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Okla. tribe under investigation for casino
Thursday, August 14, 2003

Federal regulators have launched an investigation to determine whether the Quapaw Tribe of Oklahoma is operating a casino in violation of federal law.

In an August 8 letter, Quapaw chairman John Berrey was told to turn over a wide-ranging set of documents. Tim Harper, a regional director for the National Indian Gaming Commission, provided a 25-item list that includes casino agreements, financial statements, tax filings, bank statements and internal memos.

NIGC "is conducting an inquiry into the management of the Quapaw Casino concerning the possible management of the casino without an approved contract," Harper's letter stated.

It is a violation of the Indian Gaming Regulatory Act (IGRA) to operate a casino without federal approval. Tribes who use the services of a management company must submit a management contract to the NIGC for review.

According to Berrey, the tribe has been waiting for the NIGC to approve its management contract. "We first submitted one two years ago and we were asked to make changes," he said in an interview before the NIGC investigation was announced. "They have had [the changes] since last March."

What Berry described is not unusual -- it can take 18 to 24 months for NIGC to complete its review. The lengthy wait is one reason tribes turn to third parties to operate casinos under a consulting agreement, which NIGC does not have the authority to review.

But concerns about the Quapaw Tribe's choice of management company, Right Source Marketing of Arizona, prompted the federal investigation. The concerns are centered around how much money Right Source, which is owned by Marc Dunn, is receiving; whether casino managers are qualified to run the casino; and whether the tribe is following NIGC procedures and policies.

Earlier this summer, tribal gaming officials started their own internal audit of the casino after learning, through a preliminary review, that Dunn's company was paid $4.5 million from October 2001 through September 2002 while the tribe only received $2.5 million.

The results of the preliminary review could not be independently verified but were performed by a certified public accountant retained the tribe's gaming board.

Soon after the gaming board announced it would proceed with the audit, Berrey fired the board's head, Kugee Supernaw. A July 10 letter gave no reason for the termination and in an interview, Berrey would not explain his actions, saying it was a personnel issue.

However, he discounted the suggestion that the firing was motivated by the scrutiny the casino is facing. "I'm welcome to see any audits," he said. "I don't have any problem with that."

Dunn's company runs a casino owned by the Seneca-Cayuga Tribe of Oklahoma, whose management contract does not appear on NIGC's approved list. That casino's general manager, Rick Smith, used to run the Quapaw casino before unexpectedly resigning earlier this summer.

One tribal source said Smith left after being told by the gaming board that he would have to submit to a criminal background check that is required by federal law. NIGC is asking for Smith's letter of resignation as part of the investigation.

NIGC is also demanding documentation of payments made to all casino vendors, one of which is Right Source. According to the preliminary review, Dunn's company is not only being paid to manage the casino but is also being paid for supplying casino machines to the tribe. As a vendor, Dunn's company appears to take a cut of each Class II machine that is in play.

NIGC plans to review a wide set of internal tribal documents as well. The tribe makes video and audio recordings of its general council meetings where casino business was openly discussed. It is at these meetings that tribal members who are political opponents of Berrey have questioned Dunn's management.

The Quapaw Tribe doesn't have a large gaming operation compared to others in Oklahoma. But it has provided seed money for tribal programs and has enabled the tribe to provide funding to local communities.

The Quapaw Tribe also has not experienced some of the problems others in the state have faced over the classification of casino machines, although the Quapaw and Seneca-Cayuga casinos did stop offering a type of blackjack game for a period of time in response to an NIGC order.

Relevant Documents:
NIGC Letter to Quapaw Chairman John Berrey (August 8, 2003)

Relevant Links:
National Indian Gaming Commission - http://www.nigc.gov

Related Stories:
NIGC's Hogen warns Okla. tribes on games (5/19)
NIGC asks for greater authority over industry (5/15)
Chickasaw Nation 'followed the law' (6/28)
Tribes defy federal casino order (6/17)

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