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NIGA
CERTI Fl ED SEMINAR INSTITUTE COMMISSIONER CERTIFICATION TRAINING LEVEL Ill
APRIL 2 - 4, 2019 S AN D IEGO, CA
Seminar Institute Commissioner Certification Level III April 2-4, 2019
San Diego, California Tuesday, April 2
8:00 AM 9:00 AM
Breakfast to be provided
9:00 AM 10:30 AM Effective Regulation of Gaming Elizabeth Homer, Homer Law CHTD 10:30 AM 10:45 AM Break
10:45 AM 12:30 PM Hearing and Appeals
Elizabeth Homer, Homer Law CHTD
12:30 PM 2:00 PM Lunch Break
2:00 PM 3:15 PM Employment Issues for Gaming Regulators Charlene Jackson, Jackson Law 3:15 PM 3:30 PM Break
3:30 PM 5:00 PM Avoiding and Detecting Fraud: Active Investigation & Forensic Audits Sheryl Ashley, CPA Gaming & MICS Compliance AUP Partner, Blue Bird CPA's Wednesday, April 3 8:00 AM 9:00 AM
Breakfast to be provide d Conflict Management Elizabeth Homer, Homer Law CHTD Break Title 31/OFAC George Metkovick/Josh Peukert Blue Bird CPA's Lunch Break Managing a Tribal Gaming Regulatory Agency Billy David, Bo-Co-Pa & Associates Break Network Risk Assessment Peter Nikiper, BMM Test Labs Thursday, April 4
9:00 AM 10:30 AM
10:30 AM 10:45 AM
10:45 AM 12:30 PM
12:30 PM 2:00 PM
2:00 PM 3:15 PM
3:15 PM
3:30 PM
3:30 PM 5:00 PM
8:00 AM 9:00 AM
Breakfast to be provided
9:00 AM 10:30 AM Surveillance Frauds, Threats & Vulnerabilities, PT 1 Roy Hartog, Chickasaw Nation 10:30 AM 10:45 AM Break
10:45 AM 12:15 PM Surveillance Frauds, Threats & Vulnerabilities, PT 2 Roy Hartog, Chickasaw Nation
The Effective Regulation of Gaming
What is Regulation?
• Regulation in the broadest sense may be defined as a government measure or intervention intended to direct, alter, or otherwise affect the behavior of individuals or groups to produce a socially desirable outcome, e.g.: • Require individuals to wear seatbelts to reduce driving related mortality rates • Require businesses to pay taxes monthly to improve the collection of tax revenue
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What Purpose is Served by the Regulation of Tribal Gaming?
Federal Perspective
Tribal Perspective • Realize fullest measure of tribal sovereignty • Improve the quality of life and standard of living of the tribal community • Take care of children, families, and elders • Achieve economic self- sufficiency • Create jobs and business opportunities • Provide quality health care • Provide adequate law enforcement • Provide adequate fire protection and suppression services • Protect tribal resources both human and natural • Preserve tribal identity and cultural existence for future generations
• Shield the Indian tribe from organized crime and other corrupting influences • Ensure that the Indian tribe is the prime beneficiary of the gaming operation
• Assure that gaming is conducted fairly and honestly by both the operator and players
Licensing screens out the people most likely to cheat and steal and keeps them out of tribal casinos and away from tribal cash
Internal Controls operate to ensure that casino managers and employees follow the procedures necessary to prevent fraud, theft & waste of tribal dollars
How Does the Effective Regulation of Gaming Advance Tribal Goals?
Monitoring serves to keep the staff honest
Auditing serves to keep management honest
Enforcement signals that the Tribe means business when it comes to safeguarding its assets
Regulations clarify the meaning of the statutory law and establish the standards of conduct that must be met
Hearing and Appeals ensure fairness and protect people from abuses of power
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What Makes Regulation Effective?
Regulatory Agency • Independence • Sound Organizational Structure • Proper Delegation of Authority • Adequate Funding • Proper Balance of Power • Oversight • Governmental Support of the Regulatory System
Regulator • Understands the Law • Understands Role • Understands Scope of Authority • Ethical, Principled, & Fair • Possesses Sound Judgment • High Work Ethic • Good Management Skills • Good Interpersonal Skills
An Independent Regulatory Agency is a governmental instrumentality created to interpret, implement, administer, monitor, and enforce statutory law within the limits of its delegated authority and to act and make decisions based on law and legal considerations ---
Regulatory Structure “Independence”
NOT POLITICAL CONSIDERATIONS
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“Independent”
Does not mean: “Separate and Apart From” “Free of Constraints” “Unaccountable for its Acts & Decisions”
It Means: Reasonably Insulated from Political Interference with its Decision making Processes in the Implementation and Enforcement of Civil Regulatory Law.
To regulate effectively, the regulator must apply the law to facts on the basis of legal and regulatory policy considerations in much the same way as a judicial body operates, but for the purpose of achieving the regulatory objective:
Why is Independence Important?
Enforcing Compliance with the Law
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• Regulatory bodies are responsible for making hard decisions that may be politically unpopular, e.g. • Denial of a gaming license to someone well-liked in the community • Imposition of a fine or sanction • Order to suspend use of or remove equipment
Independence
When politically unpopular decisions are made, those aggrieved by such decisions often resort to political tactics and seek to bring political pressure on the agency. The principle of independence is intended to shield both political and regulator officials from these situations in order to ensure that regulatory objectives are not undermined by political considerations.
