he group of investors due to receive more than $1 billion from the Mohegan Indian tribe for helping to establish the Mohegan Sun Casino in Connecticut had previously befriended the tribe's chief in 1995 by hiring his son, who then used employees of the investors to renovate the chief's modest house.
Shortly afterward, Mohegan Chief Ralph Sturges signed several agreements giving the investors a vast array of financial interests in the yet-to-be built casino, which today is one of the most successful in the world.
Those relationships, which were disclosed in interviews and records obtained by the Globe, suggest an unusually cozy relationship between Sturges and the investors, known as Trading Cove Associates.
That relationship is of crucial importance, because the contract between the tribe and Trading Cove may be voided and the $1 billion returned to the tribe if a court finds that Trading Cove improperly influenced the chief with gifts or services in violation of federal Indian gaming laws.
While the tribe declined comment on Sturges, one Mohegan official confirmed yesterday that the tribe had begun an investigation into possible ''inappropriate'' activities involving tribal officials and construction contractors working on a massive expansion of the casino.
Mohegan officials would not say what prompted the investigation. On Jan. 17, the Globe reported that a combination of Trading Cove funds and casino revenues covered about $880,000 in fees paid to a surveying company owned by Roland Harris, who succeeded Sturges as tribal chairman when Sturges was elevated to chief-for-life in 1995.
Harris, who served as chairman from 1995 until last year, sold his company to McFarland-Johnson Inc. in 1998, but continued to receive an annual consulting fee, according to a McFarland-Johnson official who declined to say how much was paid.
The tribe had no money until the casino opened in 1996. However, Sturges and Harris accepted $9 million from Trading Grove, a South Africa-based investment group, to fund Harris's fees and other expenses, including salaries for both men, beginning in 1994.
During that period, Sturges and later Harris negotiated a series of contracts between Trading Cove and the tribe. In January, one former tribal official criticized the deals made by Sturges and Harris as too favorable to Trading Cove.
Carlisle Fowler, the former tribal treasurer, said the deals gave Trading Cove about $430 million in extra compensation, because Trading Cove had gained development rights not only for the casino, but also for a hotel.
The close relationship between the Trading Cove partners and Sturges was disclosed after two congressmen called for an official investigation of the Mohegan Sun deal and other aspects of the $10 billion Indian gaming industry.
Indian gaming law requires that investors such as Trading Cove declare that they have made ''no payments or gifts of services or other things of value'' to tribal officials or their relatives to gain ''special privilege, gain, advantage, or consideration.''
Trading Cove and Sturges made such a representation when they signed a contract reviewed and approved in 1995 by the National Indian Gaming Commission, the government agency that regulates Indian gaming.
Michael Montalbini, one of the electricians who worked on Ralph Sturges's house in 1995, said Sturges appeared to be closely associated with Trading Cove partners Mark and Len Wolman.
''They were close with Ralph Sturges,'' he said of Mark and Len Wolman. ''I would see them together. In hindsight, they needed this guy. It was a political matter. They seemed like they took care of him. They hired his son. At the time I was working on his house, they put new siding on his house.''
Ralph Sturges, his son Paul, and Harris all declined comment.
A lawyer for Trading Cove, responding to written questions from the Globe, confirmed that Ralph Sturges's son was hired by a construction company owned by Mark Wolman and that the son was ''compensated on the same basis as others at his experience and job description.''
Paul Sturges now works at Mohegan Sun.
The Trading Cove lawyer also said that Paul Sturges renovated his father's house as a side job, separate from his work at Wolman's construction company. However, he acknowledged that Wolman's carpenters and suppliers were used on the job.
The lawyer said everyone involved was ''fairly compensated'' by Paul Sturges.
Concerning Harris's surveying company, Trading Cove said it was ''entirely appropriate'' for qualified Indian contractors such as Harris to get preference in hiring for the constuction of an Indian-owned casino. In fact, Congress endorsed such a preferences.
Montalbini said he doesn't remember who paid him. He took out a permit for the electrical work, as did a plumber for heating work, as part of an overall renovation project that included a new kitchen, new electrical service, and new siding.
But no building permit was taken out, as was required, for new siding on the house, according to records.
Peter Schultz, tribal vice chairman, confirmed a report in yesterday's edition of The Day newspaper of New London, Conn., that the tribe hired an out-of-state law firm to investigate all contracts for the $1.1 billion expansion of the casino, which will include thousands of new slot machines, a 34-floor hotel, a convention center, and a 10,000-seat arena.
The investigation began a month ago, when former FBI agents hired by the law firm interviewed tribal members.
Schultz said the investigation will be completed next month.
Indian gaming is regulated by the National Indian Gaming Commission, an independent agency. However, as sovereign nations, tribes themselves are primarily responsible for regulating their own casinos.
Kyle Nayback of the National Indian Gaming Commission said yesterday that he was pleased that the Mohegan tribe was taking the initiative to investigate possible improprieties.
Trading Cove partners include Sol Kerzner, the international casino mogul who built Sun City in South Africa in the apartheid era. Trading Cove provided $9 million to the tribe to cover expenses and salaries, prior to the casino's opening in 1996. As compensation, it was promised 40 percent of net gaming revenues for seven years.
But after three years, Trading Cove renegotiated its business deal with the tribe. Ultimately, the Wolmans and Kerzner will receive more than $1 billion, amid criticism by some congressmen that their compensation is excessive and in violation of the law regulating Indian gaming. The gaming commission has taken no steps to overturn the deal, even though it said in a letter in 1998 that the terms were exceptionally favorable to Trading Cove.
In addition to gaining development rights to the casino, Trading Cove also signed a contract with Sturges for the hotel development rights. Trading Cove now says that those hotel rights never became effective. Trading Cove formally surrendered its hotel contract in 2000, as part of renegotiations that added about $430 million to Trading Cove's overall profits in the Mohegan Sun deal, according to public documents.
Sean P. Murphy's e-mail address is [email protected].
