In a court filing responding to an Osage Nation Gaming Enterprise Board appeal challenging the tribal Gaming Commission’s power to censure board members, the regulatory agency says that enterprise board members are not required to maintain gaming licenses while they remain in office – but only to obtain a license prior to being confirmed by the tribal Congress.
The argument was one of several aimed at refuting a variety of appellate claims by the Gaming Enterprise Board, whose members – two past and three present – were individually fined $1,000 to $5,000 for balking at the release of information regarding the contract and severance package for former Osage Casinos Chief Executive Byron Bighorse after his resignation in early December.
Bighorse’s resignation came on the heels of the public release of more than 1,500 pages of documents concerning his expenses, which showed he had spent just under $400,000 on dining, bar, golf, clothing and other items in roughly three years ending in September 2021.
The revelations caused a brouhaha, the flames of it fanned by the fact that he is the son-in-law of Principal Chief Geoffrey Standing Bear. The flames were fanned higher when it was revealed that the Gaming Board had given him a severance package that netted him about $600,000 after taxes.
The Enterprise Board members did ultimately produce all of the documents that the Gaming Commission demanded but did so past the deadlines set by the Commission.
No hearing has been set yet in the Osage Nation Trial Court for the appeal.
Get a license, lose a license, stay on board?
Among other arguments, the Enterprise Board, ONGEB, had argued that the regulatory Commission, ONGC, had effectively encroached upon the power of Congress, which has the sole right to remove board members from office. If the ONGC has the power to revoke a gaming license, the board’s attorney argued, it is wielding the power to remove in defiance of the law set forth in the Osage Constitution.
Not so fast, responded the ONGC’s attorney, Eugene Bertman: “Nothing in the law requires the [board] member to maintain the license to remain on the ONGEB,” Bertman wrote in the response filed in May. “They simply need to at the time of appointment apply and qualify for a license. They further then need to be issued a license [before Congress can confirm their appointment].
“However, just because the ONGC imposes a penalty on a license (sic) does not mean that person is automatically removed from the ONGEB. The power of removal is reserved to Congress … Thus, under the law, an ONGEB member could not currently possess a license but still be a member of the ONGEB.”
The Commission also attacked the other claims made by the Enterprise Board, including the allegations that:
- The Gaming Commissioners and their attorney flipped their roles from prosecutors during the investigation then became the judges when the case was heard in early March;
- The Commission failed to issue a show-cause notice to the accused board members describing their alleged violation of gaming laws and how they could cure it;
- The Commission failed to follow its own rules that purportedly dictated the alleged breach was cured before the hearing in March so any punishment should be dropped, and;
- The varied fines were arbitrary, ranging from $1,000 apiece for longtime board members Mark Simms and Julie Malone who resigned before the March hearing date to $5,000 for Chairman Geoff Hager and $2,500 apiece for new board members Claudette Carnett and Bruce Pollock. Carnett and Pollock were appointed to the ONGEB in the spring of 2022, more than six months after Bighorse’s spending came to light and ceased – but several months before the information became public in December 2022 and the ensuing loggerheads with the ONGC that is ongoing.
In its response, the Commission alleges that the Gaming Enterprise Board members “do not dispute that they interfered with an investigation of the ONGC” and sums up the Enterprise’s arguments as saying that:
- The Enterprise Board members are beyond the regulatory authority of the Commission;
- That despite violating the law they claim to be excused for that transgression because they ultimately cured it by producing the documents past deadline; and
- That the Enterprise Board is essentially asking to have “the entire regulatory scheme declared unconstitutional, or, at the very least, have the fines declared arbitrary or capricious, despite the fact that the regulations have been in place for over twenty years, were approved by the National Indian Gaming Commission, are allowed under the constraints of regulatory law and the fines were within that statutory authority.”
Cautioning the court not to overstep
Attorney Bertman was dismissive in his response. “The members of the ONGEB are not a superboard beyond the powers of regulation,” he wrote. “More to the point, they violated the law and are required to face the penalty. The punishment given was commensurate with culpability of each member in light of the overall facts of the case.”
Bertman begins his response in earnest with a caution, quoting a law that says the trial court “shall give proper deference to the administrative expertise of the Commission,” and that the court cannot modify of remand any decision by the Commission unless it finds it arbitrary and capricious, unsupported by evidence, or contrary to law.”
He moves on to address the statements of facts as put forth by the Gaming Enterprise through its attorney, Greg Laird, who was cast into the case at the last minute after the former lawyer, Graydon Dean Luthey, resigned.
Bertman argues the Gaming Commissioners – Gary Weyl, Marsha Harlan and Tammy Baldauff – never acted as prosecutors but only as commissioners who, by law, are required to approve the filing of any licensing action. The licensing actions against the five board members were taken only after Commission Director Elizabeth Hembree was told by former attorney Luthey and current casinos CEO Kim Pearson that the commissioners were not ever going to produce the requested documents. (After changing attorneys, the board did produce the documents.)
Bertman also attacks the Enterprise Board’s appeal for assuming that this case was unique and marked the first time the commission brought in a special prosecutor on a licensing action.
“At times, Eugene Bertman has assisted the commission director during licensing actions, but in those instances, he has not also provided legal support for the commissioners in the adjudication those actions (sic). Thus, the assumptions by appellants are not based upon actual knowledge but a guess.”
Even if it were true, Bertman adds, the U.S. Supreme Court held 50 years ago that “the combination of investigative and adjudicative functions does not, without more, constitute a due process violation.”
Different people, different punishment
The suggestion that someone can violate a gaming law then cure it without facing any punishment except in the case of a criminal action is also off base in this case, Bertman wrote. On Dec. 2, 2022, the board members all refused to provide information and objected to the request from the commission, Bertman wrote. On Dec. 20, they were given a chance to cure the breach by Jan. 6, 2023, to respond but Hembree repeated that their attorney was adamant that they would not produce the requested information – at which point the licensing action was taken.
As for the Gaming Enterprise board’s complaint that the fines levied against them were arbitrary in light of the fact that all five acted as a board, not individuals, and that the evidence against all five was the same, Bertman also found fault.
“… Geoff Hagar (sic) is the Chair of the ONGEB, Claudette Carnett and Bruce Pollock are currently members of the ONGEB, and Mark Simms and Julie Malone are no longer members of the ONGEB. Thus, all factors are not the same,” Bertman wrote.
Privately, some observers have taken aim at that very issue: That it appeared because Simms and Malone resigned amid the investigation and licensing actions, the Commission granted them greater lenience because they’d already paid a price for their alleged transgression.
Simms was the longtime chairman of the Gaming Enterprise and Malone – who was the 83rd person ever licensed by the Gaming Commission – had sat on the board for five years and had much casino experience before she was appointed to it.
When she resigned in February, Malone was quite pointed in her criticism of the Osage Congress’ Commerce, Gaming and Land Committee, which has led its own investigation of the Gaming Enterprise and Bighorse’s expenses. It was the congressional committee that voted to release the expense records, and which grilled Enterprise Board members and other witnesses at a hearing in February. The day after she was grilled, Malone resigned and issued a letter accusing the Congress of engaging in political spectacle and maligning her service to the Osage Nation. “I refuse to submit to this any longer,” she wrote. “I leave with the knowledge that I served the Osage Nation well, and I hold my head high.”