The $30 million plan

Riverboat gambling was part of secret development plan in Yurok leader’s campaign

The focal point of the plan was the proposed acquisition of the Emerald Queen for gambling on the Klamath River. (Photo courtesy of Paul Jensen)

During his bid to become chairman of the Yurok Tribal Council last year, Thomas P. O’Rourke carried around a binder, but he kept its contents secret.

He took it with him while campaigning through the various tribal districts and held it up as a prop during his speeches.

Inside that binder, he told his constituents, was economic salvation, not only for the Yurok Tribe — California’s largest and one of its poorest — but for its members as well.

O’Rourke also sent a letter to tribal voters that stated he had done his “homework,” and that he had a complete project, including financial support, that would generate millions of dollars for the Yurok people within 18 months of its approval.

It was a $30 million plan, he said, one that promised large-scale economic development on the tribe’s reservation and individual payments to its 5,000-plus members.

But whenever O’Rourke was asked to reveal what was inside the binder, he said it was confidential.

“He was saying he couldn’t talk about it,” said Dr. Michael Ward, O’Rourke’s opponent in the November run-off election for Tribal Council chairman. “It was a secret document, and he was sworn to secrecy on it until after the election.”

The Daily Triplicate recently obtained a copy of the proposal that was in O’Rourke’s binder. Taken as a whole, the documents show a detailed plan to use $30 million in tax-exempt Tribal Economic Development bonds approved through a provision in the Obama Administration’s American Recovery and Reinvestment Act to purchase, relocate and build the infrastructure for a 292-foot-long riverboat casino that would be moored on the banks of the Klamath River.

“If everything would have turned out okay it would’ve worked, and it would have done a lot of things for us.” -Thomas P. O’Rourke, tribal chairman.

Even though O’Rourke said the proposal to bring a riverboat casino to Klamath is now “dead in the water,” it continues to generate controversy among the Yurok Tribe and its membership.

A former high-ranking tribal official has questioned why such a proposal would be in the hands of someone who hadn’t been elected yet, and has raised concerns about possible collusion, fraud and insider-trading. He’s taken these concerns to various state and federal agencies asking for investigations, and has even posted his interpretation of the proposal on the Web site yurokvoices.com, prompting many responses from tribal members. 

O’Rourke has called many of this official’s claims bogus, unfounded, in essence false allegations from a disgruntled ex-employee. Last week, he sent a letter to tribal members stating that the council is not currently considering the development proposals laid out in his plan and invited them to a meeting in Klamath today to ask any questions they might have.

“It was a plan, and it was a good plan,” O’Rourke said. “If everything would have turned out okay it would’ve worked, and it would have done a lot of things for us. It would have moved us forward.”

He said it was brought to him last September by a tribal member and a representative of one of the outside businesses involved in the proposal, both of whom he declined to name.

In January, after he became chairman, Tribal Council members traveled to Washington state to see the riverboat. But he said the council ultimately decided to abandon the plan due to questions surrounding an individual who was involved in the proposal.

“A flag went up,” O’Rourke said, “and anytime a flag goes up it requires a closer look.”

A massive vessel for riverboat gambling

The focal point of the $30 million economic development plan O’Rourke championed during his campaign was the acquisition of a casino riverboat named the Emerald Queen that was going to be hauled down from Tacoma, Wash., and through the mouth of the Klamath River.

The Emerald Queen, with its massive red paddlewheel, white-washed exterior and green and yellow Victorian trim, harks back to the days when Mark Twain traversed the muddy Mississippi. It was built in 1995, and is a three-story-tall, 74-foot-wide, steel-hulled vessel that can carry up to 2,000 passengers and crew.

In the proposal, the gambling vessel was to be moored next to the Klamath Camper Corral RV Park, which was also to be purchased by the Yurok Tribe and turned into a combination parking lot and reception area. Other components of the proposal included a fish cannery to process salmon and the acquisition of other parcels around the Klamath area.

Funds for this project were expected to come from the sale of $30 million worth of tax-exempt Tribal Economic Development bonds that  would be allocated through the U.S. Department of Treasury and the IRS.

‘This will devastate us as a tribe’

To Keith Parker, a former tribal official and also a tribal member, it was “a hair-brained idea.” He has been posting his concerns on yurokvoices.com under the name, “No2tribalcorrup.”

“This will devastate us as a tribe,” Parker said. “We don’t have the ability to pay back a debt load of that nature, given the lack of development and lack of economic development in the Klamath area. I mean, eight months out of the year that place is a ghost town.”

