LEVEL II AGENDA June 17-19, 2025 ZOOM Virtual Class Training on 9:00 am MST Time
Tuesday, June 17
Tribal Sovereign Immunity and The Gaming Regulator Liz Homer, Homer Law
9:00 AM 10:30 AM
Break
10:30 AM 10:45 AM
Ethics and Professionalism for Gaming Regulators Liz Homer, Homer Law
10:45 AM 12:15 PM
Lunch Break
12:15 PM 1:15 PM
Creating a New Approach to Surveillance Abe Martin, CFE, CSP Casino Cryptology
1:15 PM 2:45 PM
Break
2:45 PM 3:00 PM
Surveillance Cheats & Scams Abe Martin, CFE, CSP Casino Cryptology Wednesday, June 18
3:00 PM 4:30 PM
Gaming Crimes Liz Homer, Homer Law
9:00 AM 10:30 AM
Break
10:30 AM 10:45 AM
Effective Regulatory Writing Liz Homer, Homer Law
10:45 AM 12:15 PM
Lunch Break
12:15 PM 1:15 PM
Licensing: Key Employees & Primary Officials Billy David, Bo-Co-Pa
1:15 PM 2:45 PM
Break
2:45 PM 3:00 PM
Licensing: Vendors & Facilities Billy David, Bo-Co-Pa Thursday, June 19
3:00 PM 4:30 PM
Internal Auditing-What's Required & How it Should Be Approached Jamshed Kudratov, CPA, Partner Blue Bird CPA's
9:00 AM 10:30 AM
Break
10:30 AM 10:45 AM
Financial Controls & Accounting Standards Jamshed Kudratov, CPA, Partner Blue Bird CPA's
10:45 AM 12:15 PM
Please plan to stay for the entire class on each day to get your certificate of completion. Please be on time for sessions
11/29/22
TRIBAL SOVEREIGN IMMUNITY AND THE GAMING REGULATOR ELIZABETH L. HOMER
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¡ Sovereign immunity is a fundamental aspect of an Indian tribe’s inherent sovereignty. ¡ As noted by the Supreme Court, tribal sovereign immunity “is a necessary corollary to Indian sovereignty and self- governance.” ¡ Tribal governments are immune from lawsuits in both federal and state courts UNLESS: ¡ 1) Congress has authorized the suit; or ¡ 2) The tribe has waived its immunity ¡ Sovereign immunity also extends to commercial activities conducted by tribal entities that are “arms” of the tribe.
TRIBAL SOVEREIGN IMMUNITY: GENERAL PRINCIPLES
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TRIBAL SOVEREIGN IMMUNITY: TRIBAL OFFICIALS
¡ Sovereign immunity also protects tribal officials and tribal employees acting: ¡ 1) In their official capacity; and ¡ 2) Within the scope of their authority ¡ Why protect tribal officials? ¡ In suits against tribal officials, the sovereign entity (tribe) is the “real, substantial party in interest.” ¡ A plaintiff cannot circumvent tribal immunity simply by naming an officer of the Tribe as a defendant rather than the sovereign entity. ¡ Ultimately, relief would run against the tribe - need to protect the tribe’s treasury.
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TRIBAL SOVEREIGN IMMUNITY:TRIBAL OFFICIALS
“Individual” Acts vs “Sovereign” Acts
Individual - acts outside the scope of delegated authority are considered individual acts and not protected acts of the sovereign (tribe).
Sovereign - acts taken in official capacity and within the scope of delegated authority are protected acts of the sovereign (tribe).
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TRIBAL SOVEREIGN IMMUNITY: TRIBAL OFFICIALS
¡ How to determine whether act is within “scope of delegated authority”: ¡ Examine : Look at the enabling statute or law and determine whether the official was authorized to carry out the action at issue. ¡ Ask : Was the official empowered to do what s/he did? If so,
the action was taken pursuant to the official’s delegated authority and protected by the tribe’s sovereign immunity.
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¡ What if the official’s actions were wrong? ¡ Merely being wrong or mistaken does not take an action outside the scope of delegated authority.
TRIBAL SOVEREIGN IMMUNITY: TRIBAL OFFICIALS
¡ The scope of authority analysis turns “on the breadth of official power the official enjoys and not whether the official is charged with using that power tortuously or wrongfully.” Tenneco Oil Co. v Sac & Fox Tribe , 725 F.2d 572, 576 (10th Cir. 1984) ¡ Official action is still an action of the sovereign entity, even if the official’s actions were wrong or mistaken, so long as it does not conflict with the official’s valid authority.
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¡ HYPOTHETICAL: ¡ Gaming Commissioners revoke an employee’s gaming license. ¡ Revoked licensee sues Gaming Commissioners in their individual, personal capacities. ¡ Gaming Commissioners move to dismiss the suit on sovereign immunity grounds, arguing that the revocation action was taken in their official capacity as Gaming Commissioners and within the scope of their delegated authority. ¡ Tribe’s gaming ordinance specifically authorizes Gaming Commissioners to make licensing determinations, including suspensions and revocations. ¡ How should the court rule?
