Kahnawake casino owners sue Mohawk council, grand chief for $220 million
Two owners of a casino in a First Nations community southwest of Montreal are suing the Mohawk Council of Kahnawake for more than $200 million.
They say the council ignored their right to due process when it abruptly shut down the Magic Palace casino in March 2024, leaving them with little recourse. The closure followed a 2023 news report that alleged the RCMP were investigating an Albanian investor they suspected of using the casino to launder money for a Mexican cartel.
The lawsuit alleges the council acted in bad faith by closing the casino without verifying the claims made against it. It also names as a defendant Grand Chief Cody Diabo, who was the Kahnawake chief responsible for gaming at the time, alleging he used the closure to bolster his 2024 election campaign.
The decision to shutter Magic Palace was 'as unilateral and disproportionate as it was sudden,' the lawsuit says. 'Without prior notice or warning, the plaintiffs' 15-year-long operations were abruptly forced to a halt within mere hours.'
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None of the allegations in the lawsuit has been tested in court. The court filing was first reported by the Eastern Door, a community-based newspaper.
The two owners, Stanley Myiow and Barry Alfred, are seeking $220 million in damages, including $155 million for a planned expansion project they say has been quashed.
The Mohawk Council of Kahnawake declined to comment on the lawsuit. In a statement provided to the Eastern Door, the council said it would 'take all necessary steps to protect the community's assets.'
The council moved to close Magic Palace in March 2024 by cancelling a royalty agreement that allowed it to operate electronic gaming devices. In a news release at the time, the council said an investigation had revealed there was an 'undisclosed beneficial owner' of the casino who received 'the majority of the benefits' from its operation.
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'The decision to terminate the royalty agreement with Magic Palace sends a clear message that all gaming operations must uphold the highest ethical and legal standards applicable in the territory,' the council said.
The announcement came nearly six months after La Presse reported that an Albanian investor was suspected by police of using the casino to launder money for the powerful Sinaloa cartel, a Mexican drug-trafficking organization.
A third-party investigation later ordered by the Kahnawake Gaming Commission found the investor was receiving 58 per cent of the casino's profits. After the casino was closed, a lawyer for the owners told the Eastern Door the investor had no pending charges and no criminal record.
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Myiow and Alfred cut off their involvement with the investor after the La Presse report was published, according to the lawsuit, and agreed to co-operate with the investigation. At the time, the council issued a statement saying it was 'pleased that the owners of Magic Palace have taken swift actions' on the matter.
But the owners allege the council 'remained under significant pressure to do more,' especially with an election scheduled for July 2024. They say half a dozen armed members of the local First Nations police force showed up unannounced at the casino's premises on March 25, 2024, 'ordering them shut before the patrons' bewildered looks.'
The lawsuit says the gaming commission was aware of the Albanian investor's involvement in the casino from the outset, and that he was never an owner. Local laws prohibit ownership of gaming establishments by people from outside Kahnawake.
Myiow and Alfred claim the Kahnawake council has 'taken every measure' to ensure the casino stays closed, and has resisted their efforts to argue their case. It claims the council's conduct 'rises to the level of bad faith or gross negligence.'
The court filing describes Myiow and Alfred as 'hard-working, well-respected' members of their community, and says Magic Palace has made $12 million in royalty payments to the council to date.
With a $10-million investment from the investor, the casino expanded in 2019 to include 400 electronic gaming devices, a poker room and a steak house, which together employed more than 100 people. Another planned expansion would have generated $265 million in royalties for the community by 2033, according to the lawsuit.
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The owners also claim Diabo made 'profoundly damaging and false accusations' about them while he was campaigning to be grand chief, including by stating they had betrayed the community's trust.
'It was prosecution by press release, for electoral gain,' the lawsuit states. Myiow and Alfred are seeking $75,000 in punitive damages against Diabo personally.
The court filing also claims that two Mohawk Council of Kahnawake chiefs hold direct financial interests in Magic Palace's main competitor, Playground, a larger casino in the community. It alleges only one of them appears to have recused himself from decisions affecting Magic Palace, despite 'serious conflict of interest concerns.'
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