|Pearl River Resort|
Meanwhile, the chief financial officer (CFO) at Pearl River Resort is resigning this month. (See letter announcing resignation, at the end of this post.) Ryan Eller, who previously worked for Alabama's Poarch Band of Creek Indians, had been on the job less than nine months. (See press release about his appointment, at end of this post.)
Chief Phyliss J. Anderson has not kept tribal members updated on either development, a source tells Legal Schnauzer. In fact, Eller's departure only came to light because the resignation letter accidentally was sent to all users on the tribal e-mail system.
According to the letter, Eller resigned "due to personal reasons related to his mother's terminal illness." But our source says staff at Pearl River Resort report that the CFO had been looking for another job.
The new developments at Mississippi Choctaw facilities could have an impact in Alabama. Former Republican Party lobbyist Jack Abramoff, who spent roughly four years in federal prison on corruption charges, has admitted that he funneled some $20 million into Alabama to help Bob Riley win the 2002 governor's race over incumbent Democrat Don Siegelman.
A proponent of an education lottery in Alabama, Siegelman was seen as a threat to the Choctaws' market share, which depends heavily on Alabamians who cross the border to gamble in Mississippi. Indian gaming interests and their GOP benefactors also apparently pushed for the federal Alabama bingo trials of 2011 and '12, which resulted in zero convictions after the expenditure of millions in taxpayer dollars.
Could an FBI probe at Choctaw headquarters shine light on events that have turned Alabama into a political cesspool over the past dozen years? It's still too early to say, but an investors report out last month indicates the FBI is lurking in Choctaw territory, hinting that something still could come from the inquiry.
We first reported an FBI raid at the Silver Star and Golden Moon casinos on July 12, 2011. Two days later, we had a post titled "Why Did the FBI Launch a Raid on Mississippi Choctaw Gaming Facilities?" We tried to put events into perspective with this:
When news broke on Tuesday afternoon of an FBI raid at the Silver Star and Golden Moon casinos, many Alabamians wondered if it was driven by the political ugliness that has engulfed our state since George W. Bush entered the White House. After all, news reports indicate that Mississippi Choctaws spent $13 million, funneled through Republican felon Jack Abramoff, to help get Bob Riley elected governor in 2002. And Riley's apparent desire to protect the Choctaws market share, by stamping out gaming in Alabama, led to a federal electronic-bingo prosecution that is ongoing in Montgomery.
If Tuesday's raid has anything to do with Riley, Abramoff, and perhaps the Bush administration (hello, Karl Rove!), it would be a major national story. But so far, we have no indication that such weighty issues are driving the investigation. If they are, that would mean the Obama Department of Justice actually has its head out of you know where--and we've seen no sign that Eric Holder and Co. are up to the task of investigating and prosecuting Bush-era crimes.
One week after that, we reported that the FBI investigation had connections to Mercury Gaming Group and the Titan Agency, of Atlanta. Last July, we reported on the apparent suicide of a former U.S. prosecutor who had worked for the Choctaws.
Since then, the FBI probe has generated nothing but silence. But a report from Moody's Investors Service, dated May 2, 2013, has generated noise. It changed the ratings outlook to positive from stable for Choctaw Resort Development Enterprise (CRDE). While the report noted improvement in certain key areas, it's big-picture view was a mixed bag:
The outlook revision to positive reflects a sharp improvement in run-rate EBITDA (earnings before interest, taxes, depreciation, and amortization), largely owing to expense reductions from the termination of certain unfavorable vendor contracts. The outlook revision also recognizes changes to improve the Enterprise, including the establishment of a stable and professional management team. Notwithstanding these positives, the rating also captures weak topline trends due to soft regional economic conditions and the competitive nature of the inland markets where the casinos are located. While the bulk of major expense reductions are largely complete, Moody's still expects the Enterprise to prudently manage its costs such that EBITDA remains relatively stable despite contracting revenues.
Dark clouds continue to hover over the Choctaws' financial report. From Moody's:
The [rating] reflects Choctaw Resort's small size, earnings concentration in a single jurisdiction, relatively low population density in its primary market, weak gaming revenue trends, and the challenging local economy in its primary markets in Mississippi and Alabama. The rating also captures the high level of tribal distributions as a percentage of EBITDA and the expectation they will continue to be maximized (as per the credit agreement and bond indenture), and uncertainty related to the outcome of the FBI investigation that has been ongoing at the Enterprise since July 2011. Moody's will continue to monitor further developments from this investigation and assess potential rating implications as appropriate. In addition, the rating reflects the high degree of uncertainty surrounding the enforceability of lenders' claims at default and other unique risks common to Native American gaming issuers.
Near its conclusion, the Moody's report again raises the FBI issue:
Moody's could revise the ratings outlook back to stable if revenue declines worsen such that EBITDA meaningfully deteriorates from current run-rate levels. Any factors/events that could debilitate the gaming operations would likely result in downward rating pressure, including an adverse development in the FBI investigation, management turnover/corporate governance issues, and/or a deterioration in liquidity.