G In a letter to NIGC dated February 20, 2007, DED stated that the compensation
provision for Baxcase had been changed into a monthly fee that was not based on
a percentage of the management fees. Therefore, Mr. Campbell no longer held a
financial interest in the management contract thus no background investigation
would need to be conducted on him. An affidavit from Tony Holden attesting to
the change in Mr. Campbell’s compensation as well as a copy of the revised
agreement between DED and Baxcase was submitted to NIGC.

D. On October 1, 2007, the NIGC Chair sent a letter to the Tribe and DED approving
the Third Amended and Restated Management Agreement.!

E. Beginning in 2008, DED reverted Baxcase’s fee to a percentage of DED’s
management contract fee, thus giving Baxcase and its principal, Stuart Campbell,
a direct financial interest in the management contract.

F. The change in entities and individuals with a financial interest in the Tribe’s
management contract with DED is a modification or amendment of the
Management Agreement. 25 C.F.R. § 535.1(c)(4)

G. DED and the Tribe did not submit an updated list of entities and individuals with
a financial interest in the Management Contract as required by IGRA and NIGC
regulations. 25 C.F.R. § 535.1(b)

Violation 2: Operating under an Unapproved Amendment to the Management Contract -
Depreciation

A. On June 3, 2005, the NIGC received a class IJ and class II] management contract
between the Tribe and DED, dated March 2, 2004. NIGC conducted a review of
the management contract and identified an error in the calculation of depreciation
whereby after the initial deduction of all depreciation, the non-facility
depreciation was added back into the calculation as a depreciation adjustment,
thus inflating the casino’s net revenue and the management fee.

B. In a letter dated February 16, 2007, the NIGC informed DED and the Tribe of the
error and requested an explanation as to why the management fee was being
calculated differently than the manner required by GAAP and the Management
Contract.

' See Third Amended and Restated Management Agreement between the Peoria Tribe of Indians of Oklahoma and
Direct Enterprise Development, LLC (October 1, 2007).


CERTIFICATE OF SERVICE

I certify that this NOV-19-03 was sent by facsimile, email and certified U.S. mail, return
receipt requested, on this 10 day of May, 2019 to:

Craig Harper, Chief

Peoria Tribe of Indians

118 S. Eight Tribes Trail

P.O. Box 1527

Miami, OK 74355

Fax: (918) 540-2538

Email: chiefharper@peoriatribe.com

Tonya Mathews, Executive Director
Peoria Tribal Gaming Commission
1100 Buffalo Run Blvd

Miami, OK 74354

Fax: (918) 542-4850

Email: tmathews@peoriatribe.com

Pa

hakira Fergus
Legal Staff Executive Administrator


On May 21, 2007, the NIGC received a revised Business Plan which reflected the
correct calculation of deducting interest and depreciation in determining Net
Gaming Revenue used to calculate the management fee.

From fiscal year 2008 through fiscal year 2018, DED and the Tribe reverted back
to the erroneous depreciation calculation causing the appearance of higher net
gaming revenues and an increased management fee.

In 2017, the NIGC discovered the use of the depreciation add-back calculation
which resulted in the overstatement of net gaming revenue in the amount of
$7,347,483 and overpayments of management fees in the amount of $2,067,561.

In a letter dated September 28, 2017, the NIGC informed DED and the Tribe of
the miscalculation and overpayment of management fees. To date, DED has not
paid back the excess management fees.

The use of the incorrect depreciation calculation was in direct contradiction to the
NIGC’s direction and IGRA’s requirements that gaming revenues are used as
operating expenses for the gaming operation or one of IGRA’s five permitted
uses. 25 U.S.C. § 2703(9); 25 C.F.R. § 522.4(b)(2).

Violations 4 through 77: Misuse of Gaming Revenue — Management Advances

A.

The Management Contract provides for the Manager to pay itself a percentage of
the Net Gaming Revenue on or before the twenty-fifth (25") day of the month.
Third Amended and Restated Management Agreement, § 5.1.

The Management Contract also provides that within twenty-five (25) days after
the end of each calendar month of operations, the Manager shall calculate and
report to the Tribe the Gross Revenues, Operating Expenses and Net Revenues for
the previous month’s operation of the gaming enterprise. Third Amended and
Restated Management Agreement, § 5.1.

