Gaming official tied to land sale fraud
Suspected as trigger in Snyder’s ouster
By Michael Beebe NEWS STAFF REPORTER


Bergal Mitchell III, the former vice chairman of Seneca Gaming Corp., skimmed $880,000 when the corporation purchased land for the Senecas’ Hickory Stick golf course in Lewiston in 2006, a confidential investigative report prepared for the gambling agency charges.

Mitchell, who was forced to resign from his job last September after the FBI notified Seneca Gaming of allegations about the sale, split the proceeds with Lewiston attorney Michael J. Dowd and Dowd’s former law partner, disbarred attorney Timothy J. Toohey, the report states.

The Buffalo News obtained a copy of the preliminary audit by Manuel, Daniels, Burke International LLC of Alexandria, Va. The audit was commissioned by Seneca Gaming and delivered Jan. 8.

FBI agents and the U. S. attorney have been investigating the land sale since FBI agents raided Dowd’s law offices in Lewiston last September and told the Senecas they had been the victim of a criminal fraud.

Acting U. S. Attorney Kathleen M. Mehltretter met with Seneca leaders, and FBI agents — with the approval of the Tribal Council — have since talked to a number of Seneca officials.

Seneca Gaming ordered the audit into Mitchell’s activities; investigators from Manuel Daniels Burke interviewed 30 people and checked land transactions and other records; and 30 copies of the interim report were delivered to the Seneca Tribal Council and Seneca Gaming.

Tribal councillors have refused to release the audit, and its suspected contents have been one of the hottest topics on the Seneca reservations and

native blogs.

The audit is thought to be one of the triggers that led to the surprise decision Friday by- Seneca Gaming’s board to remove Barry E. Snyder Sr. as chairman.

Saturday, Snyder issued a statement as Seneca Nation president, a position he still holds, claiming that the interim report commissioned by the gaming board’s audit committee “has significant inaccuracies and was prepared in haste to promote the positions of the committee members.”

Snyder also took issue with The News.

“As president of the Seneca Nation, our people and economic sovereignty have been jeopardized by a small group of nation members who continue to leak confidential, inaccurate and incomplete information to a Buffalo News reporter.”

Snyder said a final report is being completed and will be delivered to the Tribal Council.

The audit’s findings come as the Seneca Nation, teamed with a start-up company, is trying to develop a $1.3 billion casino in the Catskills. The Senecas already operate casinos in Niagara Falls and Salamanca, and a temporary casino in Buffalo.

Members of the audit committee declined to comment, releasing a statement saying the audit is preliminary, subject to change and may differ from the final report.

The audit also reported for the first time that two former Seneca Gaming executives left the company in 2007 because two Seneca Gaming board members tried to get them to increase a contract so that a losing Seneca bidder could be compensated.

And the auditors report on $250,000 that Seneca Gaming gave to the Buffalo Sports Society to bring the Indigenous Games to Buffalo. That money, the auditors said, was funneled through Mitchell and Ross L. John Sr., a Seneca who served as president of the group.

When the Indigenous Games revoked the Senecas’ contract to hold the games, auditors report, Seneca Gaming tried to get its money back but found only $161.57 in the account. The auditors said the FBI has done a preliminary investigation.

The majority of the audit, however, concerns the sale of land in Lewiston for the $25.5 million Hickory Stick golf course, designed by architect Robert Trent Jones II.

The auditors, working with land sale documents and figures that the FBI provided the Senecas, said that Dowd put the land together as president of Old Creek Development. Toohey probably was involved because of his past association with Mitchell, they said.

The auditors said Dowd amassed 255 acres for the course on Feb. 15, 2006. He paid $1.2 million for the parcels and sold them that same day to Seneca Gaming for $2.1 million.

That represented a single day’s profit of $880,245.88, the forensic audit reported.

The money was then split among Mitchell, Dowd and Toohey, the report states, citing FBI documents provided to Seneca Gaming.

The FBI has not charged Mitchell with a crime. Mehltretter, the acting U. S. attorney, declined to comment.

