CATTARAUGUS RESERVATION, N. Y. - After clearing a federal hurdle, the Seneca Nation gaming project stumbled on an obstacle nearer to home.

Seneca Treasurer Arnold Cooper went to Peacemaker Court Oct. 30 to sue Seneca President Cyrus M. Schindler and two of the nation's corporations over financial arrangements to further construction of one of the three casinos authorized by New York State legislation.

Cooper's lawyer Brian P. Fitzgerald said that the commitment of up to $2 million in nation funds to the Seneca Niagara Falls Gaming Corp "places the Seneca Nation at great financial risk." He said the funds, from an existing line of credit, were paying for construction at the Niagara Falls Convention Center even though the building had not yet been transferred to the nation. Current plans are to open a casino on the site by Dec. 31.

"The work being done is being done on land not owned by the Seneca Nation, again, placing the nation at great financial risk," said Fitzgerald.

The tribal suit followed a non-decision by U. S. Secretary of the Interior Gale Norton Oct. 24 that had the effect of approving the Class III gaming compact between the Senecas and New York State. In a press release dated Oct. 24, Interior said "the Secretary will neither approve nor disapprove" the compact. Her non-action invoked a provision of the Indian Gaming Regulatory Act (IGRA) that considered the compact to be approved "but only to the extent that its terms comply with the requirements of IGRA."

The action sets up the compact for future legal challenges, but work has already begun to convert the Niagara Falls Convention Center for an early opening. A second casino is projected for Buffalo, and a third would open on one of the tribe's three reservations.

Under the compact, the Senecas would take possession of the Convention Center for a nominal fee, while assuming its debts. According to Fitzgerald, the Seneca Tribal Council authorized the $2 million commitment in an August meeting, even before federal approval of transfer of the land. The Seneca Settlement Act of 1990 allows the Nation to purchase lands for reservation status within its aboriginal territory.

Fitzgerald argued in a release that the fund commitment "violates a provision in the constitution of the Seneca Nation, which prohibits the council from appropriating any nation funds in any one year exceeding the sum of the aggregate revenue of that year."

"If the Peacemaker's Court rules in favor of Mr. Schindler and the other respondents, this will mean that officials of the Seneca Nation and any corporations which they create can do whatever they want with impunity," Fitzgerald said.

Cooper said, "I am bringing this action to protect the financial interests of the Seneca Nation."

Nation officials did not comment in advance of the court hearing.