The Management Contract further provides that the Manager shall disburse such
Net Revenues, less any amount reasonably needed to maintain a Cash
Contingency Reserve Fund, to the Tribe before disbursing the management fee.
Third Amended and Restated Management Agreement, § 5.4.

From fiscal year 2010 through fiscal year 2017, DED directed the distribution of
revenue prior to the Tribe receiving its distribution of net gaming revenue.


Violation 3:

A.

On May 21, 2007, the NIGC received a revised Business Plan from DED which
reflected the correct calculation of deducting depreciation to determine Net
Gaming Revenue used to calculate the management fee.

In a memo to DED dated October 28, 2008, Stuart Campbell stated that the
Management Contract allowed for separating depreciation into “facility” and
“non-facility” categories for the purpose of calculating the management fee;
specifically, once both categories of depreciation was deducted from the casino’s
operating costs, the “non-facility” depreciation was to be added back into the
calculation as a “depreciation adjustment” thus overstating the Net Gaming
Revenue and increasing the management fee.

From fiscal year 2008 through fiscal year 2018, DED and the Tribe reverted back
to the erroneous depreciation calculation causing the appearance of higher net
gaming revenues and an increased management fee.

Neither IGRA nor NIGC regulations allow for any adjustment to the basis for
determining operating expenses and net revenue.

The change in the depreciation calculation is a modification or amendment of the
Management Agreement. 25 C.F.R. § 535.1(c)(6).

DED and the Tribe did not submit an amendment to allow for the revised
depreciation calculation in the Management Contract as required by IGRA and
NIGC regulations. 25 C.F.R. § 535.1(b).

Misuse of Gaming Revenue - Depreciation

On June 3, 2005, the NIGC received a class II and class II] management contract
between the Tribe and DED, dated March 2, 2004. NIGC conducted a review of
the management contract and identified an error in the calculation of depreciation
whereby after the initial deduction of all depreciation, the non-facility
depreciation was added back into the calculation as a depreciation adjustment,
thus inflating the casino’s net revenue and the management fee.

In a letter dated February 16, 2007, the NIGC informed DED and the Tribe of the
error and requested an explanation as to why the management fee was being
calculated before deducting interest and depreciation as both are legitimate
operating expenses, as defined by Generally Accepted Accounting Principles and
the Management Contract, and should be included in the computation of Net
Revenues for the calculation of the management fee.


hearing is requested and why. Respondent may, in writing, 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.

VIII. Fine and Submission of Information

Each of the violations cited above may result in the assessment of a civil fine against
Respondent in an amount not to exceed $52,596 per violation. Under 25 C.F.R. § 575.5(a),
Respondent may submit written information about the violation and measures taken to
prevent future violations to the Chairman within fifteen (15) days after service of this notice
of violation (or such longer period as the Chairman of the Commission may grant for good
cause). The Chairman shall consider any information submitted in determining the facts
surrounding the violation and the amount of the civil fine, if any.

Dated this josey of May, 2019

Iden O. Chaudhuri
Chairman


1

National Indian Gaming Commission

NOTICE OF VIOLATION

NOV-19-03

To: Craig Harper, Chief
Peoria Tribe of Indians
118 S. Eight Tribes Trail
P.O. Box 1527
Miami, OK 74355
Fax: (918) 540-2538

Tonya Mathews, Executive Director
Peoria Tribal Gaming Commission
1100 Buffalo Run Blvd

Miami, OK 74354

Fax: (918) 542-4850

Notice of Violation

The Chairman of the National Indian Gaming Commission (NIGC) hereby gives notice that the
Peoria Tribe of Indians of Oklahoma (Respondent or Tribe), headquartered in Miami, Oklahoma
is in violation of the Indian Gaming Regulatory Act (IGRA), NIGC regulations, and its tribal
gaming ordinance, because the Tribe operated under an unapproved amendment to its
Management Agreement with Direct Enterprise Development (DED) and used net gaming
revenue for purposes other than those permitted by IGRA, NIGC regulations, and the Tribe’s
gaming ordinance.

