regional Science, The 
AREUEA Journal, the Journal of Urban Economics, The Quarterly Journal of Economics, The 
Journal of the American Statistical Association, and other journals. He is on the editorial boards 
of the AREUEA Journal. The Journal of Real Estate Finance and Economics and the Journal of 
Regional Science. In 1987 he published the Handbook for Real Estate Market Analysis with 
Prentice Hall. He is a graduate of Harvard College (BA with high honors in Economics) and 
Columbia University (M. Phil, and Ph.D.). In 1993, he was selected as a fellow of the Homer 
Hoyt Institute, Weimer School for Advanced Smdies. 



. 435 

BIOGRAPHICAL SKETCH 

September 19, 1993 



Dennis Heffley is a graduate of Stanford University (B.A.) and the University of 
CalifcHnia at Santa Baibara (MA., Ph.O.). Since 1973, be has taught in the Department of 
Economics at the University of Connecticut, where he is a Professor of Economics. An 
active member of American Economic Association, Eastern Economic Association, 
Western Economic Association and the Regional Science Association, Professcv HeiTley's 
research has spanned a range of tc^ics in applied mioDecooomics, especially in the fields 
of urban and regnal economics and health economics. Mud) of this woilc has involved 
the use of multi-sector models to study specific policy-related questions. His recent 
research has focused on: the effects of zoning, rent control or other housing-rdaled policies 
on the structure of urban areas; the problem of allocating public resources to infrastructure 
and human resource development; the problem of achieving an efficient market striicture in 
health care; and the restructuring of health insurance to provide incentives for cost 
containment and healthier lifestyles. Professor Heffley's research has appeared in the 
Journal of Urban Economics, Regional Science A Urban Economics, Journal of Regional 
Science, Papers in Regional Science, Journal of Real Estate Finance A Economics, 
Journal of Comparative Economics, Journal of Health Economics, Social Science A 
Medicine, and Econometrica, among others. 



436 

September 1993 
BIOGRAPHY 

Subhash C . Ray has been Professor of Economics at the 
University of Connecticut since 1992. Before coming to Connecticut 
in 1982 as assistant professor, he was a Lecturer for one year at 
the University of California at Santa Barbara, following completion 
of his economics Ph.D. degree in 1980. Professor Ray had a full 
career in India before beginning his Ph.D. work at UCSB in 1977. 
He received his B.A. (with Honours in Economics) from Presidency 
College, Calcutta (1962). He earned an M.A. from Calcutta 
University in 1964, and then taught as Lecturer (equivalent to 
assistant professor in the U.S.) in economics at the University of 
Kalyani, West Bengal. In 1972, he took a leave to pursue a 
doctorate in management at the Indian Institute of Management, 
Calcutta, one of the top two management schools in India. 
Following completion of that degree in 1976, Professor Ray joined 
the Management Development Institute of Bharat Heavy Blectricals 
Ltd., one of India's largest public-sector companies, where he 
taught management courses to executives and participated in the 
Executive Development Program. 

While completing his Ph.D. work at OCSB, Dr. Ray taught 
courses in mathematical programming, time series analysis, and 
economic theory, at the graduate as well as the undergraduate 
level. Be also participated in a major United Nations project on 
health care in Costa Rica and Guatemala, applying the then-newly- 
minted method of Data Envelopment Analysis, and in several projects 
on forecasting crime rates in California. 

At Connecticut, Professor Ray teaches graduate courses in 
econometrics, microeconomic theory, and time series modelling. His 
primary research areas are time series analysis and the 
statistical measurement of production efficiency. He has published 
articles (inter alia) in Management Science . the Journal of 
Productivity Analysis . the European Journal of Operational 
Research , the American Journal of Agricultural Economics , the 
Journal of Money. Credit and Banking , the Journal of Forecasting . 



437 



SUBHASH C. RAY BIO. 
-2- 

the International Journal of Forecasting , and the Oxford Bulletin 
of Economics and Statistics . Dr. Ray has presented papers at 
numerous national and international conferences, including the 
World Econometric Congress (Barcelona, 1990), and the European 
Meetings of the Operational Research Society (Aachen, 1991, and 
Helsinki, 1992). Be will give a paper at the forthcoming European 
Productivity Workshop at the Center for Operations Research and 
Economics (CORE) (Louvain, October 1993). Professor Ray has also 
collaborated on several economic-impact studies (of the University 
of Connecticut, the Sikorsky Memorial Airport, and the Foxwoods 
High Stakes Bingo & Casino), and in an econometric analysis of 
markets for municipal solid waste. 



438 



Jon Vilasuso received his BA degree in economics from Georgia State University in 1988 
and a MA in economics at the University of Connecticut in 1990. He is currentiy a Phd 
Candidate in economics at the University of Connecticut. He is a member of Phi Kappa Phi and 
the Golden Key Honor societies. He has received numerous academic awards including the 
Abraham Ribicoff Award, the Mortar Board Award, and the Wall Street Journal Achievement 
Award in Economics. 

He has worked as a consultant on several different projects. He has prepared an economic 
base analysis study for the proposed Sikorsky Airport expansion. Other consulting work includes 
the economic impact of the Lisbon Recycling Plant and computations of hedonic wages for expert 
testimony. He also completed work on the economic effects of product liability law on small 
businesses. 

His research interests include macroeconomic policy, monetary economics, financial 
economics, and exchange rate determination. He is Ae auAor of 'Comparing U.S. GNP Volatility 
Across Exchange Rate Regimes" which is forthcoming in the Journal of Macmeconomics. 
Current working papers include "Labor Market Heterogeneity and Unemployment Dynamics,' 
"The Problem with Interim Employment," "The Agency and Transaction Cost Determinants of 
Corporate Finance," and "Temporal Aggregation, Systematic Sampling, and the Money-Output 
Relationship." He is active in professional associations and has been a presenter at the Eastern 
Economic Association Annual meeting and served as a discussant at the American Economic 
Association Annual meetings. 

He has Uught courses at the University of Connecticut and is currently a guest lecturer 
at Trinity College. 



439 

September 1993 
BIOGRAPHY 

Arthur W. Wright has been Professor of Economics at the Univer- 
sity of Connecticut since 1979; he was Head of the Department from 
1979 to 1989. Before Connecticut, he taught economics at Purdue Uni- 
versity, the University of Massachusetts at Amherst, and Oberlin Col- 
lege. He has also held research and visiting positions at Yale Uni- 
versity, the University of Michigan, and MIT. Dr. Wright's B.A. is 
from Haverford College, and his Ph.D. is from MIT. His main research 
and teaching interests are in industrial organization, market analy- 
sis, economic regulation, and law-and-economics. A major research 
focus from the 19608 through the 19808 was energy markets and policy 
(especially oil and gas), not only in the United States but also in 
Canada, the USSR, Europe, and Japan. Dr. Wright has also written in 
public finance (particularly on the percentage depletion allowance and 
foreign teuc credits applied to energy producers), and since 1970 he 
has served on the Board of Directors of Tax Analysts, Washington, 
D.C., publishers of the weekly journal Tax Notes and other tax publi- 
cations (print and electronic). Bis recent research has focused on 
product liability (with special attention to small business) and com- 
parative discovery rules in state courts. His vrritings have appeared 
(inter alia) in the American Economic Review , the National Tax Jour - 
nal . Land Economics . Growth and Change , the Energy Journal and the 
Journal of Products Liability , as well as in numerous book collec- 
tions. Dr. Wright has received numerous fellowships and grants, and 
he has extensive consulting experience with a wide variety of clients. 



440 



ARTHUR N. NRIGHT BIO. 
-2- 

includlng corporations, small businesses, labor organizations, govern- 
ments, and attorneys. He has led an econometric study of municipal 
solid-waste markets, and also several economic-Impact studies, for the 
University of Connecticut, Sikorsky Memorial Airport (Stratford, CT), 
and Foxwoods High Stakes Bingo & Casino (Ledyard, CT) . 



441 

Mr. Abercrombie. Lieutenant Colonel, did you have a com- 
mentary you would like to make? 

Mr. Root. No, sir. 

Mr. Abercrombie. In conjunction with — ^you do not? 

Mr. Root. There is one thing I would like to say, and that is 
with respect to some of the comments I heard earlier today. The 
Connecticut State Police do the backgfround investigations for all 
prospective employees at the casino as well as all the vendors. 

We take a great deal of time and put a lot of resources into those 
background investigations. We work very closely with the Depart- 
ment of Special Revenue and with the Tribal Gaming Commission. 

To my knowledge, we have no serious organized crime problem 
at that casino, and as far as I am concerned we never will as long 
as we continue to operate in the cooperative arrangement that we 
currently have. Thank you. 

Mr. Abercrombie. Mr. Brown, you can comment as you will. 
Colonel, the testimony or perhaps more accurately the commentary 
that was made by Mr. Trump brought Connecticut into the con- 
versation at several points. You have addressed it, in some re- 
spects, but in others, I would like to question you a little bit fur- 
ther. 

Mr. Brown. Please. 

Mr. Abercrombie. The indication was that there was no dis- 
tribution of funds, that it was the money that was made or profits 
that were made were simply divided among a small number of indi- 
viduals. I take it from your testimony that is not accurate? 

Mr. Brown. That is totally false. That is totally false. 

Mr. Abercrombie. Could you describe the regulation or the law 
or administrative rules under which money that is net profit is dis- 
tributed. 

Mr. Brown. Net profit is maintained by the enterprise and dis- 
tributed in accordance with the instructions of the tribal council, 
which is the governing body of the tribe. Up until this point, the 
majority, probably 80 percent of the net profit has been used by the 
tribe to pay for the earlier construction and to pay for the contin- 
ued expansion, which has been going on since we started construc- 
tion in June of 1991. So, probably, 75 percent of the profits have 
gone back into the development of the facility and paying off the 
construction costs. By the time we finish our expansion 

Mr. Abercrombie. Those construction companies, those contracts 
are all issued to contractors in the State of Connecticut and adjoin- 
ing States and communities? 

Mr. Brown. Oh, that is correct, that is correct. By the time we 
finish our expansion, which will be completed by November 15th of 
this year, we will have $300 million into the ground. That is five 
gaming areas, two hotels, an entertainment complex, three res- 
taurants, a health club, a showroom, a cinematropolis ride, and we 
will probably be able to pay off that development during fiscal year 
1995. 

Mr. Abercrombie. Is your casino and its operations organized, 
union organized? 

Mr. Brown. It is not. 

Mr. Abercrombie. Is there an organizational attempt being 
made? 



442 

Mr. Brown. There has been. 

Mr. Abercrombie. Has there been a vote yet? 

Mr. Brown. The tribe has not cooperated. 

Mr. Abercrombie. I beg your pardon? 

Mr. Brown. The tribe has not cooperated and will not allow so- 
licitation for union support upon the reservation. 

Mr. Abercrombie. So there is no union activity that would be al- 
lowed? 

Mr. Brown. There is an employee group council, which is a 
group of 558 employee representatives, that are elected by the em- 
ployees, that deal with management on issues of benefits and sala- 
ries and discipline. 

Mr. Abercrombie. What is the arrangement, the legal arrange- 
ment with respect to the distribution of profits? Is that, could it be 
distributed to individual members of the tribe? 

Mr. Brown. It could at times, if the tribe chose to do so. 

Mr. Abercrombie. Would those funds, if they were distributed, 
then be taxable? 

Mr. Brown. Yes. 

Mr. Abercrombie. Were taxes paid on the construction, that is 
to say, appropriate excise taxes, et cetera? 

Mr. Brown. No, it was not, because the tribe took the profits 
from the gaming enterprise and paid it to the contractors who had 
built the building or paid off existing loans. We started with a $60 
million loan. 

Mr. Abercrombie. What I meant by taxes is if there were, say, 
excise taxes in the State of Connecticut with respect to projects or 
something of that nature, they would be paid; would they not? 

Mr. Brown. I don't know. We have a tribal attorney with me. We 
pay the taxes we collect from the State of Connecticut in the oper- 
ation of the facility, liquor taxes, excise taxes. 

