The Secret of Success
Vacco's lobbying firm under scrutiny for relationship with casino

by Andrea Barrist Stern Saugerties Times  October 6, 2005

There are some 3,000 lobbyists in Albany and 212 legislators, and with the high stakes associated with Indian gaming, it is not surprising that developers like Rochester billionaire Thomas Wilmot, who is seeking to develop a Las Vegas-type casino at Winston Farm in Saugerties with the Oklahoma-based Seneca-Cayuga tribe, would hire lobbyists to take them "reservation shopping." (The term has come into use nationally to describe the efforts of entrepreneurs to piggyback on Native American tribes as a means of building casinos.) It is unusual, however, for the full extent of these lobbying deals to come under public scrutiny, or for the parties involved to face fines or criminal charges.
Albany County district attorney David Soares is currently examining evidence to determine whether Crane & Vacco, the lobbying firm of former New York state attorney general Dennis Vacco, committed a criminal violation of the state's 1977 lobbying statute by agreeing to a $5.5 million "success fee" to be paid by Wilmot if the Seneca-Cayuga were awarded casino deals in the Catskills and in the Finger Lakes, Soares spokesman Richard Arthur acknowledged this week. Equally interesting is the media's role in Soares' investigation.
The New York state temporary commission on lobbying first learned of the $5.5 million contingency fee during the summer of 2004 through an article written by James M. Odato, a political reporter for the Albany Times Union, according to David Grandeau, chairman of the commission. Such contingency fees are illegal under the state's lobby statute because of the concern a lobbyist "might be willing to do something more" than he or she would otherwise do under a retainer only, Grandeau told Saugerties Times this week by phone. Vacco's firm was also paid $15,000 per month for lobbying on behalf of Wilmot.
Because contingency or "success" fees are illegal, it is unusual for them to come to light but Wilmot cited the arrangement in an affidavit involving a lawsuit between the developer and Crane & Vacco, which sued Wilmot for hundreds of thousands of dollars in unpaid legal fees (the lawsuit has since been dismissed). During the legal wrangling, however, Wilmot filed a countersuit disclosing the success fee. The developer later told the lobbying commission he assumed Vacco knew what state law allowed. Grandeau said the state lobbying commission first learned of the contingency fee from Odato's article in September 2004 on Wilmot's countersuit.
Without admitting wrongdoing, Crane & Vacco agreed to pay the state $50,000 earlier this month. It is the largest fine the commission could have levied against the firm and effectively ended any investigation by the commission into potential wrongdoing, according to Grandeau.
At the commission's October 5 meeting, Grandeau recommended the matter be forwarded to Soares for a criminal review, but the body's three Republican and three Democratic commissioners were split over whether to formally report the case to prosecutors. As a result, "Grandeau was left in the unenviable role of speaking to the media," said Soares spokesman Arthur. Last week, Soares' office requested the commission's files on the matter after the Crane & Vacco settlement was published in various newspapers along with Grandeau's comments about likely wrongdoing by the firm.
Even though contingency fees are illegal, gathering sufficient evidence to prosecute such cases is another matter, according to one source close to the Soares probe that is underway. "These guys wrote the law; they aren't idiots," this individual told Saugerties Times. "These are the kind of guys who say, 'If we word it this way, can we get away with it?'"
Arthur concurs. "We are looking for clear violations of criminal statute and, quite frankly, when you are dealing with very experienced attorneys, it is not always black and white." From 1994 to 1998, Vacco served one term as the state's attorney general before being defeated by attorney general Eliot Spitzer. Vacco is also a former U.S. attorney in western New York.
Wilmot refused to comment through his spokeswoman, Gwen Bellcourt, but James Featherstonhaugh, an attorney for Vacco's firm, told the media last week that there had been no violation of state law because the firm's work for Wilmot did not involve influencing legislation. Vacco, who was the head lobbyist in the matter, had limited his work to dealing with governor George Pataki on a proposed compact between the state and the tribe, Featherstonhaugh noted. In a written statement issued last week, Vacco's firm said that "given the time and resources which would be expended in further proceedings, the firm believes that its interests are best served by the settlement, which brings the matter to closure."
