March 22, 1996
'He ... doesn't care'
The following was taken from the Detroit Free Press -
Written by Tina Lam
The following is copyrighted material, please contact the Detroit Free
Press for permission to copy.
The Indian casino business has been good to Fred Dakota.
Since the Kewenaw Bay Indian Community opened a casino in 1986 he's
bought land, a small lakefront house, an expensive gun collection and
a gas station. He's often seen driving an expensive Dodge Viper.
But his tribe's two casinos and their 850 slot machines that helped
create his good fortune ultimately may be his undoing.
Dakota, the tribe's 58 year old chairman told the Free Press in a
recent interview that he received money in 1991-93 from a company that
was indicted last year for supplying slot machines to Michigan's Indian
casinos before they were legal in the state. In exchange the company,
International Gaming Management, got a share of the money that gamblers
lost in the slot machines.
Federal agents have been probing Dakota's links to IGM, including
why he was paid and what he did with the money, said people familiar with
the investigation. Investigators from at least six federal agencies allege
that IGM had ties to the Genovese and Gambino organized crime family in
Dakota said he was not aware of that. Charges in a federal indictment
of IGM last September include conspiracy, shipping illegal machines, money
laundering, mail and securities fraud.
People close to the investigation said Dakota, while he was the tribe's
chairman was paid at least $40,000.00 by IGM in 1991-93. Dakota won't
say how much he got, but he told the Free Press that he was paid as a
"You bet I'm scared, Dakota said of the federal probe. "I
don't think I've done anything wrong. But if Uncle wants to get
you, Uncle will get you."
In a personal journal, Joseph O'Leary, the tribe's lawyer, warns
Dakota to disclose the payments to his own and other tribes who were leasing
machines from IGM. A former tribal council president said Dakota never
told the council about the leasing arrangement.
Dakota's 1991 deal with IGM for illegal slot machines gave IGM a high
profit margin - 35 percent - than the other tribes that had similar arrangements,
according to documents IGM filed with the federal Securities and Exchange
Meanwhile, the 2,400 members of Dakota's tribe have not enjoyed casino
profits as many other Michigan Indians have. The tribe does not pay out
profit shares to adult members, nor has it invested heavily in benefits
such as health clinics and tribal schools.
Slot machines are central to Dakota's troubles but far from his only
One night last August, a group of dissidents crept into tribal headquarters
over looking Lake Superior's Assinins Bay and seized the building
to protest tribal election irregularities. The standoff is now in its
seventh month, with protestors - who claim the support of about 300 tribal
members - camped out in the building without heat or water. (Personal
note: there are about 500 adult members living on the Res.)
The Keweenaw deadlock has been marked by death threats, gunfire and attempts
by federal officials to break the stalemate. Both sides say there is no
end in sight. The protest group, Fight For Justice, charges that under
Dakota's leadership, the tribal council voided the results of a 1994
election in which Fight for Justice leader Jerry Curtis won a council
seat. Then, the council purged 200 people from the tribal voting rolls
and held a new election. Curtis lost.
The council also voided a race in which Dakota's son, Bradley, the
tribal judge, tied with a Fight for Justice member. In the post purge
election, Dakota's son won easily.
Fight for Justice members say Dakota is a dictator who controls tribal
business, jobs and police, threatening dissidents with arrest and filing
libel suits in tribal court to intimidate them.
They believe Dakota has used his office to benefit himself, not the tribe.
Curtis said his group took over the tribal headquarters because it felt
there was no alternative. The U.S. Bureau of Indian Affairs had declined
to get involved in the voting dispute, and within the tribe the only place
to turn is tribal court, where Dakota's son is chief judge.
Dakota denied that the tribe improperly took people off the voting rolls,
and accused the group of stealing documents, including the lawyer's
journal, from tribal headquarters.
"This dictator has to be elected," he said sarcastically. He was
reelected to a three- year term on the 12-member council this month, and
has been chosen chairman by the council for 21 of his 28 years of membership.
He said of his critics, "I think ultimately their goal is to take
over the casino.
Dakota offered last fall. to give the protesters $1 million to start
their own tribe.
