Action # 1 – Tribal Class Action in St. Regis Mohawk Tribal Court Filed by Tribal Members

In response to the Park Place interference, a class action was commenced on April 26, 2000, by members of the Tribe who were shocked about a last minute switch by their Chiefs just days after a key federal approval had been obtained. These Tribal members asserted claims for intentional interference with the Casino Project by Park Place. Jurisdiction was based on the fact that the new agreement with Park Place was negotiated by executives of Park Place on the Tribe’s reservation and related to a consensual agreement for commercial development for the Tribe in which Park Place voluntarily participated. The class action was filed in the St. Regis Mohawk Tribal Court (“Tribal Court”) and sought damages of $12 Billion. The complaint alleged that Park Place duped the chiefs to drop the project only one week after the Tribe received a key federal approval, inducing the former Tribal Council with an up front payment to the Tribe of $3 million and a promise Park Place would get another deal approved in four months. The prior federal approval for the Raceway project took four years to achieve.

Park Place appeared in Tribal Court to defend the action on the merits. However, one day after filing its motion to dismiss the case on the merits, and an allegation that the Tribal Court was invalid, Park Place sought an injunction against the Tribal Court proceedings in the U.S. District Court for the Northern District of New York. The request for an injunction was not granted based on lack of subject matter jurisdiction. On appeal to the Second Circuit, Park Place was similarly unsuccessful in obtaining an injunction. Park Place argued before the federal courts that the Tribal Court was invalid as it had been previously abolished by the Chiefs and was not recognized as a valid court by the BIA.

While the federal court challenge was pending, Park Place refused to return to defend the action in Tribal Court. A hearing on damages in which Park Place refused to participate resulted in a Default Judgment Order on March 21, 2001 for $1.787 Billion ($5 million of which represented punitive damages). The judgment was entered against Park Place and its General Counsel, Clive Cummis.

AN INVESTIGATION INTO THE CIRCUMSTANCES SURROUNDING ATTEMPTS AT “ABOLITION” OF THE TRIBAL COURT BY FORMER CHIEFS WAS COMMISSIONED BY THE TRIBAL COUNCIL AND FUNDED BY THE TRUST IN 2007. THIS INVESTIGATION WAS CONDUCTED BY MR. VACCO PRIOR TO HIS APPOINTMENT AS A TRUSTEE. ON THE BASIS OF THE FINDINGS IN THIS INVESTIGATION, THE TRIBAL COUNCIL DETERMINED THAT THE TRIBAL COURT HAD NEVER CEASED TO EXIST AND THAT ITS CONTINUED OPERATIONS WERE VALID UNDER MOHAWK LAW. MR. VACCO’S REPORT IS FOUND IN THE LITIGATION FILE: [LINK} HARRAH’S HAS BEEN VIGOROUSLY LOBBYING THE BIA IN 2007 TO ISSUE A DECISION THAT THE TRIBAL COURT IS INVALID.

Assignment of the Tribal Court Judgment to the Trust

Currently, as a result of an assignment of the $1.787 Billion judgment to the Trust on June 21, 2007, the Trust is actively pursuing the enforcement of the judgment. This assignment resulted from an earlier “Joint Alliance Agreement” executed in January 2007, providing for a pooling of interests of beneficiaries of the Trust and the members of the Tribal class. The pooling of interests provided for the assignment of the judgment to the Trust in exchange for 50% of the Units of the Trust. As a result, the Trust now has a 100% interest in both its original claims and the claims of the enrolled members of the Tribe, while the enrolled members of the Tribe and the prior Trust beneficiaries share an undivided interest in the Trust. This pooling of interests was approved by the Unit holders of the Trust as well as the Tribal Court.