Although the amount that is changing hands is considerably smaller, the stakes are just as high in terms of a more recent outlay by Wilmot to gain support for his casino bid. Wilmot was a "gold" sponsor of the first annual awards dinner jointly thrown by the Ulster County Development Corporation (UCDC) and the Ulster County Chamber of Commerce on October 6 at Wiltwyck Country Club. Wilmot donated $3,000, according to Chester Straub, UCDC chairman.
Wilmot was one of some dozen donors, including several local banks, who underwrote the dinner at varying levels of sponsorship. In return, the developer received ten tickets to the dinner. Wilmot did not attend, and Straub said he did not know who was seated at the developer's table, but Seneca-Cayuga chief Paul Spicer confirmed two weeks ago that several representatives of his tribe planned to attend. Spicer said he was unable to be present because of prior commitments.
Tom Struzzieri, owner of Horse Shows in the Sun (HITS) and an apparent supporter of the casino proposal, was one of the individuals honored at the event. Struzzieri was honored as businessman of the year and HITS was also recognized as business of the year. "We developed these awards to recognize the successes and achievements of individuals and businesses within their industries but also to recognize their civic contributions as well," said Straub.
Straub noted his agency has no plans to reschedule a forum on casino gambling that UCDC was to have held at Ulster Performing Arts Center in Kingston on July 13. The event was canceled in the wake of a public outcry that arose after UCDC representatives met privately with Wilmot and casino proponents. Straub said the agency is now deferring to an Ulster County special committee established to review the casino issue.
New York is one of twelve states in which Native Americans are seeking to cross state lines to open casinos - and with good reason from the developers' standpoint. Gambling at Indian-owned casinos generated some $18.5 billion in revenues in 2004, nearly twice that pulled in by Nevada's major gambling resorts, according to Congressional figures.
Former Senate majority leader Bob Dole announced several months ago that the Seneca-Cayuga were paying him $1,000 per day to lobby on their behalf as part of a six-month contract. In November 2004, less than a week after the Seneca-Cayuga tribe signed a settlement agreement with New York state based on an earlier plan to build a casino in Sullivan County, the tribe's former economic partner, Empire Resorts, retained Mercury Public Affairs as its New York state lobbyist, according to testimony on April 5 before a hearing on tribal issues convened by several state assembly committees. Kieran Mahoney, former U.S. senator Alfonse D'Amato's chief-of-staff and a political advisor to Pataki, is a founding partner of Mercury Public Affairs. Thomas Doherty, Pataki's former deputy secretary for appointments and now a Mercury lobbyist, is also lobbying for Empire Resorts. (Pataki has waffled on the issue of casinos, initially coming out in favor of them and later siding with the decision by U.S. Second Circuit Court of Appeals this fall that denied the Seneca-Cayuga and Cayuga land claim and appeared to undercut most Indian land claims in the state.)
But the Seneca-Cayugas are not the only tribe playing with a well-stacked deck. Allison Lee, the partner of congressman Maurice Hinchey (D-Hurley), is a lobbyist for Patricia Lynch Associates, which advocates on behalf of the New York Oneidas, the tribe that reportedly has an option on the former IBM recreation property in Lake Katrine in the town of Ulster. (Hinchey has vociferously opposed the siting of a casino anywhere in Ulster County with the exception of the Ellenville area - and only there if residents in that area want one.)
The Wisconsin Oneida tribe, which is fighting for a separate casino under a different claim, hired New York senate majority leader Joseph Bruno's son last year to lobby on its behalf in Albany. The same tribe has also hired the Albany firm of Malkin & Ross as a lobbyist. Malkin & Ross employs the son of state senator John Bonacic (R-C Mount Hope), who represents Saugerties and is close to the state senate's Republican majority. The Wisconsin Oneidas and their development partners, Power Plant Entertainment, are reportedly paying Malkin and Ross $10,000 per month - apparently, the going rate - to have Scott Bonacic lobby on their behalf.
Lobbyists also have connections that reach into the very top echelons of state government. Since 2001, Plunkett & Jaffe, Pataki's prior law firm, has been paid some $175,000 as outside lobbyists for the Stockbridge-Munsees, another Wisconsin tribe seeking a casino in Sullivan County, according to testimony from a state assembly hearing in April.

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