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Court Documents Detail Aladdin Dispute

LAS VEGAS – Feb. 7, 2002 --A disagreement over whether to publicly release warnings about the poor financial status of the Aladdin led property executives to fire the megaresort's former chief executive officer, according to state court documents.

Former Aladdin Chief Executive Officer Richard Goeglein was fired by the Aladdin's board of directors on Sept. 21, one week before the $1.05 billion Aladdin filed for bankruptcy protection in September.

The firing came one day after the Aladdin filed a report with the federal Securities and Exchange Commission indicating that an Aladdin bankruptcy filing was likely, and that the property's cash on hand and ability to generate additional cash was not sufficient to permit the hotel-casino to stay open.

Goeglein later filed a lawsuit against Aladdin Gaming Holdings and Aladdin Holdings, parent companies of Aladdin Gaming LLC, the operator of the Aladdin hotel-casino and the entity that filed for bankruptcy protection Sept. 28.

Goeglein's lawsuit attempts to force the Aladdin and its owners to pay him $1.2 million in termination damages provided for in his 1998 employment contract.

The former executive's lawyers said Wednesday that his employment agreement required that Goeglein receive the payment if he was dismissed without triggering one of four specified allowable causes: a felony conviction, loss of his gaming license, misappropriation or embezzlement of company funds gross mismanagement.

"He wants the $1.2 million, but he also wants to remove the cloud over his name," said Jim Jimmerson, Goeglein's lawyer. "He wasn't fired for cause, according to his employment agreement."

Goeglein agreed with his lawyer.

"The principal owners made a decision that they didn't need my services," he said. "All I ask is that they live up to their agreement."

Aladdin Chief Operating Officer Bill Timmins, a member of the board that fired Goeglein, noted in a affidavit that the former chief executive was terminated after failing to follow instructions regarding the report Becker filed with the SEC.

"With respect to the (SEC form) filing, ...the board directed that drafts be circulated to members for their consideration and revision," Timmins noted. "The members of the board assured Goeglein that they would be available by phone, electronic mail and facsimile to review (the SEC form)."

Timmins noted that when the board reconvened later on Sept. 20, Goeglein informed the members that the SEC form had been signed and filed.

"I was at the Aladdin at all relevant times on September 20 and I was available to review the (SEC form)," Timmins' affidavit noted. "However, I was never given that opportunity. I learned subsequently that, in contravention of the board's directive, no board member other than Goeglein received the draft."

The board wanted to review the SEC form before it was submitted to make sure that Aladdin minority owner London Clubs International would be able to make a coordinated similar announcement to the London Stock Exchange, Timmins wrote.

He also noted that Jack Sommer, who directs the Sommer Family Trust, the Aladdin's majority owner, told members of the board that Goeglein had placed a call to a lawyer for the Aladdin's lenders.

Goeglein told the lawyer that the Aladdin board refused to file for bankruptcy protection and that Aladdin ownership was dysfunctional, Timmins' affidavit noted.

Goeglein's version of events contradicts Timmins' filing in several ways. He noted that concerns about the need to notify the London Stock Exchange at the same time as the SEC were moot.

"The London market had already closed before the afternoon (board of directors') meeting due to the time difference between London and Las Vegas," he noted.

Goeglein also refused to accept blame for filing the SEC report, noting that general counsel Patty Becker made the decision to file the SEC form.

"Upon the very strong advice of outside counsel and prior to the afternoon board meeting, Patty Becker moved forward with the filing to ensure the company did what was appropriate and expected under SEC regulations and by Nevada Gaming Control officials," he wrote. "I was aware of the action and was in accord with its necessity, although I did not direct or order the action to be taken."

Goeglein's affidavit also said the telephone call with the lenders' lawyer cited in Timmins' affidavit was not true.

"I can state without reservation that I did not place such a call; I did not participate in such a call; and I have no knowledge whatsoever as to the statements attributed to me," he noted.

Timmins and Becker were unavailable to comment; Aladdin spokesman Fred Lewis said property policy forbids comment on topics in litigation or on personnel matters.

Goeglein's lawsuit also attempts to void a noncompete clause in his employment deal which could prevent Goeglein from working for another casino operator with Las Vegas operations.

The noncompete clause is triggered if Goeglein is dismissed for one of the four aforementioned causes.

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