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Arnold M. Knightly

Harrah's may face more heat

28 January 2008

and Joan Whitely

LAS VEGAS, Nevada -- The legal troubles involving Harrah's Entertainment room renovation problems seem to be worsening.

The Clark County Fire Department last week sent its fire inspection findings and recommendations, stemming from investigations into improper remodeling at three of the company's hotel properties and a warehouse, to the criminal division of the district attorney's office.

The file, which reviewed remodeling work at the Rio, Harrah's Las Vegas and the Flamingo, was sent to the district attorney on the recommendation of the Fire Department's civil legal counsel.

It is the first time in at least 12 months that county fire prevention officials have asked criminal prosecutors to review a case.

"I'm doing what I believe is the right thing, given the circumstances we've discovered through many different inspections," Deputy Fire Chief Girard Page said.

The deputy chief defended the length of time it took his staff to prepare the file. In mid-December, Clark County said in a statement that charges in connection with the controversial hotel remodeling projects were "imminent."

The Fire Department's move comes five weeks after county building officials issued 17 misdemeanor citations against two people for their roles in the remodeling projects at the Rio and Harrah's Las Vegas. An additional citation was issued for work done at a warehouse.

Page declined to say if the longer preparation time by the Fire Department meant that charges more serious than misdemeanors are possible.

Harrah's Entertainment did not return repeated phone calls for comment.

Page heads the county Fire Department's fire prevention bureau, which is responsible for enforcing fire-related codes. Page assumed the post in February 2007, and said he doesn't have firsthand knowledge of cases the bureau may have sent to criminal prosecutors before his tenure.

Page described the Harrah's Entertainment file now before prosecutors as lengthy.

"There's a lot of documentation ... because it involves three different properties and lots of different companies" that did various contracted work.

The fire prevention bureau followed the advice of its legal counsel in the district attorney's civil division, to have criminal prosecutors review it, according to Page. "I think it's warranted given the complexity of issues."

The file includes fire inspection reports, which are public records. It also contains documents that are not public, such as the bureau's "review of the circumstances and our recommendations to the D.A.," Page said.

It is up to the district attorney's office to make any of the latter content public, Page believes. "I don't want to cross that line prematurely," the deputy chief said. "If I share them right now, I lose my privilege to work with the D.A."

Clark County District Attorney David Roger indicated the filing itself was unusual in that the office "doesn't receive a lot of cases from the Fire Department that aren't arson-related."

George Ogilvie III, a managing partner with the law firm McDonald Carano Wilson, said turning over a case involving just building code violations to the district attorney was "highly unusual."

"I can't think of a time that I have heard the Fire Department referring violations of the code to the DA's office," said Ogilvie, who works in construction litigation.

The Fire Department usually issues notices telling the contractor or owner to fix building code violations before issuing certificates of occupancy.

Inspections of the three hotel properties since the fall have yielded evidence of fire hazards, the Fire Department's reports show. Hazards detected included a lack of fire caulking -- a vital and required measure to slow the spread of fire -- in various remodeled spaces at the Rio and Harrah's on the Strip.

Fire and building division inspectors examined the hotels after the Review-Journal began reporting in early October on allegations of undocumented and substandard remodeling at the Rio.

At the Rio, inspectors documented holes in concrete floors that weren't properly sealed against fire, as well as reconfiguration of an entire Ipanema tower floor from conventional rooms to enlarged suites. The floor's makeover took place without required permits or inspections.

At Harrah's Las Vegas, inspectors documented unapproved changes in electrical wiring, defects in fire dampers and malfunctioning sprinkler heads in certain rooms of its guest towers.

A carpenter who had worked at the Flamingo also contacted the Fire Department in early December to report he had been asked to cannibalize equipment on one guest floor that controls door closures during a fire. His contact generated inspections at the Flamingo.

Gaming regulators are not involved in the investigation, although Nevada regulators said they will look at all of the completed reports, including ongoing independent audit reports by the county and Harrah's, to determine if any actions should be taken against the gaming company or any of its executives.

To date, almost all of the remodeling problems appear to have occurred in the hotel areas of the resorts.

New Jersey gaming investigators and regulators said they also are monitoring developments in Las Vegas.

Harrah's owns four properties there -- Bally's, Caesars, Harrah's and Showboat -- with the Harrah's Atlantic City undergoing a $550 million renovation and expansion.

Peter Aseltine, spokesman for the New Jersey Division of Gaming Enforcement, however, said investigators "are not aware of any construction issues involving Harrah's expansion project in Atlantic City at this time."

Regulators' interest in the case could increase in New Jersey, however, if any charges are brought against any Harrah's employees in Las Vegas, New Jersey Casino Control Commission spokesman Dan Heneghan said.

"Certainly, if there were allegations of some impropriety, the company could be under increased scrutiny if the conduct in any way undermined their suitability for their license," Heneghan said.

Harrah's also has three properties and a fourth under construction in Mississippi, but gaming regulators there declined to discuss the Las Vegas investigations.

Harrah's may face more heat is republished from