Report on Lucky Star Casino fuels allegations

By Tony Thornton

Published: August 30, 2008

CONCHO — A report released Friday alleges self-dealing by people formerly associated with Lucky Star Casinos, including the casino's management company from 1993 to 2007.

The investigative report claims Southwest Casino Corp. bribed Cheyenne and Arapaho officials in hopes of securing an extension of the company's lucrative management contract.

That contract was worth $23 million between 2002 and 2007, and the Minnesota company's financial viability depended on securing an extension, the report states.

"There's clearly no objectivity in it,” Fox said of the 30-page report prepared by Grant Thornton, one of the nation's largest auditing firms.

"It's very surprising that they could write a report that is so biased and lacks objectivity,” Fox said.

Flyingman responded: "That's what Southwest is good at — lying. They know they're in hot water. ... The ammunition is there. It's the evidence of what Southwest did to our people.

The report claims Southwest Casino Corp. funded the tribes' gaming commission, which threatened the commission's ability to independently regulate the Lucky Star chain of casinos.

IRS documents showed the company paid $36,000 to one gaming commissioner and $29,000 to another for unsupported travel expenses, the report states.

Company general counsel Thomas Snook said Southwest Casino's contract with the tribe required the company to pay certain travel expenses for tribe officials, including gaming commissioners.

According to the report, auditors also found evidence to support allegations that Southwest Casino Corp. used Lucky Star money to influence tribe officials in hopes of securing a contract extension in 2006 and 2007. At the time, Flyingman was trying to remove the management company.

The report cites $55,000 in payments were made to tribe officials and members who were planning a vote on the contract extension.

The National Indian Gaming Commission investigated the claims last year and found no evidence of law violations by Southwest Casino. "Nor did we find that any of Southwest's actions were sufficiently coercive to rise to the level of undue influence,” the government agency reported in November 2007.

However, regulators said some of the company's actions caused concerns.

"We knew the purpose of this report,” Snook said about why the company didn't cooperate. "This is a report intended to bolster the governor's case in those (arbitration) proceedings.”

Brian Foster, who managed Lucky Star Casinos from 1995 to 2007, said the tribes' political turmoil put him and other Southwest Casino officials in "an impossible situation.”

"It was $8.9 million in debt when I took it over in 1995. ... But we put 3,000 tribal members to work during that tenure. We created jobs and opportunity for people, and I think at the end of the day, we'll all be proud of it.

"It just drove me insane, trying to deal with that environment,” Foster said.

Robert Lyttle, the tribal governor's attorney, said the investigative report is one more step in an effort to fix what was broken within the Cheyenne and Arapaho Tribes.

Since 2006, about a dozen former tribal officials and employees have been convicted in federal court of embezzling from the tribes' casino profits.

"This story has a happy ending. The tribe fixed the problem,” Lyttle said.

"This is a tribe that took responsibility for what happened before and is taking steps to fix it. ... People changed their system of government to address these problems and rooted out the bad actors, and now they have a stable, honest system,” he said.

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