Michigan’s Sault Tribe Settles for $25M in Lawsuit Over Failed Casino Projects

Article ByDavid Weir

April 11, 2023

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Posted in: Michigan Gambling News, US Casino News

Years of litigation and court hearings have come to an end this week. The Sault Marie Tribe of Chippewa Indians agreed to pay out $25 million to two Michigan-based investment and development firms over a pair of casino projects that were never built.

Back in February 2023, County Judge Joyce Draganchuck ordered the Tribe’s Kewadin Casinos Gaming Authority to pay out $88 million in damages to JLLJ Development and Lansing Future Development, both of Michigan.

The settlement this week is significantly less that the original award. However it avoids a “lengthy appeals process to fight the ruling and the significant legal expenses that would have been incurred,” according to the Tribe’s press release on the matter.

“This agreement allows Kewadin to move forward and now focus 100% of its efforts on providing the best entertainment services possible to the areas we serve,” Kewadin Casinos lawyer Aaaron Schlehuber said.

The Tribe currently operates five casinos in Michigan under the Kewadin name. They were hoping to open two new casinos, one in downtown Lansing, and the other by Detroit Metropolitan Airport. However, neither ever broke ground – resulting in the $88 million suit from their investment partners.

Default Judgements

Part of the Tribe’s case for the reduced liability of $25 million is based on its own ongoing lawsuit against its former lawyers, Patterson, Earnhart, Real Bird & Wilson LLP, of Louisville, Colorado.

The Kewadin Gaming Authority claims that the law firm was guilty of malpractice during their initial defense. It says this resulted in the default judgement and the $88 million payout that was ordered back in February.

“The default judgment caused by the Patterson firm has severely impacted the reputation of both Kewadin Casinos and Sault Tribe, and it’s important that they are held into account for the $88 million in damages against us,” said Schlehuber.

Misappropriated Funds

If Kewadin is successful in its lawsuit against its one-time Colorado lawyers, they will pay out a further $5 million to JLLJ Development and Lansing Future.

Both those Michigan based investment companies filed their original $88 million suit against Kewadin back in 2020. They claimed that the operator exaggerated and misrepresented its chance of receiving federal approval for the planned casinos.

The US Department of Interior (DOI) rejected the Sault Tribe’s application to take the land of the proposed casino sites into trust, basically cutting off the proposal from the get-go.

The Tribe did appeal. But Chief Judge Robert Jonker ruled in favor of the DOI only a few months later.

An initial $9 million was paid out by investors for land purchases and groundwork during this time. However it was never used for such purposes, and was instead “misappropriated,” claimed the suit.

This $25 million settlement from Kewadin will cover that initial investment plus interest and some of the damages claimed.

However, it is not quite the $88 million first requested. That included the plaintiff’s claim for loss of future earnings, totaling more than $60 million projected for the Metro Airport casino alone.