Mr. Abercrombie. The question has to do with most contracts 
when they are executed, taxes are paid to the State or to the coun- 
ties or to whoever it might be. I presume that the companies re- 
ceiving the contracts paid all the appropriate taxes? 

Mr. Brown. The companies paid all the appropriate taxes; that 
is correct. 

Mr. Abercrombie. Yes, the tribal entity is a50 1(c)(3). 

Mr. Brown. Oh, yes, it is. 

Mr. Abercrombie. I am sa5dng, even the companies receiving the 
contracts don't receive any of those benefits, they are private con- 
tractors? 

Mr. Brown. Oh, no, they pay tax on anything that we give them 
in payment for their services, goods and services. 

Mr. Abercrombie. Has there ever been a question raised as to 
whether or not under the terms and conditions of the gaming law 
that the tribe has a right not to cooperate? I am not quite sure of 
your answer with respect to unionization of employees. 

Mr. Brown. The tribe has taken the position that the NLRB does 
not apply on the reservation. 

Mr. Abercrombie. I see. If this law was amended to include the 
NLRB had jurisdiction over reservations, I presume that 

Mr. Brown. We would comply in every respect. 

Mr. Abercrombie. You will comply in every respect, okay. 



443 

Colonel, allegations were made here earlier today that there 
would be an explosion of scandal, that there was no way to avoid 
that. I don't recall specifically whether an allegation was made 
with respect to what would happen in Connecticut, but I wonder 
if you could amplify a little bit more on your position with respect 
to the likelihood of organized criminal activity being able to take 
place at this or any other facility with which the State police has 
authority and jurisdiction. 

Mr. Root. Well, I can only speak for within the State of Con- 
necticut. But I think that within the State of Connecticut, the way 
we are structured and the way we are organized at the existing ca- 
sino, and the way we would organize at any future casinos were 
they to exist, I don't believe that is a reality. I think that we have 
very good controls with the process that we currently use, and I 
think that it would keep us clean. 

Mr, Abercrombie. Have you ever had any opposition to any re- 
quirement that you have suggested to Mr. Brown or his associates 
or to the tribe? 

Mr. Root. No, sir. We have had a very cooperative agreement 
and arrangement with them. 

Mr. Abercrombie. They abide by the rules that you set with re- 
spect to how employees are hired or what kind of background 
checks you are going to do? 

Mr. Root. Well, the background checks were predetermined at 
the time that the compact was put together, and we have estab- 
lished formats that we follow on various levels of employment at 
the casino. We are in total agreement there, along with the Depart- 
ment of Special Revenue. 

Mr. Abercrombie. Have you or anyone associated with you, to 
your knowledge, ever experienced any pressure or had any discus- 
sions that you thought would compromise you in any way with re- 
spect to law enforcement as you saw your duty? 

Mr. Root. You mean concerning the casino? 

Mr. Abercrombie. Yes. 

Mr. Root. No, none whatsoever. 

Mr. Abercrombie. Have you ever suggested changes in the way 
you felt was necessary to conduct proper law enforcement that 
were rejected? 

Mr. Root. Well, I was involved at the beginning when we were 
putting the operation together, so yes, I did make suggestions at 
that time, not so much changes, but the way we should go. And 
since that time, changes have been suggested and implemented by 
the various members of the staff that actually served at the casino. 

Mr. Abercrombie. Are you entirely satisfied as a law officer that 
the terms and conditions under which you operate are in the best 
interests of the citizens of Connecticut with respect to law enforce- 
ment and the prevention of organized crime or individual crime, for 
that matter, taking place in the casinos? 

Mr. Root. Yes, sir, I am. 

Mr. Abercrombie. Okay. Thank you. 

Mr. Abercrombie. Mr. Johnson, and Chief Powell. You are the 
caboose on this train. 

Chief Powell. The last car. 



444 

Mr. Abercrombie. Some mention was made of Minnesota also in 
previous testimony, in a somewhat pejorative vein, I think is a fair 
characterization. I don't know how you heard the testimony, but 
that is the way I heard it or read it. 

It may not have been stated, but I have the advantage of having 
all the testimony in front of me. So I will ask you to, if you will, 
summarize your testimony. In the course of it, if you or Chief Pow- 
ell would like to comment on any previous testimony, please feel 
free to do so. 

STATEMENT OF F. WILLIAM JOHNSON 

Mr. Johnson. Thank you, Mr. Chairman. 

I thank you for this opportunity to discuss security issues at In- 
dian casinos. We welcome your interest. We welcome your inquir- 
ies, as security is crucial to maintaining tribal government gaming 
as a powerful tool for self-sufficiency that it has become. 

I am Bill Johnson, President of Little Six, Inc., which is a tribally 
chartered corporation of the Mdewakanton Sioux community. Little 
Six operates the Mystic Lake entertainment complex which re- 
cently has become the largest Indian-owned, Indian-operated and 
Indian-managed casino in the country. 

We are proud to say that our entire board of directors and our 
senior management team are Native American. I am an enrolled 
member of the Turtle Mountain Band of Chippewa Indians in 
North Dakota, and I have been CEO at Little Six for the last three 
years. Prior to joining Little Six, I had a 25-year career in commer- 
cial banking, serving as a division vice president at some of the 
larger bank^ in the upper Midwest and also as president of a cou- 
ple of community banks. 

At Little Six, we take security surveillance and internal controls 
very seriously. Our goal is to protect both the public who are our 
customers and the Mdewakanton Dakota community who are our 
stockholders. We feel we are, one, if not the most technologically 
advanced casino in the world, you will find that our security and 
our surveillance systems match or exceed any system that you will 
find in Nevada or Atlantic City. 

I would like to give you a few specific examples of steps we have 
taken to protect public interest and tribal interest in three areas: 
security, surveillance and internal controls. 

I will limit my comments because of the interest of time, but ask 
that they be entered in the record. 

Mr. Abercrombie. It will be. 

Thank you. 

Mr. Johnson. First, security. Our security director works very 
closely with local and State law enforcement and with the security 
directors of the 15 other Indian-owned casinos in Minnesota to ex- 
change information and cooperate in prosecution. In fact, just re- 
cently, all 15 security directors are aware of a robbery incident at 
an Indian casino on the Leech Lake Reservation. Because of the 
strong security programs they had in place, the Leech Lake secu- 
rity people have a full tape accounting of this incident and feel that 
it will undoubtedly lead to a successful and very successful appre- 
hension and conviction. 



445 

At Mystic Lake, 50 security guards are located strategically 
throughout the floor at all times. They are centrally dispatched 
through our video monitoring and radio system to immediately re- 
spond to any problem. We guard against employee theft and are 
currently testing a new electronic system that embeds magnetic 
elements in chips so that an employee leaving the blackjack pit 
area with chips would set off a detector. 

In addition, we work very hard to hire people of integrity. We co- 
operate with the State and the Federal gaming commissions on 
background checks. In fact, we have sophisticated electronic finger- 
print reading and transmission equipment that sends fingerprints 
instantly to Washington. Not even the Minnesota State Govern- 
ment has that capability yet. 

The second critical area is surveillance. We have a state-of-the- 
art electronic surveillance system tied into our electronic card ac- 
cess system that allows us to monitor events, movement, and trans- 
actions from all over the casino through a central control room. 

There is not a better system in any casino. Our surveillance cam- 
eras can pick up the serial number of a dollar bill and can in- 
stantly print a still picture of anything the camera sees, to be used 
as evidence or in apprehending a suspect. 

The cameras are mounted on what we call "speed domes" and 
can rotate 360 degrees, fast enough to track a running person. 
They are faster and are able to focus in greater detail than cam- 
eras in most commercial casinos in Nevada and Atlantic City. 

Our employees know that their actions are being constantly mon- 
itored and that knowledge is the best deterrent in the world. Cam- 
eras monitor all cash transactions and monitors in the central con- 
trol room are all connected to VCRs that tape the transactions. All 
security areas, those where money chips or tokens are handled or 
financial records are handled, are controlled by card access. 

Another crucial part of our system is the on-line monitoring of 
all slot machines. We can watch the machines as they are played 
to make sure they are not altered electronically or magnetically. If 
either the coin slot or drop drawer is open, a warning signal is in- 
stantly sent to central control. The preprogrammed overhead sur- 
veillance cameras can focus on that machine at the touch of a but- 
ton so we can see what the problem is and who is causing it. 

Another safeguard is our system of internal controls. All trans- 
actions are monitored and audited. We have a casino recap profes- 
sional and a full internal audit department. Our procedures were 
reviewed by a former Nevada gaming commissioner, and we are 
audited every year by the independent national CPA firm of Grant 
Thornton. We voluntarily adhere to the a cash transaction policy 
Title 31 of the Federal Bank Secrecy Act and report all cash trans- 
actions above $10,000 to the Federal Government. 

In addition, there are several ways we avoid problems that other 
commercial casinos are open to. We do not serve alcohol in our ca- 
sino. We do not serve alcohol in our restaurants. We do not extend 
credit. And we do not give away airplane trips, hotel rooms, or any 
of the customary gifts that are used to attract people. 

Our regular external audits are reported to our own board of di- 
rectors, who are members of the Mdewakanton Dakota community 
in the State of Minnesota. Our own board is probably the best safe- 



84-760 O - 94 - 1 5 



446 

guard against any problems. They will not let any individual or 
group of individual put this precious resource in jeopardy through 
illegal or unethical behavior. 

Along with the internal controls of our tribal corporation, we also 
have three levels of regulatory controls that have to be complied 
with: Tribal, State, and Federal. Combined with that, the require- 
ment that all corporation board members be tribal members, this 
makes it almost impossible for anyone from the outside to infiltrate 
the governing body of our company. 

This idea of organized crime running around Indian casinos is 
absolutely nonsense. We take pride in the people who run our de- 
partments and our operations. A number of them came to us di- 
rectly from some of the major commercial casinos of New Jersey 
and Nevada. A couple of them worked for Donald Trump. Our di- 
rector of surveillance, our director of table games, and our senior 
vice president for casino operations all have received and continue 
to maintain 

Mr. Abercrombie. Excuse me, Mr. Johnson. The people who 
worked for Mr. Trump, did they look like Indians? 

Mr. Johnson. I will reserve that comment until I get hold of 
them. 

One of the things that Mr. Trump has said and the Nevada peo- 
ple or the New Jersey people talk about is the value of their senior 
or their key employee license. All of the people that we have hired 
that come from that regulatory environment have that license and 
annually renew that license and continue to be licensed, and those 
are some of the key people we have working at our casino. 

We believe that we are a positive force in our neighborhood. We 
have brought thousands of jobs to the Twin Cities metropolitan 
area and have brought millions of people and millions of dollars to 
the State and to our local economy. I look with pride at what the 
tribe does with their children. We do similar things. And something 
that we don't know here is that the Twin Cities of Minneapolis and 
St. Paul is the second largest — ^has the second largest urban Indian 
population in the United States. 

At Mystic Lake, we subsidize a bus service that drives down to 
the urban area and picks up Indian people so they can come to 
work for us. Some of them don't have a car. Some of them have 
a hard time getting a car. But that urban population now has an 
opportunity and they are coming to work at Mystic Lake casino via 
subsidized bus service. 

Indian gaming does good things to the Mdewakanton community. 
It does good things for the urban population of Indian people that 
need to be looked at as well. 

I must say in closing that I and the Mdewakanton and Dakota 
community for whom I work deeply resent the baseless accusations 
about organized crime that have been so irresponsibly strewn about 
through the media by opponents of tribal government gaming. It is 
the worst kind of McCarthyism and it demeans anybody who 
purveys it. It is wrong, it is ludicrous, and it is based on unjustified 
jealousy. 

We cherish this resource that has been given to us, one of the 
few resources that the Europeans have left us. We will protect it. 



447 

We will protect it against criminals and we will protect it against 
demagogues. 

I tell you in closing one last statement, I just — my friend Mikey 
Brown to the right, there is nothing wrong with Indian people 
making money but there is nothing wrong with Indian people be- 
coming millionaires, if Mr. Trump's mathematics are right. Those 
people aren't millionaires. But yet he can go on and claim millions 
of dollars for himself. I think it is jealousy, not organized crime. 
Thank you. 

