Maine Indians : Poverty Still Grips Newly Rich Tribes

To get to the Shays’ home, you cross a shaky one-lane bridge over the broad Penobscot River, pass a fake totem pole and a three-story gray wooden tepee with a sign advertising moccasins, wind through a warren of battered wood-frame homes, then knock on the door behind the white Baptist Church.

Madeline Shay, 70, sits in a small, cluttered living room weaving delicate baskets of brown ash and sweet grass. Her husband, Lawrence, watches a color television set. Both wear heavy silver bracelets and chunky turquoise rings. Both are full-blooded Penobscot Indians. And both are confused.

“People think we’re wealthy,” said Shay, a burly, 73-year-old retired construction worker with gravel in his voice and iron in his grip. “They think we’ve got lots of money. Well, it’s not that way at all.”

‘Why Is Everyone Poor?’

“If we’re so rich, why can’t we afford our own home?” added his wife. “If we’re so rich, why is everyone still so poor?”

Many of Maine’s Indians are asking similar questions, nearly five years after Congress agreed to pay the Penobscot and Passamaquoddy tribes $81.5 million in September, 1980, to settle a staggering series of lawsuits in which the two tiny tribes had claimed 12.5 million acres of land--or nearly two-thirds of the entire state. They face an unlikely dilemma today.

Since 1980, the two once powerless and penniless tribes have become high-stakes financial entrepreneurs with growing political and economic clout. Investing their millions across Maine instead of just handing them out on the reservation, the tribes have bought vast tracts of Maine’s timber and blueberry barrens, two profitable radio stations, the largest cement plant in New England, a tape-cassette factory and more. New investment offers, from shopping malls to a slaughterhouse, arrive daily.

Poverty Lingers

But the Penobscots’ and Passamaquoddies’ growing riches across Maine have not solved generations-old problems of poverty at home: Unemployment is chronic, welfare is endemic and housing is critically short for many of the 4,200 tribe members scattered on three rugged and remote reservations in Maine’s “Deep North” woods.

Their future, in large part, lies 150 miles south in downtown Portland at the antique-filled offices of Tribal Assets Management, an investment bank and legal firm created in October, 1983, specifically to manage the tribes’ new-found wealth.

“The goal is to create for the tribes a wealth that is permanent and ongoing and provide jobs and income for generations to come,” said TAM President Daniel A. Zilkha, 42, a meticulously tailored, Egyptian-born art collector and scion of three generations of international bankers.

To meet that goal, TAM helps the tribes use leveraged buy-outs, tax-free Indian bonds and other creative financing methods to buy operating companies away from the reservation. And the tribes’ apparent success in the bewildering world of high finance is drawing increasing attention across the state and the nation.

“It’s a story with a kind of happy ending for all involved,” said Maine Gov. Joseph E. Brennan in Augusta. “‘They’re participating. They’re players at the table. They’re getting in the economic mainstream.”

“It’s a good role model for other tribes,” agreed John Fritz, manager of the Bureau of Indian Affairs and deputy assistant secretary of the Interior in Washington. “Frankly, they’re making more money than one could ever possibly imagine. . . . All of a sudden, we’ve seen the tribes of Maine go from being an adversary of the people of Maine to probably being the biggest capitalists in the state.”

Long-Term Development

Fritz said the Maine tribes are “the first to look beyond the reservation boundaries” for long-term economic development. They will not be the last, according to TAM co-founder Thomas N. Tureen, a dapper, graying, 41-year-old lawyer who led the tribes’ bitter legal battle in the 1970s.

On Aug. 2, Tureen, acting for the Lac du Flambeau band of the Lake Superior Chippewas in northern Wisconsin, completed a $23.7-million leveraged buy-out of the Simpson Electric Co., which makes electrical test equipment. The 2,000-member Chippewa tribe used the future profits of the company, which employs 900 workers in five Midwestern factories, to gain financing from Barclays Bank PLC, UBAF Arab-American Bank and E.F. Hutton Group.

“It’s revolutionary in Indian country,” said Jim Jannetta, Chippewa tribal attorney, of the financing arrangement. “And the potential economic impact, not only for us but the state, is tremendous.”

Tureen said TAM also is representing or negotiating to buy properties or businesses for the Puyallup and Colville tribes in Washington state, the Mescalero Apache in New Mexico, the Navajo, Hulapai and White Mountain Apache in Arizona, the Cherokee in North Carolina and the Pequot tribe in Connecticut.

Opportunity for Tribes

“It’s the only opportunity tribes have to get out of the cycle of dependence and to gain financial independence,” Tureen said. “It’s something every tribe is thinking about.”

But many Maine Indians are thinking about other things as well. They say few Penobscots or Passamaquoddies have gotten jobs at the far-flung investments, and reservation unemployment ranges from 20% to 60%, compared to 7.5 % in nearby white communities.

Welfare, state assistance and food stamp levels actually have increased, tribal officials say. Dissatisfaction appears widespread.

“We’re cash poor,” complained Mary Socoby Yarmal, lieutenant governor of the 800 Passamaquoddies at Pleasant Point, a 100-acre, rocky seaside spit near Maine’s coastal border with Canada. “We haven’t gotten one thing from the investments to help the people.”

More Dependent

“It hasn’t created anything beneficial,” said Dana Mitchell, 43, an unemployed ironworker and one of 1,800 Penobscots at Indian Island, a Penobscot River island about 15 miles north of Bangor. “It’s made us more dependent on handouts and welfare.”