Now, he said, he intends to see the dissidents sent to jail through the
"They can stay until hell freezes over but somebody's going to
have to pay," he said. Meanwhile, the tribe has set up new offices
nearby, although the protesters have the tribe's computers and files.
Some tribal casino officials testified before a federal grand jury in
Marquette in December, according to tribal members who requested anonymity.
That investigation is a spinoff of the
Minnesota federal probe that led to the IGM indictments. Assistant U.S.
Attorney Judd Spray in Marquette said he could neither confirm nor deny
the existence of a grand-jury investigation. Legal trouble
The International Gaming Management case, which has not yet gone to trial
in Minnesota, is a complicated web involving the publicly traded company,
Michigan's tribes and New York mobsters, according to federal court
In 1988, Congress passed the Indian Gaming Regulatory Act, allowing tribes
to have casinos, including slot machines, if they negotiated agreements,
called compacts, with their state governors. Both Gov. James Blanchard
and his successor, John Engler, refused to sign com- pacts that allowed
slot machines, the most lucrative part of any casino. In the late 1980's,
all but one of the tribes operating Michigan casinos installed the machines
anyway, but, after a threat from the state to shut them down, removed
In January 1991, according to lawyer O'Leary's journal, Dakota
worked out the deal with IGM to put slots back in his tribe's casino
and others in Michigan, and get a cut for himself. Federal court documents,
securities records and interviews with people familiar with the investigations
paint the following picture:
In early 1991, Jerrold Polinsky of New Jersey, three of his sons and other
key shareholders of IGM set up subsidiary companies and contracts among
themselves to receive shares of the Indian slot machine profits. They
also paid themselves consulting fees up to $20,000 per month.
Those arrangements prevented IGM from showing a profit despite the $6.6
million in slot machine revenues for three years. Instead, the money went
to various companies the Polinskys and reputed organized-crime figures
controlled. One of IGM's shareholders was Gary Danzo, who was indicted
in 1984 along with members of the Genovese and Gambino crime families
in New York for running an illegal gambling operation. He was convicted
of a misdemeanor in the case.
Polinsky told attorneys in a deposition that he and Danzo had been friends
for 20 years and did business together starting in 1991. Other federal
documents say their business relationship went back further, and that
Polinsky gave Danzo 35,000 shares of IGM stock in 1988 and another 3,000
A federal informant said Danzo was Polinsky's mob "handler,"
the person who told him what to do.
By June 1991, the first shipments of slot machines arrived at four Michigan
Indian casinos, including Dakota's. IGM had told manufacturers the
machines were headed to states where slots were legal.
By August 1991, IGM had 175 machines in Michigan casinos; by 1993, there
were nearly 700. The company continued to ship machines to Michigan through
August 1993, the indictment against IGM claims. The tribes paid IGM from
20 to 35 percent of their slot machine revenues in exchange for use of
In August 1993, Engler finally signed a compact with the tribes allowing
them to have legal slot machines. The deal was final in November. At that
point, Michigan tribes were allowed to buy slot machines from legally
licensed distributors in Nevada and New Jersey. At that point, at least
two tribes, including Dakota's, bought machines from IGM.
IGM, through a subsidiary it controlled in Louisiana, used the tribes'
money to set up slot machines in truck stops in Louisiana. The Louisiana
firm bought its slot machines from Worldwide Gaming, a Louisiana company
federal investigators say was a front for the Genovese and Gambino crime
families of New York and the Marcello family of New Orleans.
Polinsky testified in a 1994 deposition that it was Gary Danzo who introduced
him to officials of Worldwide.
Eighteen people associated with Worldwide were convicted of racketeering
and other charges late last year, accused of skimming profits from Worldwide
for mob bosses. Most were sentenced March 6 to prison terms; the rest
will be sentenced in April.
Where it stands
None of the Michigan tribes has been indicted in the scheme, and the tribes
say they did not know
IGM had ties to organized crime.
But the tribes knew it was illegal to ship machines to Michigan. Although
Dakota insists he did nothing wrong in taking money from IGM, the tribe's
attorney warned him against it.
