Chief Gray and Osage Gaming Enterprise Board being sued for breach of contract

Former gaming Chief Financial Officer Bill Leonhart is suing Osage Nation Principal Chief Jim Gray and Osage Gaming Enterprise Board members Tom Slamans, Frank Oberly and George Pease for breach of contract and for firing him on “malicious allegations.”

According to the petition, filed in Osage County District Court Oct. 30, Leonhart’s contract was terminated 21 months prematurely in August of 2009 and he wants $386,000 for benefits and perks that were lost under the contract that went through June 2011. Leonhart is also suing the gaming board for punitive damages for loss of reputation and emotional distress and $10,000 in punitive damages from Chief Gray personally in which the suit alleges Gray influenced the board to breach Leonhart’s contract and that his actions were “intentional, willful, knowing, unjustified and malicious.”

Neither Leonhart nor his counsel, Tulsa-based attorney Kay Bridger-Riley, returned phone calls by the time this story was published.

Leonhart was hired by the Nation to be its CFO in May of 2007. In April of 2008 Leonhart became acting CEO when then CEO Phillip Glass left the Million Dollar Elm. The suit alleges that shortly after Leonhart became acting CEO, he was offered a position by the Chickasaw Nation to be their CFO. The gaming board “in order to keep him” modified Leonhart’s contract to extend it by three years and compensated him for the additional duties he had assumed. The suit alleges that Chief Gray did not like this and did everything possible to have Leonhart fired, even though Gray is not in charge of the Nation’s gaming enterprise.

Gray referred comment to his legal counsel, Norman-based attorney Gary S. Pitchlynn of Pitchlynn & Williams.

“At this point it appears that the plaintiff is making more of this than what it is, which is basically an employment issue,” Pitchlynn said. “My understanding is he was terminated for cause, failure to perform or such failure, and until I can study the cause I won’t be able to comment any further.”

Gaming board members Slamans, Oberly and Pease, were appointed by Chief Gray and confirmed by the Osage Nation Congress to act as a buffer between the Executive Branch and the Nation’s gaming industry and are charged with making independent decisions for the gaming enterprise. According to the suit the board members did not exercise independent judgment in Leonhart’s case and fired him on Gray’s orders.

Before Leonhart was hired by the Nation in May of 2007 he had been vice president of finance at Harrah’s and Harrah’s Entertainment for nine years and the suit alleges that his “good reputation” was ruined by his termination by the Osage Nation.

Slamans, who is in Argentina, referred comment to Pitchlynn. Oberly and Pease have not yet been served so they both could not comment on the case and referred any comment to Pitchlynn as well.

Leonhart, who now works for Alliance Entertainment and Great Escape Theaters in New Albany, Ind., was sent a termination letter by the gaming board that outlined the reasons why he was being fired. Pitchlynn said he knows of the letter but has yet to see it and at this time cannot give a copy to the Osage News.

According to a Bigheart Times article published on Nov. 5, “Leonhart’s pay raise on May 30, 2008 came less than two weeks before the Osage Nation Gaming Commission slapped what is known as a ‘preliminary notice of violation’ on the casino for potential violations of internal control standards, all concerning accounting.”

“On June 11, the Gaming Commission issued a letter saying that the tribe’s ‘gaming assets are in jeopardy’ because ‘financial records are incomplete, inaccurate and unreliable.’”

According to the Times’ article Leonhart’s tenure at the MDE saw the upheaval of MDE’s accounting process which was first handled by the accounting firm Finley & Cook and then transferred to MDE March 31, 2008 to be handled in-house to save the tribe money.

More problems ensued and the Osage Nation Gaming Commission sent gaming auditors to review the accounting. What they found was “deeply troubling.”

According to the Times’ article, “No actual notice of violation was ever issued based on the Commission’s finding. In August of 2008, a few months later, Leonhart sent a memo to several tribal officials saying that the accounting had been improved.”

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