A Game of Casino Hardball

A wind-swept little graveyard sits atop a knoll on the Buena Vista rancheria, a quiet resting place in the Sierra foothills for an Indian clan that has neared extinction.

Yet this patch of land with its gnarled oaks and golden grass has been the focus of ferocious machinations on two coasts -- a fight cementing California’s status as the hottest front in the nation’s Indian casino wars.

Two years ago, the Buena Vista Miwoks, a band of six adults and six children, announced plans for a gaming hall on their 67-acre rancheria. Competition appeared in the form of a young mother, who claimed the rightful authority to negotiate on the tribe’s behalf.

Casino developers and rival tribes jumped into the fray, and along with them came several top Washington operatives, including Scott W. Reed, who managed the 1996 presidential campaign of Bob Dole, and Roger Stone, who strategized for George W. Bush during the 2000 presidential recount in Florida. Bush administration officials also got involved, signaling their interest in the case to a high-level Interior Department executive, who was fired in the midst of an FBI inquiry into his role.

The battle for control of the Buena Vista showcases the turmoil spawned by California’s Proposition 1A. Approved by voters in 2000, the measure granted a monopoly on casino gambling to the state’s federally recognized tribes.

California is home to 108 tribes, one-fifth of the nation’s total. An additional 54 have applied for federal recognition. Many are located within a few hours’ driving distance of urban centers.

The race for market share is fierce. California has capped the number of slot machines at 52,000. Fifty-two casinos already are operating with more than 40,000 slots. Tribes that have begun gaming also worry about nearby rancherias siphoning off business as new casinos open.

Many of the tribes are tiny -- some with fewer than a dozen members. A tribe with one adult member -- the Augustines -- opened a casino in Coachella.

For insiders, that means few to share the spoils. For outsiders, “small tribes are easier to control,” said Cheryl Schmitt, director of Stand Up for California, a gambling watchdog group.

The rewards can be substantial. Tribal casinos brought in $12 billion in revenue nationally last year. They donated nearly $4 million to national parties, and their candidates so far this election cycle and paid out $15.6 million for federal lobbying, according to Dwight L. Morris & Associates, a campaign-finance research company.

In California, campaign donations by tribes to state candidates have topped $42 million since 1999, and annual tribal gambling revenue exceeds $5 billion.

The California brand of hardball “concerns me,” said Bureau of Indian Affairs head Neal McCaleb. “It makes me wonder what’s next.”

Six months after passage of Proposition 1A, Buena Vista leader Donnamarie Potts announced that the tribe was teaming up with Cascade Entertainment Group, a Sacramento gaming firm, to build a $100-million casino on its rancheria 30 miles southeast of the state capital. Most of the investors were New York financiers, a Cascade executive said, but he would not identify them.

They envisioned a sprawling gambling hall filled with 2,000 slot machines, restaurants, a concert arena and a Native American sculpture garden. A high fence and a park would protect the old cemetery, Potts said.

One of the graves on the knoll holds the remains of Jesse Flying Cloud Pope, the father of Rhonda Morningstar Pope. She objected to the prospect of a casino. The plan would desecrate the cemetery, she said.

Pope charged that she had been unlawfully excluded when Potts formed the tribal government in 1994. Pope argued that she should be negotiating for the tribe because she is a Buena Vista Miwok by blood, while Potts is related to the tribe only by marriage.

Between her salary as a bookkeeper and child care payments, Pope’s annual income is only $30,000. But she hired three law firms to steer her claim through the Bureau of Indian Affairs and the courts. Sources say her financial backer is Thomas C. Wilmot, a Rochester, N.Y., shopping-mall developer and Democratic donor who has invested in several tribes around the country hoping to build casinos. Wilmot would not comment.

Pope does not rule out supporting a Buena Vista casino somewhere outside the rancheria grounds. Under federal law, Native Americans can purchase property adjacent to their reservations and ask that the U.S. take the land into trust, recognizing it as territory where tribal rule holds sway. Several undeveloped parcels border the Buena Vista rancheria.

Pope’s breakthrough came Dec. 27, 2001, when the superintendent of the Central California BIA office agreed to void the tribe’s constitution, essentially removing Potts from control and cutting off federal funding that paid her tribal salary of $20,000 a year. A few months later, a court order postponed any work on the casino until the wrangling was resolved.

Potts and Cascade Entertainment were stunned, their grand plan put on hold and maybe canceled altogether. Cascade executives said they had already sunk $10 million into the project. The assault on Washington began soon afterward.