TRIBAL SOVEREIGN IMMUNITY: TRIBAL OFFICIALS
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¡ Under these circumstances, the court should dismiss the suit because: ¡ 1) The revocation was an official act of the Gaming Commission and performed by the Gaming Commissioners in their official capacities; and ¡ 2) The revocation action was taken pursuant to the Gaming Commissioners’ authority under the gaming ordinance to suspend and revoke gaming licenses.
TRIBAL SOVEREIGN IMMUNITY: TRIBAL OFFICIALS
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¡ The hypothetical is based on a state court opinion, now depublished. ¡ The state court did not find the Commissioners’ sovereign immunity claims persuasive. ¡ Contrary to the long-settled doctrine of sovereign immunity, the CA state court ruled that sovereign immunity did not apply,
TRIBAL SOVEREIGN IMMUNITY: ISSUES CONSIDERED BY COURTS
and that the Gaming Commissioners exceeded the scope of their powers by revoking the employee’s license without cause.
¡ What went wrong?
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¡ Classic Case of “Bad Facts Making Bad Law”: ¡ The licensee/plaintiff was a blackjack dealer who, after observing criminal activity on the gaming floor, became a confidential informant for the California Department of Justice. ¡ The Gaming Commissioners scheduled a private meeting with the licensee, but he was never personally notified of the scheduled meeting. After missing the meeting, he was suspended from work. ¡ The Gaming Commissioners notified him of his suspension and their intent to revoke license by letter mailed to his former address. ¡ About a month later, the licensee met with the Gaming Commissioners and was asked to disclose information about his informant activities.The licensee declined to do so. ¡ Shortly after the meeting, the licensee was notified by letter that his license had been revoked. ¡ The licensee sued Gaming Commissioners personally, claiming that the revocation was in retaliation for his informant work.
TRIBAL SOVEREIGN IMMUNITY: ISSUES CONSIDERED BY COURTS
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¡ Court’s Ruling: ¡ The Gaming Commissioners overstepped their authority by revoking the employee’s gaming license in retaliation and without cause. ¡ Sovereign immunity will not protect the Gaming Commissioners unless they can show that the license was revoked based on criteria identified in IGRA, Compact, or gaming ordinance. ¡ Nothing in the record shows that the Commissioners had the authority to revoke his license without cause or in retaliation.
TRIBAL SOVEREIGN IMMUNITY: ISSUES CONSIDERED BY COURTS
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¡ Breakdown of the Court’s (Mis)Reasoning: ¡ The court looked beyond the Commissioners’ “scope of authority” to consider the circumstances under which the Commissioners exercised that authority. ¡ The court focused on the lack of evidence/record to support the revocation decision – i.e., the Commissioners’ failure to provide evidence regarding plaintiff’s unsuitability for licensure. ¡ Without such evidence, the court simply accepted the plaintiff’s allegation that the revocation was without cause and in retaliation. ¡ Since the Commissioners did not have the authority to revoke licenses without cause or in retaliation, their conduct was outside the scope of their authority and not protected by the tribe’s sovereign immunity. ¡ In other words, the Commissioners’ act of revocation was lawful, but their motives were not, so therefore the act was outside the scope of their authority.
TRIBAL SOVEREIGN IMMUNITY: ISSUES CONSIDERED BY COURTS
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¡ Where the Court Went Wrong: ¡ State courts are not meant to have any role in tribal gaming licensing, let alone decide whether tribal officials are in compliance with their own laws. ¡ The Commissioners’ motives for carrying out an otherwise official and lawful act are irrelevant for purposes of sovereign immunity. ¡ Decision allows plaintiff to sue Commissioners individually for an action of the tribe’s government. ¡ This means tribal officials may be held personally liable simply by voting or participating in a decision to effect a sovereign act of the tribe.
TRIBAL SOVEREIGN IMMUNITY: ISSUES CONSIDERED BY COURTS
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¡ It’s Not as Bad as it Sounds: ¡ The case has been “depublished,” which means it’s non-binding and cannot be relied on as precedent. ¡ Also, bear in mind this is a state court decision. ¡ Nonetheless, the case serves as a cautionary tale for TGRA officials and employees. ¡ Key question is: what can you do to avoid finding yourself in this situation?
TRIBAL SOVEREIGN IMMUNITY: ISSUES CONSIDERED BY COURTS
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¡ In 2014, the Supreme Court decided Bay Mills , a case that reaffirmed the broad reach of tribal sovereign immunity. ¡ The vote was 5-4. ¡ The Court held that in suits involving commercial activities on nontribal land, tribes are immune from suit so long as federal law has not expressly waived sovereign immunity. ¡ The decision also noted in dicta that a state may use alternative, state-specific enforcement measures against individuals affiliated with the commercial activity ¡ Such suggestion has been interpreted by some as signaling approval of leaving the resolution of state-tribe disputes to the states.
