Minn. Case Tests Who Polices Indian Gaming

DARRELL 'CHIP' WADENA slides out from under his two-tone pickup. Even with grease-stained hands, he carries himself with the confident air of a long-time Chippewa leader.

Nearby, Mr. Wadena's flaxen-hued home and manicured lawn blend well with the Minnesota fall foliage. But they stand in contrast to the peeling facades and boarded-up houses elsewhere on the White Earth Reservation.

Asked about the difference, Wadena says simply: ''I just take care of my money better.''

His wealth is a touchy subject.

Two months ago, a federal grand jury handed down a multiple-count indictment alleging corruption by several White Earth Band leaders. Wadena was among those named in the indictment. Some of the charges relate to the tribe's Shooting Star Casino.

The indictment, the first of its kind on a reservation, symbolizes the growing concern among police and tribal leaders about the potential for corruption as a result of the huge amount of cash flowing into Indian coffers.

Across the country, one-third of the 330 tribes in the lower 48 states now have licenses to operate casinos. Though few allegations of illegal activity have surfaced so far - and Wadena and the others named in the indictment here deny any wrongdoing - tribal councils in at least a half-dozen states are quietly investigating chiefs for suspicion of skimming gaming profits, according to sources close to the probes.

The boom in Indian gaming is also raising enduring questions about who should police such activities on Indian lands - and what happens when corruption is found. The case unfolding here at the headwaters of the Mississippi River will provide some of the first clues.

''There's a lot of smoke, and this is the first time a flame has been seen,'' says William Thompson, a gaming expert at the University of Nevada in Las Vegas.

The Minnesota indictment focuses on the construction of the tribe's Shooting Star Casino in Mahnomen, which took in an estimated $125 million in gambling revenues last year. According to the indictment, Wadena, one of the most powerful Indian leaders in Minnesota, allegedly conspired to steal $428,682.50 in tribal money in one deal alone.

The semi-sovereign status of reservations makes vigilance complicated, however, and many also point to a historic neglect of tribes by the government. Professor Thompson argues that federal resources have so far been insufficient to regulate Indian gambling. But the billions of dollars now flowing into Indian-run casinos has not gone unnoticed by federal law-enforcement officials.

''Attorney General Janet Reno has paid more attention to Indian issues than any attorney general in the last 100 years,'' says David Lillehaug, the US Attorney in Minneapolis, whose office is prosecuting the case here. ''Her motives are absolutely pure politically. This is not a big winner for anybody, but ... it's very big on her radar screen.''

Ms. Reno has taken several steps to increase cooperation between between tribes and the Justice Department, which, for example, this year set up a special Office of Tribal Justice as a contact point for Indians and the Department.

But the connection between corruption and gambling is still disputed. ''There is no general theme as far as corruption and the nexus of industries that surrounds Indian gaming,'' says Robby Robinson, a senior economist at the Center for Applied Research in Denver. The White Earth case is ''unquestionably an isolated incident,'' he argues.

Such a view may be naive, according to Lillehaug. ''We are dealing with a cash industry that in our country historically has been subject to corruption, not just by people who run gambling but by politicians and others - law enforcement officials,'' he says.

Many Chippewas at White Earth appear more concerned about the distribution of gaming profits than alleged corruption. They say they can't find much evidence of a bonanza. The tribes ledgers are closed to the public.

Tribal leaders ''are keeping it [casino profits] a secret from their own people because their tribal members are not seeing the money,'' says Thompson, who has visited the reservation.

Rumblings of discontent over the actions of tribal leaders first surfaced several years ago. One tribal member, Sue Bellefeuille, at the time thought reservation ''dissidents'' were just misguided. She now expects to testify in the pending trial against tribal leaders named in the indictment.

Other Chippewa activists were also suspicious of Wadena long before the casino was built four years ago. Erma Vizenor, a tribal member who is completing her doctorate at Harvard University, accuses Wadena of running the reservation like his own fiefdom for years. Yet the casino heightened suspicion about Wadena. ''Gambling upped the ante on [corruption] considerably,'' she adds.

TRIBAL dissidents trace Wadena's problems to his support for the1986 White Earth Land Settlement Act (WELSA). Under this law, Congress paid the tribe and individual Indians a total of $16.5 million for more than 100,000 acres of property caught up in disputed land claims between Indians and non-Indians. The act extinguished remaining Indian claims. Critics accuse Wadena of a sellout.

''Congress was going to pass [WELSA] anyway. They were not going to give us anything,'' responds Wadena. For the band, it was a question of take the money or nothing. Wadena says his attorney has advised him not to comment on specific allegations.

The federal indictment alleges that three tribal council members, including Wadena, made illicit profits on the contract to build the casino. Some funds to construct the casino came from the WELSA settlement.

Last month, some tribal dissidents sued the federal government in a separate case to have White Earth's leaders replaced with a court-appointed trustee. Yet it is not clear how far the government can get involved in tribal affairs. ''Certainly sovereignty and jurisdiction are issues that will be raised and fully argued vigorously,'' said John Brink, Wadena's defense attorney of the charges against the tribal leader.

Another Minnesota case concerning corruption on Indian reservations may affect the White Earth trial. State Sen. Harold ''Skip'' Finn, the first and only American Indian in the Minnesota Senate, was indicted in June on federal charges of stealing some $1 million from the Leech Lake Band.

Mr. Finn's defense attorney, Douglas Kelley, says his success or failure will mean a lot to the White Earth defendants. ''If I win, they win. We pave the way for them.''

Simply put, he will argue that Congress in 1953 granted the state of Minnesota, not the federal government, exclusive rights to prosecute crimes committed on reservations. ''Nobody has sorted out this whole issue,'' he says.

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