For nearly two years, Parker was the executive director of the Yurok Tribe’s Economic Development Corporation. Before that he was a licensed broker for NYLIFE Securities in the Bay Area for more than 10 years

“I realized that this had been put together before (O’Rourke) had ever been put in office, which concerned me because there was no input from the Tribal Council,” Parker said. “This was something that he had obviously had put together along with a lot of non-Yurok people.”

Once he actually saw the proposal, which was only given to Tribal Council members after O’Rourke was installed last Dec. 9, Parker had immediate questions.

“What jumped out and grabbed me is that it appeared a few people and entities were going to make a large sum of money at the expense of a lot of people — the tribal members.”

Draft contracts with companies in the middle

In particular, there were two drafts of contracts for the Yurok Tribe to buy the Emerald Queen riverboat and Camper Corral RV Park from Naturally Native Development, a company out of Salem, Ore., operated by Luzahan Wakinyan, for $11 million and $2.3 million, respectively.

Naturally Native Development, however, did not and does not own either the Emerald Queen or the RV Park, and the prices in the draft contracts seem to include substantial mark-ups from what the properties are valued at.

Today, the Emerald Queen, owned by the Puyallup Tribe of Indians in Washington, is priced at $4.5 million. While the asking price was reduced from $12 million, the proposal included a redacted copy of an appraisal performed in September 2009 on a riverboat casino vessel with the same specifications as the Emerald Queen, that placed the current fair market value at under $10 million.

Camper Corral RV Park was last sold in 2006 to a man who still owns the property today and said it is not on the market. When it was appraised in 2006, the assessed value of the RV park and its property was just over $1 million.

Wakinyan could not be reached for comment.

Another company that stood to potentially make a significant amount of money through the proposal was Sawtooth Development, LLC. This company, also based in Salem, was slated to be the master developer for the entire project and receive 30 percent of the profits from the riverboat, cannery, RV park or any other related businesses.

On the low end of the total revenue projections, the tribe and Sawtooth Development would have made around $5.2 million in 2010 and $9.1 million by 2016, according to the proposal. The “most likely” revenue estimates were $5.2 million in 2010 and $23.2 million in 2016.

According to documents in the proposal, a Pennsylvania company, Lehigh Capital Access, Inc., would provide bond financing for the $30 million plan. This money, the draft contract stated, was for a fish cannery, RV Park and gaming vessel.

But under the IRS guidelines for Tribal Economic Development Bonds, money was not allowed to be used for class II or III gaming, yet the proposal aimed to use a significant portion of the funds for exactly that.

Under the terms listed in the draft agreement with Lehigh Capital, the business and its associates would have earned 4.5 percent of the gross proceeds from the financing.

Representatives from Sawtooth Development and Lehigh Capital Access did not want to comment specifically about the proposal, but they did say it was nothing more than that since no agreements were finalized.

Interest suddenly dissipated this month

O’Rourke echoed this sentiment, and called the proposal a “shell” that would have been vetted by tribal officials to determine if it was a viable option to explore. It never got to that point, he said, because he and other Tribal Council members had concerns about certain aspects of the deal before any decisions were made.

“It’s just another day gone by that something didn’t happen,” he said.

The interior of the Emerald Queen riverboat. (Photo courtesy of Paul Jensen)

O’Rourke said interest in the proposal didn’t really dissipate until this month when he and the other council members saw some flaws in parts of the plan that couldn’t be ignored. He said this prevented any in-depth analysis of the proposal from taking place because the project was immediately disqualified from consideration.

“Council never made it to the decision that they wanted to do this or not do this until all of this stuff came up,” he said. “When it all came up, it all went out the door.”

Tribal Council members reached by The Triplicate declined to comment.

Looking for new chances to ‘go forward’

As far as the $10.9 million in bonds the Yurok Tribe can now issue, O’Rourke said it can be used on other economic development projects on the reservation, and added that the funding might not even be used should other options for money become available.

“Regardless of whether it was this proposal or another one, we need some sort of funding,” O’Rourke said. “This is one option of funding and we may or may not even use this funding, but it’s an option.”

In reference to the riverboat proposal, he said if he knew then what he knows now, he never would have accepted the binder when it was offered to him during his campaign to become chairman.

“The reason that I listened to this proposal in the beginning is because it sounded like a good thing to generate revenue for our people and for our government,” O’Rourke said. “I didn’t get here from ripping my people off. I didn’t get here from taking advantage of my people. I got here from being upright, from being honest, for helping my people, for telling the truth and for hard work.”

He said he’ll tell tribal members that at today’s meeting, and promised that he would continue to look for new economic development proposals to help his people and its government.

“Any individual who wants to move something forward has more than a single plan,” O’Rourke said. “We’ll just move to a different idea and go forward.”

The Klamath River. (The Daily Triplicate file photo)