[I realize that this article is about one Tribe. I think
however that the issue raised might be investigated by any
Nation considering the benefits of gambling. -Michele]
This article is from the twice monthly newspaper, News From Indian
Country. It is published by Indian Country Communications, Inc.
with offices at Rt.2 Box 2900A, Hayward, WI 54843. They may be
contacted by calling (715) 634-5226; FAX (715) 634-3243.
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Madison, Wisconsin
Fired staff member recommends Buffalo Brothers license be revoked
Says Casino Management firm took advantage of tribe
by Paul DeMain
News from Indian Country
The management firm for the St. Croix Chippewa's two casinos,
already under lawsuit from some tribal members, and at the heart
of tribal elections this year, took another blow when the director
of the Wisconsin Indian Gaming office recommended in a draft report
that the company's license to operate in Wisconsin be revoked.
The draft report written by Michael A. Liethen, and
subpoenaed by a court and presented to a Minneapolis law firm of
Dorsey and Whitney, resulted in the immediate firing of Liethen by
Gaming Commission Chairman John Tries, July 1st.
The memorandum indicates that the Buffalo Brothers Management
Company, owned by Roy C. Palmer and Ronald G. Brown, deceived the
St. Croix Chippewa Tribe in presenting financial information and
making management recommendations to the tribe about leasing or
purchasing of several hundred slot machines.
The management company recommended to the tribe that they
lease the machines from Interstate Gaming, a company that is also
owned by Roy C. Palmer and Ronald G. Brown, indicating that they
believed the daily profit from the slot machines (called the drop)
would average around $40.00 per day.
That average is about three times lowers than what the industry
average is across the United States. Interstate was paid 30% of the
drop from the slots as "rent".
In response to the successful opening and operating of the
casino, Interstate Gaming actually was paid rent from the machines
in the area of $115 per day or more during March of 1992, two
months before a much larger casino was opened. This resulted in
Interstate receiving $6,165,240 during the first six months of
operation of the new Turtle Lake Casino running from May 1992 to
September 27th, 1992 according to the report.
The entire amount received by Interstate Gaming during 1992
included $1,606,104 from the tribe's Danbury operation and
$7,441,921 from the Turtle Lake facility.
The Buffalo Brothers Management Company during the same
period earned $2,993,159 and according to a June 30th memo from
Dorsey and Whitney the total amount in dispute as of this date
may exceed $18 million.
The key to the recommendation by Liethen for the suspension
or denial of a business license is that during the same period the
Buffalo Brothers were estimating to the tribe the $40 daily drop
which in March of 1992 was actually over $115 per day, it was
representing to the investment company Miller and Schroeder
Investment Corporation (the company from which Interstate borrowed
money to pay cash to Sodak Gaming Supplies to purchase the
machines) as early as April 1992, figures ranging from $150 to $225
daily and added that "the assumption is considered a conservative
estimate and is less than current experience . . .".
According to the report, during the same period they were
negotiating with the bank, and on April 3, 1992, the tribe and
Interstate entered Amendment Number One to the original lease
agreement. The Amendment re-cited the Management Agreements with
Buffalo Brothers made specific reference to and approved the Lease
by reference, and extended the expiration date of the Lease almost
three additional years from February 1, 1996 to January 27, 1999.
The financial reports regarding financing of the $3,284,500
contract to Sodak for 598 machines indicated that Interstate Gaming
or the tribe, had the tribe bought the machines, could have paid
off the entire loan within four months.
During 1992 Interstate borrowed $3,763,525 for machines and
with revenues of $9,048,025 could have paid the loan off and had
$5,763,525 as operating profit from the machine rent alone, or
almost twice the value of the machines, the report noted.
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"..Combined Buffalo Brothers/Interstate compensation was therefore
$13,786,908 during 1992. The Tribe's share of net revenue was
$6,515,764 during 1992. Since Buffalo Brothers was already paid at
the maximum percentages of net revenues under the Management
Agreements and also the maximum permitted by Compact, the payments
under collateral Interstate leases constitute excessive
compensation in the amount of $9,048,025 in violation of IGRA and
the Compact during 1992. The magnitude of this excess is
illustrated by noting that the $13,786,908 received by Buffalo
Brothers/Interstate is 124.8% of the net revenues of $11,044,952
and is 211% of the amount received by the Tribe."
Gaming Office Draft Report
"...Buffalo Brothers has engaged in a pattern of conduct which poses
a threat to the public interest and created and enhanced the
dangers of unsuitable and unfair practices in its role as the
Tribe's agent in carrying on the business and financial activities
of the gaming enterprise"
Indian Gaming Office Draft Report
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Michele Lord + If you have come here to help me,
+ you are wasting your time.....
+ But if you have come because
+ your liberation is bound up with mine,
milo@scicom.alphacdc.com + then let us work together.
Aboriginal Woman
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