.. J 

AattonaI Bnbtan Qamtng QCommi$$ton 

SETTLEMENT AGREEMENT 

INTRODUCTION 

1. This agreement is entered into by and between the Coyote Valley Band of Pomo 

Indians (Tribe) and the Chairman of the National Indian Gaming Commission 

(NIGC) to resolve the Chairman's concerns regarding the Tribe's use of gaming 

revenues. 

2. An investigation by the Tribal Council and the NIGC revealed that some of the 

Tribe's gaming revenues were incorrectly used. The Tribe and the NIGC have 

determined that the deficiencies in the Casino's accounting systems, internal controls 

and policies and procedures have contributed to the impermissible use of gaming 

revenues. The Tribe and the NIGC agree that resolving these matters by settlement 

agreement is in the parties' best interest. 

RECITALS 

3. Under the Indian Gaming Regulatory Act, 25 U.S.C. 2701 et seq., the NIGC is 

responsible for regulating Class I1 gaming and certain aspects of Class I11 gaming on 

Indian lands. 

4. On November 7, 1994, the Band adopted an ordinance authorizing and regulating 

gaming on the Coyote Valley Indian Reservation. The tribal ordinance was adopted 

for the purpose of establishing gaming within the Reservation "in conformity with the 

federal Indian Gaming Regulatory Act . . . and regulations promulgated thereunder." 

5. A revenue distribution plan, which governs the expenditures of the Band's gaming 

revenues, was adopted by the Band on November 7, 1994, and approved by the 

United States Department of the Interior on September 19, 1995. That plan provides 

that "[nlo Tribal Programs Account funds shall be used to make payments to or on 

behalf of individual Tribal members, unless a specific program authorizing such 

payment has been approved by the Tribal Council." Further, the expenditures under 

the plan must be incurred under a budget approved by the Tribal Council and General 

Council. 
6. The term "net revenues" means gross revenues of an Indian gaming activity less 

amounts paid out as, or paid for, prizes and total operating expenses, excluding 

management fees. 25 U.S.C tj 2703(9), 25 C.F.R. tj 502.16. 

7. Under IGRA and the Commission's regulations, 25 U.S.C. § 2701(b)(2)(B) and 25 

C.F.R. tj 522.4(b)(2), tribes are authorized to use net gaming revenues for the 

following purposes only: 

a. to fund tribal government operations or programs; 

b. to provide for the general welfare of the tribe and its members; 

c. to promote tribal economic development; 

d. to donate to charitable organizations; or 

e. to help fund operations of local government agencies. 

8. Tribal gaming operations must keep records "sufficient to establish the amount of 

gross and net income, deductions and expenses, receipts and disbursements. " 

25 C.F.R. tj 571.7. 

9. In 1997, the Coyote Valley Casino (Casino) issued American Express Corporate 

Credit Cards to each member of the Tribal Council and to the General Manager. 

10. The Tribal Council engaged in the following improper action with regard to casino 

assets: 

a. From 1997 until February of 2000, members of the Tribal Council used the 

Casino-issued American Express Corporate Cards for personal expenditures such 

as vacations and personal items such as gifts, clothing, toys, and automobile tires. 

b. From 1997 until February of 2000, members of the Tribal Council used the 

Casino-issued American Express Corporate Cards for expenditures that had 

already been provided by the Casino through other means. For example, Tribal 

Council members received cash advances to cover travel expenses, yet charged 

the same expenses on the casino-issued charge card, effectively causing the 

Casino to pay twice for the same expenses. 

c. From 1997 until February of 2000, members of the Tribal Council used the 

Casino-issued American Express Corporate Cards for tribal governmental 

business. For example, members of the Tribal Council traveled and charged 

expenses to the Casino-issued credit card when, in fact, such travel was not for 

casino business. If such travel was for tribal governmental purposes, the Tribal 

Council members should have asked the tribal government to pay such expenses. 

Allowing governmental expenses to be charged to the casino prevents the tribal 
government from having control and accountability over governmental expenses. 

