Tribal chairman convicted of bribery, tax evasion; acquitted of conspiracy

Friday, June 27, 1997 | 11:17 a.m.

Dakota, tribal chairman of the Keweenaw Bay Indian Community in the Upper Peninsula, was convicted on charges he accepted bribes from a New Jersey slot machine dealer and then evaded taxes on the $127,000 in payments.

Dakota, who has headed the tribe for 22 years, led negotiations with Gov. John Engler that resulted in compacts for several Michigan tribes in 1993.

But as he negotiated the compacts making slot machines in reservation casinos legal, prosecutors said he took kickbacks from 1991-93 from Jerrold Polinsky of Atlantic City, N.J.

Dakota received the series of checks from Polinsky in a deal that involved leasing 200 slot machines for the tribe's Ojibwa casino in Baraga from Minneapolis-based International Gaming Management Inc., or IGM.

The tribe paid 35 percent of machine revenues to IGM. Of that, Polinsky received 5 percent and paid Dakota.

Both men were charged with bribery and conspiracy to bribe. Dakota was acquitted on a conspiracy charge while Polinsky was found guilty on both charges.

Engler's spokesman John Truscott said that while the governor doesn't favor casino gambling, he has been impressed by how it has helped some tribes.

"He's known Fred for a number of years. This is really unfortunate because many tribes have been able to do good things for their members because of casino revenues," Truscott said. "It's certainly unfortunate for Fred and for his tribe."

Dakota started Indian gambling in a two-car garage. Opened on New Year's Eve 1983, cars lined up to sit at Dakota's handmade blackjack table and bar.

But the federal government closed the operation down two years later when an appeals court ruled that a tribe, not an individual, could operate a casino.

That decision and one involving a California tribe led to the federal law that allows recognized tribes to operate casinos on reservations.

The verdict marks the latest controversy to beset the tribe. Dakota's tribal center was seized in August 1995 by a dissident group unhappy with some of his decisions. Fight For Justice members held it for 18 months.

"I'm happy for our people," said Georgianna Emery, an FFJ member who attended the nearly three-week trial. "I hope it can bring us back together."

Tribal spokesman Rich Rossway said the tribe was encouraged that Dakota was found innocent of conspiracy.

"This verdict emphatically puts an end to the irresponsible allegations of corruption that have plagued our honest and hard-working community for the past two years," Rossway said in a statement.

Neither Dakota nor his son would comment on the conviction. But Dakota's attorney said an appeal was in the works.

Defense attorneys had argued throughout the trial that Polinsky paid Dakota advances to promote a national Indian lottery.

But the 900-number lottery was never launched and Dakota did not repay the money.

The payments stopped in 1993, prosecutors said, because the lease was terminated once the tribe had a compact with Michigan officials and it decided to purchase its own slot machines.

The U.S. District Court jury of nine men and three women announced their verdict Friday after deliberating for about 9 1/2 hours.

Both men will be sentenced Sept. 30 and remain free on bond until then.

Dakota faces a maximum 19 years in prison for bribery and three counts of tax evasion. Polinsky faces up to 15 years in prison.

U.S. Attorney Michael H. Dettmer congratulated his assistant attorneys who argued the case, Judd Spray and Mark Courtade, and federal agents who analyzed thousands of documents to piece the case together.

Dettmer said the verdict showed "this district is not going to accept corruption from any public official - Indian or otherwise."