The Case for Independence
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The Enactment of Law is a Political Process
The Promulgation of Regulations is Largely Political in Nature, but
Regulatory v. Political Processes
The Implementation and Enforcement of the Law is a Regulatory Process
Hence the Concept of Independence is much stronger in the Context of Implementation and Enforcement than in the Context of Rulemaking
• The Legislature Enacts the Law through the Political Process • Establishing the “Independent Regulatory Agency” • Specifying the Functions, Duties, and Responsibilities of the Agency • Delegating the Agency the Necessary Authority to Implement and Enforce the Law • Imposing Standards for Agency Conduct • Providing for Agency Oversight
How is the Framework Supposed to Work?
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• Typically, an Independent Regulatory Agency is Delegated Broad Authority to: • Interpret & Implement the Law through the Promulgation of Regulations (Quasi-Legislative Power) • Monitor Compliance and Enforce the Law (Quasi-Executive Power) • Apply the Law to Facts to Determine whether the Law has been Offended and Assess Sanctions (Quasi-Judicial Power)
Agency Authority &
Functions, Duties, and Responsibilities
Legislate + Execute + Adjudicate =
Making the Framework Work: Balance of Power
“Basic Powers of Government”
In the Constitution, the Framers Carefully Divided
These Powers and Assigned them to the
Three Branches of Government
WHY?
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To Provide a Strong Governmental Structure with Proper Checks & Balances
To Secure the Basic Rights and Fundamental Freedoms of the Citizenry Guaranteed by the Constitution To Constrain Governmental Power
Why???
To Prevent Governmental Abuses of Power
To Ensure Fundamental Fairness and Due Process of Law
Regulatory Agencies may Possess Broad Powers, but they are Limited in Nature
How are these Objectives Achieved in Relation to Regulatory Agencies?
A Regulatory Agency may not Act so as to Exceed the Scope of its Delegated Authority
Standards are Applied: An Agency is Prohibited from Acting in an Arbitrary & Capricious Manner
Agencies must Faithfully Interpret and Apply the Law as Intended by the Legislature.
Agency Actions & Decisions are Subject to Political and Judicial Oversight
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May be Achieved through Various Organizational Models Structured to Meet the Particularly Structure of the Governmental Entity Creating the Agency
Structures may have Varying Degrees of Complexity from Basic to Complex
Effective Regulatory Structure
Structure of the Agency will Depend on the Organizational Components Necessary
Citizenry (Electoral Process)
Legislature Legislates Confirms Executive Appointments
Executive Appointment
Judiciary Judicial Oversight
Regulatory Agency Legislative, Executive, Judicial
Gaming Operation
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Tribal Court
Council Legislates
Enforcement
Licensing
Operation
Tribal Governing Body
Tribal Gaming Commission Rulemaking Hearings & Appeals
Office of Tribal Gaming Compliance Day-to-Day Regulatory Activities
Tribal Gaming Enterprise
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Electorate
Executive
Legislative
Judicial
Regulatory Agency
Gaming Enterprise
Gaming Facility
Gaming Facility
Gaming Facility
Gaming Commission Commissioner or Commissioners
Legal Counsel
Audit & Enforcement Division
Office of Hearings And Appeals
Licensing Division
Gaming Enterprise
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Gaming Commission Commissioner or Commissioners
Hearings & Appeals
Legal Counsel
Executive Director
Licensing Division
Audit Division
Enforcement Division
Employee Licenses Vendor Licenses Facility Licenses Background Investigations
Gaming Machines MICS: Operational Special Investigations IT
Internal Audits Title 31 MICS: Accounting
The Overall Institutional Structure of the Tribal Government;
The Key to Effective Regulation is not in a Particular Organizational Framework
All Models Can Be Effective
The Size and Scope of the Regulated Activity;
The Key to Effective Regulation is Selecting the Right Framework in terms of:
Available Resources; and
An Unwavering Commitment to the Framework and Making it Work by Everyone within the System.
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Even if a Government has Adopted an Excellent Gaming Ordinance Establishing a Well-Funded, State-of-the-Art Regulatory Structure with Clearly Defined Authority, Powers, Responsibilities, and Functions, there is NO Guarantee that the Agency will be Effective A Regulatory Agency Cannot Be Effective without the Trust and Support of the Government that Created it.
