Rocky Boy casino lawsuit stretches back more than a decade

Wednesday’s hearing in a lawsuit that has led the government of Rocky Boy’s Indian Reservation to warn it would be laying people off and not making payments in some areas to its members is the latest step in a story about funding a tribal casino that goes back more than 10 years.

The Chippewa Cree Business Committee and its Child Support Services office announced last Tuesday that due to BEH Gaming Ltd.’s lawsuit freezing up funds, the tribe would have to reduce its workforce, stop sending child support payments and stop making general assistance payments, in documents posted on The Chippewa Cree Tribe of Rocky Boy Montana Facebook page.

A post Friday on the page says general assistance payments would be made that day.

District Judge Dan Boucher approved a motion for a hearing in which the tribe could discuss the impacts of its assets being frozen after his judgment saying the tribe must pay its creditor more than $25 million. Boucher scheduled the hearing for Wednesday.

Boucher’s judgment issued Feb. 14 says BEH has a first-priority interest in the more-than $25 million he ruled the tribe owes the gaming company.

The tribe says BEH froze all of its assets rather than only casino assets as allowed by the judgement.

Although no connection is made in either the criminal cases or the order in the lawsuit, criminal investigations by The Guardians Project, that was established to investigate fraud and embezzlement on Montana’s Indian reservations, found that tribal officials and others were embezzling tribal funds at the same time that some of the trouble with loans was occurring.

Officials including former state representative, tribal council member and Chippewa Cree Construction Corp. CEO Tony Belcourt; council member and previous council chair John “Chance” Houle; Havre psychologist and former Rocky Boy clinic CEO James Howard Eastlick Jr. and Havre businessman Shad Huston were among people who pleaded guilty to or were found guilty of fraud and embezzlement and sentenced to prison.

As for the lawsuit, in his Dec. 14 order in favor of BEH’s request for a judgment without the case going to trial, Boucher wrote that Alan Ginsburg and Joseph Shunock formed Box Elder and Havre Gaming Ltd., or BEH, in about 2005 for the purpose of building a casino at Rocky Boy.

Ginsburg sought approval of tribal leaders in 2006 to enter a contract to build Northern Winz Casino on the reservation and received the financial backing of BankFirst of South Dakota, which issued a $12.6 million loan to Chippewa Cree Community Development Corp. to build the casino, the order says. BEH acted as a guarantor of the loan.

After several delays and cost overruns, Northern Winz opened to a “lackluster reception in February of 2007,” the order says.

In 2009, BankFirst was placed into receivership by the Federal Deposit Insurance Corporation, which transferred the loan to Outsource Credit Management LLC. Federal District Court entered summary judgement in favor of OCM Dec. 7, 2010, and BEH agreed to pay the management company $13 million over four years, the order says. It made its final payment May 7, 2013.

On Rocky Boy, the casino immediately failed to generate revenue, the order says, and the tribal development corporation defaulted on its 2006 loan, now managed by OCM.

In 2011, BEH filed suit in state District Court, which resulted in a settlement agreement in which the tribe, its development corporation and its online lending company, Plain Green, agreed to make payments and agreed to a limited waiver of sovereign immunity and consent to settle in suits in state or federal courts.

The development corporation defaulted on its obligations under the settlement agreement in March of 2013, the order says. BEH filed a suit alleging breach of contract based on the settlement agreement Sept. 23, 2014.

The development corporation argued against the summary judgment motion including that BEH was a partner in a joint venture, that Plain Green did not received benefits from its promise to help repay the loan and that the tribe wanted the decision stayed until the completion of an investigation by the National Indian Gaming Commission, alleging the 2006 contracts were not approved by that commission and therefore were void.

Boucher ruled that the development corporation’s arguments were at odds with the terms of the agreements and the actions taken by the parties and that the request to stay the decision subject to the Indian Gaming Commission’s ruling does not say how long that decision would take. He also noted that BEH denies ever having been contacted by the commission’s investigator.