Business Deals | Litigation

Lac du Flambeau Band loses ruling in messy casino bond case

Wednesday, December 2, 2015

The Lake of the Torches Resort Casino in Wisconsin. Photo from Google+

The Lac du Flambeau Band of Lake Superior Chippewa Indians in Wisconsin lost a ruling in a complicated and long-running dispute over a failed $50 million casino bond transaction.

The tribe sought to diversify its gaming enterprise by opening a commercial riverboat casino in another state. When the effort failed, the tribe refused to pay the remaining $46.6 million in debt, a move that spawned litigation from Wells Fargo Bank.

The 7th Circuit Court of Appeals later ruled that the bond agreement was invalid because it was never approved by the National Indian Gaming Commission. The tribe eventually commenced litigation in its own court against Wells Fargo, other financial institutions and a law firm that were involved in the deal.

Indianz.Com SoundCloud: Oral Arguments in Stifel, Nicolaus & Company v. Lac du Flambeau Band of Lake Superior Chippewa

The 7th Circuit, however, upheld an injunction that frees the financial firms from answering to the tribal lawsuit. In a unanimous decision, a three-judge panel of the court determined that the tribe likely lacks jurisdiction over the non-Indian entities.

Additionally, the court determined that the Godfrey & Kahn law firm also might be able to avoid the tribe's jurisdiction. The case was remanded to a federal judge for further proceedings. The judge previously had declined to include the firm in the injunction.

Separately, the tribe is being sued in state court for failing to pay the bonds. A hearing is scheduled for December 14, The National Law Journal reported.

Get the Story:
Wisconsin Law Firm Wins Key Ruling on Tribal Jurisdiction (The National Law Journal 12/1)

7th Circuit Court of Appeals Decision:
Stifel, Nicolaus & Company v. Lac du Flambeau Band of Lake Superior Chippewa (November 24, 2015)