Casino investment helped fund Wendt Foundation’s gambling suit
The Margaret L. Wendt Foundation’s investment in one of the world’s largest gambling companies generated enough profit to pay for the legal fight against a downtown Buffalo casino.
The foundation, the primary financial backing behind a federal lawsuit opposing the Seneca Nation of Indians Buffalo Creek Casino, made $2.1 million in earnings by selling 60,000 shares in Harrah’s Entertainment in 2006, according to IRS tax filings examined by The Buffalo News.
Harrah’s owns or manages 41 casinos nationwide, in Canada and in England.
The profitable investment has sparked further criticism of the second-largest private charitable foundation in Western New York, which has been tagged as an elitist group for its attempts to block the $333 million casino and hotel.
“You can’t have it both ways,” said lawyer and blogger Alan Bedenko, who along with fellow blogger Christopher Smith revealed the Harrah’s connection on his Web site, Buffalopundit.com. “It’s either bad or it’s not bad. If the Wendt Foundation has a philosophical belief against the casino in Buffalo, I guess it should explain why it’s not bad everywhere.”
The foundation bought the Harrah’s shares in 2003 for $2.8 million, according to its 2007 tax return. The stock was sold in May 2006 for a total of $4.9 million — a 75 percent return in less than three years.
Wendt’s three trustees agreed to finance the lawsuit in January 2006, and the foundation so far has funneled $1.9 million through the Network of Religious Communities, one of the plaintiffs, for legal expenses.
The trustees were unaware of the Harrah’s investment until a periodic review following their decision to fund the suit, said trustee Robert J. Kresse.
Investment advisers Groesbeck Investment Management, based in New Jersey, determined the investment choices. The trustees decided to sell because the holdings were “inconsistent” with their position on gambling in the City of Buffalo, Kresse said.
Some people were resorting to unfounded attacks on the foundation because the U.S. District Court determined the casino is illegal, as many anti-gambling opponents have argued all along, he added.
The Rev. G. Stanford Bratton, executive director of the Network of Religious Communities, said he was unaware of Wendt’s investment in Harrah’s, but he downplayed its significance.
“Most folks who have a retirement plan may well be invested in a casino,” said Bratton. “It’s hard for almost any of us to be pure in that sense.”
The foundation’s mission is to assist the Western New York region and confront what is harmful, and it shouldn’t be limited in those aims simply because it holds stock in a company that promotes gambling, Bratton said.
“That would say to many of us that we can never speak out,” he said.
It’s akin to a peace protester accused of hypocrisy because he pays his income taxes, which help fund a war effort. “How far do you draw this?” said Bratton.
Besides, casinos and federal agencies have huge amounts of money to invest in lawsuits, while “the people opposed have peanuts,” he said.
Without the Wendt money, opponents of the downtown casino probably would not have been able to press forward in their case against the U. S. Secretary of the Interior and the National Indian Gaming Commission.
U.S. District Judge William M. Skretny ruled earlier this month that the nine-acre plot on Michigan Avenue is sovereign Seneca land but does not meet the exception for off-reservation gambling.
Some casino supporters have blamed the foundation and others for halting what they believe will be an economic shot in the arm for Buffalo.
A spokesman for the Seneca Gaming Corp. declined to comment on the Wendt Foundation’s connections to Harrah’s, which manages a few Indian casinos and in 2002 had expressed interest in working with the Senecas on their Niagara Falls site.
“We’re not going to discuss it. That’s between the Wendt Foundation and the organizations they support,” said Phil Pantano, the spokesman.
Bedenko said he wasn’t necessarily in favor of a casino but changed his mind after the court decided it was sovereign land.
He took aim at the foundation on his Web site because he was disgusted by the nearly $2 million spent on lawyers.
“This is a foundation that doesn’t think a casino in the Cobblestone District of Buffalo is a good idea, but they don’t have a problem investing in a public casino corporation for the gain of the foundation,” said Bedenko, who in 2007 ran unsuccessfully for a seat on the Erie County Legislature. “The whole thing just sort of stank to me.”
Bedenko’s posting provoked a variety of reponses, agreeing and disagreeing with his assessments.
Skretny’s decision is being appealed. The foundation will continue its legal funding, all the way to the Supreme Court, if necessary, Kresse said.
Formed in 1955, the Wendt Foundation has given away more than $61 million in grants to Western New York organizations and played a pivotal role in saving the Buffalo Philharmonic Orchestra, Shea’s Performing Arts Center, the Darwin Martin House and the Roycroft campus in East Aurora, among other charitable enterprises.
The foundation has an endowment of more than $140 million and gives away about $6 million per year, mostly to support the local arts and culture, and the needs of the poor, elderly and disadvantaged.
That amount, Kresse said, will only grow as the foundation matures, unlike the casino deal, which will never contribute to the city’s tax base and will end up draining the local economy and taking money from those who can least afford it.
“We haven’t destroyed lives in the process,” he added. “We have helped people.”
