Published June 2003

Stillaguamish gaming application withdrawn

By Scott Morris
Herald Writer

OLYMPIA — Top officials of the state Gambling Commission in May confirmed their concerns about the financing arrangements for the Stillaguamish Tribe’s proposed casino.

A study of the commission’s investigation — which closed May 9 when the tribe’s consultants withdrew their license application — shows that state agents were looking into federal indictments in January of union officials in Michigan who had close ties with the casino’s key financial backers.

Those charges were in addition to a civil judgment the U.S. Department of Labor won against the key financiers, the Carpenters Pension Trust Fund of Detroit, in 2000.

State agents also found that the tribe violated its state gambling compact by getting a roughly $5 million advance last fall on its $36 million loan before the financiers were certified by the state. The $5 million was used to tear down 29 federally subsidized homes and purchase new homes for tribal members.

But in that case, the commission’s two top staff members said sanctions are not likely to be imposed for burning down the houses early.

“We’re still taking a look at whether (the sanctions) are appropriate,” said Rick Day, executive director of the Gambling Commission. “Most cases are resolved in an informal process.”

The commission’s scrutiny caused the tribe’s consultants, Arlington Gaming LLC, to withdraw its application rather than subject the financiers to criminal background checks.

Eddie Goodridge Jr., the tribe’s executive director, insists that new homes found to replace the old ones are safe from potential litigation. He has also expressed confidence that Arlington Gaming has an alternate plan, which could include getting new financiers.

If other backers are found, Arlington Gaming could turn in a new application, which would trigger a new investigation.

The casino was to be financed by the Carpenters Pension Trust Fund of Detroit via its investment firm, AA Capital, which was formed in 2002 in Chicago. The pension fund owns a substantial interest in AA Capital, according to state agents.

The January indictments were served against four leaders and one employee of the Michigan Regional Council of Carpenters. The Carpenters Pension Trust Fund of Detroit manages retirement benefits for the carpenters union. The federal charges were for alleged misuse of union funds and conspiracy.

The case has not yet gone to trial. In an April 3 letter, state licensing agent Neal Nunamaker wrote to Arlington Gaming that the Gambling Commission had not yet determined whether the federal indictments had any direct bearing on Arlington Gaming’s application.

“However, our level of concern about the Carpenters Pension Trust Fund Detroit and vicinity has increased based on our knowledge that some officers and members of the (carpenters’ union) also hold positions with the pension fund,” Nunamaker wrote.

Frederick Ball, a Chicago consultant for Arlington Gaming, responded in an April 18 letter that none of the five union people charged in January were trustees of the pension fund and therefore could not affect the use of pension money because they only manage union money.

But Arlington Gaming apparently did not want to risk extensive background checks of the trustees. Because of that, the Gambling Commission’s two top directors said they closed the investigation before determining whether any of the tribe’s investors had criminal histories.

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