Oct. 30--MONTICELLO, N.Y.--Arthur Goldberg, owner of Caesars, Bally's, and other casinos in Atlantic City, knew a threat when he saw one: When an Indian tribe, the St. Regis Mohawks, announced plans last year to build a casino in Monticello -- an hour closer to New York City than his casinos -- Goldberg knew his business would suffer. 

But Goldberg, a fund-raiser for the Democratic Party, had friends in high places. Pretty soon he was arranging meetings with President Bill Clinton and Vice President Al Gore. Then came a cascade of "soft money" contributions to the Democrats. 

Over a five-month period following the April 2000 announcement of the Mohawk casino deal, Clinton's Bureau of Indian Affairs made several unusual decisions helpful to Goldberg. First, the bureau withdrew the federal government's longstanding support for the group of Mohawks who planned the casino in Monticello; instead, the bureau backed a group of tribal leaders allied with Goldberg; and finally, the bureau intervened to help prevent the enforcement of a Mohawk tribal court's $1.8 billion judgment against Goldberg for interfering in tribal affairs. 

On the very day -- Oct. 6, 2000 -- that the Bureau of Indian Affairs issued a letter declaring that the tribal court had no authority, Goldberg's company contributed $10,000 to the Democratic National Committee. It was the second time a Goldberg contribution was registered on the day of a decision favorable to him. 

Now, 12 months after Goldberg's death and nine months after the end of the Clinton administration, the original Mohawk leaders are challenging the Bureau of Indian Affairs' actions in court. The outcome could determine the flow of potentially billions of dollars in gaming revenues. 

In the fast-growing world of Indian gaming, with annual receipts now over $12 billion, decisions made by political appointees in the Bureau of Indian Affairs can clear the way for tribes to build casinos, or block them entirely. 

In the Clinton administration, the Bureau of Indian Affairs was headed by Kevin Gover and his top deputy, Michael J. Anderson, both former Clinton-Gore fund-raisers. Their decisions spurning the recommendations of staff genealogists to approve tribes for gaming have come under sharp scrutiny by Congress and the Bush administration. 

But no case has raised the issue of money and politics in Indian gaming more directly than that of the St. Regis Mohawks. 

"Arthur Goldberg reached right into the government to protect his Atlantic City casinos by controlling gaming in New York state," said Robert Berman, a businessman who headed the group planning the Mohawk casino at the Monticello Raceway. "It's obvious that if you put a casino up here, Atlantic City has problems." 

Declared Berman, "Goldberg bought access to the top political decision-makers and got the results he wanted." 

But representatives of Park Place Entertainment, the casino company that Goldberg once headed, strongly object. They say the Bureau of Indian Affairs withdrew its support for the group of Mohawk leaders allied with Berman because of a lack of popular support for that tribal government. 

Any suggestion the BIA switched sides "as a result of political contributions is utterly without factual foundation and is absurd," a lawyer for Park Place said. 

Gover, the former BIA head, also insists his decision was not politically influenced. 

The Mohawk have been recognized by the United States as a sovereign nation for over 200 years on their vast Akwesasne Reservation, which stretches from the northern Adirondack Mountains in New York into Quebec. 

In the late 1980s, dire economic conditions on Indian reservations prompted Congress and the Supreme Court to give their blessings to Indian casinos. 

By the mid '90s, New York state officials, who watched with frustration as New Yorkers crossed state lines to spend ever-increasing sums in Atlantic City and at the new Indian gaming palaces in Connecticut, recommended that tribes be invited to open casinos in the most economically distressed areas of New York, such as the Catskills, where once-magnificent resorts are now shuttered. The state could share as much as 25 percent of the gross, as Connecticut does from its Indian casinos. 

Non-Indian investors such as Berman jumped at the chance to recruit a tribe into the Catskills. Tribes such as the Oneida, Cayuga, and Seneca were courted by investors like royalty. 

Berman signed an agreement with the Mohawks, purchased the racetrack in Monticello, and set about wending his way through years of environmental reviews. 

But not without catching the eye of casino magnates Donald Trump and Goldberg, each of whom controlled about one-third of the $4 billion Atlantic City market. Goldberg's friend, Senator Robert Torricelli, Democrat of New Jersey, came out publicly against Berman's deal. 

Trump last year paid a $250,000 fine to the New York Lobbying Commission for failing to publicly disclose his role in trying to undercut public support for the Catskills deal by giving a negative portrayal of the Mohawks in advertisements. 

On the Mohawk reservation, meanwhile, the Bureau of Indian Affairs worked to adopt a written constitution and an independent judiciary. Elected by a slim majority and recognized by the bureau, the new constitutional government faced an immediate challenge from the previous government, in which power was concentrated in the hands of three chiefs. The chiefs charged that a 51 percent majority was needed for passage of the constitution. Only 50.9 percent voted for it. 

The Bureau of Indian Affairs stood firm with the constitutional government through several years of appeals, but eventually, in 1999, a federal judge ruled that 50.9 percent did not equal 51 percent, even in a practical sense, and cited the three chiefs' growing popular support. 