Mitchell’s attorney, Joseph

V. Sedita, said his client is guilty of no crime. He said Mitchell did nothing wrong.

“There was a contract to sell, more or less, 255 precisely identified acres of land for $2.1 million,” Sedita said. “And that’s exactly what happened. And nothing was skimmed on that transaction. The purchaser paid $2.1 million and got precisely what it bargained for. There’s no skim on that.”

Sedita described the money that Mitchell, Dowd and Toohey received as finder’s fees or commissions and said there is nothing illegal about it.

Joel L. Daniels, the attorney representing Toohey, said the report is wrong in one respect.

“He put the deal together,” Daniels said of Toohey, his client, not Dowd. “He was the broker. He earned a commission.”

Like Sedita, Daniels said the deal allowing the construction of a championship golf course will be good for the Senecas and their attempts to lure high rollers to their casinos.

Rodney O. Personious, representing Dowd, said the Senecas knew how much they were paying because the Seneca Tribal Council approved the $2.1 million payment.

“It was a good deal for them, it served a purpose they had in mind,” Personious said. “They knew what they were getting into; there was nothing improper about this transaction.”

The land sale contract, however, states that there were no commissions or brokers’ fees paid.

Manuel Daniels Burke, consisting of former FBI agents and Department of Justice investigators, said Seneca Gaming charged them to find any events that should be reported to the Securities and Exchange Commission, and violations of the law reportable to the National Indian Gaming Commission.

The SEC has jurisdiction over Seneca Gaming finances because of the $500 million Seneca Gaming borrowed from bondholders for its operations, and the NIGC is the regulatory agency controlling Indian gambling.

The audit also, for the first time, cites the reasons for the departures from Seneca Gaming of John Pasqualoni, the chief executive officer, and Joseph D’Amato, the chief operating officer.

Auditors cite a letter from Pasqualoni that the two left after two members of the Seneca Gaming board tried to get them to increase a contract by 3 percent to benefit an unnamed, unsuccessful Seneca bidder.

Pasqualoni told the auditors that the two board members were Mitchell and Martin Seneca, an attorney and former chairman of Seneca Gaming’s audit committee.

Pasqualoni also said that an unnamed Seneca tried to force the architect of the Seneca Buffalo Creek Casino to increase its contract by 2 percent to pay her.

The architect, SOSH, was also threatened with a suit by this unnamed Seneca in Seneca Peacemaker’s Court, auditors said.

“When we were informed of these incidents, we told the architect that Seneca Gaming Corp. does not do business in that manner and we would not reimburse him if he made the payments,” Pasqualoni’s letter states.

The audit said that Seneca Gaming’s outside counsel, Akin Gump Strauss Hauer & Feld of Washington, D. C., told the gambling company it did not have to report the attempts to the SEC because no crime occurred.

Auditors said that Seneca Gaming should take another look at whether the SEC should be informed.

They also found fault with Akin Gump, as well as Seneca Gaming attorney Rajat Shah, for failing to thoroughly vet the Hickory Stick land purchase.

Dowd had offered much of the same land to the town of Lewiston in 2002 for a municipal golf course for $300,000, the auditors said.

“It appears the Seneca Gaming Corp. agreed to pay $8,171 per acre ($2.1 million for 257 acres) of the same land that Old Creek Development had previously agreed to sell to the Town of Lewiston for $1,667 per acre ($300,000 for 180 acres) 27 months earlier,” the auditors reported.

The previous offer, though, included plots for residential housing that Old Creek would develop, as well as the right for Old Creek to manage the municipal golf course.

A week before the sale to the Senecas, the auditors said, Akin Gump attorney Jeffrey Seitz asked Dowd why he was listing the price of land as $1.2 million, with nearly $1 million as “something other than the property.”

“Obviously the something else could not be described as money being skimmed off the sale to pay Bergal Mitchell’s finder’s fees,” the auditors wrote.

Hickory Stick is scheduled to open in the spring of 2010.

mbeebe@buffnews.com
http://www.buffalonews.com/cityregion/story/608177.html