Normally, the Chairman issues a Letter of Concern under 25 C.F.R. § 573.2 prior to bringing an
enforcement action. In this case, however, given that many of the violations identified here were
raised with the Tribe during the most recent management contract review, the fact the
Management Agreement with DED is no longer in effect, and the misuses of Net Gaming
Revenue at issue were primarily the result of actions by DED principles, who are no longer
present at the Casino, the Chairman believes that a Letter of Concer is not warranted in this
matter.


VI.

VII.

E. On 64 different occasions, these distributions were wired directly into the
personal bank accounts of Tony Holden and David Qualls before the Tribe
received its distribution, in violation of the terms of the management contract.
Third Amended and Restated Management Agreement, § 5.4.

F. On 10 different occasions, distributions were made directly to outside parties for
items that include such purchases as a motorcycle for Tony Holden’s motorcycle
shop.

G. The distributions were direct payments of revenue to Tony Holden, David Qualls,

and various others at the direction of DED and were made in violation of the
terms of the approved management contract thus unauthorized distributions of the
net gaming revenue in violation of IGRA. 25 U.S.C. § 2703(9); 25 C.F.R.

§ 522.4(b)(2).

Measures Required to Correct these Violations

Because the Tribe and DED have terminated their contractual relationship and DED is no
longer managing the facility, the Tribe has already taken steps to cease operating under an
unapproved modification to the management agreement. There is no way to correct the past
violations. The Chair will, however, consider the Tribe’s efforts taken to mitigate damages,
including recouping overpayments of management fees, when determining an appropriate
civil fine amount under 25 C.F.R. § 575.5, further discussed in Section VIII below.

Appeal

Within 30 (thirty) days after service of this Notice of Violation, Respondent may appeal to
the full Commission under 25 C.F.R. Parts 581, 584 or 585 by submitting a notice of appeal
and, if desired, request in writing for a hearing to the National Indian Gaming Commission,
1849 C Street NW, Mail Stop #1621, Washington, DC 20240. 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 a hearing before a
presiding official, 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


Additionally, the Tribe and DED modified the terms of the Agreement to increase DED’s
fee. This was done after the NIGC had raised concerns with the calculation and the parties
had changed it in order to obtain the Chair’s approval of the Management Agreement.
Moreover, the re-calculation resulted in the net revenue amount being increased solely for the
purpose of calculating the management fee. The revised calculation was not used to
determine the amount of actual net gaming revenue distributed to the Tribe. Put another way,
the revised calculation benefitted DED to the amount of $2,067,561 at the Peoria Tribe’s
expense.

One of the purposes of IGRA is to provide a statutory basis for the operation of gaming by
tribes as a means to promote tribal economic development, self-sufficiency, and strong tribal
governments. It is also to ensure that Indian tribes as a whole are the primary beneficiary of
gaming revenue. To achieve that purpose, IGRA permits a Tribe to use its net gaming
revenue for the five purposes listed above in paragraph III(I).

Net revenues means gross gaming revenues of an Indian gaming operation less— (a)
amounts paid out as, or paid for, prizes; and (b) total gaming-related operating expenses,
including all those expenses of the gaming operation commonly known as operating
expenses and non-operating expenses consistent with professional accounting
pronouncements, excluding management fees. Properly categorized as net revenues, the
payments discussed herein are subject to IGRA and NIGC restrictions on their use.

Violations

Violation 1: | Operating under an unapproved Amendment to a Management Agreement —
Stuart Campbell

A. On June 3, 2005, the NIGC received a class II and class III management contract
between the Tribe and DED, dated March 2, 2004. NIGC conducted a review of
the management contract and discovered a contract between DED and Baxcase, a
law firm owned by Stuart Campbell, which gave Mr. Campbell 5% of the
management fee in exchange for legal services rendered to DED and the Tribe.

B. In letters dated January 11, 2006; October 24, 2006 and February 16, 2007, the
NIGC informed DED and the Tribe that if Baxcase and Mr. Campbell were to
maintain a direct or indirect financial interest in the Management Agreement, the
entity and individual would need to be submitted for a background investigation
and suitability determination pursuant to 25 U.S.C. § 2711 and 25 C.F.R. §
533.3(d).


IV.

G. Any modifications to a management contract for the operation of a class II or class III
gaming activity that have not been approved by the Chairman are void. 25 C.F.R.

§ 535.1(f).