Heavy Hitters

Potts and Cascade lured plenty of big shots to their cause. The consulting team included Reed and Stone and at least 10 others, such as a former University of California regent and legislator; a San Francisco energy lobbyist and former Interior Department official; and several partners in the law firm Gale A. Norton left to become the Interior secretary.

To work Capitol Hill, Potts hired two Democrats, both former BIA appointees under former President Clinton.

“It’s a big fight,” Potts said. “We were losing everything.”

Potts appealed the Central California BIA decision to the BIA regional director in Sacramento. But she was worried about the viewpoint of several officials in the BIA’s regional office who belong to a neighboring tribe, the Ione Band of Miwoks.

The Iones too have buried kin at the Buena Vista graveyard; they also have discussed gaming with potential investors -- giving them two reasons to be unhappy about Potts’ progress toward a casino just a country lane away.

Hedging their bets, Potts’ lobbyists pursued another tack. The BIA sometimes allows appeals to go straight to Washington for a judgment. Potts’ counselors set out to make that happen.

The decision fell to Wayne Smith, the deputy director of the BIA. Smith had asked for authority over gambling and land issues when he moved to Washington from Sacramento in August 2001. If I’d known then what I know now,” Smith said, “I’d have taken water issues or energy.”

Smith said he soon heard from Jennifer Farley, a White House aide in the intergovernmental affairs office. She wanted him to talk with a friend of hers from her days at the Dole campaign, and with his boss Reed. She began calling weekly to inquire about the case, Smith said.

When asked about the calls, White House spokeswoman Claire Buchan responded for Farley. “We dismiss these assertions. They don’t accurately represent the facts,” she said. Asked whether that meant the calls didn’t take place, she declined to elaborate.

Cascade worked other connections as well. California Senate Republican leader Jim Brulte forwarded an e-mail to Smith from a former aide working for Cascade. And Deputy Interior Secretary J. Steven Griles passed along a letter from an old friend being paid by Cascade. “Can you tell me about this?” Griles scribbled on the sheet.

Smith asked BIA head McCaleb for advice: Should he take control of the Potts-Pope dispute right away and make the decision himself, or should he allow it to go through the usual appeal process at the regional office?

McCaleb said not to intervene. Smith “told me the process was working,” McCaleb said. When he got phone calls from Potts’ lobbyists, he referred them to Smith.

Power Lunch

Reed invited Smith to lunch March 14 at a seafood restaurant on Washington’s K Street, a thoroughfare locally known as Lobbyists’ Gulch.

In Smith’s recounting, he told Reed flat out that he was going to let Potts’ appeals run the regular course. Reed was not happy. The lobbyist’s response was to reach into his coat pocket, drawing out a piece of paper folded in thirds.

“It would look really bad if this got out,” he said.

Smith acted surprised when he read it, Reed recalled. That’s because he was, Smith said.

The paper was a letter to a tribe seeking consulting work. It was signed by Philip Bersinger, who had once been a partner of Smith’s in a now-dissolved consulting business in California for nontribal card rooms. The letter was written on “Bersinger & Smith” stationery. It was one of two in Reed’s possession that invoked Smith’s name to drum up business with tribes in Washington state and California.

Bersinger phrased his qualifications this way: “As for the Bureau of Indian Affairs, no one is better connected than me.” He mentioned his vacations with Smith and that Smith stayed at his home whenever he traveled to Sacramento. “I could go on and on, but I think you get the picture,” Bersinger wrote.

“These letters could embarrass the secretary [of the Interior] and the White House,” Reed told his lunch companion.

In his mind, Smith said, the conversation had turned ominous: “First came the threat, then the blackmail.”

Reed’s account of the lunch is similar but differs on two important points. He said Smith told him the Buena Vista issue would be decided in Washington, as Reed and the rest of the Potts team had hoped. The warning about the letters, Reed said, was merely friendly advice.

Asked about the discrepancy, both men stuck by their stories. Smith said he never told any of Potts’ representatives at any time that he would fast-track the matter to D.C. Reed said Smith “tells you what you want to hear and then does nothing.”

Smith left the restaurant with reason for concern. He was still close to Bersinger, staying at his house during visits to Sacramento -- and once allowed him to tag along to a restaurant meeting with Potts and her advisors. He knew that the letter Reed had shown him could cast an ugly light on their relationship.

Smith says he phoned Bersinger and told him that selling their friendship was inappropriate.

