By Michael E. Miller
By Allie Conti
By Keegan Hamilton and Francisco Alvarado
By Jake Rossen
By Allie Conti
By Kyle Swenson
By Chris Joseph
By Michael E. Miller
Wearing dark sunglasses that masked his eyes, Seminole Tribal Councilman David Cypress strolled to the witness stand in federal court in Fort Lauderdale on December 13 and for the next five hours astonished observers. On trial were three former Seminole employees charged with embezzling millions of dollars. The trio's defense was simple: Their management of money wasn't out of line with that of the tribe's leaders. With his long dark hair pulled back into a ponytail, Cypress spoke rapidly and nervously about tens of millions of dollars he'd lavished on friends, tribe members, and himself.
"I have no problem with spending money; that's what I've been telling you," the Sun-Sentinelthe next day quoted Cypress as saying. "I bought Lexuses for anyone who asked for one. Give me a [sad] Hank Williams song and I'll give you one too."
Cypress represents the Big Cypress Reservation on the five-member tribal council, and he receives an annual spending allocation for his reservation. Other councilmen receive stipends for Brighton, Tampa, Immokalee, and Hollywood. Discretion in spending those millions of dollars is, to put it mildly, a subjective exercise.
Cypress recounted a personal litany of largess that amounted to $57 million in three and a half years. Among the expenditures were $1.6 million to Michael's Decoration; $69,000 to Sound Advice; $40,000 for Bose stereo equipment; $600,000 for auto maintenance and repair at Hendry County Motors; $100,000 at Sears; and roughly $1 million in American Express charges. He spent millions more at Lexus, Cadillac, Honda, BMW, Jeep, Ford, Volkswagen, Lincoln Mercury, and Harley-Davidson dealers.
"I have tribal members that I buy cars for, they go off the reservation, get in trouble, and I need to get a lawyer to get them off the hook," Cypress said. He's shelled out hundreds of thousands of dollars to hospitals, drug treatment centers, and lawyers for tribe members and friends who have been overwhelmed by the excesses big money often brings.
He paid $5.8 million to Nationwide Landscaping, which is owned by Krishna Lawrence, his business associate. With $350,000 of tribal money, the two bought a Hollywood boxing gym, from which Cypress keeps all profits.
"I like to help people, and I enjoy giving money away," Cypress told the jury. "Everyone knows if they show up at my door, I'm probably going to help them. That's just the way I am, and I don't want to change."
Nor does it appear that he or any of his fellow councilmen have any reason to curtail the spending binge. In an August 2002 deposition in a civil lawsuit involving the Seminole Tribe, Priscilla Sayen, the tribe's secretary-treasurer, was asked about budget controls and Cypress' spending. Sayen said that the council had budgeted $5 million for the year to Big Cypress Reservation. More than $12 million had already been spent, however. No budget amendments or resolutions had been passed to approve the $7 million in additional spending, nor was he sanctioned as a result.
The tribe's free-spending ways come as no surprise to Tim Cox, who was once the government operations manager for the Seminoles and the right-hand man to former Chairman James Billie. Cox and Billie have been wrangling with the tribe in court since they were ousted in May 2001 by the tribal council, and they've also been targets of federal investigations.
"Keep in mind that you're not dealing with the City of Fort Lauderdale; it's a different country," Cox says of the sovereign Indian nation. "They send their tribal members to Disney on a routine basis, all expenses paid. Buy them cars. They get free medical, which includes breast implants, penile implants. You name it, they get it. And it's all free. Budgets don't mean that much to them. They pass them because they have to for [federal] money. But they've never followed them."
The tumult in leadership came at a crucial time in the tribe's negotiations with Baltimore-based developer Cordish Co. to build Hard Rock Cafe resort-casino complexes in Hollywood and Tampa. Cox claims that Cordish took advantage of the turmoil in tribal leadership and sweetened the deal for itself. Under the deal's terms, the Seminoles offered a $290 million revenue bond to build the resorts, but the tribe is required to use its own money for actual construction of the casino portions, which will cost an estimated $60 million. The tribe won't regain complete control over the operations for 25 years. Completion is expected in spring 2004, with the casinos the last component to be built.
