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State regulators wade through Mashpee tribe’s casino issues

By Colin A. Young / State House News Service

Posted Dec 6, 2019

Gaming Commission updated on Wampanoag’s ongoing legal battles.

BOSTON — As they continue to mull the question of issuing the final casino license available under an 8-year-old law, gaming commissioners were brought up to speed Thursday on the complex web of litigation and legislation surrounding the Mashpee Wampanoag Tribe’s quest to secure land in trust, on which it intends to build a casino in Taunton.

The briefing from the Gaming Commission’s executive director and legal team was meant to give the decision-makers a sense of the ongoing legal wrangling over the decision to approve the tribe’s land in trust, which was granted by the Obama administration but overturned and thrown into doubt by the Trump administration. The tribe planned to construct its $1 billion First Light Resort and Casino on tribal land in Taunton, a project that would have a significant impact on the state’s commercial casino industry.

Region C, the commission’s name for Bristol, Plymouth, Barnstable, Dukes and Nantucket counties, has been an unsettled matter for the commission for years. In 2016, when it appeared a tribal casino in Taunton was likely, regulators rejected a proposal for a commercial casino in Brockton. Since then, the commission has discussed reopening the bidding for Region C, but has not been in any rush to take that step.

“What we’re attempting to do here is to provide a framework for the beginning of that discussion,” Executive Director Edward Bedrosian told commissioners at the outset of the briefing Thursday.

A federal judge’s ruling later in 2016 nullified the Obama administration’s decision to grant the Wampanoag a 320-acre reservation on which the tribe planned to construct a resort casino and President Donald Trump’s administration last year officially reversed the Obama-era declaration.

Since then, the tribe’s efforts to secure its land in trust status have been tied up in federal court. Deputy General Counsel Todd Grossman walked commissioners through the three main cases at play. One is Littlefield et al. v. U.S. Department of the Interior, in which a judge ruled in 2016 that the land could not be held in trust. That verdict was appealed to the U.S. Court of Appeals for the First Circuit and the appeal remains pending.

There’s also a case in U.S. District Court for the District of Columbia — Mashpee Wampanoag Tribe v. Interior Secretary David Bernhardt — in which the tribe argues that the Department of the Interior secretary failed to properly consider extensive factual evidence it submitted to make the case that it should be eligible for land in trust.

Associate General Counsel Justin Stempeck told commissioners that the D.C. district case is “pending with multiple current summary judgment motions” and he estimated that no resolution would come until the latter end of a six- to nine-month window.

As the tribe works to secure its land in trust through the courts, U.S. Rep. William Keating, who represents Taunton and Mashpee, has pushed legislation that would use the power of Congress to reaffirm the 2015 decision by the Interior Department to take land into trust for the tribe, though Trump has opposed it.

The U.S. House of Representatives voted 275-146 in May to approve that bill, titled the Mashpee Wampanoag Tribe Reservation Reaffirmation Act, and it has not moved since being referred to the U.S. Senate that same month.

In addition to getting up to speed on the lawsuits and federal legislation involving the tribe, the commission also agreed in October to have its staff draft a request for information that would solicit information on all sorts of relevant Region C matters, like the state of the gaming market, local support and more.

Commission Chairwoman Cathy Judd-Stein said she was interested in questions that “reflect the struggle we have with respect to equity” and include an examination of the statewide implications of a Region C casino as well as the impact to the surrounding communities.

“I think we do have an obligation to consider the best interest of the commonwealth as well as the region,” she said. “It’s not lost on I don’t think any of us here that Region C folks, not all, may be interested in having a casino because of the economic benefits that we’ve seen coming through both regions A and B, yet we are not obligated ... to issue another license. So I am particularly interested in the question around the impact of Region C in the absence of our issuing a license.”

One concern, as expressed by local officials and others, is that commercial casino operators might not be willing to invest the minimum $500 million in a project that could have to compete with a nearby tribal casino. If the Gaming Commission opts to go ahead with licensing a commercial casino in Region C and the tribe is allowed to open its own casino under federal law, Massachusetts would receive no tax revenue from the tribal casino.

