Former NC local officials may get slices of Catawba casino profits too, document shows

Not only the brother of a U.S. congressman or an ex-governor’s husband are positioned to profit from the Catawba Indian Nation’s Two Kings Casino. Two former Cleveland County officials who long supported the project could be in line to make money too.

The Charlotte Observer reviewed a July 1, 2020, document identifying shareholders of Kings Mountain Equipment Supply. That leasing company will earn 20 cents of every $1 in profits from some slot machines at the casino, the Wall Street Journal recently reported.

Former Cleveland County manager David Dear held a direct stake in Kings Mountain Equipment Supply in 2020, according to the member schedule.

Former Cleveland County commissioner Eddie Holbrook was not named as a shareholder. But Moose & Putter Butter LLC, was. Holbrook and his wife signed articles of organization for that limited liability company in 2015. Millie Holbrook was later named registered agent for the LLC, whose name was changed to Moose Putter Butter, according to opencorporates.

The KMES shares held by Dear and Moose & Putter Butter are small, 1.88% (875 shares) and 1.34% (625 shares) respectively out of 46,643 total shares, according to the document. And any potential payout is unknown. The Catawba nation has estimated that Two Kings will generate $308 million per year once fully built and operational. How much KMES would earn is not clear.

Early believers in the project

Dear and Holbrook were early supporters of the casino, with Kings Mountain Herald news reports citing Dear as a proponent as early as 2013 when the project was not yet public and code named “Project Schoolhouse.” Dear was the Cleveland County manager from 2004 to at least 2011 and was appointed interim county manager in 2013.

In 2014, Dear and Holbrook were photographed with Bill Harris, the Catawba nation chief, and Wallace Cheves of Sky Boat Gaming, the casino project’s developer, at its expected location in Kings Mountain. Working with the Cleveland County Economic Development Partnership by then, Dear that year authored a front-page column in the Kings Mountain Herald detailing how the casino development could bring huge economic gains to Cleveland County.

During a January 2021 Kings Mountain City Council public hearing, Dear spoke in favor of Cheves’ plan to construct nearly 600 homes and luxury apartments near the planned casino, The Observer reported. The City Council granted a rezoning the project required.

Holbrook, a Cleveland County commissioner for 12 years before he lost his seat in 2018, did not return requests for comment. Dear could not be reached.

The Catawba Nation’s Two Kings Casino opened a first-phase facility right off I-85 last summer with 500 slot machines. In December, it doubled the number of slots and added more than 40 electronic table games in its first-stage facility, which is open 24 hours a day 35 miles west of Charlotte.

The casino project is under investigation by the federal National Indian Gaming Commission but that is not related to it vendors, the Catawba nation stressed last week. The commission put it this way:

“Our investigation is limited to the requirements of the Indian Gaming Regulatory Act, including ensuring that the Tribe maintains the sole proprietary interest in its gaming operation. Actions by the Tribe’s vendors outside the confines of IGRA are not within the scope of the Agency’s jurisdiction,” NIGC spokesman S. Justin Platt wrote in an email.

A long fought-for casino

The Catawba Indian Nation reservation land is located near Rock Hill, S.C. But because South Carolina bans most gambling, the Catawba pushed for years for permission to build a casino on North Carolina land, arguing it was part of its ancestral territory.

In March 2020, the U.S. Department of the Interior agreed to put close to 17 acres near I-85 in Kings Mountain in trust, which gave the Catawbas rights to develop a casino and resort, The Observer has reported.

Kings Mountain Equipment Supply finalized an equipment lease agreement with the Catawba nation on July 6 that year, according to the National Indian Gaming Commission’s general counsel.

The Wall Street Journal reported that John B. Clyburn, a brother of U.S. Rep. James Clyburn of South Carolina, received notice he had a small stake in a company related to the Catawba casino in 2013 and has since received about a half-dozen payments as high as $1,300. While he is not listed as a shareholder, he is affiliated with a company that owns a portion of a company called AGS of North Carolina LLC, which owns 10.1% of Kings Mountain Equipment Supply, the Journal reported.

Rep. James Clyburn in March 2021 sponsored successful legislation that reaffirmed in federal law the interior department’s decision enabling the Catawba to own and operate a gaming facility in Cleveland County. He said he was unaware of his brother’s financial tie and that they had not discussed the project, the Journal reported.

Michael Haley, husband of former South Carolina Gov. Nikki Haley, also has a small stake in AGS of North Carolina LLC, the Journal reported. A company he owns did cybersecurity and other work for the casino project and was compensated with a stake in the casino, a representative of his company told the Journal.

The casino project had generated some complaints over alleged conflicts of interest in North Carolina prior to these disclosures.

Citing concerns about “a nearly untraceable network of LLCs,” a group of 14 North Carolina state House Democrats wrote a letter to Attorney General Josh Stein in March of 2021. They sought an investigation into any potential conflicts of interest by local officials and whether nearby land deals met state requirements for “transparency and legality.”

Public records reviewed by The Observer then showed that Holbrook, who worked in fundraising and government affairs at the Cleveland Community College before retiring, had a financial stake in land near the casino. Holbrook was listed as an officer of E5 Holdings LLC, which owned 22 acres directly across from the casino property, The Observer has reported.

Holbrook told The Observer then that he’d supported the casino project while a commissioner due to its potential economic benefits to the county. He also said he bought a 10% stake in E5 Holdings, which was created after he left the county commission.

Stein spokeswoman Laura Brewer, in response to the Democrats’ letter, said the attorney general’s office didn’t have authority to launch the requested probe unless a local district attorney requested it, The Observer has reported.

The Eastern Band of Cherokee Indians, which has two casinos in western North Carolina, has opposed the casino but has been unsuccessful in stopping it in federal court.

Charlotte Observer reporter Payton Guion and News & Observer reporter Tyler Dukes contributed to this reporting.

This story was originally published August 8, 2022 at 11:04 AM with the headline "Former NC local officials may get slices of Catawba casino profits too, document shows."