TRIBAL SOVEREIGN IMMUNITY: MICHIGANV. BAY MILLS INDIAN COMMUNITY
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¡ The Supreme Court’s holding in Lewis v. Clarke (2017) effectively limited the scope of tribal sovereign immunity by effectuating a comparison between state and tribal sovereign immunity. ¡ That being said, the Court’s decision is relatively limited. ¡ In the opinion, Justice Sotomayer analogizes tribal sovereign immunity to state or federal immunity, acknowledging that tribal immunity is serious and legitimate in the eyes of the Court. ¡ Because it is a narrow opinion, the Lewis decision leaves many questions unanswered: ¡ Do tribal employees enjoy the same protections as their state and federal counterparts in respect to official immunity? ¡ Does tribal sovereign immunity apply when no forum will hear the case? ¡ This implication arose in Bay Mills and many hoped it would be resolved in Lewis .
TRIBAL SOVEREIGN IMMUNITY:
LEWIS V. CLARKE
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¡ Lewis was only decided in late April 2017, but it was quickly worked its way into lower court decisions that same year. ¡ Approximately two dozen lower court challenges to the extent and scope of tribal sovereign immunity have cited or relied upon the Lewis opinion.
TRIBAL SOVEREIGN IMMUNITY:
¡ So, what can we conclude? ¡ While the official and individual
LEWIS V. CLARKE
capacity tests are still the standards to determine when to bar tribal sovereign immunity, their application across different fields of law has drawn
different levels of scrutiny and consideration from the courts.
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FUNDAMENTAL PRINCIPLES FOR TGRAS
Act within the scope of your authority •TGRA may only exercise such power as it has been delegated and NO MORE
Act
Avoid arbitrary and capricious acts •There should be a rational connection between the facts examined and the action taken by the TGRA
Avoid
Interpret the law fairly and reasonably •Be unbiased (free of personal animus) •Avoid prejudging the outcome
Interpret
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PROCESS MATTERS
Fundamental Fairness:
• Fairness and consistency • Proportionality • Least adversarial means to achieve objective
Due Process Requires:
• Notice • Opportunity to be heard • Impartial adjudicator • Fair process
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¡ In other words, the affected person should always be advised of: ¡ What is happening? ¡ When and where it is happening? ¡ Why it’s happening? ¡ What could happen? ¡ And, what they can do if it does?
PROCESS MATTERS
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ADMINISTRATIVE RECORD
¡ Importance of an Administrative Record ¡ Create a paper trail documenting decision-making process and basis for agency decision. ¡ Record should reflect the following: ¡ TGRA collected the available information ¡ Considered all relevant factors ¡ Made a reasoned decision based upon credible, substantial evidence in the record ¡ The administrative record will be your greatest weapon in defending against challenges to agency actions.
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¡ Cases may be non-binding, but that doesn’t mean it can be ignored. ¡ The Supreme Court has left questions unanswered that may lead to state interpretation like the depublished opinion. ¡ Sovereign Immunity is an affirmative defense, which means the tribe or tribal official must present it when suit is filed.
FINAL THOUGHTS
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END
ELIZABETH LOHAH HOMER HOMER LAW CHARTERED 1730 RHODE ISLAND AVE NW SUITE 510 WASHINGTON, DC 20036
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Ethics and Professionalism in Tribal Gaming ELIZABETH L. HOMER HOMER LAW CHARTERED
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Ethics
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Homer Law, Chartered
Gaming is Special from the Standpoint of Ethics.
u Inherent Conflict and Appearance Issues u Nation is both owner and regulator u All Tribal members stand to benefit financially u Tribal members have close kinship ties u Cash Intensive u “Suspect” Industry u Scandal may Result in Changes in Public Perception and Public Policy
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u Integrity Key Issue u Avoid Conflicts of Interest u Avoid Appearance of Impropriety u Ensure Proper Conduct u Guide Decision Making u Guide Performance u Establishes Proper Parameters u Ensure that All Parties Understand
Why Are Standards of Conduct Important?
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Basic Principles
Tribal Gaming Operations Serve a Tribal Governmental Purpose not a Private Commercial Purpose . Government should always conduct itself in a manner that instills complete confidence in its Integrity.
Fair and Honest Government is a Basic Right of Every Citizen.
Public service is a Public Trust
Tribal Gaming Enterprises Should Always be Conducted in a Manner that Instills Complete Confidence in its Integrity. Personal financial interests of casino officials and employees should not conflict with Proper Performance of Duties
Fairness and Honesty in Tribal Gaming is a Basic Right of Tribal Government and its Citizenry Personal financial interests of government officials and Gaming Enterprise Employees Must Not Conflict with the Duty of
Public office and Positions must never be used for Private Gain.
Conscientious Performance .
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Employment and Post Employment
Contracts
Complimentary Items
What Should be Covered?
Game Play
Gifts
Outside Interests and Activities
Endorsements
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All Government Officials and Employees
•Council Members • Regulators •Staff of all of the Above
Who Should Be Covered?