The commission did not vote to take any particular action Thursday but agreed to provide feedback on an eventual new draft prepared by staff at a later date.

House affirms Mashpee Wampanoag’s sovereignty

By Tanner Stening
Posted May 15, 2019

WASHINGTON — The Mashpee Wampanoag Tribe is halfway home.

After several attempts over many weeks to move the legislation to a vote, the U.S. House of Representatives on Wednesday passed the Mashpee Wampanoag Tribe Reservation Reaffirmation Act, a bill aimed at putting an end to a protracted legal fight challenging the tribe’s trust eligibility under the Indian Reorganization Act.

Lawmakers voted 275-146 to approve the measure under regular order. The bill was introduced by U.S. Rep. William Keating, D-Mass., earlier this year.

In a statement issued by the tribe, Tribal Council Chairman Cedric Cromwell praised Democrats and Republicans for coming together.

“What they demonstrated today on the House Floor was nothing short of genuine understanding of my people, the Mashpee Wampanoag,” he stated.

“Our Tribe has suffered so much in the past from the United States’ failure to protect our land -- today the House of Representatives acted to change that history, and to help us take one step closer towards a better and more secure future for the Mashpee people” Cromwell said.

Last month, Keating and his colleagues had tried to pass the bill on a suspension of the rules, a process that expedites so-called noncontroversial bills. It appeared headed for passage last week before President Donald Trump issued a tweet urging Republicans to vote against it, saying it would allow a “special interest casino” backed by U.S. Sen. Elizabeth Warren, D-Mass., to move forward.

“Had President Trump not tweeted about this bill, it would have likely passed on suspension,” U.S. Rep. Mary Gay Scanlon, D-Pa., said before Wednesday’s vote.

As anticipated, the bill was the subject of much debate on the House floor, highlighting deep divisions between Rhode Island and Massachusetts lawmakers over the tribe’s plan to build a $1 billion casino-resort in Taunton, as well as the impact of millions of dollars spent lobbying on the issue.

Rhode Island Gov. Gina Raimondo and her state’s federal legislative delegation have long expressed opposition to the bill, saying the tribe’s casino project would hamper their state’s gambling revenue. U.S. Reps. David Cicilline and James Langevin, both Democrats, expressed their opposition on the floor.

“It would be the first time Congress ever reversed a final federal court ruling,” Cicilline said, referring to a finding from a federal judge in 2016.

That judge ruled that the secretary of the Interior Department did not have the authority to take the tribe’s 321 acres of land into trust because the tribe was not under federal jurisdiction at the time of the passage of the Indian Reorganization Act in 1934, and therefore did not qualify under a definition of “Indian” used by the Department of the Interior.

Rep. Paul Gosar, R-Ariz., led the opposition to the bill, contending that the tribe selected Taunton as the site for its planned casino because of its proximity to the Rhode Island gambling market — a process referred to as “reservation shopping.”

“H.R. 312 is contrary to the view of the Department of the Interior ... and it aims to reverse federal court decisions on this matter,” Gosar said.

In a fiery speech on the House floor, Keating defended the merits of the legislation, noting that it’s “not about gaming” but about “justice.”

“Tragically, like so many Native Americans, the Mashpee Wampanoag Tribe have lived through centuries of injustices,” he said. “After nearly 250 years since our country’s founding, we would not be where we are without them. They deserve that dignity, they deserve that respect and they deserve that sovereignty.”

The vote follows increased public scrutiny of Rhode Island-based Twin River Management Group for its ties to several high-powered lobbyists linked to Trump. The company, which manages the state’s two casinos, paid Black Diamond Strategies $30,000 during the first quarter of this year, according to federal filings. Twin River paid Cove Strategies $30,000 in the same quarter.

