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July 23, 2017

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Tribe sues to cancel development deal with Las Vegas company

A Las Vegas company said Thursday it will contest a California Indian tribe’s lawsuit seeking to cancel a hotel-casino development deal.

The Big Sandy Rancheria of Mono Wind Indians filed suit Feb. 3 in federal court in Fresno, seeking an order invalidating the tribe’s 2007 development deal and credit agreement with Brownstone LLC.

The suit says the agreements involved a development, financing and consulting agreement for a planned “casino, hospitality and recreational project for the tribe.”

“For unknown reasons, Brownstone demanded that the development agreement include provisions that purport to relieve Brownstone from any licensing requirements imposed under the federal Indian Gaming Regulatory Act (IGRA), the (state gaming) compact, the tribal gaming ordinance and the tribal gaming regulations,” the lawsuit says.

The lawsuit says that after the development deal was signed, the tribe’s Gaming Commission informed Brownstone it had to be licensed to proceed with the project.

The NIGC later determined Brownstone is required to be licensed by both the tribe’s gaming ordinance and the state compact.

“Failure of Brownstone to become licensed is a violation of the compact and the tribe’s gaming ordinance, which must be remedied,” said a July 2, 2010, letter to the tribe from Penny Coleman, at the time the acting general counsel of the NIGC.

“Despite the tribe’s offer to work with Brownstone and to entertain additional proposals from Brownstone provided that Brownstone comply with the licensing provisions of the compact, the gaming ordinance and the gaming regulations, Brownstone continues to refuse to submit to any of the licensing requirements,” the lawsuit says.

Brownstone, a subsidiary of Las Vegas-based American Vantage Companies, doesn’t need to be licensed, American Vantage said in a statement Thursday.

“The multi-million dollar development agreement identifies Brownstone as the exclusive provider for development and construction oversight of the Big Sandy proposed gaming and hospitality facility. Based on the non-gaming nature of these services, the development agreement clearly states that Brownstone has no gaming license requirement. Further, the credit agreement provides that Brownstone’s 2007 loan advances to Big Sandy, in excess of $1 million, would be used only for ‘governmental matters’ unrelated to gaming activities,” American Vantage said in a statement.

“The principals of Brownstone have been licensed many times by various tribal gaming authorities, state gaming commissions and the National Indian Gaming Commission, the governing federal agency; so, there is no issue about the ability of the principals of Brownstone to be approved for gaming licenses. Since these agreements were executed, Brownstone has continued to meet its obligations to the Big Sandy Tribe, including the introduction of various credible third parties to provide development financing for the proposed project, notwithstanding the Tribal Council repeatedly declined these financing opportunities to fund the project,” Brownstone CEO Robert F. Gross said in the statement.

American Vantage CEO Ronald J. Tassinari added: “We believe the tribe’s lawsuit has no merit. It is our position that the company’s contracts with Big Sandy remain fully enforceable and valid, and we have retained the services of the Sacramento law firm of Stevens, O’Connell and Jacobs to vigorously defend this lawsuit and preserve these contracts through all available legal means. Brownstone also intends to aggressively assert cross claims on the defaulted loans and seek damages as available under the law. These actions could delay the project for an indeterminate amount of time.”

The tribe, however, is moving forward with an unidentified new development partner on its proposed casino that would be 5 miles east of Friant in Fresno County on a 48-acre parcel.

The development would include a 300-room hotel, a conference center and casino with 2,000 slot machines and 40 table games.

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