&Mona1 3nbian Qaming &ommi$$ion 

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NOTICE OF PROPOSED CIVIL FINE ASSESSMENT 

NO: CFA-0 1-02 

To: Principal Chief 

Seminole Nation of Oklahoma 

P.O. Box 1498 (% mile E ofjunction 59 & 270) 

Wewoka, OK 74884 

Fax: (405) 257-6205 

1. Under the authority of 25 U.S.C. 5 2713(a), of the Indian Gaming Regulatory Act 

(IGRA), and the regulations of the National Indian Gaming Commission (NIGC) at 

25 C.F.R. 9 575, the Chairman of the NIGC hereby provides notice of his intent to assess 

a civil fine against the Seminole Nation of Oklahoma (Respondent), Wewoka, Oklahoma, 

for violations of 25 C.F.R. $5 571.12 and 571.1 3, as set forth in detail in Notice of 

Violation No. NOV-01-02, issued May 18, 2001, a copy of which is attached hereto 

(Exhibit 1). NOV-01-02 required that Respondent submit independent audit reports and 

management letters for each gaming operation for four gaming operations for the years 

, ending September 30, 1999, and September 30,2000, within ten (10) days after issuance 

II of the NOV. 

2. Pursuant to 25 U.S.C. 5 2713(a) and 25 C.F.R. 5 575.4, the Chairman of the NIGC may 

assess a civil fine, not to exceed $25,000 per violation, against a tribe, management 

contractor, or individual operating Indian gaming for each violation cited in a notice of 

violation issued under 25 C.F.R. 5 573.3. If noncompliance continues for more than one 

day, the Chairman mby treat each daily illegal act or omission as a separate violation. 

25 C.F.R. 5 575.4(a)(2). 

3. The NIGC regulation at 25 C.F.R. § 575.5 provides that, within 15 days after service of a 

notice of violation, or such longer period as the Chairman may grant for good cause, a 

respondent may submit written information about the violation. The Chairman shall 

consider any information so submitted in determining the facts surrounding the violation 

and the amount of the civil fine. The following information was submitted within 15 days 

after service of the Notice of Violation No. NOV-02-01: 

On May 22, 2001, the Seminole Nation Development Authority's auditor 

submitted a letter stating that it had prepared drafts of the fiscal year 1999 audit 

and that the fiscal year 2000 audit was tentatively slated to be started June 4,2001 

(Exhibit 2); 

On May 30,2001, Respondent submitted a letter stating that it had been unable to 

obtain financial information fiom the Seminole National Development Authority 
(Exhibit 3); and On May 30, 2001, Respondent's attorney submitted a letter 

stating that the fiscal year 1999 audit was "substantially complete" and could be 

completed June 2001and that the fiscal year 2000 audit would require "several 

months" before completion (Exhibit 4). 

4. The Chairman has considered the factors set forth in 25 C.F.R. $ 575.4, as follows: 

i. Economic benefit of noncomvliance. Respondent obtained an economic 

benefit fiom failure timely to submit audits for fiscal years 1999 and 2000 by 

postponing the cost of paying an independent auditor for performing timely 

audits. 

ii. Seriousness of the violations. Respondent failed to submit audit reports for two 

fiscal years. Submission of the annual independent audit by a firm of certified 

public accountants is critical to NIGC's mission to protect the integrity of 

Indian gaming. Annual audit reports provide both the Tribe and the NIGC with 

important information on the financial strength and security of the assets of the 

tribal gaming operation. The ability of a firm to conduct the audit assures the 

adequacy of the books and records, the functioning of the internal financial 

controls, and the disclosure of information having a bearing on the financial 

statements. These, in turn, assure the integrity of the gaming operation. 

Respondent's failure to submit audit reports left Respondent's gaming 

operations vulnerable to fmancial improprieties. 

iii. Histow of violations. Respondent has been the subject of two fmal orders of the 

NIGC: 

a. Notice of Violation No. NOV-98-01 and Order of Temwrary 

Closure No. CO-98-01, January 13, 1998, for operating "Reels of 

Skill," a Class JII gambling device, in the absence of a tribal-state 

compact (Exhibit 5). Following issuance of the Commission's 

final decision in NOV-98-01, the Chairman and Respondent 

entered into an Agreement on November 30, 1998, whereby 

Respondent agreed to pay a civil fine in the reduced amount of 

$7,500 (Exhibit 6), which was paid. 