Notes from attorney O'Leary describe Dakota's efforts to sell
IGM equipment to other tribes in early 1991 and the warnings O'Leary
issued. On Jan. 16, 1991, O'Leary wrote in his daily journal: "Spoke
with Fred about problems with his arrangement with IGM to get a cut; he
really doesn't care. Said he's entitled to a share and that he
will be fully open with everyone about it! Also does not feel that he
is misusing his office since he's also selling this game to other
tribes in the state. What's an attorney to do!"
On Jan. 25, O'Leary wrote: "Spoke with Fred about the ... machines.
I stressed strongly to him that he MUST inform council fully. He promised
he would, but he wanted to wait until there were no reporters around and
until the deal was closer to being finalized."
On Feb. 14, O'Leary again warned Dakota. "I told him to tell council
about his deal with IGM. He again promised he would, when the time was
In a formal response to a grievance the protesters filed against him with
the State Bar of Wisconsin, O'Leary said some of the notes were taken
out of context and said he did not know whether Dakota ever took IGM money
Myrtle Tolonen, a former council chairman and member of the council for
more than 20 years, said Dakota never told the council that IGM was paying
him. Several other tribes that leased machines from IGM also said they
were unaware Dakota was getting money from IGM.
IGM and the Keweenaw Bay tribe did other business together. Among the
documents seized by protesters from tribal headquarters is a 1993 letter
to Dakota from IGM quoting cigarette prices and delivery times.
The letter, signed by Jerrold Polinsky's son Gary, said the younger
Polinsky was also working on new signs for the casino. He closed by sending
his regards to Dakota's wife, Doris, and "the rest of my friends
It was signed: "Your friend, Gary."
Members of the dissident Fight for Justice also have turned over to investigators
receipts they found for $7,000 worth of tax exempt gasoline Dakota
had shipped to his gas station, saying it was for the tribe.
Dakota acknowledges, too, that he tried to convince members to set up
a corporation which would own the slot machines in the tribe's two
casinos. The machines are now owned by the tribe itself. Under his plan,
tribal members would buy shares and get a split of the profits based on
the number of shares they owned.
Curtis, of Fight for Justice, said the plan so outraged him that he ran
for tribal council. Not only would something that now benefits the whole
tribe pass into the hands of a few who could afford to buy in, but Dakota
would appoint the corporation board, Curtis said. "It's ludicrous."
Dakota said he thinks tribal members are just jealous of his success.
"Anything I've done, anybody else can do," he said. "Ijust
wish they'd come up with their own ideas once in awhile.
Close to midnight on a frigid February night, a group of Fight for Justice
members gathers around the kitchen table in the local priest's house
near the occupied tribal headquarters. They are smoking cigarettes and
eating homemade pasties.
Several say they can't leave the compound because there are tribal
arrest warrants for them related to the takeover. Tribal police, many
related to Fight for Justice members, have refused to serve the warrants
Nearly 40 members of the group have lost their jobs with the casino or
tribal government since the standoff began, they say.
The home of one Fight for justice member was peppered with gunfire shortly
after the takeover started, when no one was home. A member of the American
Indian Movement who has joined the takeover is accused of hitting a Dakota
supporter with a crowbar when the man leaped in his truck.
"We want Fred gone," said Curtis, whose father was tribal chairman
in the 1970s.
"Every agency tells us they won't get involved in tribal disputes
and we have to settle it ourselves. That's what we're doing."
A few miles down the road, Dakota sits in his kitchen, protected by a
security camera and a guard who patrols outside. Two semiautomatic guns
are in a cabinet nearby. He sees himself as a force of stability, keeping
the insurgents at bay.
"They're criminals," he said of the dissidents. "I'm
getting tired, but I'll be here as long as the people want me. I can't
step down now.
By his own admission Fred Dakota pushes the rules as far as can, or creates
new ones. He says that's the only way he can keep his tribe from disappearing
and melting into the rest of the culture.
Dakota's guiding rule is this: The Keweenaw Bay Indian Community is
a sovereign nation where federal, state and local laws don't apply.
"People use sovereignty as a word a term," he said. "I say
it means nothing unless you exercise it. "I don't want to be just
another race living here. I want to be an American Indian who once owned
this country I don't want people to forget about that."
