Saturday, August 1, 2015

How Tribal Leaders and Their Cohorts Can Steal Money From Tribal Members

A first entry from guest blogger Free Range Indian is a piece on how tribal members can get bilked by tribal leaders and the gaming business entity for the tribe.  A primer of what can happen.

How do Tribal Leaders and Their Cohorts Steal So Much Money FROM YOU

First of all let us understand that even a trained monkey can run a casino. There is no genius involved. You put a machine in the middle of the floor. People put money in it. You collect the money. It is after the money is collected that the problem begins. One rule to remember here, Crooks go where the money is. It is very hard to be a thief when there is nothing to steal.

The first order of business is the development of policies that favor theft. Re-written constitutions and ordinances that only your attorney can understand and what they understand is that you have surrendered all you authority to them. Adoption of Management Agreements that are designed to get around the provisions of the Indian Gaming Regulatory Act (IGRA) If there was ever a piece of legislation that legalized theft in Indian Country IGRA is it. IGRA is responsible for so many violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) because it does not provide for real oversight, investigative powers and authority or enforcement over Indian Gaming. By the time the attorneys and lobbyist were done with IGRA it was full on open season in Indian Country.
So let’s get down to the nitty gritty then.

How does the theft occur?



Manipulation of definitions as to what Net Profit and Gross Profit mean are the first order of business. Any time you question what the net earnings were for your casino there is never a straight answer and you are deemed as stupid for not understanding the financial report. So you have an Indian Gaming Authority (IGA) approved Tribal Revenue Allocation Plan (TRAP). It is supposed to protect you from dishonesty and allow equitable distribution of revenues in a manner approved by the Tribe.
So which is it? Is your share of the profits from the net or the gross? In a perfect world all of the revenue earnings of the casino should be deposited with the tribe then the casino asks for an approved operating budget for monthly or quarterly operation of the casino. What is left is the net earning and it is from these net earnings that the TRAP funds are derived.

What is the real life situation? Some Tribal leaders allow the casino management to determine how much money is sent to the Tribe as net profit. If management was truly greedy they would just expense you out every month and you would receive nothing. But they know they can’t do this and get away with it for very long.

You alone are responsible for what comes next. Management, along with corrupt tribal leaders, gaming commissions and accountants begin a systematic testing of what makes you happy. How much money makes you happy. They start with a number that is low and will keep it there if you never challenge them. You know that according to your TRAP you are entitled to 40% of the net earnings. (40% as an example). The math is simple. If your casino has a net of $20,000,000 per month then your monthly per-capita should be $8,000,000 and then divided by the number of tribal members of the tribe. If there are 1,000 members in your tribe this should equal a payment of $8,000 per month. But you are only receiving $4,000 a month. What happened to the other $4,000? More realistic, what happened to the other $4,000,000?

What happens after you discover the discrepancy and how it is corrected is now your responsibility. This is where the lies and cover up begins. We have heard every excuse and reason imaginable as to why your per capita is not what it should be.

New construction is probably one of the easiest ways to manipulate casino revenues. Is your casino stuck in continuous construction, remodeling and upgrades? Do you really need it? The real question is why is the cost of construction coming out of your per capita when it should be coming out of economic development. Even more the question is who authorized the new construction and the source of funds?

Next is the excuse about “comps”. You are simply a tribal member and you can never understand the complexity of comps. You must have comps in order to attract customers. So why are the comps deducted from your net earnings and not from the gross? So comps are $4,000,000 per month.

Now your net earnings are only $16,000,000 a month instead of the $20,000,000. Now your per capita is $6,400 per month. You accept the explanation and you are still happy. Remember they are looking for your happy point. What makes you happy and off their back. They don’t need all of you to be happy, just 51% of you. That is enough to control the tribe. That is all it takes. A simple Christmas bonus always assures winning the hearts of at least 51% of the Tribe. It was the same tactic used by the United States in settling the Claims Cases. The money was distributed just a week before Christmas. A lot of happy ripped-off Indians. But they were happy.

Let’s take a closer look at that bonus. A bonus is defined as something extra beyond a stipulated payment. Where did that bonus come from? Does anyone know of a TRAP that has a bonus written into it as one of the provisions? I doubt it.

So where does the bonus come from? It can’t come from economic development or tribal administration. Those moneys are locked up by the TRAP. The bonus can’t come from the casino because that would be a violation of the TRAP. Have you figured it out yet? The bonus comes from the per capita they did not pay you. It comes from your 40%. So that means it really isn’t a bonus. It is your money doled out to you to capture you loyalty with something that is already yours.

So what happens with those funds? They are set aside in an account as an emergency fund.

Since you are already convinced that it is not your money it is easy for you to believe that there is an emergency or residual fund. If an individual bonus is $30,000 that is $30,000,000 dollars that they held back from you. So where is that money? It is in investments or banks making money. Good money. So at the end of the year management can cash out the investments, give you what is yours and keep the profits off those funds for themselves. They are the ones that really get the bonus. You just get money that was already yours anyway. But you are happy so why rock the boat?

Now we can talk about some of the mechanics of casino theft. There are many products that are sold through the casino that you never think about as being income to you and the tribe. Often times a commission is paid by a vendor to have their product sold in your casino. From the napkins on a table to the salt in the salt shaker and the beer in your hand there is a commission paid for that product to be there. So who gets the commission? If this area of the casino is not regulated by the tribe then it is wide open to any cunning thief to take advantage of the tribe. Sometimes it is management. Sometimes it is tribal leaders and sometimes it is both. So if a soda dealer wants to sell their product in the casino it is legal for them to offer the person authorizing the purchase a commission simply because you have not regulated this type of sale or purchase. Commissions can be very high and upwards of $70,000 just for a vendor to get their product in your casino. That is $70,000 you will never see. Do remember it is legal for your purchasing agent to receive these commissions until you do something about it.