Casino
• Management • Employees •Vendors
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u Clash between an individual’s duties and their own private pecuniary interest u Financial interest in the outcome of a transaction u Family member or close relative has a financial interest in the outcome of a transaction
Conflict of Interest
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Appearance of Conflict
Actions that may lead others to believe that an official is placing his or her personal interests above that of the public u Transactions involving, for example: u close friends u former business associates u former employers u former clients u future employers
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Appearance of Conflict Issues
Should be addressed by rules and standards addressing, for example:
Nepotism Cronyism Gifts Complimentary items Game Play Outside Interests or Activities Contracting
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Actual Conflicts
Should always be avoided
Should be subject to rules governing disclosure and recusal
Violations constitute grounds for removal or termination
Subject to Sanctions and Penalties
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Ethics Rules Should Be: u Simple u Straightforward u Written in plain language u Easy to apply u Easy to follow u Necessary procedures should be clearly spelled out (e.g. notice, recusal, process for hearing, and appeal)
u Penalties and Sanctions Identified
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u As a general matter should be prohibited. u Gifts to the TGRA from the Gaming Operation. u Gifts to the TGRA or Operation from Vendors. u Gifts from Vendors to Casino Employees. u Provide Definition of Gift u Exceptions, if any, should be Identified u Limits should be Clearly Specified u Gaming Operation should not provide direct or in-kind services to TGRA (travel, extravagant meals, use of credit cards, etc.) u Define prohibited sources (vendors, contractors, manufacturers, etc)
Gifts & Donations
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u TGRA should not game at operations they regulate u Recusal Policy regarding Contracting, Licensing, Adjudications u (avoid nepotism and favoritism, establish limits on contracting authority, establish approval process) u Council or TGRA (or operation with TGRA approval) should establish Policy Governing Gifts u Outside Employment Policy u Disclosure Policy u If an official or employee has any questions about an actual or potential conflict of potential interest, the employee should discuss the matter with his or her supervisor.
Activities
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Endorsements
u TGRA may classify electronic items, but never endorse a product or vendor u TGRA should not appear in advertisements u Casino Staff should not Endorse Gaming Products u This General Policy Need Not Restrict Advertising Campaigns for the Gaming Enterprise.
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Invaluable
Affects the “bottom line”
Reduces the risk of enforcement issues
Reputation for Integrity
Promotes political stability
Increases public confidence
Increases confidence of membership
Decreases conflicts and disputes.
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Hypothetical – Part I
u Sam, a tribal member, was appointed to the Tribal Gaming Commission two years ago. He is considered an excellent choice because he is an attorney and because of his previous experience in Casino Security and as a law enforcement officer. u Sam keeps long hours at his office is in the Casino, so he is well- acquainted with the entire staff from the General Manager to the housekeepers. About three months ago, Sam started dating Betty, the hostess for the Casino Steakhouse. Two weeks ago, Betty threw Sam a 40th birthday bash in the private room of the steakhouse. Almost the entire staffs of the casino, gaming commission, and tribal council attended. Betty’s boss gave Betty a 60% discount on each plate and donated two bottles of wine for each table, a red and a white. As with all private parties at the Steakhouse, the General Manager provided each guest a goodie bag, containing coupons for five slot tokens, a keychain, a deck of cards, and some chocolate coins.
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Hypothetical – Questions I
1. Identify the ethical issues raised in this hypothetical.
2. Should Betty have hosted Sam’s birthday party in the casino?
3. Are there any ethical problems with accepting the bottles of wine?
4. Should Sam pay back the 60% discount to the Steakhouse? Why? Why not?
5. Is it permissible for Sam to receive a “goodie bag” at the party? Why? Why not?
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Hypothetical – Part II u Sam received some wonderful presents: an expensive bottle of French champagne from Betty’s boss; some official Audubon Society binoculars from his staff, which had taken up a collection; and a beautiful Pendleton blanket from the Council. u The next morning at work, Sam got on the computer to e-mail a thank you notes. So many people attended that it took him nearly an hour to get the notes out. It was a good thing that he came in early, he thought to himself. He spent the rest of the morning reviewing a stack of pending appeals. He noted that one was filed by a distant cousin. Sam had never met the fellow, but he couldn’t help feeling a little sorry for him. Unfortunately, he had waited too long to file his appeal, so Sam prepared the letter informing him the appeal was denied on the basis of timeliness. Sam signed and mailed the letter just before going to lunch.
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Hypothetical – Questions II
1. Which of the gifts received by Sam pose ethical concerns? Why?
2. Should Sam have returned any of the gifts?
3. Did Sam misuse the Tribe’s computer by sending personal thank you notes?
6. Should Sam have recused himself from handling his cousin’s appeal?
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Hypothetical – Part III u Sam had lunch with Connie, the Director of Licensing and Compliance. Sam and Connie had a good working relationship and he had grown to respect her judgment. Sam liked to joke around with Connie, especially since she had such a good sense of humor. “Hey,” he said, “I just spent my morning going over all the trouble you’ve made; is there anyone who isn’t appealing one of your decisions?” “No,” said Connie, “I think every one of them is sitting on your desk right now, and I’m counting on you to do the right thing.” “I always do the right thing,” Sam replied. “By the way,” Connie added, “Super Tech just dropped off the brand new Super Duper Bingo or Bust game this morning and will be demonstrating it after lunch; want to drop in?” “Sure,” he said, “let’s go.” u When they arrived, the Super Tech reps hurried over to shake hands. “You’re going to love this game,” they said, “it’s the best.” He added, “in fact, we’d really be happy if you all would be our guest at headquarters and let us show you the whole process, we could fly you down in the corporate plane, and have you home by dinner time.”