Before getting the boot, Cox and Billie had set up a deal in which Cordish would foot all the upfront costs of securing the bond and the tribe would have gained control in ten years, Cox says.
The modified Cordish-Hard Rock deal has already caused problems for Seminole leadership. As Cypress' testimony suggests, the tribe manages to spend almost all of its roughly $325 million annual revenue, which is derived mainly from casinos in Hollywood, Coconut Creek, Brighton, Immokalee, and Tampa.
"It's not hard to figure out that if you're making $300 million a year and you're spending $290 a year, it's hard to [save] $60 million," Cox says of the money needed for the casinos. "It's basic arithmetic. The only way to [get $60 million] is to terminate contracts and sell land."
The tribe has done just that, Cox contends, by reneging on a major contract for an existing casino. In June 2002, the tribe quit making monthly payments to Coconut Creek Gaming, the outside partnership that funded construction and installation of gaming machines at Coconut Creek Casino. As part of that deal, the tribe committed to paying the partnership 35 percent of the casino's net gaming revenues for ten years after its opening in February 2000. Attorneys for the partnership tried in vain to meet with tribal officials to discuss the delinquent payments, which amount to about $2 million a month. Coconut Creek Gaming has since sued the tribe.
Tim Cox lives in a modest neighborhood in Plantation just off I-595 with his wife, Amy, who is a member of the Seminole Tribe, and their two children. Their one-story, rust-colored brick house is sparsely decorated inside. His study, however, just down the hall from the sunken living room, is jam-packed with tribal documents and court pleadings. Taped to the office door, a homemade placard declares: "Fourth Seminole War Room."
On this cool and sunny day in early January, Cox is beset with a flurry of incoming phone calls, which he is forced to start screening in hopes of completing an anecdote without interruption. He projects the image of a 33-year-old teenager. His frame is small and gangling, and a sly grin frequently crosses his baby face. His high-timbre voice rolls with a rich Southern drawl. He's wearing beige shorts and a black T-shirt with lettering that cautions: "Do not start with me, you will not win." For would-be litigators, at least, the admonition is apt.
Cox worked as government operations manager for the Seminole Tribe of Florida for about two years before losing that job on May 10, 2001. Cox says he resigned; the tribal council officially terminated his employment at a meeting later that same day. Two weeks later, the tribal council suspended its chairman, Billie, who had become enmeshed in a federal lawsuit accusing him of sexually harassing a tribe employee.
In September 2001, the tribe sued Cox, Billie, and the St. Petersburg-based Raymond James investment firm in federal court, alleging they had misused the tribe's $30 million investment reserves. The judge dismissed this civil suit in July 2002 for lack of jurisdiction. In a similar criminal case filed in federal court in June 2002, Cox, along with tribal employees Dan Wisher and Michael Crumpton, were indicted and charged with diverting $2.77 million to private accounts in South America.
The three men went on trial in Fort Lauderdale in early December. Assistant U.S. Attorney Ed Stamm contended that the men had funneled money to a bogus company, Virtual Data, which was used to conceal the fraud. Cox and Wisher gained access to the tribe's $25 million investment account, Stamm told jurors, and then wrote checks to personal accounts and phony businesses. Other funds were transferred to front companies in Belize and Nicaragua, he claimed.
Billie's testimony laid waste to the prosecution's case, however, when he told jurors that he'd fully authorized Virtual Data. The company was a foray into the lucrative field of Internet gambling and used the discretionary funds available to Billie as chairman. He kept the venture secret, though, because of the tribe's ongoing dispute with the state over a gaming compact and a possible crackdown on Internet gambling by Congress. If the winds turned against such an operation, he didn't want the tribe connected with it.
Using a procedure he said was routine for the tribe, he ordered Cox and Wisher to set up Virtual Data under their own names and use their own accounts for all transactions. The practice was intended to keep the outside world from seeing all their holdings.
After two weeks of testimony, U.S. District Judge William Dimitrouleas didn't even let the case go to the jury, ruling that the government's allegations were undermined during defense cross-examination and that there was insufficient evidence that tribe money was embezzled. The judge suggested that this case was not unlike prosecuting someone for stealing a car without first checking with the car's owner whether it had been stolen. The three men were acquitted.