b. Notice of Violation No. NOV-99-03, March 2, 1999, for failure to 

con'duct background investigations on .primary management 

officials and key employees and to submit employee applications, 

investigative reports, and suitability determinations to the 

Commission (Exhibit 7). A Civil Fine Assessment was issued 

June 3, 1999, in the amount of $4,500 for the violations identified 

in NOV-99-03 (Exhibit 8). Respondent did not pay the fine. 

iv. Negligence or willfulness. Respondent's fiscal year 1999 audit was due 

u January 28, 2000. Respondent's fiscal year 2000 audit was due January 28, 
2001. Respondent was made aware of its continuing failure to submit the audits. 

On August 14, 2000, the NIGC issued a Potential Notice of Violation (PNOV) 

concerning the 1999 audit; the purpose of the PNOV was to make Respondent 

aware of the violation and to provide an opportunity for voluntary compliance 

(Exhibit 9). On March 16, 2001, the NIGC requested submission of the fiscal 

years 1999 and 2000 audits (Exhibit 10). 

By Respondent's own admission, Respondent was unable to maintain control 

over the Tribe's gaming operations. Chief Jerry Haney's May 30, 2001, letter 

(Exhibit 3) to NJGC states: "Just as you [NIGC] have not received audits, we 

too have not received any financial information despite repeated requests. The 

requests to the Director were referred to the SNDA Board and then disregarded 

or refused." 

"Some immediate concerns pertain to SNDA's contract with Mr. Ivy Ong as a 

vendor, but in his capacity as vendor acts as a management contractor 

seemingly to avoid NIGC's requirement for background check. Mr. Ong has 

managed the gaming for 10 months under an agreement only approved by 

SNDA and not the General Council.. . ." 

"We have requested reports on the distribution to the vendor and band 

statements in order to verify reports. We continue to see discrepancies in their 

financial reports." 

Respondent submitted the fiscal year 1999 audit on July 27, 2001, almost 

eighteen (1 8) months late. Respondent submitted the fiscal year 2000 audit on 

December 5,2001, more than ten (1 0) months late. 

Respondent failed to meet its responsibilities under IGRA and the implementing 

regulations. Respondent cannot explain its failure to submit timely audits by 

blaming others within the tribe; Respondent must exercise control over its own 

gaming establishment. Respondent's failure to maintain control over the gaming 

operation and, as a result, failure to compel submission of the required audits, is 

evidence of negligent conduct of Respondent's governmental duties. 

v. Good faith. Failure to submit the fiscal year 1999 audit for eighteen (18) 

months and failure to submit the fiscal year 2000 audit for more than ten (10) 

months shows a minimal good faith effort to comply with IGRA and NIGC 

regulations. 

5. WHEREFORE, the Chairman, having carefblly reviewed the above factors, has 

determined that a fine in the amount of three thousand dollars ($3,000) is assessed on 

Respondent for failure timely to submit the fiscal year 1999 audit, and a fine of one 

thousand five hundred dollars ($1,500) is assessed on Respondent for failure timely to 

submit the fiscal year 2000 audit. 

w 6. The above-described amounts represent an appropriate balancing of the factors cited 
above. 

Pursuant to 25 C.F.R. $ 577.3, within 30 (thirty) days after service of this Notice of 

Proposed Civil Fine Assessment, Respondent may appeal the proposed fine to the full 

Commission by submitting a notice of appeal to the National Indian Gaming 

Commission, 1441 L Street, NW, Suite 9100, Washington, DC 20005. Respondent has a 

right to assistance of counsel in such an appeal. A notice of appeal must identify this 

Notice of Proposed Civil Fine Assessment. Within ten (10) days after filing a notice of 

appeal, '~es~ondent must file with the Commission a supplemental statement that sets 

forth with particularity the relief desired and the grounds therefore and that includes, 

when available, supporting evidence in the form of affidavits. If Respondent wishes to 

present oral testimony or witnesses at the hearing, Respondent must include a request to 

do so with the supplemental statement. The request to present oral testimony or 

witnesses must specie the names of proposed witnesses and the general nature of their 

expected testimony, and whether a closed hearing is requested and why. Respondent 

may waive its right to an oral hearing and instead elect to have the matter determined by 

the Commission solely on the basis of written submissions. 

Dated this 26th day of April 2002. 

Chairman 

w 

Cynthia Shaw Omberg 

Attorney