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Hypothetical – Questions III
u How should Sam & Connie respond to Super Tech’s offer?
u Should Sam discuss the appeals he’s reviewing with Connie in this manner?
u Was Connie and Sam’s conversation about doing “the right thing” ethically appropriate?
u Are there any other ethical issues in this hypothetical?
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Questions?
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Professionalism
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Regulatory agencies are responsible for effecting compliance with the laws, rules, regulations, standards, polices, and procedures under its jurisdiction by those subject to its regulatory authority through oversight, monitoring and enforcement.
These are important responsibilities, which, in turn, create a duty on the agency’s part to carry out these responsibilities professionally and in accordance with principles of professionalism.
Professionalism
To be effective, the TGRA must not only hold those regulated to a high standard of integrity, the TGRA must also hold itself to such standard.
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Professionalism in TGRAs
Be objective and unbiased in the performance of your duties and with regard to the interpretation of the laws, regulations, rules, standards and procedures they enforce.
Be Objective and Unbiased
Be Transparent with Expectations and Requirements
Part of maintaining a working relationship with gaming operations is making information as accessible and understandable as possible. It is much easier to acknowledge and follow guidelines when they are clearly disseminated.
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Professionalism in TGRAs
Communicate Clearly and Proactively
If you notice or are put on notice of a potential violation or misstep, contact the gaming operation sooner rather than later. Waiting for an issue to become a larger problem promotes a system of mistrust.
Regulatory Professionals have a duty to be fair and equitable when applying legal and regulatory standards and carrying out their regulatory duties and functions.
Be Fair and Equitable.
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Professionalism in TGRAs
Uphold the Integrity and Independence of the TGRA.
Base your decisions on factual information free of undue influence, personal feelings, and conflicts of interest, and to ensure that information and communication, whether verbal or written, are complete, accurate, and truthful.
Act in a calm, courteous, and respectful manner when carrying out your regulatory duties and functions.
Maintain Respectful and Ethical Professional Relationships.
Strive to build constructive relationships with others by ensuring mutual respect, candor, confidentiality, and understanding.
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Professionalism in Gaming Operations u Perform Duties Competently and Diligently. u Be competent in the performance of your duties by acquiring and maintaining the knowledge, skills, and abilities essential to the performance of your assigned functions in the continually evolving regulatory environment.
u Respect the Authority of TGRAs u Regulatory authorities work to maintain a
balanced system that promotes the goals and needs of the Tribe while also considering the goals and needs of the gaming operations and licensees.
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Professionalism in Gaming Operations u Do Not Hide Mistakes u You must act diligently in the exercise of your duties and be candid and forthcoming about honest mistakes to permit swift and timely correction. u Be Proactive with Concerns u While regulatory and statutory provisions should clearly indicate what is required of the gaming operation, asking for clarification at any point is a great way to keep lines uncrossed.
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Professionalism in Gaming Operations u Complete Reports Accurately and Timely u Gaming operations are required to keep and produce accurate reports throughout operation and at the request of TGRAs. These reports are vital to maintaining a functional relationship between agencies and operations. u Address Violations Swiftly u If a violation should occur, take all necessary steps to quickly address and rectify the situation.
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u Communication in the workplace and gaming world is not only inevitable; it is key. u Effective communication allows for working relationships between TGRAs and gaming operations to run smoothly and efficiently. u A vital part of effective communication is maintaining professionalism.
Communication
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u Professionalism in communication includes: u Clarity and concision u Respect
u Feedback u Promptness
Communication
u Don’t let communications linger unaddressed
u Keeping channels of communication open
u Ideas and thoughts will not align 100% of the time. Shutting down communication is not a solution.
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Oral
Communication
Visual
Written
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Communication
Written Memos Reports Letters and Emails
Oral Interviews Meetings
Visual Signs Presentations
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Confidentiality
The TGRA should protect confidential information.
Confidential information includes personal information and data regarding licensees, license applicants, and vendors, as well as non- public information concerning gaming operations.
TGRA employees should take all necessary and proper precautions to appropriately protect confidentiality in their day- to-day use of confidential information.
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u Limit Collection of Confidential Information u Limit Use of Confidential Information u Limit Access to Confidential Information u Limit Disclosure of Confidential Information u Maintain Confidential Information in a Secure Manner u Protect Confidential Information from Unauthorized Modification and Destruction
Confidentiality
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A Fraternization policy should clarify the importance of maintaining professional relationships with individuals licensed by the TGRA.
