Land for the aborted Star Lake Casino project in Otter Tail County was purchased for as much as 10 times its assessed value, according to an anti-corruption task force (the Other Governmental Project) in White Earth, which is recommending that its findings be turned over to the FBI for criminal investigation.

Bemidji-based attorney Mike Garbow, who is leading the investigation with the task force, said the land purchases were made by a limited liability corporation - the Central Minnesota Land Company, LLC - which was set up by tribal attorney Joe Plumer. The land was later transferred to the White Earth Band of Minnesota Chippewa Tribe.

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According to Garbow:

- On July 15, 2015, the Central Minnesota Land Company, LLC, purchased two parcels of land for $1,950,000. The assessed value of the two parcels of property was $194,800.

- On Sept. 8, 2015, it purchased a parcel of property for $350,000. The assessed value of the property was $168,700.

- On Sept. 30, 2015,it purchased a parcel of property for $360,000. The assessed value of the property was $36,800.

- On Nov. 30, 2015, it purchased a parcel of property for $550,000. The assessed value of the property was $44,600.

In all, the White Earth Band allegedly paid over $3.2 million for property that was valued at approximately $444,900.

The Star Lake project was primarily headed up by Tribal Council Secretary-Treasurer Tara Mason, who was defeated in the June 12 election, and District Rep. Kathy Goodwin, who retained her seat, and the late District Rep. Punky Clark, who lost a close race.

After the 2016 election, the three were opposed on the council by Tribal Chairman Terry Tibbetts and District Rep. Umsy Tibbetts.

White Earth Secretary-Treasurer Alan Roy, who was elected earlier this year, is the moving force behind the investigation. He replaced Tara Mason on the tribal council.

In a phone interview followed by a written statement, Mason denied any wrongdoing.

"I served as Secretary-Treasurer for the White Earth Reservation from 2014 to 2018," she said. "In that time, I committed no crimes, I did not commit malfeasance, and worked to advance the interests of all White Earth and Minnesota Chippewa Tribe members."

Since leaving office, she added "my name has been slandered and dragged through the mud by a new administration hell-bent on a backward looking witch-hunt rather than moving forward for the benefit of the White Earth people. Since leaving office, I have tried to move forward with my life, but I have been constantly attacked by the so-called "Team Unity." It's interesting to note that this team has actually brought nothing but division to White Earth.

"There are several pressing issues with my family that take precedence at this point, and I plan to enjoy the holidays with them. I will fully respond in more detail after the new year, but a brief response to the constant attacks is necessary now." The rest of Mason's response is later in the story.

'Unconscionable' spending on Star Lake Casino

Garbow reported that "numerous Tribal Council meetings that took place during time periods in which millions of dollars were expended on this project consisted of only three Tribal Council members. The late Punky Clark would usually chair the meeting and the motions would be passed by Secretary-Treasurer Mason and District Rep. Goodwin.

He said a tribal attorney (Joe Plumer) and a former casino general manager handled the negotiation and signing of contracts with various entities involving millions of dollars of tribal money.

"The amount of money that was expended on this ill-fated Star Lake Casino Project is unconscionable," the OGP said in its report. "The fact that the White Earth Band members are not going to benefit from millions of dollars of tribal expenditures is probably the result of criminal activity. The level of incompetence demonstrated by the responsible parties for the negotiations and purchase of $3.2 million worth of property that currently has no use for the White Earth Nation is more than likely beyond malfeasance and is criminal in nature."

The report also faulted Mason for "arranging for the White Earth Nation to pay approximately $1.6 million for electrical infrastructure that is of no use to White Earth Band members." That referred to an agreement with electrical cooperatives in the Star Lake area to provide the infrastructure needed to power the Star Lake Casino.

And it faulted Mason for "paying $7 million ... for a feasibility study that did not provide a proper pro and con analysis for the proposed Star Lake Casino Project."

It also criticized Mason for "relying on faulty financing projections that could have resulted in the White Earth Nation having to carry an insurmountable amount of debt because of the expense of the proposed Star Lake Casino Project," and for "not properly providing band member inspection of the financials that would have shown millions of dollars in highly questionable expenditures regarding the Star Lake Casino Project."

And it said Mason should not have involved the tribe in a relationship with a Valerie Red-Horse, a national-level native financing expert "in which Ms. Mason was to pay exorbitant amounts of money once the financing was completed for the Star Lake Casino Project," including a commission for the financial expert that could have reached as high as $2 million.

Red-Horse did not respond to an emailed request for comment Friday.

Project had 'red flags'

The report alleges that Star Lake Casino project cost was projected to rise to $130 million, far more than the projected revenue flow could support.