2007 Enforcement Action

An enforcement action was filed by the Trust against Harrah’s and Clive Cummis on June 22, 2007, in the United States District Court for the Northern District of New York. Harrah’s and Mr. Cummis subsequently filed a motion to dismiss the case on the basis that the assignment of the judgment to the Trust constitutes an unlawful act of champerty based on a New York ambulance chasing statute directed at attorneys buying claims to pursue litigation. They further claim that the judgment was previously settled in a prior enforcement action that had been dismissed without prejudice in 2003 while the parties were negotiating a settlement that was never executed or implemented, that provided no consideration for class members, and that by its terms would have required the approval of the Tribal Court and notice to class members of their right to opt out of any settlement (none of which occurred).

On December 4, 2007, Judhe McAvoy denied the motion to dismiss based on procedural defects on the part of the defendants and ordered the parties to proceed with limited discovery on the issues raised in the motion. Judge McAvoy noted that these issues would more properly be raised in a summary judgment motion after discovery.

Award of Interest

The judgment of $1.787 Billion is now apprxmately $3 Billion, inclusive of over $1 Billion in interest, at 9% since March 2001, as ordered in July 2007 by the Tribal Court.

Action # 2 – Presently on Appeal to the U.S. Court of Appeals for the Second Circuit

A second action was filed in the U.S. District Court for the Southern District of New York by the Monticello Raceway entities on November 13, 2000, after a draft settlement agreement relating to a $300 million settlement failed to be concluded due to the death of Park Place CEO Arthur Goldberg in October 2000. Mr. Goldberg had been the principal architect of the settlement structure and his untimely death ended all settlement discussions.

Over the past seven years, this case has found its way to the U.S. Court of Appeals for the Second Circuit (“Second Circuit”) on three separate occasions, where it is now pending once again. Thus far, Park Place and Harrah’s have prevailed in the District Court, as described below.

In this case, the plaintiff entities commenced a contract interference suit against Park Place for interfering with their respective agreements with the Tribe. After preliminary proceedings were completed, but before a jury trial was held, the District Court Judge, the Hon. Colleen McMahon, dismissed the case. She dismissed a claim for contract interference on the ground that the contracts were subject to certain approvals of the NIGC and therefore not entitled to protection. She also granted the defendant’s motion for summary judgment with respect to a separate charge of interference with business relations on the ground that sufficient evidence of wrongful conduct by defendant nor causation of harm to the plaintiffs had been adequately shown.

Discovery of hidden audio tapes

While the plaintiffs were preparing an appeal, additional evidence in the form of audio tapes were discovered. The tapes revealed that Park Place viewed the Chiefs as simpletons in business and that their existing on-reservation casino payroll was being manipulated by a co-conspirator of Park Place in order to get the Tribe to switch to Park Place, who was baiting the Chiefs with rescue funds in exchange for an exclusive gaming agreement for New York. These tapes had not been produced by Park Place and other parties during discovery.

As a result of the tapes, the plaintiffs successfully petitioned for the original judgment to be set aside, so that additional evidence could be placed in the record. The case was then remanded to the District Court, which allowed limited discovery. After a long delay, the Court reentered its original judgment against the plaintiffs, finding that the suppressed audio tapes did not contain evidence of the kind of wrongful conduct necessary to support the plaintiffs’ claims for intentional interference with business relations.

Case restored to the Second Circuit

While the Trust pursued its appeal of the reinstated judgment, the plaintiffs’ attorneys became aware of a jurisdictional problem in the case, which was pointed out to the Second Circuit. Briefs were filed and oral arguments were heard in October of 2005. However, after its initial review, the Second Circuit remanded the case to the District Court for further jurisdictional findings. In connection with these proceedings, by stipulation of the parties, the District Court dismissed two of the three plaintiffs from the case and a new complaint was filed in the name of the Trustees on behalf of the Trust with respect to the claims of the two dismissed plaintiffs. The new case was then consolidated with the original case and the District Court reentered its judgment as to the entire case, including the claims made on behalf of the Trust. The effect of this has been to restore the case to the Second Circuit in essentially the same position that it was in at the time of the remand.