Commitment to the System
Governmental Support and Trust are Prerequisites to Effective Regulatory Agencies
The Importance of Oversight
It is Antithetical to Human Nature, however, to Place a High Degree of Trust in an Entity that Possesses Tremendous Power over which one has Limited Capacity to Control, Particularly where the Entity has the Power to Affect the Financial Health of one’s Most Valuable Asset
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The Most Effective Check Against Agency Abuses of Power is Oversight because it Operates to Effect Accountability If Accountability Measures are Built Into the Regulatory Framework, it is much Easier to Place One’s Trust in the Agency
Effective Oversight is Essential to Accountability
• The Statute Provides for:
• Clearly Defined Agency Roles & Responsibilities • Clear Delegation of Powers • Due Process of Law • Qualified Appointees & Staff • Standards to Guide Conduct & Decisionmaking Judicial Oversight • Appropriate Political Oversight
Accountability Measures
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No Person should ever be the Ultimate Arbiter of his or her Own Decisions
Political Processes are not Appropriate for Handling or Reviewing Civil or Criminal Law Enforcement Actions and Decisions in particular cases or matters because Political Processes Entail Political Considerations which are Inappropriate in the Context of the Application of the Law to a Particular Set of Facts Judicial Bodies are the Appropriate Entities for Providing Oversight in the Context of Agency Action & Decisionmaking as the Interpretation of Law and the Application of the Law to Particular Facts is a Judicial Function
Principles for Oversight
Decision Makers Make Better Decisions when they Understand that the Decision is Subject to Judicial Review
Judicial Review Serves as an Important Check Against Abuses of Power
Principles of Oversight
Judicial Review Serves to Ensure the Proper Interpretation and Application of the Law
Judicial Review Serves as a Check Against Error, Bias, Poor Judgment in Decisionmaking, Misapplication of Law, and Misconduct The Assurance of Due Process Increases Public Confidence in the Government and its Processes
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Improves Regulatory Effectiveness
Strengthens the Regulatory Framework
Advances Statutory Objectives
Decreases the Potential for Conflict and Power Struggles
To Trust and Support…
Encourages Sound Decisionmaking
Advances the Tribal Interest
Increases Political Stability
Represents Half of the Equation
The Effective Regulation of Gaming Part II
The Effective Regulator
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Inspires Trust and Confidence in the Regulatory Process
Understands his or her Responsibilities, Duties, Obligations as well as the Agency’s Functions under the Law
Acts within the Scope of Authority Delegated
Fairly and Objectively Applies the Law
The Effective Regulator
Exercises Good Judgment
Is Ethical, Reasonable, and Fair
Has a High Work Ethic
Exercises Discretion
Ensures that Subordinates are held to the Same Standards of Conduct
• To Effect Compliance
• With the Law Through • Fair and Reasonable Regulation • In Order to Ensure the Integrity of the Regulated Industry without stifling its growth & profitability so as to • Foster Public Confidence and Achieve • All Regulatory Objectives
Primary Goal of the Regulator
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In a Perfect World In a Perfect World Everyone Would: • Know the Law and Regulations by Heart • Obediently Comply • Seek out the Regulator’s Advice and Guidance • Eagerly Await the Regulator’s Visits • Enthusiastically Adopt the Regulator’s Recommendations • View the Regulator with Utmost Respect and Appreciation • Always Agree with the Regulator’s Viewpoint • Welcome an Enforcement Action as an Opportunity to Improve
The Job of a Regulator Is Easy…
• Regulators are Often Regarded: • With Equal Measures of Dread and Distrust • As Intrusive Second Guessers • As Unsympathetic and Self- Important • As Harsh and Unyielding • As Thoughtless and Unmindful of Practical Realities • As a Drain on Resources • As an Imposed Evil
In the Real World…
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Understandthese tensions going in
Resist being impatient, defensive, or angry
Recognizethat these concerns arecommon
To be an Effective Regulator
Beprofessional at all times
Ensurethat your staff maintains professionalismat all times
Adheretothe“Ruleof Law”
Ensure fundamental fairness andDueProcess of Law
Remember, your job is to effect compliance – NOTTOPUNISH
End Part 2
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Administrative Hearings and Appeals
The Hearing Process
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DISCLAIMER
• This Presentation is Based on General Principles of Law and Jurisprudence Arising Primarily from the Federal Administrative Procedures Act. • The Law Governing the Hearing Process for Tribal Gaming Commissions is Tribal Law . • Accordingly, While this Presentation is Intended to Assist you with Basic Concepts and Principles, You Should Always Rely on Your Tribe’s Gaming Ordinance or Administrative Procedures Laws in Conducting Hearings • If Your Agency is Authorized to Conduct Hearings, but Tribal Law Does Not Contain Procedures Your Agency, if Authorized, Should Promulgate Regulations Establishing such Procedures and Make them Available to All Licensees.
Tribal Gaming Regulatory Agencies
• Tribal Gaming Regulatory Agencies are Typically Accorded Broad Powers, Including the Authority to: • Promulgate Rules • Monitor Compliance • Investigate Possible Violations • License • Enforce the Law • Sanction and Penalize • Adjudicate
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The Authority of a Regulatory Agency, however, is of a Limited Nature An Agency may only Exercise Such Power as it has been Delegated and NO MORE.
Limitations on Authority
Agency Authority is also Constrained by Certain Fundamental Principles
•Due Process of Law •Fundamental Fairness Adhere to Principles of
An Agency Must…
It Must Act Within the Scope of its Delegated Authority
It May Not Act in an Arbitrary and Capricious Manner
It Must Interpret the Law Fairly and Reasonably
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WARNING
• No Matter How Good its Hearing Procedures or HowWell it Conducts Hearings, an Agency Action or Decision is Vulnerable Upon Appeal if it Fails to Adhere to the Foregoing Principles
The Basics
• While a Gaming License is Usually Deemed a Privilege NOT a Right, Most Tribal Gaming Ordinances Grant Licensees some Right of Hearing if the Agency Denies, Suspends, or Revokes a Gaming License or if it Acts to Sanction a Licensee for a Violation of Law.
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The Right to Hearing
• The 5 th and 14 th Amendments of the U.S. Constitution guarantee all citizens the right to “Due Process of Law” when government actions deprive a citizen of life, liberty, or property. • This principle is applicable to actions of tribal governments by means of the Indian Civil Rights Act of 1968. 25 U.S.C. § 1301
• An Administrative Hearing is Typically a Significantly less Formal Proceeding than a Trial in a Court of Law • At the Same Time, Both Trials and Administrative Proceedings are Governed by the Same Constitutional Principles of Fundamental Fairness and Due Process of Law
Trial v. Administrative Hearing
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Due Process of Law
Entails the exercise of governmental power within settled principles of law conducted in such a way so as to safeguard the rights of the individual. More succinctly put… the right of a citizen to be heard and to defend against governmental actions or decisions impinging upon the protected rights or interests of the citizen under the Constitution and/or laws of the United States.