In carrying out its regulatory functions and duties, the TGRA relies upon the professional integrity of relationships between employees and licensees of the TGRA. When TGRA employees develop close personal relationships with licensees subject to the regulatory jurisdiction of the TGRA, they risk undermining the public’s trust and confidence in the unbiased implementation of the regulatory mission.
Fraternization
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Fraternization
u Avoid conduct that may cross or blur professional boundaries and understand the following potential conflicts of professional interest which may arise: u Potential for Complaints of Favoritism
u Potential for Loss of Objectivity u Potential for Abuse of Authority u Potential to Undermine Authority
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END
Homer Law, Chartered 1730 Rhode Island Ave., N.W. Suite 501 Washington, D.C. 20036 (202) 955-5601 (202) 955-5605 (fax)
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11/29/22
CREATING A NEW APPROACH TO SURVEILLANCE
Presented By: Bo-Co-Pa & Associates
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CHANGING THE TRADITIONAL CULTURE OF SURVEILLANCE
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QUICK QUESTION; CAN YOU JUSTIFY YOUR POSITION? CAN YOU JUSTIFY THE DEPARTMENT?
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Traditional surveillance: Ø React: No proactive approach, react to what you see on screen
Ø Observe:watch what happens at the end of the camera lens, good, bad or indifferent. Not necessarily required to have any results, just recorded activity.
Ø Report: What was seen on the screen as well as what was shared from floor staff.
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REACTIVE
We have been taught throughout the years that you only do something when you have been notified…..well for the most part.
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OBSERVE: UNUSUAL ACTIVITY OR OCCURRENCES
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REPORT: CYA! JDLR! TRUST BY VERIFY!
This Photo by Unknown Author is licensed under CC BY-NC-ND
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GOING BEYOND
What does this mean? q Not just observe and report.
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NEW SURVEILLANCE (MITIGATING OUR RISK)
Going beyond the “observe and report philosophy”
Utilizing new technology in the department,
Reports that add value to the whole organization,
Justification of the department and job positions,
Department Plan development and execution,
Risk based observation/surveillance,
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This Photo by Unknown Author is licensed under CC BY-NC-ND
UTILIZING TECHNOLOGY
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UTILIZING TECHNOLOGY:
Identify what technology you currently are using.
What is your knowledge of the technology?
Be honest of your level of understanding and how the department uses it.
Where do you start?
What currently happens to your data?
Its important to know what you are doing with your data now and what you want to do with it when identify risk. Your failure to use data that is currently being use could cause more risk. Don’t work under the assumption that someone else is doing or review it.
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VALUE ADDED REPORTING
This Photo by Unknown Author is licensed under CC BY-SA
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Key Performance Indicators (KPI): items found in the data that we determine to be of value, this helps us gain valuable information. This data helps us understand what is happening in the operation. Data Points : Locations where data is created, produced and/or a combination of both. Measurable Data Points : Filtering through all the data and identifying what data is good data and what data is not measurable. Design Analysis Reports : Developing a reporting structure from all of the data that is provided to you from data received. Key Performance Objectives : Obtained for the analysis report. This will help us to determine what our goals should be. Data Mining : is the computational process of discovering patterns in large data sets involving. (Wikipedia)
TERMS WE SHOULD GET COMFORTABLE WITH
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RISK BASED OBSERVATION
The trend is changing in how we observation the casino, we are going from “observe and report” to “risk-based observation” This is being done because we need all departments to either generate more revenue or find places in the organization that are losing revenue, whether through detecting cheats and scams or just inefficiencies or ineffective processes.
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WHY RISK-BASED SURVEILLANCE?
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RESULTS!
Risk based observation delivers results rather than just develop more data that just sets in the file cabinet or on the network
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IDENTIFY THE RISK
This Photo by Unknown Author is licensed under CC BY-SA
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MODIFY R.A. FOR SURVEILLANCE
Discussion: What is a low-risk department? What is moderate-risk department? What is a high-risk department?
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RISK-VS-PRIORITY
Discussion
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SURVEILLANCE DEPARTMENT AUDITS
What are your roles and responsibilities?
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Use department audit reports to assist you in making the decisions of assigning Risk,
What's the purpose?
When do I use them?
How do they work?
DEPARTMENT AUDITS=DATA
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ANALYTICAL DATA
Analytical data comes in many different areas, some of the most common areas are: q Point of Sales : critical areas to analyze. q Slot machine accountability systems : know what your systems is and what data it can generate. q Players Club : point scams is one of the fastest growing crimes in the casino, q Surveillance audits : these audits create data that is truly valuable.
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RISK BASED SURVEILLANCE
Identify your purpose, 1
Identify the processes that will be used, 2
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Identify your level of risk, 4
Identify how you will receive the data that will be generated, 5
Identify what you will do with the data that is shared with you, 6
Identify your risk,
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Key Performance Indicators Let them guide the way.
IDENTIFY THE DATA
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Questions???
