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Originally published Saturday, September 26, 2009 at 12:06 AM

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Big payoff eluding troubled tribe

Casino Snoqualmie was supposed to launch the tribe's approximately 600 members to long-awaited economic prosperity, but instead it is bringing in only about a quarter of the revenue projected. And the tribe is hobbled in tackling its problems because of internal political turmoil.

Seattle Times staff reporter

The Snoqualmie tribe last November opened a showpiece casino a half-hour from downtown Seattle — and took on $375 million in debt — amid high hopes.

The casino was supposed to launch the tribe's approximately 600 members into long-awaited prosperity. Instead, it has been bringing in only about a quarter of the projected revenue to the tribe.

The tribe, which just regained federal recognition in 1999, has been faced with budget cuts and layoffs, according to a June memo written by Henry Flood, a grant and contract administration consultant, to the tribal council and administrator.

"The adopted budget for 2009 ... has proved to be wildly inaccurate. Gaming revenue is $250,000 a month instead of $1,000,000 a month," said the memo, obtained by The Seattle Times. "A combination of cutbacks and loan funding is imperative to avoid financial collapse."

And, for the second time in as many years, the tribe is in political turmoil, too.

In April 2008, the tribe banished nine of its members, in part over a disputed election the previous May. As a lawsuit slowly worked through the courts, the banishment weighed on the tribe until a federal judge partially overturned it earlier this year.

And today, as the tribe meets to reconsider that banishment, it also must consider ways to restore its leadership after another falling out. The tribal council, mired in disagreement over the May 2008 elections, was so severely divided it would not meet regularly to conduct business.

Troubled finances

Flood's memo pointed out a host of problems in need of attention — what he called "The Big Fix" project. He noted unresolved federal audit findings questioning costs dating back to fiscal year 2004 that could potentially exceed $1 million. But until the tribe completes the audits, it can't know what, if any, liability it's facing.

The tribe is working with old overhead rates on contracts, which hurts cash flow, Flood noted. He also found the finance office is not staffed to handle the volume and complexity of transactions it sees, and the staff lacks training.

Flood determined the tribe was not keeping current on reimbursements on some contracts and grants, had advanced "large sums of money" without getting paid back, and that inaccurate record keeping made getting paid more challenging. Flood also found the tribe has "major problems" organizing, tracking and monitoring its awarded contracts and grants, and that financial reports on many grants and contracts are delinquent.

"The result is inefficiency and confusion, disorganized and lost paperwork, delayed payments, suspensions and negative compliance reviews."

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Who's governing?

But the tribe can't tackle The Big Fix without a functioning government — and it's been plagued by infighting.

"They were a split council and would not come together for joint meetings off and on since May," said Judy Joseph, superintendent for the Bureau of Indian Affairs (BIA) Puget Sound Agency in Everett.

"To maintain a government-to-government relationship, they have to be a viable tribal government," Joseph said. "If there is any question about that, it causes red flags to go up, and they were split, they were not meeting."

In August, the tribe's administrative offices were padlocked and some of its federal funds frozen. Elders stepped in to dissolve the council and take charge until new elections could be held — but they had no constitutional authority to do that.

Tribal administrator Matt Mattson wrote to tribal staff on Sept. 1, according to an internal e-mail, explaining the tribal council and government "are in turmoil amid an internal rift ... I have closed the tribal center and central records facility to allow all parties to think about their options."

He called it a "terrible situation" and said the tribe was facing the prospect of the U.S. government assuming administrative control of the tribal government. "This is not in anyone's interest. At the moment that step is not imminent, but it is real and possible," he wrote. He did not return telephone calls from The Times requesting more information.

The Bureau of Indian Affairs offered mediation this month. Two days of talks at a Seattle law firm — paid for by U.S. taxpayers — resulted in reinstatement of the council that was in place before the disputed May election.

The tribe's general membership will meet this morning in Monroe. After taking up the banishment question, tribal members also will be asked to consider election procedures and set a date for a new council election.

Still in business

Through it all, tribal clinics and the casino have continued to function.

Susan Arland, spokeswoman for the state Gambling Commission, which licenses Casino Snoqualmie, said the political dispute has not, "to the agency's knowledge," affected the orderly and lawful operation of the casino, so it has not affected the tribe's gambling license.

Joseph, at the BIA, said her agency stepped in reluctantly. "It is not very often that we have to do this, and it is not a good thing," Joseph said.

Tribal administrative offices were reopened Sept. 15. Joseph said she also has authorized unfreezing federal funds.

How lasting the mediation will prove is yet to be seen. "Part of the meeting Saturday is to discuss that very issue, whether they accept the pre-May council as their council," Joseph said. "They could decide they don't go with the mediation. Then who's the council? You are right back where you started."

It's been a painful chapter.

"Especially when it comes to a casino tribe, you are walking a thin line there when you have put the money up for a multimillion-dollar casino," said Joseph, a member of the Yakama nation. "There are always people who want to see you fail. A lot of this is new-tribe growing pains."

Gabriel de los Angeles was elected to the council in May as an alternate. He said his council position is "off in the ether at this point." Angeles, 30, said he was thrilled to go to work for his tribe, bringing a master's degree and a range of experience with nonprofit groups. Now, he doesn't even want to go to the general membership meeting.

The feuds at tribal government were frustrating, he said. "It has been very difficult, to deal with this thing, it has been so confusing, so back-and-forth — here is a decision, and a protest to that decision, and another protest to the decision. It makes it difficult for anyone to get any work done."

Lynda V. Mapes: 206-464-2736 or lmapes@seattletimes.com

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