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Gaming Commission files petition against Osage Casinos CEO and attorney

The petition further recommends the Osage Casinos CEO be banned and fined up to $25,000

The relationship between the Osage Nation Gaming Commission, the tribal casinos and the Gaming Enterprise Board has reached a boiling point, with the commission threatening not only to strip the casinos’ chief executive of her license and fine her – but also to bar the gaming enterprise’s lawyer from continuing in that position.

In a petition filed Friday, July 7, Gaming Commission Director Elizabeth Hembree recommended stripping Osage Casinos CEO Kimberly Pearson of her license, fining her up to $25,000, permanently banning her and Gaming Enterprise attorney Greg Laird from the casinos and ordering the gaming enterprise not to contract with either of them.

The reason for the stunning recommendations: Laird and Pearson asked the Gaming Commission to submit questions related to an audit of employee credit card usage in writing rather than by unscheduled telephone interviews that, according to documents obtained by the Osage News, were unnerving employees and creating a “hostile work environment.”

When that suggestion was rejected, they asked the Commission, rather than interview by ambush, at least schedule interviews so employees could have a witness present. That suggestion was also rejected.

Principal Chief Geoffrey Standing Bear, who has stayed mum on the controversies about executive expenses that have rocked the casinos for the past 18 months, broke his silence to comment on the petition Hembree filed.

“I’ve been involved in Indian gaming since 1984 as a tribal attorney and I’ve worked with gaming commissions and as counsel for the Oklahoma Indian Gaming Commission – and I have never seen a gaming commission interfere with attorney-client relations in a petition,” Standing Bear said.

“I’ve never seen an administrative body interfere like this.

“It’s a miscarriage of justice should this go through, in my opinion. The Gaming Commission and its director, Elizabeth Hembree, are going after legal counsel on the other side of the case. This is an attack to take him out. That’s how this reads.

“We’re acting like some of the tribes I’ve seen before that self-destruct when everything is going well. And I’m just talking about this petition.”

Elizabeth Hembree, Osage Nation Gaming Commissioner. Courtesy Photo/LinkedIn

The petition

The dispute stems from the Gaming Commission’s investigation of expense spending by casino executives that wound up centering on former CEO Byron Bighorse, the chief’s son-in-law who spent about $400,000 on his company credit card at golf and country clubs in just under three years on dining, drinks, golf, clothing and other items that many deemed exorbitant and for which he offered little back-up documentation. Bighorse resigned in December 2022, after which Pearson took over the leadership of the casinos.
After the brouhaha over Bighorse, the Gaming Commission expanded that investigation to look at credit card and country club spending by other casino employees.

In her petition, Hembree wrote that on May 20, she informed the Gaming Enterprise Board, Pearson and Laird that the audit was wrapping up.

Quoting her own memo to those parties, she wrote: “THE ONGC is finalizing the credit card and country audit review [sic]. In the next week, we will continue to review documentation with procedures we have developed in order to provide a narrative. We will begin inquiries with selected cardholders. I, along with other ONCG Auditors, will be reaching out to various cardholders to answer some questions and concerns that have come to our attention regarding the credit card and country club membership documentation.”

Twelve days later, on June 1, the petition says that she and other auditors had “deemed it necessary to interview certain employees” but makes no mention of letting the Gaming Enterprise Board, Pearson or Laird know about that decision. The same day, Hembree wrote in the petition, she and another auditor contacted five casino employees: Tulsa General Manager Jeffry Bailey, Director of Security and Surveillance James Redcorn, Chief Information Officer Joe Roybal, Purchasing Manager Stephanie Parker and Acting Director of Compliance Ashlee Hartness.

“These employees stated that he [sic] was not authorized to be interviewed by ONGC Staff,” Hembree wrote in the petition. “They advised that the direction came from an email from the CEO, Kimberly Pearson.”

Shortly thereafter, Hembree wrote, Laird sent her an email with a reminder: “As stated previously, all communications regarding this review need to go through me. Please send written questions you have for any current employees to me, and I will get responses as quickly as possible.”

The Gaming Commission’s lawyer, Eugene Bertman, responded: “We appreciate your position, but that is inconsistent with the law. We will be proceeding with the audit and interviews. Ms. Hembree’s e-mail [sic] was just a courtesy.”