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Thank you
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12/1/22
Cheats & Scams: Surveillance
Abe Martin, CFE, CSP abe@casinocryptology.com 931-CRYPTIC (279-7842) www.casinocryptology.com 1
Warm-up
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Methodology
• Team
• Less burden and risk • Regardless of game, one member is usually responsible for keeping the dealer’s attention • Not all members will bet the same • Members may change, or change positions
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Methodology
• Individual –
• Greater burden and risk • May be more aggressive in betting and play • More attention to surroundings (rubber necking)
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What is a Scam?
• Usually falls under fraud; defined as: • The intentional use of deceit, a trick or some dishonest means to deprive a victim of money, property or legal right. • BASIC Elements of fraud are: • A purposeful deception • Intent to deprive the victim of something • The victim suffered an actual loss as result of the fraud
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What is a Scam?
• Theft could also apply; defined as: • The unauthorized taking of property from a victim with the intent to permanently deprive them of it. • BASIC elements of theft are: • A taking of someone else’s property • The requisite intent to deprive the victim of the property permanently.
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Then came “Cheating”
• Most (gaming) jurisdictions now have laws against cheating; generally defined as: • Manipulating the outcome of a game or payments made • BASIC elements of cheating are: • An intentional act that • Effects the outcome of a game resulting in • Gain or advantage • Devices make it EASY for us!
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So….advantage play?
When a player uses their own mind, or other legal method to reduce/eliminate the house advantage in a game.
LEGAL OR ILLEGAL?
What if they refuse to give a name or show ID?
What if they are confirmed at another casino?
What if they are using a calculator?
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advantage play?
How about in these scenarios?
• Hole carding • Bonus Chasing • Edge Sorting
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Training for Surv
• Just watch people • Watch out for the scatoma:
Medical term to describe floating blind spot(s) in vision. Also used in psychology referring things the mind ignores in order to prevent overload and maintain sanity.
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SCATOMA
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SCATOMA
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SCATOMA
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SCATOMA
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SCATOMA
FINISHED FILES ARETHE RESULT OFYEARS OF SCIENTIFIC STUDY COMBINEDWITH THE EXPERIENCE OF YEARS.
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SCATOMA
I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid Aoccdrnig to rscheearch at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it wouthit a porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Amzanig huh?
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JDLR
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Abe Martin, CFE, CSP abe@casinocryptology.com 931-CRYPTIC (279-7842) www.casinocryptology.com
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6/15/24
GAMING CRIMES AND BAD ACTS
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GAMING CRIMES ARE NEWS MAKING EVENTS
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WHY IS THIS PROBLEMATIC? • The integrity and safety of tribal gaming is paramount not only to the bottom line, but to the continued health of the industry. • Criminal activities at tribal casinos: • Undermine public confidence in the safety and fairness of tribal gaming, driving patrons away • Provide detractors with political ammunition to undermine tribal gaming.
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PUBLIC CONFIDENCE IN THE SAFETY AND FAIRNESS OF GAMING • Public confidence is hurt when patrons hear about financial crimes or improprieties • Loss of public confidence not only negatively impacts player participation but also endangers the continued ability of tribal entities to conduct gaming, which could be negatively altered through negative legislation or regulations
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PROTECTING AGAINST CRIMES BEFORE AND AFTER THEY HAPPEN • Tribal gaming regulators can both prevent crime and mitigate the negative effects of any crime that does occur by: • Knowing what crimes are commonly committed against tribal gaming operations and how they’re committed • Understanding the circumstances that allow for crime to occur
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THEFT/FRAUD GENERALLY
• According to the Association of Certified Fraud Experts (ACFE) 2020 Report: • Organizations lose ~5% of revenue to fraud each year. • The average fraud case lasts 14 months before detection and causes a loss of $8,300. • 54% of organizations did not recover any losses. • The United States had 829 reported fraud cases in 2020. • 44% of these cases were committed by an employee 6
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Improper sheltering of taxable gains by passing third-party transactions through Indian tribes Disguising enterprises to appear tribally-owned to evade Federal Unemployment Tax and oversight by state insurance regulators
EXAMPLES OF ABUSES AND SCHEMES
Embezzlement from tribal enterprises
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Use of tribal credit cards for personal gain
EXAMPLES OF ABUSES AND SCHEMES
Use of casino comps for purposes unrelated to gaming play Illegal activities (i.e., bribes and kickbacks) in enterprises where tribes lack adequate internal control
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Employment tax irregularities
EXAMPLES OF ABUSES AND SCHEMES
Improper tax treatment of net gaming revenue, including misclassification of tribal member distributions Misrepresentation of federal status of the tribe to attempt to obtain tax advantages
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Misrepresentation of treaty provisions to claim improper tax relief
EXAMPLES OF ABUSES AND SCHEMES
Claiming nonresident alien status through the filing of false Forms W- 8BEN
Schemes related to income derived from the land
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Occupational Frauds by Category -- Frequency
