HOSKIN LAWSUIT IS ‘SMEAR,’ FILING SAYS
LEGISLATIVE HOPEFUL DROPS CLAIM OF REPRESENTING ENTIRE NATION

By JOHN M. WYLIE II
Editor
Copyright 2006, Oologah Lake Leader, LLC

MUSKOGEE -- A federal lawsuit filed by House District 6 candidate Chuck Hoskin and six colleagues is part of a political “smear” campaign that amounts to an abuse of the courts, according to documents filed Monday in the U.S. District Court here.

Hoskin and six colleagues on the Cherokee Tribal Council filed a lawsuit in June against Cherokee Nation principal chief Chad Smith and two executives of a tribal subsidiary.

The complaint alleges the three committed securities fraud when Cherokee Nation Industries bought a controlling interest in Global Energy Group.

Smith contends in his new filing that the suit has no factual or legal basis, starting with the fact that those filing it represent a minority of the council.

Hoskin admitted that in a statement he issued Tuesday.

In addition, Smith contends that the suit makes no allegations that could even meet the loosest definition of securities fraud.

“Taken together, Plaintiffs’ patent legal failures reveal the Complaint in its true colors - an inappropriate use of the federal courts for a legally insufficient political attack by a political minority to smear a political opponent in advance of an upcoming election. The Court is urged to have none of it and dismiss the action against Principal Chief Chad Smith with prejudice,” Smith’s filing contends.

A separate filing made by James Majewski, who is on administrative leave from his CNI post, makes the same arguments.

The third defendant, Benjamin Dixon, has left CNI and has not yet filed his answer.

Diversity of citizenship is required for a lawsuit to be heard in federal court, Smith notes, but even the original complaint by the seven councilors admits that all parties are Oklahomans.

That alone would be grounds for the court to dismiss the lawsuit, he adds.
He notes that the suit seeks $6 million in damages, but does not and cannot claim that he received a dime from the disputed transaction. Instead, he says, it makes the curious claim that CNI acquired the stock by purchasing it from (and making payment to) the people who owned it.

Smith reviews 10 pages of requirements set by federal law for bringing a securities lawsuit, and notes that the complaint against him does not meet any of them.

“Allegation of security fraud is a serious matter. Accordingly [federal regulations] strictly enforce safeguards of a defendant’s reputation and goodwill from improvident charges of wrongdoing,” he says.

“Plaintiffs are seeking to drag this court into a patently political fight between a minority of the Tribal legislature against the Tribal chief executive concerning inherently and exclusively Tribal matters,” he adds.

In his statement, Hoskin contends that he believes that “a majority of Cherokee Citizens support our efforts.” (See below for complete text of the statement).

Meanwhile, the schedule for deciding the case set last week by U.S. District Judge Frank H. Seay shows that it would consume much of Hoskins’ time if he is elected to the Oklahoma House Nov. 8.

The first key procedural deadline comes Nov. 3, five days before the election. From then until the five-day trial in March, there are 11 more deadlines — all after newly elected lawmakers will have been sworn into office.

The jury trial is set to start March 19 in Muskogee.

Thus Hoskin would have to choose for a week between his duties as a plaintiff and Cherokee councilor in court, or his duties as a lawmaker 140 miles away in Oklahoma City.

The legislative session lasts from the first Monday in February to the last Friday in May, or 17 weeks.

Thus Hoskin’s choice to continue as a plaintiff in the lawsuit means he already plans — before being elected -- to miss about 6 percent of the session.
In contrast, a two-week vacation for a year-‘round employee represents less than 4% of the work year.

While the legislative schedule for 2007 has not been set, the trial is planned for the crucial period when a key House deadline normally occurs.

Once that deadline passes, any bills which have not been approved in the House are considered dead for the session.

Bills from freshman lawmakers, if heard at all, generally come up in the last days or hours before the deadline.

In his statement, Hoskin acknowledges that he would likely drop out as a plaintiff if the case continues past the end of his term as a councilor in June.

(A library of original documents involving this case is available at the Leader’s website, www.oologah.net. It also includes previous stories about the ongoing controversy in the Cherokee Nation.)


HOSKINS ANSWERS QUESTIONS ON SEPT. 14 STORY

House District 6 candidate Chuck Hoskin did not receive a request for comment from the Leader last week until the newspaper’s deadline had passed.

The Leader offered him until Tuesday to reply, and he did so Tuesday morning.
The request for comment involved three questions about new developments in a lawsuit filed by Hoskin and six other Cherokee councilors against principal chief Chad Smith and two executives of Cherokee Nation Industries.

The questions and Hoskins’ answers are printed here in their entirety:

Q. Does the language in [Part I of a new court filing], "action by a minority number of Cherokee Tribal Council members," mean that you and the other councilors no longer claim to represent the Cherokee Nation as a whole? Please explain.

A. It is a fact that the councilors that are seeking justice in this case represent one vote shy of a majority of the council.  In my opinion, a majority of Cherokee Citizens support our efforts to combat the kind of fraud and abuse that is at alleged in this case.
 
Q. If the councilors are granted the right to charge legal fees to the tribe, it will total $160,000 according to this estimate. Defense costs of $330,000 also would be paid by the Cherokee people, as I understand it, under the common business doctrine that the employer covers defense of actions taken by employees in the course of their duties. (I have not verified, but I understand that there may be CN -- specific language as well for each individual indemnifying them -- again, that is common in the business world). Do you feel it is worth spending a half million dollars of Cherokee money to settle this dispute? Explain.

A. This case is about principles of good government and fair business dealings that are difficult to put a price on.  The councilors involved in these proceedings were elected to fight for our constituents and each one of us takes that responsibility very seriously.  We would be derelict in our duties if we did not take a stand on behalf of our constituents.  When we succeed, we will, in just this case alone, protect millions of dollars for the benefit of the Cherokee people, far in excess of any investment in legal fees. 

Q. When we have discussed your dual role if elected, you indicated you planned to end your tribal involvement when Cherokee elections are held in June. However, the schedule set forth in the Joint Status Report [since changed, see separate story] indicates that the earliest a settlement conference would be scheduled would be in mid-June, meaning a trial date would likely go into the second year of your first term. Again, can you fairly represent H6 constituents at the same time you are involved in massive federal litigation?

A. Yes.  Certainly, if the litigation extends beyond the period of months left in my Cherokee Council term, it would make sense for me to withdraw as a plaintiff, as the plaintiffs consists exclusively of Cherokee Councilors with standing to take legal action.