SEARCH NEWS:

 

Atlantic City Roundup

ATLANTIC CITY, New Jersey — Donald Trump's casino company issued a fraudulent earnings release that led to an increased stock price, but neither he, his company nor any of the involved executives will be punished, the Securities and Exchange Commission ruled.

The SEC issued a hard-hitting press release touting that Trump Hotels & Casino Resorts is the first company ever to run afoul of the agency's crackdown on abuses of pro forma reporting. The only action it took, however, was to order Trump Hotels to "cease and desist" the practice.

"Typically we don't impose (a civil monetary penalty) on public companies on the rationale that it ultimately comes out of the pockets of shareholders, who usually have not engaged in wrongdoing and may even be harmed by wrongdoing," said Wayne Carlin, director of the SEC's Northeast Regional Office.

The SEC faulted three Trump executives for their role in issuing a 1999 third-quarter press release that failed to disclose that $17.2 million of its net revenue was due to a one-time, noncash gain. Trump, however, did inform investors of another one-time event that quarter, an $81.4 million World's Fair closing charge.

The inconsistency in the pro forma reporting is where Trump erred, the SEC said. Pro forma reporting is legal but cannot be misleading.

Pro forma results tell investors of a company's performance if certain events are included or excluded. Companies use them in earnings releases to emphasize their normal operating performance.

The SEC blamed former Trump CEO Nicholas Ribis for issuing the faulty release and Chief Financial Officer Frank McCarthy and Treasurer John Burke for preparing it. Ribis is now vice chairman and minority owner of Resorts Atlantic City, which is connected to Trump Taj Mahal.

Trump Hotels singled out Ribis in a press release announcing the SEC action, but Donald Trump would not answer questions about whether he was putting all the blame on Ribis. Trump, who was only company chairman at the time, was not named in the SEC's findings and said he then had no knowledge of the matter.

The one-time gain was the result of Trump Hotels assuming the assets of the Official All-Star Cafe at Trump Taj Mahal. Parent Planet Hollywood International, which has filed for bankruptcy protection, handed over the assets to satisfy future lease obligations.

0-0-0-0-0

After months of fuss and personal embarrassment, the next Park Place Entertainment general counsel was found qualified for a New Jersey gaming license in 60 seconds.

The Casino Control Commission, without discussion, voted unanimously to find Kim Sinatra qualified. Just seven weeks earlier, the commission referred the matter to a hearing because of an error in her divorce 10 years ago.

The Division of Gaming Enforcement said Sinatra had remarried in Florida in 1992 before her divorce in New York had been formally entered. Sinatra said she had assumed it had gone through before marrying her current husband. She told investigators that it was "dumb, a bad thing" to have done and that she was sorry and embarrassed. She promptly remarried her existing husband to make it official.

Nonetheless, the DGE recommended that the commission find Sinatra qualified. The commission instead wanted a hearing.

Seven weeks later, the commission waved the matter through without a hearing. What happened in the meantime, Chairman James Hurley said, was that the commission learned more about the matter and was satisfied there was no problem.

"If qualified by the commission, Ms. Sinatra will succeed Clive Cummis as executive vice president and general counsel of Park Place," company CEO Tom Gallagher said in a letter attesting to Sinatra's good character.

Sinatra is now deputy general counsel. Cummis, 73, is expected to retire this year.

0-0-0-0-0

It's official: By a scant $2.2 million, the Atlantic City casino industry finished 2001 with a revenue increase, keeping intact its perfect record of annual gains.

The Casino Control Commission released final results that showed the annual win at $4.3 billion, a 0.05 percent improvement over the previous year. It was a narrower gain that first reported when the preliminary December results came our earlier this month.

The 0.05 percent increase was the industry's worst ever, beating the previous low of 1.4 percent in 1991.

The year-end statistics showed a citywide slot payout of 91.97 percent, up slightly over the previous year. Table-games revenue suffered its second-worst decline ever, down 4.2 percent.

Slot-machine revenue accounted for 73 percent of the industry's total gaming revenue, the 21st straight year it's increased its share of the financial pie.

0-0-0-0-0

Caesars Atlantic City is going where few casinos dare with a new billboard that advertises "gambling."

"Gambling at its best," says a prominent board on the Atlantic City Expressway.

"Gambling is gambling. It's what we do. We're proud of it. There's nothing immoral about it," President Paul Henderson said. "Caesars is the No. 1 name in gambling and has been for decades. It's what Caesars stands for."

0-0-0-0-0

A Trump Hotels bond security is one of 59 on the "Weakest Link Global Issues" issued by Standard & Poor's. It's the only gaming company on the list.

The credit-rating agency listed those companies that have a S&P rating of CCC or lower and are either on CreditWatch with negative implications or have a negative outlook.

The $109.5 million Trump Holdings issue is supported by cash flow from the Trump Indiana riverboat casino in Gary.

Joe Weinert covers the gaming industry for The Press of Atlantic City. He can be reached at jweinert@pressofac.com.

< Gaming News