Matthew Schlapp, who works for Cove Strategies, was an early Trump supporter and chairman of the American Conservative Union, which organizes the annual Conservative Political Action Conference. Schlapp also is married to Trump’s director of strategic communications, Mercedes Schlapp.

However, lobbying spending by the tribe’s financial backer, Genting Malaysia, has appeared so far to outpace efforts opposing the bill. Genting spent more than $1 million on various lobbying firms in 2018 in connection with the cause, three times more than it did in 2017, according to federal lobbying disclosures.

The House also voted 323-96 to pass H.R. 375, the so-called “clean Carcieri fix” introduced by Rep. Tom Cole, R-Oklahoma, under a suspension of the rules.

The bill would reverse the 2009 Supreme Court decision, known as Carcieri v. Salazar, which established that the secretary of the Interior could not take land into trust for tribes that were not under federal jurisdiction before 1934, at the time of the passage of the Indian Reorganization Act. Carcieri v. Salazar increased the burden of proof tribes had to meet to qualify for trust status.

Since neighbors of the tribe’s Taunton casino successfully sued the Department of the Interior in 2016, the Carcieri decision has stood in the way of the tribe, leading to the original finding out of the U.S. District Court of Massachusetts.

With respect to the Mashpee legislation, Cole said there had been “a lot of misinformation put out” following Trump’s tweet.

“This is a bill about keeping our federal promises to tribes,” he said.

The bill now will go before the Senate for review. The second leg of the journey may prove a tougher track. Warren’s presidential bid has cast a shadow on the potential for bipartisan support in the Senate and the likelihood that Trump will sign it into law.

Warren previously was a co-sponsor of a Senate version of the bill, but she has since distanced herself from the legislation.

In a telephone interview following the vote, Keating said he was pleased with the number of Republicans who signed on with their support.

“I’m just glad we had the opportunity within less than a week’s time to show that the House is an independent body that can deal in a bipartisan way on fundamental legislation,” he said. “This could have well been a death knell for the tribe.”

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House moves closer to affirming Mashpee Wampanoag reservation

By Tanner Stening
Posted Apr 29, 2019

Tribal bill set for Wednesday markup.

MASHPEE — Federal legislation that seeks to clarify the status of the Mashpee Wampanoag Tribe’s reservation will be marked up and considered Wednesday by the House Committee on Natural Resources.

The Mashpee Wampanoag Tribe Reservation Reaffirmation Act, introduced by Rep. William Keating, D-Mass., earlier this year, is scheduled for a full committee markup to potentially advance the bill to the floor for a vote. Lawmakers use the markup to consider changes to legislation, proposing and ultimately voting on amendments to it.

The bill would end a legal challenge to the tribe’s 321 acres of reservation land in Mashpee and Taunton and prevent future legal challenges to the land.

Keating crafted the bill in response to a lawsuit brought by neighbors of the tribe’s proposed $1 billion casino in Taunton in 2016 in the U.S. District Court of Massachusetts. That lawsuit resulted in the U.S. Department of Interior reversing a decision it made the year before to take the Mashpee and Taunton land into trust on the tribe’s behalf.

Read previous stories about the Mashpee Wampanoag Tribe.

A federal judge ruled that the Secretary of the Interior did not have the authority to take the land into trust because the tribe was not under federal jurisdiction at the time of the passage of the Indian Reorganization Act in 1934, and therefore did not qualify under a definition of “Indian” used by the Interior Department.

Interior’s Sept. 7 reversal put the future of the tribe’s reservation in jeopardy — though it remains in trust until a final court order is issued. The tribe has since filed a lawsuit against the agency challenging that decision.

On April 3, the subcommittee for Indigenous Peoples of the United States held a hearing on the bill that opened a rift between Rhode Island politicians who oppose the Taunton casino and its supporters. The Ocean State delegation has garnered opposition to the legislation, claiming a tribal casino would curb the state’s gaming revenue and undermine competition.