Mr. Abercrombie, Thank you very much. 

[Prepared statement of Mr. Johnson follows:] 



448 




House Committee on Natural Resources 
Native American Affairs Subcommittee 
Bill Johnson Extended testimony 
Little Six, Inc. 
Oct. 5, 1993 

Chairman Richardson, Rep. Thomas, distinguished 
Members of the committee, 

I thank you for this opportunity to discuss security at 
Indian casinos. We welcome your interest and your 
inquiries, as this is a subject that is crucial to 
maintaining tribal government gaming as the powerful 
tool for self-sufficiency that it has become. 

I am Bill Johnson, the chief operating officer at 
Little Six, Inc., the tribal corporation of the 
Mdewakanton Dakota community just south of Minneapolis. 
Little Six operates Mystic Lake and Dakota Country 
casino, the largest Indian-owned and Indian-operated 
casino in the country. Our board of directors and >. ur 
senior management team are all Indian people. Before 
joining Little Six, I had a career in commercial 
banking in Minneapolis. 

We take security, surveillance and internal controls 
very seriously at Little Six. Our goal is to protect 
both the public who are our customers and the 
Mdewakanton community members who are our stockholders. 
We know that the integrity of running a clean and 
secure operation is our number-one asset and that we 
must protect it. 

We are the most technologically advanced casino in the 
world. Our security and surveillance systems match or 
exceed any systems you will find in New Jersey or 
Nevada. Our systems at Mystic Lake and Dakota Country 
casino are so advanced that we regularly have 
executives from other casinos visit to see our systems. 
In the last two months we've had casino CEOs from Las 
Vegas and the Bahamas review our systems at Mystic 
Lake. 



1 
2400 Mystic Lake Blvd. • Prior Lake. MN 55372 • (612) 445-6000 • FAX (612) 496-7280 

An Enterprise of the Shakopee Mdewakanton Dakota Community 



449 



Many other Indian tribes from around the country have 
also visited our operation to learn more about security 
issues. Tribes are sharing information and helping one 
another strengthen security. 

I would like to give you specific examples of steps we 
have taken to protect public interest and tribal 
interest in three areas — security, surveillance and 
internal controls. 



First, security. Our director of security has set up 
an association of security directors from all of 
Minnesota's 16 Indian casinos who meet monthly and 
exchange tips, share security techniques and warn each 
other of attempted scams. This helps all casinos be 
forewarned and prepared. In addition, our security 
director works closely with local and state law 
enforcement. We meet at least monthly with our local 
police department and cooperate fully in prosecuting 
any wrongdoing that happens at our casino. We work 
together to develop contingency plans to deal with 
major problems such as bomb threats or armed robberies. 
We share information with the state about techniques 
criminals may use to try to defraud the casino. 

We have 50 security guards on the floor at all times. 
They help deter criminal activity by their presence, 
and are centrally dispatched through our video monitor 
and radio system to immediately respond to any problem. 

We also have regular patrols of our parking lot, to 
deter simple theft and more sophisticated electronic 
devices for cheating on the games . 

In all areas where money is handled in front of 
customers, we have panic alarms — just like in a bank 
— that can be hit to alert security if a threat is 
made or a robbery attempted. 

We also guard rigorously against employee theft. We 
are testing a new electronic system right now that 
embeds magnetic elements in our chips so that an 
employee leaving the blackjack pit area with chips 
would set off a detector. We train all our employees 
to use standard procedure in money handling so that any 
variation from those standards perpetrated to palm or 
pocket money or chips is immediately detected by our 
pit bosses, security people or our overhead 
surveillance cameras. 



450 



In addition, we work very hard to hire people of 
integrity who will not cause problems. We cooperate 
with the state and federal gaining commissions on 
background checks -- in fact we have sophisticated 
electronic fingerprint reading and transmission 
equipment that sends fingerprints instantly to 
Washington. V'^t even Minnesota's state government has 
that capability yet. We fingerprint and do background 
checks on all employees, voluntarily going beyond our 
compact requirements to fingerprint and check key 
employees and senior executives . And we do credit 
checks on applicants to make sure we don't hire someone 
with unusual financial need who might succumb to 
temptation. 

The second critical area is surveillance. We have a 
state-of-the-art electronic surveillance system tied 
into our electronic card-access system that allows us 
to monitor events, movement and transactions all over 
the casino from a central control room. There is not a 
better system in any casino in the world. We have 
travelled to Europe, Canada and all over the United 
States to see other systems, and we have adapted the 
very best of what is available. 

Our surveillance cameras can pick up the serial number 
on a dollar bill and can instantly print a still 
picture of anything the camera sees to be used as 
evidence or in apprehending a suspect. The cameras are 
mounted in what are called "speed domes" and can rotate 
360 degrees fast enough to track a person running. 
These are faster and able to focus on greater detail 
than the cameras in most commercial casinos in Las 
Vegas or New Jersey. 

Our employees know that their actions are being 
constantly monitored, and that knowledge is the best 
deterrent in the world. Our goal is to keep problems 
from occuring rather than fix them after they've 
happened, and this system gives us that capability. 

All areas of the casino are monitored — except the 
restrooms. We have 600 cameras covering our facility, 
and we can see in detail what is happening anywhere in 
the casino. 

Cameras monitor dealers handing out chips, changing 
cash into chips, dealing cards. Cameras monitor all 
cash transactions, including at counters where chips 
are cashed in or checks cashed. And monitors in the 
central control room are all connected to VCRs that 
tape the transactions. Tapes are kept for three weeks 
so that any problems that turn up in audits or counts 
can be traced back to the source. 



451 



All security areas -- those where money, chips or 
tokens are handled or where financial records are 
handled — are controlled by card access. No single 
person can get into our vault or counting areas alone 
— not even our CEO. Even our CEO would need to be 
accompanied by a supervisor of a counting team to gain 
access to a counting room. Each person's electronic 
access card is programmed to allow access only to the 
areas his or her job requires . And each time a card is 
used, it is logged on the computer. So if someone 
unauthorized tries to get into a secure room, the 
system sends an alarm to the central control room and 
automatically records who tried to get in and when. 

We even have cameras in the executive office area that 
monitor traffic automatically during the day. After 
hours, if a door to my office is opened, for example, a 
camera automatically turns on and a signal is sent to 
the central control room so they can determine who is 
in the office and what that person is doing. 

Doors in critical areas automatically send an alarm to 
the central control room if they are held open longer 
than 30 seconds, preventing anyone from propping doors 
open to remove material . 

Another crucial part of our surveillance system is the 
on-line monitoring of all slot machines. Each slot 
machine at our casinos is electronically connected to 
our computer system. That allows us to do several 
things at a remote distance. We can watch the machines 
as they are played to make sure they are not being 
altered electronically or magnetically to pay off at 
abnormal rates. We can see instantly if any machine is 
being tampered with, by an employee or a customer. If 
either the coin slot or the drop drawer is opened, a 
warning signal is instantly sent to our central 
control. The pre-programmed overhead surveillance 
cameras can focus on that machine at the touch of a 
button and we can see what the problem is and who is 
causing it. 

The slot machines themselves are set and tested by 
Gaming Laboratories Incorporated to verify payout 
percentages and jackpot levels. The machines are 
tested in the casino so there is no opportunity to 
alter them after they've been set. 

To avoid the human tendency to give a friend a break, 
we don't allow our surveillance teams to fraternize 
with our other employees . They cannot ride our 
employee buses to the casino, and they eat and take 
their breaks in separate areas . 



452 



Another safeguard is our system of internal controls. 

All transactions with cash, chips, tokens or bank funds 
are carefully monitored and audited. When we set up 
our system, we borrowed from the best of Nevada and New 
Jersey's systems and improved upon them. Our 
procedures were reviewed by a former Nevada gaming 
commissioner and are audited every year by the 
independent firm of Grant Thornton. 

From the smallest to the largest transactions, counts 
are made and double-checked and records kept. At all 
shift changes of a dealer or a cashier, for example, 
balances are counted, just as in a bank. And any 
electronic transfers of bank funds are accompanied by a 
transmittal receipt so there is a paper trail. At the 
end of every business day, our bank faxes us a list of 
all transactions that have been made on our accounts, 
so that nothing can be hidden. We have several layers 
of procedural checks and balances so nothing can slip 
through. 

We voluntarily adhere to the cash transaction policy 
Title 31 of the federal Bank Secrecy Act. We report 
any cash transactions above $10,000 to the Federal 
government. This is one of several places where we go 
above and beyond the regulations we are required to 
follow. 

We have surprise cash counts two or three times a week, 
where we pick a cash drawer unannounced and balance the 
drawer. This lets people know that at any time they 
might be subject to an internal audit. 

When cash is taken from slot machines, which happens 
once a day, a counting team is accompanied by security 
guards to transport the coins or tokens. The totals 
from each machine are checked by teams from three 
separate departments to assure accuracy and avoid 
collusion. 

When the coins are counted, it is done in a secure room 
to which only counting and security personnel have 
access. The coins are weighed as they come into the 
counting room, and then weighed again after they've 
been counted and wrapped in plastic tubes to make sure 
no money is diverted. 

Our regular external audits are reported to our own 
board of directors — who are members of the 
Mdewakanton Dakota community — and to the state of 
Minnesota. Our own board is perhaps our best safeguard 
agains any problems. They oversee our operation for 
the good of the tribe. They recognize the value gaming 
provides to our community, and they are fiercely 
protective of that value. They would not let any 
individual or group of individuals put that resource in 
jeopardy through illegal or unethical behavior. They 
oversee what we do very closely, and we feel a great 
responsibility to them. 



453 



Along with the internal controls of our tribal 
corporation, we also have three levels of regulatory 
controls — that of tribal, state and federal 
governments. Combined with the requirement that all 
corporation board members be tribal members, this makes 
it impossible for anyone from the outside to infiltrate 
the governing body of our company. This idea of 
organized crime running Indian casinos is absolute 
nonsense. 

There are several ways we avoid problems that 
commercial casinos are open to. First, we do not serve 
alcohol in our casino nor do we let people consume 
alcohol anywhere on the casino grounds, including the 
parking lot. This keeps people more level-headed and 
keeps many problems from happening. And we don't 
extend credit, which opens many casinos to problems 
from people who lose more than they can afford. And we 
don't give away airplane trips, hotel rooms or any of 
the customary gifts used to attract people. Our 
customers come to our casino on their own to have an 
enjoyable time. 

In addition, we are very careful about vendor 
relations. All contracts are put out for bid and 
reviewed by our board, not just by the executive team. 
This makes cozy and compromising relationships 
impossible and protects the interests of our community. 
And we are very careful about delivery of goods and 
material. All deliveries must be made through our 
loading dock. That means anything that might come in 
through unusual channels would immediately stand out 
and invite scrutiny. And at the loading dock, 
deliveries will only be accepted with a signed purchase 
order, again negating the opportunity for underhanded 
deals. And our conflict-of-interest policy prohibits 
employees from selling supplies to the casino, avoiding 
more problems. These steps may seem simple, but casino 
experience shows that vendors are the entry point for a 
great deal of trouble. 

We take pride in the people who run our departments and 
our operations. Many of them came to us directly from 
some of the major commercial casinos in New Jersey and 
Nevada. Several of them worked for Donald Trump. Our 
director of surveillance, our director of black jack, 
and our senior vice president for casino operations all 
have key employee licenses from Atlantic City. That 
means they have met rigorous background and training 
requirements . 

At the same time we are borrowing the best expertise 
from around the country, we are training our own tribal 
members to take key roles in the operation, from 
managing floor shifts to directing departments. We 
want to gain experience ourselves so that we achieve 
the self-sufficiency that IGRA envisioned. And that is 
happening, with tribal members and other native 
americans running Little Six. 



454 



We believe we are a positive force in our neighborhood. 
We have brought thousands of jobs to the Twin Cities 
metropolitan area, and have brought millions of people 
to the state and to our local area. But our friends in 
the Prior Lake Police Department will tell you that 
there has been no increase in crime because of our 
casino. That is important to us — we want to be good 
neighbors and to help our local economy. 

