Business & Real Estate

Warring factions in Corning casino tribe agree to election to settle dispute

After weeks of armed standoffs, cyber attacks, allegations of multimillion-dollar theft and legal battles over who controls the tribe’s $100 million-a-year casino, warring factions of the Paskenta band of Nomlaki Indians in Tehama County have agreed to a binding general election to settle their dispute.

A federal judge in Sacramento signed off Monday on the landmark agreement, which came after a marathon three-day mediation that included 12 consecutive hours of negotiations at one stretch, said Andy Freeman, who is recognized as tribal chair by both factions. “The mediation went well. It gave us the opportunity to talk to each other and see both sides,” Freeman said. “The bottom line is the whole tribe needs to talk.”

All 216 adult members of the tribe can vote in the election on Sept. 13, “and a third party will make sure it’s run straight,” Freeman said.

Until the election results are certified, a federal temporary restraining order against weapons within 100 yards of the tribe’s Rolling Hills Casino in Corning and other tribal properties will remain in effect in the form of a preliminary injunction, said U.S. District Judge Kimberly J. Mueller.

The judge ordered both sides to return to court Oct. 2 for a status conference on the results of the election and the allocation of tribal assets. “Issuance of this preliminary injunction will serve the public interest by preserving the status quo,” Mueller said, “and avoiding injury to the people of the state, until the final resolution of this case.”

Attorneys for both sides were pleased with the result. “I think it’s excellent that members of the tribe can come together and find at least a temporary solution to their issues, rather than fight it out in court,” said McGregor Scott, a lawyer who represents a group of tribal council members ousted at the tribe’s annual meeting April 12.

At that meeting, Freeman also suspended the ousted council members – along with about 40 others – from membership in the tribe. That action cut off the annual $54,000 payments each member received from the casino.

A new council, also headed by Freeman, was elected in May by the remaining members.

Rob Rosette, attorney for Freeman and the new council, said Monday that the chairman “is healing his tribe.”

“He’s demonstrated great leadership so everyone’s voices can be heard. Everybody should be willing to accept the election results. Until then, there will be no legal action.”

The dispute centered on allegations by Freeman and other council members that Tribal Economic Development Director John Crosby, a former FBI agent, misappropriated $1.4 million from tribal accounts to pay for his house, swimming pool, basketball court and remodeling work, along with several cars and $209,000 worth of gold. Tribal Treasurer Leslie Lohse, one of the ousted council members, was accused of embezzling money and misusing the tribe’s jet to attend her son Kyle’s professional baseball games.

Freeman produced canceled checks to support his allegations of wrongdoing. Crosby and Lohse, in turn, supplied employment contracts indicating they were each granted $5 million lines of credit “to either be paid forgiven or extended” after 2020 if they negotiated a new gambling compact with the state. Both said they’ve acted in the tribe’s best interests.

Tensions escalated to the point that armed security guards aligned with the warring factions faced off at the casino, prompting the local sheriff to intervene. On June 9, the Bureau of Indian Affairs’ Central California Superintendent Troy Burdick issued an “administrative cease and desist order” saying the newly constituted tribal leadership had violated federal law by taking control of the casino just off Interstate 5 in Corning. Burdick added that the BIA would continue to recognize the old tribal council “until the internal dispute can be resolved by the tribe.”

On Monday, the two factions issued a joint statement laying out the terms of their settlement. They said they would choose a mutually agreed upon accounting firm or forensic auditor to investigate the alleged financial improprieties. A mutually agreed upon third party will supervise the election.

“The agreement is effective immediately and will remain in effect until the September election, when both parties agree to recognize the election results,” according to the joint statement.

Both sides have agreed to work together to sell the tribe’s $3 million jet and 162 ounces of gold – along with other tribal properties and assets.

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