Inside Bush's Indian Bureau

A labyrinth of lobbyists is manufacturing millions

When Wayne Smith began walking the huge corridors at the Department of Interior a few months after George Bush took office in 2001, he felt like he'd finally hit the big time. In the '90s, he'd been chief deputy to California's Republican attorney general. But now, at 52, he was assistant deputy secretary at Interior, managing the $3.5 billion budget of the Bureau of Indian Affairs (BIA) and overseeing the hotly politicized Indian casino industry. What he didn't know was that, within nine months, he would be gone—vanquished by the insider culture consuming Bush's Washington.

Smith's mother was raised on a destitute Lakota Sioux reservation in South Dakota, where his grandfather was chief. Memories of the "appalling poverty" he saw on family visits to the reservation inspired him in his new job—which he got on the recommendation of a colleague from his AG days, Sue Wooldridge, top aide to Secretary of the Interior Gale Norton. Neal McCaleb, who was Smith's immediate boss and ran BIA, put him in charge of gaming, a business where government decisions, not markets, turn molehills into jackpots—recognizing tribes, taking land in trust for new casinos, manufacturing designated millionaires.

Smith was no babe in the woods. He'd started a California lobbying firm himself in 1999, but he was unprepared for the incestuous intrigue at BIA. In the Clinton era, the Democrats dunned tribes for unrestricted amounts of campaign wampum, and the departed BIA chief was found in the parking lot signing backdated documents three days after the Bush inaugural. The Bush team immediately tossed the tardy decisions. But, as this Smith saga will make clear, BIA remained a bureaucratic land where the only chiefs are buttoned-down lobbyists, raking in millions from tribes whose casinos are virtually franchises to print influence-peddling largesse.

Smith was troubled early on when Republican lobbyist Scott Reed told him that the Democrats had long had free reign at the agency and that now it was "our turn"—a charge a Reed associate denies though his firm has attracted a dozen gaming clients since 2001. Smith felt uneasy when his office was lobbied on behalf of two tribes by Diane Allbaugh, the wife of Joe Allbaugh, head of the Federal Emergency Management Agency and the 2000 national campaign manager for Bush. Diane Allbaugh, who worked at a firm headed by former Republican National Committee chair Haley Barbour, appeared on behalf of a Louisiana casino developer under contract with the Jena Band of Choctaw Indians and the Paucatuck Eastern Pequots, a Connecticut tribe then tied to Donald Trump. McCaleb urged Smith to take her calls, explaining that he and Joe Allbaugh were old Oklahoma friends and that Allbaugh had "helped convince the White House" to install him at BIA.

The Washington Postwould later do stories about the awesome influence of Jack Abramoff and Mike Scanlon, who combined to drain $45 million in reported lobbying fees from four tribes in the first three Bush years, prompting an ongoing investigation by Senator John McCain. Abramoff's top political allies were House Majority Leader Tom DeLay and former Christian Coalition head Ralph Reed.

But no one noticed that Bill Jarrell and Jennifer Calvert, two lobbyists who'd worked with Abramoff prior to 2001, left him within days of the election to form their own company, Washington Strategies, immediately attracting tribal clients. Jarrell, like Scanlon, was once a top DeLay staffer. Smith says Jennifer's husband, Chad Calvert, while he was Interior's deputy director of legislative affairs, introduced her to him, left documents from her in his office, and joined the two of them at lobbying lunches—recollections the Calverts only partially deny. When Chad Calvert was recently promoted, the Interior press release said he'd been "coordinating department legislative policy" for "the assistant secretary for Indian affairs" for three years. Jennifer Calvert's bio says her "lobbying expertise focuses on Native American issues," one of those marvelous coincidences of inside-the-beltway life.

The lobbyist who concerned Smith more than any other, however, was never even seen in Interior's crowded corridors. His was a name McCaleb whispered to Smith. Like Chad Calvert, he'd been on the transition working group for Interior, staffing the agency. The dark force of Indian gaming, retained as a hidden consultant by tribes and developers across the country, was Roger Stone, a veteran of eight Republican presidential campaigns and star of the Miami/Dade recount shutdown. Scott Reed is often his up-front lobbyist face.

So, too, are William Brack and Chris Changery, onetime lobbyists with Brownstein, Hyatt, the Denver-based firm that employed Norton. Changery had been a press spokesman for Senator Ben Nighthorse Campbell, the Colorado Republican who chairs the Indian Affairs committee. Brack is counsel to the Nighthorse Foundation, a recent invention of the retiring senator. Stone threw a fundraiser for the senator at his Miami estate. Though Brack and Changery left Brownstein in 2003, Stone still gets tribes to hire them "for the specific mission of inserting our language" in a Campbell bill, according to a Stone memo. Though the two recently orchestrated a Campbell-sponsored technical correction helpful to a Stone project, neither filed as lobbyists. The language, which deliberately omitted the tribe's name, was quietly withdrawn after Voiceinquiries about it.

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."

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.

While Stone believes Smith and Bersinger "were running a scam operation," McCaleb, Peebles, and Pratt say they are "unconvinced" that Smith knew what Bersinger was doing. Peebles says he thinks Smith is "a decent guy," adding that he doesn't believe Bersinger and Smith "had this grand, synchronized conspiracy" and that "a lot of things were spun that I don't think are accurate." Smith's successor, Aurene Martin, is a former aide to Senator Campbell recommended for BIA by Reed and Fluharty. On Smith's way out the door at BIA, he saw Buena Vista lobbyists Brack and Changery, the old Campbell duo, on their way in.


Research assistance: Catrinel Bartolomeu, Molly Bloom, Andrew Burtless, Adam Hutton, Catherine Shu, Jessie Singer, and Andrea Toochin

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