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Gaming Guru

Arnold M. Knightly
 

New York tribe seeks $3 billion from Harrah's Entertainment

20 July 2007

LAS VEGAS, Nevada -- A Delaware-based trust is seeking to collect nearly $3 billion in tribal court judgments and interest from Harrah's Entertainment resulting from a default judgment awarded to members of the St. Regis Mohawk tribe six years ago.

The Catskill Litigation Trust announced Tuesday it filed papers in U.S. District Court for the Northern District of New York to enforce a March 20, 2001, default judgment by the St. Regis Mohawk Tribal Court, which is considered a foreign sovereign court under U.S. law.

The original judgment for $1.8 billion was awarded because tribal members represented by the trust claimed Park Place Entertainment had interfered in the tribe's earlier plans to develop a casino in upstate New York.

The judgment included a 9 percent per year interest rate that has added about $1 billion to the judgment since it was awarded.

"The billion-plus dollars in interest represent the cost to the defendants for ignoring the tribal court judgment for the last six years," said trustee Dennis Vacco, former attorney general for New York.

Harrah's, is named in the lawsuit because it acquired Park Place with its $9.4 billion buyout of Caesars Entertainment in June 2005. The company declined to comment on the lawsuit.

New Jersey-based attorney Clive Cummis, who is also named in the lawsuit, did not return inquiries for comment.

"The tribal court judgment is going to be difficult to enforce against Harrah's without some further action in the federal courts," said Kathryn Rand, co-director of the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota.

Harrah's said in March it believed the case is already settled, according to a filing with the Securities and Exchange Commission.

Harrah's, however, said it will "vigorously contest any attempt to enforce the judgment," the filing concluded.

The gaming company, through its attorney George Carpinello, reiterated in a July 10 letter to the federal court that the company believes the matter has been settled.

The company asked for an extension until Aug. 13 to respond to the lawsuit.

"The claim that it was settled is a gross misrepresentation of the facts," Vacco said.

The enforcement stems from a default judgment finding Park Place and Cummis "fraudulently induced" St. Regis Mohawk tribal chiefs into a management agreement to quickly develop a southern Catskills casino in 2000.

The agreement undermined 1996 and 1999 contracts the tribe had with other parties to develop a similar project, according to federal court documents.

The Catskill Litigation Trust was put together in 2004 by three limited-liability companies: Catskill Development, Monticello Raceway Development Company and Mohawk Management.

The St. Regis Mohawk tribe recently joined the trust to pursue the judgment.

Rand said plaintiffs in tribal courts sometimes have to turn to federal courts to enforce judgments against nonreservation individuals and corporations.

"Although tribal court judgments are entitled to respect by federal and state courts, they aren't necessarily given automatic recognition or enforcement," she said.

Rand said the federal court will look to see if the initial claim is within a tribal court's jurisdiction, whether the judgment was appropriate and if the tribal court followed due process.

The enforcement request comes four years after Carpinello, then representing Park Place, sent a letter to the same court requesting a 60-day extension to collect the last of more than 30 plaintiff signatures needed to finish the settlement.

One of the conditions of the proposed settlement was an agreement to vacate the tribal court order.

A letter to New York Supreme Court dated June 1, 2004, from Park Place attorneys also indicated a settlement was close, but not yet complete.

The gaming company had filed a defamation lawsuit in state Supreme Court in March 2001 against 30 individuals of the tribe.

The 2004 letter asked for that case to remain open pending the federal court settlement.

A follow-up letter to the Supreme Court dated Dec. 5, 2006, from Harrah's said the "status of the settlement agreement has not changed" and the gaming company was not "prepared to abandon" its Supreme Court case.

However, a Feb. 8 letter to the Supreme Court said the gaming company's position changed and the "disputes were settled, not withstanding the defendants' failure to execute a settlement agreement."

St. Regis Mohawk tribe operates two casinos in New York and is pursuing a Catskill project.

New York Gov. Eliot Spitzer agreed in February to allow the tribe to build and operate a $600 million, 750,000-square foot resort on 29 acres in the southern Catskill Mountains.

The tribe is partners with Empire Resorts to design a two-story facility for 3,500 slot machines, 125 gaming tables and 24 poker tables at Monticello Raceway.

Harrah's is in the process of a $17.1 billion buyout by private-equity firms Texas Pacific Group and Apollo Management.

New York tribe seeks $3 billion from Harrah's Entertainment is republished from Online.CasinoCity.com.