Indians Sign Pact With Investors

The Juaneno band of Mission Indians, striving to become Orange County’s first federally recognized tribe, has entered into a private partnership with Nevada investors to bring the county its first Las Vegas-style casino, according to documents obtained by The Times.

A faction of Juaneno leaders signed the confidential agreement in September 1995 to build a gambling enterprise while continuing to lobby Washington to get federal recognition for the tribe.

Winning such status would make the tribe eligible for various government programs for Native Americans and give it the right to offer certain forms of gambling--an enterprise that has been highly lucrative for Indians in San Diego and Riverside counties as well as other parts of the country.

According to the documents, the Juanenos have received more than $250,000 from an investment group led by Brandcor, a Las Vegas-based corporation, which is helping fund the campaign for recognition with the ultimate goal of opening a casino.

A portion of that money was used to hire former Secretary of Agriculture Michael Espy, now a Washington lobbyist, to help the tribe get recognition. Through November, Espy had been paid more than $34,000, according to the documents.

Espy did not return telephone calls from The Times.

The investors also made payments to E.O.P., a Washington-based public relations firm, and provided up to $12,000 a month in expenses.

The tribe hopes to acquire 20 acres in San Juan Capistrano, the ancestral home of the Acjachemen Nation--the original name of the 1,400 Juanenos nationwide, including more than 1,000 in Orange County--for a gambling and museum complex.

But even if the property was certified by the federal government as tribal land, the Juanenos would still have to negotiate a compact with Gov. Pete Wilson if they want to legally offer any gambling beyond poker and bingo.

When contacted by The Times for his reaction to the agreement, David Swerdlin, the city’s mayor, said he opposes a casino and would try to prevent it. Dist. Atty. Michael R. Capizzi said a casino would pose a challenge to law enforcement and have a “negative impact” in Orange County.

Even before the deal with outside investors, the Juanenos had split into two groups, one (the pro-casino faction) then headed by David Belardes; the other by Sonia Johnston. Both are finalists for federal recognition, albeit as separate entities.

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Citing differences, Belardes has since left the pro-casino faction, which recently named Jean Frietze as chairwoman. Frietze did not return calls from The Times.

Belardes, who helped spearhead the deal with outside investors only to renounce it later, said the casino could make money to pay back debts accrued by the tribe in seeking recognition from the U.S. Bureau of Indian Affairs.

“It takes money to get recognized,” Belardes said, noting that tribes can spend thousands of dollars on recognition and fail.

Under terms of the original seven-year agreement, investors offered to provide funding to the Juanenos in an aggressive bid to win recognition, while planning for a casino.

In return, the tribe promised the investors at least 35% of any casino-related profits, according to documents. And if the tribe failed in its bid? Then, Friends of the Juanenos--the umbrella term given to the tribe’s financiers--would lose its investment, which Belardes said now exceeds $400,000, covering office expenses, legal advice, consultants and the like.

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Robert C. Anderson of Reno, listed with the Nevada secretary of state as the primary officer of Brandcor, did not return calls from The Times regarding the firm’s dealings with the tribe.

But Rick Colvin, executive vice president of Marnell Corrao Associates of Las Vegas--one of the leading casino builders in the world and listed with Nevada authorities as one of Brandcor’s corporate officers--said the agreement should eventually prove fruitful for both parties.

Colvin said the Juanenos approached the company, “not the other way around,” and that if the firm does end up building a casino in San Juan Capistrano, “then it would be our first involvement with a Native American group.”

Casinos are “extremely profitable,” Colvin said from Las Vegas. “I can understand why they [the Juanenos] would want to do it. I would, if I were in their position. . . . It’s so far off at this point, though, that at the moment we’re not really taking it all that seriously.”

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According to the documents, the recognition/casino plan was intended to work like this: Once the Juanenos are recognized, investors would agree to buy 20 acres of land here for a casino, administrative offices and a museum dedicated to the tribe.

But from the beginning, not everyone was sold on the concept. Dissident members of the Juaneno faction that signed the agreement with outside investors consulted attorney Jim Cohen, directing attorney for California Indian Legal Services of Escondido, who advised them to abandon the plan.