Administrative Proceedings
• The APA does not Subject All Agency Actions to the “Formal” Adjudicative Process contained in Section 554 of the Act • The Underlying Statute MUST require a “Hearing on the Record” to trigger the Formal APA Process • Most Agency Adjudications, thus, are “Informal” and prescribed by Agency Rule
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So What Process is Due?
• The Answer Depends… • What Does The Gaming Ordinance Require? • Formal “On-the-Record” Hearing? • Semi-formal Hearing? • Informal Meeting? • Exchange of written documents? • Is there other Applicable Tribal Law, such as a Tribal Administrative Procedures Act?
Basic Procedures
• The APA Provide Certain Minimal Procedures Applicable to Both Formal and Informal Adjudications See, 5 U.S.C. § 555: • Right to Counsel for Parties Compelled or Entitled to Hearing • Conclusion of Matters in a Reasonable Time • Right to Appear, including interested persons if the “Orderly Conduct of Public Business Permits” • Prompt Notice of Denial of Applications • Statement of Reasons for Denial
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Agency Procedures
• Tribal Law, however, may or may not Accord a Respondent the Same Procedures as Contained in the APA • The Right to be Represented by Counsel, for example, may Differ • The Degree of Formality may Differ • The Right to Appeal, Discovery, or other Procedures May Differ
Fundamental Procedures
• Due Process, however, Requires Certain Basic Procedures: • Notice
• Opportunity to be Heard • An Impartial Adjudicator • Fair Process
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Notice
• Due Process Encompasses the Notion that “Fundamental Fairness” Requires the Respondent to be Provided “Effective Notice.” Generally, “Effective Notice” Entails a Writing Containing:
• Date, Time, and Location of the Proceeding • Information as to the Nature of the Proceeding;
• Statement of Legal Authority and Jurisdiction (With Citations) • Narrative Statement of the Matters or Issue (With Particularity) • Reference to Potential Outcome (Fine, Suspension, Revocation) • Statement of Rights (Right to be Represented by an attorney present; Present Evidence; etc._ • Reference to Degree of Finality (Reconsideration, Appeal)
In Other Words…
• A Person Should Always Be Advised of • What is happening • When and Where it’s Happening? • Why it’s Happening? • What could Happen? • And, What they can do if its does.
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Example
• Dear Licensee:
• Youare hereby advisedthat the GamingCommission is inreceipt of evidence indicatingthat youviolatedSection15.1 of the GamingCode, whichprohibits any licensee fromacceptingany thingof value inexcess of $25.00 fromagaming vendor. Inparticular, it is allegedthat youaccepteda Rolex Watchvaluedat more than$25.00 fromthe XYZ Gaming Machine Company. • Youare furthermore advisedthat a hearinghas beenscheduledtoaffordyouthe opportunity toshowcause why the GamingCommissionshouldnot suspendor revoke your gaming license and/or assess acivil fine against you for this violation. • The hearingshall take place on January 1, 2008 at 2:00 p.m. at the GamingCommission’s offices locatedat 1313 MockingbirdPlace inOur Town, Oklahoma. • Under the GamingCode youhave aright tobe representedby anattorney at the hearingas well as the right to present witnesses or other evidence, providedthat yousubmit awitness list andcopies of any documents youplanto present at the hearingonor before December 1, 2002. If youchoose tobe representedby counsel, youshouldhave your attorney contact the Commission’s Attorney at 1600 Pennsylvania Ave… • If the GamingCommissiondetermines that youhave violatedSection15.1 of the GamingOrdinance, it may suspend or revoke your gaming license and/or assess acivil fine against youupto$5,000.00. Inthe event youare assesseda finedor your license is revoked, youwill have the right toappeal the Commission’s decisionto…(the full Commission; tribal court; etc). • Shouldyou fail toappear at the hearing, the Commissionmay issue a final determinationandassess any of the aforementionedcivil sanctions. Under the GamingCode, failure toappear at hearingconstitutes anadmissionof the facts allegedandawaiver of your right toappeal the Commission’s determination
Rights of Parties at Hearing.
• In a Formal Proceeding, a Respondent has a Right to a “Full and Fair Opportunity” to Participate, including the: • Right To Appear (and, usually to be Represented by Counsel (At Respondent’s Own Expense). • Right To Inspect Evidence of the Proponent • Right To Testify And Present Evidence • Right To Call Witnesses • Right To Confront And Cross-examine Witnesses
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The Agency
• Has a Corresponding Rights and Duties, Including The” • Right to Call Witnesses and Present Evidence • And the Duty to Present Sufficient Evidence to Meet its Evidentiary Burden • “Clear and Convincing Evidence” • “By a Preponderance of the Evidence” • “Substantial Evidence” • The Right to Cross-Examine Respondent and Respondent’s Witnesses.
The Adjudicator
• Hearings may be Conducted by Various Types of Adjudicators: • Sometimes Hearings Are Conducted by a Body or they may be conducted by a Single Adjudicator, such as:
• Hearing Officer • Presiding Official • Administrative Law Judge
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The Adjudicator
• Must be “fair and impartial” • This means that the Adjudicator should:
• Have no “pecuniary” (financial) interest in the matter (or other conflict of interest); • Be Unbiased (free of personal animus) • Not have Prejudged the Outcome
Discovery
• Discovery is the Means Through which Evidence is Exchanged Between Parties • The Requirement for and Scope of Discovery Depends on the Relevant Legal Authority • In Administrative Proceedings Discovery is Typically more Limited than in the Context of a Trial. • Discovery may Simply Involve the Exchange of Documents or it Could Entail Witness Interviews, Depositions, Interrogatories, or the Use of Subpoenas, for example.
