October 31, 2002
Casinos' fate is in the hands of the Seneca
by John Abeel
Although the quality of the future of the Niagara Frontier depends on its outcome, there is far too little coverage in the Buffalo News or the Niagara Gazette of the Seneca election. That election, which will be held on November 5, pits the Seneca Party's presidential candidate, pro-Convention Center Casino Ricky Armstrong, against Treasurer and former Seneca Party candidate Arnold Cooper. It is a story which includes a Chinese-born billionaire, a developer under investigation, a failed offshore casino boat operator, the Pequot Indian Nation and a cast, quite literally, of thousands.
A struggle has ensued inside the Seneca Nation which casts a dark cloud over future gaming possibilities in Niagara Falls. Seneca Treasurer Cooper printed, stamped, and was trying to mail a report to Seneca members which was reportedly strongly critical of the financial deal involving the Seneca Nation, a Malaysian-based financier, a somewhat shady developer, the City of Niagara Falls, the State of New York and others. His political opposition, Seneca President Cyrus Schindler, sent marshals to seize the letters. Cooper accused Schindler of federal mail theft, Schindler dismissed four full-time people from Cooper's office, and Cooper was fired as Chief Financial Officer. At one point, Cooper's supporters took over tribal headquarters.
If the current plan for a commercial gambling casino owned ostensibly by the Seneca Nation and located in Niagara Falls goes forward, Gaming Consultant G. Michael "Mickey" Brown would emerge as a major economic power in Western New York. Brown is already being treated by local media as the voice of the Seneca Nation. But Mr. Brown has a history. He worked with the Pequot Nation of Connecticut in building the Foxwoods Casino, the world's largest. To make it happen, he teamed up with C.R. Klewin, a construction company, and an 84-year-old Chinese-born billionaire, Lim Goh Tong, who chairs Asia's largest gambling casino, the Genting Berhad hotel and casino complex near Kuala Lampur, Malaysia. Mr. Lim Goh Tong loaned $60 million to the Pequots at high interest and will continue to receive 9.9 percent of Foxwood's adjusted gross revenue until 2016. A condition of the loan was that Brown and another attorney from New Jersey, Al Luciani, run the casino. According to the Wall Street Journal, Lim Goh Tong will finance the Seneca casino in Niagara Falls.
One might have expected that facilitating such an operation would have been the kind of lifetime achievement which would occupy Brown through retirement, but such has not been the case. Foxwoods opened on Valentine's Day, 1992, and trouble was almost immediate. Although the casino was raking in more than a million dollars a day, the stipend to the Pequots was small. Eight months after it opened, the CEO, Luciani, resigned. Lim Goh Tong named Brown to succeed him. The Pequots hired Deno Marino, an internal auditor, to look into allegations of double billing contractors and other financial improprieties, but Brown strongly resisted any efforts to audit the casino operation or even to review the records.
Under his management, the Pequots were actually losing money, their credit rating fell through the floor and their debts piled to the ceiling. Their Standard & Poor's bond rating plunged from A to BBB. By the time they found a way to remove Mr. Brown the Pequots were reportedly around $1 billion in debt even though the casino operation was enjoying $1 billion in annual revenue. Brown resigned in 1997 under pressure from the tribal council amid accusations he had improperly profited on a sale of stock he owned in IWERKS, a virtual reality entertainment company he had chosen as one of the casino's vendors. The episode was described as one of insider stock trading.
The construction company employed by Brown at Foxwoods has encountered problems with the law. The former mayor of Bridgeport, Connecticut has been named in a 24-count federal racketeering indictment for accepting a bribe from Klewin in connection with the construction of a minor league baseball stadium at Harbor Yard. Klewin allegedly offered then-Mayor Joseph Ganim $350,000 for the contract to do the job. Although no one in Klewin has yet been indicted, Klewin did pay the bribe and their officers are probably cooperating with the prosecution. Undaunted by such revelations, Mickey Brown introduced Klewin to the Senecas and the company is the contractor for the Niagara Falls Casino project.
The choice of C.R. Klewin within the Seneca Nation has also stirred controversy. Klewin comes with a financial rating which may have contributed to the fact that M&T bank refused to bankroll the casino development, forcing the Seneca Nation to turn to Lim Goh Tong. Neither C.R. Klewin or Mickey Brown were ever voted by the Seneca Council to lead the project. These choices were made by a newly created Seneca Gaming Corporation which, Seneca Nation members are learning, is beyond the reach of the Seneca Council or its members. Seneca Nation President Cyrus Schindler is not eligible to stand for election as president and is running for office as a tribal councillor. He is the most notable Seneca member of the Seneca Gaming Corporation which could become one of the most powerful economic entities, and a major employer, in Western New York.
Plans for an off-reservation commercial gambling casino or two have been fiercely contested on the Seneca Nation. During the first referendum, gaming lost badly. In the most recent referendum on the subject, it passed by a razor-thin 52 votes. The Seneca Nation's Council and those who favor the deal with Mickey Brown and Cyrus Schindler using Lim Goh Tong's money to refurbish the Niagara Falls convention center are desperately forging ahead with construction so they can make the argument that it is too late to stop the casino, but the November 5 election is shaping up as another referendum. A Seneca elder summarized the plot: Lim Goh Tong is going to hold the mortgage over the whole thing. Posters and fliers have been circulating among the Nation's membership and interested observers report those who want to dismantle the Seneca Gaming Corporation and relegate the whole deal to the dustbin have a good chance of winning.
A persistent reader of the Buffalo News and the Niagara Gazette would know little of this. The Buffalo News has the resources to ferret out and either confirm or disprove this rather robust story but has shown little desire to do so. The biggest story of the year in Western New York has been covered by small papers, including the independent Niagara Falls Reporter. Are the News and Gazette afraid of lost future ad revenues if the Seneca Gaming Corporation is embarrassed by fact patterns like those discussed here? The stock defense—that they didn't think it was a news story—is one reason the commercial press is losing credibility among readers.
Among the issues of interest to Seneca voters was a demand by Assembly Speaker Sheldon Silver that casino employees be represented by the Hotel and Restaurant Workers Union, a union which saw some of its leadership indicted several years ago on embezzlement charges. Some Senecas are deeply unhappy the Schindler administration agreed to these demands without input from the Seneca people. Indeed, input from the Seneca people is a major issue in the campaign. Councillor Barry Snyder, a major supporter of the Seneca Gaming Corporation, is quoted as saying that the people don't tell the Seneca Council what to do, the Council tells the people what to do. It's the kind of statement that, in politically heated times, bears repetition among a Seneca constituency which clings to the illusion that their government is a democracy.
Legend has it that some decades ago a tradition persisted in Niagara Falls that when the wiseguys had to tell the big boss they had messed up and lost tons of his money, the losers were treated to a pair of cement shoes and driven to a remote area of the Welland Canal where they experienced the depths of their failure. Fortunately that kind of thing doesn't happen any more.
Or not.