Laird lobbed back: “I appreciate your position as well, however your past interpretation of certain laws has been suspect at best. Please provide me with citation to the ‘law’ to which you are referring.”

Laird also sent an email to Hembree around the same time: “Please stop calling casino employees and threatening to take their gaming licenses if they don’t speak to you. You are creating a hostile work environment. I am happy to schedule meetings with out and any current employees next week. Or email me written questions and we will provide answers.”

Hembree responded: “I have not threatened anyone at any time. I have had a witness on every call, Sr. Auditor Lori Cochrane. She will verify that at NO time have I mentioned a gaming license.

“I must continue to make my calls.”

Commission attorney Bertman then weighed in with another email to Laird, telling him to cease sending Hembree emails and instead deal with him directly. He chided Laird for placing “roadblocks to prevent the Commission from performing its investigative functions.”

“We are no longer willing to bend to your limitations,” Bertman wrote. “If licensees do not wish to cooperate with the Commission staff, it will be noted and included in the investigation results.”

Notwithstanding that warning, Hembree wrote the employees continued to refuse to be interviewed. Two weeks after the June 1 flurry of emails, Hembree asked Pearson about her memo to casino staff. Pearson confirmed that she had indeed, on legal advice, sent a memo directing employees targeted by the Gaming Commission credit-card audit to ask investigators for questions in writing, questions that she would forward to Laird for review.

Hembree’s petition sums up that Pearson and Laird both refused to comply with Osage gaming law, that there was “no good faith basis for the advice provided by Mr. Laird, the position taken by CEO Pearson, or the position taken on ONGE.”

As an aside but without citing a source, Hembree wrote that any casino employee who violated Pearson’s directive was subject to disciplinary action, including possible termination.

Hembree declined comment for this article.

Eugene Bertman, Gaming Commission attorney. Courtesy Photo/LinkedIn

In late May: A change of attitude

The idea that Hembree and other auditors should have unfettered access to quiz employees developed at the very end of May or beginning of June.

An email string between Hembree, Osage Casinos Chief Financial Officer Tim Steinke and Controller Laban Miles between May 24 and May 25 shows that at that time Hembree agreed that she needed to be communicating through Laird as her point of contact. On May 24, she sent an email to Steinke asking for the “approval hierarchy” for employees who reported under two accounting and inventory systems, noting that “We are finalizing the credit card review for 2019-2021 and need this information to close.

Steinke forwarded that email to controller Miles and another casino financial officer with the note, “Guys, What can we provide her?”

Miles wrote back directly to Hembree to say he was about to embark on an a largely off-the-grid vacation but that he needed a list of names of the people whose approvals he needed to pull for her.

Hembree replied with an “oops” email the next day, May 25: “Dear Laban and Tim: Thank you for your response. I will send you the requested information. I just realized that I must send the request through your attorney Greg Laird. I will resend the request and include the names I have so far.”

In an earlier email to Laird in March, Hembree wrote that she hoped to start the credit card audit at the casinos’ Central Services offices in early April and asked him to which room credit card records would be delivered, if the space would be large enough for six auditors, and if the space would be locked. She also asked: “Who is the individual that would be our point of contact for additional questions and comments as the audit processes.

Laird responded to the questions, wrapping up with: “I will be the point of contact. In case you don’t have it, my cell number is 405-***-**** [number redacted].”

Kimberly Pearson, Osage Casinos CEO. Courtesy Photo/Osage Casinos

Pearson: Written questions and answers are standard in audits

In a prepared statement issued July 11, Pearson said that her priority has always been and remains the financial success and regulatory integrity of the Osage Casinos operation.

“I respected the role and process of the Osage Nation Gaming Commission and I never interfered in their audit whatsoever,” she said. “There was an agreed-upon procedure established between the Osage Nation Gaming Enterprise and the Osage Nation Gaming Commission. I merely forwarded our attorney’s request to inform all employees that upon advice of legal counsel ONGC requests [should] be submitted in writing for clarification of what information was needed and to establish our responses. These are generally accepted audit standards and procedures.

“Furthermore, I have dedicated 15 years of service to our Nation and as a tribal member I continuously seek to engage in actions that move our Nation forward for a positive and sustainable future.

