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Tiny Modoc casino tribe adopts white men in failed attempt to profit

At left, the Alturas Rancheria’s would-be casino in Yreka, 165 miles east of the Modoc County rancheria, sits empty near Interstate 5 after the federal Bureau of Indian Affairs refused to approve it. The tribe, which operates the Desert Rose Casino in Alturas, at right, has faced a series of disputes over who can be a member and who receives money from rancheria operations.
At left, the Alturas Rancheria’s would-be casino in Yreka, 165 miles east of the Modoc County rancheria, sits empty near Interstate 5 after the federal Bureau of Indian Affairs refused to approve it. The tribe, which operates the Desert Rose Casino in Alturas, at right, has faced a series of disputes over who can be a member and who receives money from rancheria operations. bnguyen@sacbee.com

Calvin Phelps, a white cigarette manufacturer from North Carolina, seems an unlikely candidate for membership in a California Indian tribe. He even served as vice-chairman.

Phelps is serving a 40-month federal prison term for fraud. But that hasn’t kept him from voting via email in a tribal government election for the tiny Alturas Rancheria in Modoc County, which operates the Desert Rose Casino.

The tribe has just three to seven members, depending on who is counting. Perhaps the smallest of California’s 68 casino tribes, Alturas Rancheria in recent years has adopted five members as a way to make money. Two of them, including Phelps, are white.

Dale Risling, deputy regional director of the Bureau of Indian Affairs, said he could not recall another California tribe adopting white people who were neither Indians nor Californians.

The tribe’s adoptees came with ambitious money-making ideas, including a second, much larger casino, a cigarette manufacturing plant, a smoke shop and offshore gaming. None of these plans ever panned out.

The newcomers have divided the tribe and stoked a conflict over tribal revenues that has consumed an outsized amount of time and money in state and federal courts. The U.S. Postal Service even had to decide recently which of the feuding members was entitled to receive the tribe’s mail.

At stake is control of $2 million a year in revenue: the roughly $700,000 the tribe makes from the Desert Rose Casino, the $1.1 million it receives in revenue sharing from the state’s big casino tribes, and several hundred thousand dollars in federal funds earmarked for tribal governments.

Howard Dickstein, one of the nation’s foremost tribal lawyers, said the adoption of people with no connection to the tribe and little or no Indian blood “doesn’t pass the smell test.”

“It’s not necessarily against the law to adopt a white person, but if there’s no historical connection to the tribe, it sounds like a scam to take advantage of their membership for business reasons and manipulate the tribal government,” Dickstein said.

The tribe’s key antagonists are a feuding brother and sister, Phillip and Wendy Del Rosa, the only two members who can trace their blood line to an original member of the 20-acre Rancheria on a hard slice of ground framed by the Warner Mountains. The Del Rosas have been drawn into shifting alliances with adopted members over who is in control of the tribe – and the flow of cash.

Phillip Del Rosa, 42, is a car-racing enthusiast and builder from Medford, Ore. Wendy Del Rosa, 41, is a former pharmacy technician at High Desert Maximum Security Prison in Susanville.

Wendy is allied with Wayne Smith, a consultant who was once the second-highest-ranking official in the BIA but was forced to resign in 2002 amid accusations of influence peddling, according to news accounts. In 2004, the tribe hired Smith to help launch a new casino project – a 23,000-square-foot gaming palace in Yreka, 165 miles west of Alturas.

Phillip Del Rosa is aligned with Darren Rose, once his enemy, who was adopted into the tribe in 2003 in exchange for an interest in his plan to build the new Yreka casino on 120 acres of Indian land he said he had inherited.

Members mean money

The Alturas Rancheria began in July 1924, when the federal Office of Indian Affairs bought 20 acres east of Alturas for about 40 landless Indians, mostly from the Pit River tribe. It was one of 50 California rancherias – in effect, sovereign mini-nations – created by the federal government for displaced Indians in the early 1900s.

The BIA in 1971 designated five people who could vote on the Alturas tribe’s constitution, including Judy “Babe” Allen and her daughter Violet Del Rosa, grandmother of Phillip and Wendy. Both Allen and Violet Del Rosa later died in car accidents.

Violet Del Rosa’s son, Paul – a professional race-car driver and home builder – was elected chairman of the Alturas Rancheria and supervised the opening of the Desert Rose Casino in 1999.

Before casino money started rolling in, the Del Rosas adopted into the tribe two of their struggling cousins, Joseph Burrell and his sister, Jennifer Chrisman. The tribe’s goal was to increase the amount of federal health and education grants it collected, which are awarded based on the number of enrolled tribal members.

Phillip Del Rosa said both cousins have since been bought out with yearly payoffs and health care to relinquish their tribal membership; Wendy said Burrell is still a voting member.

