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Maine Indians : Poverty Still Grips Newly Rich Tribes

September 03, 1985|BOB DROGIN | Times Staff Writer

INDIAN ISLAND, Me. — To get to the Shays' home, you cross a shaky one-lane bridge over the broad Penobscot River, pass a fake totem pole and a three-story gray wooden tepee with a sign advertising moccasins, wind through a warren of battered wood-frame homes, then knock on the door behind the white Baptist Church.

Madeline Shay, 70, sits in a small, cluttered living room weaving delicate baskets of brown ash and sweet grass. Her husband, Lawrence, watches a color television set. Both wear heavy silver bracelets and chunky turquoise rings. Both are full-blooded Penobscot Indians. And both are confused.

"People think we're wealthy," said Shay, a burly, 73-year-old retired construction worker with gravel in his voice and iron in his grip. "They think we've got lots of money. Well, it's not that way at all."

'Why Is Everyone Poor?'

"If we're so rich, why can't we afford our own home?" added his wife. "If we're so rich, why is everyone still so poor?"

Many of Maine's Indians are asking similar questions, nearly five years after Congress agreed to pay the Penobscot and Passamaquoddy tribes $81.5 million in September, 1980, to settle a staggering series of lawsuits in which the two tiny tribes had claimed 12.5 million acres of land--or nearly two-thirds of the entire state. They face an unlikely dilemma today.

Since 1980, the two once powerless and penniless tribes have become high-stakes financial entrepreneurs with growing political and economic clout. Investing their millions across Maine instead of just handing them out on the reservation, the tribes have bought vast tracts of Maine's timber and blueberry barrens, two profitable radio stations, the largest cement plant in New England, a tape-cassette factory and more. New investment offers, from shopping malls to a slaughterhouse, arrive daily.

Poverty Lingers

But the Penobscots' and Passamaquoddies' growing riches across Maine have not solved generations-old problems of poverty at home: Unemployment is chronic, welfare is endemic and housing is critically short for many of the 4,200 tribe members scattered on three rugged and remote reservations in Maine's "Deep North" woods.

Their future, in large part, lies 150 miles south in downtown Portland at the antique-filled offices of Tribal Assets Management, an investment bank and legal firm created in October, 1983, specifically to manage the tribes' new-found wealth.

"The goal is to create for the tribes a wealth that is permanent and ongoing and provide jobs and income for generations to come," said TAM President Daniel A. Zilkha, 42, a meticulously tailored, Egyptian-born art collector and scion of three generations of international bankers.

To meet that goal, TAM helps the tribes use leveraged buy-outs, tax-free Indian bonds and other creative financing methods to buy operating companies away from the reservation. And the tribes' apparent success in the bewildering world of high finance is drawing increasing attention across the state and the nation.

"It's a story with a kind of happy ending for all involved," said Maine Gov. Joseph E. Brennan in Augusta. "'They're participating. They're players at the table. They're getting in the economic mainstream."

"It's a good role model for other tribes," agreed John Fritz, manager of the Bureau of Indian Affairs and deputy assistant secretary of the Interior in Washington. "Frankly, they're making more money than one could ever possibly imagine. . . . All of a sudden, we've seen the tribes of Maine go from being an adversary of the people of Maine to probably being the biggest capitalists in the state."

Long-Term Development

Fritz said the Maine tribes are "the first to look beyond the reservation boundaries" for long-term economic development. They will not be the last, according to TAM co-founder Thomas N. Tureen, a dapper, graying, 41-year-old lawyer who led the tribes' bitter legal battle in the 1970s.

On Aug. 2, Tureen, acting for the Lac du Flambeau band of the Lake Superior Chippewas in northern Wisconsin, completed a $23.7-million leveraged buy-out of the Simpson Electric Co., which makes electrical test equipment. The 2,000-member Chippewa tribe used the future profits of the company, which employs 900 workers in five Midwestern factories, to gain financing from Barclays Bank PLC, UBAF Arab-American Bank and E.F. Hutton Group.

"It's revolutionary in Indian country," said Jim Jannetta, Chippewa tribal attorney, of the financing arrangement. "And the potential economic impact, not only for us but the state, is tremendous."

Tureen said TAM also is representing or negotiating to buy properties or businesses for the Puyallup and Colville tribes in Washington state, the Mescalero Apache in New Mexico, the Navajo, Hulapai and White Mountain Apache in Arizona, the Cherokee in North Carolina and the Pequot tribe in Connecticut.

Opportunity for Tribes

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