H. NIGC regulations provide that it is a substantial violation of IGRA for a management
contractor to manage an Indian gaming operation without a contract that the Chairman
has approved under part 533 of NIGC regulations. 25 C.F.R. § 573.6(a)(7).

I. IGRA, NIGC regulations, and the Tribe’s gaming ordinance specify that net gaming
revenue from Class II and III operations may only be used for the following purposes: (1)
to fund tribal government operations and programs; (2) to provide for the general welfare
of the Indian tribe and its members; (3) to promote the tribal economic development; (4)
to donate to charitable organizations; (5) to help fund operations of local government
agencies. 25 U.S.C. §§ 2710(b)(2)(B) and 2710(d)(1)(A) Gi); 25 C.F.R. §§ 522.4(b)(2)
and 522.6(b); Peoria Tribe of Indians of Oklahoma Gaming Ordinance, §16.1.

Circumstances of the Violation

A. Managing without an approved Contract

As discussed in greater detail below, the Tribe and DED entered into two modifications to its
approved management contract without obtaining the NIGC Chair’s approval. More
troubling than the violation itself, though, is that the parties modified the Agreement to
implement changes for which the NIGC had previously expressly raised concerns, and that
were removed from the Agreement to obtain the Chair’s approval.

Acting under unapproved modifications to a management contract threatens the NIGC’s
ability to achieve its congressionally mandated goals of shielding the Tribe from organized
crime and other corrupting influences; ensuring that the Tribe is the primary beneficiary of its
gaming operation; and ensuring that gaming and management is conducted fairly and
honestly by both the operator and players. See 25 U.S.C. § 2702(2). The unapproved
modifications that are the subject of this NOV prevented the NIGC from fulfilling those
statutory obligations, resulting in loss of net gaming revenues to the Tribe.

B. Misuse of Net Gaming Revenue

As also discussed in greater detail below, the Tribe’s casino regularly made payments to
DED’s principles in a manner inconsistent with the terms of the Management Agreement.
Numerous payments were issued directly to the principles, or to third parties on the
principles’ behalf. Although these advances were paid back from the management fee, there
was no guarantee at the time the advances were made that the fee would be sufficient to
cover the advances and the advances were made outside the scope of the approved
management fee. As such, they were unlawful distributions of net gaming revenue.


Il.

TL.

Authority

A. The Chairman of the NIGC may issue an 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 U.S.C. § 2713; 25
CER. § 573.3.

B. The Chairman shall have authority to levy and collect appropriate civil fines, not to
exceed $52,596 per violation, against the tribal operator of an Indian game or a
management contractor engaged in gaming for any violation of any provision of this Act,
any regulation prescribed by the Commission pursuant to this Act, or tribal regulations,
ordinances, or resolutions approved under the Act. 25 U.S.C. § 2713(a)(1); 25 C.F.R.

§ 575.4.

Applicable Federal and Tribal Laws

A. Under IGRA and NIGC regulations, the NIGC Chairman (Chairman) may issue a Notice
of Violation (NOV) to any person for violation of any provision of the IGRA, NIGC
regulations, or any provision of a tribal gaming ordinance or resolution approved by the
Chairman. 25 U.S.C. § 2713; 25 C.F.R. § 573.3.

B. IGRA provides that an Indian tribe may enter into a management contract for the
operation of a class II or class III gaming activity if such contract has been submitted to,
and approved by, the Chairman. 25 U.S.C. § 2710(d)(9); 25 U.S.C. § 271 1(a)(1).

C. Management contracts and changes in persons with a financial interest in or management
responsibility for a management contract that have not been approved by the Chairman
are void. 25 C.F.R. § 533.7.

D. NIGC regulations provide that a tribe may enter into a modification of a management

contract for the operation of a class II or class III gaming activity, subject to the approval
of the Chairman. 25 C.F.R § 535.1(a).

E. NIGC regulations require that a tribe submit a modification of a management contract for

the operation of a class II or class III gaming activity to the Chairman within 30 days of
its execution. 25 C.F.R. § 535.1(b).

F. NIGC regulations require that if the modification or amendment involves a change in
person(s) having a direct or indirect financial interest in the management contract or
having management responsibility for the management contract, a list of such person(s)
and the information required under §537.1(b)(1) of NIGC regulations must be submitted
to the Chairman for review.