ALBANY -- The St. Regis Mohawk tribe, which has about 12,000 members living on impoverished territory along the New York-Canadian border, stands a chance of becoming very wealthy from a Catskills casino it never built.

Although the tribe is still trying to open a gambling hall in Monticello, it could receive a huge payout anyway, perhaps $2.8 billion or more, because of a judgment from a little-used and questionably established tribal court.

The court and its judgment are the subjects of a case before the U.S. District Court in Syracuse that tells a seamy story of greed and potential corruption.

The matter stems from a 2000 class action lawsuit by tribal members against Park Place Entertainment in which a tribal court ruled the gambling company wrongly interfered with the Mohawks' project for a Monticello casino.

The gambling hall was projected to generate tens of millions of dollars annually for the state treasury. That never happened, a pending suit alleges, after the project was hijacked by a big-time casino company from a smaller player. The big-time player, Harrah's, is now being ordered by that tribal court to pay $2.8 billion for the alleged theft of the project.

Documents filed in the suit feature accusations of scheming businessmen, duped tribal leaders, unscrupulous lawyers and the potential fraud of a federal judge and stock investors.

And the outcome could reverberate from Wall Street to the Las Vegas strip.

The litigation in the federal court was triggered in 2000, when the St. Regis Mohawk tribe's leaders saw that in a few months the tribe would realize unprecedented wealth from a huge casino planned for Monticello Raceway. A key federal approval for the project had just been granted.

Surprisingly, the chiefs at the time abruptly switched developers, saying they were partnering with Park Place Entertainment, a major Las Vegas casino company, instead of the raceway owner, Catskill Development, now called Empire Resorts. The Mohawks had been partners with Catskill since 1996.

That decision ultimately derailed the casino project by requiring the federal review process to start all over, costing the tribe, and state government, probably hundreds of millions of dollars in shared gambling revenue over the last seven years.

"I don't think there is anything worse than the St. Regis tribe not receiving the revenues they would have," said Mohawk Chief Lorraine White. "We truly believe what we are seeking is something we should have received by today."

Harrah's, owner and operator of some of the biggest casinos in Atlantic City and Las Vegas, became involved in the case when it purchased Park Place Entertainment in 2005.

After Harrah's disclosed earlier this year that it was about to be bought out by investors, the current chiefs, working with a group called Catskill Litigation Trust, a trust organized in Delaware to represent the interests of tribal members, public shareholders of Empire Resorts and others, filed an enforcement action in the federal court to collect a small fortune -- the $2.8 billion judgment including interest -- from Harrah's.

In August, Harrah's filed for dismissal of the case. U.S. District Court Judge Thomas McAvoy has set a Jan. 18 hearing on the matter in Syracuse.

The case features feuding casino companies and their attorneys:

Former Attorney General Dennis C. Vacco represents the current tribal government and some major investors of the tribe's current casino partners, Empire Resorts again. Vacco's clients want Harrah's to fork over the $2.8 billion judgment. Vacco says the former tribal government was induced by Park Place Entertainment to break its contract with Empire Resorts through means such as a $3 million payment for tribal operating expenses.

Albany lawyer George Carpinello, currently a nominee for the Court of Appeals, the state's highest court, represents Harrah's, which maintains that Vacco and others are trying to shake down the Las Vegas casino company at a time when Harrah's is on the verge of being sold in a $27 billion deal. His papers charge Vacco with distorting the facts.

Attorney General Andrew Cuomo's chief counsel, Henry Greenberg. Before joining the attorney general's office in January, Greenberg got a big cut of the $500,000 in fees paid by Empire Resorts officials on behalf of a group of Mohawks who won the class-action judgment.

Greenberg defended the existence of the tribal court at the Akwesasne Indian Reservation in Hogansburg, Franklin County. In 2001, the tribal court issued the $1.78 billion judgment against Park Place. In July, it tacked on another $1 billion in interest. Harrah's inherited the liability when it acquired Park Place. Greenberg, the current No. 2 man in the attorney general's office, and Vacco, the former attorney general, stressed that federal courts previously have recognized tribal courts, including the Mohawks'.

Vacco was paid $100,000 recently for five months of work to put together a provocative "investigative report" that is now part of the court records. He has been warning Harrah's that the interest on the judgment is compounding.

His report claims Park Place never planned to build a casino in the Catskills, but essentially swindled the Mohawks to protect its interests in Atlantic City.

The report asserts, referring to taped recordings of Park Place officials, that Park Place executives plotted to steal the Monticello project by convincing tribal leaders they could not meet the payroll at their existing small reservation casino in Hogansburg and therefore would be desperate to take $3 million from Park Place.

"They pulled the rug out from Empire, grasping defeat from the jaws of victory," said Michael Rhodes-Devey, a lawyer now assisting Vacco. He handled the original class-action case and is confident a big reward is on the horizon. "How many people laughed at me when I got this $1.7 billion tribal court judgment?" he asked.

