Mississippi Choctaw gaming facilities had fallen on financial hard times when former Alabama Governor Bob Riley launched a crusade last year to close gaming facilities in his state. That is one of several revelations in recent days from Mississippi, including news that the Choctaws' money woes are ongoing.
A major outside auditing firm no longer is providing its services to the Choctaws after a federal raid at gaming facilities in July. PricewaterhouseCoopers (PWC), a big-four accounting firm that has audited Pearl River Resort for more than a decade, has stepped down from that role, according to a report in the Jackson Clarion-Ledger. Reporter Jerry Mitchell also shows that the federal probe is focusing on Doug Pattison, head of Atlanta-based Mercury Gaming Group.
The Choctaw story is of profound interest in Alabama because former Governor Riley reportedly received at least $13 million in support from Mississippi gaming interests, funneled through GOP felon Jack Abramoff. Those funds apparently were designed to protect Choctaw market share from Alabama gaming entities. Riley responded, it appears, by launching a crusade to shut down electronic bingo facilities in Alabama. And that led to a federal investigation and trial that ended last week with no convictions--and now is scheduled for a retrial in October.
What caused Choctaw finances to take a turn for the worse? The answer remains unclear, but the problems seemed to start when former tribal chief Phillip Martin left office in 2007. Reports Mitchell:
Records obtained by the FBI show that when Martin left office in 2007, the casinos were earning more than $120 million in cash. By the end of 2010, that amount was only half of what it had been.
Was Riley pressured to launch his Alabama crusade in order to help his Choctaw benefactors? Have the people of Alabama been caused to suffer because the Choctaws could not properly manage their finances? It's starting to look that way.
Mitchell's report indicates that Choctaw finances are not getting any better:
Two days after the July 12 raid, Moody's Investors Service downgraded $200 million in securities borrowed by the Choctaw Resort Development Enterprise to junk bond status.
The FBI's investigation may "indicate potential internal control weaknesses and could affect Choctaw's casino operations in the future," Moody's report said.
PWC officials clearly did not like what they were seeing, but they refused to comment on the reasons for their exit. Mitchell puts the decision in context:
The firm's decision came at the same time FBI agents subpoenaed records from Beasley Denson, the tribe's chief, who in recent days has been kicking off his re-election campaign in various Choctaw communities. His office would not comment.
The FBI already has seized hard drives and documents from the tribe's casinos at the Pearl River Resort near Philadelphia.
Denson told The Clarion-Ledger last month that the FBI warrants from that July 12 raid named both the Atlanta-based Mercury Gaming Group and its marketing arm, the Titan Agency.
Mercury is run by Doug Pattison, who was hired in December 1999 as CEO of the Silver Star Casino. Securities and Exchange documents show the tribe gave him a five-year contract, paying him $400,000 a year, a $40,000 relocation fee and benefits, including the free use of a car.
Financial arrangements between Pattison and tribal chief Beasley Denson are murky--and seemingly of serious interest from the FBI:
During his tenure, Pattison has said he brought the casino more than $250 million in revenue. Two years later, the tribe fired him, giving him nearly $1 million in severance pay, bonuses and vacation money, according to SEC documents.
Those documents list no reason for his firing, but one witness told the FBI that when tribal officials told Pattison to leave, he vowed to return and "bleed the casinos dry."
After Denson was elected chief in 2007, one of his first acts was hiring back Pattison, who heads the Mercury Gaming Group.
In February, Denson raised Pattison's pay from $60,000 a month to more than $200,000 a month. Denson told The Clarion-Ledger the raise took place because Pattison was helping the tribe with its new Bok Homa Casino.
The Choctaws will elect a new tribal leader on September 6, with Denson, Phyliss Anderson, and Shirley Berg in the race. Berg was a surprise late entry, and she seems to sense that the tribe is in deep trouble:
Asked what made her decide to run, Berg replied, "Different reasons," but did not specify.
She later released a statement, saying recent events have brought into question "the stability of our tribal government and, more specifically, the tribe's financial status. ... There is a need for a leader who is trustworthy and has integrity to lead the tribe into the future. ... My vision is to empower the tribe's legacy of self-determination, bringing the voice of the people back into tribal government."
Anderson says when she takes office, she will cancel tribe contracts with Mercury and Titan.
The last few months "have been difficult for our tribal people," she said in a statement. "With an overturned election, FBI raid and downgrade of the tribe's bonds, we have some serious challenges to overcome, no doubt."
She blamed what has happened on "the failed leadership of the current administration."
Did Bob Riley take directions from that failed administration? Alabamians should demand answers to that troubling question.