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
86%
89%
83.50%
43%
35.40%
38%
10%
10%
9.60%
Asset Misappropriation Corruption
Financial Fraud Statement
2020 2018 2016
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Occupational Frauds by Category – Median Loss
$975,000
$1,00 0,000
$954,000
$900,000
$800,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$250,000
$200,000
$200,000
$200,000
$114,000
$125,000
$100,000
$100,000
$0
Asset Misappropriation
Corruption
Financial Fraud Statement
2020 2018 2016
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Median Loss Per Month of Different Fraud Schemes
Expense Reimbursements Payroll Skimming Cash Larceny Billing Check and Payment Tampering Noncash
$6,000
$4,600
$4,200
$4,000
$2,900
$2,600
$1,400
$0 $1,00 0 $2,00 0 $3,00 0 $4,00 0 $5,00 0 $6,00 0 $7,00 0
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18 U.S.C. 1163 Embezzlement and Theft from a Tribal Organization
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Stealing
Embezzling
Knowingly converting
ELEMENTS
Willfully misapplying or permitting to be misapplied Knowing of anyone stealing, embezzling, converting or misapplying
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ELEMENTS
• Any:
• Money • Funds
• Credits • Goods • Assets or • Other property • Belonging to an Indian Tribe or an Indian Tribal Organization (ITO)
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INDIAN TRIBAL ORGANIZATIONS • Any tribe, band, or community of Indians subject to U.S. law. Also includes any corporation, association, or group organized under such laws. • Something is an ITO if it is subject to the Tribe’s control and conforms to federal laws regarding Indian affairs. • Examples: Great Lakes Intertribal Council, Indian Land Tenure Foundation, All Indian Pueblo Council
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Real property and theft from individual members of a tribe is not included under this statute This statute includes both principal actors and members involved in a conspiracy
1163 is used most often for employees of tribal establishments or for members of a tribe.
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PENALTIES
Property value stolen = $1,000 or less: • Fined • Imprisoned for no more than 1 year • Or both
Property value stolen = $1,000 or more: • Fined • Imprisoned for no more than 5 years • Or both
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CASE EXAMPLE I (2002) • A tribal chairman was issued a Tribal credit card:
• On 19 occasions, he received a travel advance for hotel expenses and then charged those expenses to his Tribal credit card. • He also used the Tribal credit card for personal expenses. • Obtained cash advances, which he used to game at the Casino. • He was convicted of both counts of theft from a tribal organization in federal district court. • The Seventh Circuit affirmed his convictions. 20
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CASE EXAMPLE II (2009) • The Defendant was a tribal member with significant authority over the Tribe’s emergency assistance funds program. • Defendant abused the program by issuing herself money to pay for repairs to her personal vehicle and paid herself four installments to purchase a new car. • She was convicted of embezzling Indian tribal funds in District Court. • Conviction affirmed by the Tenth Circuit.
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CASE EXAMPLE III (2014) • The Defendant is a tribal official, serving as secretary on the four-person governing board for 4 years. • From 2007-2009, she cashed 436 checks totaling $111,465 made payable to her from Tribal accounts-- many of which she wrote herself. • She also authorized 679 checks for her fellow board members.
• A jury found her guilty, and the District Court entered judgment for thirty-three months of imprisonment. The Eighth Circuit affirmed. 22
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CASE EXAMPLE IV (2015) • The Defendant, a general contractor hired by a Tribe, deposited checks for a Tribal project into his personal bank account. • Initially, he paid his subcontractors from his account, but he eventually stopped paying his subcontractors, claiming that the Tribe was not issuing checks. • Evidence showed that the company received $11.6 million in funds but still owed its vendors $1,562,921. • The Defendant was convicted on two counts of conversion and misapplication of funds.
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18 U.S.C. 1167 Theft from Gaming Establishments on Indian Lands
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• To extract or remove something Abstracting
• To steal Purloining
ELEMENTS
Willfully misapplying
Taking and carrying away with intent to steal
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ELEMENTS
• Any:
• Money • Funds • Assets or • Other property
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To be charged under this statute, the gaming establishment must be operated by, for, or licensed by an Indian Tribe
1167 is most often used for theft from gaming establishments when the individual is not an employee of the establishment and/or is not a member of the tribe
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PENALTIES
• Fined • Imprisoned for no more than 1 year • Or both Property value stolen = $1,000 or less: • Fined • Imprisoned for no more than 10 years • Or both Property value stolen = $1,000 or more:
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CASE EXAMPLE I (2009) • Defendants won a $10,000 prize through a Casino giveaway. • They submitted 9,355 of the 15,000 entries in the raffle, even though they only earned 23 entries. • Both were indicted and found guilty by the District Court, and each received a sentence of 10 months with an order to pay back the $10,000. • The 7th Circuit affirmed the district court, holding that both men willingly and intentionally attempted to steal the $10,000 by forging entry forms.
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CASE EXAMPLE II (2021) • A casino employee of a tribal casino determined when patrons had free play credits, reset their accounts, and printed duplicate cards with the stolen credits. • She fraudulently obtained a total of $682.00. • The Court determined that the credits belonged to the Tribe (not individual players) as the credits came with stipulations, could be removed at any time by the Casino, and were taxed differently than regular income. • Defendant was convicted of theft from an Indian gaming establishment. 30
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