“I have always worked in partnership with the commission and will continue to do so.”

ON Gaming Enterprise Board attorney Greg Laird. Courtesy Photo/CAIR Oklahoma

Laird: Commission actions are unprecedented and irresponsible

Laird said that early on in the credit-card audit, the Gaming Commission and Gaming Enterprise Board agreed to limit the costs of the audit in part by making Laird the contact person for the Gaming Commission.

He said Hembree acknowledged the agreement several times until doing an about-face on May 30, when she emailed Laird and others that Gaming Commission employees would be calling casino employees.

Laird responded by reminding her of the agreement, and he said that Pearson merely passed on his advice that it was in “everyone’s best interest that all questions be answered in writing, rather than on phone calls with no evidence of what was said.

“At no time did CEO Pearson tell any employee not to participate in the audit or not to answer the ONGC questions.” Laird said in a prepared statement. “She merely relayed Mr. Laird’s position that it would be best to follow the agreement reached between the ONGC and the ONGEB that all communications relative to the audit would go through Mr. Laird.”

Laird also said that he was further driven to ask for written communication because of his past encounters with Hembree.

“Ms. Hembree has a history of either remembering things wrong or misstating facts altogether, so I wanted everything to be in writing,” Laird said. “I believe that anyone would agree that written responses are always the best evidence so that there is no question what was asked and answered.”

Laird said the commission responded by saying it would no longer abide by the agreement and would do as it pleased: “Thereafter, Ms. Hembree began making phone calls to casino employees and, on at least one occasion, threatened to suspend individuals’ gaming licenses if they did not answer.”

Commission actions fly in the face of legal norms

Laird added the actions of the Gaming Commission are unprecedented and out of line.

“Filing an action against CEO Pearson for merely forwarding legal advice from the casino attorney to employees, advice that simply asked the employees to follow the terms of the agreement, in itself is unprecedented and irresponsible,” he said.

Laird also took umbrage at the Commission filing against him because he tried to make it adhere to the agreement they had ironed out months earlier.

“Their decision flies in the face of all norms of any legal system,” Laird said. “If this is allowed to continue, the Nation will not be able to obtain lawyers to assist on any level for fear of being fined or terminated by the Commission.

“Not once in my 25 years of practicing law has a body attempted to sanction me for simply doing my job.”

Geoff Hager, ON Gaming Enterprise Board Chairman. Courtesy Photo/Osage Casinos

Hager: Casinos were not only cooperating but making the process efficient

The petition gobsmacked Geoff Hager, the chairman of the Gaming Enterprise Board – which has been engaged in a legal battle with the Gaming Commission over a series of fines it levied against him and other board members for a tardy response to a demand for records about Bighorse’s employment and severance package.

(That case is creeping along in tribal court; most recently Laird’s response to a filing by the Commission accuses the Commission of making false statements, and assuming a wide variety of facts never introduced into evidence (including such basics as establishing that Hager is the Gaming Enterprise Board chairman, that Mark Simms and Julie Malone had resigned from the same board, and relying wrongly on the assumption that the gaming enterprise would never produce the requested Bighorse documents – documents that were, in fact, produced, albeit a few weeks past the deadline the Commission had set.)

The petition against Pearson and Laird was a shocker, Hager said, because the Gaming Enterprise and its board believed they were not only cooperating but were streamlining communication to be more efficient, more responsive and to avoid disrupting the day-to-day operations of the casinos.

“We (ONGE) have been working diligently to comply with the ONGC requests, but the methods deployed by the ONGC have become increasingly hostile and unreasonable,” Hager said. “We have offered to set up employee meetings for interviews, whether by phone or in person, and these requests have been ignored.

“We have set up rooms on-site for required information to be delivered.

“In the end, what started as seemingly simple requests for information, has now evolved into aggressive employee interviews, where the Commission has a witness during every call, but the Enterprise employee is called at an unscheduled time, making it near impossible to have a witness. We have been told by employees that licensing action has been threatened by the ONGC if they didn’t take the interview, which was denied by the ONGC.”

