Court Allows Prosecutions for Indian Slot Machines

An appeals court Tuesday gave a legal go-ahead to federal prosecutions targeting the widespread use of slot machines in California’s Indian casinos.

The 9th Circuit Court of Appeals reinstated criminal charges against the non-Indian managers of the sprawling gambling hall on the Morongo reservation outside Palm Springs--charges dismissed by a lower court in a 1994 decision that derailed an announced crackdown on the thousands of video slot machines openly used in tribal casinos around the state.

Although Indian gambling issues repeatedly have become mired in tangled legal disputes, the three-judge 9th Circuit panel ruled that “the plain language” of the federal Indian Gaming Regulatory Act permitted “the prosecution of large-scale gambling predicated on the use of slot machines.”

Because the ruling is certain to be appealed, it is not likely to generate any immediate onslaught of new criminal cases. But federal and state law enforcement officials nonetheless hailed the decision as a crucial step toward breaking a nearly two-year stalemate on criminal prosecutions stemming from gambling on tribal lands in California.

“It confirms the federal government’s ability and authority to enforce [gambling] statutes everywhere . . . including on Indian reservations,” said Assistant U.S. Atty. Jonathan Shapiro, who has handled the Morongo prosecution.

“In the state of California, slot machines are illegal,” Shapiro added. “[And] someone does have the power to act.”

The appellate ruling comes just as another federal indictment in Los Angeles hints at the money at stake in the tribal casinos. A member of the Morongo Tribal Council, Clive “Sonny” Miller, is charged with bankruptcy fraud for allegedly concealing vast amounts of income after filing for bankruptcy--allegedly including $700,000 he got over two years from the company operating the tribe’s casino along Interstate 10.

Miller, who is scheduled for arraignment March 11, could not be reached for comment. But another Morongo official said the tribe fears any cutback in gambling because it has become the economic centerpiece of the community, the 80,000-square-foot casino now supporting 500 employees. “Every time we come up with an idea, someone comes up with a way to stop us,” the tribal official said.

At issue in the 9th Circuit case was a May 11, 1994, indictment that had been billed as the start of a crackdown on the electronic slots used in virtually all of California’s two dozen tribal gambling halls. The 24-count indictment, brought under the federal Organized Crime Control Act, did not target members of the Riverside County tribe themselves, but charged the outside managers of its casino with offenses ranging from money laundering to interstate travel in aid of racketeering.

Months later, U.S. District Judge Richard A. Gadbois Jr. dismissed all but one of the counts in a complex opinion based on California’s general “public policy” toward gambling. Although the California Penal Code “bans slot machines without exception,” the judge said, the state allows so many other forms of gambling that it undercut the government’s right to impose criminal sanctions on tribal gambling.

That ruling, in restricting federal prosecutions, left tribal gambling operations with virtually no fear of prosecution in California because other courts earlier had barred state and local law enforcement officials from staging gambling raids on Indian lands.

But the 9th Circuit panel said casinos such as the one at Morongo opened themselves up to federal prosecution by installing hundreds of video slot machines without having approval for them in the tribal-state compacts required by the 1988 Indian Gaming Regulatory Act.

The federal judges said the defense offered by attorneys for the casino would lead “to an absurd and unintended result . . . the kind of illegal gambling involved here (multiple persons conspiring to engage in continuous illegal gambling) . . . would become immune from prosecution in Indian country.”

The chief attorney for the defendants--E.C. Investments Inc. and four of its officials--did not return a call for comment Tuesday. But the defendants are expected to ask for a rehearing before the full 9th Circuit and, if they lose there, appeal to the Supreme Court.

Meanwhile, one of the state’s leading Indian gambling attorneys, Howard Dickstein of Sacramento, predicted that federal prosecutors will continue to “refrain from prosecuting these cases” until the Morongo case and others are fully resolved.

The most notable dispute centers on the assertion of the tribes that California must agree to compacts allowing video slots because the state’s lottery games are little different. Gov. Pete Wilson has refused to enter into such compacts, maintaining that the tribes have defied the law by using the machines.

State Atty. Gen. Dan Lungren’s office, which has long maintained that federal prosecutors have authority to order the machines removed, applauded Tuesday’s decision. “U.S. attorneys could go after Indian tribes today for using video slot machines illegally,” spokesman Steve Telliano said.

A new trial date must now be set in the Morongo case. Before it was halted by the dismissal of charges, the case provided a glimpse into the profitability of the gambling machines that play electronic versions of poker, keno and other games. At the time of the 1994 indictment, a federal grand jury said the 140 such devices at Morongo had generated more than $10 million in revenue in the last year alone.

By last spring, the tribal casino--which began as a small bingo hall in 1983--featured 880 of the machines, in addition to poker and blackjack tables.