But by this time, Bersinger was already engaged with the Potts group. Within weeks of Smith’s lecture, Bersinger had two meetings with Potts’ attorney, John Peebles, and Cascade’s president, Russell Pratt. Through his attorney, Bersinger said he didn’t invoke Smith in any way this time. But Potts’ group says Bersinger talked of Smith repeatedly.

“Phil said only he could solve the problem at the BIA. It was a heavy lift. And worth a lot of money,” said Jean Munoz, a public relations consultant who said she was authorized to speak for Peebles and Pratt. Asked how much money, according to Munoz, Bersinger said he had to talk with Smith and get back to them. She said Bersinger claimed to have “a long-standing business plan” with his important pal.

On April 4, Bersinger visited Peebles, indicated he had talked with Smith, then asked for $25,000 a month plus a percentage of casino revenue, Munoz said.

The lawyer asked Bersinger to put it in writing. A copy was obtained by The Times.

Bersinger used his personal stationary and never mentioned Smith or fees. He wrote that he would be available to consult on Potts’ interest in the BIA’s recognition of her tribal leadership. His services, he wrote, would include advice and, “when appropriate, representation before administrative agencies.”

Bersinger’s attorney, Matt Jacobs, says “I categorically deny that he said any” of the statements that Potts’ side attributed to him.

Smith said his old friend “never talked to me. I didn’t know anything about this.”

Leaks and Fakes

In mid-April, Michael Copperthite, an advisor to a faction of the Iones, says Roger Stone gave him copies of the Bersinger letters, told him that Wayne Smith was “a bad guy,” and asked him to get the documents to the press.

Stone did not return phone calls seeking comment. But Copperthite says he sent the letters to Time magazine, which then ran a story about Bersinger’s relationship with Smith.

Within days, several offices at the Interior received a faxed message expressing concern about Smith’s reported behavior. The fax appeared to come from David Quintana, then an Indian affairs aide to California Senate Republicans. Quintana said in an interview that he did not send any faxes and that the cover sheet appeared to have been fashioned from his business card.

Tribal leaders also received faxes urging them to call the Interior Department and demand Smith’s firing. The faxes came from a Colorado group they’d never heard of.

The FBI and internal Interior Department investigators began an inquiry into whether Smith tried to get the Buena Vista and other tribes to hire his friends, or whether he was the victim of a frame-up by people connected to the Buena Vistas or others.

On May 2, Smith said, he was called into the office of one of Interior Secretary Norton’s top aides, Sue Ellen Wooldridge. According to Smith, she told him not to mention the White House interest in the Buena Vista case to anyone, including federal investigators, or he would be “gone in a heartbeat.”

Wooldridge says she was upset after learning that Smith had revealed internal discussions to an outsider, a mutual friend who is lobbying for California tribes. But she said she never told him to hide anything from federal agents.

Smith and his attorney, Nancy Luque, said they later told federal authorities about the conversation. No federal law enforcement official would comment on the case.

On May 6, the BIA’s Pacific regional director upheld the original decision in favor of Pope, ruling that Potts was not entitled to lead the Buena Vista tribe. The official window for bringing the decision back to Washington had opened.

Within weeks, Smith was fired.

Smith says he was never given an official reason. His dismissal letter states only that his services were “no longer required.” The FBI and internal Interior investigators had not reached any conclusions. Interior officials refused to comment.

“My friend wrote some ... letters, he never lobbied me, and I got fired,” Smith said.

“It doesn’t look good, I don’t deny that, but I never knew what he was up to. And there is no evidence that I did.”

As he was packing up his boxes, three men showed up in the BIA corridor at the Interior Department for an appointment with Smith’s replacement and Secretary Norton’s counsel.

The visitors were from Norton’s old law firm. They were there on Potts’ behalf to talk about Buena Vista rancheria.

No Compromise

In late September, on a week’s notice, the two factions claiming the Buena Vista mantle were requested to appear in Room 485 of the Russell Senate Office Building for a hearing by the Senate Indian Affairs Committee. McCaleb’s new deputy was asked to testify as well.

The committee has 15 members. Only Sen. Ben Nighthorse Campbell (R-Colo.) showed up.

Potts testified that she hoped to use gambling proceeds for an elder center, education and a source of loans for her tribe of six adults and six children.

Pope did not appear, but her attorneys explained that she was not against economic development -- she just didn’t want the ancestral site developed.

Campbell advised them to work out a compromise.

It turned out that Pope’s group had thought of that too. Potts said afterward that she has already been offered $2.8 million by her rival to end the appeal and accept the decision that ousted her from her tribal role.

She refused. “My heritage is not for sale,” she said.