Niagara Gazette

February 20, 2014

OTB files lobbying complaint against Rochester developer working with Seneca Nation

Staff reports
Niagara Gazette

Niagara Gazette — Western Regional Off-Track Betting Corporation has filed a complaint with the New York State Joint Commission on Public Ethics against a Rochester developer who has been helping the Seneca Nation of Indians in its bid to build a new casino in Henrietta. 

OTB officials on Tuesday accused Rochester developer David Flaum, the Seneca Nation of Indians and the Seneca Gaming Corp. of violations under New York's Lobbying Act. 

The OTB's complaint alleges that Flaum engaged in "unregistered lobbying activities" and accepted employment with a contingent-based fee from the Seneca Nation and the SGC in violation of the New York State Lobbying Act. 

“There is evidence strongly suggesting that Flaum and Flaum Rochester are lobbying on behalf of the Seneca Nation and the SGC,” said Michael P. Nolan, Executive Vice President/COO of WROTB.

A spokesperson for the Seneca Nation of Indians directed all inquiries to Flaum who did not respond to a request for comment from the Niagara Gazette on Tuesday. 

The OTB, citing media reports, said in August 2013 Flaum and his firm, Flaum Rochester, contracted with the Seneca Nation and SGC to create a gambling and hospitality development in Henrietta in Monroe County. 

OTB officials said JCOPE has no records indicating that either Flaum or Flaum Rochester formally registered as a lobbyist in New York. OTB officials suggested Flaum has performed "lobbying activities" on behalf of the Seneca Nation and the SGC, citing a section of state law that defines such activities as “any attempt to influence ... the approval, disapproval, implementation or administration of tribal-state compacts, memoranda of understanding, or any other tribal-state agreements and any other state actions related to Class III gaming.” 

Nolan said an agreement obtained by the OTB shows signatory lines for the Nation, the SGC and Flaum and indicates that Flaum Rochester will provide "liaison services." OTB officials allege that those services included helping the Seneca Nation secure either an amendment to the current Gaming Compact with the state or approval of a new gaming compact. They also suggest that the agreement calls for Flaum to represent both parties on related matters involving local municipal governments. 

“I think it’s clear that those responsibilities fall under the definition of lobbying” Nolan said.

Michael Kane, President of Western Regional Off-Track Betting Corp., suggests that further evidence of a contingent-based fee arrangement exists between the Seneca Nation and Flaum.

“The agreement states that Flaum Rochester will be eligible to earn a Success Fee if a Compact Approval becomes effective, and that fee is as high as $5 million,” said Kane. “This ‘Success Fee’, can only be considered the type of contingent-based fee rendered illegal by the Lobbying Act.”

The JCOPE is responsible for ensuring compliance with state ethics and lobbying regulations.