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IRS auditing Seneca Nation's casino operations

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Saturday, 03 July 2010

IRS auditing Seneca Nation's casino operations Tribe's business dealings with employees and contractors also under scrutiny By Dan Herbeck News Staff Reporter Published: July 02, 2010 The Internal Revenue Service is auditing the Seneca Indian Nation’s casino operations and the tribe’s business dealings with employees and contractors, The Buffalo News learned this week. The audit comes as the Senecas are already under under investigation by FBI agents in connection with a $2.1 million land deal for the tribe’s new golf course in Lewiston. IRS officials declined to comment on the audit, but The News learned Thursday that auditors have requested a wide array of business documents from the Indian tribe, including: • Records of payments, fringe benefits and bonuses to President Barry E. Snyder Sr., other employees of the nation and its casinos. • Records on “per-capita” payments, which the tribe makes annually to more than 7,000 tribe members. • Information on property leases signed by the tribe and its subsidiaries. • Records on all payments made by the tribe. • Reports on any audits conducted internally by the Senecas, or by outside auditing companies hired by the tribe. The audit is focused on Seneca expenditures from the year 2008, sources close to the situation said. While Snyder and Tribal Council Chairman Richard E. Nephew did not return calls seeking comment, Seneca government sources confirmed they were notified of the audit last month. They said they consider the audit by the FBI’s Office of Indian Tribal Governments a routine matter. In a news release issued last December, the IRS said it is stepping up efforts to investigate “abusive schemes” involving companies and individuals that do business with Indian tribes. “The growth in tribal economies, the fact that tribes are not subject to federal income tax, and the self-governance rights of tribes, has made them an area where unscrupulous individuals can gain a foothold for illegal and/or unethical activities that include tax schemes,” the IRS said in the release. The IRS urged anyone with information about schemes involving any Indian tribes to send the information to IRS investigators at P. O. Box 227, Buffalo, NY, 14225-0227. When Seneca leaders declined to comment, an outspoken Seneca elder, Edna Gordon, 89, said she is not surprised about the audit. Gordon is an author and longtime critic of Snyder and other Seneca government leaders. She said she has been trying unsuccessfully for years to get answers about the tribe’s expenditures. “Damn right, I have questions,” said Gordon, a resident of the Senecas’ Cattaraugus Reservation. “We’re fed up with our government. ... We don’t have a voice in our government.” Robert W. Jones, co-chairman of a grass-roots organization called Senecas For Justice & Preservation, said his group has also had trouble getting information about Seneca Nation contracts. But Jones questions whether the IRS should have any legal right to conduct audits of the Seneca tribe, which is a sovereign nation. According to the IRS, the tribes are not subject to federal taxes, but when tribes form corporations to operate casinos, they can be subject to taxes. The Senecas are not the only tribe under scrutiny from the IRS. The Miami Herald reported last month that two Florida tribes that run casinos — the Miccosukees and the Seminoles — are under investigation by the federal tax agency. Last year, an audit conducted for the Senecas by a firm from Alexandria, Va., raised questions about a land sale for the Senecas’ new golf course in Lewiston, and also about a controversial program for contractors, which has made millionaires of a few Senecas. Bergal Mitchell III, former vice president of the Seneca Gaming Corp., which runs the nation’s casinos, received $250,000, and his wife, Rachel, received $90,000 of the $2.1 million that the tribe paid for land used for the Hickory Stick Golf Course, the audit by MDB International said. The men who sold the land to the tribe received $1.1 million. Timothy J. Toohey, a disbarred Lewiston attorney, admitted during a federal court plea deal that he received $201,000 in an “unlawful agreement” tied to the land deal. The FBI and other agencies continue to investigate the land deal. And investigative stories by The News have raised questions about millions of dollars paid to politically connected Seneca business owners through the Tribal Employment Rights Ordinance, a program to help companies owned by tribe members. http://www.buffalonews.com/2010/07/02/1101483/irs-auditing-seneca-nations-casino.html

 

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