Tribe has 30-day grace period to pay casino bonds

Bondholders await payment -- tribal courts created and sue; casino employees paid in cash

Carmen GeorgeApril 3, 2013 

A leadership division at the Picayune Rancheria of Chukchansi Indians has spilled into its casino -- resulting in a missed $12 million payment to the tribe's bondholders that was due April 1.

The tribe now has a 30-day grace period before a default -- what could result in the elimination of the $1 million a month the tribe receives for government operations, services and monthly payments to tribal members.

Meanwhile, tribal leaders on both sides of the standoff have each created a tribal court within the last few weeks, with both courts waging charges against the other sides' actions.

The political division has created problems with paying the casino's 1,300 employees.

Last week, casino employees were instructed in a memo from the human resources department that they would not receive their normal direct deposits, and that payroll cash would be available for pick-up in the casino March 28.

The reason for the cash payments is because the Nancy Ayala group -- who has maintained control of casino management -- is not authorized to write checks through the tribe's official bank accounts, which only allow for direction from the group led by Reggie Lewis, said Richard Verri, a lawyer representing the Lewis council.

Verri said Ayala's group is not making the scheduled casino cash payments into the tribe's primary account that pays the bondholders, and that without that casino cash, there was not sufficient funds to make the April 1 deadline. According to the agreement in place, the tribe must also have an additional $14 million in the bank after the $12 million is paid.

The Chukchansi tribe also faced a potential default on its bonds last year, but reached an agreement with bondholders that restructured the $310 million in debt, reducing it to $250 million, with payback extended to 2020.

"These obstacles that are being created by Nancy's failure to abide by the terms of the compact with the National Indian Gaming Commission, the indenture, and the internal control standards, are so unegregious," Verri said.

Verri said he is hopeful the bondholders will demand a whole new casino management team, that can perform an audit and put money in the bondholders accounts, and that charges filed against the Ayala group in a new tribal court will enable other U.S. courts and agencies to get involved in what's happening.

Ayala's council did not respond to questions about these issues and allegations, but stated they believe Wells Fargo Bank has the authority to instruct Rabobank to pay the bondholders.

Ayala's council also stated they filed a lawsuit against Rabobank in a tribal court that their council appointed, to obtain an order directing the bank to make the loan payment.

In another Chukchansi tribal court, appointed by the Lewis council, the judge told Rabobank to dismiss that lawsuit.

A third Chukchansi faction, led by Morris Reid, is also back in play, filing a complaint Friday in the United States District Court for the District of Columbia that proposed gaming ordinance amendments were not addressed in proper time by the National Indian Gaming Commission.

Reid was elected to tribal council in December, 2011 but was never allowed to be seated, along with the elected Dixie Jackson, Dora Jones and Harold Hammond -- who are all against recent tribal disenrollments that the other leaders had been voting in favor of.

"The amendments were based on two main purposes," said lawyer James Qaqundah, representing Reid's council. "One purpose was to separate the gaming commission from tribal council, so the gaming commission would not be influenced by tribal politics, and so whoever is in charge of the tribal council can't inappropriately contact the NIGC and use the gaming commission as a political tool. The other amendment is to make it so tribal council could not use casino security for improper political purposes."

The Reid council also has two appeals before the Interior Board of Indian Appeals, claiming Bureau of Indian Affairs officials recognized certain Chukchansi individuals as the legitimate governing body of the tribe for contracts, without notifying all parties involved in last year's leadership dispute.

The most recent Chukchansi leadership split occurred during a tribal business meeting Feb. 21, when a petition signed by an estimated 14 individuals was brought forward, calling for a new tribal council.

Ayala supported the petition, which ordered the six other tribal council members off council, replacing them with members of her family.

Several days later, her council changed to include two suspended tribal council members, whose investigations and hearings were still pending, and brought back another unsuspended council member.

On meeting agendas since then, other members of Ayala's family have remained listed as "temporary" tribal council members.

"She went on television talking about how the tribe accepted a petition signed by 30% of the tribal members, and it's a petition signed by 14 members -- 30% of 46 people," Verri said. "That is not all of the qualified voters of the tribe, and she knows that because she ran in a tribal council election in December that circulated 750 ballots to qualified voters."

Both the Ayala and Lewis tribal councils each claim to have a quorum of council members to operate as the tribe's government.

Mediation offers from Bureau of Indian Affairs have been refused by the Ayala group, Verri said.

Qaqundah said the Reid council, and many tribal members, are now advocating for a "clean slate" election to resolve the Chukchansi leadership issue, what would allow all tribal members as of the December, 2011 election to vote for seven new tribal council members.

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