Paul Del Rosa, the tribe’s visionary, died in a car accident in May 2002, leaving Wendy and Phillip in charge.

The Desert Rose makes between $50,000 and $80,000 a month, but the family wanted to diversify the tribe’s finances, Phillip said. In 2002, the tribe’s law firm introduced them to Darren Rose, who said he was a Karuk and Shasta Indian. Rose said he could build them a second casino at a much better location off Interstate 5 in Yreka – where they could pull in more than $30 million a year.

In 2003, the tribe adopted Rose and began paying him $5,000 a month as vice chairman of the tribe’s business committee.

Using a construction company purchased by the tribe, Rose said he partnered with a Florida developer who invested $9 million to build the casino in 2005. The BIA refused to approve the new casino, and the building now sits empty.

In an attempt to sway the BIA, the tribe turned in 2004 to a Smith, the former No. 2 official at the BIA, who had helped the United Auburn Indian Rancheria get approval for its successful Thunder Valley casino outside Lincoln.

Phillip Del Rosa said he and his sister didn’t realize that Smith had been forced to resign from the BIA after being accused of using his influence to help a former business partner profit from another California tribe seeking federal recognition – the first step in getting an Indian casino.

“We thought he was politically connected with the BIA,” Phillip said. “We thought Wayne could do something like the Thunder Valley casino.”

Despite his failure to secure BIA approval for a casino, the tribe in 2011 hired Smith as tribal administrator at a salary of $7,500 a month, plus $400,000 in retroactive payments, according to tribal documents.

Smith, who is Sioux, said the new casino “was a long shot from Day One.”

“It will never open, and technically the U.S. government owns the land the empty casino sits on,” Smith said.

Smith noted that he was never prosecuted for his alleged wrongdoing at the BIA. “The BIA’s the most screwed-up agency in the world; they’re worthless,” he said. “A lot of these disputes revolve around who is and who isn’t a member, and they rage on because the BIA refuses to deal with it. You see all these disenrollments in Alturas, Redding and half a dozen California tribes – and they’re all casino tribes.”

Risling, the BIA official, said his agency is powerless to stop conflicts like the one at Alturas from escalating. “The courts have held that tribal disputes are internal to the tribe, and only tribes have the authority to resolve them, so basically we’re told to keep hands off,” Risling said.

Casinos, he said, have intensified conflicts within California tribes. “There’s a lot more money at stake, and that makes them more intense,” Risling said.

Cigarettes don’t light up

In 2008, the first of many conflicts erupted within the tiny Alturas Rancheria tribal membership. Rose and the two other adoptees, Burrell and Chrisman, joined forces to try to force Phillip Del Rosa out as tribal chairman, claiming he diverted tribal funds for personal use.

Wendy and Phillip responded by bringing in two new adoptees, cigarette manufacturers Phelps of North Carolina and Donald Packingham of New Mexico.

Phillip Del Rosa said the tribe adopted Phelps and Packingham not only to stop Rose from taking over, but also to manufacture cigarettes on the Rancheria and sell them tax-free throughout California. “We felt it would be very lucrative,” he said. The tribe invested $325,000 in a smokeshop in Cloverdale on Highway 101 that went out of business in a matter of months.

The cigarette manufacturing plans fizzled like the dream of a second casino. Packingham was disenrolled in 2012 “for many attempts to overthrow the tribal government,” Wendy Del Rosa said.

Packingham, 61, said he was in law enforcement for 34 years before retiring as undersheriff of Torrance County, N.M., to get into the cigarette-manufacturing business.

“I wanted to help (the tribe) get their cigarette business off the ground, but they’re so greedy all they care about is money,” he said in a phone interview from Albuquerque. “Never did I see a financial statement, never did I know where the money was going. They just did what they wanted.”

Packingham said he complained to the FBI about tribal spending. He said he was told the tribe was a sovereign nation and how it spent gaming money was its business. “When they kicked me out, I didn’t care. I didn’t get anything but heartache.”

As for Phelps, Wendy Del Rosa and Smith said he is still a tribal member.

In an interview from prison in West Virginia, Phelps, 53, said he’s proud to belong to Alturas Rancheria, which still pays him $5,000 a month, plus health care for his wife and two kids. He said his family has been in North Carolina since before the Civil War, and he claimed traces of Cherokee, Apache and Lumbee Indian blood.

“I saw an opportunity where I could help the tribe and the tribe could help me; it looked like a win-win,” he said. In 2009, Phelps said he went abroad on tribal business to bid on a tobacco contract in Iraq and explore a casino project in Vietnam.

In March 2014, Phelps was sentenced to 40 months in prison and ordered to pay $5.1 million in restitution after pleading guilty to federal charges of fraud, making false statements and unlawful financial transactions involving his North Carolina tobacco businesses.