I must say in closing that I and the Mdewakanton Dakota 
community for whom I work deeply resent the baseless 
accusations about organized crime that have been so 
irresponsibly strewn about through the media by the 
opponents of tribal government gaming. It is the worst 
kind of McCarthyism and it demeans anybody who purveys 
it. It is wrong and it is ludicrous and it is based on 
unjustified jealousy. 

We cherish this resource, one of the few resources that 
the Europeans have left us. We will protect it — 
against criminals, and against demagogues. 

Thank you. Chairman Richardson. 



455 

Mr. Abercrombie. Chief Powell, you are chief of the Prior Lake 
Police Department. I take it that is not one of the great metropoli- 
tan police departments in this Nation? 

Mr. Powell. Only if they have 16 members like ours. 

Mr. Abercrombie. Well, you heard Mr. Trump's discussion of 
what he thinks about the ability of police departments and law en- 
forcement individuals and groups across the country, let alone in 
Prior Lake. Do you have anj^hing you would like to convey to him 
if he manages to get a tape of this hearing? 

Mr. Powell. I do, Mr. Chairman. Thank you. I appreciate the 
opportunity to round out this picture. 

I am the second line of defense after the casino itself and we 
handle about 630 calls each year at the casino. And for anyone that 
is interested, most of those calls are service calls such as medicals 
or where somebody is locked out of a car or something along this 
nature. 

Many of those calls are calls from the casino requesting help 
when they have underage people or people under 18. And there is 
no law in Minnesota; however, we go out and look for false identi- 
fication, this sort of thing, in discouraging these people from gam- 
bling. 

We ran about 50 felonies last year, which I think is a rather re- 
markable figure considering right now we have up to 24,000 people 
a day that go through this institution. We also have 5,000 employ- 
ees, and as Bill has said, a lot of these folks come from the inner 
ciiies and are not without problems and take a lot of time and pa- 
tience to work with. 

I am extremely proud of the casino. I am extremely proud of the 
fact that any place in that building I can walk without having any 
trouble at any time to view what I like. I have never been censured 
from where I go there. Our officers are treated well. When I need 
money to increase my police budget to do a better job when it 
makes a difference for the reservation or makes a difference with 
our city, I am given those funds. 

I think that in conjunction with the job that the casino does in 
terms of preventing crime and doing a good job of protecting it, I 
think this is verified in our figures. We solve about 50 percent 
more crime on the reservation because of the technology than we 
do in the white community that is right next to it. That is a rather 
astounding figure when we are solving about 50 percent of our 
crimes out there. And, again, these are not crimes like prostitution 
which we have not had in the second or first, depending upon how 
you want to describe that casino in terms of size. We don't have 
one case of prostitution that has been documented. We don't have 
assaults that amount to more than a handful and these are usually 
strange situations. 

We have crime of credit cards, we have crime of fraud and other 
things like this. And our casino has gone to the extent of inviting 
the FBI and inviting other Federal people, inviting people from 
Foxwoods from the East and bringing them all together largely at 
the expense of our casino in order to get law enforcement in one 
spot to discuss how we can do a better job and what our common 
problems are. 



456 

They are truly civic leaders not only within our community but 
have a tremendous sense in just a few years of civic responsibility. 
When I first started as a police chief 20 years ago, they were burn- 
ing copper wire in order to recover the copper. They have educated 
themselves. They have come along and they have been generous 
with the community that hosts them. 

I am very proud to be able to testify today on the good things 
that they have done and the support that they give the police. With 
our task forces that are made up of FBI, with local people as well 
as State people, there has never been a word breathed to me — -and 
believe me, I question them on a regular basis — about organized 
crime. There is not one verified case or one verified whisper to me 
that the Mystic Lake Dakota casino has organized crime. I think 
that it is truly pointed out. If you want a good picture of what our 
casino is like, if you were to go out there on Thursday, and that 
is when our local Rotary Club, which is comprised of businessmen 
within the area and businessmen from other communities, come 
out and we all have lunch at the Rotary there. 

I thank you very much for the opportunity to round out this pic- 
ture and tell you that it is a safe place to be and well run. Thank 
you. 

Mr. Abercrombie. Thank you very much, Chief. 
Mr. Johnson, do all the employees, including those of Indian an- 
cestry pay taxes on the incomes that they receive? 

Mr. Johnson. All employees pay income taxes on the money that 
is paid to them as salary and wages. 

Mr. Abercrombie. What — do you have a nonprofit entity which 
receives the funds into the casino? 

Mr. Johnson. I guess I would — it would be best to say as suc- 
cinct, it is like a subchapter "S" corporation. Rather than annual 
distributions, however, we have monthly distributions and those 
funds are turned over to the tribal government where they are then 
used in infrastructure: sewer, water system, housing, welfare hous- 
ing programs. We turn the profits over to the tribal government 
monthly. 

Mr. Abercrombie. So that the individuals are not profiting as 
such, other than by such jobs as they may get under any other kind 

of a nonprofit 

Mr. Johnson. As in any corporation, they will receive divi- 
dends — would receive what you say can be looked upon as divi- 
dends. 

Mr. Abercrombie. They pay taxes on those dividends, do they 
not? 

Mr. Johnson. Yes, they do. They pay taxes on any money they 
receive from the company. 

Mr. Abercrombie. Because the impression has been left, as you 
may have discerned in the earlier discussion, despite some at- 
tempts by some of us on the committee to point out that there is 
a difference between distribution of income to a tribal entity that 
engages in activities such as building infrastructure, schools, pro- 
viding subsidized buses and so on, and individuals who may receive 
funds upon which taxes are collected. 

Mr. Johnson. Yes. That is the picture that is being painted, is 
that individuals don't pay taxes. They do pay taxes on any money 



457 

they receive. The tribal government is Hke any city government, 
any State government. They use those funds to work for their indi- 
vidual needs. 

Mr. Abercrombie. What kind of a compact — that is probably be- 
yond the scope of this particular hearing but you have a compact 
arrangement, do you not? 

Mr. Johnson. We have two compact arrangements with the 
State of Minnesota. One for slot machines, one for blackjack. 

Mr. Abercrombie. Would you have any objection or, Mr. Brown, 
you may chime in here, too, if you will, do you expect that there 
would be any objection from legitimate enterprises not necessarily 
even on the scale that you maintain because some might be consid- 
erably smaller, would there be any objection to regulatory bodies 
requiring surveillance such as audits, et cetera, the kind of thing 
that Mr. Palmer and others from the IRS indicated they would rec- 
ommend at this stage of the development of the Gaming Act? 

Mr. Brown. I don't believe so, Mr, Chairman. We spent a portion 
of our time working with other tribes that have small gaming fa- 
cilities helping them set up surveillance department internal con- 
trols and cage operations security systems. We voluntary comply 
with all the CTR requirements and would encourage other tribes 
to do so. 

Mr. Abercrombie. Would it not be to the advantage, Mr. Brown 
and Mr. Johnson, of any tribe which sets up an operation under the 
Gaming Act to have full cooperation with the IRS, with the Depart- 
ment of Justice, et cetera, to establish credibility in the public 
mind? 

Mr. Brown. Yes. 

Mr. Abercrombie. Mr. Johnson. 

Mr. Johnson. I think both tribes would be open to that. I know 
I mention in my testimony that we already voluntarily complete 
the requirements of the Bank Secrecy Act. 

Mr. Abercrombie. If that was made mandatory, would that be — 
would there be an objection? 

Mr. Wapato. Mr. Chairman, may I respond to that? 

Mr. Abercrombie. Certainly. 

Mr. Wapato. As I mentioned earlier, NGA, the National Gaming 
Association, has 95 tribes that are members. We have been hosting 
a number of meetings in conjunction, which is called the Senators 
Inouye-McCain process. 

Mr. Abercrombie. I am familiar with the first part. 

Mr. Wapato. Good. Good choice, too. But within that process, 
within those meetings, the tribes have indicated that they would 
comply with the Bank Secrecy Act provisions as they apply to any 
other casino in America. They would oppose any specific amend- 
ment which is Indian specific. 

Mr. Abercrombie. I quite understand. 

Mr. Wapato. The regulations apply to casinos not in the act but 
in the regulations of the act. And something along that line would 
be, we believe, appropriate for Indian casinos. 

I think what is being suggested by Mr. Trump, Mr, Torricelli is 
something beyond that and we would oppose that, 

Mr. Abercrombie. That is because I think there is an argument 
there as to whether or not sovereignty comes into play, and from 



84-760 0-94-16 



458 

my point of view, speaking as someone who represents, in part, 
people who have had their trust relationship denied, at least by 
some political entities, this would be unacceptable. At least from 
my point of view, and I believe from a constitutional point of view 
the existence of a trust relationship is such that the United States 
as a governmental entity dealing with sovereign nations with re- 
spect to Native Americans and Native Hawaiians is entirely in 
order; in fact, long overdue. The question seems to have arisen 
principally in relation to the regulation of gambling as opposed to 
whether or not it should be — it should take place in the first place. 

Mr. Wapato. I would like to reiterate something that Senator 
McCain, I believe, spoke to this morning a Uttle bit but in the in- 
teresting colloquies that we heard in between, it might have gotten 
lost. 

In that process of dialogue between the Governors and the Attor- 
neys General and the tribes, regulation is not a sticking point. We 
spend a lot of time in a whole bunch of areas. The regulation area, 
the organized crime allegation area are not hot topics that we can 
resolve. We are at the last part of that process and we are engaged 
in the scope of gaming issue. We believe that the others are at a 
stage where a resolution that would be acceptable to the three 
principal parties can be achieved. The scope of gaming issue, of 
course, is Congressman Calvert's issue also. 

The point I want to make is it is not crime. It is not organized 
crime. It is not regulation that is the overriding issue on those dis- 
cussions. Those things have been discussed and we know ways to 
resolve those at the State, at the Governors' level and State Attor- 
neys General and tribal level. 

And so while this committee may have heard a lot of rhetoric 
here today, we would hope they would take into consideration that 
what Mr. Mikey Brown and Mr. Johnson have testified to, those 
things can be handled appropriately in the compacting process and 
the tweaking of regulations or acts that needs to be done is very 
minimal to make things like the Bank Secrecy Act applicable to 
tribes and those type of things. 

Mr. Abercrombie. Very good. Well, this has been a long day but 
it has been a very informative one. I am very appreciative, particu- 
larly of all of you on the last panel for your kindness and courtesy 
to us by staying with us today, and I wanted to say that this last 
panel has been particularly valuable to us in helping to establish 
a perspective on the entire day's activities. 

With that, I will say mahalo, thank you very much, and aloha. 

[Whereupon, at 3:28 p.m., the subcommittee was adjourned.] 



APPENDIX 



October 5, 1993 



Additional Material Submitted for the Hearing Record 



DONALD M PAYNE 
IOtm District, New Jersey 



COMMITTEES 
EDUCATION AND LABOR 
ELEMENTARY SECONOAHV 

LABORS 

SELECT EDUCATION 
AND CIVIL RIGHTS 




FOREIGN AFFAIRS 



GOVERNMENT OPERATIONS 

HUMAN RESOURCES AND 

INTERGOVERNMENTAL RELATIONS 



Congre{S£( of tfie ^niteb ^tatti 

J^ount of ^tpttitntatibti 

aBa«f)ington, M€ 20515-3010 



WASHINGTON OFWCE 

417 Cannon House Office Buildin< 

Washington. DC 20515-3010 

(202) 225-343S 

DISTRICT OFFICE 

FEDERAL BUILDING 

970 BROAD Street 

Room 1435 B 
Newark. NJ 07102 
(2011 645-3213 



Statement of Support for the Ramapough Mountain Indian Tribe 
Congressman Donald M. Payne 



Mr. Chairman, thank you for providing me the opportunity to 
submit this statement in support of the Ramapough Mountain Indian 
Tribe's petition for federal recognition now before the Bureau of 
Indian Affairs (BIA) into the record for the Subcommittee on 
Native American Affairs hearing held, October 5, 1993. I have 
recently reviewed the case of the Ramapough Mountain Indian 
Tribe's petition and I wanted to share my views with you at this 
time. 