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The Record – Regardless of whether there is a Statutory Requirement for Administrative Hearings to be “On the Record,” a Record Should be Maintained in any Oral Proceeding (Audio Recording Will Suffice unless Court Reporter Required by Law). An Administrative File Should Also be Opened and All Documents introduced as well as Investigative Reports and any other Relevant Materials Should be Included in it.
Conducting the Hearing
Without these Items, the Agency is Extremely Vulnerable if the Matter is Subsequently Appealed
The Agency’s Jurisdiction is Clearly Established
Oaths are Administered and Recorded
Bear in Mind the Importance of the Record and See that…
The Adjudicator, Respondent, Witnesses, and Attorneys are Clearly Identified for the Record
Ensure that Responses are Verbal
Establish the Time, Date, and Location of the Hearing
Establish the Reason for the Hearing
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Burden of Proof
In Criminal Trials the Burden of Proof is on the state or federal government and in Civil Cases the Burden of Proof is on the Plaintiff.
At Trial the Party with the Burden of Proof Presents First.
In Administrative Proceedings the Party Bearing the Burden of Proof Depends on what is Contained in the Statute, in some cases it will be the agency while in others it may be the Respondent.
The Default Rule in Federal Administrative Proceedings is that the Agency Bears the Burden of Proof and thus presents first.
Administrative Proceedings Unless Otherwise Required by Statute or Rule are not Bound by Formal Rules of Evidence
Generally, Hearing Officers Simply Permit all “Relevant” or “Probative” Evidence to be Submitted
Evidence
And, Exclude only that Evidence that it Irrelevant, Immaterial, or Unduly Repetitious.
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Findings of Fact/Conclusions of Law
At theendof theHearing Process, the Adjudicator may Announce its Findings or it may Instruct the Attorneys toSubmits Proposed Findings of Fact andConclusions of Law
Even if theAdjudicator Announces the Findings, they ShouldbeReducedto Writing soas toReflect theFacts ReliedUponandtheLegal Conclusions Made
This neednot bea long, complicated document, but it shouldcover the basics, including theAuthority of the Agency toMaketheDecision; the Authority Reliedupon inComing to theDecision; theAgency’s Jurisdiction over theRespondent andtheSubject Matter; andtheFinal Decision
Jurisdiction Authority of Tribunal
Burden of Proof
Duty to Establish Facts
Hearing
Evidence
Species of Proof including testimony, records, exhibits, documents, objects, etc.) Principle governing judicial oversight of a subordinate decision maker
Standard of Review
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In most Tribal Gaming Ordinances, the Gaming Regulatory Agency has Jurisdiction over All Licensees
Violations of the Gaming Ordinance
Jurisdiction of Agency
Licensure Decisions
Patron Dispute
Enforcement Actions
Classification Determinations
Establish Jurisdictional Authority of the Tribunal
This matter comes before the Tribal Gaming Commission which has jurisdiction over all licensing appeals from the Tribal Office of Licensing and Enforcement pursuant to Section 1 of the Tribal Gaming Ordinance.
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Jill Smythe appeals the finding of unsuitability and subsequent denial of a gaming license issued by the Director of the Tribal Licensing and Compliance Office on April 1, 2004. Smythe’s appeal is timely filed. She has appeared here today in person and wishes to proceed. Is that correct Ms. Smythe?.
State the Issue
Ms. Smythe, under Tribal law, an applicant for a gaming license has the burden of proof in all appeals. It is, therefore, your responsibility to present evidence sufficient to persuade the Commission that the Director’s finding and decision should be set aside.
Establish Burden of Proof
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It is, therefore, up to you to provide “clear and convincing” evidence sufficient to establish that you are entitled to prevail in this matter.
Establish Evidentiary Standard
Upon conclusion of the evidentiary hearing, the Commission shall consider all of the evidence presented by the parties and determine whether as a matter of Tribal law the Decision of the Director shall be affirmed or reversed.
Establish Standard of Review
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► Exceeds Authority of Agency ► Improper Interpretation of Law ► Unfair or Abusive Processes ► Arbitrary and Capricious
Appeals: Standard of Review
THE TERM “INDEPENDENT” REALLY MEANS SOMETHING WHEN IT COMES TO ADJUDICATIONS
EFFORTS BY THIRD PARTIES TO INFLUENCE THE DECISIONS OF HEARING OFFICERS ARE IMPROPER – THERE SHOULD BE NO EX PARTE CONTACTS WITH ADJUDICATORS ONCE A NOTICE OF HEARING IS ISSUED, EVEN AGENCY STAFF SHOULD REFRAIN FROM DISCUSSING DISPUTED FACTS WITH THE ADJUDICATOR AND SHOULD NOT OPINE AS TO THE APPROPRIATE OUTCOME
Miscellaneous
HEARINGS SHOULD BE OPEN – THIS DOESN’T MEAN AN INVITATION NEED ISSUE, BUT IT DOES MEAN THAT THE PUBLIC SHOULD NOT BE EXCLUDED IF THEY SHOW UP
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Miscellaneous Continued
IT’S THE LITTLE THINGS THAT CAN GET YOU REVERSED– BE SURE THAT ALL PROCEDURAL REQUIREMENTS ARE MET – IF THE STATUTE REQUIRES PERSONAL SERVICE OF THE NOTICE OF HEARING, PROVIDE PERSONAL SERVICE; IF THE STATUTE SAYS FIVE DAYS, GO AHEAD A INTERPRET IT AS FIVE “BUSINESS” DAYS.