Such expenses may be paid by the tribal government through net revenues for the 

tribal casino if such expenses meet the requirements set for in 25 U.S.C. 8 2701 

(b)(2)(B) and 25 C.F.R 8 522.4 (b)(2). 

11. From 1997 until February 2000, Tribal Council members incurred a minimum of 

$150,000 for personal andlor improper credit card charges that were paid by the 

Casino. As of March 30, 2001, the remaining balance still owed by the Tribal 

Council members exceeded $95,000. Moreover, members of the Tribal Council 

incurred a minimum of $10,272.95 in charges for tribal govenunent business that was 

paid by the Casino. 

12. The Casino accounting department and the Tribe lacked an effective system of 

internal controls necessary to track gaming revenues. This allowed Casino assets to 

be diverted before the assets were distributed according to the revenue distribution 

plan, in violation of 25 U.S.C $2703(9), 25 C.F.R. 5 502.16. 

13. Desiring to preserve their longstanding relationship, representatives of the parties to 

this Agreement have explored amicable methods of resolving the above referenced 

concerns. 

AGREEMENT 

ACCORDINGLY, the parties agree as follow: 

14. The Tribe and the Chairman have determined that deficiencies in the Tribe's 

accounting systems, internal controls and policies and procedures have contributed to 

the improper uses of gaming revenues. Accordingly, the parties agree to the 

following terms to remedy these deficiencies: 

15. Independent Tribal Gaming Commission. Within thirty days of the date of this 

document, the Tribe shall submit an amended gaming ordinance to the Chairman of 

the NIGC for his approval in order to strengthen the Casino's Gaming Commission. 

Such amended gaming ordinance (Ordinance) will reaffirm that the Commission is an 

independent tribal Gaming Commission. The Tribe's current ordinance will include 

the following concepts: 

a. The Tribal Gaming Commission's duty is to regulate tribal gaming operations. 

b. The Tribal Gaming Commission serves as a regulatory, rather than managerial, 

purpose. The Tribal Gaming Commission is empowered to conduct oversight to 

ensure compliance with Federal, Tribal, and, if applicable, state gaming laws and 

regulations. The Tribal Gaming Commission serves as the licensing authority for 

individuals employed in the gaming operation and administers an effective 

program for background investigations as part of the licensing process. The 

Tribal Gaming Commission monitors compliance with the internal control 
standards for the gaming operation and the policies and procedures governing 

expenditure of gaming revenues. To cany out its regulatory duties, the Tribal 

Gaming Commission has unrestricted access to all areas of the gaming operation 

and to all records. The Tribal Gaming Commission has clear authority to take 

enforcement actions, including the authority to suspend or revoke an individual 

gaming license and may order the suspension or revocation of credit card or 

purchase authority. 

c. The Tribe recognizes the importance of the independence of the Tribal Gaming 

Commission in maintaining a well-regulated gaming operation. Therefore, the 

Tribal Gaming Commission has been empowered to act independently and 

autonomously from the Tribal Council in all matters within its purview. No prior 

or subsequent review by the Tribal Council of any actions of the Tribal Gaming 

Commission is required or permitted except as otherwise explicitly provided in 

the Tribal Gaming Ordinance. 

d. The Tribe understands that the independence of the Tribal Gaming Commission is 

essential to a well-regulated gaming operation. The Tribal Gaming 

Commissioners are appointed for staggered terms of three years and may be 

removed from office by the Tribal Council prior to the expiration of their 

respective terms only for neglect of duty, misconduct, malfeasance, or other acts 

that would render a commissioner unqualified for hisher position. Any 

allegations of neglect of duty, misconduct, malfeasance, or other acts that would 

render him or her unqualified for hisher position must be substantiated by a 

preponderance of the evidence. A Commissioner shall be given a reasonable 

opportunity to provide evidence rebutting the grounds for his or her removal 

before the removal is final. A wrongful removal shall entitle the affected 

Commissioner to compensation for expenses incurred in an appeal and any pay 

withheld. 