I believe that the civil rights of the Ramapough Mountain 
Indians would be violated if the determination to grant or deny 
their petition was based on anything other than the petition 
before the Bureau of Indian Affairs. That petition has a 
detailed history of the Tribe going back to the 1700 's, which is 
backed up with eight volumes of data. Through nearly 600 linear 
feet of genealogical charts the Tribe traces its Indian ancestry 
back to the mid 1700 's in the New York / New Jersey area. The 
state legislators of New York and New Jersey adopted resolutions, 
in 1982 and 1980 respectively, to recognize the Ramapough 
Mountain Indian Tribe and urged the federal government to follow 
their lead. It is my hope that this situation will soon be 
rectified and the Ramapough Mountain Indians will be able to 
continue their traditions and their lives to preserve their 
Native American ancestry. 

I along with Benjamin Oilman and a bipartisan group of 
Members of Congress sent a letter to Secretary Babbitt to 
carefully review this matter which has been pending since 1979. 
As you know in 1978 the Department of Education recognized the 
Ramapough Mountain Indian Tribe under the Indian Education Act. 
I have also had the opportunity to debate and discuss this issue 
in great detail with its opponents, and I have not heard any 
concrete evidence to support the claims against the stated goals 
of the Tribe. I hope that we will not stand in the way of their 
petition. 



(459) 



460 



Stat«""«»"t of Support for the Ramapough Moiintain Indian Tribe 
bv Congressman Benjamin A. Gilmam 

Mr. Chairman, thank you for providing me the opportunity to 
submit this statement for the record regarding the hearing held 
before the Subcommittee on October 5, 1993. As Representative of 
the 20th Congressional District in New York, I represent nearly 
one-third of the members of the Ramapough Mountain Indian Tribe. 
These members live in Rockland County, New York. The Chief of 
the Tribe, Ronald Van Dunk, also resides in my district in 
Hillburn, New York. 

The Tribe has lived according to the traditions of its 
Munsee Indian ancestors in the N.Y.- N.J. border area for more 
than 200 years. Both the States of New York and New Jersey have 
officially recognized the Ramapoughs as an Indian Tribe. Since 
1979, the Tribe has worked diligently to assemble the required 
documentation for Federal Recognition. This documentation 
includes historic and genealogical evidence showing Indian 
ancestry and ties to the aboriginal Munsee Indian Tribe.- 

For a decade, I have worked closely with the Tribe in its 
ongoing efforts to be Federally Recognized by the Bureau of 
Indian Affairs. I have been impressed with their commitment and 
sincerity to the petition process. In all of my dealings with 
the Tribe over the last decade, their actions have been of the 
highest ethical and moral standards. 



461 



Page 2 



Accordingly, I strongly support the Ramapough Mountain 
Indian Tribe's efforts in obtaining Federal Recognition and will 
continue to support any efforts to preserve their Indian 
heritage . 




BENJAMIN A. OILMAN 
Member of Congress 



462 



COUNCIL 

JAMES E. BILLIE 

Chairman 

FRED SMITH 
VIce-Chairman 

PRISCILLA SAYEN 
Secretary-Treasurer 

REPRESENTATIVES 



of '^jLorida 



October 13, 1993 



JACK SMITH, JR 
Brighton 



NANCY MOTLOW 
Immokalee (n v ) 



The Honorable Bill Richardson 

Chairman 

Subcommittee on Native American Affairs 

Committee on Natural Resources 

1522 Longworth Building 

U.S. House of Representatives 

Washington, D.C. 20515 



Dear Mr. Chairman: 

At an October 5, 1993, oversight hearing on the Indian Gaming Regulatory Act before 
your Subcommittee, Congressman Robert Torricelli (D-NJ) and retired FBI special agent 
Richard Ekoy made undocumented allegations about the gaming operations conducted on 
Seminole reservations. I respectfully request that this letter responding to those allegations be 
included as part of the official hearing record. 

Let me begin by saying that the Seminole Tribe of Florida is committed to making every 
effort to assure that gaming activities conducted on our tribal lands are legal and proper. We 
have a vested interest in assuring that the economic benefits of these gaming activities accrue 
to the benefit of the Seminole people - not to the benefit of any criminal element. 

Income from our bingo operations will account for more than 75 percent of all Seminole 
Tribal income in FY 1994. In turn, gaming proceeds will fund more than 75 percent of the 
Seminole Tribe's expendimres in FY 1994. Gaming income pays for tribal member services, 
education programs, administration of the tribal government, tribal parks and recreational 
facilities and services, and economic development on the reservations that otherwise would not 
exist. 

None of the allegations raised by Mr. Torricelli or Mr. Elroy has ever been pursued by 
the FBI, by an other agency of the federal government or by the Special Committee on 
Investigations of the Senate Select Comminee on Indian Affairs that initially heard these charges 
more than four years ago. It is obvious from this inactivity that such allegations were found to 
be of insufficient merit to warrant pursuit. We know that they are completely without substance. 



463 



The Honorable Bill Richardson 
October 13. 1993 



Page 2 



Let me emphasize that we, as a sovereign national whose ability to house, feed and 
educate our people depends in large part on our gaming income, have considerably stronger 
motivation to keep our operations free from corruption than do conunercial gaming 
establishments. We strongly urge that any individual with information concerning corruption 
or links to organized crime within our gaming operations make that information inmiediately 
available to the FBI. We pledge to cooperate fully with any legitimate federal investigation of 
such allegations. 

We will be happy to provide additional information should you require it, and to answer 
any questions you may have concerning this issue. We appreciate the opportunity to present this 
information for the record. 

Sho Naa Bisha, *- \ 



JEB/cac 




c:\wpdocsUini\Richards.013 



464 




Ramapough Mountain Indians, Inc. 

"A Tribal Organization " 

Hillburn • Mahwah • Ringwood 

Mailing Address: P.O. Box 478, Mahwah. N.J. 07430-0478 
(201)529-1171 or(20I) 529-1057 



Tribal 

Chief- Ronald Van Dunk 

Secretary - Linda Powell 

Statement of Chief Ronald "Redbone" Van Diink 
Chief of the Ramapough Mountain Indiana 



I am Ronald "Redbone" Van Dunk, Chief of the Ramapough 
Mountain Indians. I oust respond to the attacks against my people 
by Donald Trump and his allies before this Subcommittee. My tribe 
consists of 3,000 Native Americans living on the New York/New 
Jersey border. We are recognized by both the states of New York 
and New Jersey. 

In 1979, almost ten years before the Indian Gaming Act was 
passed, my Tribe began the process with the Bureau of Indian 
Affairs seeking Federal Recognition. Federal Recognition will 
ensure that the heritage of my people will be preserved. As a 
Federally Recognized Tribe, we will benefit from the Indian 
education and economic programs of the Department of the Interior. 

However, because under the law a Federally Recognized Tribe 
has the right to engage in gaming, Mr. Trump and his friends have 
attempted to have the Department of Interior deny our petition for 
Federal Recognition. 

As I see it, if Mr. Trump and his Congressional supporters 
believe that the gaming laws need to be changed then they have 
every right to try to make those changes. However, their efforts 



465 



to deny my people their heritage by trying to block our recognition 
is misplaced. 

On three separate occasions Mr. Toricelli signed letters to 
the Department of Interior on behalf of my people's long fight for 
recognition. I am greatly saddened by his sudden change in 
position and his recent letters opposing our petition. 

The BIA recognition process is very clear. It is based on 
specific criteria which includes historical existence as a Tribe; 
a distinct Indian community; political autonomy and traceable 
Indian ancestry. 

In a recent letter written to the Secretary of the Interior, 
Mrs. Roukema sought to have our petition denied on irrelevant 
issues. In addition, many of her statements were just plain wrong. 
First, she claimed that our "only interest in federal recognition" 
is to establish "casino gsunbling in Bergen County." I point out 
that we began the Federal Recognition process in 1979, ten years 
before the Indian Gaming Act was passed. She further notes that 
representatives of the township of Mahwah are unanimous in their 
opposition. Again, not so. Councilwoman Maia Wojciechowska of 
Mahwah has sent Congresswoman Roukema a strong letter directly 
challenging this false statement. 

Congresswoman Roukema also says that our petition is 
"dubious." Yet, this petition has been cited by experts as one of 
thee best documented ever. We have submitted eight volumes of 
evidence and over 600 feet of genealogy tracing our Indian ancestry 
back to the mid-1700' s. The Rockland Journal -News has recently 
called for our recognition noting that our historical ties to the 



466 



aboriginal Munsee are well known. 

Finally, she says that our petition for Federal Recognition 
should be denied because "casino gambling in the immediate New York 
metropolitan area could have a negative impact on the gambling 
industry in Atlantic City." Not only is Mrs. Roukema jumping to 
conclusions, but this issue has nothing to do with the recognition 
process, which is described in great detail in BIA regulations. 

Unfortunately, the New Jersey Law Journal article placed into 
the record by Congresswoman Roukema feeds off of the irresponsible 
conduct of the Trump forces. I recently submitted a letter to that 
publication in response to this outrageous and misleading article. 
I would now like to enter that response into the record of this 
proceeding. 




-hief Ronald "Redbone" Van Dunk 
October 14, 1993 



467 



jgBiSMi— — —I — I ■ ■ ■ - .-#- ^ , — 



L..ltUl.lAMIIIJIII!U.lfLl! 



IBHiUfflMiHitfl 



yOlGE OF THE BAR 



ito CMif rf *».niiM|i n tfft M«a- 
tlli'Iidka Itiba, I xp« lapood is 
te ftte ■T^iiriHiiw faft I7 Tim 
O^ftfca'B MiklB in dn low Joumai 
at9tpi. 13, 1993, caitied "Ws IMi 
B«Ud<1 TrilM't Casino?" (133 
NJJ-J. 1491. Ite simpin truth ii dut 
O0f Tribe ti9i*ftf bift btto md oevcf 
will be iD^'<«Ji B> 4af eSon to avoid 
er vioiacs dte laws et ^ Uajtei 
Swef . We alio do not own or apema 
a fiainn QUf ovbi wlieiiisiD^ nscBdon 
ii DOW and has beea fix ibe past 14 
yean oa adnemg a Fedoally Rec- 
ognized itaiiia as an Amoncas Indian 
TiiUB tlHC will resMMe onr diuity and 
oar ligtu&d pUce in Aaeitan bls- 
lorjr. Oar ctoUiea dcKrre no leas. 
Oar elden bave abcady beea denied 



Mr. CBriea does not daim diat a 
uu^e fnpinhrf of otir over 2,2(XV 
manber tzibe is involved in aey 
wran^BDin^ RatDer, tn a wmli mIuh 
and dimuttic sttx^, ha tiH'iinrti to tie 
the good lod d^rfiB peoplB of the 
RaoHpoogh Tifte intlirectiy to an 
organized crime penon thiotigh ' a 
Kiaij of mrr iirtrriH thiee tanes re* 
itiov^ uoni the Tribe. 

Aiao, our Tfve ksed Geoi^ L- 
*rhnHilTf as oar tstoncy over nro 
yean ago. pmially becMae of Ut 
fins rcfwtauon in law eafixutuent 
and fcrffsnuBBA ci reica ut Mew Jer* 
sey. With Mi. Schneider's ten yean 
ezperieaee at the Etaex Couacy 
Prosecutor and as the Oiief Trial 
P iuieuiM r fiar die ^4ew Jeiaey At- 
torney Oeneni. wq fees inoM eon* 
fidees that he cao and will protect us 
froot besng nflucaoed by asyOBB win 
woidd be nndesirabiB or in anj-^fay 



l uyiuyei 10 deal with in any of oar 
iWAniHtMO and Uiiiiiw n enctia* 

In 1979. long bdoie gamins ea 
Indiaa ftaanMiciM wu la inue n 
Dooald Tnaip or anybody die, oof 
Tribe aiipUed to the Baneaa of India 
Anairs^ to be ofrauaily leoognmo by 
the United Swes GovamneaL Shwe 
that dne, we have worignd loog and 
hard on achieving dat lesdL Pedeiai 
Kwwputiu i wS entitle our peopte to 
IwjK fit in the way ef jobe, boasing« 
edneaoott and ecoBoaiK uevetowitMit 
Hm ItgBlMiRt of our Home tiMB cf 
New ieney wd New York bive offi- 
cially r **"^"^ at aod IntTQ called 
oa the Fodenl GovensKH to Nlow 
ther lead. W« limptjr sedc funen to 
taTQ ttic U.S. gowBDOQt j™9^ ^'^ 
pebtios oa in "'^^''T The tine fbr 
out iccogiuCKB IS loag weiuuo* 

Chief Rooald "Redbona" Van Doak 

Ranapoogh MoiatfaiB Indhai Trlie 

Mahwth 



468 





CongreBs of the Bnitd States 

htmt of KqrrtsEntatiots 
Washington, BC 20515-3009 





The Honorable Bruce Babbit 
^Secretary ' ~ ^ 

i43S=tj.s.-t)epartinent of Interior /.-..- 

1849 C Street, N.W. 
'^Washington, B.C. "20240 - ' ^ 

Dear Mr. Secretary: 

I have signed letters to your Department several tines in the 
past two years to express support for the Raoapough Mountain Indian 
Tribe's petition for federal recognition. 

