National Indian Gaming Commission 

w 

NOTICE OF VIOLATION 

To: Floyd Jourdain, Hereditary Chief, Chairman (agent for service of process) 

Red Lake Band of Chippewa Indians 

Red Lake Band of Chippewa Indians Gaming Board 

P.O. Box 550 

Red Lake, MN 56671 

FAX: (218) 679-3361 

Todd Smith, Chairman 

Red Lake Gaming Commission 

1 5882 Main Avenue 

P.O. Box 561 

Red Lake, MN 56671 

FAX: (218) 679-41 19 

1. Notification of Violation 

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

that the Red Lake Band of Chippewa Indians ("Respondent" or "Band"), located in Red 

Lake, Minnesota, is in violation of NIGC regulations for failure to submit timely 

quarterly fee statements and fee payments and failure to submit a timely annual audit. 

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 ("IGRA"), NIGC regulations, or 

any provision of a tribal gaming ordinance or resolution approved by the Chairman. 25 

C.F.R. 573.3. 

3. Applicable Federal and Tribal Laws 

A. IGRA mandates that the Commission shall establish a schedule of annual fees to 

be paid to the Commission annually by each Indian gaming operation that 

conducts class I1 or class III gaming, and that such fees shall be payable to the 

Commission on a quarterly basis. Failure to pay the scheduled fees may be 
grounds for revocation of the approval of the Chairman of any license, ordinance, 

or resolution required for the operation of gaming. 25 U.S.C. 5 2717(a). 

B. NIGC regulations require that each gaming operation on Indian lands compute 

quarterly statements determining the amount of fees owed to the Commission. 

The quarterly statements are due on March 31, June 30, September 30, and 

December 31 of each calendar year the gaming operation is subject to the 

jurisdiction of the NIGC. The quarterly statements shall be transmitted to the 

Commission and arrive no later than the due date. 25 C.F.R. $8 514.l(c) and 

5 14.1 (~)(2)-(4). 

C. 25 C.F.R. $ 514.1(~)(5) requires each gaming operation to remit to the 

Commission the fees due each quarter with the quarterly statement. 

D. 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. 25 U.S.C. 5 

27 1 O(b)(2)(C). 

E. MGC 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) and any management letter(s) setting forth the 

results of the annual audit(s) to the NIGC within 120 days after the end of each 

fiscal year. 25 C.F.R. $5 571.12 and 571.13 

F. Section 500 of the Red Lake Band of Chippewa Indians Gaming Ordinance 

("Ordinance"), as amended - the Band's approved gaming ordinance - requires 

Respondent to fully comply with all applicable U.S. federal law, to include the 

provisions of the Indian Gaming Regulatory Act (25 U.S.C. section 2701 et seq.). 

4. Role of Quarterly Fees and Quarterly Statements 

The annual fees collected by the MGC in order to hnd 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 fiom the gaming operations in a 

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

5. . Role of Independent Audit Report 

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

accountants is critical to the MGC'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 

W 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. 

6. Circumstances of the Violation 

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

Lake, Minnesota. 

B. Respondent operated its gaming facility, Seven Clans Casino Red Lake, during all 

or part of the following years: 2000,2001,2002,2003,2004 and 2005. 

C. Respondent operated its gaming facility, Seven Clans Casino Warroad, during all 

or part of the following years: 2000,2001,2002,2003,2004 and 2005. 

D. Respondent operated its gaming facility, Seven Clans Casino Thief River Falls, 

during all or part of the following years: 2000,2001,2002,2003,2004 and 2005. 

E. The NIGC has not received or received untimely quarterly statements and fee 

payments for the quarters up to December 31,2004 as follows: 

I. Seven Clans Casino Red Lake 

Quarter: Due: Received: 

1" 2001 313 1/01 Not filed 

2nd 2001 6/3010 1 Not filed 

3rd 2001 913010 1 Not filed 

4th 2001 12/31/01 Not filed 

1 2002 313 1 102 Not filed 

znd 2002 6130102 Not filed 

3"" 2002 9/30102 Not filed 

4th 2002 1213 1 102 Not filed 
. . 

11. Seven Clans Casino Warroad 

Charter: Due: Received: 

lSt 2000 313 1 100 Not filed 

2nd 2000 6130100 Not filed 

3rd 2000 9130100 Not filed 

4th 2000 1 213 1 100 Not filed 

lS' 2001 3/31/01 Not filed 

2nd 2001 613 010 1 Not filed 

3rd 2001 913010 1 Not filed 

4'h 2001 12/31/01 Not filed 

. . . nl. Seven Clans Casino Thief River Falls 

Ouarter: Due: Received: 

1 St 2000 313 1 100 Not filed 

znd 2000 6/30/00 Not filed 

3d 2000 9/30100 Not filed 

4"' 2000 1 213 1 100 Not filed 

lst 2001 3/31/01 Not filed 

2"d 2001 613 010 1 Not filed 

3rd 2001 913 010 1 Not filed 

4fi 2001 12/31/01 Not filed 
F. Pursuant to NIGC regulations, the final quarterly statement and fee payment for 

each year were due on December 31. 25 C.F.R. 5 514.1(~)(2). Quarterly 

statements and fee payments must arrive at the NIGC on or before the quarter 

ending date. 25 C.F.R. fj 514.1(~)(4). Respondent is therefore in violation of 

these regulations for failure to submit timely quarterly statements and fee 

payments. 

G. The NIGC received an untimely audit report for the fiscal year ending December 

3 1,2003. The audit report was due to the NIGC on April 30,2004, 120 days after 

the end of the Band's fiscal year. The audit report was received May 4,2004. 

yrl' 

H. IGRA requires that tribes submit annual audits of each gaming facility. 25 U.S.C. 

2710(b)(2)(C). NIGC regulations require that a tribe cause to be conducted an 

annual independent audit of the financial statements of each gaming operation on 

Indian lands and submit a copy of the audit report(s) and any management 

letter(s) setting forth the results of the annual audit(s) to the NIGC within 120 

days after the end of each fiscal year. 25 C.F.R. $5 571.12,571.13. The Tribe is 

therefore in violation of these statutes and regulations, as well as section 500 of 

the Gaming Ordinance, for failure to comply with IGRA. 

7. Measures Required to Correct these Violations 

A. There is no way to rectify submission of late quarterly statements and fee 

payments. NIGC regulations require that the quarterly statement and fee 

payments be transmitted to the Commission to anive no later than the due date. 

25 C.F.R. §$ 514.1(~) and 514.1(~)(2)-(4). 

B. There is no way to rectify the late submission of an annual audit. NIGC 

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

year. 25 C.F.R. $ 571 -13. 
8. 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 (10) 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 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 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. 

9. 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. 5 575.5(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 

r good cause). The Chairman shall consider any 

g the facts surrounding the violation and the amount 

PHE~. HOGEF~ 

Chairman 

National Indian Gaming Commission 
Certificate of Sewice 

I certify that this Notice of Violation was sent by facsimile and mailed VIA U.S. 

certified mail return receipt requested on this 3 1st day of January, 2006 to: 

Floyd Jourdain, Jr., Hereditary Chef, Chairman (agent for service of process) 

Red Lake Band of Chippewa Indians Gaming Board 

P.O. Box 550 

Red Lake, MN 56671 

FAX: (2 18) 679-336 1 

Todd Smith, Chairman 

Red Lake Gaming Commission 

15882 Main Avenue 

P.O. Box 561 

Red Lake, MN 56671 

FAX: (2 18) 679-41 19