Jun. 14--WASHINGTON--Senator John McCain, the Indian Affairs Committee's most prominent member and a longtime supporter of tribally operated casinos, yesterday called for an investigation into the $1 billion in profits taken by investors in the Mohegan Sun Casino in Connecticut in apparent evasion of federal law. 

"It's clearly a subject for a hearing before the Indian Affairs Committee," said the Arizona Republican, who in 1988 helped shape the law that strictly limits profits of non-Indian partners in casino ventures. 

"I don't think anyone in the Senate anticipated the dynamic growth that we've seen in Indian gaming, and it's important to evaluate whether the law is working in the context of that growth," McCain said in an interview. 

Two of his colleagues on the panel, Senator Daniel K. Inouye, Democrat of Hawaii, and Senator Ben Nighthorse Campbell, Republican of Colorado, said in interviews that they will look into the Mohegan Sun case and then discuss with McCain his call for hearings. Inouye and Campbell are chairman and vice-chairman, respectively, of the committee. 

Patricia Zell, the committee's chief counsel, said an amendment to the law governing Indian gaming may be required to close the loophole that apparently allowed non-Indian partners to reap huge profits from Mohegan Sun. In addition, she said, the committee could request the Interior Department's inspector general to investigate the Mohegan deal for possible wrongdoing. 

A spokesman for the investors in Mohegan Sun, who include Sol Kerzner, the international gambling mogul who developed Sun City in South Africa, declined comment on McCain's request for hearings. 

Mark Brown, chairman of the Mohegan Tribal Council, also declined comment. 

The investors, known as Trading Cove Associates, have said they complied with all applicable laws. Brown has previously maintained the tribe got a good deal in its partnership with Trading Cove. However, one former top tribal official, Carlyle Fowler, disagreed. He said the tribe overpaid Trading Cove by as much as $450 million. 

One current tribal official, speaking on condition of anonymity, said the tribe was forced into paying more than the congressional limit because the only alternative was litigation against Trading Cove, and that was deemed untenable from a business point of view because it would entail years of delay in Mohegan Sun's ongoing $1 billion expansion. 

That official said the tribe's former chairman signed away all of its development rights in 1993 at a time when the tribe had little money and the chairman was eager to solidify a deal. 

The federal government's role in protecting tribes from making agreements that are too lucrative to their non-Indian partners was evaded in the Mohegan case when Trading Cove fragmented the deal into components, one for a casino and another for a hotel, according to an examination of the deal. 

Last month, Kevin Gover, the former head of the Bureau of Indian Affairs, became the first government official at the time of the Mohegan deal to say the government was outmaneuvered by Trading Cove. "There's no question the deal was structured to avoid federal review," said Gover. 

The Mohegan deal came up yesterday as the Indian Affairs Committee met to consider the nomination of Neal McCaleb to succeed Gover as head of the Bureau of Indian Affairs. 

McCaleb, a top state transportation official in Oklahoma, said in an interview that questions about profits received by non-Indian investors belonged with the National Indian Gaming Commission, which reviews such tribal-investor deals. 

"It's their problem, not mine," he said. 

Monte Deer, chairman of the National Indian Gaming Commission, declined comment. Deer has also declined to release numerous documents on file with the commission concerning the Mohegan deal. 

The Senate Indian Affairs Committee oversees the commission as well as the Bureau of Indian Affairs. The commission's former general counsel, Barry Brandon, ruled in 1998 that its jurisdiction over the Trading Cove-Mohegan agreement could not be stretched to cover both components in the fragmented deal. Others at the commission disagreed and warned the deal gave excessive profits to Trading Cove. 

While the Senate begins to examine the Mohegan deal closely, another is in the works between a group of non-Indian investors and the Nipmuc Indians of Massachusetts. 

The Nipmucs are already at least $2 million in debt to investors who are paying salaries to tribal council members and their advisers, according to documents. 

But yesterday McCaleb hinted he might upset those plans by reversing a Clinton administration decision to recognize the Nipmucs as a tribe, a designation that carried with it the right to operate a casino. Recognition of the Nipmucs came in the very last hours of the Clinton presidency, conferred by Michael J. Anderson, a political appointee then serving as head of the BIA. Anderson left his post at the conclusion of his term for a job lobbying on behalf of gaming tribes. 

McCaleb pointed out that Anderson's recognition of the Nipmucs came over the objections of the bureau's staff of professional historians and genealogists, which concluded the group includes many descendants of Indians but nevertheless did not qualify as a tribe because it lacked the necessary cohesiveness of community. 

Anderson's decision -- along with many other last-minute Clinton decisions -- became the subject of a procedural freeze instituted by the Bush administration on its first day in office. 

McCaleb, therefore, now has the right to reverse Anderson's decision -- and thereby change the fortunes of the investors who envision a Nipmuc-owned casino on the scale of Mohegan Sun and Foxwoods, each of which now receives more than $1 billion in annual revenue. 

"We're going to go back to the staff who recommended against the recognition and look at what they had to say," said McCaleb, whose nomination received the hearty endorsement of several senators on the committee, although no vote on his confirmation was taken yesterday. 

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