Knowing all he did about the council's laissez-faire attitude toward finances, Cox says he was confident that his actions wouldn't be found criminal. "I never believed I was going away," he says. "I never sat down with my kids and said, 'Daddy may be going away for a while.' I was looking at ten years, but I was sure the system would prevail."
Despite the tribe's civil lawsuits against him, Cox says he doesn't hold a grudge against the Seminoles. He considers what's happened in the past few years involving him, Billie, and others as a "family feud." He reserves his animosity for the FBI and prosecutors. "I spent $1.3 billion for the tribe. And they're questioning me about a $2.7 million transaction? That's like me giving you $100 and coming back later and asking you how you spent that money, coming up with $99.80, and you say to me, 'You fucking thief.' That's the equivalent."
Because he was a demanding manager, Cox had an antagonistic relationship with employees from the moment he began. "James called me 'the hatchet man,'" Cox recollects. "I was the one who was going to get everybody mad by changing the organization." He remembers Councilman Max Osceola telling employees at one meeting, "If you get mad at what [Cox] does, you don't understand who you work for. We're telling him what to do. Don't get mad at him; come to us."
The Seminole Tribe of Florida is composed of descendants of Native Americans who resisted forced relocation by the federal government from Florida to Oklahoma during the first half of the 1850s. Rather than move, some retreated into the Everglades. In 1934, Congress passed the Indian Reorganization Act, which became the basis by which Indian tribes could organize tribal governments and adopt constitutions. The Seminole Tribe of Florida formed a charter in 1957, but most of its members remained uneducated and poor. In 1971, Chairman Howard Tommie introduced tobacco shops and high-stakes bingo in Hollywood. Bingo had already been allowed in Florida, but the law limited jackpots to $100. The state sued, but in 1981, the Fifth Circuit Court of Appeals in Atlanta upheld the tribe's right to offer high-stakes bingo. Through the 1990s Indian gaming has boomed nationwide, as have the Seminoles' gaming operations. The 2,800-member tribe has reaped hundreds of millions of dollars, but its management of that newfound lucre remained unsophisticated. Billie charged Cox with modernizing the organization.
Support for Cox, however, had waned by the end of 2000, and he was under fire at council meetings. It was around that time that agents of the FBI and IRS began asking questions of members and employees of the tribe. The agencies were interested in the tribe's connections with overseas hotels and casinos and whether those operations were being used for laundering money. Most of the inquiries centered on Billie. "They started actively knocking on doors," Cox says of the agents. "I believe they threatened the councilmen," he asserts, particularly David Cypress and Mitchell Cypress, who was then vice chair. New Times requested interviews with both men but received no response. FBI spokeswoman Judy Orihuela says agents represented themselves in a professional manner and did not pressure anyone.
Cox points to a cartoon, taped to the wall, that was published in the Seminole Tribune in March 2001. The drawing depicts him standing before the council and advising a spending freeze; a handful of arrows are lodged in his buttocks. "I should have probably left then, but I'm tougher than I am smart," Cox says. "It was after one nasty meeting that Mitchell looked at me and goes, 'No offense -- everything's OK with you. I'm just not going to jail for James Billie.' And David said, 'Me too.'
"Of course, investigations and rumors of investigations have been around James Billie since he became chair in 1979, so there have been 24 years of investigation. But all they came up with was trying to get me, which wasn't a case at all. They wanted James Billie so bad that they intentionally looked past the evidence."
This latest investigation and the expulsion of Billie, however, came at a vital time in the tribe's negotiations with Hard Rock Cafe and the project's developer, Cordish. "I think Cordish took advantage of a volatile situation, the turmoil in the tribe," Cox asserts. And because it was a deal that Billie had put together, the council felt it needed to change it, he adds. "But they really changed it to the disadvantage of the tribe and its members," Cox claims. "They had no idea what they had committed to. It always looks easy when somebody else is doing it. James had been doing it for 22 years by that point. But they figured if dumb old James can do it, they can do it. But reality has not borne that out, unfortunately."
For ten years, tribe officials pondered building a casino in the northwestern suburbs of Broward County. "The question was: Is Hollywood getting it all already?" Cox says. "Hollywood was doing $100 million a year. The feasibility studies were against the place from the start; that's why the tribe didn't do it with their own money."
