Tax-free status enriches nation's second-largest American Indian population

TheGeneral+ · Oct 5, 2003

"They're really kind of upset about it, even those who aren't church people," he said, "because they don't see it doing anything for our community."

(KRT) - THACKERVILLE, Okla. – Just north of the Red River, the towering neon sign flashes endlessly, beckoning Interstate 35 travelers to escape the droning highway for a glitzy world of instant riches.

The Chickasaw Nation's newly expanded WinStar Casino is the largest structure visible for miles in this part of southern Oklahoma, but its location is no accident: It positions the tribe to aggressively market its version of Vegas to millions of potential gamblers a short drive away - in North Texas.

The Chickasaws are not alone.

Across Oklahoma, home to the nation's second-largest American Indian population, billboards touting slots and casino jackpots are becoming as much a part of the landscape as oil pump jacks. From Thackerville to Tonkawa, as many as 72 gaming centers, more than triple the number a decade ago, now dot the former Indian Territory, generating millions of dollars for tribes, thousands of jobs - and growing discontent among some government officials and taxpayers.

The rub: Because casinos are located on tribal-owned land and operated by sovereign Indian nations, state and local governments can't tax or regulate them, even though the casinos often depend on taxpayer-financed roads for access and fire departments for protection.

Further, critics fear that ongoing state-tribal negotiations could end up allowing tribes to expand from their somewhat restricted video slots and betting parlors into full-fledged Vegas-style games. That, they say, would attract a stampede of gamblers and result in a host of broken lives.

"We have a huge problem," said state Rep. Forrest Claunch, a Midwest City, Okla., Republican who has led the fight against expanded gambling, including efforts to create a state lottery. "We have 39 (federally) recognized tribes, and almost all want to do some gambling in some form or another.

"If they turn these guys loose … we'll be run over."

Indian leaders scoff at the dire talk, arguing that casinos and smaller gaming centers generate jobs and revenue that benefit cash-strapped tribes as well as surrounding communities, many of them in distressed rural areas. Gambling provides sorely needed capital for tribes to diversify their economies and become more self-sufficient.

"What we see in our history is that whenever tribes have assets and use those assets, someone comes and takes them away," said Chad Smith, chief of the nation's second-largest tribe, the Tahlequah, Okla.-based Cherokee Nation. "Now that we have a new asset - gaming opportunities - history repeats itself. People want to take it."

As the debate intensifies, several tribes are parlaying their casino winnings into much grander operations. They are staging nationally televised boxing matches, offering shows with big-name entertainers and drawing up plans to surround casinos with destination-style resorts. In Catoosa, Okla., for example, the Cherokee Nation is spending $60 million to double the size of its suburban Tulsa gaming center to 80,000 square feet, modernize a Perry Maxwell-designed golf course and build a seven-story hotel-conference center. In south Tulsa, on the banks of the Arkansas River, the Muscogee Creek Nation is launching a $75 million project that includes a new casino-hotel-convention center.

And 80 miles up I-35 from Dallas, just outside Thackerville, population 410, the Chickasaws recently christened their expanded, 110,000-square-foot WinStar Casino, with three restaurants and a 600-seat theater for live shows. Coming soon to the WinStar: three hotels, more casino space, a golf course, a movie theater and a children's arcade.

The tribes are promoting their casinos more than ever. On Oklahoma City television stations, casino ads run among commercials for car dealers and furniture stores. The Cheyenne and Arapaho tribes' Lucky Star Casino near El Reno, Okla., bills itself as the place where "riches can be found." The Absentee-Shawnee's Thunderbird Wild Wild West Casino near Norman, Okla., offers "a whole lot of Vegas and gold rush fun."

Like other southern Oklahoma casinos - some of which are 100 miles closer to Dallas-Fort Worth than northwest Louisiana's riverboats - the WinStar is marketed heavily on North Texas airwaves and highway billboards. The blitz may be paying off: On a recent weekday morning, 118 of the 133 vehicles in one parking lot bore Texas license plates.

For others, the casinos offer another option for local entertainment.

Sammy Williams, 32, who visits the nearby Lucky Star "every couple of months," said he goes to the casino for a night's outing with friends.

"It's fun - for about 15 minutes," Williams said. "It doesn't take me long to lose my money."

Williams said his luck was better last year but has turned south recently.

"Last Saturday I lost 60 bucks," he said. "I could have left winning $25, but the others wanted to stay."

