Inside Bush's Indian Bureau

A labyrinth of lobbyists is manufacturing millions

Smith did not realize, when he began to review the Sacramento-area office's decision in a factional fight involving the Buena Vista Rancheria of the Me-Wuks, that he was on a collision course with Stone and his usual coterie of sidekicks—Reed, Brack, and Changery. Remarkably, the Buena Vista faction that paid Stone a six-figure retainer and guaranteed him 7.5 percent of annual tribal revenue consisted entirely of DonnaMarie Potts and her two adult children. The opposing faction consisted of a single Me-Wuk. Deep-pocket developers on both sides were spending millions bankrolling a legal war that, in December 2001, suddenly turned against Potts.

The mostly Democratic insiders around Potts picked Stone as the Republican player who could, as Buena Vista attorney John Peebles put it, "reverse the area director's order" that dislodged Potts as tribal chair. The strategy was to try to get Smith to yank the Buena Vista issue out of the ordinary appeals track—where it faced delay and likely defeat—and resolve it himself.

So Reed began leaning on Smith in late January 2002. Smith even got a note supporting the Stone faction from the Republican leader of the California state senate, Jim Brulte. Stone had recommended the retention of a consulting firm owned by Brulte's former chief of staff, Tom Ross, and Ross wrote the memo summarizing the Buena Vista case that Brulte enclosed. Later in 2002, Stone would host a fundraiser for Brulte at his 40 Central Park South apartment and take Brulte to visit Stone's longtime client Donald Trump. The Brulte intervention sent a particularly strong message to Smith because he'd attended a 2001 Palm Springs meeting involving Karl Rove and a dozen tribes, where Brulte was introduced as "the administration's main man in California—especially for Indian matters."

Wayne Smith: Acknowledging that it was a mistake to bring a friend to breakfast, he wound up becoming a feast for Stone.
photo: Bill Burke/Page One
Wayne Smith: Acknowledging that it was a mistake to bring a friend to breakfast, he wound up becoming a feast for Stone.

Smith agreed to a February 19 breakfast in Sacramento with Reed partner John Fluharty, Potts, attorney Peebles, and Russ Pratt, president of the development company. Smith was staying at the home of his old friend and former business partner Phil Bersinger, who drove him to the restaurant and joined the breakfast. A memo Stone prepared at the time contends that Bersinger "participated fully in the discussion" of the tribe's "current policy issues"—a contention dismissed by Smith, Peebles, and Pratt, but key to the subsequent saga Stone spun.

While it's unclear who initiated the next contact, Bersinger wound up talking to both Peebles and Reed by phone. On March 23, Bersinger, Peebles, and Pratt had an "amiable" lunch and discussed retaining Bersinger as a Buena Vista consultant. Bersinger, who used Smith's name as his calling card, promised to call back with a price. Strangely enough, Smith's appointment diaries indicate he had a morning meeting with Reed on March 22, giving him a final no. Nonetheless, Bersinger came to Peebles's office on April 4 seeking a monthly retainer and percent of revenue, ostensibly to influence a decision Smith had already announced. Stone says he advised Peebles to ask Bersinger to put it in writing and Bersinger faxed a bland request without specifics.

Stone, who calls this "the most naked attempt at extortion I've ever seen," was already collecting other Bersinger solicitations. One was a February letter Bersinger had written another tribe celebrating his access to Smith and seeking a $1,000-a-month retainer. The other was sent after Stone advised a lawyer for the tribe, Phil Thompson, to ask Bersinger to turn his oral pitch into a written proposal. Stone had already put Thompson on the Buena Vista payroll. Then Stone, by his own account, assembled the letters in a press package for selected reporters, using an associate named Mike Copperthite as the pass-through to Time magazine.

By April 11, Time's reporter was on the phone with Smith citing, and then faxing, another ostensible Bersinger letter—one that demanded a $250,000 payment from a Louisiana tribe, the Coushattas. Everyone, including Stone, would eventually agree that the third letter was a fabrication, so instantly discredited that Time never mentioned it in the April 15 story. Not only does the addressee, Coushatta vice chair William Worfel, say it's a phony, but he says he met Stone for the first time two weeks before it was written. "We exchanged cards," Worfel recalls, adding that federal investigators who questioned him said they'd found his card in the offices of Buena Vista. Stone says he "has no memory of ever seeing the Louisiana letter." Copperthite, who was not involved in the Smith dispute, says "Stone handed me that package with that phony letter in it."

The other two letters raised damaging enough issues, as Stone points out, and within four days of Time's piece, New Jersey senator Bob Torricelli wrote Norton seeking a Smith investigation. Stone says he "probably" got his old friend Torricelli to do it. Several fake faxes about Smith started arriving at Interior—one from Brulte's office—and Stone allies at the Thompson tribe wrote letters deriding Smith. The Interior inspector general started an investigation, but the White House—where staff assistant Jennifer Farley had pressed Smith to side with Buena Vista—forced Smith out shortly after the probe began. The IG finished its report by August 2002, but has yet to release it though Smith, Peebles, and Pratt want it released.

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