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Casino tribe alleges fraud

Cache Creek suit accuses lawyer, financial adviser

October 10, 2007 Sacramento Bee By Hudson Sangree and Stephen Magagnini

The Cache Creek Casino Resort in Yolo County has moved its owners, the Rumsey Band of Wintun Indians, from poverty to immense wealth. But the Rumsey Band claims its ex-lawyer and financial adviser engineered deceptive deals that benefited the defendants far more than the tribe. Sacramento Bee file, 2005/Anne Chadwick Williams

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The Rumsey Band of Wintun Indians, owners of the Cache Creek Casino Resort, filed a bombshell lawsuit Tuesday that claimed their longtime lawyer and financial adviser swindled the tribe for years, even as they guided its members from poverty to immense wealth.

"This lawsuit is about greed and betrayal," begins the 58-page complaint filed in Yolo Superior Court. It claims fraud, negligence and breach of contract.

It names as defendants prominent Indian gaming attorney Howard L. Dickstein and financial adviser Arlen Opper, both of Sacramento.

The suit says the tribe placed its trust in Dickstein and Opper starting when it was a small, impoverished band in the Capay Valley. The tribe was rewarded with great success but also with "a course of dealing that involved breaches of trust and violations of duties of the most basic, and, indeed, sacred kind."

In their civil filing, the Rumsey Band charges that Dickstein, Opper and other defendants involved the tribe in a series of lopsided investments and real estate deals that benefited the defendants more than the tribe.

The lawsuit marks the first time one of the many Indian nations represented by Dickstein have turned on him with such fury.

Called the "Godfather of California Indian Law" by one prominent legal publication, Dickstein, 62, has arguably done more to bring Indian gaming to California than any other individual.

Since the 1988 passage of the Indian Gaming Regulatory Act, which opened the door to modern Indian gaming, he's helped numerous tribes around the state open and operate gambling halls.

In an interview with the Bee on Tuesday, the lawyer said the allegations are unfounded.

"We stand by our record with Rumsey," he said. "It's a 20-year record when the tribe went from less than $100,000 to a gargantuan entity with assets over a billion dollars."

"For them to be coming back against the people who represented them with little or no compensation for the first 10 years is very mean-spirited and disappointing."

Dickstein said the Cache Creek Casino now makes more than $300 million a year.

Filed by lawyers in the San Francisco office of Sonnenschein Nath & Rosenthal, the lawsuit seeks an unspecified amount of compensatory and punitive damages along with the return of millions of dollars in tribal assets.

"The Tribe's former trusted counsel and investment advisor literally fed off the Tribe's financial success, or allowed others to do so, without the Tribal Council's knowledge and approval," the lawsuit claims.

The suit comes on the heels of last year's change of tribal leadership, when members voted to oust former tribal Chairwoman Paula Lorenzo, who worked closely with Dickstein, and install current Chairman Marshall McKay.

Dickstein and Opper were also dismissed in the transfer of power. Afterward, the tribe hired Kroll Associates, one of the world's leading investigative firms, to look at its past business dealings under the duo.

"We felt there was something very wrong," McKay said Tuesday. "There was a feeling we were being taken advantage of."

The lawsuit was filed because the "tribal council is determined to take control of our business and to protect the sovereignty of our tribe," he said.

According to the court filing, the investigation found a troubling history in which Dickstein and Opper enriched themselves at the tribe's expense.

Among the allegations are that Dickstein misused tribal assets, from taking a $224,000 trip to France on a tribal jet, without properly reimbursing the tribe, to mishandling money in a $9 million trust account.

It also claims that Dickstein and Opper sold the tribe on investments that were more lucrative to others, including themselves, their friends and business associates. These deals were "fraught with self dealing and conflicts of interest they failed to disclose," the complaint alleges.

Dickstein, for instance, urged the tribe to invest in a casino in San Pablo to be operated by the Lytton Band, a tribe he also represented as a lawyer, the suit claims. He didn't disclose the pitfalls of representing multiple clients in the deal, nor the fact that he stood to gain $1 million a year in fees, according to the complaint.

In Opper's case, he persuaded the tribe to invest in a development project in Knights Landing in which the tribe was to put up 100 percent of the capital but receive less than 50 percent of the profits, the suit claims. Opper, meanwhile, got a 10 percent interest in the deal plus a $24,000 transaction fee, the suit alleges.

The lawsuit says the Rumsey band paid Dickstein $18 million in legal fees over a 13-year period, but that he "failed to provide the Tribe legal guidance" and "left the tribe unprotected in a variety of investments."

Opper collected $17 million in pay from the Rumsey band between 1995 and 2006 and took a cut in deals he recommended to the tribe. He also took management fees for assets he did not actually manage, the lawsuit claims.

Opper could not be reached at his home or office Tuesday.

Dickstein responded to the lawsuit by saying every trip, expense and investment he made was approved by the tribal council.

"Members and the former chair (Paula Lorenzo) have made it clear in writing I was authorized to do any and all acts I did," he said. "Investments made appreciated by tens of millions of dollars, both in their real estate and investment portfolio."

Despite the allegation that he directly benefited from investments he steered the tribe toward, Dickstein said, "I had no financial interests in any of their investments, nor did my firm."

Opper, he said, "disclosed his interests in those investments and the tribe encouraged him, wanting them to have the same financial interests they did."

Dickstein said he spent a year and a half trying to resolve the tribe's problems and concerns, but they had little interest in negotiating.

"They never really responded with any proposals as to exactly what they expected," he said. "They were bound and determined to try and embarrass and discredit me and our law firm."

"There are personal agendas, people who are angry with me for alleged personal slights from decades ago."

Dickstein said he would countersue, now that the tribe has waved its sovereign immunity to litigation by filing its civil action against him.

The legal complaint also names as defendants Dickstein's law partner, Jane Zerbi, and Mark Friedman, one of Sacramento's leading real-estate developers.

Zerbi did not return a phone call to her office. Friedman said he was shocked by the lawsuit's "level of venom" and denied any wrongdoing.

Lorenzo, Rumsey's chairwoman and CEO of the tribe's casino from 1993 to 2005, said she knew an investigation was underway but didn't know a lawsuit was coming.

"I was shocked," she said.

Lorenzo credited Dickstein with helping her impoverished tribe get back on its feet in the late 1980s and said he played a pivotal role in dealing with investors, government officials and community members.

"He did a great job of bringing those forces together," she said.

The area's other hugely successful Indian tribe, the United Auburn Indian Community, remains a client of Dickstein.

He also helped them go from abject poverty to millionaires with their Thunder Valley Casino.

Chairwoman Jessica Tavares said she was stunned to hear the allegations against Dickstein.

"If it wasn't for Howard, I don't believe our tribe would be where it is today," she said. "Howard's above board. He's the most honest person I've met."

Dickstein acts as an adviser to the tribe and does not call the shots himself, she said.

"Howard doesn't make the decisions," she said. "He presents the information to the board of any tribe and they make the decisions.

"If I had to do it all over again, Mr. Dickstein would be the attorney I would seek to represent this tribe," she said.