So you have ATM’s. Of course you do. No casino can operate without ATM machines. So who banks the ATM’s? In the past the ATM machines were owned and operated by outside vendors. They would collect fees on every transaction. Those fees could be anywhere from $1.00 to $10.00 per transaction. This one truly is a no brainer. In some cases, the casino now banks the ATM machines. This means that casino cash is now being used in the ATM machine. Not money from Bank of America, Wells Fargo or any other bank. You are now banking the ATM machines.

So why is this use of an ATM machine a no brainer for the crooks? It is because it allows the casino to convert real cash into cyber cash. Every time a patron uses the ATM machine that patron is allowing that machine to access their bank account and transfer money from them to an account designated by the casino. So where is that account? Obviously it is a bank account. Do you know which bank is receiving these electronic transfers? More importantly, the money is now outside of the casino and completely out of your jurisdiction. That old NIGC mantra is ringing in my ears. “Once the money is outside the casino it is no longer within our jurisdiction.” Not only are they taking that money, they are collecting the fees as well.

Then there are those wonderful policies. There is one casino that has a policy that it will not prosecute theft if it is less than $50,000. They do this by proclaiming that they will resolve the theft in house. This plays right in to the hands of theft rings like the Tran Gang. And for real they do in fact do this. They average around $50,000 a night in theft from the table games. Each is a separate incident so it never rises to the level of a prosecutable crime because of casino policy. Cumulatively that is $1,500,000 per month or $18,000,000 per year. In per capita terms, that is $18,000 you will never see. In this particular case the Tran Gang operates with complete impunity because they don’t cross that line of $50,000. Also impunity is guaranteed by the Tribal Chairperson because he gets his cut as well.
Then there are the machines themselves. Even the inventors of gambling machines cannot think of all the ways thieves can access money from the machines. There is physical theft. Someone physically takes the money out of the machine before the count. I saw this being done at one casino and reported the theft to casino security, with the badge number of the employee and the machine number. Their response, “So what do you want us to do about it.”

Then there is electronic theft from the machines. I am not a machine tech so I do not even begin to understand all the ways a machine is being ripped-off. The symptoms are sometimes very simple and glaring. The best symptom is “No One Is Winning”. If no one is winning in your casino then it is best to assume there is massive theft going on. This really hurts because it drives customers away. So the excuses begin to roll off the tongues of management. Player patronage is down. The economy is bad. It is always this way at Christmas or tax time.

Player patronage is down because no one is winning and you are the one becoming the big loser. Real good tech thieves can get away with it for usually around two years before anyone finally speaks out and forces changes. Sometimes even management doesn’t realize the theft is going on. Other times they are part of the theft.

Probably, just while this is being written, a hundred more ways to steal from casinos has been devised. Stopping that theft is the genius of operating a casino. All I can say is that right now there is no genius in casino. There never will be any genius in casino operations as long as you are happy with what you are receiving in per capita. And if you dare not be happy, careful, disenrollment is knocking at your door.

My all-time favorites are the excuses for a tribe owning a jet. They are needed to transport high-rollers. They are needed to transport the tribal council in the event the President needs their wisdom. They are needed so the tribal council can stand before congress at a minutes notice. They are needed for business meetings. They are needed because it is more economical than using commercial airlines.
Who cares as long as you are happy? They have found your happy point and that happy point is probably about 1/3 of what you are really entitled to as per capita. For that 1/3 you will let your neighbors be dis-enrolled, your own family members be dis-enrolled, For that 1/3 you will keep your mouth shut, your eyes closed and brain in dreamland.

There is a saying, “Everyone has a price.” It is a shame that the United States has found your price for dis-enrollment. The United is the biggest benefactor of Indian Gaming because it has pushed the extermination of Indians into warp speed. Now that is genius. Indians killing Indians and leaving the United States blameless is true genius. And the Bureau of Indian Affairs, you know that agency that doesn’t work for Indians, is under the operation of Indians. So those BIA decisions to turn their back on modern day genocide helps to masque the true intent of the United States since it is Indians doing it to Indians.

BIA why would you not recognize a tribe? Why would you not stop disenrollment? Why would you not do the will of the people even when you know leadership is corrupt? Of course we all know the answer to that one. The BIA management is corrupt too. They too have a price and the attorneys found that out early in the game. I know you have heard the attorneys laugh and joke about what cheap buys BIA officials are. Really, how much did it cost to frustrate the efforts of tribes who might operate within the sphere of an attorney’s clients and threaten their revenue? I can guarantee you it was cheap and yes it has been done several times. It does get a little more expensive when you want to block the federal recognition of a tribe. At that level you usually have to satisfy the needs of a congressman.
When you roll it all together it spells RICO but remember IGRA has so far prevented RICO violations from being filed against any of these despicable leaders and attorneys. But who cares as long as you are happy. When they are finally throwing peanuts at your feet is that when you will get it? Is that when you will realize that you are not for sale? Ha ha, too late. Now that really makes the crooks happy. Will there be bankrupt casinos in California? Just around the corner and you better believe it. At that time you won’t even be getting peanuts.
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