Still, in the mid-1990s, Indian casinos were popping up all over the nation, and outside investors were vying to help cash-strapped tribes build and furnish casinos in exchange for a piece of the action. "The lure of big money -- that's what it comes down to," Cox says. "The lure of being able to do things and circumvent the federal and state statutes. That's why people go to the reservations." Indeed, if the Seminoles were cautious about launching a new casino, others weren't so hesitant.
Around that time, Robb Tiller, a tribe hanger-on, approached Billie. "[One] day, he comes up with a guy by the name of Gary Fears, and he says he wants to get into a gaming contract," Billie recalled during an interview with the St. Petersburg Times, the transcript of which is posted on the tribe's website. "I said, 'Yeah, right. You bring something out here, a Turbo Commander [aircraft], lay it right there the next day, and I'll believe you.' Time went along and I be goddam, there was a Turbo Commander layin' out there, and I said, 'What the hell is this?' 'We're gonna give it to you, chief.'"
Fears, an Illinois restaurateur and developer, had already made a fortune in riverboat gambling, but he'd also established a dubious reputation. Using his political connections with the governor, Fears had received a state loan for $13.4 million in 1982 for the financially troubled Collinsville Holiday Inn, which he partly owned. He suspended payments several times during the next five years, according to accounts in the Chicago Sun-Times newspaper. By 1995, the state moved to cut its losses on the deal by letting Fears pay $6.3 million in lieu of reimbursing the full $20.6 million of the loan. "The taxpayers are going to take a bath, no question about it," state Treasurer Judy Baar Topinka said at the time. Illinois' attorney general put the kibosh on that settlement, and the matter is still unresolved.
Fears also sidestepped the background checks required by the Illinois Gaming Board in order get into riverboat gambling, according to an investigation by the Sun-Times. Fears led an investment group called the Alton Riverboat Gaming Co, which applied for a license in July 1990. The group included Fears' son, Victor, and about a dozen other stockholders. In November 1990, fearing that financial problems with his restaurants would interfere with the impending background investigation, the elder Fears sold his 8.3 percent interest to a business partner, who in turn gave Gary and Victor Fears an option to buy the stock back. In 1994, Gary Fears signed over all the options to his son, who sold them for about $4 million.
Billie claimed that Fears' gift of an aircraft didn't influence him or the tribe; still, the two men began negotiating a deal for a casino in Coconut Creek. That didn't sit well with Tiller, however, who eventually sued Fears and several other parties for destroying his relationship with the Seminole Tribe. According to Tiller's Broward County Circuit Court complaint, in 1994 he had "learned of a valuable business opportunity to expand gaming activities at... a new facility in Coconut Creek." That same year, he met Fears, who said he owned Argosy Gaming Co. Fears proposed that together they could find additional financing and buy out the existing management contract at the Hollywood casino and introduce Class III gaming, which is high-stakes Vegas-style gambling, the complaint states. Tiller claims Fears used him for entrée to Billie and the council, "who were notoriously distrustful of Anglo-American businessmen because they had broken their promises in the past and skimmed millions of dollars from the casinos in Hollywood and Tampa."
The Hollywood buyout didn't happen. Instead, Fears began negotiating with the tribe in 1995 to develop a casino in Coconut Creek. In March 1995, Tiller introduced Fears to George Straub, who had controlling interest in Straub Capital Corp. Tiller alleges that in the fall of 1995, Straub and Fears conspired to oust him. Billie continued to support his involvement, Tiller claims, until a St. Petersburg Times article in July 1997 depicted him as disparaging the tribe and chief. The tribe "cut all social and business ties" with him, he claimed. The court dismissed the complaint in October 2002, citing the lack of an actual business agreement between Tiller and the tribe. Tiller's appeal to the Fourth District Court of Appeal in West Palm Beach is pending.
Regardless of what his relationship had been with Tiller, Fears pressed on, only to hit his own roadblocks with Coconut Creek city officials, who were wary of his background. Coconut Creek Casino was ultimately built by Coconut Creek Gaming, a limited partnership. Its general partner is North American Sports Management IX Inc. (NORAM), which is based in Maitland, Florida. Alan H. Ginsburg, NORAM's president, has casino development deals with tribes in five states, according to a December 2002 Time magazine investigation of Indian gaming. Fears is apparently still involved, however. The St. Petersburg Times reported in July 2001 that Fears had admitted in a lawsuit deposition to being "the largest and probably majority" shareholder in the partnership.
