A New Band of Tribal Tycoons

By Frederick Ungeheuer/Portland

The renovated Victorian warehouse in the Old Port section of Portland, Me., seems an unlikely setting for an investment firm. Instead of having spacious wood-paneled boardrooms adorned with portraits of famous financiers, the modest offices of Tribal Assets Management feature bare brick walls lined with photographs of Indian chiefs in full headgear. But when Tribal Assets speaks, the Passamaquoddy, Chippewa and Cherokee tribes listen. The company has handled investments worth $250 million for Indians across the U.S., bringing Wall Street wizardry to the world of tribal finance.

Such expertise is badly needed. A large number of American Indians still live under depressed conditions, and unemployment on some reservations runs as high as 60%. In recent years, though, several tribes have won multimillion- dollar settlements of long-standing claims against the U.S. and state governments for illegally seizing land. Most tribes shared the settlements among their members, but a few frugal, forward-looking chiefs sought more profitable ways to spend their people's windfalls.

That is where Tribal Assets comes into the picture. The idea for the 3 1/2- year-old firm came from Thomas Tureen, 42, a graduate of Princeton College and George Washington University Law School, who took up the cause of Indian rights. In a ten-year court fight on behalf of the 4,200 members of Maine's Passamaquoddy and Penobscot tribes, he won an $81.5 million land-claim settlement in 1980. The Indians then asked him to become their financial adviser. Recalls Penobscot Chief Timothy Love: "We just did not want to dissipate all our money the way some other Indians have with their settlements."

Under Tureen's guidance, the Maine Indians used a third of their settlement to repurchase 300,000 acres of lost forest land. Another third was put into a trust and now provides each Passamaquoddy and Penobscot household with a $1,000 to $1,200 annuity. To help the Indians invest the remaining $27 million, Tureen set up Tribal Assets in partnership with Daniel Zilkha, 44, a Princeton friend and former Wall Street investment banker. Because of Zilkha's connections in the financial community, says Tureen, "we had access to capital markets in a way that Indians would never have had on their own." Says Zilkha: "These tribes were sitting on one of the largest pools of private investment capital in Maine. They were a potential conglomerate."

Their first investment was $2 million to acquire a local 5,000-acre blueberry farm. Its products are now sold under the Native American Foods label in New York City gourmet shops. After the farm venture, the Indians bought other enterprises on or near their reservations, including two radio stations, an ice-skating arena, a fish-processing plant and factories that turn out audiocassettes and prefabricated homes.

Their biggest investment, though, was off the reservation. With an assist from Tribal Assets, the Passamaquoddies paid $16 million for New England's largest cement factory, the Dragon Cement plant in Thomaston, Me. Explains Zilkha: "The Indians want to upgrade their position in society as well as make money." One of their proudest moments came when a group of them toured their new factory. Says former Passamaquoddy Council Chairman John Stevens: "We almost couldn't believe the huge buildings. So many people working for us, calling us 'sir.' It was overwhelming."

The success of the Maine Indians has impressed other Indian tribes. In the past two years Tureen has spoken before more than 15 tribal councils, sometimes arriving for powwows in his Beechcraft Bonanza plane. In 1985 Tribal Assets helped the Lac du Flambeau Chippewa Band in Wisconsin buy Simpson Electric for $23.7 million. Another client is the Eastern Band of Cherokees, whose 6,400 members live amid the green peaks of North Carolina's Great Smoky Mountains. Last September Tureen and Zilkha helped the Cherokees buy Carolina Mirror with $1.5 million of their own money and $32 million raised through issuing bonds on Wall Street. The takeover was not hostile. The Cherokees may once have been a fierce tribe, but neither they nor Tribal Assets is yet ready to become a corporate raider.