JUST BECAUSE A HEARING HAS BEEN SCHEDULED DOESN’T MEAN THAT AN ALTERNATIVE MEANS FOR RESOLVING THE MATTER SHOULD BE DISCOUNTED – SETTLEMENTS MAY BE ADVISABLE IF APPROPRIATE TO THE CIRCUMSTANCES
End
Homer Law, Chtd. 1730 Rhode Island Ave., N.W. Ste. 501 Washington, D.C. 20036 (202) 955-5601
(202) 955-5605 (fax) www.homerlaw.com
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Tribal Employment Law Issues for Gaming Regulators NIGA Indian Gaming Level III Apri l 2019 ©Charlene D. Jackson – Jackson Law Firm PLLC
We Know …. IGRA ü Establishes NIGC as the independent agency responsible for regulation of gaming and gaming operations ü Establishes standards for gaming including licensing, operations, regulation, and investigation ü Recognizes conditions for Class III gaming ü Recognizes tribal authority to regulate gaming and establishes minimum standards for tribal regulation of gaming operations
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But … What Does this Mean? Tribal Gaming Commissions have regulatory oversight of Gaming Operations ◦Compliance with applicable law, regulations and policies and procedures ◦License employees and those who conduct business with the Gaming Operations ◦Surveillance of operations including gaming and money Mission : Maintain integrity, fairness and security of gaming operations
It also means … You Avoid Operational Issues Commissions do not engage in operational activities ◦Human Resource Related Issues ◦ Suitability or qualification for a particular position ◦ Hire/Terminate/Discipline ◦Business Decisions ◦ Game selection ◦Marketing ◦ Expansion No Monday morning arm chair quarterbacking
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Commission Activity and Employment Law? While IGRA does not specifically impose federal employment laws on gaming operations, however IGRA impacts employment thus implicating employment law ◦Employees must have a gaming license ◦Tribal-State compacts may reference employment related law or issues Issuance, Denial or Revocation of license directly impacts employment eligibility thus Commission activity is related to employment
Another Aspect: Commission Management How does Commission fit within overall structure? How is the Commission managed and supervised? ◦Organizational chart ◦Commission Executive Director and employees Separate Policies and Procedures?
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The Conflict IGRA requires Tribes to be sole proprietors Responsibility: ◦Operations – Maximize profits ◦Regulation – Compliance with law and regulation to protect tribal assets
Suggested Solution Separate operations from regulation Commission, like NIGC should have some autonomy Gaming Ordinance should delegate independent regulatory authority ◦ Regulate licensure of employees ◦ Issuance, Denial, Renewal, Revocation ◦ Hearing ◦ Regulate operations ◦ Investigations ◦ Audits ◦ Compliance reviews
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Why the Separation? Protect the Owner (Tribe) from employment related claims Commission is not the employer so work is not credited to the employer Licensing decisions are not made by employer Commission does not decide to hire, discipline, terminate or retain an employee However actions licensing actions could impact employment eligibility
What About Tribal Sovereign Immunity Remember: IGRA does not specifically impose federal employment laws on gaming operations, however IGRA impacts employment thus implicating employment law Remember: As a general rule, statutes by their own terms “applying to persons” includes Tribes and their “property interests” ◦ Federal Power Commission v. Tuscarora Nation , 362 U.S. 99 (1960)
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Exceptions to the General Rule Exclusive rights of self-governance; purely intramural matters Application of the law abrogates treaty rights Proof that Congress intended the law would not apply to tribes ◦ Donovan v. Coeur d’ Alene Tribal Farms , 751 F.2d 1113 (9 th Cir. 1985)
Examples Title VII of Civil Rights Act of 1964 – specifically excludes corporations owned by US and Tribes ◦Indian Preference in Hiring on or near reservation – permitted but cannot have preference for members of a particular tribe over another (case law) Age Discrimination In Employment – silent ◦Applies in capacity as proprietor when claimant is not a tribal member (case law)
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More Examples Americans with Disabilities ◦ Title I - Equal employment opportunities – excludes tribal corporations ◦ Title II – Equal opportunity to benefit from programs – no mention of tribes – sovereign immunity may apply ◦ Title III – Public accommodations and commercial facilities – prohibit exclusion, segregation or unequal treatment ◦ Can apply to public accommodations run by tribe (case law)
More Examples Fair Labor Standards Act – silent National Labor Relations Act – no express applicability or exemption for tribes ◦Has been applied to tribal gaming operations since about 2002 ◦Courts analysis – no treaty rights involved and not an issue of self-governance ◦Tribal Labor Sovereignty Act – attempt to exempt tribes from NLRA – was not enacted
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NLRA Protects “concerted activity” – employees working to improve conditions NLRB ◦Members appointed by the President - partisan ◦High discretion ◦Words of caution: “protected activity” has been interpreted very broadly
Tribal-State Compacts May Impose Employment Laws Workers’ Compensation and Unemployment Compensation Human Rights Laws Compliance with Federal Employment Laws
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Employee Licensing
“Adequate System” - Background Investigations Background investigations on primary management officials and key employees and oversight on an ongoing basis and Tribal license for primary management officials and key employees with notice to NIGC Minimum Standards: any person – prior activities, criminal record, reputation, habits/associations pose a threat to public interest or effective regulation or create, enhance dangers of unsuitable, unfair or illegal practices shall not be eligible for employment Notice to NIGC of background investigation results prior to issuance of tribal license Subject to continuous review