Added Hager: “Then in an about-face, the Commission sends a petition against our new CEO, Kimberly Pearson, who has faithfully and diligently served Osage Casinos for 15 years, recommending licensing action and/or a $25,000 fine for simply directing employees to defer unscheduled interviews to legal counsel for proper scheduling so that the Enterprise can set up meetings with a witness or to obtain questions in writing.

“The Commission has lost credibility with these unreasonable and hostile tactics which are injuring the Enterprise and lowering employee morale. Our legal counsel communicated our desire to utilize a single point of contact to ensure proper transfer of information from the Enterprise to the Commission without disrupting operations. The Commission has now responded by filing the petition against him also.

“We are at a loss at this point. The Commission has gone off the rails.”

Chief Standing Bear was matter-of-fact when asked if the tumult could harm the Gaming Enterprise.

“We went through Covid,” he said: “We can get through this.”

Author

  • Louise Red Corn

    Title: Reporter

    Email: louise.redcorn@osagenation-nsn.gov

    Twitter: @louiseredcorn

    Languages: English, Italian, rusty but revivable Russian

    Louise Red Corn has been a news reporter for 34 years and a photographer for even longer. She grew up in Northern California, the youngest child of two lawyers, her father a Pearl Harbor survivor who later became a state judge and her mother a San Francisco native who taught law at the University of California at Davis.

    After graduating from the U.C. Berkley with a degree in Slavic Languages and Literatures with no small amount of coursework in Microbiology, she moved to Rome, Italy, where she worked as a photographer and wordsmith for the United Nation’s International Fund for Agricultural Development, specializing in the French-speaking countries of Africa.

    When the radioactive cloud from Chernobyl parked over Rome in 1986, she escaped to New York City to work for the international editions of Time Magazine. She left Time for Knight-Ridder newspapers in Biloxi, Miss., Detroit and Lexington, Ky., During nearly 20 years with Knight-Ridder, she was a stringer (freelancer) for The New York Times, The Wall Street Journal and Parade Magazine.

    In 2004, she married Raymond Red Corn and moved to Oklahoma, where she worked for the Tulsa World before she bought the weekly newspaper in Barnsdall and turned a tired newspaper into the award-winning Bigheart Times, which she sold in 2018. She hired on at the Osage News in early 2022.

    Throughout her career she has won dozens of state, national and international journalism awards.

    Red Corn is comfortable reporting on nearly any topic, the more complex the better, but her first love is covering courts and legal issues. Her proudest accomplishment was helping to exonerate a Tennessee man facing the death penalty after he was wrongfully charged with capital murder in Kentucky, a state he had never visited.

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Louise Red Corn
Louise Red Cornhttps://osagenews.org

Title: Reporter

Email: louise.redcorn@osagenation-nsn.gov

Twitter: @louiseredcorn

Languages: English, Italian, rusty but revivable Russian

Louise Red Corn has been a news reporter for 34 years and a photographer for even longer. She grew up in Northern California, the youngest child of two lawyers, her father a Pearl Harbor survivor who later became a state judge and her mother a San Francisco native who taught law at the University of California at Davis.

After graduating from the U.C. Berkley with a degree in Slavic Languages and Literatures with no small amount of coursework in Microbiology, she moved to Rome, Italy, where she worked as a photographer and wordsmith for the United Nation’s International Fund for Agricultural Development, specializing in the French-speaking countries of Africa.

When the radioactive cloud from Chernobyl parked over Rome in 1986, she escaped to New York City to work for the international editions of Time Magazine. She left Time for Knight-Ridder newspapers in Biloxi, Miss., Detroit and Lexington, Ky., During nearly 20 years with Knight-Ridder, she was a stringer (freelancer) for The New York Times, The Wall Street Journal and Parade Magazine.

In 2004, she married Raymond Red Corn and moved to Oklahoma, where she worked for the Tulsa World before she bought the weekly newspaper in Barnsdall and turned a tired newspaper into the award-winning Bigheart Times, which she sold in 2018. She hired on at the Osage News in early 2022.

Throughout her career she has won dozens of state, national and international journalism awards.

Red Corn is comfortable reporting on nearly any topic, the more complex the better, but her first love is covering courts and legal issues. Her proudest accomplishment was helping to exonerate a Tennessee man facing the death penalty after he was wrongfully charged with capital murder in Kentucky, a state he had never visited.

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