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At least $1.5 million in casino funds were pocketed by St. Croix Chippewa tribal leaders, or used for a variety of expenses including trips to Hawaii and Las Vegas with little or no documentation or receipts, federal regulators said this month.
'The dollar amounts are staggering,' said Eric Dahlstrom, an Arizona attorney with about 40 years of experience in Indian legal issues. 'I certainly haven't seen (a Notice of Violation) as large as this. ... Tribal gaming funds are strictly regulated and should be used to provide badly needed government service and build infrastructure.'
Among the payments listed in the National Indian Gaming Commission's Notice of Violation were 74 totaling $154,173 that went to Lewis Taylor, longtime chairman of the tribe, from 2014 to 2017. Tribal Council member Elmer 'Jay' Emery received 94 payments totaling $235,888 during the same period, the agency charged.
In addition, the regulators said that from 2015 to 2017, the St. Croix Casino Turtle Lake issued 275 payments totaling $562,246 to seven tribal members.
All told, the 29-page Notice of Violation lists 527 violations of the federal Indian Gaming Regulatory Act, NIGC regulations and tribal ordinances. The notice states that each violation could result in a fine of $52,596, meaning the total fine could exceed $27 million.
Regulators paint a picture of sloppy bookkeeping where casino cash was tossed around freely and without documentation.
'Many of the payments — worth hundreds of thousands of dollars — were issued to the same small group of people, often with the only supporting document being a request for disbursement form with the words 'travel' or 'consulting fees' scrawled into the comments section,' the notice signed by NIGC Chairman Jonodev O. Chaudhuri states. 'Upon further questioning by NIGC investigators, the tribe was unable to produce documentation to support treating the payments as expenses of the gaming operation.'
The seriousness of the charges prompted the agency to bypass its normal procedure of issuing a concern letter before a notice of violation is fired off.
'In this case, however, given the pervasiveness and serious nature of the violations, coupled with the fact that many of the individuals identified in the Notice of Violation are still in a position to direct casino and net gaming revenues, the chair has decided to proceed directly' and issue the notice, the document states.
Rory Dilweg, a California lawyer who has more than 20 years of experience in Indian legal issues, said the notice could spark other probes.
'The NIGC has documented over $1.5 million in unaccounted funds. This is very serious,' Dilweg said in an email that noted the NIGC 'could issue a closure order for the Tribe’s casinos.'
On top of that, he said 'there could also be action taken by other agencies such as the FBI, the IRS, and Wisconsin Department of Revenue.'
About 2,000 people live on the St. Croix reservations in Barron, Burnett, Polk and Washburn counties. The St. Croix Casino in Turtle Lake employs about 1,000 people and the tribe's Hole in the Wall Casino in Danbury employs about 200, according to the Great Lakes Inter-Tribal Council.
Calls to Lewis Taylor; Jeff Taylor, chairman of the tribe’s Gaming Commission; and officials in the tribal attorneys office were not returned Thursday. Aaron Harkins, a Minneapolis attorney who represents the tribe on some issues, said, 'I can't comment on anything involving this client.'
The tribe can appeal the findings in the notice to the full NIGC.
The notice leaves little hope that the tribe could undo the damage. 'There is no way to correct these violations, but (Chairman Chaudhuri) will consider the tribe's efforts taken to mitigate damages when determining an appropriate civil fine,' the notice states.
Other violations listed in the notice include:
- From 2015 to 2017, the Turtle Lake casino paid $301,287 in consulting fees to Lawrence Larsen 'without any support (i.e. contract, invoice receipts) for goods or services provided by Larsen.' Regulators provided no additional information about Larsen and noted that tribal officials could not produce a contract with Larsen or 'provide a written description of the terms of any oral agreement' with him.
- In 2017, Larsen was paid $12,746 for travel. Larsen received payment twice for the same trips but provided receipts for only one trip. A February 2017 request of disbursement form shows three first-class trips for Larsen to fly from Honolulu to Los Angeles, Los Angeles to Seattle and Seattle to Atlanta.
- Council member Emery used a casino credit card to purchase four first-class plane tickets to Hawaii in 2016 even though a tribal travel ban enacted in 2014 was still in effect. The ban was enacted in 2014 to deal with 'the challenge of meeting its financial obligations in an economic climate which yields diminished revenue streams,' according to a council resolution.
- In December 2016, the Turtle Lake casino cut $10,000 checks to Lewis Taylor and the four council members. The request for disbursement for the council members stated 'Travel to Las Vegas Legal Symposium.' Taylor's disbursement form said 'Travel AZ Legal Symposium.' The checks were cut before the trips and there is no supporting documentation or receipts available.
- Two council members — Stuart Bearheart and Carmen Bugg — each received $15,000 for a 'project allocation,' the regulators noted. The tribe was unable to provide regulators with a description of the project.
State and federal officials declined to say whether there were any criminal investigations as a result of the NIGC report.