The Second Circuit subsequently requested that supplemental briefs be filed. These supplemental briefs have been filed and the parties are waiting for a date on which oral arguments will be heard. The next stage is the oral argument, which is expected to occur during the 4th quarter of 2007 or first quarter of 2008. An opinion is expected to be issued in 2008.

A brief description of the principal issues on appeal follows:

Validity of Plaintiffs’ Contracts. In the District Court, Park Place conceded that its contracts knowingly conflicted with the plaintiffs' contracts. However, Park Place was successful in persuading the Court that those contracts were void and therefore not entitled to protection under New York law because federal law declares gaming management contracts void unless they have been approved by the NIGC. On appeal, the Trust has argued that the contracts were drafted in strict compliance with federal law, and that federal law and regulations only treat as void contracts that are not in compliance with the law. Moreover, the Trust argued that federal law did not apply to any of the contracts at the point in time that the interference occurred. Finally, the Trust argued that under previous decisions by federal and state courts, the status of the contracts under federal law for purposes of federal approvals does not remove the protection of the contracts from interference under applicable New York law.

Wrongfulness of Park Place’s Conduct. Persons who have valuable business relationships are entitled to protection against “wrongful” acts of competitors and others, even if those relationships are not based on a valid contract. Plaintiffs alleged several types of questionable acts engaged in by the defendant in the course of its dealings with the Tribe, but the District Court did not agree that there was sufficient evidence that the conduct in question was the type of “wrongful” conduct which can support the cause of action. Among the items alleged by the plaintiffs were:

1. Misrepresentations to the Tribe that a switch to Park Place would not significantly delay a new casino project at another location.

2. Enlisting business partners of the Tribe in the effort to have the Tribe abandon the Monticello Raceway project by promising them financial rewards and then repudiating those promises

3. Using various strategies to put economic pressure on the Tribe.

The District Court did not agree that there was sufficient evidence of misrepresentation to the Tribe because it viewed the statements as merely optimistic opinions, which the Tribe could not rely on. It also found that:

• The conduct of Park Place with respect to the Tribe’s business partners, while possibly fraudulent as to those nonparties, was not sufficiently connected to the decision to abandon the plaintiffs’ project

• The Tribe’s economic distress was not created by Park Place, so that the financial inducements offered by Park Place were merely efforts to make a more attractive business deal for the Tribe.

On appeal, the Trust argued that:

• There is ample evidence in the record, and particularly in the belatedly discovered audio tapes that had not been produced by both defendant and the Tribe's business partners, to allow a reasonable jury to conclude that the promise by Park Place that there would be no significant delay was a bargained for contractual representation to the Tribe.

• The questionable arrangements with the Tribe’s business partners were engaged in specifically for the purpose of interfering with plaintiffs’ business relationships.

• The actions engaged in by Park Place in exploiting the Tribe’s economic difficulties were in fact wrongful.

Causation. In granting the defendant summary judgment on the claim of interference with business relationships, the District Court, in addition to finding an absence of wrongful conduct on the part of Park Place, found an absence of causation.

• In this respect, the court held that even if Park Place had engaged in wrongful conduct, the relationship between the Tribe and the plaintiffs was strained, and that so many hurdles existed that it was uncertain that the plaintiffs could have received any value from the project.

• On appeal, the Trust has argued that there is ample evidence in the record to show that the plaintiffs had a valuable relationship with the Tribe.

• The Trust believes that Park Place inappropriately characterized certain business and legal difficulties unrelated to the project and that these matters, affecting only a limited number of individuals who were indirectly involved in the project, would not have influenced the ultimate outcome of the project and have been used by Park Place only to smear the plaintiffs.

• In this regard, the Trust pointed out statements by the Tribal Chiefs on the recently discovered audiotapes specifically expressing their reluctance to abandon plaintiffs.

• In addition, the Trust believes that the court erred in confusing causation and the measure of damages, believing that the project had tangible value at the time the Tribe abandoned the plaintiffs.

• The Trust believes that the efforts of Park Place to secure a relationship with the Tribe indicate clearly that there was value in the project.