Tribe sues lawyer, 2 others who helped it grow rich on gambling, investments
SACRAMENTO -- They profited together from the rise of tribal gambling in California, but on Tuesday the rift between the Rumsey Band of Wintun Indians and the lawyer who led them out of poverty was laid bare in a lawsuit.
The tribe accuses Howard Dickstein, whom it fired last year after more than two decades, along with former investment consultant Arlen Opper and real estate developer Mark Friedman, of siphoning off tens of millions of dollars of its money from a variety of deals involving gambling, real estate and securities.
The suit contends that Dickstein, one of the state’s most influential Indian law attorneys, also used the tribe’s plane for personal trips to the south of France, Big Sur and Grand Prix events in Monte Carlo and Montreal for which he owes the tribe $1.2 million.
“This lawsuit is about greed and betrayal,” says the document, filed in Yolo County Superior Court.
In its 57 pages, the suit lays out more than a simple tale of a partnership gone bad. It details how the once-poor tribe, which counts just 22 members on federally designated land outside Sacramento, flourished after opening the Cache Creek Indian Bingo and Casino in 1985.
Dickstein negotiated gambling compacts with the state for the Rumsey under three governors.
Over the next 20 years, the tribe, growing ever richer, spent millions of dollars on deal after deal, including new gambling ventures, a hedge fund investment, the lease of an airplane and property it bought -- and in some cases developed -- from California to Illinois. In May 2000, the tribe bought the former Internal Revenue Service building in Sacramento.
The suit says, however, that the tribe and its former chairwoman, Paula Lorenzo, were so naive that Dickstein, Opper, Friedman and others took advantage of their tremendous wealth to line their pockets.
Dickstein, of Sacramento, said in defending himself Tuesday that when he began working for the tribe, it was running a bingo game out of a flimsy structure and had less than $100,000 in the bank.
“When they terminated our services, the tribe had a net worth in excess of a billion dollars and a casino that’s making over $300 million a year,” Dickstein said. “Their return was just phenomenal.”
Dickstein and his firm did well, too, according to the suit, earning $18 million in fees from the tribe between 1993 and 2006, including $3.4 million in 2005.
The suit says Dickstein permitted the tribe to enter into deals on unfavorable terms, in which he sometimes represented other tribes at the same time -- a conflict of interest -- and generally failed to protect the Rumsey.
It also accuses him of paying other clients’ bills from the tribe’s $9-million trust account.
The suit accuses Opper of improperly taking a stake in various tribal investments without putting any money in, of collecting fees for managing investments which he had nothing to do with, and other misappropriations.
Opper declined to comment.
Friedman, who was the tribe’s partner in some of the deals, participated with Opper and Dickstein in schemes that cost the tribe money, including changing the terms after deals had been agreed to with approval from Lorenzo but not other council members, the suit says.
Friedman said he had agreements signed by the tribe for every deal. “Every one of them was extremely profitable,” he said. “Every one of them was absolutely fair on its face and will stand up to scrutiny.”
With the boom in Indian casinos over the last decade, tribes became one of the wealthiest interest groups in California. Dickstein emerged as a powerful force on behalf of the state’s tribes.
His office has been the scene of numerous political fundraisers. In August, he and others in his circle hosted a fundraiser for presidential candidate Sen. Barack Obama (D-Ill.).
Dickstein, who still represents three other tribes, said the Rumsey were not duped, as they contend. He said he did not do anything without their knowledge.
As general counsel, he said, he was not involved in some of the real estate deals. He threatened a countersuit for libel, saying current members of the tribal council were angry at him over personal grudges.
“It’s just an attempt to hurt my reputation,” he said. “It’s very hurtful and disappointing.”
Marshall McKay, who became the Rumsey chairman in 2006 and commissioned a private investigation into the tribe’s finances, said that “the issue isn’t whether Howard Dickstein helped the tribe get where we are today.”
He said the tribe had lost “tens of millions of dollars” in bad business deals.
“When the tribe began to prosper, I feel, and the council feels, that he betrayed our trust,” McKay said.
Among the most egregious of the deals, according to the suit, was a 2001 deal in which Friedman bought West Sacramento land owned by the tribe to avoid tax liability on another property, then leased it back with no benefit to the tribe.
The tribe missed a deadline to buy the land back and lost the property.
Friedman, who also threatened to sue the tribe, said the Rumsey made $10 million off that deal.
And in 2003, Opper invested $3 million in tribal funds, without tribal council approval, into Wood River II LP, a hedge fund that became insolvent, the suit says. The money was lost.
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Times staff writer Dan Morain contributed to this report.