This petition is currently under "Active Consideration" by the 
Bureau of Indian Affairs (BIA) . Dnder BIA regulations, proposed 
findings could be issued as early as July, 1993. 

I have been reassured that the BIA's federal recognition process 
is completely separate from all issues involving gaming on Indian 
reservations. I would like to make it clear at this time that I 
strongly oppose the establishment of gjuning operations on any lamds 
controlled by the Ramapough Tribe. If it is discovered that one of 
the Ramapough Tribe's objectives in seeking federal recognition is to 
gain the ability to manage casinos or establish gaming of any type, I 
would immediately and unconditionally withdraw my support for federal 
recognition for the Ramapough Tribe. 

Thank you for your consideration of this matter. 



Sincerely, 



ROBERT G. TORRICELLI 
Member of Congress 



469 



•MRGE nOUKEMA 






Congrai Of tilt HnitEri ^tflOB "" "^trrr^ TT" 

nonit of KcpustBiadDa '^SSSTSSLT 



Juaa 24, i»>3 



OHNUnWD 



Tba HocormtUo Brues aafcbic= 

Secxecary 

D.S. Sapartaant of elia Iseanor 

1849 C seraae HV 

nmmhioertea, OC 20340 

Dear aecracory Bahhi et ; 

'Rie aaowpough •luttona' of lUnrati, Sa* Jaraay, racontily f Had an qipllcaclcBi vith 
cJia Bux*«u of Indian Affairs ;BZA1 for federal lacoqaitlcsi am a Bativa Jtaarlcaa Indian 
crlba. : wane vpu eq lovaw. T bm atlamnrlv nnno»ed Co tmdi^rwl t»«m.~^ |-| nn FIT TT* 

BaMKSBJSft-asasffl. for tC« iollowuig raaaona: 

1. Ttia Baoipouqli peoplaa' only inCBzaac la federal raaognlcloD la co ciramtwac 
local, atata, and fedsral juxiadiccloi for gh« tmraB«« tut ■■gtil^ifi'inff —■*■«» 
yMhllnn in H«r«Tan Ccnngv. 

3. Rapzaaaocaeivaa oc etia TowAlp of MaAaaa axa ugj^iasu^ ia taair eppca itlon ee 
fadazal raeognltloa ot tbm tt^m^aagb paevla. 

3. ma r lejiiiiiijli peeplB have a dubl<sia clalA to rBoognlclon aa aadva MBrloana. 
In face, tJia Ranavougtaa ara tiling tha cuxxaBC pardon htwiaa tfaair initial 
a££art lacxad su2flci.an£ tvxdanca eo suppore tfialr claia aa a nasi'** paopia. 

4 . ragin g gaablsjs? :-n tha lioBadlata tfev Tork natrcpolitan araa ff rr n ld hava a 
oaoatlira iapaec ^ ziM gaming Indoacry in Atlantic City. 

Padaral raeogsieicn aa a Bacm Aaazacon rnrtt in txlba ia a btioum aactar. Haelva 
jaarlcan ncognlciaa and banaf ita ahoaid ooly ba granted to paoplaa witli lagitiaaca 
,-1 f .— to it, aj^ to gxet^B cbae ha:va a ganoina mtazaat in pzsaama? rh a ir culeura and 
baritaga- -MOT for Uia purpoae of uvloicing en* rndl a n QMlnq Ka^ulacory Act. 

ThaUc you for taking a £a« alniiaa to conaidar tUla iaona of i^ortanea en tha 
citizena of my Consraaaional dlatrlct. 12 you hawa turthnr ijiiaatiana raqazdiag thia 
jiaetar plaaaa £eei fraa lo oantact na directly, or ftava a aaataar at your ata^ ooicace 
Bruea Butlar is ay WaaluasteD ottioa. 

s^lnoaraly. 



KUrgv RouJuna 
KambmT of Ccngrcss 



470 




^Tinvnsfiip of ^Aahwaii 



of Intarlor Bruca 



Municipal Dttiaai 
3000 Rome 17 South 
MnhwnJi, NJ 07430 



from th« fl»9l< of CouncilHOwan ri«i« Uoici«cho»i»k« 
n«raa RoukHM 
Hcniaa of Raora«antatlv»« 
UaahlfMton O.C. 80919 

0mm- Comrvaaweaan. 

Your July 19. 1993 1 attar ta Saeratarv 

Botatottt atataa. aaona ottiar aendacitiaai 

'a. Raoraaantattvaa of tha Toanaftio of tiahwah mrm 
unaniaaua In thair opooaitlon to fadaral racoonition 
of tha Raaaoouoh oaoola." 
Uauld vou olaaaa orovlda mm aith ahatavar proof you aiotit 
haw te aiAatanttata thla atataaant and laeklna proof aould 
you proyida Mr. Batotittt aitH raaaona Htiy you« Tarrtcolli. 
Andrawa. Zlaaar. Saaton and Huohaa aionad your naaaa to auch 
a patant lia? Our Council Praaldant Mill ba oolllnq ethar 
B— tiTB of Hahwh ' a aovarnlna body and aaka public aliat you 
M> inaccurataly portrayad to tha Saeratary of Xntarior. 
Parhaoa ona of our raaidant* who baliayaa that hia lack of 
statura iohyaical and intal tactual) haa aoaathinq ta da alth 
•n Indian euraa, la your aourca of Information about tha 
Raaaoauoh oaopla* thair application. lntantiona« hiatoryi 
tradition, ate.? 

You and thoaa othara tdie aionad that infaaoua lattar omo mn 
apoleoy to tha Raaapouoh paople. to ua. who aorva on tha 
nahMah Council and to Bacratary Babbitt.. 
Sincaraly youra.^'^ *-:-■■- -ci:^^^^^^^^^"^-- 
Maia Uojciactiowaka. 
CC1 Gacratary Babbitt, Council. Raaaoouah Council, aadia 



PIcaiv Mali lo: 
RO. Uux 733 




471 



LETTERS 



Ramapough Indian 
tribe's rights 

TotteEdUon 

I am writing in response to the 
recent attacks on the Ramapough 
Mountain Indian Tribe's peuiion 
for federal acksowted^ent 

Congronraman Marge 
Roukema (R-NJ) and Donald 
Trump have actnally gone so far 
aa to challenge the tribe's Indian 
heritage; 

Ai a Certified Genealogist 
working la New York and New 
Jeney with over twenty years 
prof aacoal e x pe ri ence. I am 
wrtttaig to tell yoa their skepticism 
is nnf ouaded. 

Recently, building on 
geaeaiogical work begun in the 
1970s. I submitted a certified 
report to thwBureau of Indian 
Affairs which traces the Indian 
ancestry of the modenwlay 
Ramapough Tribe to the mid- 
1700s. 

Land records, censuses, tax 
lists, death and marriage 
certificates, and many other 
docomcBis supplement historical 
evideoee ahowmg the tribe has 
occupied the Ramapough region as 
a distinct Ip^'a" community 
during the entire period. 

Tlie Ramapough Indian 
bloodlines can be traced (o 
thousands of descendants of the 
aboriginal Munsee Tribe who 
occupied the Ramapough region 
for thousands of years before the 
first Europeans settled in the New 
World. 

Unable to share the land 
p e a ce f ully with the original 
inhabitants, the Europeans bought, 
and in some cases confiscated, the 
valuable property in the region in 
aa attempt to drive the Indians 
away. 

To a large extent the white 
settlers were successful in 



'n¥rita'^;iia:^' 

«a^Mi wisl c o ni a l eH— oiri 
• topics x^cujrem 

'^BQetry.'OrcopissanattBfS'.i^Q 

'f.umt, taottwf jnedaJL^ttarac^ 

.^houklbe nd mor0 th8n°20a:^ 

yvord}(shortBr.is bettar);.'^^ 




that the Fedsal Govarmmn 
should follow what the statai of 
New Jersey and New York have 
already done and rec o g nlw the 
Ramapough Meontala Indian 
Tribe. 

Roger 0. Joslyn. 
New Windsor 



•A12 



destroying the Indian civiiization 
throughout eastern America. Mass 
movements of Indians took place 
and reservations out west were 
established by the Federal 
Government 

It is recorded, however, that 
not all east coast Indians 
abandoned their homelands. One 
such hardy band of abonginal 
Munsee retreated into the 
wilderness of the Ramapough 
Mountains where they continued to 
live off the land. 

Today this Indian group is 
known as the Ramapough 
Mountain Indian Tribe. 

The Indian ancestry of the 
Ramapough Tribe cannot be 
seriously questioned. 

My findings are supported by 
four volumes of documented 
evidence and over 600 linear feet 
of genealogical charu. 

Tliere should be no question 



Wednesday 

July 21, 1993 

Rockland 

Joumal-Naws 



472 



so Bbk 710 
Udarseo. W M910 
M, 199S 



Ma Omht 

JU«i«t«at UerwtMTT ' Indiaa Affairs 

Oepsrtaant of the loterior 

IStfa < C StTMta MV 

Buhlagtan. O.C. 29240 



Dear Hadaa fl«er«tarf : 



I as wrltin? this l«ttar Is npport o£ fadw*! acknwiliigMut of tbo 
Saaipoosh ladiaii Trite of Mr York and Itow Jmrwrnf I «■ tht ionMr ftueh 
CMaf for tba Braneli of XekaMlad^Hat aad liiiTch ud «M tbr frlMar 
antbor of tlw ackaotrladsBaaft rafolatioM, 25 C.rJI. B3. 



I taawv bad tlw epportntity to rwlav tte Baaipeagb patitlea^aad 
supporting Jutia w ut ation. Basad od thia r«vi««» I stronglr ballavV'tlia- 
trlba ahoaid bagraatad fadaral reeesnltlonr^'lftaK-M raars ofrasteaati'v 
rasaan'h, ths B — a p o n g h Itlba has sotaittad- ana of Vtt» aoat thoroaghiy 
iliir i—itu(i easaa for fodarml acknowlsiijaawt I taawv-badtha plaam to 



The triba has nnqaastlonably dnaoiiatratad ita Indian anoaatry tknragh 
historical and gaaaalogical ovldeace and has dovolopod avidaDCO that 
spoeif ieally daaaiistratea ovory lodlvidoai aiiatiT of the trlb* has TUmiii 
aiiesct27. ftrtfaar. the i anap oog h s harve clearlT deaonatratad a eehaaive 
••If-govaraia? coaannity that has «xl«ted for ovar 200 Tears. I haw* 
parseneUr visited the Baaapnaryh coaanaltr aad talked elth Mtof tribal 
eaefaers. It is iapessible to be acqaaiittad vlth the grovp for ai7 laagth 
of tise and not conclude that they are entitled to federal ackBoeledgBaBft 
as an ladiaB tribe tnder any reasonable interpretation of the asdatiag 
criteria. 

9 

I wish you continued good Incfc with yesr work as AaalstaBt Secretary. 



