National Indian Gaming Commission 

VVrf 

NOTICE OF VIOLATION 

To: Webster A. Demrnert III, President 

Klawock Cooperative Association 

P.O. Box 430 

Klawock, AK 99925 

FAX: 907.755.8800 

1. Notification of Violation 

The Chairman of the National Indian Gaming Commission (NIGC) hereby gives notice 

that the Klawock Cooperative Association (Respondent or Tribe), located in Klawock, 

4~~ Alaska, is in violation of the lndian Gaming Regulatory Act (IGRA), NIGC regulations, 

and its Gaming Ordinance for failure to submit annual audits and failure to file quarterly 

statements. 

2. Authority 

Under regulations of the National Indian Gaming Commission, the Chairman of the 

NIGC (Chairman) may issue a Notice of Violation (NOV) to any person for violation of 

any provision of the Indian Gaming Regulatory Act, NIGC regulations, or any provision 

of a tribal gaming ordinance or resolution approved by the Chairman. 25 C.F.R. $573.3. 

3. Auulicable Federal and Tribal Laws 

A. 25 U.S.C. $2710(b)(2)(C) - IGRA requires an annual audit of each 

gaming operation and requires that a copy of the results of the annual audit 

be submitted to the NIGC. 

B. 25 C.F.R. $5 571.12 and 571.13 -NlGC regulations require that a tribe 

cause to be conducted annual independent audits of the financial 

statements of each gaming operation on Indian lands and submit a copy of 

the audit report(s) setting forth the results of the annual audit(s) to the 

NIGC within 120 days after the end of each fiscal year. 
C. 25 C.F.R. $ 5 14.1 (c) requires tribes to file quarterly statements no later 

than March 3 1, June 30, September 30, and December 31 of each calendar 

year for each gaming operation subject to the jurisdiction of the NIGC. 

D. Section 5.01 (a) of the Gaming Ordinance of the Klawock Cooperative 

Association - the approved gaming ordinance requires the Tribe to obtain 

outside annual audits for all of its gaming operations and to submit the 

results of those audits to the NJGC. 

4. Role of lndependent Audit Report 

Submission of the annual independent audit report by a firm of certified public 

accountants is critical to the NIGC's mission to protect the integrity of Indian gaming. A 

firm's ability to conduct an audit in accordance with generally accepted auditing 

standards and render an opinion on the financial statements prepared in conformity with 

generally accepted accounting principals provides a certain level of assurance as to the 

security of tribal gaming revenues. The audit report prepared and submitted on a timely 

basis is evidence of, among other things, the integrity of the gaming operation and, more 

specifically, of 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. 

5. Role of Quarterly Statements 

The annual fees collected by the NIGC in order to fund the agency's work are based upon 

the quarterly worksheets submitted by Indian gaming operations. NIGC must set a fee 

rate sufficient to fund its annual budget, yet may not exceed the fee cap set by Congress. 

Thus, it is imperative that the NIGC receive worksheets from the gaming operations in a 

timely manner so that the NIGC is able to set accurate preliminary and final fee rates. 

5. Circumstances of the Violation 

A. Respondent is a federally recognized Indian Tribe with tribal headquarters 

in Klawock, Alaska. 

B. Respondent operated its gaming facility, Klawock Cooperative 

Association Bingom Pulltab Shoppe, during all or part of the following 

years: 2001,2002, and 2003. 

C. To date the NIGC has not received audit reports for: 

i. Klawock Cooperative Association Bingo/IRA Pulltab Shoppe: 

1. Fiscal Year 2003. 
D. The audit report for Klawock Cooperative Association BingolIRA Pulltab 

Shoppe for the fiscal year ended December 3 1,2001 was received on May 

17,2004. The 2002 fiscal year audit was due April 30,2002. 

E. The audit report for Klawock Cooperative Association Bingo/IRA Pulltab 

Shoppe for the fiscal year ended December 3 1,2002 was received on May 

17,2004. The 2002 fiscal year audit was due April 30,2003. 

F. The quarterly statements for Klawock Cooperative Association Bingo/lRA 

Pulltab Shoppe for fiscal years 2001,2002, and 2003 were due on March 

3 1, June 30, September 30, and December 3 1 of 2001 and 2002. 

G. The quarterly statements for Klawock Cooperative Association Bingo/lRA 

Pulltab Shoppe for fiscal year 2004 were due on March 3 1 and June 30, 

2004. 

6. Measures Required to Correct these Violations 

To correct the continuing audit violation, Respondent must submit an independent audit 

report within 45 days of receipt of this letter for each of the years listed in paragraph 5 of 

this notice. 

There is no way to rectify the late submission of the 2001 and 2002 audits. The 

regulations require that audits be received within 120 days of the end of the fiscal year. 

To correct the continuing quarterly statement violation, Respondent must submit 

quarterly statements for the following quarter end dates: 

A. March 31,2004; and June 30,2004. 

7. Appeal 

Within 30 (thirty) days after service of this Notice of Violation, Respondent may appeal 

to the full Commission under 25 C.F.R. Part 577 by submitting a notice of appeal and, if 

desired, request for hearing to the National Indian Gaming Commission, 1441 L Street, 

NW, Ninth Floor, Washington, DC 20005. Respondent has a right to assistance of 

counsel in such an appeal. A notice of appeal must reference this Notice of Violation. 

Within ten (1 0) days after filing a notice of appeal, Respondent must file with the 

Commission a supplemental statement that states with particularity the relief desired and 

the grounds therefore and that includes, when available, supporting evidence in the form 

of afidavits. 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 specify the names of proposed witnesses and 

the general nature of their expected testimony, 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. 

8. Fine--Submission of Information 

The violation cited above may result in the assessment of a civil fine against Respondent 

in an amount not to exceed $25,000 per violation per day. Under 25 C.F.R. 9 575.5(a), 

Respondent may submit written information about the violation to the Chairman within 

15 days after service of this notice of violation (or such longer period as the Chairman of 

y grant for good cause). The Chairman shall consider any 

termining the facts surrounding the violation and the amount 

National Indian Gaming Commission 

. , 

Staff Attorney 
Certificate of Service 

I certify that this Notice of Violation was sent by facsimile and mailed on this 241h day 

of August 2004 to: 

Webster A. Dernmert JII, President 

Klawock Cooperative Association 

P.O. Box 430 

Klawock, AK 99925 

FAX: 907.755.8800 

Klawock Gaming Commission 

FAX: 907.755.8800 

Staff Attorney