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Investigations Lengthy application – separate and distinct from Human Resource background check Due diligence Procedural safeguards ◦Due Process ◦Issuance/denial/revocation of license
Action on License Key Management or Office ◦ Notice to NIGC ◦ Chair has time to review ◦ Can suspend/revoke
◦ Tribe must provide hearing to licensee ◦ NIGC has own standards/regulations Ordinance should include similar hearing process for any
employee required to have a license Must have Due Process protections
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Due Process – What is It? Basic sense: Notice ◦Basic information about negative action ◦Any rights a licensee might have (representation, witnesses, documents/evidence) ◦Hearing date Meaningful opportunity to be heard
Perceptions of Fairness Challenges
◦ Small Communities ◦ Familial Relations ◦ Politics Procedural Fairness ◦ Defendants will take a negative decision better if: ◦ Treated with respect ◦ Communication/knowledge of what to expect ◦ Opportunity to tell their side of the story ◦ Explanation of decision
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Somethings to Consider Review hearing policies and procedures ◦Address fairness concerns
◦Includes clear procedures – manage expectations Understand and implement procedural fairness
Human Resource Terminology At-Will Employment
For Cause Termination ◦Employer has a reason to terminate ◦Could include loss of gaming license
◦Employer or employee may terminate employment for no reason but not an illegal reason ◦Excludes contract employees
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One case: The Interplay Facts: Bob, the employee is employed as the Pit Boss. He is the CEOs first cousin, he is constantly late for work, calls out sick often, is constantly complaining about his low wages, has poor performance reviews. He attended a recent Tribal Council meeting to complain about the low wages tribal members are paid compared to non-tribal members. On his way home, he was stopped, arrested and held on felony DUI and drug charges for possession of marijuana. At the time of the incident he was riding in the car with his girlfriend, who is the known drug dealer. Because he could not post bond, he missed several days of work and did not call in and he was terminated.
What do we have here? Human Resource issues Potential licensing issues Potential criminal issues Who investigates? What happens in one could impact the other
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Possible Outcomes Human Resources ◦ Terminate for cause – ability to file grievance ◦ Terminate ”at-will” – possible unemployment claim Commission ◦ Suspension or revocation of license - hearing Criminal case
◦ Guilty - loss of job and license ◦ Not Guilty – process is slow
Let’s Complicate Things Human Resources takes action and terminates him “for cause”. Bob files a lawsuit in a court with jurisdiction claiming the casino discriminated against him because he is “disabled” due to alcohol addiction and he claims he has a medical marijuana charge to alleviate back pain caused by working conditions of having to stand at the pits for several hours without rest. He also claims the Commission unfairly suspended his license without due process on the basis of criminal charges that have not been proven beyond a reasonable doubt and because the Commission Chairman doesn’t like his cousin, the CEO.
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Because that wasn’t enough Bob also files a claim with the NLRB claiming that the Casino’s termination and Commission’s suspension were in retaliation for his complaints about wage complaints.
What do you do? Where do you start?
The Lesson Important to have good policies and procedures
Good understanding of how issues can influence/impact others Important for Commission to remain independent from undue influence Understanding potential legal employment issues can help you make more informed decisions, in compliance with regulations and policy and insulate the casino from legal liability No sure answers
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Looking to the Future Internet/Online gaming ◦How will you regulate? ◦What should you be concerned with?
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Avoiding and Detecting Frauds Sheryl L. Ashley, CIA, CFE, FCPA, CPA Partner BlueBird, CPAs
Definition of Fraud Black’s Law Dictionary:
“…all multifarious means which human ingenuity can devise, and which are resorted to by one individual to get an advantage over another by false suggestions or suppression of the truth. It includes all surprise, trick, cunning, or dissembling, and any unfair way by which another is cheated.”
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Common Law 4 Elements of Fraud
• A material false statement. • Knowledge that the statement was false when it was uttered. • Reliance of the victim on the false statement. • Damages resulting from the victim’s reliance on the false statement.
Abbreviated Definition of Fraud Fraud includes any intentional or deliberate act to deprive another of property or money by guile, deception or other unfair means.
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AICPA Definition of Fraud “An intentional act that results in material misstatement in financial statements that are subject to audit…There are two types of fraud: • Misstatements from fraudulent financial reporting & • Misstatements frommisappropriation of assets”
Principal Categories of White Collar Crime
Misrepresentation of material facts Concealment of material facts
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Bribery
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Conflicts of interest
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Theft of money or property
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• Theft of trade secrets or intellectual property • Breach of fiduciary duty • Statutory offenses
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Predication • Predication is the totality of circumstances that would lead a reasonable, professionally trained, prudent person to believe that a fraud has occurred, is occurring, or will occur. • All fraud investigations must be based on proper predication; without it, a fraud investigation should not begin.