Even though the tribe’s cigarette-manufacturing business never got off the ground, Phillip Del Rosa spoke fondly of Phelps. “I really like Calvin. I still care about Calvin and was very let down when he pleaded guilty,” he said.

Family feud

Pushed and pulled by their adoptees, Wendy and Phillip Del Rosa turned on each other.

In January 2012, they disagreed over Phillip’s plan for the tribe to buy a hotel and trucking company in Medford, Ore. They also clashed over Wendy’s alliance with Smith. Phillip said he wanted Smith fired and felt the former BIA administrator hadn’t been honest about why he left the agency.

Wendy countered that Phillip and Darren Rose wanted to run the tribe without her input, and raised questions about Phillip’s management of the tribe’s finances.

Phelps, who initially sided with Phillip, said he switched his allegiance to Wendy and Wayne Smith after Phillip tried to disenroll him.

In October 2013, Wendy, Phelps and Burrell revoked Phillip’s voting rights, accusing him of embezzlement and theft of $2.5 million. Phillip has never been charged.

When the feud intensified, “there was a tug of war between the Wendy faction and the Rose faction,” Smith said. “Wendy and I went to the casino and removed $85,000 and put it into a tribal account.”

Phillip Del Rosa and Rose allege Wendy and Smith stole the money. They filed a civil suit to get the bank to return it to them. A recent BIA mediation session failed to resolve the conflict.

Meanwhile, the BIA has frozen $200,000 in aid to tribal governments and another $300,000 in health and education funds, and the California Gambling Control Commission has frozen $550,118 in revenue shared from the state’s large gambling tribes.

“It’s a brutal political game to get control of the tribe for their own benefit,” said Phillip Del Rosa, who blames his sister for being “manipulated by Wayne.”

On March 11, U.S. Postal Service Administrative Law Judge Gary E. Shapiro ruled that Rose – an adoptee – is the person entitled to receive the tribe’s mail. He said Wendy Del Rosa, Rose and his daughter Alyssa Rose are members. He offered no opinion on Phillip Del Rosa. He found that nobody else, including Phelps, was a legitimate voting member.

In his 11-page decision, Shapiro described a level of conflict that stands out even among California tribes, which are known for their membership disputes. “The tribe seems incapable of resolving its own membership disputes,” he wrote. Wendy Del Rosa and Smith have appealed.

Looking back, Wendy said she and Phillip made a mistake pinning their hopes for increased wealth on outsiders. The tribe has spent more than $2 million on legal fees. “When Phillip and I took over, we didn’t know what we were doing,” she said. “We should never have adopted anybody into the tribe.”

Call The Bee’s Stephen Magagnini, (916) 321-1072. Phillip Reese and Pete Basofin contributed to this report.

A TANGLED FAMILY

The cast of characters in the saga of the Alturas Rancheria:

Phillip Del Rosa

42, Medford, Ore.

Former Alturas leader; home builder

Relation to tribe: Grandson of original tribe member Violet Del Rosa

Wendy Del Rosa

41, Susanville

Former Alturas board member; worked as a prison pharmacy technician

Relation to tribe: Granddaughter of Violet

Paul Del Rosa

Deceased

Relation to tribe: Son of Violet Del Rosa; started the Desert Rose Casino; died in an auto accident in 2009.

Violet Del Rosa

Deceased

Relation to tribe: Daughter of original tribe member Judy “Babe” Allen; mother of Phillip and Wendy; died in an auto accident.

Darren Rose

42, Redding

Member of the tribe’s board; owner of Burning Arrow smoke shops

Relation to tribe: Adopted into the tribe in 2003 for a stake in his plan to build a casino on land he possessed in Yreka.

Joseph Burrell

44, Alturas

Relation to tribe: First cousins of the Del Rosas; became member and representative of the tribe in the ’90s.

Jennifer Chrisman

40, Mountlake Terrace, Wash.

Relation to tribe: First cousins of the Del Rosas; became a member and representative of the tribe in the ’90s.

Calvin Phelps

53, Mocksville, N.C.

Federal inmate; former cigarette maker

Relation to tribe: Adopted, along with Donald Packingham, as members in 2008 to help Phillip keep control on the tribe’s leadership and to manufacture cigarettes on the rancheria; serving federal sentence for unrelated fraud in Welch, W.Va., but still a tribe member receiving monthly payments.

Wayne Smith

Former Bureau of Indian Affairs official

Relation to tribe: Consultant hired by Wendy Del Rosa in 2004 to help fast-track Darren Rose’s casino plan near Yreka.

Sources: Bee research, Nexis, Bureau of Indian Affairs, Modoc Record

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