The Tonto Apache Tribe has filed a breach of contract lawsuit against former Mazatzal Casino Chief Executive Officer Jim Gannarelli.
Information provided at the time of Gannarelli's exit in January, on behalf of the Tonto Apache Tribe, which owns the casino, did not address any kind of wrongdoing. Officials said the parting was a result of management changes.
The tribe filed its breach of contract suit against Gannarelli in the Tonto Apache Tribal Court May 26.
Gannarelli, whose employment was terminated in January, is also facing litigation for breach of duty; breach of fiduciary duty; conversion and tortious or interference with contract expectancies.
"We are still waiting for a response from Gannarelli's attorney," said Nathaniel Campbell, administrator of the Tonto Apache Tribal Courts. "They had 30 days to respond. They called Monday (June 27) and said they would be filing a response."
Campbell said once a response is filed, a hearing date will be set. He said he expects the hearing to occur within 15 days of the court's receipt of Gannarelli's attorney, Luis Ochoa's response. The hearing will be open to the public.
The tribe is seeking both actual and punitive damages, as well as repayment of all salary, benefits and perquisites of employment paid to Gannarelli during the time he was making the breaches and afterward.
The lawsuit does not indicate the time period in which Gannarelli was in breach of his contract and related duties.
Campbell said it will be up to the tribe's attorneys, Joe Cleese and Leah Smith, to prove in court the time during which the asserted wrongdoing occurred and the amount of damages suffered by the tribe as a result.
The CEO received a salary of $20,000 a month, according to the lawsuit. He was to pay both his own and the employer portions of all applicable taxes, according to his employment agreement. The court papers indicate that the tribe erroneously paid these taxes. The suit also claims Gannarelli accepted medical benefits from the tribe to which he was not entitled.
The employment agreement states he would not be entitled to any reimbursement of travel, moving or gaming conference expenses.
The former CEO sought and accepted reimbursement for expenses. The suit goes on to claim he sought and received reimbursement from the tribe for expenses unrelated to his employment and/or made improper and unauthorized donations of tribal funds and/or property.
The tribe's employment contract with Gannarelli includes an expectation of exclusive service, with substantially all of his business time and attention devoted to the casino and confidentiality. He was also expected to return any tribal property in his possession at the time of his termination.
The lawsuit claims while Gannarelli was employed by the tribe, he was an officer and director of Eagle Visions, Inc., in which he had financial, as well as management issues.
He did not fully disclose to the tribe, the level of his involvement with the company, but still entered into a contribution and participation agreement with the tribe on behalf of the company, according to the court document. Money was paid, but obligations to the tribe were not met by Eagle Visions.
The tribe also claims in the suit, that while still employed at the casino, Gannarelli began working for the Bear River Tribe of Rhonerville Racheria and its Bear River Casino in Eureka, Calif., so was not providing an exclusive service to the Tonto Apache Tribe.
There is an additional claim Gannarelli solicited Mazatzal Casino employees to come to work for the Bear River Casino.
The suit states he converted the property of the Tonto Apache Tribe by taking custody over property to which he is not entitled and these activities were engaged in with the intent of harming the tribe.
His contract states that he isn't eligible to receive a severance package should he be terminated for breach of duty. Upon his release in January, the lawsuit states Gannarelli demanded and was paid a $60,000 severance package.
Telephone calls to the offices of the attorneys involved in the lawsuit were not returned by press time. Attempts to contact Gannarelli at his new place of employment, Bear River Casino in Eureka, Calif., were also unsuccessful.
In 2002, Gannarelli had his state certification (for gaming administration) suspended for 120 days by the Arizona Department of Gaming. However, he was allowed to continue to work at the Payson casino for all but 50 days of the suspension.
The period of suspension ended Oct. 10, 2002 and the tribal council allowed Gannarelli to resume his duties as general manager of the casino. The suspension was without pay and his duties were temporarily assigned to other employees.
"We believe that the penalty imposed on Mr. Gannarelli is fair and appropriate." That was the official position of the Tonto Apache Tribal Council as stated in a formal release on the matter, provided to the Roundup Oct. 9, 2002.
According to the tribal council's release, "Under the Settlement Agreement and Release signed by James Gannarelli and the Arizona Department of Gaming on Aug. 20, 2002, Mr. Gannarelli admitted that there was evidence to support the conclusion that he had violated three sections of the Gaming Compact between the Tonto Apache Tribe and the State of Arizona. Under that Agreement, the Department of Gaming also agreed to withdraw charges that Mr. Gannarelli had violated six other compact provisions."
Gannarelli's violations included using vendors at Mazatzal Casino who were not certified by the state, according to Campbell.