The federal government has seized a bank account with $10.1 million in gambling revenue from Pojoaque Pueblo.

The move is just the latest turn in a yearslong dispute between the state of New Mexico and the pueblo over the share of earnings the state receives from Pojoaque’s casinos north of Santa Fe.

The tribe set aside the funds after its previous gambling agreement with the state expired in 2015. The U.S. attorney at the time allowed the tribe to keep its casinos open without an agreement in place as long as Pojoaque Pueblo would abide by a few conditions. That included a requirement that the tribe place the same share of proceeds it would have been required to turn over to the state into a bank account until a legal battle over the gambling compact was finally resolved.

The tribe ended up signing on to a new compact with the state last year, but Pojoaque Pueblo’s leaders and the New Mexico government have remained at odds over who should keep the money that piled up during the two-year dispute.

Settling that argument for now, the U.S. Department of Justice confirmed Friday it had deemed the money to be proceeds of illegal gambling and filed in federal court to begin forfeiture proceedings and resolve all claims for the money.

“The United States has now initiated a civil forfeiture process to address the impasse that has arisen between the state and the pueblo,” a spokeswoman for the U.S. Attorney’s Office said Friday.

Pojoaque Pueblo officials accused the federal government of violating an agreement with them in a move they said was meant to punish the tribe and maintained they are not required to pay the state a share of revenue earned when there was no gambling compact in place.

Pojoaque has instead sought to keep the money for the needs of the tribe and to promote economic development.

“I am disappointed that the Department of Justice has chosen to pursue this course of action,” Pojoaque Pueblo Gov. Joseph M. Talachy said in a statement late Friday. “The money in this account by law should help provide food, shelter, education and other basic necessities for the Pueblo’s people, including funds to fight the overwhelming opioid epidemic that is devastating the Pueblo.”

State officials have argued that allowing Pojoaque to keep the money would amount to giving the tribe a tax holiday for the two years it was not covered by the gambling compact.

And the dispute over the compact happened to coincide with a series of financial crises for the state that sent legislators scrounging for every few million dollars they could find.

Since 1997, tribes in New Mexico have entered into compacts with the state in exchange for what amounts to a monopoly on table games and the right to operate slot machines along with racetracks and fraternal and veterans organizations.

The compacts specify the games that tribes can offer in their casino operations, as well as the share of revenue they must pay to the state government.

A 2005 compact that required tribes, including Pojoaque, to pay 8 percent of gross gambling revenue to the state expired in 2015. Most of the tribes operating casinos under that compact signed on to a new agreement.

But Pojoaque Pueblo’s representatives rejected the terms offered by Gov. Susana Martinez’s administration, accusing state officials of seeking an unreasonably large share of gambling revenue and of negotiating in bad faith.

The tribe went to court, contending it should be allowed to negotiate a new compact with the federal government rather than with the state.

The U.S. Attorney’s Office took the position that the tribe would be involved in illegal gambling if it continued to operate its casinos, Buffalo Thunder and Cities of Gold, without a state compact.

But then-U.S. Attorney Damon Martinez agreed to hold off on cracking down on Pojoaque’s casinos while the tribe made its case in court.

Martinez wrote that allowing the casinos to remain open on the condition that the tribe paid the usual share of revenue into an escrow account would at least maintain the status quo, protect the interests of residents in the Pojoaque Valley, shield other tribes from an unfair competitive disadvantage and safeguard funds that would have gone to the state government.

Forcing a tribe to close its casinos altogether would be a highly unusual step for the federal government, but would not have been without precedent.

Then-U.S. Attorney John Kelly won court orders in the mid-1990s to seize slot machines and freeze the bank accounts of casinos operated by the Mescalero Apache Tribe in Southern New Mexico and Jicarilla Apache Nation in Northern New Mexico during a dispute over gambling compacts around the state.

New Mexico’s dispute with Pojoaque never came to seizing slot machines. But state gambling regulators threatened not to renew licenses for some vendors supplying and serving the pueblo’s casinos while the tribe did not have a compact in place.

Courts shot down Pojoaque Pueblo’s case. Amid the mounting pressure from state regulators, the tribe signed on to the new compact in 2017, which its representatives say calls for paying the New Mexico government a bigger share of revenue.

The two sides could not agree on what do with the money set aside during the dispute, however.

The tribe had entered into a trust agreement with an attorney at the law firm Morgan Lewis who has overseen the funds and provided monthly reports to both Pojoaque Pueblo and the U.S. attorney.

According to court filings, the trust contained $10,128,847.42 at the end of January.

Contact Andrew Oxford at 505-986-3093 or aoxford@sfnewmexican.com. Follow him on Twitter @andrewboxford.

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