The deal between the Seminoles and the partnership was structured so that the latter would build the casino, supply it with gaming equipment, and fund startup costs. The tribe, which would operate the casino, would then pay back all those costs, including interest. In addition, the tribe would pay the partnership 35 percent of the net revenues for the next ten years, which by 2002 was about $2 million a month. About 800 slot machines fill the 30,000-square-foot casino.
According to Craig Rasile, a Miami attorney who represents Coconut Creek Gaming, the tribe had already paid back the upfront costs by the summer of 2002. But then, inexplicably, the tribe failed to make the $1.79 million payment due in June. The tribe had waived its sovereign immunity for the deal, which meant that the partnership had the ability to file a lawsuit in court against the tribe. The waiver, however, had stipulated that in the event of a dispute, the company would first need to meet with tribal officials before filing a lawsuit, Rasile says. The partnership wrote to the tribe three times in August requesting a conference but received no response.
The company filed suit against the Seminole Tribe in Broward Circuit Court on October 11, 2002. At the same time, the partnership requested that the court appoint a custodian to make sure the casino accounts were not commingled with other funds. In supporting its case for a custodian, the company alleged in court papers that Billie's ouster as chairman created a void in tribal leadership "resulting in disarray and a lack of control over tribal affairs." The motion also cites Treasurer Priscilla Sayen's deposition as an indication of the "state of disarray" in the tribe's cash management policies.
The tribe's attorneys maintain that Billie made changes to the contract that did not receive the required sign-off from the Bureau of Indian Affairs and the National Indian Gaming Commission (NIGC). As a result, they assert, the contract is void.
Cox dismisses the tribe's defense of its actions. "I didn't particularly agree with the NORAM deal, even when I was with the tribe," he says. "But keep in mind that despite the fact that these guys say this contract was done by James Billie and they didn't know about, it is a valid contract that was approved by the council, which at that time was the [Seminole] Gaming Commission. They knew it from the get-go. The current chair, Max Osceola, negotiated the deal. It was in the works for six years. The contracts were forwarded to the NIGC, forwarded to the BIA."
In October 2002, the tribe submitted to the NIGC the contracts that are now in force, says Richard Schiff, a spokesman for that agency. The NIGC is currently examining them to see if they violate the Indian Gaming Regulatory Act.
As profitable as the Coconut Creek Casino quickly proved itself to be, the tribe's planned resort-casinos in Hollywood and Tampa promise to be a bigger bonanza.
The Hollywood casino, which will be built northwest of the intersection of Stirling Road and State Road 7, will cover about 115,000 square feet and house about 2,000 electronic gambling machines and 65 gaming tables, making it the largest in the state. The first phase calls for a 250-room hotel, with the construction of a foundation for 500 more rooms in the future. The resort area includes 12 restaurants, 50,000 square feet of meeting and convention space, and a 1,500-capacity music arena. About 400,000 square feet of retail-entertainment space will be built in two phases.
The tribe closed on $315 million in bond financing in June 2002. The terms of the bond call for the Seminoles to pay $2 million a month for interest payments as well as save $36 million to fund the construction of casinos in Hollywood and Tampa. The estimated cost of building both is $60 million, Cox says.
The tribe began negotiating in the mid-1990s with Hard Rock Cafe International, which is a subsidiary of London-based The Rank Group, to anchor the gambling complexes in Hollywood and Tampa. The Cordish Co. was brought in as developer.
"The tribe needed Cordish," Cox recalls. "They are one of the premier developers in the country. They've never done business in Indian country, though they've been chased many times to do so."
The development company was founded by David Cordish in 1968 and focused solely on suburban shopping center developments. By the 1980s, the company branched out into large-scale urban projects in Niagara Falls, Salt Lake City, Detroit, and Chicago. Its development centerpiece, however, is on Baltimore's Inner Harbor. Cordish converted a dilapidated and abandoned brick power plant into an entertainment-retail complex, which includes a Barnes & Noble, an ESPN Zone, and the Cordish headquarters.