The bureau began the process of appeal, and, in internal documents authored by federal prosecutors acting on behalf of the bureau, the judge's decision was called "erroneous." By then, Berman was within months of approval to convert the racetrack into a casino. Berman had agreed in writing to work with whichever tribal leaders prevailed in the legal wrangling. 

But then something unexpected happened. A week after the Berman group received final Bureau of Indian Affairs approval for the casino, the three chiefs' government, in power pending the appeal, abandoned Berman and signed with Goldberg's company, which promised a bigger casino on a different site, once he had received the necessary state and federal approvals. 

Stunned, the tribe's constitutional government vowed to fight. 

Gover, then the head of the Bureau of Indian Affairs, acknowledged last week that he felt pressure "by both sides" for and against the appeal -- which now would determine whether Berman's or Goldberg's faction controlled the tribe. Gover said it was a close decision, but he decided the three chiefs had gained more popular support. 

"We made the decision on the merits," he said. "There was nothing nefarious about it." 

Gover, a lawyer/lobbyist who was appointed to the Bureau of Indian Affairs' top job after years of fund-raising for Clinton, is now representing gaming tribes for a Washington law firm. While in office, he said, he made it a point not to know who was making political contributions. Asked about Arthur Goldberg, he said he didn't know who he was. 

But Berman and the Mohawks' constitutional government find that response isn't credible. Documents indicate that while Gover was weighing his decision on the appeal, Goldberg was reaching out to his many political contacts. In June 2000, Torricelli and Jon Corzine, then running for Senate in New Jersey and a recipient of campaign contributions from Goldberg, arranged meetings for Goldberg with Clinton and Gore, according to written phone logs kept by Goldberg's secretary and subpoenaed by the New York Lobbying Commission. 

On June 28, 2000, for example, Corzine left a message with Goldberg's secretary saying that he "does not mean to be pushy but he has to know before the meeting with the president if he can count on you for $16,000." In fact, Goldberg contributed $16,000 to the Democratic Senatorial Campaign Committee on Aug. 30, 2000, the day a court official accepted the Bureau of Indian Affairs' request to drop the appeal. The records of donations are listed by the Center for Responsive Politics, a nonpartisan Washington-based group that posts on its Web site political donations disclosed in Federal Election Commission records. 

A Corzine spokesman said Corzine never discussed any casino business with Goldberg. 

Earlier in the summer, a Goldberg company affiliate, the Hilton Flamingo, had given the Democratic Congressional Campaign Committee $25,000, and Hilton Hotels, from which Park Place originated and remains affiliated, contributed $10,000 each to the Democratic senatorial and congressional committees. 

Meanwhile, Goldberg's company was trying to fight off a huge court judgment against it. A group of tribe members sued the company in Mohawk tribal court -- a court set up with the help of the Bureau of Indian Affairs -- saying the company had interfered with tribal business. The court agreed, setting a whopping damage figure of $1.8 billion in lost casino revenues. 

The three chiefs, with Park Place's encouragement, passed a resolution repealing the tribal court, according to documents. Still, a federal court judge refused to accept the repeal and ruled in favor of the judgment. 

On Sept. 22, 2000, the three chiefs met with Anderson, Gover's deputy, and asked for a letter stating that the tribal court had no authority in the eyes of the federal government. 

Three days later, the wife of Goldberg's general counsel, Clive Cummis, contributed $5,000 to the Democratic Naional Committee; on Sept. 26, the three chiefs' lawyer, Bradley Waterman, contributed $500 to the DNC; and one day later, Cummis and his law firm each contributed $5,000 to the Democratic National Committee, and Hilton Hotels contributed $2,000 to the Democratic Congressional Campaign Committee. 

On Oct. 6, Anderson sent his letter saying the tribal court had no authority, and Goldberg's company contributed $10,000 to the Democratic National Committee. 

Anderson's letter was immediately used by Goldberg's lawyers fighting to get the $1.8 billion judgment against the company dismissed. The case is now pending before a federal appeals court. Anderson has gone on to a job as a Washington-based lawyer/lobbyist, and in fact has worked closely with the three chiefs since leaving office. 

Anderson did not return phone calls. Representatives of Clinton, Gore, and Torricelli did not respond to questions. 

But in Monticello, where a casino was supposed to open in spring 2002, there is suspicion. Goldberg's plan for a casino in the Catskills still lacks the necessary approvals. 

Unemployment is high. Times are hard. Many contend that Goldberg never intended to build a casino, so long as he could stop the one planned by Berman, thus assuring Atlantic City's rule over the New York gambling market. 

"People wanted the casino for the jobs," said Valerie Caruso of Monticello. "We're an impoverished community. But somehow it got taken away, and I know politics had something to do with it, somehow." 

Waterman, the lawyer for the three chiefs, said there was no connection between the soft money contributions by Park Place and its associates and a desire to affect Bureau of Indian Affairs policy. "I've never heard any suggestion of an attempt to influence the bureau," he said. 

Asked about his own $500 contribution, Waterman said he did so because he supported Al Gore for president. 

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(c) 2001, The Boston Globe. Distributed by Knight Ridder/Tribune Business News. PPE,