Federal law leaves state and local governments powerless to regulate Indian gaming because tribes are considered sovereign nations. The federal National Indian Gaming Commission does monitor tribal casinos to ensure that their games are within the scope of state-permitted forms of wagering.

Since Oklahoma permits bingo and pari-mutuel horse racing, Indian casinos are supposed to restrict their operations to those forms of gaming.

The thousands of video slot machines in Oklahoma casinos - complete with rolling tumblers of fruit and music-box tones - are but variations of bingo, tribal leaders say.

Some casinos have off-track betting parlors as well. Others allow table games, but the players play against each other, not the house.

In recent months, some Oklahoma tribes were cited for running afoul of federal authorities. Earlier this year, the Seminole Nation in east central Oklahoma was fined nearly $11.3 million for violations that include operating illegal slot machines. Twenty-seven tribes were warned that they faced closure unless they discontinued blackjack games in which players competed against the house. Each Oklahoma tribe has full authority to set payoff amounts and frequency from its gaming machines, and some advertise or post the possible jackpots. The Indian gaming commission said, however, that the tribes are under no obligation to guarantee any minimum.

It's not clear exactly how many Indian casinos are operating in Oklahoma – at least in part because tribes are not required to report such activities to the state. Gov. Brad Henry puts the number at 72. Others believe it is closer to 65. The National Indian Gaming Commission lists 70 Oklahoma casinos on its Web site but doesn't include every center in operation.

A Harvard University study, published in July 2002, found 55 Oklahoma gaming centers. It estimated total revenue of $208 million, about 40 percent of which flowed directly to the tribes.

In many cases, experts say, tribes hire non-Indian firms with gaming expertise to manage the facilities. In some cases, the management firms provide the capital to build the casinos. Critics complain that tribes and their members often don't receive the full benefit of casino operations because they are paying exorbitant fees to casino management companies.

But Smith, the Cherokee chief, said gaming revenues enable tribes to diversify their economies into such things as travel centers, grocery stores, radio stations and banks, helping thousands of rank-and-file members.

"Gaming is really just a means to an end - it's not an end in itself," he said. "It's part of a long-term strategy of becoming economically self-reliant."

With an Indian population of 273,230 - 8 percent of the state's residents - Oklahoma was behind only California in the number of American Indians in the 2000 census.

Across Oklahoma, the casinos are viewed as something of a mixed bag.

While hundreds of cars filled the lots at the WinStar Casino on a recent weekday, the streets were mostly empty in nearby Thackerville. City Hall closed at 11:30 a.m. Two cars were parked outside the only convenience store. A half-dozen cars lined the cafe parking lot.

Cary Jones, pastor of Thackerville's First Baptist Church, said he's noticed more traffic in town since the WinStar expanded. But most, he said, involves people who missed the casino exit or can't figure out how to reach the gaming center.

Jones said he has noticed "uneasiness" in Thackerville over fears that the casino could end up burdening local schools, police and fire and other town services.

"They're really kind of upset about it, even those who aren't church people," he said, "because they don't see it doing anything for our community."

In Kingston, Okla., Pam Reich, who owns The Gift Box, welcomes the Chickasaws' combination gaming center, fast-food restaurant, gas station and convenience store, just down Highway 70 near Lake Texoma and the state lodge.

"I don't see that it hurts," she said. "We definitely need the jobs in this area.

"It's just another draw, another option, especially in the evenings when they can't do anything (on the lake). This town could really explode someday with the Chickasaws coming in. This area has really never been marketed very well."

http://www.centredaily.com/mld/centredaily/news/6938826.htm

Railbird · Oct 6, 2003

Indian casinos are bad for America, the jobs that are created come with lung cancer.

Jazz · Oct 6, 2003

I'm on the fence on this issue - on the one hand, I don't like what the Indians are doing here, but on the other hand, the government has COMPLETELY AND TOTALLY FVCKED THEM for decades by their purposeful criminal handling of the billions they supposedly hold in trust for Indian tribes. The government can kiss my ass if they think I'll side with them against the Indians on ANY issue whatsoever until they make this situation right.

Following is a 1996 article on this - following is a current article on the status of this sickening problem.

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Billions Missing From U.S. Indian Trust Fund
by Joel Dyer

The U.S. has lost not millions, but billions of dollars belonging to native Americans. In his testimony before Congress, John Echohawk, director of Native American Rights Fund, called it "yet another serious and continuing breach in a long history of dishonorable treatment of Indian tribes and individual Indians by the United States government."
Arizona Senator John McCain, the chairman of the Senate Committee on Indian Affairs, bluntly called it "theft from Indian people."

