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Monday, August 18, 2003

Federal regulators have been warning an Oklahoma tribe for more than a year that its casino may be in violation of federal law.

In a January 24 letter, the National Indian Gaming Commission (NIGC) said it had denied the Quapaw Tribe of Oklahoma's casino management contract. Fred W. Stuckwish, NIGC's director of contracts, said the agreement, with a company owned by Marc Dunn, "did not comply with certain regulatory requirements."

NIGC's take on the contract was not that unusual, however. Tribes are often asked to submit changes for additional review, and the back-and-forth can take up to two years. The lengthy process has prompted some tribes to enter into consulting agreements, which the NIGC lacks the authority to review.

But according to Stuckwish, the tribe failed to respond to issues NIGC raised on two different occasions, one in August 2002 and the other in April 2002. "To date, we have not received the required submission items or a revised contract that address all of the deficiencies," he wrote.

The letter contradicts information Quapaw chairman John Berrey gave in a interview last month. At that time, he said the tribe submitted changes to NIGC "last March." "We have a gaming contract waiting for approval," he said.

Berrey has since expanded on the reason for delay, The Joplin Globe reported yesterday. At a monthly business committee meeting held at the tribe's headquarters on Saturday, Berrey placed the blame on NIGC.

"In fact, they admit they've even lost some of the original documents," The Globe quoted Berrey as saying.

The lack of an approved management contract violates the Indian Gaming Regulatory Act. The tribe can be punished with fines it if does not comply, and the NIGC can order a shutdown of the facility.

The agency has not gone that far. In an August 8 letter, the tribe was told by NIGC to turn over a wide-ranging set of documents, including casino agreements, financial statements, tax filings, bank statements and internal memos. Berrey characterized the information request as a routine inquiry, The Globe reported, although NIGC is viewing it as an investigation.

Even though the contract is up in the air, the tribe has continued to pay Dunn's company manage the casino. Some of those figures are in dispute, and the tribe's gaming board has decided to conduct its own audit of the casino finances.

Dunn's company also manages the Seneca-Cayuga Tribe's casino, whose manager, Rick Smith, used to run the Quapaw casino until he unexpectedly resigned earlier this summer.

According to tribal sources, the Quapaw Tribe submitted an entirely new casino contract to NIGC in June. But NIGC, in a follow-up letter believed to have been issued late July, outlines additional problems, according to those who are familiar with the letter.

The contract isn't the only area of concern for federal investigators. According to NIGC's June 2002 compliance report, the Quapaw Tribe has not submitted its annual casino audit that would detail how much money Dunn's company is receiving.

Normally, NIGC does not allow a management company to take more than 30 percent of a tribe's revenues. In one case, the agency did approve a 60-40 split but that agreement has since expired.

The Quapaw Tribe has not submitted a report on how it is meeting minimum internal control standards (MICS) either, according to NIGC's 2002 compliance report. The standards cover everything from cash management to background checks.

Relevant Documents:
NIGC Letter to Quapaw Tribe (January 24, 2003) | NIGC Letter to Quapaw Chairman John Berrey (August 8, 2003)

Relevant Links:
National Indian Gaming Commission - http://www.nigc.gov

Related Stories:
Quapaw Tribe: NIGC lost casino documents (8/18)
Quapaw casino manager denies wrongdoing (8/15)
NIGC launches Quapaw casino probe (8/14)
NIGC's Hogen warns Okla. tribes on games (5/19)
NIGC asks for greater authority over industry (5/15)
Chickasaw Nation 'followed the law' (6/28)
Tribes defy federal casino order (6/17)

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