Judge hears RST vs. BBC complaint
by Stan Krogman
Todd County Tribune
Jan 2004
ROSEBUD - Testimony was heard for nearly nine hours Friday, Jan 2, in Tribal Court on the RST vs. BBC complaint filed in August 2001 by William Kindle, former president of the Rosebud Sioux Tribe.
During the pre-trial session Friday morning, all eight counts of the complaint were explained. Testimony on counts one and three only were heard by Judge B. J. Jones during the trial.
Atty. Judy Shapiro and RST Atty. Gen. Dana Hanna were counsel for the tribe. Bob Reutter represented BBC Entertainment, Inc. of which current RST Pres. Charles Colombe is president.
According to the legal complaint document, the Rosebud Sioux Tribe entered into a management agreement with BBC Entertainment, Inc. on June 14, 1994, to develop and manage the Rosebud Casino. The management agreement generally provided that the tribe and the manager would split the net revenues of the Rosebud Casino on a 65%-35% basis.
Following the tribe's review at the casino financial records, the tribe concluded that BBC had received an improper share of casino funds.
BBC denied that charge, and asserted that the tribe owed BBC additional accounts as an obligation of the management agreement. During the balance of 1999 and until February 2001, the tribe and BBC exchanged views on the obligations of the parties without reaching agreement.
A key issue in the dispute is the differing interpretations of the management contract.
Count 1 of the complaint involved the operating expense reserve fund. Starting in June 1997, 7.5% of each party's share of net revenues was set aside as a contribution to the operating expense reserve. Near the end of the management contract, which ended in Aug. 1999, BBC paid itself over $415,000 from the operating expense reserve. BBC contends this was 35% of the money put into the reserve account. The tribe contends that recovery of money from the reserve by BBC violated the management agreement.
Count 3 of the complaint contained language referring to the unauthorized distribution of net income. The management agreement states that net revenues are to be distributed each month following the casino accounting but no later than 45 days following the end of the month. In Aug. 1999, BBC paid itself over $272,000 with no distribution to the tribe. The management agreement does not authorize any advance payment at the conclusion of the contract term.
Called to testify by the plaintiff, the Rosebud Sioux Tribe, was Paul Thorstenson of Ketel-Thorstenson, LLP, a Rapid City accounting firm. Thorstenson said he reviewed financial statements prepared by BBC with Robert Mudd, former casino general manager, and Jock Shierbeck, current RST gaming director.
The plaintiff also called Harold "Sonny" Hill, former Internal Controls Auditor, RST Gaming Commission; Robert Mudd via speaker phone; James Wike, RST Treasurer; and Norman Wilson, former RST President and current RST Vice President. Hill, Mudd and Wilson were present when the management transition took place at midnight Aug. 15, 1999.
The defendant called Charles Colombe and Paul Valandra to testify. Valandra was RST Gaming Director at the time of the transition.
Colombe claims the Tribal Council would not cooperate with him on the transition, forcing him to make the decision to pay BBC.
Wilson, tribal president during the transition, testified that Colombe at no time notified him or the council that, if they would not meet with him, he intended to authorize unilateral payment to BBC. Colombe's testimony corroborated Wilson's that the did not notify Wilson or the Council of his intention and subsequent action to pay BBC $415,000 and another $272,000.
After all testimony was given, Judge Jones asked that closing arguments be submitted to him by mail within one week. He will render his decision after that time.
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