The Vacco report quotes from private notes of the Mohawks' and Park Place's former lawyers and includes excerpts of taped conversations between the alleged conspirators.

Park Place officials were heard describing the former chiefs as unintelligent -- short of "brain cells," the Vacco report states. Notes from the tribe's former lawyer, Brad Waterman, also were obtained by Vacco. He alleges Waterman began serving Park Place's interests, because it supplied the tribe money to pay his fees, including $100,000 in back pay.

The report charges that Waterman violated his ethical duties, conspiring with Park Place to craft a "ghost-written" letter for the Bureau of Indian Affairs to submit to a federal judge in an effort to have the tribal court declared invalid.

Vacco, also a former U.S. attorney, wrote his report like an indictment, calling the scheme a fraud, a "corrupt manipulation of the federal court."

Park Place's and Harrah's lawyers have denied his accusations. Waterman said he is considering a defamation suit.

Vacco also alleges that Park Place and Harrah's denied its shareholders knowledge of the potential liability in filings with the Securities and Exchange Commission.

Although Vacco's report suggests he is working for the little guy, he and his partners stand to share in at least 50 percent of any settlement or judgment.

Records show fees for some of the consultants used by Vacco's team will include 3 percent of anything over $200 million.

Siding with Harrah's, several Mohawk members doubt the tribal court was ever legitimate. Its was established amid controversy, contested elections and tribal governmental disputes.

"All we are as tribal members are pawns," said Rowena General, a former tribal government official. She's part of a group of tribal activists -- some of whom have renounced their membership in the Mohawk tribe -- who say the court is a sham and are disgusted with the lawsuit.

"The Vacco report is absurd," General said. "Vacco has a conflict of interest because he is an employee of Empire Resorts."

Vacco did not respond to a request for comment, but Joseph Bernstein, a co-trustee with Vacco of the Catskill Litigation Trust, which has been bankrolling the judgment litigation for the tribal government, said millions of dollars have been spent by Empire Resorts, its allies and the trust to uphold the judgment. He suspects more has been spent by his adversaries.

Bernstein, a lawyer and Manhattan real estate owner, is a major investor in Empire Resorts, whose racinoat Monticello Raceway is financially hurting.

"Sure, if this comes out, I'll make a lot of money," he said. "But these guys are bad guys and they need to pay for the injustice they've done the tribe."

Gary Thompson, a spokesman for Harrah's, said, "we believe the tribal court decision is without merit." He said when Harrah's acquired Park Place, the company thought the case had been dismissed.

Indeed, a settlement struck among lawyers for the tribal litigants and Park Place seemed to be in place at the time. But not all the plaintiffs signed off on it. That deal called for no payment and an agreement that all litigation be dropped, including Park Place's defamation suit against its adversaries.

"The Vacco action and the hope of collecting billions from Harrah's are motivating the recent efforts by a faction of the Mohawk tribe," Carpinello said in legal filings.

He said the tribal court had been abolished by the tribal government two years before the judgment against Park Place was handed down.

His point of view conflicts with the majority of the current tribal council, as well as that of the chiefs in charge in 1994 who created the court.

Carrie Garrow, the judge who handed down the $1.7 billion award, said she has no doubt of the validity of the court. She said she had little choice but to rule in favor of the class-action litigants because Park Place refused to appear to argue its case. "We gave them every opportunity," Garrow said. "So I was forced to decide the case according to what I had."

At the time, Garrow, a Stanford Law School graduate and member of the California bar elected tribal court judge, was working on a master's degree in public policy at Harvard. She had formerly worked as a deputy district attorney in Riverside, Calif.

Now the executive director of the Center for Indigenous Law, Governance and Citizenship at Syracuse University, she said she'd testify if asked to stand up for her decision.

During her seven-year tenure on the tribal court bench, different governing bodies were recognized by the Bureau of Indian Affairs. One of the governing bodies voted to kill the court in 1999, but it was out of power at the time, she said. Yet her paychecks eventually got stopped by the ruling body.

One of the three chiefs now in power, James Ransom, said he believes the court was out of business when the judgment came down because the tribal council in 1999 disbanded it. He also objects to its creation because there was no referendum from the community.

Carpinello also blasts Vacco for resorting to "character assassination" to depict the Mohawks as victims. He defended Waterman in his papers, saying his actions were always supervised by the tribal council he served and the so-called ghostwritten letter for the BIA was no more than an honest attempt to make sure a federal judge looking at the case knew about the tribal court's history.

One Wall Street analyst who follows Harrah's stock and spoke on condition of anonymity said the judgment isn't a concern based on briefings with Harrah's. "Wall Street doesn't really expect it to succeed," he said, "but we're not lawyers."

James M. Odato can be reached at 454-5083 or by e-mail at jodato@timesunion.com.