A lawsuit filed in state Supreme Court last week by the former owners of the Niagara Splash Park charges the state's Empire State Development Corp. with fraud in its seizure of the property and subsequent gifting of it to the Seneca Niagara Gaming Corp.
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The suit was filed on behalf of Fallsite LLC, by attorney John Bartolomei, who is also a partner in the company. It alleges that the state, acting in concert with the Seneca Nation of Indians, committed fraud during the eminent domain proceedings that eventually resulted in the Seneca acquisition of the property.
The lawsuit could result in much of the property surrounding the Seneca Niagara Casino going back on the tax rolls of the city, the school district and the county, said two attorneys who looked at the suit on behalf of the Niagara Falls Reporter. Because the Seneca Niagara Gaming Corp. lacks the sovereign status of the Seneca Nation, it can be legally taxed, and in fact does pay property taxes in Lewiston, where it operates the recently opened Hickory Stick Golf Club.
The suit contends that only sovereign land actually owned by the Nation is considered non-taxable under the compact signed by the state of New York and the Seneca Nation of Indians on April 12, 2002, a document that doesn't even mention the Seneca Niagara Gaming Corp. Further, it argues, the state had no right under the compact to condemn the Splash Park for eminent domain seizure.
"Even if the Seneca Niagara Gaming Corp. were a legally existing entity, it is clearly not the Seneca Nation of Indians, to which the Empire State Development Corp. was obligated to transfer the property pursuant to the compact," the suit contends.
Since the state's authority with respect to the Splash Park property derives solely from the compact, the suit alleges, it lacked the power to seize the land on behalf of the Seneca Gaming Corp.
Furthermore, under the eminent domain statute, property can only be seized by the state "for the benefit of the community." At the time the property was seized, the Senecas announced plans for a billion-dollar luxury hotel and casino complex to be located there. The suit contends that more recent plans call for the construction of a tax-free smoke shop and gas station. Meanwhile, some of the most valuable property in the city sits fallow and off the tax rolls.
"It's pretty tough to argue that the transfer of this property has benefited Niagara Falls in any way at all," one attorney said. "It's basically a huge vacant lot in the center of the city. They could grow corn there."
According to a tax map obtained by the Reporter, the Seneca Nation owns only the land occupied by the casino itself, the parking ramp, the former United Office Building at Third and Niagara streets and a surface parking lot at Third Street and Rainbow Boulevard. Most of the rest of the land between Third Street and John B. Daly Boulevard is owned by the Seneca Niagara Gaming Corp.
"This is a problem as well, since the compact states quite clearly that gaming can only be conducted on sovereign land, either on the reservation or on land directly owned by the Seneca Nation in Buffalo and Niagara Falls," the attorney said. "Strictly speaking, they couldn't legally build a casino on that property if they wanted to."
Ironically, Seneca courts have ruled that the creation of the Seneca Niagara Gaming Corp. was illegal, and a violation of the tribe's own constitution. And a U.S. Justice Department probe that resulted in an indictment and guilty plea by disbarred Lewiston attorney Tim Toohey shined new light on the sometimes unsavory workings of the gaming corporation.
Documents relating to the federal investigation also contained allegations against Barry Snyder and Bergal Mitchell, the gaming corporation's former chairman and vice-chairman. Both men stepped down from their positions with the corporation.
The investigation centered on kickbacks received by various individuals connected to the sale of property for the construction of Hickory Stick Golf Club in Lewiston. The golf club is a wholly owned subsidiary of the gaming corporation.
An internal Seneca audit showed that nearly $900,000 went missing during the property acquisition phase of the project. The FBI says that $540,000 of that was split between Toohey, Mitchell, and Mitchell's wife, Rachel.
Where the rest of the money went is anyone's guess, but Michael Dowd, the lawyer who put together the Lewiston land deal, told a landowner that the reason for the land payoffs was "Barry Snyder needed money to pay for his re-election," according to FBI agent Robert Gross, citing a secretly recorded conversation.
While Toohey has been the only one indicted thus far, documents show that the FBI investigation into Snyder and Mitchell is continuing.
"People need to know, if you're a member of an Indian nation, you're not insulated from prosecution if you embezzle money or receive goods that are stolen from the Indian nation," said James H. Robertson, special agent in charge of the Buffalo FBI office.
The Fallsite suit can be seen as simply the latest episode in the comically tragic history of the Seneca Niagara Gaming Corp., which has been in the spotlight practically since the day it was incorporated. The antics of its former CEO Mickey Brown, whose very public mistress, Judy Dale, was indicted on numerous felony counts in connection with her management of the swank Parkway Condominiums here, were only the beginning.
Not only has the acquisition of the property not benefited the Niagara Falls community, it is difficult to make a case that even the casino itself has been a benefit. Other than the pathetically small sliver of casino profits allotted to the city by the state -- which the mayor and the City Council burn through like binge-drinking sailors on a three-day shore leave -- it is difficult to see any gain at all.
Nearby restaurants and taverns have gone out of business in numbers, relatively few Niagara Falls residents work there, and the economic condition of the city has noticeably deteriorated since the casino was opened.
Clearly, the time has come for the state Legislature and the governor to take the bull by the horns here and authorize legal gaming in New York state. Billions in new taxable revenue would be generated, and the secretive administration of Native American gaming here would be marginalized.
The Seneca casino compact expires in just four years, exactly the time it would take for the Legislature to pass legalization.
Unfortunately, our state Assemblywoman Francine Del Monte has quite a cozy relationship with the Seneca Niagara Gaming Corp., depending on it for both her campaign war chest and as an employment agency for her family. It isn't likely that she'll move for change any time soon.
She seems quite content to wallow in the cesspool of lawlessness she helped create in the center of the city she once called home.
| Niagara Falls Reporter | www.niagarafallsreporter.com | June 29, 2010 |