“An Indian casino in Rhode Island’s gaming catchment area poses a serious threat” to that revenue, Claire Richards, executive counsel to Rhode Island Gov. Gina Raimondo, previously told the subcommittee. Keating responded by pressing Richards on the specifics of Rhode Island’s opposition, noting the bill’s purpose is to protect the tribe’s reservation and that Massachusetts already has approved a casino in that part of the state.

The markup comes amid a move by tribe members to recall Mashpee Wampanoag Tribal Chairman Cedric Cromwell and Vice Chairwoman Jessie “Little Doe” Baird.

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Mashpee tribe leader’s financial powers reinstated

By Tanner Stening
Posted Feb 7, 2019

MASHPEE — The Mashpee Wampanoag Tribal Council has moved to restore Chairman Cedric Cromwell’s financial powers, three weeks after it decided unanimously to remove them and took a vote of no-confidence in him.

On Wednesday, council members voted 7-0 to rescind the no-confidence vote and reinstate Cromwell’s fiduciary responsibilities as chairman of the tribal council and president of the Mashpee Wampanoag Tribal Gaming Authority, according to a statement issued by the tribe. The gaming authority is a five-member board overseeing the tribe’s long-stalled gaming operation.

The reversal comes four days before the tribe’s annual election. Cromwell is not up for re-election.

“Now that we’ve had time to look at this more carefully, based on evidence and documents, the Tribal Council made a conscious, collective decision to reinstate the Chairman’s power back,” Tribal Council Secretary Ann Marie Askew wrote in the statement.

It’s unclear what evidence the council reviewed before making the decision and a spokesman for the tribe said specifics about the evidence were not available.

The initial vote on Jan. 23 came after revelations that Cromwell and his wife, tribal council member Cheryl Frye-Cromwell, owe the IRS $37,000 in back taxes. The pair are going through a divorce proceeding in Taunton.

In addition, an unrelated financial audit of the tribe’s government services department for 2016 that was completed last year and posted to a publicly available federal website found numerous record-keeping flaws, including “material weaknesses and significant deficiencies” in the tribe’s internal control over its financial reporting and over major programs paid for by federal grants.

The audit also pointed out that the gaming authority had accumulated $375 million in debt as of January 2017. It described the gaming authority as a “discretely presented component of the tribe.” Tribal debt has since risen to more than $440 million as a result of loans provided by its casino backer, Genting Malaysia. That debt does not have to be paid back if the tribe’s $1 billion casino project in Taunton does not move forward, according to tribal officials.

The tribal council did not reinstate Cromwell’s financial authority because he asked them to, according to Askew.

“We did this on our own. We worked it out and we are tired of beating a dead horse. There is no evidence of any financial impropriety on the part of any tribal officer,” Askew wrote. “Our ancestors are twisting in their graves over people running to the news media to try and divide us.”

The tribe has been fighting a multiyear legal battle to secure its reservation. Neighbors of its planned resort casino sued the U.S. Department of the Interior after the federal agency took 321 acres of land into trust on the tribe’s behalf in 2015 under the Obama administration, effectively creating the reservation and seemingly paving the way for the gaming facility. A federal judge sided with the neighbors and sent that decision back to the Interior Department, which declined to take additional action, putting the future of the casino project at risk.

U.S. Rep. William Keating, D-Mass., has reintroduced a bill in Congress that would secure the land and bar future legal challenges to its status but it faces stiff opposition from a variety of interests.

In a statement, Cromwell wrote that it is difficult to see his credibility questioned, but that he remains committed to moving forward in an effort to secure the tribe’s reservation by pushing for the legislation.

“Of course it’s painful for personal attacks and innuendo to be flung in my direction, but this struggle is bigger than me or any one person,” he wrote. “So I will continue to fight for my people as best as I know how.”

