Published in Economic Development
An initial rendering by the Hnedak Bobo Group of the Sault Tribe’s proposed casino in downtown Lansing. (COURTESY IMAGE) An initial rendering by the Hnedak Bobo Group of the Sault Tribe’s proposed casino in downtown Lansing. (COURTESY IMAGE)

Judge orders Sault Tribe gaming entity to pay developers $88.8M in damages for 2 failed casinos

BY Thursday, January 05, 2023 12:33pm

LANSING — An Ingham County circuit judge has ordered the Sault Ste. Marie Tribe of Chippewa Indians’ gaming authority to pay nearly $89 million in damages and lost revenue to its development partner in two failed off-reservation casino projects in Lansing and Wayne County.

Judge Joyce Draganchuk on Jan. 3 ordered Kewadin Casinos Gaming Authority, the Sault Tribe’s gaming arm, to pay $88.88 million in breach of contract and fraudulent misrepresentation damages to the development entities behind the proposals in Lansing and New Boston.

Investors and developers in the projects, which included developers and attorneys from Ohio, initially loaned the gaming authority $8.8 million to advance the projects, based on the tribe’s claims that the land would be taken into trust.

That designation would have facilitated the build-out of temporary casinos at both sites, followed by permanent casinos. The tribe and development team planned to enter into a revenue-sharing agreement.

However, court filings indicate that the tribe never completed an offer to submit additional documents to the U.S. Bureau of Indian Affairs to have the off-reservation land taken into trust, which would have facilitated the development of a temporary and then permanent casino at both sites. The BIA initially determined that the tribe’s application lacked sufficient evidence to place the land into trust, but it left the application open “so the Tribe could present additional evidence that the acquisitions would enhance tribal lands. That did not happen,” Draganchuk wrote in her 28-page order.

Dennis Ibold, an Ohio-based attorney, led the development of the New Boston casino through JLLJ Development LLC, while former HomeBancorp Inc. Chairman and CEO Jerry Campbell led the Lansing development through Lansing Future Development II LLC. The projects had investors from Michigan, Ohio and Florida, according to Ibold.

“We’re pleased with the ruling,” Ibold told MiBiz. “We’ve been working with the tribe for many, many years to try to resolve this.”

The nearly $88.9 million award includes $11.4 million in principal and interest on the initial loans, and more than $75 million in lost revenue that was calculated from the temporary and permanent casinos never launching. The casino proposals date back more than a decade.

The development partners initially filed suit against the gaming authority in March 2021, seeking to reclaim the loans based on alleged misrepresentations by the tribe. Since then, tribal attorneys argued multiple times that they had sovereign immunity in the case, though each of the tribes’ appeals were denied.

Through a spokesperson, the Sault Tribe has declined to comment on Draganchuk’s ruling.

Ibold expects the tribe to appeal Draganchuk’s ruling. Draganchuk is next expected to issue an order on attorneys fees.

Read 4162 times Last modified on Thursday, 05 January 2023 12:44