“I strongly recommend that the Juaneno band renounce any and all agreements” with the investors, Cohen wrote in a memo to the tribe. “All of the agreements I have reviewed are illegal under federal law, and public disclosure of the agreements could well lead to a rejection of the band’s application for federal recognition.”

California Indian Legal Services based its conclusions on the fact that unrecognized tribes are ineligible for gambling enterprises and thus could have no such agreement approved by the National Indian Gaming Commission, which oversees casinos run by recognized tribes.

Thomas Sweeney, spokesman for the Bureau of Indian Affairs, said his agency was unaware of the Juanenos’ partnership with outside investors but that it makes no difference in deciding whether to grant recognition.

“We look at the criteria of whether they’re eligible for recognition--and that’s all we look at,” Sweeney said. “It doesn’t influence our decision, and we don’t need to know about it. The federal government has a policy of encouraging economic development for tribes, including gaming. I suppose it’s perfectly acceptable for tribes to plan ahead, as it were. Legally, I can see nothing wrong with it.”

As part of the original agreement, all six members of the faction’s tribal council signed a “non-disclosure and confidentiality” clause, which sources say prohibits them from discussing it publicly.

At least one Juaneno official said the casino plan is off, but he wouldn’t discuss the details.

Alfred R. Lopez, a member of the Juaneno tribal council that signed the agreement, said any contracts with outside investors are “now null and void. . . . They’ve all been terminated. We don’t want casinos. We only want federal recognition.”

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Lopez declined to provide documentation showing that the contracts have been terminated.

But Belardes and one other source close to the tribe said the agreements remain active and that the tribe is merely waiting for recognition, which could come within the next two years.

Belardes walked out last year after investors began to renege, in his words, on earlier promises. He took issue, he said, with investors seeking a greater share of gambling revenues--as much as 50%--as well as management of all tribal accounting and audits, which he viewed as a threat to the tribe’s sovereignty.

Alfonso Ollivares, who like Lopez and Belardes, is a member of the tribal council that signed the agreements, said that it would be news to him if the contracts were terminated.

Ollivares echoed Belardes in saying the group sought the participation of outside investors because “it takes money to do anything you want, and we want recognition.”

Under U.S. Supreme Court decisions and the national Indian Gaming Regulatory Act, approved by Congress in 1988, reservations and rancherias--the small tribal reserves common in California--can conduct high-stakes versions of any form of gambling legal in their state. In California, that basically means bingo, poker, horse wagering and lotteries.

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The tribal casinos have been highly controversial, however, with federal and state officials in California complaining that many flaunt other types of gambling that are illegal in the state, particular video slot machines. Wilson has refused to negotiate gambling compacts with any tribes offering such slots and federal prosecutors continue trying to block their use.

Nonetheless, many of the 41 gambling halls now run by California’s recognized tribes remain highly successful, having kept the dispute mired in the courts for years.

The Barona Casino, near Lakeside in east San Diego County reports gross earnings of more than $60 million annually.

The casino drumroll in Orange County began to build in 1995 after the Juanenos reached “ready” or finalist status with the Bureau of Indian Affairs.

According to sources, it was during that year that a prominent Juaneno arranged a meeting with Dr. Jack Weinstein of Villa Park.

The tribal member who arranged the meeting with Weinstein is married to an employee of Los Alamitos racetrack, where Weinstein is known as a breeder of thoroughbred horses. Weinstein agreed to play the role of middleman and locate investors willing to help the tribe.

Weinstein said he was “not at liberty to discuss” his relationship with Brandcor, Friends of the Juanenos, Marnell Corrao Associates or any party named in the documents.

Johnston, who heads the rival faction of Juanenos not involved with pursuing a casino, wonders if her colleagues have jeopardized the elusive goal of recognition.

“Only the future of our tribe is at stake,” she said. “More than anything, this entire episode has left me with a grave sense of sadness. . . . I want for my people only the best. Sadly, this is anything but the best. It makes my heart sick.”