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https://www.capecodtimes.com/news/20190207/mashpee-tribe-leaders-financial-powers-reinstated

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Mashpee Wampanoag Tribe’s past accounting practices faulted

By Tanner Stening
Posted Feb 1, 2019

MASHPEE — As the Mashpee Wampanoag Tribe struggles to secure its reservation lands and save an embattled casino project already saddled with a mountain of debt, a recently published 2016 audit has raised additional concerns about its finances and accounting practices.

The audit of the tribe’s government services department sent to the tribal council on June 27 by Arizona-based Walker and Armstrong LLP outlines a myriad of deficiencies and weaknesses in internal controls, including accounting policies and procedures more than a decade out-of-date, discrepancies in the pay rates of employees, and lack of regular inventory of capital assets. The report pointed to practices that left the tribe open to potential theft and fraud.

The government services department includes human services, education, historic preservation, natural resources, housing, public works, health services, public safety, planning and development and tribal administration, according to the 30-page report, which was posted to a publicly accessible database maintained by the federal government.

Representatives from the auditing firm did not return messages requesting comment.

Although the document identified numerous record-keeping flaws, the audit does not point to any instances of financial impropriety or violations of law.

The audit identified “material weaknesses and significant deficiencies” in the tribe’s internal control over its financial reporting and over major programs paid for by federal grants.

Those problems include the use of an accounting manual from 2003 — which auditors warn heightens the risk of “material misstatements, fraud and an inefficient accounting and reporting process” — to failing to submit a single audit reporting package required by the federal government within nine months of the year’s end due to “numerous reporting errors in prior years that required significant analysis and correction.”

The audit cited a lack of internal controls over payroll processing. For two of 40 transactions tested, employee pay rates used did not match what was listed in personnel files. Auditors also couldn’t locate authorized pay rates for employees in nine of 40 transactions tested.

“Furthermore, management is not reviewing the payroll registers prior to processing and recording payroll in the general ledger,” the report says.

Tribal finance officials kept stocks of check in an unlocked cabinet during the day and signature stamps used to sign checks were not kept in a secure location, creating opportunities for employees to “initiate unauthorized transactions that could go undetected,” according to the report.

Tribal officials did not monitor the provisions of vendor contracts to verify that contractors complied with the wage requirement for Indian Housing Block Grants, the report says. The grants provide a range of affordable housing activities on Indian reservations and Indian areas, according to the U.S. Department of Housing and Urban Development.

Weaknesses and deficiencies in the audit are typical of accounting departments in smaller organizations that are not well managed, according to Timothy Mitchell, associate department chairman for accounting at the Isenberg School of Management at the University of Massachusetts Amherst.

“Those ... weaknesses demonstrate that there is opportunity for fraud, but not that fraud occurred,” Mitchell said Friday.

The financial statements provided to the auditor by the tribe reflect only transactions from each major fund across 2016, and do not show year-over-year changes with respect to the tribe’s financial position or its cash flows. The tribe’s government services department receives roughly 19 percent of its revenue from federal sources, according to the audit.

The Mashpee Wampanoag Tribal Gaming Authority had accumulated $375 million in debt as of January 2017, the report says. The audit describes the gaming authority, a five-member board charged with overseeing the tribe’s long-stalled gaming operation planned for 150 acres in Taunton, as a “discretely presented component of the tribe.” In 2016, the authority transferred more than $17 million in cash and real estate to tribal operations.

The tribe has been fighting a multiyear legal battle to secure its reservation. Neighbors of its planned $1 billion resort casino sued the U.S. Department of the Interior after the federal agency took 321 acres of land into trust on the tribe’s behalf in 2015 under the Obama administration, effectively creating the reservation and seemingly paving the way for the gaming facility. A federal judge sided with the neighbors and sent that decision back to the Interior Department, which declined to take additional action, putting the future of the casino project at risk.

U.S. Rep. William Keating, D-Mass., has reintroduced a bill in Congress that would secure the land and bar future legal challenges to its status but it faces stiff opposition from a variety of interests.