Slooarely, 



S^Mf--^ 



Bod Shapard 



473 



Noting history 

Rockland has stake in Indian recognition 



<•-'- » 



If the Ramapough 
Mountain Indians achieve 
federal recognition, the 
ghosts of their long-gone 
ancestors among the Munsee 
tribe may well murmur with 
thanks from the historic 
sandstone caves in the 
Monsey Glen. 

We believe the 
recognition is overdue. Not 
only will it qualify the 3,000- 
member Ramapoughs access 
to federal funds for jobs, 
greater educational 
opportunity and small 
business growth, it will set in 
historical stone the 
realization that once the 
tribe lived originally as 
Munsee Indians in the 
Rockland area. 

The Munsees occupied 
the Rockland /Bergen region, 
including the historic Monsey 
Glen off Route 59, for 
thousands of years before the 
first Europeans settled in the 
New World. 

Many of the original 
tribes in the Northeast were 
driven westward by the 
settlers, but most of the 
Ramapough Indians 



remained, heading into the 
wilderness of the Ramapo 
Mountains while the white 
man took over the better 
land of the lower woods and 
fields. 

In order to quality for 
recognition by the federal 
Bureau of Indian Affairs, the 
Ramapoughs and Chief , 
Ronald Van Dunk of Hillbum 
have had to offer hundreds 
of documents, oral history 
and a detailed historical 
account that demonstrates 
community continuity. It 
isn't alwa3rs a successful 
process, but Van Dunk and 
his tribe, which has 300 
ndembers living in Hillbum, 
are cautiously optimistic. A 
decision is expected in 
November. 

We hope the Ramapoughs 
are recognized. Those of us 
in Rockland who are close to 
the county's history know 
full well the accounts of the 
Munsees and the 
Ramapoughs. To recognize 
them officially would be to 
properly note their place in 
not only the history of this 
nation and Rockland, but in 
their own history as well. 



Thursday 

Septembers, 1993 

Rockland 

Journal-News 



474 



CHARL.ES S U3ROEB 
GEORGE U. SCMNEIDERT 
VINCENT J NUZZIt 
PAUL. J VICHNESS 
EDWARD J 81UNKASM 
BRIAN W MASON 



PATRICK P TOSCANO. J 
EILEEN M EGAN 
GERARD V ROSS 
MICMAEU R CARLJJCCI 
RICHARD COPPA' 



IRVING VICHNESS (I»II1«»7) 



LoRBER, Schneider, 

NUZZI, VICHNESS & BlUNKAS 

ATTORNEYS AT l_AW 

3IOPASSAIC AVE . FAIRnCUD. N J. 07004 

C201)S7S.|400 FAXS73-40I0 



MORRIS COUNTY OFFICE 
300-ROLrnt •lO-SOLTTMBL.DG. 
RANDOL.PH. N.J. 07a«9 

(20i)3se-eioo FAX3««-ea»e 

RCtf PONO TO: 
^^AIRF1EL.O 
O RANDOLPH 



Statement of George L. S chneider 

Counsel to the 
Ramapouah Mountain Indian Tribe 



I am legal counsel to the Ramapough Mountain Indian Tribe. 
I submit this statement in response to the article written by Tim 
O'Brien for the September 13, 1993 edition of the {Tgw Jgrggy L9,¥ 
Journal , entitled "Was Mob behind Tribe's Casino?" , and placed into 
the record of this proceeding by Congresswoman Marge Roukema. 

The O'Brien article is factually inaccurate and grossly 
misleading. I have spent ten years in law enforcement as the 
former Essex County Prosecutor and as Chief Trial Attorney for the 
New Jersey Attorney General in the Division of Criminal Justice. I 
have extensive experience in the prosecution of organized crime and 
2un very sensitive to that element's efforts to infiltrate 
legitimate businesses. I can assure you there is absolutely no 
organized crime influence in any phase whatsoever of the Ramapough 
Mountain Indian business affairs. Furthermore, there is no 
"Tribe's Casino". 



475 



Using "McCarthyism" tactics, the Law Journal has 
sensationalized a stoty about one Bob Frank whom it refers to as a 
"friend" of the Ramapough Mountain Indian Tribe. According to the 
Law Journal . Frank is a "longtime associate" of another person, 
totally unknown to the tribe. The Law Journal then states that 
this second unknown person was associated, over seven years ago, 
with yet a third person who is an organized crime figure. I can 
report to this Sub-Committee, unequivocally, that this third person 
is also completely unknown to the Tribe. He has never had any 
connection directly or indirectly with the Retmapough Mountain 
Indian Tribe or any of its members in any way, personal or 
business. 

Congresswoman Roukema and others have also charged that the 
only reason the tribe seeks Federal Recognition is to operate a 
casino operation in Bergen County. However, it should be noted for 
the record that the Tribe began its efforts for Federal Recognition 
in 1979, almost ten years before the Indian Gaming Act was passed. 

The recognition procedure is very complex and extremely 
demanding. The preparation of a petition is time consuming, costly 
and requires experts in many fields, including genealogy, 
anthropology and historical research. It is not unusual for a 
Tribe to take ten years or more to complete the process. 

In the early 1980 's, the Tribe worked with a professional to 
undertake preliminary research and to seek a Federal grant. That 
grant award would have funded the research necessary to meet the 



476 



requirements laid out in the formal recognition process. This 
grant, unfortunately, did not materialize. As a consequence, the 
Tribe needed to raise money from Indian activities and from private 
funding sources to support its recognition efforts. 

In 1985, Bob Frank, along with several others, offered 
assistance to the Reunapough Mountain Indian Tribe in its efforts to 
gain Federal Recognition from the Bureau of Indian Affairs. After 
deliberation and debate by the Tribal counsel, this assistance from 
Mr. Frank was finally accepted. As I have stated before, the other 
persons named in the Law Journal article were not part of Mr. 
Frank's group and not part of this effort. Indeed, Mr. Frank and 
his group were ineffective and the Tribe's relationship with Mr. 
Frank's group was formally terminated two years ago. Today, the 
Ramapough Mountain Indian Tribe considers Mr. Frank to be no more 
than one of the many persons and organizations that have offered 
assistance over the years. Neither he nor anyone else should be 
considered to be "waiting in the wings" or "ready to come home" in 
the event the Tribe is recognized as was reported in the Law 
Journal article. 

The tribal members are good and decent people, who detest 
organized crime every bit as much as any law abiding citizens 
including congressman Torricelli and Congresswoman Roukema. Using 
my experience in the criminal justice system and my personal first 
hand knowledge of the organized crime personnel and structure, I 
have worked with the tribal counsel to ensure that all outside 
funding sources are free of any criminal element and I will 
continue to do so. 



477 



The tribe's overwhelming goal, as it has been for over 14 
years, is to achieve a Federally Recognized status to restore its 
rightful place in history. 




fmL 



meider, Esq. 
14, 1993 



478 



O'CONNOR & HANNAN 

ATTORNEYS AT LAW 

SUITE 800 

1919 PENNSYLVANIA AVENUE N W 

WASHINGTON. DC 20006 3<S83 

1202I e87-MOC 
WAYNE M. ZELL 
WRITER-S DIRECT 0,*L ^ELEX 89 7420 

I202I 887-M69 FAX (202I 466 2198 



This letter is intended to refute the claims of certain 
critics who have alleged that, unlike State-conducted gaming 
activities, gaming operations conducted on Indian tribal lands 
escape Federal taxation. The law clearly contradicts these 
claims. 

1 . Indian Tribal Governments Are Treated As States for Certain 
Federal Tax Purposes . 

Prior to 1983, the Internal Revenue Service ruled that 
Indian tribes are not taxable entities. 1 The ruling- further 
provided that tribal income not otherwise exempt from federal 
income tax was includable in the gross income of an Indian tribal 
member when distributed or constructively received by that 
individual . 

In 1983, the United States Congress passed tax legislation 
providing that, for specific purposes under the Internal Revenue 
Code (the "Code"), Indian tribal governments are to be treated 
the same as States or similar to States. 2 The 1983 legislation 
further provided that a subdivision of an Indian tribal 
government is to be treated as a political subdivision of a State 
(i.e., and therefore treated essentially the same as the States 
themselves) only if the Treasury Department determines, in 
consultation with the Interior Department, that the subdivision 
of the Indian tribal government was delegated the right to 
exercise one or more of the sovereign powers of the Indian tribal 
government. It is not necessary for a whole range of sovereign 
powers to be delegated to be treated as a political subdivision 
of a State; it is sufficient if at least one sovereign power 
(e.g., police power) has been delegated. 



1/ Rev. Rul. 67-284, 1967-2 C.B. 55. 



2/ Pub.L. 97-473, Title II, §202 (a) , 96 Stat. 260S 
I.R.C. §7871. 



35 Years of Professional Legal Services 



479 



The reason for this legislative change was that many Indian 
tribal governments already exercised sovereign powers. This fact 
was recognized by the United States in various treaties with 
certain tribes. Moreover, Indian tribal governments increasingly 
sought funds with which they could assist their people by 
stimulating tribal economies and by providing governmental 
services. The 1983 legislation was enacted to facilitate efforts 
of Indian tribal governments that exercised such sovereign 
powers . 

Under the 1983 legislation, most federal excise taxes do not 
apply to articles sold for the exclusive use of Indian tribal 
governments. An identical rule applies to the States and their 
political subdivisions. As noted below, however, withholding and 
excise taxes imposed on gaming and wagering activities do apply 
to the Indian tribal governments. The legislation also provides 
that Indian tribal governments are to be treated generally the 
same as States for purposes of the tax-exempt bond interest 
provisions, subject to significant restrictions; the deduction 
for taxes under Code Section 164; the determination of whether 
contributions or transfers to or for the use of a tribal 
government are deductible as charitable contribution^ under Code 
Sections 170, 2055, 2106 and 2522; and for certain other 
purposes. The legislation originally was scheduled to terminate 
after December 31, 1984, but was extended and made permanent in 
the Deficit Reduction Act of 1984.3 

2 . Indian Gaming Operations Are Subject To The Same Federal Tax 
Provisions As State Gaming Operations . 

In 1987, the U.S. Supreme Court ruled that Indian tribes may 
engage in gaming on tribal lands to promote tribal self- 
sufficiency and economic development .4 In 1988, Congress enacted 
the Indian Gaming Regulatory Act ("IGRA") to provide a statutory 
basis for the operation of gaming by Indian tribes as a means of 
promoting tribal economic development, self-sufficiency, and 
strong tribal governments . 5 Congress established an independent 
federal regulatory authority for gaming on Indian lands and a 



3/ Pub. L. 98-369, Sec. 1065, July 18, 1984, 98 Stat. 847, 
1048. Further amendments were made to the legislation in 
the Tax Reform Act of 1986 and the Revenue Act of 1987. 



4/ California v. Kabazon Band of Mission Indians , 480 U.S. 202 
(1987) . 



5/ 25 U.S.C. §2702(1); Pub.L. 100-497, §3, Oct. 17, 1988, 102 
Stat. 2467. 



480 



National Indian Gaming Commission to address congressional 
concerns regarding gaming and to protect such gaming as a means 
of generating tribal revenue . 6 

Under the IGRA, Code provisions concerning the reporting and 
withholding of taxes on winnings of gaming or wagering operations 
apply to Indian gaming operations governed by the IGRA. 7 These 
provisions apply to the same extent and in the same manner as 
they apply to State-conducted gaming and wagering activities. 