Contact Cary Spivak at (414) 223-5467 or cspivak@jrn.com. Follow him on Twitter at @cspivak or Facebook at https://www.facebook.com/cary.spivak
The St. Croix Chippewa tribe paid a hemp consultant who did a decade in prison on drug charges more than $300,000 and also paid for his flights to Hawaii and elsewhere, the Milwaukee Journal Sentinel has learned
The consultant, Lawrence Larsen, 39, collected $301,287 from the tribe's St. Croix Casino Turtle Lake from August 2015 to September 2017, the National Indian Gaming Commission said in a 29-page 'Notice of violation' that charged the tribe with 527 violations of federal and tribal law and regulations.
All told, tribal leaders and others pocketed or improperly spent more than $1.5 million in casino cash on personal expenses and undocumented purchases, the commission said in the notice issued this month. The tribe could be fined more than $27 million by the federal agency and its profitable St. Croix Turtle Lake casino could be temporarily closed.
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Though the commission report provides little information about Larsen, Indian country sources said Larsen is a marijuana and hemp consultant based in the northwest U.S. The tribe is one of several Wisconsin tribes looking into growing marijuana plants to produce hemp or cannabidiol, a marijuana extract used to treat a variety of ills. Cannabidiol, known as CBD, does not produce a high for the user
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Larsen was incarcerated in Washington state prisons from April 1999 until September 2009, according to Karen Takacs, communications director for the Washington Department of Corrections.
The prison time was followed by one year of probation, Takacs said.
Larsen was convicted of six counts of manufacturing/delivering/possessing with intent to deliver — in other words, drug dealing — four counts of forgery and one fraud count. Takacs said.
Jeffrey Cormell, the tribe's former general counsel, said Larsen began working with the tribe around 2015. Cormell said he had little idea of what Larsen did or how much he was paid until he saw the commission report this month.
'That was shocking,' Cormell said. 'I had no idea about the $300,000 — that blew my mind.'
Larsen did, however, discuss his time behind bars with him.
Larsen told Cormell that during his dealing days he was involved with a notorious biker gang and that he had a tattoo on his forearm showing a man's lips sewn shut, an indication that Larsen did his time and did not snitch on any of his cohorts.
'He was proud of that,' Cormell said.
Cormell said he did not know the specifics of Larsen's duties.
'I kept my distance,' Cormell said.He said he would occasionally see Larsen in the tribal offices.
The commission report did not mention Larsen's criminal record and said Larsen was a consultant, but the tribe could not 'describe any benefit expected or received from Lawrence Larsen's consultant services,' according to the notice filed earlier this month.
Cormell said he resigned his tribal post in September in the closing months of the commission probe that started in in 2015. He explained that when a lawyer sees activities that could be viewed as 'illegal acts and the client continues the actions, the attorney has a choice to either continue or resign.'
Lewis Taylor, the tribal chairman, hung up Monday on a reporter who asked about the report and Larsen.
'I have no comment — thank you very much,' Taylor said.
Larsen did not return messages left with him at the tribe's headquarters in Burnett County and with Elmer 'Jay' Emery, a tribal council member who was a key contact with Larsen.
The state Department of Administration, which is charged with certifying vendors who service tribal casinos, said Wednesday that Larsen is not certified by the state Division of Gaming.
In addition to the $300,000 payment to Larsen, the commission said the tribe's casino operation:
- Paid Larsen $12,746 in January and February 2017 for first-class airfare to Hawaii, Seattle and Atlanta.
- In April 2017 the casino wired $21,247 to Larsen to buy a 4x4 off-road vehicle.
- Paid Larsen $9,000 in May 2017 for ' 'project supplies' without receiving an invoice, receipt description or location of the supplies purchased.'
- Paid $237 to purchase items, including Clear w/Banger and Honey Comb Bubbler from the Vape Spot in Atlanta.
- Paid REZ Connections, a company owned by tribal council member Emery and his longtime girlfriend Nikki Nielsen, $105,000 even though 'the tribe provided no written contract or other evidence to indicate' why the payments were made.
Sources said that the tribe was in negotiations with a Hawaiian politician to form a venture to manufacture and sell hemp on the islands.
Cormell, however, said the talks ended in 2016, well before the trips cited in the commission report took place.
The report describes how casino cash was tossed around freely on the reservation with little or no documentation.
Though the St. Croix Casino Turtle Lake is believed to be one of the state's more profitable Indian casinos, many people living on or near the tribe's reservation remain poor. The tribe pays a dividend to its approximately 2,000 tribal members of about $5,000 annually, sources said.
The tribe has reservation land in Barron, Burnett, Polk and Washburn counties. The Turtle Lake casino employs about 1,000 people and its Danbury casino employs about 200, according to the Great Lakes Inter-Tribal Council.
'Many of the payments — worth hundreds of thousands of dollars — were issued to the same small group of people' who frequently just 'scrawled' the words 'travel' or 'consulting fees' on expense documents, the notice signed by commission Chairman Jonodev O. Chaudhuri charged. Among the payments was $154,173 to Taylor, longtime chairman of the tribe, from 2014 to 2017 and $235,888 to Emery during the same time frame.
The tribe can appeal or object to the commission's findings.
Contact Cary Spivak at (414) 223-5467 or cspivak@jrn.com. Follow him on Twitter at @cspivak or Facebook at https://www.facebook.com/cary.spivak