The tribe is under no contractual agreement to repay the authority debt based on an outside legal review, according to the audit. Additionally, the tribe has not guaranteed the payment of the debt or any other gaming authority obligation.

But if the Taunton land is taken out of trust, the tribe would have “contractual exposure” for the authority’s debt obligations associated with any liens, created by the tribal mortgage, on the property.

“This leak of confidential financial information is clearly an attack on our Tribe, designed to raise suspicion with non-Tribal partners and allies and sow discord within the Tribal Citizenry,” the tribe’s treasurer Gordon Harris wrote in a statement emailed to the Times on Thursday. “It’s difficult enough to fight for our land and combat the assaults on our sovereign rights without having to deal with leaks intended to undermine the hard work and credibility of dedicated, committed tribal servants.”

But the audit is publicly available information on the Federal Audit Clearinghouse website. All nonfederal entities spending more than $750,000 in federal awards must be audited, according to the federal Office of Management and Budget guidelines. Tribes may opt out of making their reporting packages publicly available on the website, according to an official with the Federal Audit Clearinghouse.

Harris acknowledged that there were “financial reporting, accounting and internal control areas that need improvement,” but said the findings by Walker and Armstrong were “typical” of audit reports.

“Once notified of these audit findings, the tribe and its management immediately developed and is implementing corrective action measures to effectively address each audit finding,” Harris wrote. “The implementation of these corrective measures addresses each of the audit findings.”

The tribal government is committed to strengthening its internal control over its accounting, he wrote. The audit report included a corrective action plan prepared by the tribe that was to be completed by Dec. 31. It is unclear from Harris’ statement whether the plan has been implemented.

The tribe’s comptroller was listed as the contact for the majority of the plan.

But findings from the audit appear to contradict earlier statements from the tribe’s chairman, Cedric Cromwell, who was recently stripped of control over the tribe’s finances after a Times story about his personal financial problems.

Cromwell previously said the tribe’s financial record-keeping is subject to “regular outside audits to ensure we maintain best practices in terms of accounting.”

Last week, the tribal council voted 7-0 to strip Cromwell of his fiduciary duties as chairman and in his role as president of the gaming authority, according to sources present at the time. The council also took a vote of no confidence in Cromwell, 9-0, with one abstention, signalling a lack of faith in his leadership. The move to limit Cromwell’s control and influence came after revelations that he and his wife, council member Cheryl Frye-Cromwell, owe the IRS roughly $37,000 in unpaid taxes.

Since Cromwell’s rise to power in 2009, the tribe has racked up $440 million in debt to its financial backer, Genting Malaysia, which recently wrote off its investment in the tribe as a loss. Financial records detailing that debt, the repayment of which tribe leaders say is contingent on the success of the Taunton casino, have been kept out of public view, and even from tribe members, although the Walker and Armstrong audit sheds some light on the flow of money through the gaming authority to the tribe.

More recent financial information show the tribe’s financial situation has deteriorated dramatically since the period covered by the audit. Expenditures from Jan. 1 to Dec. 31 of 2018 left the tribe with $83,670 in its general fund, according to a statement of its expenses and revenue for the year obtained by the Times.

The tribe began 2018 with $6,369,258 in the fund, and spent $6,285,589 as of the end of the year, the document shows. Those figures were roughly equal to what the tribe had in cash or cash equivalents in 2016, according to the audit.

Of the total allocated for general spending purposes for fiscal year 2018, $5.4 million came from loans issued by Genting, a figure that is about half of what the tribe received from the international casino developer in 2017.

It is unclear what the tribe currently has in its coffers. Tribal financial records are typically not publicly available.

“Obviously it’s concerning that they owe $440 million and don’t have a productive asset to show for it,” Mitchell said. “You don’t borrow money for things that don’t produce income in the future.”

In response to the mounting financial pressure, the tribe laid off 31 employees in the past year, and Cedric Cromwell has warned that more layoffs and service cuts were likely this year.

— Follow Tanner Stening on Twitter: @tsteningCCT.

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