Managers of Indian Casino Are Indicted

The managers of the casino on the Morongo Indian Reservation near Palm Springs were indicted Wednesday for allegedly operating illegal slot machines--and skimming millions of dollars from the Morongo tribe in the process.

In a 24-count indictment that provides a rare glimpse at the profitability of the electronic gambling machines increasingly popular in California’s Indian casinos, a federal grand jury in Los Angeles said 140 such devices at the Morongo reservation had generated more than $10 million in revenue in the last year.

Federal prosecutors termed the indictment part of an “extensive and ongoing” investigation, suggesting that they could be examining the use of slot-type machines at other California Indian communities. Such a move has long been urged by state law enforcement officials, who have been frustrated in their attempts to limit the scope of Indian gambling.

Although Wednesday’s indictment does not spell out how much the tribe received, it alleges that the outside management firm, E.C. Investments Inc., fraudulently set up an intermediary firm to lease the machines to the Indians--and in effect paid itself an extra $3.3 million over the last 15 months.

“This is a lot of money,” said Assistant U.S. Atty. Jonathan Shapiro of the Los Angeles-based Organized Crime Strike Force, which sought the indictment. “How much the Indians got, we’re still trying to determine.”

Indicted along with E.C. Investments, also known as Great Western Casinos Inc., were its president, Ira Englander, 66, of Los Angeles, who manages the casino along Interstate 10, and three others: Gyorgy Hargitai, 46, of Budapest, Hungary, the owner of ECI; William C. Armstrong, 43, of Pompano Beach, Fla., described as a consultant to the firm, and Roger Keesee, 56, of Atlanta, also a consultant.

The charges--including illegal gambling, money laundering and interstate travel in aid of racketeering--carry a potential sentence of 20 years in federal prison for each defendant.

No tribe members were named in the indictment.

“Tribal members have cooperated (with) and assisted the FBI and U.S. attorney’s office,” said Morongo’s lawyer, George Forman of Berkeley. Forman defended the use of video gambling machines but said “if the (other) allegations were true, the tribe would feel betrayed by the company.”

Attorneys for the defendants said they had not been arrested but that they agreed to surrender for their arraignment Monday in federal court in Los Angeles.

Santa Monica lawyer Richard P. Crane Jr., who represents the management company and Englander, said his clients were “outraged at this high-handed action by the United States. Within less than a week after the President . . . issued strong statements in support of Indian gaming (at a conference with tribal leaders in Washington) . . . my clients are being made a test case in a battle of wills between the United States and the state of California over who will establish guidelines . . . regarding the tribes’ use of gaming machines.”

“My clients committed no crime,” Crane said.

The indictment alleges that ECI brought in “illegal gambling devices”--namely video keno, poker and “Pot-O-Gold” machines--after taking over management of what was merely a card room and bingo hall on the Morongo reservation in March, 1992.

Even before that, other California tribes had quietly installed similar machines, prompting state Atty. Gen. Dan Lungren to call for a crackdown on the use of slots on Indian land in 1991. But after sheriff’s departments in several areas, including San Diego County, followed his advice and staged raids, a judge ruled that only federal authorities have jurisdiction over Indian gambling.

That decision was appealed and the legality of such machines in California is being contested in several drawn-out legal cases. In one, about 20 tribes are seeking to force the state to negotiate gambling “compacts” that would allow them to offer fast-paced video wagering machines, which the tribes maintain are not much different than the technology used in the state’s own lottery games.

Federal prosecutors have generally been reluctant to take action against the approximately dozen California reservations that continue to use the machines--in part because of the political sensitivity of legal actions against Native Americans.

Indian gambling experts said it was not by chance that Wednesday’s indictment alleged not merely that the machines were illegal, but that the non-Indian managers may have been cheating the tribe.

“I don’t think there would be any indictment without the alleged (mis)conduct,” said Sacramento attorney Howard Dickstein, who represents several California tribes. “There were no tribes or Indian people indicted, which I’m sure is not coincidental. . . . What triggered this is that part of the indictment that alleges that the manager was stealing from the tribe . . . not simply the use of disputed gambling devices, which are the subject of litigation.”