These men were describing the single largest and longest-lasting financial scandal in history involving the federal government of the United States.

With no other recourse left at their disposal, NARF, along with other attorneys, filed a class action lawsuit in federal district court on June 10 on behalf of more than 300,000 American Indians. The suit charges Secretary of the Interior Bruce Babbitt, Assistant Interior Secretary of the Interior for Indian Affairs Ada Deer and Secretary of the Treasury Robert Rubin with illegal conduct in regard to the management of Indian money held in trust accounts and managed by the Bureau of Indian Affairs.

If the lawsuit's claims are correct, and there's an overwhelming body of evidence that suggests they are, then the federal government has lost, misappropriated or, in some cases, stolen billions of dollars from some of its poorest citizens.

"The BIA has spent more than 100 years mismanaging, diverting and losing money that belongs to Indians." The trust accounts in question -- which hold approximately $450 million at any given time -- aren't filled with government handouts. They contain money that belongs to individual Indians who have earned it from a variety of sources such as oil and gas production, grazing leases, coal production and timber sales on their allotted lands.

Revenues from such sources are held in more than 387,000 Individual Indian Money (IIM) accounts managed -- or according to detractors, "mismanaged" -- by the Bureau of Indian Affairs (BIA). "The BIA has spent more than 100 years mismanaging, diverting and losing money that belongs to Indians," Echohawk says. "They have no idea how much has been collected from the companies that use our land and are unable to provide even a basic, regular statement to Indian account holders."

Echohawk is quick to point out that the lawsuit was the very last resort. Native Americans have long been hopeful that a governmental remedy to the BIA's mismanagement could be found. Finally in 1994, after years of pressure by both Indians and legislators, Congress enacted the Indian Trust Fund Management Reform Act and appointed Paul Homan as the special trustee charged with straightening out the century-old mess.

Once again there was hope. But the legislative solution proved to be just another in a long line of toothless piles of paper generated by government bureaucrats. Although Homan was ready and willing to repair the system, Congress failed to provide funds to make the changes a reality. With no other path before them, the Indians took their fight to the courts.

In many instances it provides the only life-line for Indian families who often make up the most impoverished sector of our society Echohawk's claim that the BIA is completely out of touch with the amount of revenues it collects or should be collecting has been confirmed by countless congressional oversight hearings covering decades.

As an example, during one such hearing -- a 1987 Appropriations Subcommittee hearing on uncollected royalties -- then director of the Minerals Management Service William Bettenberg told the committee he was aware that hundreds of millions of dollars that belonged to Indians was going uncollected from oil royalties each year. This is in spite of the fact that MMS, a branch of the Department of the Interior, had been made aware of the annual lost revenue six years earlier. Bettenberg's revelation is typical of BIA behavior.

Adding still more credence to Echohawk's claims of government incompetence pertaining to the IIM accounts is the recent example provided by the long overdue audit of the tribal trust funds. These tribal funds, which are also managed by the BIA, are a collection of approximately 2,000 tribal accounts owned by some 200 tribes. These accounts hold about $2.3 billion at any given time and are primarily used to finance essential tribal government services.

Several years ago, after a decade of extensive pressure from the House Committee on Government Operations, the BIA agreed to contract with Arthur Anderson & Co. to audit and reconcile both the tribal accounts and a random sampling of some 17,000 IIM accounts. The sampling of the IIM accounts was to be a precursor to a complete reconciliation of all IIM trust accounts -- the first in history.

What happened next is truly astounding. After years of work and millions of dollars in fees, Arthur Anderson was only able to reconcile the 2,000 tribal accounts -- not the 17,000 IIMs -- and only then for the relatively short period of some 20 years from 1973 to 1992.

For this 20-year period alone, the auditor noted that at least $2.4 billion in the tribal trust accounts was unaccounted for and billions of dollars more were virtually untraceable because of the questionable nature of the government's records.

As for the IIMs, Arthur Anderson told the feds that its trust fund system for individuals was so screwed up that it wouldn't even try to reconcile the accounts and estimated that it would cost $108 million to $281 million just to attempt the monumental task. The accounting firm claimed that the government had destroyed, never created or otherwise did not maintain the records necessary to conduct a reconciliation. Even if the full IIM audit were performed, the firm said the costly information would be of little or no value when it came to providing IIM account holders with any real assurance that their balances are correct.

