Quechans say president not answering their casino questions

  Former Quechan tribal councilmen and current tribe members say tribal President Mike Jackson is denying access to public documentation on a proposed new casino.

  They say repeated requests for public information meetings have been ignored by Jackson and the current council.

  Tribal elders Preston Arrow-Weed, Priscilla Prettybird and Vernon Smith and tribal members Valerie Jose-O'Brien and Yolanda Escalanti say Jackson and the council have disallowed viewing of financial documents linked to the bonds and financing for a proposed casino resort off Interstate 8 and Algodones Road.

  Under tribal law, they say, any financial transactions or dealings must be documented and available to tribal members during normal business hours Monday through Friday.

  The Quechans had $155 million in bonds downgraded to junk status in early October by Fitch Ratings, a Securities and Exchange Commission-recognized independent rating agency. Jackson and the council are leading an effort to secure $25 million in private funds needed to solidify the bond status and continue construction of the resort.

  Jackson stated Oct. 7 that the Quechan council would obtain the funding by Oct. 10. He then issued "no comment" statements when asked about the funding Oct. 13, saying he did not wish to talk about the situation.

  The tribal council, via Wednesday's edition of the Quechan News, issued a statement that the $25 million in private funding had not yet been secured. Repeated messages left by The Sun at Jackson's office, home and cell phones Tuesday and Wednesday were not returned.

  The tribal members and former council members said transactions of the bonds are not listed anywhere, and thus are not available in tribal offices.

  "Under Mike Jackson's administration, they stopped it," said Smith, a former tribal councilman. "I can't go over and look at it even though I have a right to under the tribal constitution.

  "He has been very secretive. When we first talked about getting this big, huge loan we asked, 'How are you going to pay that?' and what the collateral was. He didn't say. He just said not to worry about it."

  All five questioned the decision to build another casino, noting the tribe was doing well with existing Paradise Casinos and that many members of the tribe feared going into a $214 million debt, the expected total cost of the project. Arrow-Weed and Smith have voiced casino concerns since the idea's inception.

  "Now we are at the point where the tribe doesn't have the money and they can't get any more investors," Smith said. "We saw these red flags coming up, that there could be a recession. We're not experts, not by a long shot, but you could see that it was so risky."

  The Quechans, according to the Oct. 3 Fitch Ratings report, need to secure $25 million in private funding. But "due to adverse market conditions, the tribe has not been able to secure the financing externally. As a result, a project fund deficiency is occurring under the gaming enterprise bond indenture."

  Fitch downgraded a $45 million 2007 series and a $110 million 2008 series to CCC and CCC+, respectively. Both grades are considered junk bond status. "Junk bond" status means the bonds are not worthless, but are in high risk of default. Their former ratings were B+ and BB-, respectively.

  To cure the project funding ills, the tribe must "either deposit $25 million in the project fund, or must fund the deficiency amount of $25 million in six equal monthly installments of $4.2 million," the Fitch report read.

  The tribe has elected to start to fund the deficiency over six months while continuing to attempt to secure external financing, the report said. The first monthly installment of $4.2 million was contributed during the first week of October, using tribal government funds.

  Other agreements of the bond state that the tribe must have an unrestricted net asset balance equal to at least 125 percent of the principal amount of long-term outstanding indebtedness.

  "It's getting to the point where investors want their money, we can't pay it and we go into default," Smith said. "My fear is that they are going to freeze all tribal assets if we can't pay.

  "What's going to happen to the tribe? Mike Jackson is not coming forward with any other plans: Plan A, B, C and so on."

  There are also questions as to what entity the bond was issued. The five Quechans say that because Jackson and the council will not allow financial documents to be viewed, they fear that the bonds are in Jackson's name.

  "We have asked that question directly," Prettybird said, "and he would not answer. It should be under the tribe."

  The tribal members allege the council has began to dip into tribal monies derived from the current casinos that were supposed to be placed only in funds for certain needs like maintenance. Now, Smith says, portions of the funds are going for casino costs.

  Jackson issued a "Report to the People" in the July 2 Quechan News after a tribal council special meeting involving Smith, Prettybird, Jose-O'Brien and Escalanti, among others.

  A question was raised, according to the report, about the council taking funds from the Minors Trust Account - an account into which tribal monies derived from casinos are placed for those under 18 years of age.

  Jackson wrote in the report that "the council never raided the children's trust account." He wrote that the council only "changed the per capita plan with approval of tribal membership."

  However, that per capita plan change reduced the funds received by minors, per Jackson's explanation in the Quechan News. He wrote that the former plan had 25 percent of the revenues going per capita with an even split between minors and adults. That means for every $100 in distributed casino income, $25 would be distributed with minors and adults each getting $12.50.

  The plan now in effect, as Jackson wrote, increased the per capita distribution to 40 percent, allotting 80 percent of that amount to adults and 20 percent to minors. Thus, for every $100 distributed, $40 is split in the 80-20 setup, meaning adults would get $32 to the minors' $8 in the example - rendering false Jackson's written statement that "the minors actually gained more money into their account."

  And, as the five Quechans say, with the council admitting tribal casino revenues have decreased, the funds for each account will be down as well.

  "Why a bogus letter to us all? He is intimidated by the people." Escalanti said.

  Jackson's alleged actions could make him subject to a recall, the five
say. Jackson, who was recalled in July 2007 but not forced out of office, is in the midst of a four-year term. There are no plans for open council meetings between now and the election.

  "He has divided everybody," Smith said. "I don't know why it is so hard to sit down with the elders and ask for advice. All we're asking is that he be held accountable and assure the people that we have nothing to worry about."

  Added Arrow-Weed, a former council member: "They are playing a deadly game and they are going to destroy us all. There's so much denial."

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Matt Keller can be reached at mkeller@yumasun.com or 539-6857.