Leaders of Pinoleville Pomo Nation can be sued for alleged fraud

Monday, October 8, 2018  

Leaders and associates of the Pinoleville Pomo Nation can be sued for allegedly defrauding a gaming investor out of nearly $5.4 million, a federal judge ruled last week.

The individual tribal defendants aren't protected by sovereign immunity and the lawsuit doesn't target the tribe itself, Judge William H. Orrick wrote in the October 5 decision. Therefore, they can be sued under the precedent set by the U.S. Supreme Court in Lewis v. Clarke, he concluded.

"Applying Lewis to the facts alleged here, I conclude that this suit is against the tribal defendants in their individual capacities and that the tribe is not the real party in interest," Orrick wrote in the 13-page ruling, a copy of which was posted by Turtle Talk.

The tribe announced a $50 million casino almost a decade ago. Plans called for a 90,000 square-foot casino and a 72,100 square-foot hotel on an 8.8-acre site in Ukiah, California.

The project never really got off the ground even after the tribe negotiated a new Class III gaming compact with the state and secured a favorable ruling from the National Indian Gaming Commission. The site falls within the tribe's original reservation, the federal agency said in a 2015 Indian lands opinion.

The land was put on the market two years ago and the tribe ended up buying the property in 2017, after it was used for a failed marijuana operation.

But a firm called JW Gaming claims there were red flags along the way. The firm invested $5.38 million in the casino, believing others were also involved, but that wasn't the case, according to the lawsuit.

After asking the tribe in 2011 for an audit of the investment, JW Gaming "alleges that the defendants used its payments for personal purposes, including, for example, a $95,000 transfer to a romantic partner, a $400,000 transfer to an organization over which two defendants have ownership interests, and a $1 million transfer to other defendants," the court decision stated. The allegations have not necessarily been proven in court.

In addition to suing Chairperson Leona L. Williams, Vice Chairperson Angela James and other tribal officials, JW Gaming named a firm called Canales Group as defendants. The firm was the one that claimed to be an investor in the casino, according to the lawsuit.

The Canales Group's representatives include Michael Canales, who has been cited in numerous press reports as being the president of the tribe's economic development corporation.

The Supreme Court decided Lewis v. Clarke in April 2017. The ruling, which was unanimous in the outcome, opened the doors for tribal officials and tribal employees to be sued, even for carrying out the duties of their jobs.

Federal Register Notice:
Indian Gaming (February 3, 2012)

National Indian Gaming Commission:
Pinoleville Pomo Nation Indian Lands Opinion (September 28, 2015)

U.S. Supreme Court Decision:
Syllabus [Summary of Outcome] | Opinion [Sotomayor] | Concurrence [Thomas] | Concurrence [Ginsburg]

U.S. Supreme Court Documents:
Docket Sheet No. 15-1500 | Questions Presented | Oral Argument Transcript

Connecticut Supreme Court Decision:
Lewis v. Clarke (March 15, 2016)