While the missing billions from the tribal accounts aren't part of the NARF lawsuit, the reconciliation process for these accounts does illustrate how badly the BIA's accounting system, or lack thereof, actually works. In June of this year, Special Trustee Homan told the Senate Committee on Indian Affairs that the IIM account system was "as bad or worse" than the tribal accounts. For now, NARF lawyers are concentrating on the mismanagement of money in the IIM accounts because in many instances it provides the only life-line for Indian families who often make up the most impoverished sector of our society. Echohawk told Congress that most of the IIM account holders are so poor that they need their money just for basic subsistence.

BIA's fiscally irresponsible behavior may prove more sinister than mere incompetence So how did the BIA's financial house get into such disarray and why has it been allowed to stay that way? The truth is it has never been in order, and the reasons behind the seemingly never-ending tolerance of the BIA's fiscally irresponsible behavior may prove more sinister than mere incompetence. Critics of the bureau point out that the United States has a long history of trying to separate Native Americans from their lands and way of life.

You can choose almost any year since the BIA's predecessor, the Indian Department, was created in 1824 and find governments reports describing poor management, no accounting system, missing money, no attempt to fulfill the fiduciary duty to the Indians as promised and required by law.

Congress has verbally demanded accountability and drastic change in the BIA's behavior for more than 100 years. Yet as of 1996 little if anything has actually changed. A 1992 report titled "Misplaced Trust: The Bureau of Indian Affairs' Mismanagement of the Indian Trust Fund" was prepared by the Committee on Government Operations. The 66-page report contained a scathing review of the BIA and hundreds of examples of the bureau's blundering over the years.

Among other things, the report surmised that "one hundred sixty three years later, Schoolcraft's assessment of the BIA's financial management still rings true. BIA's administration of the Indian trust fund continues to make the accounts look as though they had been handled with a pitchfork.

"Undoubtedly there is a screw loose in the public machinery at the Bureau. Indeed, while mismanagement of the Indian trust fund has been reported for more than a century, there is no evidence that either the Bureau or the Department of the Interior has undertaken any sustained or comprehensive effort to resolve glaring deficiencies."

Unfortunately, most of what was contained in the Misplaced Trust report was old news. Essentially the exact same findings were embodied in the GAO's 1928, 1952 and 1955 audits of the Indian trust fund. In fact, just since 1982, more than 30 audits have been performed on the BIA's records. Every single one of the 30 reports generated have noted serious accounting and financial management problems and weak internal controls throughout the BIA.

In a tone not often heard these days in Washington, Senator McCain cut to the chase during a June 11, 1996 oversight hearing when he stated that "Trustees receive and disburse funds all the time for other Americans, and if they blow it they pay. In this case it's the Native Americans who are rightfully owed the money and the federal government who will be forced to compensate for their loss."

Taxpayers who will have to cough up the money lost by the BIA McCain makes a good point. But in typical politician style he forgets to tell us that when he says it's "the federal government" that will be forced to pay for the mishandling of the Indian trusts, what he's really saying is it will be taxpayers who will have to cough up the money lost by the BIA.
Every day that the BIA procrastinates on fulfilling its trust responsibilities, the price tag to repair the damage goes up. The 1992 Misplaced Trust report clarifies the vulnerability of taxpayers.

The report states that "Continuing mismanagement and incompetence in the supervision and control of Indian trust funds present a clear danger to the American taxpayer, who must bear the financial burden of compensating trust fund account holders for BIA's breach of fiduciary duties."

Other sections of the report contain testimony that reads like the vision from a crystal ball. Speakers from six and 10 years ago offer warning after warning about the potential for costly litigation at the taxpayer's expense. The NARF lawsuit stands as harsh evidence that the warnings fell on deaf ears at the bureau.

Guarding our pocketbooks gives everyone a reason to get involved with the struggle to correct the injustices being perpetrated by the BIA. But at some point we must confront the reality that there is something more at work here than bureaucratic ineptitude.

"If this happened in Social Security, I tell you there would be a war" When obvious and admitted abuses of a small minority of people by a government are allowed to continue unchecked for over a century -- with little or no outcry from the citizenry -- it most likely means that the majority of the citizens condone the government's behavior.
What other explanation can there be for the BIA's belligerent lack of concern for its fiscal responsibilities to Native Americans? It isn't that the task of properly handling the revenue is just too daunting. Other departments of the government deal with larger and more complicated accounting systems with comparable ease everyday.

A similar observation was made by then-Representative from Texas Albert G. Bustamante during oversight hearings in 1990.

"We have 300,000 accounts. We have about 350 tribes in the United States. It is really sad that these people have been misrepresented by the BIA ... They have no real representation in Congress.

