In a potentially devastating decision for Seneca Niagara Casino honcho G. Michael "Mickey" Brown, the Seneca Nation of Indians Court of Appeals ruled the very existence of the Seneca Niagara Falls Gaming Corp. he heads is illegal under the tribe's 1848 constitution.
Calling the corporation a "government within the government," the court recommended it be dissolved and reconstituted as a committee of the Seneca Nation Council. In any event, the court stated, the "activities, operations and financial liabilities" of the casino should be overseen by the Council.
At issue was Brown's claim that both he and the corporation enjoyed the same sovereign immunity as the Seneca Tribal Council and could not be sued in court. The claim stemmed from a February ruling in which Brown was found to be in contempt for paying the State of New York its $38 million share of casino revenue in violation of a court order.
Some Senecas wanted to withhold the payment after officials in Albany publicly floated a plan to start taxing cigarette and gasoline sales to non-Indians on the Allegany and Cattaraugus reservations. In that case, Brown was ordered to pay a $455 fine, the maximum allowable for contempt.
Brown invoked the sovereign immunity argument and refused to pay the fine. But in their seven-page, Aug. 10 decision, Appeals Court Judges Maxine Black, Maurice John Sr. and Emery Williams ruled that there is no provision in the constitution for the establishment of a corporation, in essence voiding Brown's employment.
"(T)he gaming corporations are subject to the jurisdiction of the Nation's Courts and, in both their existence and operation, such corporations are unconstitutional as written and presented in evidence," the judges wrote. "Therefore, this Court hereby declares these corporations to be a nullity. The decision of this court, being based on evidence, is final and not appealable."
The judges were also highly critical of the law firm of Aiken, Gump, Strauss, Hauer & Feld, which not only represents Brown and the gaming corporation, but the Seneca Tribal Council and, potentially, the court itself. Stating that the situation amounts to a "near conspiracy," the judges called for the Council to find different legal representation.
"This court is merely pointing out this critical unethical problem of conflict of interest before any case is appealed to the Federal level," the judges wrote. "Our Tribal Council is urged to take the necessary immediate action to remedy this conflict of interest."
The ruling reflects a rising tide of dissatisfaction toward Brown on the part of many on the reservations. Aside from the unauthorized payment to the state, Brown negotiated on behalf of the tribe to borrow the $60 million used to open the casino from shadowy Malaysian billionaire Lim Goh Tong. Sources say the loan's exorbitant interest rate -- in excess of 30 percent -- eats up much of the $1 million a day the casino is said to take in.
And many were outraged earlier this year when the Tribal Council awarded Brown a $600,000 bonus on top of his $600,000 annual salary.
Meanwhile, the casino has done little to improve the lives of Senecas living on the Cattaraugus and Allegany reservations. The average monthly check to Seneca elders from the Seneca Nation fund has risen just $100, from $50 to $150, since the casino opened, and only 300 of the casino's 2,160 employees are Native Americans.
Similar discontent among Pequot tribal officials, as well as the enrolled membership, led to Brown's hasty exit as head of the Foxwoods Casino in Connecticut.
Various charges were leveled at Brown and his associate, Al Luciani, who is also now an executive at the Seneca Niagara Casino. Luciani resigned as Foxwoods CEO shortly after the casino opened in 1992. Brown resigned in 1997.
The Pequots' Standard & Poor's bond rating, which had been listed as A just a few years earlier, had been reduced to BBB by the time of Brown's departure. And, although Foxwoods was bringing in $1 billion a year, the tribe was $1 billion in debt and had to borrow money to make ends meet.
Whether the Seneca Nation Council will follow the Appeals Court ruling and move immediately to dissolve the corporation is unclear. But with tribal elections taking place in November, it is certain they will be under pressure to do so. In many respects, the election will be a referendum on whether or not Brown has the best interests of the Seneca people in his heart.
|Niagara Falls Reporter||www.niagarafallsreporter.com||Aug. 17 2004|