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For the sake of tribal credibility, the Mashantucket Pequot Tribal Council should ask Steven Thomas to step down from his position as treasurer and suspend his duties as a council member. Last week a federal grand jury issued indictments against Steven Thomas, 38, and his brother and former tribal chairman, Michael Thomas, 44, for the alleged theft of tribal funds.
However other tribal leaders may feel about the legitimacy of the charges - and last week a statement from the tribe expressed confidence in Steven Thomas - they cannot ignore the troubling message it would send to maintain as treasurer someone under federal indictment for theft. If subsequent legal proceedings exonerate Steven Thomas, then the council could reinstate him or he would be free to seek the position again. As of now, his reputation is tainted and, by extension, so too the reputation of the tribe.
Troubling in a different fashion is the indictment of Michael Thomas, chairman from 2003 to August 2009 of the tribe that operates the Foxwoods Resort Casino. During his chairmanship the tribe went from unprecedented success to default on its debt. Mr. Thomas' apparent predilection for doing what he wanted no matter what it cost, his apparent belief that money was never an object, seems to have permeated through tribal operations at the time, though not perhaps to the extremes of its leader.
In December 2011, already the subject of an FBI probe, Mr. Thomas, who once enjoyed a lavish salary as chairman, filed for Chapter 7 bankruptcy, listing just $346,000 in assets and $10.2 million in liabilities. The indictment alleges that his actions went beyond fiscal recklessness to criminality, contending he "did embezzle, steal, obtain by fraud, intentionally misapply, and … convert to his own use" tribal funds. The indictment seeks forfeiture of $102,393, suggesting the extent of the alleged theft that prosecutors feel confident they can document.
Current Chairman Rodney Butler has done a credible job in trying to rebuild the image of the tribe from one that is irresponsible with its wealth to an entity that can make the tough choices to restore solvency, including slashing the size of its bloated bureaucracy and phasing out stipends paid to tribal members. His leadership has brought the tribe to the brink of approval for a $2.2 billion debt-restructuring plan, critical for the tribe to get access to the capital it will need to remain competitive in a changing casino environment. Almost final, the plan still requires approval from some noteholders who will have to accept financial losses in the restructuring deal.
Tribal leadership needs to demonstrate that safeguards are in place to prevent future misappropriation of resources. Greater fiscal transparency, as called for by the debt-restructuring plan, would help. Allowing a treasurer under federal indictment to stay in place would not.
The indictment against Treasurer Steven Thomas, and the demand he forfeit $739,744, appears tied to allegations that he held a "no-show" job as assistant director of the tribe's Department of Natural Resources Protection from January 2005 to June 2008. The department received federal grants and that, in the opinion of prosecutors, makes taking pay for a sham job in the department a federal crime.
In a statement issued after the indictments the tribe said that "the federal government's decision to move forward with this action … has strong implications on self-governance throughout Indian Country."
While the tribe is withholding further comment, it would appear it finds troubling the actions of federal authorities in prosecuting a tribal member for allegedly receiving unfair compensation. It likely views the allegation as an internal matter that comes under its sovereign authority. Because of the involvement of federal funds, however, federal law appears to say something else.
That will all be part of the judicial process. As of now, however, the tribe has its treasurer under federal indictment and only it can correct that.