Judge gives Sault tribe 2 weeks to resolve $89M settlement with developers of failed casinos

LANSING — An Ingham County judge gave the Sault Ste. Marie Tribe of Chippewa Indians two weeks to work out the details of how an $89 million judgment will be settled with two Michigan development firms and further prohibited the tribe from disposing of assets.

Ingham County Circuit Court Chief Judge Joyce Draganchuck re-issued a two-week temporary restraining order, and said the tribe cannot be trusted to not violate court orders.

Draganchuk ruled earlier this month the tribe's gaming hand, Kewadin Casinos Gaming Authority, has to pay $88.8 million to the New Boston and Lansing development companies.

The payouts, which include $9 million in loans from the developers, interest and loss of potential future profits, include $60 million for an unbuilt casino in Huron Township near Metro Airport and $28.8 million for an unbuilt casino in Lansing.

The tribe disputes the ruling because of a "non-recourse provision that only allowed for recovery if there were profits from the casino that never came to be," attorneys for the tribe wrote in a court filing.

Lawyers for JLLJ Development LLC and Lansing Future Development II discovered the Sault tribe passed a resolution in September to shield assets from the judgment.

More:Sault Tribe's former legal counsel advised hiding assets from judgments, records show

Draganchuck called the resolution "jaw-dropping."

Ingham County Circuit Court Judge James Jamo signed the first restraining order in Draganchuck's absence.

"I did not sign the TRL, I wasn't here, another judge signed it in my absence, (but) I fully endorsed it," she said. "I would have signed it absolutely had I been here. The resolution was jaw-dropping and fully justifies the ex parte TRL."

Draganchuck said attorneys for the tribe and the developers have until 2:30 p.m. on Feb. 15 to create a preliminary injunction that both satisfies federal tribal laws and the developers' judgment. Absent an agreement, Draganchuck will hold another hearing and issue her own, she said.

"If during that time period, counsel are able to come up with a mutually-agreeable injunction that will protect the tribe's ability to function as a tribe and will also protect the plaintiffs to allow them to be able, at some point, to collect a judgment, then you, of course, will do that and I won't see you on the 15th," Draganchuck said.

Andrew Broder of Payne, Broder and Fossee, PC, one of the attorneys who brought action against the Sault tribe after the projects failed, argued the tribe cannot be trusted without a restraining order. He said he is aware of a tribal board of directors' meeting coming up on Feb. 7 but said that even if a resolution is passed to reverse the September 2022 document, it doesn't stop the tribe from passing another down the line to insulate their assets.

Barnett started representing the tribe on Jan. 13. Draganchuck said she doesn't know if the tribe's previous lawyers told them to disobey court orders, or if tribal officials made those decisions.

"When people tell you who they are, believe them; and we have a long history here," she said. "I laid it out in my findings and conclusion of law about the tribe's deliberate disobedience of court orders and defiance of court orders. I don't know if we blame it on the tribe, the client or the attorney."

A message was left with a tribal spokesperson.

More:Sault Tribe contests judge's ruling on failed Lansing casino deal

The restraining order is part of an array of legal battles the tribe has faced against JLLJ and Lansing Future since 2021 for the failed casinos and whether the tribe is contractually obligated to pay developers for the loss and how much. Developers had hoped to recuperate $124 million in lost investments and revenue.

Neither casino project broke ground after a five-year state lawsuit. The U.S. Department of the Interior denied the tribe's request to take the land into trust, which is needed for all off-reservation ventures. U.S. District Court then-Chief Judge Robert Jonker ruled in the Department of the Interior's favor after the Sault Tribe appealed the denial.

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Contact reporter Krystal Nurse at 517-267-1344 or knurse@lsj.com. Follow her on Twitter @KrystalRNurse.

This article originally appeared on Lansing State Journal: Sault tribe has 2 weeks to resolve $89M settlement over failed casinos