The report said that Red-Horse provided a Star Lake Casino financing option update package to Tara Mason in which the following problems were evident:

- Many lenders could lend only 1.5 times cash flow, which would support $21 million in loans. "This is the first major eye-opener that should have kept anything from escalating to the level of $130 million," the investigation team wrote. "They found a couple of lenders willing to stretch, but only up to $35 or 40 million."

- Tribal lending for new construction would be assessed a premium (interest rates of 12 percent or more and higher costs) because of perceived risks by lenders. "This is the second 'red flag,'" investigators said.

- Low collateral value. "The third risk, very elevated risk, is the remote nature of the location, which dramatically calls into question the real value of the complex out in the middle of nowhere," the financial expert wrote. "The uncertainty of the value of the property also drives up the interest cost and the amount a lender will lend and shortens the required repayment, driving up the payment amount and pressure on cash flow."

- Many lenders passed on the opportunity to loan money for the Star Lake project, although Bremer Bank was interested. "But all deposit accounts were a requirement, which gives them obvious access to cash collateral," Red-Horse wrote.

- The tribal investment up front was proposed to be less than 10 percent of the total project cost. "This is fundamentally irrational to pursue further, because of the resulting cost of financing such a high percentage of the project," Garbow wrote. "Given the construction overrun experience of the Bagley Casino, the 10 percent contingency for this one seems very light," he added.

- USDA loans for 40 years, unless these are forgiven at the end, despite the very attractive interest rates, "the length of term is not responsible," Garbow said.

- The proposed construction management fee percentages on a project of this scope "seem way high," Garbow wrote.

- TED Bonds: "While it is certainly true that the cost of money can be reduced if the debt issuance is Tax Exempt to the lender, they admit gaming facilities are disqualified," Garbow wrote. "They suggest these bonds could be used on the hotel part, but with a secluded campus driven by gaming, I just don't see this as an alternative. Refinancing other existing debt on some other Tribal Asset would appear to be the only way."

- Diversification: Further investment in gaming makes the tribe more reliant on gaming, Garbow wrote. "It seems to me there should be an effort to find other investment options to bolster the economy of the White Earth Nation. Again, this seems fundamental."

Tara Mason responds

"I have nothing to hide," Mason said. "I welcome any independent investigation or audit into any of my actions during my term."

But she said Garbow, the private attorney leading the investigation, is far from neutral. "The current investigator in the OGP represented the current Secretary-Treasurer, Alan Roy, in the election dispute that brought Roy into office," she said. "It is not an independent or fair investigation by any stretch of the imagination. Conclusions have already been made and now they are scouring records for anything that confirms those preexisting conclusions, no matter how much of a stretch it is."

She added that "the current administration has claimed White Earth is in financial dire straits and has made significant cuts to services for our people and elders. Yet, a quarter of a million dollars has been allocated to the witch-hunt against me while elders go without services."

During Mason's entire tenure as secretary-treasurer, White Earth had one tribal chief financial officer (Scott Omlid, who has been CFO at White Earth since 2012) who continues in that role, she said. "This individual is licensed as a certified public accountant. This individual had and has an ongoing professional duty to report malfeasance, misappropriation, and any suspected criminal activity to the appropriate authorities. This individual was fully aware of each and every action mentioned in the OGP reports that have been made public prior to those decisions being made. This individual never advised the RBC (Tribal Council) or myself that the actions we were taking violated any financial protocol, rule or regulation. This individual never reported any activities during my tenure. This is evidence that the allegations made by OGP are strictly political in nature and have no meaningful foundation or merit," she said.

Tribal Attorney Joe Plumer, who represented White Earth and who was mentioned in the OGP investigation, "resigned from White Earth earlier this year," Mason said. "Yet, he was re-hired by the Roy Administration immediately after he came into office. If this individual was involved in any suspected wrongful activity, why is he working for White Earth right now? Again this individual never advised the RBC or myself of any wrongdoing or malfeasance," Mason said.

A more detailed response to all allegations will be forthcoming, she said. "This is unfortunate as I would like to move on with my life and want nothing but the best for White Earth and its people. It's disappointing to me that we have elected leaders that are so intent at looking backward they fail to advance an agenda that will move White Earth forward. But I will defend myself and stand up for our people as I need to, we still are all in this together. Miigwech."

The Star Lake project called for construction of a 30,000-square-foot casino with 180 hotel rooms, convention space, a 15-stall RV park, three restaurants and other amenities on land on Star Lake, which sits between Dent and Maplewood State Park. The casino project would have sat on 15 acres of trust land and another 225 acres of "fee land" purchased by the tribe.