A group of people who claim to be descendants of the Paugussett Indian tribe have raised a cloud of uncertainty over the economic recovery of Bridgeport, Conn., and several of its suburbs.

The group has petitioned the federal Bureau of Indian Affairs in several lawsuits for rocognition as a legitimate tribe, and wants back 80 acres of its ancestral land that is situated in the heart of downtown Bridgeport.

State officials characterize the petition as part of a plan to put a gambling casino oil the land. But William Wechsler, a Hartford attorney representing the Paugussetts, said the case is a matter of wrongful seizure, and that he "has between 20,000 and 30,000 pages of information to prove it."

"So far. the tribe has exercised a tremendous amount of restraint." Wechsler said. "I cannot promise that restraint will continue."

He said the leader of the Paugussetts -- Chief Quiet Hawk -- has said the issue Is a matter of survival as well as social justice. "Theirs is a very sad history. We want to see it improve," Wechsler said.

But federal, state, and local Connecticut officials said yesterday that the group's claim to the land has more to do with the Indians' interest in opening a casino in the city.

"In their literature and in public statements, these people have said the sole purpose of these suits is to gain the rights to open a casino." said Richard Blumenthal, Connecticut's attorney general.

Connecticut has no legalized gambling, but there is a casino on the Mashantucket-Pequot Indian reservation in Ledyard near the Connecticut-Rhode Island border. The casino was allowed by a 1988 federal statute that said an Indian reservation is a separate nation and can make its own rules on gambling.

In return, the casinos must dedicate a portion of their revenues to the state in which they are located.

According to several Connecticut officials, the Mashantucket casino has been very successful, and will contribute $100 million to state coffers during this fiscal year.

The Mashantucket-Pequots have over 180 members and have been federally recognized as a legitimate tribe since 1983. At the time of their federal recognition, the question of casino gambling was never raised.

The situation surrounding the Paugussetts is different.

The Paugussetts, who say they will open a casino in downtown Bridgeport as soon as they are recognized, place their membership at 100 to 120. The state has maintained that the actual membership may be as low as 30.

Attorney General Blumenthal claims the tribe's only interest in wanting the land is gambling. As proof, Blumenthal claims the tribe has accepted between $250,000 and $500,000 from two companies -- impressions Delivery Inc. and Native American Game Productions -- to support the suit. Both firms are casino and gaming companies.

The ruling on the legitimacy of the tribe's claim is pending. But several municipal bond participants have voiced concerns about a town's ability to sell debt when its tax base could be significantly diminished by a successful Indian claim.

"We have filed a few land claims, but we are not interested in taking people's homes," Wechsler said. "However, if this continues, the tribe feels we have legitimate claims on over 20% of Connecticut land."

The attorney general said that if the federal Bureau of Indian Affairs refuses to grant the Paugussetts' request for legitimacy, the tribe may have no choice but to drop their lawsuits.

According to Blumenthal, the Paugussetts have filed land claims in Bridgeport, Trumbull, and Orange, and have threatened to do the same in Seymour, Monroe, Stratford, and Shelton. All of these towns are within a 40 mile radius of Bridgeport.

"This is not, however, a quick process," said Richard Slausky, district director for U.S. Rep. Christopher Shays, D-Bridgeport. "The quickest the Bureau has completed a petition is two years, and the longest is eight years."

Bridgeport, which is rated BB by Standard & Poor's Corp. and Ba by Moody's Investors Service, has $200 million of debt outstanding.

The other towns with land claims pending have over $100 million in unenhanced debt. The ratings for those towns range from Baa to Aa by Moody's Investors Service and from BBB to AA-minus by Standard & Poor's Corp. Rating agency officials said none of the towns are under review, but added that they will be on a case-by-case basis, if warranted.

Several land claims have been filed based on agreements between the Paugussetts and England's King George III before the Revolutionary War.

Blumenthal said that since the United States is not subject to any rulings of a king, it does not matter what happened prior to the war.

The Paugussetts' lawyer said he is unsatisfied with Blumenthal's response to the suits.

"The attorney general has not done an overwhelmingly impressive job handling this," Wechsler said. "Since day one, we have sought a negotiated settlement and he has resisted any negotiations. Unfortunately, there has not been the type of political leadership in the state to do this."

This is not the first time Indian tribes have attempted to seize their ancestral homes. In upstate New York and in Maine, for example, tribes have sought and were granted the return of lands that have been proven to have been wrongfully seized.

But local officials in Connecticut are mounting their defenses. Kenneth S. Heitzke, first selectman in the city of Monroe. said the claim against Monroe is refuted by written proof that the Paugussetts were actually paid twice for the land in a 1671 agreement.

How these land claims will affect municipal debt is uncertain, according to market participants. But concerns are starting to mount as more attention is given to the ancient land claims.

"I wouldn't be as concerned about the overall Connecticut state credit as I would about localities' ability to finance long-term projects," said one municipal analyst. "The larger question surrounds how much localities are dependent on services the Indians may end up providing."

The analyst said that localities could lose a significant amount of tax revenues from cigarette and gasoline taxes because the Indians may sell those products and collect tax revenues that would otherwise have gone to the state.

Rating agency officials said it is premature to say what the effect will be on municipalities subjected to the Indians' claims.

"It's really going to depend on how the claims affect the overall economic picture," said William Hogan, senior analyst at Moody's. "We are certainly following the development there."

Hogan said the agency will conduct a review of Bridgeport and Trumbull within the next few months, and will look at the matter more closely at that time.

"Normally, these questions get settled over time with a large chunk of money," said Hyman Grossman, managing director at Standard & Poor's. "We would certainly require a clear statement from any credit that had a large portion of land in question before handing down a rating."

Grossman said although Maine was placed on negative CreditWatch for a short time in the 1970s after a similar lawsuit was decided in favor of the Penobscott Indians, the state was not downgraded as a result of the ruling.

Grossman said many such conflicts are resolved through a large Federal payout and do not prompt a rating change.

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