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ON Gaming Commission fines Gaming Enterprise Board members

Gaming Enterprise Board attorney says he plans to appeal the matter to the ON Trial Court

The Osage Nation Gaming Commission took the unusual step March 15 of issuing personal fines against members of the tribal Gaming Enterprise Board for actions they took in their official roles as board members.

The decision was met with immediate notice from the Gaming Enterprise Board’s attorney, Greg Laird, that the matter would be appealed to the Osage Nation’s trial court and thence to the ON Supreme Court to determine the legality of the commission’s action. The appeal should be filed within 30 days.

The three gaming commissioners ordered Gaming Enterprise Chair Geoff Hager to pay $5,000, his board colleagues Claudette Carnett and Bruce Pollock each to pay $2,500 and the board members who resigned, Mark Simms and Julie Malone, each to pay $1,000, presumably because they have already paid some penance by resigning as the commission investigated expense spending by the casinos’ former Chief Executive, Byron Bighorse, who resigned in December after his expense reports were released to the public by the Osage Nation Congress.

The gaming board members have insisted that from a legal standpoint, they have always acted as a board, not individuals, and that they had always acted on advice of their former lawyer, Dean Luthey, who counseled them not to comply with Commission orders to produce documents that were legally protected by non-disclosure and other agreements.

Luthey also checked out and resigned from his casino work, and the Gaming Enterprise has since hired a new lawyer, Greg Laird, who ultimately advised the board to produce the documents concerning Bighorse’s compensation and severance packages, and other matters.

It is unusual for members of any corporate board of directors to be held personally liable for their actions unless they individually engaged in fraud, theft, sought personal gain, acted recklessly or performed other legal torts – even if they act in a way that is clearly wrongheaded. For instance, in Florida a member of a condominium board of directors could not be held personally liable for failing to renew a fire insurance contract even though he was clearly negligent in his actions.

Caught between a rock and hard place

In legal briefs filed in the case, Laird argued that Victoria Holland, the prosecutor hired by the gaming commission to make the case against the enterprise board members, misinterpreted Osage law by stating that “even if an entire department decided to defy [ONGC] lawful requests the individuals in that department would be subject to licensing action petitions, regardless if the department voted as a group to defy such lawful request.”

Laird wrote that Holland’s position was “extreme” and that sovereign immunity does extend to individuals acting in their official capacity as a board.

Laird posited his own extreme example: If the principal chief of Osage Nation or the Osage Nation Congress decided to buck an order from the gaming commission, those individuals could have their licenses revoked simply because they were acting within their authority as Osage Nation officials. (In reality, the chief and members of Congress are not licensed by the Gaming Commission, but Laird is speaking theoretically.)

“[T]he ONGC as prosecutor, judge and executioner could have the individual congressmembers licenses revoked without them having a claim of sovereign immunity,” Laird wrote. “Is this truly the precedent the ONCG wants to set?”

Laird elaborated that the gaming enterprise board was caught in a Wewoka Switch: The Gaming Commission made demands upon the board for documents to which the board members as individuals would have no access, but for which they are being punished as individuals.

“Thus, either (A) the Respondents failed to do something as individuals that they were completely incapable to accomplishing as individuals, or (B) they were acting in the scope of their duties and authority when they did not provide the documents in a timely manner.” No individual, he added, should be personally punished for failing to perform a task that they are incapable of legally performing. Likewise, if the Gaming Commission believes that the enterprise board members were acting within the scope of their duties, then sovereign immunity applies. Laird wrote: Either way, the cases against the individual commissioners should be dropped.

He also noted that the gaming board members had ultimately produced all of the requested documents, which constitutes a “cure” for the breach of which they were accused under Osage gaming rules and regulations.

Commission prosecutor: Board members are individually licensed and they violated the rules of cooperation

In her legal retort to Laird, the Gaming Commission’s prosecutor, Holland, acknowledged that the targeted individuals are clearly Gaming Enterprise Board members, but added that due to that position they are individually licensed by the commission as primary management officials.

“Licensees are required to abide by reasonable conditions imposed by the Commission,” Holland wrote. “Whether or not they acted in concert in these actions is immaterial to their individual violations of the condition of their license. As such, these individuals would be subject to the same conditions regardless of their position.

“For example, if there was an employee of the Osage Casino who failed to provide information as lawfully requested by the GC then that individual employee would be subject to a Licensing Action Petition since they individually hold a license. Further, even if an entire department decided to defy GC lawful requests the individuals that were in that department would be subject to Licensing Action Petitions, regardless if the department voted as a group to defy such lawful request. Board members should not be entitled to specialized treatment that an employee would not also receive.”

Holland also wrote that the Enterprise Board members were acting outside the scope of their duties and authority when they balked at producing the documents the Gaming Commission demanded.

“There is no question that had these individuals acted within the scope of their duties and authority, they would be cloaked with the protection of sovereign immunity,” Holland wrote. “However, they were not acting within the scope of their duties and authority.”

The reason, she proffered: Osage law directs them to oversee the gaming enterprise in compliance “with all applicable laws of the Osage Nation and the United States” that include a provision that they must respond promptly to any request from the Commission.

It follows, she wrote, “that hindering the GC from fulfilling [its] duties, as is the case with the individuals refusing to provide information to the GC, is a violation of Osage Nation law.”

In sum, she said: “This matter ultimately concerns the failure of the individuals to provide reports required by the GC, and a plain reading [of the laws] would show that this failure is a direct violation of their reporting requirements, which falls outside of the scope of their duties and authority, excluding them from the protection of sovereign immunity.”

Separation of powers is not an issue, says commission

Holland also took aim at Laird’s argument that the Gaming Commission was violating the separation of powers clause in the Osage Constitution, usurping the role of Congress, which has the sole power to remove appointed officials like those on the Gaming Enterprise board.

“[It] is the role, and the duty, of the GC to issue licenses, limit, imposing conditions, suspend, or restrict any license or permit, approve licenses or permits, and to approve an imposition of a fine upon any person licensed or permitted for any cause deemed reasonable by the Commission, Holland wrote. “While there might be collateral consequences for actions taken on a license, the GC is only concerned with the license, not those collateral consequences …

“The Osage Nation legislature knew what it was doing in subjecting the Board to licensure by the GC. The legislature did not vest the GC with removal power, and therefore, the GC is not overstepping by fulfilling its duties as specified [by law]. This is not a matter of separation of powers, this is a matter of checks and balances. “

In his reply to the Gaming Commission and Holland, Laird saved some pointed remarks for a footnote. He noted that the gaming commissioners – Gary Weyl, Marsha Harlan and Tammy Baldauff – are the three people who decide to bring actions against licenses, and thereafter become judges during licensing hearings. Because of an alleged “conflict of interest,” the commissioners then hire a separate lawyer to prosecute the claim on their behalf, “which someone cleans their hands of any conflict perceived or actual,” Laird wrote.

“This scenario, where the same individuals are the original prosecutors … then the judges … is a clear violation of due process under any standards in western democracy.”

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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