The Fraud Triangle (Cressey)
OPPORTUNITY
FINANCIAL PRESSURE
RATIONALIZATION
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Top Ten Personal Characteristics for Fraud • Living beyond their means • Overwhelming desire for personal gain • High personal debt • Close association with customers/vendors • Wheeler-dealer attitude
Top Ten Personal Characteristics for Fraud • Undue family/peer pressure • Compulsive gambling habits or other addiction • Feeling not commensurate with responsibility • Challenge to beat the system • No recognition for job performance
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Behavioral Red Flags Displayed by Perpetrators
Top Ten Organizational Characteristics for Fraud • Placing too much trust in employees • Lack of proper authorization procedures • Inadequate disclosure of personal investments/income • Lack – custody/authorization by same person • Lack of independent checks on performance
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Top Ten Organizational Characteristics for Fraud • Inadequate attention to details
• Lack – custody/recording by same person • Lack – separation of duties in accounting • Lack – clear lines of authority and responsibility • No independent review by internal audit
Employee (Misconduct or Abuse) • Use equipment for personal use • Use internet for personal use at work • Conduct personal business while at work • Long breaks without approval • Late to work/leave early • Slow or sloppy work • Use sick leave when not sick • WWUI (working while under the influence…)
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Perpetrator’s Education Level
Perpetrator’s Age
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Perpetrator’s Gender
Common Schemes
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Duration of Fraud Schemes
Initial Detection of Occupational Frauds
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Source of Tips
What To Do When We Get Home • How Do We Identify a Perpetrator Before He/She Strikes? • Tackle all three sides of the Fraud Triangle • Raise the overall fraud awareness • Robust anonymous tip reporting process • Develop/enhance policies and procedures • Real pre-employment personality testing for key positions • Also have exit screening with personnel that terminate employment
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Forensic Audits
Sheryl L. Ashley, CIA, CFE, FCPA, CPA, Partner BlueBird, CPAs
Definitions – External Audit This is an audit performed by an auditor engaged in public practice, leading to the expression of a professional opinion that lends credibility to the assertion under examination. (Materiality, professional skepticism) Forensic accountants can be engaged in public practice or employed by insurance companies, banks, police forces, government agencies, and other organizations. • Litigation (preparing documents & expert testimony) • Investigative
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Definitions – Forensic Accounting The forensic accountant or accounting comprises two distinctly different fields. • Forensic generally is defined as “belonging to the courts of justice.” • An accountant generally is identified as an “expert in the field of accounting.” • Accounting is described as a methodology for organizing, preserving, and reporting on business transactions.
Definitions – Forensic Audit While a regular audit focuses on errors, omissions, assertions, and misstatements, a forensic audit focuses on suspicious activity, exceptions, and irregularities.
Typical areas of focus include payables, payroll, profits, and revenues.
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Definition – Forensic Investigation • While a forensic investigation can be found in any discipline, including accounting, medicine, DNA analysis, or engineering, the general definition applies in any case. • The forensic investigation involves using special investigative skills in order to carry out an inquiry so that the outcome may be used in a court of law.
Definition – Internal Audit This is an audit performed by an employee who examines operational evidence to determine whether prescribed operating procedures have been followed.
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Types of Forensic Accountant Investigations • Employee fraud and criminal fraud • Business economic losses • Shareholder and partnership disputes • Insurance claims • Personal injury and wrongful termination claims • Matrimonial disputes • Mediation and arbitration Forensic Investigator Should Have Knowledge of: • Constraints of legal system • Rights of suspects • Skills in interview techniques • Attorney-client work product privilege • Criminal rules of evidence and procedure
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Useful Websites:
www.acfe.com
Certified Fraud Examiner
www.acfei.com
Certified Forensic Consultant
www.aicpa.org
Certified in Financial Forensics
www.fcpas.org
Forensic Certified Public Accountant
www.imanet.org
Certified Management Accountant
www.isaca.org
Certified Information Systems Auditor
www.nacva.com
Certified Forensic Financial Analyst
Active Investigations
Sheryl L. Ashley, CIA, CFE, FCPA, CPA, Partner BlueBird, CPAs
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Quiz Question 1
• How early can children lie as successfully as adults?
a) 5 b) 8 c)
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Quiz Question 2
• What percentage of adults say it’s okay to lie to avoid hurt feelings?
a) 44% b) 65% c) 77%
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Quiz Question 3
• What percentage of adults lie to make themselves sound cool?
a) 25% b) 33% c) 44%
Quiz Question 4
• What percentage of teens think downloading illegal music is more justified than stealing from
a store? a) 26% b) 47% c) 78%
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Quiz Question 5
• What percentage of adults 18 to 24 would not admit to having STDs to their partner? a) 7% b) 17% c) 37%
Quiz Question 6
• What percentage of teens admit to lying to their parents?
a) 97% b) 98% c) 99%
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Quiz Question 7
• What percentage of men approve of cheating if their partner loses interest?
a) 14% b) 26% c) 56%
Facts About Lies On Average: • A person lies 3 times during 10 minutes of conversation • 42% of adults think its okay to lie • 54% of lies are accurately detected • 98% of teenagers lie to their parents
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Facts About Lies • Generational differences: o 1922-1945 •
Bernie Madoff, Bernie Ebbers, Ken Lay
o 1946-1964 o 1965-1980 o 1980-1994 • On average the older the generation, the higher the loss!
Micro-Expressions • A micro-expression is a very brief facial expression shown on the face of humans when one is trying to conceal an emotion. o A micro-expression can not be faked. o It usually is only less than 1/25th of second.
• (Dr. Paul Ekman)
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Micro-Expressions
7 Universal Facial Expressions of Emotion
Happiness
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Surprise Sadness
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Fear
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Anger
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Contempt
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Disgust
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Happiness
Happiness & Fake Smiles
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