Indian Gaming: More Corrupt Than Ever

By Stephen Pizzo, News for Real. Posted on January 10, 2006.

When sleaze meets sleaze, magic happens. One glance across a crowded room, and they instantly recognize kinship. But when supersleaze teams up with supersleaze, a fusion-like chain reaction flashes to life, consuming everything in range.

And that's what happened when Jack Abramoff met Indian gambling.

Oh, I know the media is all atwitter over the political implications for ruling Republicans, but as usual, they are missing the soul of this saga — the political correctness and hypocrisy that surrounds Indian gaming.

Let me explain. I have no moral objections to most vices, including gambling, and when I can get away with it, I indulge in several vices myself. So the morality of gaming is not my beef with Indian casinos. It's what I learned way back in the 1980s about what's really going on behind all that helping the poor Indians blather.

While working on our savings and loans book "Inside Job" in 1986, my co-author, Mary Fricker, and I followed one of our S&L crooks to a small Indian reservation outside Palm Springs. It was the home of the Cabazons, the very tribe that took their case for gambling rights to the U.S. Supreme Court and won — sparking the Indian gaming revolution.

What we found there was unnerving, to say the least. Sure, there were Indians — about 25 of them — but they weren't in charge. Instead, a group of Los Angeles-based mafioso were running the operations, people with names like Rocco. The gaming operations were run by a non-Indian "management" company. They would front the money to build, maintain and operate the various gaming operations, with the promise that the tribe would get a share of the "profits" as calculated by Rocco and friends.

This is how Indian gaming began. After being chased out of Las Vegas and New Jersey by state and federal heat, the mob discovered Indian reservations. It was like a gift from the Mob Gods. One mobster testifying before Congress was asked how the mob viewed Indian reservations. He replied, "As our new Cuba."

That's because Indian reservations are sovereign nations within a sovereign nation. The mob could set up casinos, pay off tribal leaders and skim casino proceeds with impunity. If the FBI showed up, they had tribal security usher them out the gate, because they had no jurisdiction on reservation property.

During our short investigation of the goings-on at that Indio, Calif., Blazoning reservation:

* Three members of the tribe were found shot in the head a week after threatening to go public with corruption at the gaming facilities An illicit arms-sales operation was set up peddling machine guns
* The non-Indian head of the tribe's gaming management company, John Philip Nichols, was sent to prison on a hire-for-murder charge
* The S&L crook who led us to the reservation in the first place, and who had financed the tribe's high-stakes bingo parlor, was charged with running fraudulent insurance companies and running off with customer premiums
* The same fellow was later sued by the federal government for tens of millions in fraudulent loans he got from now-defunct S&Ls

There was more. And it's still going on.

We heard reports back then of similar activity on Indian reservations in Florida and Minnesota. Mobbed up management companies were rounding up their own tribes coast to coast. One operator was pitching so many tribes, he referred to his targets as "chief of the week" sessions.

Indian gaming proponents are quick to counter, "That was then; things have changed."

They've changed all right; they got smart. The likes of one-time Republican National Committee chairman Frank Farenkopf, and later, GOP lobbyist Jack Abramoff, stepped in. While Democrats saw Indian gaming as supporting another downtrodden minority, something "we have to put up with because of how we screwed the American Indians in the past," the GOP saw it another way. The GOP saw Indian gaming the same way the mob saw it: as a cash cow.

And so Indian gaming really is different now. It's bigger and even more corrupt. The mobsters were shoved into the closet and replaced out front by buttoned-down businessmen, men with the kind of connections that get things done — and without all that messy "batta bing, batta bang" stuff.

Not only could these guys bring big money and big influence to Indian gaming, but legitimacy, and even a reassuring glaze of morality. After all, would Jesus-boy Ralph Reed associate himself with something sleazy?

Farenkopf made the way safe for fellow Republicans, serving as president of the American Gaming Association. The ASA is the lobbying arm of the gaming industry. It formed in 1995, and hired Frank at a hefty $1 million-plus per year. For his keep, Frank took gambling's case directly to GOP bigwigs, even at the White House.

"He was the best hired gun that money could buy," said the Rev. Tom Grey, founder and executive director of the National Coalition Against Legalized Gambling. "There is no doubt that he plays a very skilled Washington game."

When Farenkoph argued his case to fellow Republicans, he surely pointed out two critical facts: 1) Gaming produces tons of free cash, and 2) Democrats have been getting most of the Indian gaming action.

From 1998 on, the GOP's share of Indian gaming revenues has steadily grown. But Farenkoph played by the rules, so Dems kept their lead, though it narrowed through 2004. It wasn't until Jack Abramoff blended political action with tried-and-true mob techniques that the GOP pulled past Dems.

I mention this because the only way to get to the bottom of a problem is to identify all the elements that created it in the first place. Sure, we need campaign finance reform, and we need lobbying reform as well. But we also need to admit that little has changed since the days when powerful white men set up trading posts on Indian reservations, traded their goods for cheap liquor they knew was poison to them, then, once hooked on hooch, proceeded to exploit them in every way imaginable.

That's all Jack Abramoff and Ralph Reed were doing: simply following in the footsteps of those hardy pioneers. Behind all the altruistic hoopla you hear today, Indian casinos are just the latest incarnation of the old exploitative reservation trading posts.

But don't expect anyone in Washington to admit that. Not the Democrats, who you can bet are rushing to assure gaming tribes — and those that want to join the party — that Dems hold no grudges about their little fling with GOP whores. The DNC brothel is right where it always was, and welcomes their indigenous constituents back with open arms — but do bring wallets.

And don't expect Republicans to say anything but the nicest things about Indian gaming for the next few years — and for free! Republicans must now do penance for golfing in Scotland on Indians' money, even as Abramoff and his pals gang-raped their tribal clients.

I don't argue that revenues from reservation casinos have helped some Indians. But I am quite certain that tribes never see the lion's share of the cash that flows through those operations. Non-Indian management and politicians do.

A final thought. Cash, in the quantities produced by gambling operations, always attracts two kinds of people: sleaze and politicians.

Stephen Pizzo is the author of numerous books, including "Inside Job: The Looting of America's Savings and Loans," which was nominated for a Pulitzer.

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