Peoria Tribe Unable to Impose $2M Fine on Casino Management Firm

Posted on: August 7, 2023, 08:16h. 

Last updated on: August 7, 2023, 08:16h.

The Peoria tribe of Oklahoma’s gaming commission has been denied the ability to fine a casino management company $2 million for “unjust enrichment,” as ruled by a judge.

The Buffalo Run Casino & Resort in Miami, OK. But fining its former management company $2M is not OK, says judge. (Image: Peoria)
The Buffalo Run Casino & Resort in Miami, OK. But fining its former management company $2M is not OK, says judge. (Image: Peoria)

Pottawatomie County District Judge John Canavan concluded that the gaming commission lacked the authority to fine Direct Enterprise Development LLC (DED), the management team behind the tribe’s Buffalo Run Casino & Resort in Miami, OK, according to a report by Tulsa World.

The tribe filed a lawsuit in 2019 against David Qualls and Tony Holden, co-owners of DED, alleging that they had improperly received over $2 million in management fees through an accounting process inconsistent with GAAP (generally accepted accounting processes).

Violation of IGRA

The tribe’s lawsuit followed a reprimand from the National Indian Gaming Commission (NIGC) for allegedly violating the Indian Gaming Regulation Act (IGRA). The tribe had operated under an unapproved amendment to its management agreement with DED without federal approval, according to the NIGC.

Under IGRA, net gaming revenue can only be used for specific purposes such as tribal government funding, economic development, welfare of tribal members, and charitable contributions. Consequently, issues surrounding commercial management companies running tribal casinos are complex.

According to the NIGC, the casino regularly made payments to DED principals in a manner inconsistent with the terms of the management agreement.

The tribe blamed DED and initiated a civil suit against Qualls and Holden, accusing them of embezzlement, unjust enrichment, and deceit.

The lawsuit claimed that the tribe was unaware of the violations until it received notice from the NIGC in 2017.

Lack of Calculation

However, the judge dismissed all eight claims against Qualls and Holden and ruled that the fine had not been authorized by tribal ordinance or the commission’s bylaws. This is because neither document specified the potential fine amount or a method of calculation, which is required by federal, state, or tribal constitutions.

Due to the failure to specify the amount of potential fines or a method of calculation, the Peoria Tribe Gaming Commission lacked the jurisdiction to issue any fine against either defendant. The unauthorized fines the plaintiff seeks to collect in this action therefore violate due process, continued Canavan.

Holden expressed to Tulsa World that the litigation has caused severe personal loss.

“I’ve lost everything I own. Everything. Home. Marriage. Every dollar. And there’s no recourse because they have sovereign immunity,” he said.

A lawyer representing the Peoria tribe, Mike McBride III, stated that the tribe believes the case was wrongly decided and intends to appeal.

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