An investment deal brokered by ex-chairman James E. Billie effectively gives ownership of the tribe's casino to a non-Indian group, federal officials rule.
By JEFF TESTERMAN
Published July 26, 2003
TAMPA - Four years ago, then-Seminole Chairman James E. Billie negotiated a lease contract that would repay a group of investors for putting up $19.6-million to build the tribe's Coconut Creek Casino in northern Broward County.
The investors' payback? Up to $200-million over a decade.
The deal smelled fishy to other tribal officials. After an internal audit, the tribe suspended Billie, then cut off the monthly rent payments of $1.7-million to the investor group, Coconut Creek Gaming. When the investors sued, the tribe asked for a federal review of the contract.
Now, federal regulators have declared the contract illegal.
In a letter to the tribe filed July 7 in federal court in Fort Lauderdale, Penny J. Coleman, acting general counsel of the National Indian Gaming Commission, said the agency was "particularly troubled" that the lease required the Seminole to pay the investors 35 percent of the casino's net revenues for 10 years, especially because the tribe paid all $19.6-million of the construction money back within six months of the facility's opening.
"In other words, the documents enable Coconut Creek Gaming to collect a large amount of money, over a lengthy period of time, for doing nothing," Coleman wrote.
Coleman concluded that the lease deal had conveyed control of gaming operations and ownership of the casino to Coconut Creek Gaming, which is a violation of federal law. Under the Indian Gaming Regulatory Act, only American-Indian tribes may own gambling casinos.
A separate letter from the U.S. Bureau of Indian Affairs says the Coconut Creek lease agreement is void because it was never submitted to that agency for approval.
Based on the two letters, tribal attorneys have asked that the suit brought by the investors be dismissed. They also believe Coleman's letter requires the tribe to sever its contract with Coconut Creek Gaming.
Paul N. Filzer, attorney for Alan H. Ginsburg, the Maitland developer who heads Coconut Creek Gaming, said Friday that he had no comment about the NIGC opinion. Billie, who was removed from his $312,000-a-year job as Seminole chairman in March, did not return a call from the St. Petersburg Times.
Coleman noted that the tribe's explanation that Billie and Ginsburg's group misled everyone about the deal "resonates with a certain credibility," particularly because the tribe had enough money in the bank to build the casino without outside help.
The casino required less than $20-million to build, yet brings in an estimated $61-million a year.
"The fairly negligible investment required, as opposed to the profits to be taken, raised serious concerns about the nature of the relationship between the tribe and Coconut Creek Gaming," Coleman wrote.
Part of that relationship involved Illinois businessman Gary Fears. In an effort to win a casino management contract at Coconut Creek, Fears donated to the tribe a $1.7-million property and the use of a $670,000 Turbo Commander aircraft.
Fears failed in his quest because of questions about his background. He had defaulted on a state-backed loan in Illinois and had met resistance from the Illinois Gaming Board when he attempted to secure a riverboat gambling license.
According to Coleman, the NIGC determined that the Fears company Coconut Chips received an $8-million promissory note, but the tribe received anything of value in return.