16. Ordinance Requirements. The amendment to the ordinance shall include the 

following: 

a. All members of the Tribal Gaming Commission shall attend 40 hours of 

regulatory, gaming-related training each year. 

b. For any non-budgeted expenditure by the Casino Board of Directors, Tribal 

Council or Casino greater than $500, the Tribal Gaming Commission shall certify 

that the expenditure constitutes a gaming operating expense. 

c. To avoid potential conflicts of interest between the operation and regulation of the 

Casino, the Tribe shall require that: 

i. No member of the Tribal Council may serve on the Tribal Gaming 

Commission. 
ii. Members of the Tribal Gaming Commission and the Board are prohibited 

from gambling in the Casino. 

iii. Members of the Tribal Gaming Commission, Board, and Tribal Council 

are prohibited from accepting complimentary items from the Casino. 

iv. Employees of the Casino or any gaming enterprise on the reservation are 

prohibited from serving on the Tribal Gaming Commission. 

v. Persons who are not eligible to serve as key employees or primary 

management officials are prohibited from serving on the Tribal Gaming 

Commission or Board. 

vi. Tribal Gaming Commissioners shall be subjected to a background 

investigation and deemed suitable by the Tribal Council before 

appointment to the Tribal Gaming Commission. 

vii. Tribal Gaming Commission employees shall be subjected to a background 

investigation and deemed suitable by the Tribal Gaming Commission 

before employment with the Tribal Gaming Commission. 

17. Protection of Tribal Gaming Revenues. The Tribe recognizes the importance of 

ensuring that the tribal government, rather than individual members or casino 

employees, determine the appropriate and lawful use of tribal gaming revenues. 

Accordingly, the Tribe has adopted polices that ensure the following: 

a. No personal loans or advances shall be made to members of the Tribal 

Council, the Board or the Tribal Gaming Commission from Casino assets. 

b. Neither goods, nor services, nor equipment shall be provided to non-casino 

employees out of Casino assets. 

c. Casino expenditures that do not benefit the gaming operation are prohibited. 

Casino expenditures are authorized only if they are considered gaming 

, operating expenses in accordance with GAAP. Casino expenditures must be 

made in accordance with good business practices. Casino expenditures made 

for the benefit of individuals or the Tribe are prohibited. 

d. No charitable gifts or other gifts shall be made by the Casino. This will not 

prohibit, however, the marketing department from sponsoring promotions or 

other budgeted marketing activities. If the Tribe wishes to make charitable 

gifts, it may do so as a government in conformance with the approved uses of 

net gaming revenues, after such revenues have moved from the gaming 

operation to the Tribe. 
18. Casino Travel Expense Policy. The Tribe, through the Casino management, has 

established and implemented a Casino travel expense policy. The Casino travel 

expense policy and procedure provides the following: 

a. Credit cards may be issued to gaming operation employees and gaming board 

members only. 

b. Travelers shall be reimbursed only for expenses incurred while traveling on 

Casino business. 

c. Travel advances shall not be authorized for credit card holders. 

d. Travelers shall be reimbursed only for legitimate and necessary travel 

expenses. Legitimate and necessary travel expenses include but are not limited 

to lodging, meals, vehicle rentals, and incidental expenses. Incidental 

expenses include reimbursement for tips to wait staff, tips for transportation, 

pressing and cleaning of laundry. 

e. Certain expenditures, including but not limited to, clothing, physical therapy, 

expenses for spouses, children, significant others, andlor any other persons 

accompanying the traveler, shall be prohibited. 

f. All travel shall be pre-approved by a designated person in Casino 

management. 

g. Travelers shall justify their claimed travel expenses by providing receipts and 

other supporting documentation to the Casino management. 

h. Requests for travel reimbursement shall include a complete explanation of the 

costs, the amount of the purchase, the dates the expenses were incurred, the 

purpose of the expenditure, and receipts proving the expenditures. 

