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Tribe must pay $3-million fine
By JEFF TESTERMAN © St. Petersburg Times, published December 9, 2000 TAMPA -- The National Indian Gaming Commission has fined the Seminole Tribe of Florida $3-million for failing to obtain regulatory approval for a management contract at its Immokalee casino in Collier County. The NIGC, the federal agency that oversees all Indian gambling activities in the country, also ordered the former Immokalee management company, Pan American & Associates, to repay the tribe $2-million for income it earned at the Immokalee facility from 1994 to 1999. "We'd been investigating them and warned them there would be an enforcement action," Kevin Washburn, general counsel for the NIGC, said Friday. "Push came to shove, and they saw our position and entered into a settlement agreement." Seminole Chairman James E. Billie executed a management agreement with Pan American managing partner Jim Clare on Aug. 25, 1994, according to NIGC documents. It "appeared to formalize" the management agreement and was to be effective upon approval by the NIGC, but that never happened, the documents show. "The bottom line is that we operated there until 1999, and the tribe never submitted the management agreement," said Buddy Levy, the attorney for Pan American, which also once ran the tribe's Tampa casino. "We knew there was no approved contract," Levy said. "It was just one of those things. You take your chances." Levy declined to say how much the tribe paid Pan American for the five years the company oversaw the Immokalee gambling hall. Seminole records show that the tribe projected revenues at Immokalee of $26.9-million in fiscal 1997, with a $2.5-million fee paid to Pan American for that year. Tribal attorney Jim Shore had complained to Billie and the tribal council in January 1998 that Pan American had never sent required background information to the tribe for the Immokalee contract. "The risk of the NIGC saying we are operating without an approved contract grows larger," Shore advised, according to the tribe's newspaper, the Seminole Tribune. The council ended the discussion by deciding to keep Pan American at the Immokalee casino under a "consulting agreement." "A lot of tribes have tried to use so-called consulting agreements to keep management contracts from going to the NIGC for approval," said Assistant Florida Attorney General John Glogau. "Why? They don't want the management companies to undergo scrutiny." Clare, who was first hired by the tribe in 1982 to run its Tampa bingo hall, was arrested in 1962, when he was a 21-year-old substitute letter carrier in Houston. According to court records, Clare took $90 in cash from an envelope addressed to a society for the crippled. The indictment was dismissed a year later. On state applications for Seminole casino liquor licenses, Clare did not divulge the arrest, as required by Florida law. The tribe took over operation of the Immokalee casino in September 1999. In May, the tribal council voted not to renew Pan American's Tampa contract, which NIGC officials said did have commission approval. A month later, the NIGC violation involving Immokalee was settled. Billie called the tribe's takeover of the Tampa casino "a historic moment" because it meant all five of its casinos were under tribal control for the first time. But the Seminole Tribune, which Billie controls as publisher, has never reported the NIGC violation and $3-million fine. Billie's relationship with Pan American is deeper than the casino contracts. In 1992, Clare loaned Billie the money he needed to buy a $70,000 property in Collier County. Levy provided free legal services to Billie in connection with a tobacco shop Billie operated. Billie also was a shareholder in Clare and Levy's Coastal Gaming, a company that failed in a 1998 attempt to put a gambling ship named Liberty II in New York Harbor. The tribe, which is seeking U.S. Department of Interior permission to operate Las Vegas-style casino games in Florida, remains an investor in a Coastal Gaming venture that until September was running the Royal Star, a 221-foot, three-tiered gambling cruise ship docked in Miami. Levy said the $10.25-million ship is to be sold. "We just don't have the staying power, cash-wise, to stay with it," said Levy. "Hopefully, all the investors will come out all right." Billie, attorney Shore and Seminole Gaming Commission Executive Director Allen Jumper did not return calls concerning the NIGC violation. The $3-million fine at Immokalee adds to another multimillion-dollar payout by the Seminoles involving the same casino after the tribe canceled the original casino contract of tribe member O.B. Osceola and his family, and hired Pan American. Osceola sued for $5-million. After the tribe agreed to waive sovereign immunity, an arbitrator awarded the Osceola family $2.3-million. The Immokalee violation marks the second time in four years the NIGC has levied fines for failure to obtain NIGC approval of a management contract at a Seminole gambling hall. In May 1997, the NIGC filed a notice of violation concerning the Hollywood casino, where James P. Weisman's company, JPW Consultants, was managing the facility without an approved contract. The fine against JPW by the NIGC came to $3.4-million. In 1998, JPW filed a federal suit against the NIGC to overturn the fine, but a judge sided with the U.S. government. An appeal is pending. Meanwhile, the tribe is an investor with Weisman in an off-shore gambling facility, the Lightning Casino on the Caribbean island of St. Maarten. - Jeff Testerman can be reached at (813) 226-3422 or testerman@sptimes.com.
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