Specifically, the IGRA expressly provides that the reporting 
and withholding provisions applicable to Indian tribal 
governments include Code Sections 1441, 3402 (q) , 6041 and 60501 
as well as the excise tax provisions of Chapter 35 of the Code . 8 
Code Section 1441 generally imposes withholding obligations on 
any person (including officers and employees of the United States 
or any State) having the control, receipt, custody, disposal or 
payment of certain items of income, including dividends, rent, 
salaries, wages, remunerations, compensations, annuities, profits 
or gains(e.g., gambling winnings), of any nonresident alien and 
certain foreign partnerships. Code Section 3402 (q) provides that 
the United States, the States and their political subdivisions 
are required to withhold income tax at a rate of 28% from any 
gambling or wagering winnings specifically subject to the 
withholding provisions. Code Section 60501 requires any person 
engaged in a trade or business to report the receipt of more than 
$10,000 cash in a single transaction. Casinos with gross 
revenues in excess of $1 million dollars are defined as financial 
institutions and must report currency transactions under the Bank 
Secrecy Act and implementing regulations rather than under Code 
Section 60501.9 Finally, any person engaged in the business of 
accepting a wager is liable for excise taxes imposed under 
Chapter 35 of the Internal Revenue Code (Code Section 4401 et 
seq . ) . The excise tax applies to Indian and non-Indian gaming 
operators alike, but does not apply to parimutuel enterprises, 
coin-operated devices and State-conducted lotteries. i° 



6/ 25 U.S.C. §2702 (3) . 
7/ 25 U.S.C. §2719 (d) (1) 
8/ 25 U.S.C. §2719 (d) (1) 



9/ 31 C.F.R. 103 .11 (i) (7) , 103.22(a)(2) and 103.37. Casinos 

are not required to file duplicative information under Code 
Section 60501. Treas . Reg. §1 . 60501-1 (d) . 

10 / See I.R.C. §4402. 



481 



3 . Conclusion . 

In summary, Indian tribal governments generally are treated 
the same as States for Federal tax purposeg . Indian tribes, 
their subdivisions and subjects are permitted to engage in gaming 
and wagering activities on Indian tribal lands, to the extent 
permitted under State law and the IGRA. Indian tribes are 
subject to the same Federal reporting and withholding tax 
provisions as are States and their political subdivisions in 
connection with gaming or wagering operations. In addition, 
individuals and businesses conducting gaming operations on Indian 
tribal lands are subject to Federal excise taxes on most gaming 
and wagering winnings. 



Sincerely, 
Wayne M. Zell 



482 



O'CONNOR & HANNAN 

ATTORNEYS AT LAW 

SUITE aoo 

1919 PENNSYLVANIA AVENUE N W 

WASHINGTON. DC 200063483 

I202I 887 I400 

TELEX 89-7420 

JOHN J McDERMOTT FAX I2021 466-2198 



Critics of gaming on Indian lands have suggested that tribal 
governmental gaming is more susceptible to penetration by 
organized crime than gaming outside Indian reservations. The 
evidence does not support the contention. Indian gaming is but 
one form of an expanding industry. "Underpinning this vast 
expansion in legalized gaming is the lottery, a relatively new, 
once controversial but now widely accepted industry of state 
government:." 1/ "Gambling, from state-run lotteries to video 
poker machines, is popping up all over as cash-hungry states and 
municipalities look to benefit from an apparently insatiable 
public." i' 

In 1988, the Congress passed and enacted into law the Indian 
Gaming Regulatory Act (IGRA) in response to some unanswered 
questions created by the U.S. Supreme Court's landmark decision, 
California '■■■ Cabazon Band of Mission Indians , 480 U.S. 202 
(1987). Cabazon states thaz sovereign tribal govermr.ents could 
engage in certain forms of gaming that are merely regulated by 
the civil law of the surrounding state. The U.S. Supreme Court 
recognized the interest of the federal government in promoting 
Indian self-sufficiency, economic development and strong tribal 
governments. IGRA articulates the congressional policy in part 
to be "to provide a statutory basis for the regulation of gaming 
by an Indian tribe adequate to shield it from organized crime and 
other corrupting influences, to ensure that the Indian tribe is 
the primary beneficiary of the gaming operation, and to assure 
that gaming is conducted solely and honestly by both the operator 
and players;" 25 U.S.C.A. §2702(2). IGRA also established the 
National Indian Gaming Commission (NIGC or Commission) ro meet 
congressional concerns and to protect Indian gaming as a means 
for generating tribal revenue. 25 U.S.C.A. §2704. 



Walsh, Edward, "States Increasingly Betting on Gambling 
Revenue," The Washington Post , October 8, 1991, pg. A4. 

Hanson, Gayle, "Gambling: Playing Their Ace to Get Out of 
the Hole," Insight , June 6, 1993, pg. 8. 



483 



The NIGC is empowered by Congress with full investigative 
powers to interact with law enforcement officials, to obtain 
confidential information and to involve the Attorney General of 
the United States to investigate activities associated with 
Indian gaming. 25 U.S.C.A. §2716. The Commission also has a 
full range of civil penalties to include the closure of gaming 
activities found to be in contravention of IGRA and other 
applicable law. 25 U.S.C.A. §2713(b)(l). Tribal gaming 
activities must be pursuant to extensive regulation by tribal 
gaming ordinances and NIGC regulations. 25 U.S.C.A. §2710. NIGC 
is also charged with conducting or causing to be conducted [by 
the Federal Bureau of Investigation] such background 
investigations as are necessary. 25 U.S.C.A. §2706(b)(2). 

Each year. Gaming & Wagering Business publishes annual 
statistics on legalized gaming. Since the inception of IGRA, 
gaming on Indian lands has been included. "To some extent the 
Indian experience with IGRA is paralleling the Nevada experience 
with the Nevada Gaming Act of 1931. In both cases gaming is 
creating a commercial economy in regions that prior to 
legalization had none.''^ Tribal gaming is but one of many legal 
forms of gaming. "Today, only Utah and Hawaii do not have some 
form of gaming. By the turn of the century, 39 states are 
expected to have legalized casino or riverboat gambling."!'' 

On March 18, 1992 the Senate Select Committee on Indian 
Affairs held one of a series of oversight hearings on the 
implementation of IGRA. The Department of Justice was 
represented by Paul L. Maloney, senior counsel for Policy, 
Criminal Division. Mr. Maloney emphatically stated that "[t]he 
perception in the media and elsewhere that Indian gaming 
operations are rife with serious criminality, does not stand up 
under close examination." He went on to testify that the 
Department of Justice is cognizant that the flow of currency 
through Indian casinos would require constant and continuous 
vigilance; however, he stated in answer to a question by the 
Committee that there were only five active investigations 
involving alleged organized crime. 



y Christiansen, Eugene Martin," The 1992 Gross Annual Wager of 
the U.S. Part II: Revenue." Gaming and Wagering Business , 
August 15, 1993 - September 14, 1993, pg. 15, col. 1. 

1'' Hanson, Insight , pg. 8. 

- 2 - 



484 



A recent U.S. News & World Report article on Indian Gaining 
corroborates Mr. Maloney's testimony. "The FBI does not see a 
'coordinated, concerted effort' by organized-crime families to 
raid the Indian gambling industry, says Jim Moody, Chief of the 
FBI's organized-crime section. "i' Moody went on to state that 
the FBI had "six ongoing investigations — one more than when 
Moody testified on Capitol Hill just a few months ago. "5'' 

"The vast majority of the 175 total Indian casinos and bingo 
halls are honest and clean. Many employ Las Vegas or Atlantic 
City pros and have vigilant in-house security teams. "I^ Many of 
the management companies that operate Indian games are publicly 
traded and have "passed overlapping layers of government 
scrutiny. "^^ 

The allegation that Indian gambling is more susceptible to 
organized crime, or any crime, is simply not supported by 
existing evidence. To the contrary, it would seem that Indian 
gambling is no more susceptible to penetration by criminal 
elements than other forms of state-authorized gaming. In fact, 
Nevada casino owners now operate many tribal casinos and comply 
with the same rules as are in force on casinos in New Jersey and 
Nevada. 2^ 

In summary, we believe that the federal assets allocated to 
the Department of Justice and the NIGC are sufficient to address 
criminal intrusion into gaming on Indian lands pursuant to 
IGRA. Organized crime is not a significant concern for gaming on 
Indian lands. 



Sincerely, 




McDermott 



Popkin, James, "Gambling With the Mob", O.S. News and World 
Report , August 23, 1993, pg. 31. 

Popkin, U.S. News and World Report , pg. 31. 

Popkin, U.S. News and World Report , pg. 31. 

Popkin, U.S. News and World Report , pg . 31. 

Hevener, Phil, "Casino Beat", Gaming and Wagering Business , 
August 15, 1993 - September 14, 1993, pg. 6. 

- 3 - 



485 



hlOG IB '93 02! 19PM rWT'L GOVERNORS'OSSOCIfiTION 



NAHONAL 
GOVERNORS 

AssmmoN 






I1U. OKI I 

p. 2x3 



■wiCtHnim 









FhtKXQ 

Tc)qik«M<]«]i*:«.«Me 



Tile Hononbl* John McCain 
Vice Chair, Coauoittat on 
Indian ASkira 
United State* Saute 
Washington, DC 20510 



f - ^ 

"*t^ 3^ Auguat 17, 1993 

*•* 

The Honorable Daniel Inouye 
Chaiireafi, Conunittee on 
lodttanASain 
United States Senate 
Washington, DC 20S10 

Dear Senator Itaouya and Senator McCalm 

The Netionai Govemon' Asiodatioa'i annual mettiag in Toiaa, Oklahoma, 
provided the flm solid opportunhy for GoveiBOTs to meM and review the cuirem 
draft propoia], intended to dai^ the implememtlon of tbe faHi yp Gimiog 
Regulatory Act of 1988 dCHU), ynder discuaiios between the atate and tribal 
negotiatisg teams. 

A nmnb* of Govemoa rsviewcd and discuaied the negotiation procos and the 
latest draift proposal Whik we appreciate the good fthh efibrt on the part of both 
state and tribal represcnutivei, the Govemori resiais concerned that the current 
proposed framework does not adequately address the areu of critical concen 
eiqjressed by NGA on the ifflplenentttioa of the lORA. 

As OovanBor Sullivan explained in the July 2 mealing, our tfatishold iiiue is to 
saeur* clear, game specific language before we can sarieualy consider a flpnsmsus 
a tn e n il m en t . Oarificatioa of IQRA oust provide an objective standard on the 
scope of g aming , without requiring constant litigation relating to state public 
policy. For example, under as amended IGRA, a state lottery's uM of eieotrooie or 
video ticket di^jeniers should not force the state to negotiate whh the tribes fbr 
video ganang devices. 

AtM, «Ue w* are interested in reducing litigation ittder IQSJi, we are concerned 
that the cuirent structure stfll encourages paitiee to rely on court reeohition of 
confliets. Aj we irvt teen, these couit battles are expensv* and also cauae 
uonecasaaiy ftiction between state and tribal govemma&ta. Funbemiore, we 
believe an ameadcd IGRA should reaSna the viability of Settleoeot Acts 
coneatly in eflba. 

We remain committed to resolving this impoitam issue and recogniia that this 
govenreent to govemmstt process encourages broader state-tribal relations. We 



486 



AUG 18 '93 02: 19PM NflT'L GOVERNORS 'ftSSOCIPTION 



p.a^ 



would like this proceit to cosdau^ despite the other alternativei tviil&ble. 
However, tve insist thit a rMolutloo be achieved wfthout lufrendertag our 
fuadttaeatal beiieft about the applicaxioa of our own stat« law aod the potential 
that this iuue will change the cultuni lasdscape of a state without the full 
p a rt i cip i tion of iti dtizeas We recotnnMod that the state tad tribal 
r^resestatives meet in Albuquerque oa August 23 and 24, a$ pUfiOed, to discuu 
our eoncetos is sore detail and to censidei the noo steps Is tUs prooess. 

We tppreoiate the efibrts of aO of the partidpaati in ^ oggotiation precesa and 
we look forward te resolutioa oi^mt cSfficult iuuea. 

Sincerely, 




Ooveisc^Xoy Romtr 
National Goveraors' Aiiociatios 




GovenoruB^SD A.| 

Vice Chabtnan 

Natiottal Oovetaori' Assodttion 



^^^<^%i4^5^.**-— '''^^^^^''*****^ 



Goveraor Michael J. SuDrvm 

ChaiitBiD 

Tadc Force oo Indian Gasdng 



Governor Tciy £. Bnaitad 
Task Forot oninSea Gamag 




'Ur-.jdr^ 



Biuce Sundhm ooveraor Tom&yo.'iii^apioD 

pa Ia4iii> Qcaing Task Fens^Iadiu Gaming 






•officio 
Forc^^ibn Indian Gasiiog 



•Bol 
Ex-offlolo 
TaakFofoe os Ladiaa Gtoang 



o 



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