i. The Casino may issue credit cards for employees or board members who will 

be traveling on behalf of the Casino. Each cardholder shall sign a contract 

with the Casino acknowledging that helshe has received a copy of the Casino 

travel expense policy and procedure and that helshe understands that helshe is 

responsible for justifying all expenditures made and that all expenditures shall 

be incurred and repaid in accordance with the Casino travel expense policy 

and procedure. 

j. All travel expenses shall be reconciled at the end of each month, and no 

honoraria, per capita payments, or other payments shall be issued to the 

responsible traveler if that person has an outstanding travel balance. 
k. Casino-issued credit cards shall be used for travel expenses only. Casinoissued credit cards cannot be used for general or special purchases for the 

Casino except by the Casino's specifically appointed purchasing agent. 

1. A copy of the Casino travel expense policy shall be submitted to the NIGC 

and Commission within thirty days of the date of this document. 

19. Auditing and Accounting Systems. The Tribe shall improve and maintain its 

accounting systems and procedures that, at a minimum: 

a. Include an adequate system of internal accounting controls; 

b. Permit the preparation of financial statements in accordance with generally 

accepted accounting principles; and 

c. Are susceptible to audit. 

20. Internal Audit Department. The Tribe shall establish an internal audit department 

that shall be responsible for establishing an audit plan with provisions ensuring: 

a. all expenses submitted to the Casino as an expense are in accordance with the 

Casino travel expense and purchasing policy; 

b. no individual person receives duplicate travel or purchasing expenses; 

c. all travel and purchasing expenditures are for Casino business and that the 

Tribe is responsible for expenditures relating to tribal business; 

d. all travel and purchases are documented; and 

e. all net gaming revenues are transferred to a tribal government account. 

21. Internal Audit Report. An internal audit report shall be issued annually. A copy 

of the report shall be submitted to NIGC and the Tribal Gaming Commission 

concurrently with the annual audit report required by IGRA. 

22. Expense Audit Report. The Casino shall continue to engage an independent CPA 

firm to perform audits of all travel expense and good will and charitable 

contributions made by the Casino. Such audits shall be submitted to the Tribal 

Gaming Commission and NIGC. 

23. Repayment of Sums Owed. The Tribe has required any outstanding expenses 

made by Tribal members to be repaid to the Casino in accordance with the 

promissory notes designated promissory notes "A" through "Dm incorporated into 

this agreement by reference. Each month, the Comptroller shall submit proof of 

compliance with the agreement to the NIGC Region I1 Chief. That proof shall 
include copies of the monthly records of payments being made to the Tribe and a 

certification that the monthly payment records reflect the actual payments being 

made pursuant to the agreement and that identify the source of the payments as 

being made directly from the debtor or from the withholding of honoraria, per 

capita payments or other sources. The Tribe has reimbursed the Casino the 

$1 0,227.95 deemed as tribal operational expenses. 

24. The Tribe shall take immediate action in accordance with these terms and notify 

the NIGC of the measures taken in accordance with these terms within 30 days of 

the date of this document. The ordinance amendment shall be submitted to the 

Chairman, National Indian Gaming Commission, 1441 L Street, NW, Suite 9100, 

Washington, DC 20005. All other required information shall be submitted to 

Regional Chief, Region 11, National Indian Gaming Commission, 501 1 Street, 

Suite 12400, Sacramento, California, 958 14. 

25. The NIGC shall monitor compliance with this agreement. The Band shall comply 

fully with the NIGC's monitoring efforts and inform the general membership of 

this agreement. 

26. The parties agree that this settlement will resolve all potential Commission 

enforcement action related to improper use of Tribal casino credit cards from the 

time period of January of 1997 until February 2000. 

27. The parties agree to work in good faith to resolve any future disputes concerning 

the Tribe's gaming activities. 

The Agreement entered this @day of @ 2001. 

On behalf of the National Indian Gaming Commission: 

d.leQ! 

Montie R. Deer, Chairman 

On behalf of the Coyote Valley Band of Pomo Indians 

Tribal Council