Lac Du Flambeau consider mortgage to address financial woes

Milwaukee, Wisconsin (AP) 2-08

The Lac Du Flambeau Band of Lake Superior Chippewa may mortgage part of its reservation to combat a cash crunch caused by several multimillion-dollar investments.

The tribe’s lawyers were told in January to act quickly on a $50 million bond “so that the contractors would not walk off the job in Mississippi,” according to a memo by Brian Pierson, a Milwaukee attorney representing the tribe.

Bond money would be used to refinance $22 million in debt on the Mississippi project and the Lake of the Torches Resort Casino on the reservation in Lac du Flambeau.

Most of the remaining $28 million would go to an effort to launch a casino boat in Natchez, Miss. The tribe has already poured $8 million into that project.

That’s after it lost more than $3 million on a gambling boat project in Cancun, Mexico. The boat, called The Dream Catcher, is sitting in dry dock in Florida, waiting to be sold.

Pierson sent a three-page memo to the Tribal Council early Febuary, blaming the financial problems on low seasonal revenue at the tribe’s casino in northern Wisconsin, bond payments and a multimillion-dollar investment in XIT Networks, a startup telecommunications security company based in Houston.

He urged tribal leaders to act fast to protect the tribe’s “credit rating, reputation and prestige.”

“It is important to convey calmness and cool-headedness to the BIA (Bureau of Indian Affairs), the Tribe’s lenders, the business community generally, the State of Wisconsin and to the Tribe’s neighbors,” Pierson wrote. “Indian country meltdowns are a source of delight to anti-Indian people. They do lasting harm to tribes.”

Lac du Flambeau spokeswoman Laura Stoffel predicted the 3,300-member tribe be in better shape by summer.

“The stars have clearly aligned in the wrong way at this time,” she said.

The problems – and the prospect of mortgaging Indian land – have angered some members.

Tribal police and Vilas County sheriff’s deputies were called to a community center when about 70 members had a heated argument over the tribe’s problems, Stoffel said. Spokesmen for the police and sheriff said the crowd dispersed without problems and no one was arrested.

Tom Maulson, a tribal leader running for Lac du Flambeau president, said the problem is that the tribe has yet to see a return on its investments.

“Every deal they’ve made so far has not brought any money back to the Lac du Flambeau,” he said. “It’s going to take at least a year to see any light at the end of the tunnel. ... We’re just in a big hurt.”

Still, he said, many believe a mortgage is “a big no.”

The property being considered for a mortgage is known as fee lands – property once owned by tribal members, sold decades ago and repurchased in recent years with casino profits.

Pierson said other options include selling the tribe’s investment in the proposed Mississippi casino and XIT. Together, they are worth about $11 million, tribal officials said.