“It’s creating political turmoil on the reservation,” said Ralph Dana, 62, owner of a $2-million trucking and construction company at Pleasant Point, the largest privately owned Indian business in the state. “There’s unrest. The community is not happy at all with what’s going on.”

Allegations of corruption by tribal officials also has hindered progress. A three-year-old federal grand jury closed without indictments last month after FBI agents investigated reports that officials at Pleasant Point had misspent $600,000 in federal housing funds.

Housing has been critically short at Pleasant Point, with three and even four families jammed into some homes, a result of hundreds of Indians returning since the 1980 settlement. But the tribe won approval this month to annex 490 acres from the nearby town of Perry to build 200 new homes, more than doubling the current number. The tribe will pay $350,000 to offset the town’s tax losses, in addition to buying the land.

Positive Signs

There are positive signs on the reservations as well. New schools, tribal offices and community centers have been built on all three reservations. Medical care has improved. The Passamaquoddies have begun joint police and ambulance services with nearby towns, where Indians once were refused haircuts. And attitudes clearly are changing on and off the reservation.

“It’s like a 180-degree turn,” said John Stevens, 52, governor of about 16,000 Passamaquoddies at Indian Township, a 33,000-acre reservation about 40 miles north of Pleasant Point. “Now, they want to cooperate. They’re beginning to treat us like human beings.”

“Before, this community had graduated one person in 25 years from high school,” added Wayne A. Newell, 43, director of health services at Indian Township. “Now, graduation is expected. Now, 40 people are going to college.”

The Passamaquoddies last year published their first dictionary of their traditional oral language and about 160 students now study Passamaquoddy at reservation schools. And the tribe’s annual three-day celebration in August at Pleasant Point drew more than 400 Indians and whites to watch and cheer about 50 buckskin-clad Indians perform traditional wedding, peace pipe and other ceremonial dances.

Traditional Ceremonies

“Back in 1965, there were very few kids willing to put on traditional ceremonies,” said teacher Joseph A. Nicholas, 60, after narrating the haunting “Flight of the Wounded Eagle” dance in English and Passamaquoddy to the thumping of a leather tom-tom. “Now they do it proudly. I’m very hopeful for the future.”

The Indians are gaining political clout as well. The Penobscots’ non-voting state representative, Priscilla Attean, drew surprised gasps in the Legislature in Augusta recently when her pleas fell only six votes short of winning a two-thirds override of Brennan’s veto of a bill allowing high-stakes bingo on the reservation.

“That wouldn’t have happened 10 years ago,” said David Cheever, Brennan’s press secretary. “The governor credits Priscilla almost single-handedly with almost overriding his veto.”

The Indians see sweet irony there. As state attorney general, Brennan first won the statehouse in 1979 riding a reputation as “Indian Fighter Joe,” the state’s chief opponent to the Indians’ labyrinth of lawsuits to reclaim millions of acres of ancestral land taken by whites since the 1700s.

Under the settlement bill signed by President Carter on Dec. 12, 1980, the Bureau of Indian Affairs was given one-third of the $81.5 million to invest in liquid government securities. As a result, each tribe member is paid about $400 a year in dividends. The tribes have invested nearly all the rest, about $54 million, in Maine.

“These tribes have been here essentially forever and plan to be here forever,” Tureen said. “So it makes sense to invest in the region.”

Failed Investments

Not every investment has prospered. The Penobscots spent nearly all their money buying 150,000 acres of timberland only to watch prices plummet, according to Timothy Love, 33, three-term Penobscot governor. He said the tribe’s new $1.5-million ice rink also is losing money, and a telephone-sales operation died at birth.

“But the successes are greater than the failures,” Love said. “I think within the next couple of years is when the payoff will really come.”

The tribe has used the land as collateral for other ventures. A $2.5-million joint enterprise with Maine’s Shape Inc. to build a video- and audio-cassette factory on the reservation will employ about 60, he said.

In addition, the tribe’s Penobscot Guarantee Fund has given loan guarantees to a real estate firm, a hospital management concern, a Portland condominium project and more, all in return for equity. The tribe also plan to manage a high-stakes bingo game for Connecticut’s Pequot Indians and are trying to buy an insurance company, a peat-energy concern and lake-front campgrounds.

‘Lots of Advantages’

“We can do things other people can’t do,” Love added. “We don’t pay property tax. We don’t pay federal income tax. We can borrow money at lower rates. We have a labor force that needs work. So we offer lots of advantages.”

The Passamaquoddies have increased their worth by about 50% since the settlement, Tureen said. Although the tribe also bought 75,000 acres of unprofitable timber, they already have recovered the $2.2 million they spent for the state’s second largest blueberry company, with about 3,500 acres of blueberry fields near Columbia Falls.

The tribe also anticipates revenues of $2 million to $3 million a year from their purchase in March of the region’s largest cluster of cement, lime, pre-mixed concrete and aggregate plants and distribution facilities from the Cianbro Corp. in Pittsfield, saving 200 jobs. They also purchased Rockland radio stations WRKD-AM and WMCM-FM, a local water company, and they have even invested $700,000 in a photocopier distribution center in Los Angeles.

“We’re learning how to work within the system,” said Cliv Dore, 42, governor of the Passamaquoddies at Pleasant Point and the only one of 12 children in his family to finish high school. “It’s part of surviving. Instead of hunting with a bow and arrow, we’re hunting for investments. Different jungle, I guess.”