"I have a tribe that I represent in my district, but throughout the years, most of these people have been abused by many, and you in the BIA ought to be the ones that really look after them.

"If this happened in Social Security, I tell you there would be a war. If we can manage Social Security, we ought to be able to manage this."

NARF's Echohawk speculates that the reason for the government's seemingly eternal incompetence is darker than accidental mismanagement. "I think it comes down to race. Our people have historically suffered abuse after abuse. We have continuous problems with unemployment, health care and education. It just goes on and on. We don't have any political power to change it, so the government just continues to ignore us."

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Indian Trust Fund Decision Expected Soon

August 29, 2003

NEW YORK — While Native Americans await a judge's ruling on how the government should manage Indian trust fund money, the Bush administration is making efforts to reach out to the tribal communities.

The Native American Rights Fund sued the federal government last year, saying it owes at least $10 billion to Native American landowners, a result of massive mismanagement by the Interior Department of its trust accounts.

For more than 100 years, the Interior Department has leased properties and processed revenue earned from farming, drilling and other uses of Native American-owned land. It distributed payments to more than 300,000 American Indian landowners through the Trust Asset and Accounting Management System.

Federal Judge Royce Lamberth found the government guilty in 1999 of not upholding its responsibility to the Indians, and held then-Interior Secretary Bruce Babbitt and then-Treasury Secretary Robert Rubin in contempt. They were fined $600,000 for failing to turn over documents in the 5-year-old class-action lawsuit.

He is considering similar charges against current Interior Secretary Gale Norton and 40 other Interior officials.

"Our understanding is, it's imminent -- it's coming down in the next few days," said Keith Harper, an attorney for the Native American Rights Fund. "It's going to be huge."

Harper said tribes have been trying to work with the Interior Department on a trust management plan. The tribes want the court to appoint an independent person to oversee it.

But Norton has rejected that idea and instead proposed a new Bureau of Indian Trust Asset Management to oversee reform. "The problem is, the negotiations are going very poorly," Harper said.

Former Special Trustee Thomas Slonaker resigned in July after finding many records were either missing or destroyed. He said he was given a choice of resigning or being fired after continuous struggles with Interior officials as he tried to explain the missing cash.

"Things have not been going well in terms of trust reform, but it's not always the message they want to hear," Slonaker told The Associated Press.

A recently released report by the Interior Department's inspector general said the "litigation has so embroiled and angered those involved that they cannot see or think clearly in order to make a correct decision."

Several federal lawmakers, including Sens. John McCain, R-Ariz., Tom Daschle, D-S.D., and Ben Nighthorse Campbell, R-Col., have introduced legislation to reform trust management. The Senate Indian Affairs Committee is expected to continue its probe of the issue when Congress returns from its August recess.

But BIA officials say much progress is being made.

"There's a lot of folks who are outside of the process that are throwing rocks at it," said BIA spokesman Dan DuBray. "We are working … shoulder to shoulder with the representatives of Indian country on coming to a resolution to this problem."

In fact, a task force assigned to help Indians and government hammer out the kinks in the system is meeting in Anchorage, Alaska, this week. The group has held about 10 meetings this year.

"We've developed strong relationships with tribal leaders," DuBray said. "We're having a very good dialogue with folks on this issue."

Meanwhile, BIA is continuing its outreach to Indian country.

Indian tribes, corporate American and federal agencies are holding an economic summit in Phoenix, Ariz., Sept. 16-19 to boost business opportunities and living wage jobs in Indian country. The goal is to create 100,000 jobs for Native Americans by 2008 and establish sustainable, market-driven tribal economies by 2020.

BIA is also holding regional meetings to help Indian schools put President Bush's No Child Left Behind Act into action.

The president's 2003 budget provides $84 million to remedy deficiencies in trust programs on top of last year's $153 million appropriation to expand trust program operations, a $35 million increase from the previous year.

But Native Americans are concerned that the president may try to alter government policy in such a way that the federal government would deal with states over tribal land issues rather than with the tribes themselves.

"The United States is supposed to be operating for the benefit of tribes and making decisions that at least, at a minimum, are considering their interest," Harper said. "Most of the time, they don't consider their interests at all."

"If there's one thing Indian people want more than anything else, it's to keep their identity," Harper said. They can't do that if they must answer to state control, he added.

BIA spokeswoman Nedra Darling said the Bush administration is committed to maintaining the government-to-government policy, whereby the federal government deals with tribal governments.