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Benjamin Spillman
 

Unhappy partners, creditors sue Moulin Rouge developers

31 July 2008

LAS VEGAS, Nevada -- People trying to revive the former Moulin Rouge casino hotel near downtown Las Vegas will need to overcome more than a blighted neighborhood and battered credit market to succeed.

They're also facing lawsuits from disgruntled business partners and alleged creditors who say Moulin Rouge Development Corp. owes hundreds of thousands of dollars for old loans and busted deals.

In Clark County alone, there are currently five active lawsuits against the company and its top executives, including one by a man who claims he is a 25 percent partner and expects to share in the proceeds when and if the $500 million redevelopment project gets off the ground.

"They don't talk to me anymore right now," said Michael Glenn Jr. of Chicago about Moulin Rouge partners Dale Scott and Chauncey Moore.

Glenn says in 2005 he purchased a 25 percent stake in the project on Bonanza Road. "I think they figure if they ignore me, I am going to go away. It doesn't work that way."

Moore and Scott did not respond to interview requests made through a spokesperson for the company.

In an e-mail Scott wrote: "We will not comment on the lawsuits other than to say that they are not valid claims, and that is why they are in court. However, like piranhas, those that smell the potential success of the Moulin Rouge will do anything they can to stop its progress."

An attorney for the Moulin Rouge said one of the lawsuits, filed by plaintiff John Whisenant, deals with a loan that had an unreasonable interest rate. The attorney, Erika Pike Turner, said the original loan of about $250,000 has ballooned to more than $1 million with interest in less than a year under a contract she said is not legally valid.

"They don't dispute they owe him the principle amount," she said. "We are hoping we can work out something."

Whisenant's attorney, Kurt Bonds, defended the deal, which included interest of $2,667 per day.

"Whatever they negotiated, they negotiated," Bonds said. "My client gave them the money, they used it, they haven't (given) it back."

In the case by Glenn, a real estate developer, Glenn says he paid $250,000 for a stake in the company.

He said a third party introduced him to Moore and Scott and that he was happy to invest in their plan to develop a resort on the site of the first racially integrated casino in Las Vegas.

"I liked pretty much everything about it," Glenn said.

Although Moore and Scott have presented a number of different proposals for the site, the basic idea has remained the same. The men say they want to revive the spirit of the Moulin Rouge as it was during its brief life in 1955 -- a hip hangout for black and white gamblers, revelers and performers.

At the time, Las Vegas was segregated and the Moulin Rouge was a place where performers such as Frank Sinatra, Sammy Davis Jr., George Burns and others would mingle, sing, dance, drink and gamble.

The project appears to have broad support in the community. About 50 residents turned out in support for it at an April 3 meeting of the Las Vegas City Council. The council voted to approve three procedural items the developers needed for the site to be able to host a resort.

Councilman Ricki Barlow, who represents the area that includes the Moulin Rouge, said support for the project hasn't waned since April.

"It has a lot of rich history," Barlow said of the project. "It will drive more redevelopment and development efforts in that area."

Glenn said he thought he was buying a stake in that optimistic vision. But so far that hasn't been the case.

He said Moore and Scott have avoided contact and didn't include him in a decision to bring in another company to steer the project. The company, Republic Urban Properties, is a real estate development firm that specializes in urban revival and has a $4 billion property portfolio in California, Washington, D.C., and other states.

"They keep telling me one thing and doing another," Glenn said.

Michael Van Every of Republic Urban said he had no comment on the lawsuits.

In another case, Bank of America alleges Moulin Rouge Hotel and Casino owes about $12,000 for banking and financial services. Attorneys for the plaintiff did not return a call for comment.

Another case by plaintiff Siavelis Construction Management Services says Moulin Rouge officials owe more than $10,000 for services. There is also a lawsuit by plaintiff Kenneth Black who says he loaned the firm more than $10,000.

Glenn's lawsuit was filed in March 2006, and is the oldest among the five active cases. The most recent is the case by Bank of America, bearing a court filing stamp dated July 1.

Glenn says his lawsuit is a way to protect his stake in the outcome, which he said he hopes is a prosperous resort.

"If it is going to be a successful project, I might as well stay in," he said.