Chairman of the Keweenaw Bay Indian Community for 21 years, Dakata, 58,
wields great power in his tribe He also has strong support he was re-elected
to the tribal council this month despite serious allegations by tribal
A flamboyant figure,Dakata is married to his third wife, a blond non-Indian,
and lives behind his gas station .He owns 42 acres on the nearby Sturgeon
River, 60 acres behind the tribe's casino, and a small lakefront house
he's remodeling. He's proud of his 1960's classic cars, his
60-inch television and his gun collection.
A former lumberjack and U.S. marine, he was pressured to leavce the reservation
and move to Chicago in the early 19608 as part an effort by the Bureau
of Indian Affairs to get Indians to assimilate. Finally, homesick, he
returned to the reservation "It wasn't a good thing for Indian
people," he said the federal program to push assimilation.
That may have shaped his attitude,he said. Dakota believes' Indian
tribes should have their own representatives in Congress. He believes
tribes should be able to operate casinos wherever and however they please.
It bothers him that by taking federal money for some tribal programs,such
as housing and healthcare, his tribe has to follow federal regulations.
"We should be able to tell the feds to get off our back," he said.
His is the only tribe Michigan that has its own license plates, bearing
the tribal symbol, a fierce-looking flying eagle in red.
Dakota is the only tribal leader in the state who operates his own business
on the reservation -- a gas station, convenience store, and furniture
and carpet outlet under one roof He also owns land inside the reseveration
with a non-Indian partner, where he has talked of opening a distillery.
In other tribes, the tribe itself owns businesses such as gas station,
and profits go to the tribe. Most other tribes have also used their casino
profits to start health clinics, tribal schools, senior citizens homes
and other programs Two tribes pay a percentage of the casino profits to
"We don't have any of that," said Georgianna Emery, a Dakota
critic and one of the people involved in a takover of tribal headquarters.
The tribe doesn't even hire Indians for many key jobs at its casino,
Fred is more oriented towards himself than toward the tribe, said Chuck
Loonsfoot,former council member.
The tribe has purchased one business, a bathtub and shower manufacturing
firm, with casino profits and money from a federal economic development
program. Dakota said the company has yet to show a profit.
Dakota said his tribe has put casino money into progams that benefit members.
The tribe recently set up a 3-mlllion trust which pays senior citizens
$175 per month, has a fund That helps pay college students' expenses
and has an emergency-needsfunds for members. The tribal council decides
who gets the money.
Dakota said "the possibilities are endless," if tribes push to
use their sovereign nation statue' for business puposes
The reservation could be a duty-free zone with the powor to import raw
materials assemble than into finished products and sell tham he said Reserverations
could house banks not subject to federal regulatlion such as reporting
large cash deposits, or medical schools, like those on Caibbean islands,
without permission from the American Medical Association. All these are
ideas Dakota has pursued, although none has come to fruition yet.
"We've had so much internal strife I've had no time to do
a lot of things," he said "We should be able to do Whatever we
want, and not have to ask your permission to do it."
He's done his beat to live up to that philosophy. In 1984, he opened
Michigan's first casino, a blackjack parlor in his garage. A federal
judge ordered it closed in 1985, saying only tribes, not individuals,
could run casinos, but in the meantime Dakota made $2,000 a day, according
to documents in that case.
In 1994, his tribe opened its second casino on tribal land near Marquette,
although state and federal officials said the casino was illegal becausee
under federal law the tribe needed permission from tbe governor for an
official reservation casino Dakota sued to prevent the federal goverment
from moving to shut down the casino. In February, a federal judge aided
with him, saying tbe federal law didn't apply.
Last fall, during the intense first few weeks of the takeover of his tribe'sheadquarters
by proesters, he threatened to barricade U.S. Highway 41, which runs through
the reservation. next to the takeover site, because state and federal
police wouldn't get the proesters out.
He rationalizes having had illegal slot machines in Michigan reservation
casino before a 1993 agreement that legalized them.
"The machines were being delivered to a sovereign nation, not Michigan,"
he said "You have to do what you have to do."