Casino files for bankruptcy protection, tribe says
By EDWARD SIFUENTES North County Times July 4, 2012
The Santa Ysabel Casino in North County filed for federal bankruptcy protection amid financial troubles, including a $3 million debt to the county.
Officials with the casino, which is owned by the Santa Ysabel Band of Mission Indians near Julian, said the facility will continue to operate while it seeks to restructure its debt. Lawyers for the tribe filed the bankruptcy petition in federal court Tuesday, David Chelette, the casino's general manager, said in a statement.
"This proactive step enables us to protect the jobs of our employees, which are vital not only to them and their families but the local economy as well," Chelette said.
All casino operations, promotions and payouts will be unaffected, Chelette said.
The county has been fighting the tribe in court to collect a $3 million judgment.
Santa Ysabel owes the money as part of an agreement to pay for off-reservation problems caused by the casino, including the increased need for law enforcement, fire protection and other services.
As a condition of opening the casino, the tribe agreed in 2005 to pay the county about $600,000 a year but has never made any of the payments, according to court records.
In an effort to collect the money, the county seized thousands of dollars held in the tribe's bank accounts.
Attorneys for the tribe said in court that the money seized by the county included funds for government programs.
Last month, Judge Lorna Alksne stopped the county from taking any more action to collect the money until the court can decide whether government funds were seized.
Alksne also ordered a debtor's exam, which is a process that would allow the county to ask questions of the tribe about its bank accounts. A meeting was scheduled to be held between the tribe and the county next week to begin that process.
An attorney for the tribe said in court last month that if the county was allowed to seize all casino money, the facility would be forced to close its doors.
"If they sweep everything, the way they've already done ... the casino will close," said Santa Ysabel attorney Geoff Hash, according to a court transcript. "That's 120 employees out of a job."
Call staff writer Edward Sifuentes at 760-740-3511.