"I negotiated the first deal with Cordish over about six months," Cox says. "They weren't happy with it, but they were going to make a billion dollars over the life of the contract. You need a Cordish to land the big-name franchises. You're building an $800 million complex. You don't want to put in unknown restaurants. You want the Barnes & Nobles, the Hard Rocks, the Harley-Davidson Cafes. Most big-name people don't want to deal with Indian country because of the sovereign immunity, the instabilities. It's just a different environment because of the very short distance between abject poverty and where [tribes] are now. The business experience you're working with is minimal.
"What Cordish was going to do was actually bring in bidders, if you will, such as Harley-Davidson Cafe," Cox explains. "Because the goal was -- now this was me thinking -- everyone that got a spot would have a tribal member partner. 'You want to open a Harley Davidson Cafe? That's great. Who's your Indian partner? None? Sorry... next!' That way, the Indians get a double benefit: An increase in dividends, and they get business experience with a little bit of extra money over here."
The contract Cox negotiated, he says, was for ten years, similar to the Coconut Creek Casino deal. The tribe would sell municipal bonds to fund the resort-casinos in Hollywood and Tampa, but Cordish would have paid all the money to close the bonds, which would have included funding for building the casino. The tribe would have had total control over all hiring, design, and subcontracting.
"I've been around the tribe for ten years, and I knew they wouldn't save money," Cox says. "It's just not in their nature. For anybody to commit the tribe to putting away that kind of money" -- referring to the $36 million required in the current contract -- "and $2 million a month for interest payments -- it can't happen without eventually doing what they've done."
Cox maintains that Cordish seized upon the tribe's internal strife and brokered a new deal. "I think they saw an opportunity to go back and get what they didn't get with me," Cox says. "They wanted a contract for the retail and the hotel all the way up through the 25th year, which was when the Hard Rock franchise agreement would expire.
"I do know that the new contract isn't advantageous to the tribe. Are they going to make a lot of money? Yeah. Are they going to make as much as before? Yes, up to the tenth year, but on that 11th year, when you're still paying Cordish, you've just lost money. And you'll lose all the way to the 25th year. [The tribe] can't even say who the general manager is. My son, who's 5 now, he'll be 31 years old before the tribe regains control of that property. And there's no guarantee that he'll have any experience in [casino management] to make a claim as a tribal member. The last 15 years, the tribe gets fucked."
Cordish did not respond to questions e-mailed by New Times.
Cox contends that tribe officials felt compelled to rejigger the Hard Rock deal because he and Billie had been involved with it. "All these guys are concerned with is the appearance that they're doing something," he says. "I don't think they necessarily knew what they were agreeing to."
The tribe's attempt to rid itself of payments to Coconut Creek Gaming is just desperation to make the Hard Rock deal work, Cox says. Indeed, during a deposition taken in September 2002 for a civil lawsuit against the tribe, Jim Shore, long-time attorney for the Seminoles, suggested as much. "When we were financing the Hard Rock project," Shore said, "we wanted to make sure all of our other gaming documents were in order so as not to jeopardize the funds that we were going to raise for that project."
Paul Filzer, a Cleveland attorney who represents Coconut Creek Gaming, says it doesn't really matter why the tribe reneged. "The bottom line is we had a valid fully enforceable contract," he says. "I have no concrete evidence as to why the tribe stopped paying at Coconut Creek, and I have no evidence regarding their transactions in Hollywood and Tampa. I don't know the tribe's financial position to know whether or not they would have needed to take the payments they make to the Coconut Creek partnership and use that to fund their construction escrow account. Anything's possible."
Early in January, Billie showed up at Seminole headquarters and announced he was stepping back into the chairman's shoes. After a bit of a ruckus, Billie left at the request of tribal police. Asked about the casino contracts, Billie told New Times, "To tell you the truth, I haven't spent much time worrying about how the contracts are. I've been worrying about getting in first, and then I'll look at it. I'm sure it's not too far out of whack, but I won't know until I get in."
Cox says he believes the tribe will ultimately come up with the money needed to complete the Hard Rock resorts -- but at a greater cost. "The problem I see is, who's going to want to do business with them?" he concludes. "If you're a franchisor and you see what's been in the papers the last several years, would you really want to do business with them?"