SEARCH NEWS:

 

Court Faults Harrah's for Extending Credit to Bankrupt Gambler

``The 8th U.S. Circuit Court of Appeals in St. Louis ruled Monday in favor of the trustee handling Murray Armstrong's involuntary bankruptcy. It said Harrah's Casino in Shreveport, La., had information `that should have warned it' about Armstrong's financial troubles. The court said the casino knew Armstrong was `in over his head.'

``Last July Armstrong began serving 55 years in prison for his 1997 conviction on 11 theft charges from Cleveland County.

``...Armstrong was accused of swindling residents of Lincoln, Cleveland and Bradley counties out of an estimated $6 million through phony timber contracts and trust transactions. Prosecutors determined that most of the money Armstrong embezzled went to pay off gambling debts at several casinos that had granted him a short-term line of credit.

``...Beginning May 5, 1995, Harrah's Casino in Shreveport allowed Armstrong to sign markers in exchange for gambling chips. His line of credit began at $15,000 and reached $100,000 on Aug. 12, 1995. During that year, he lost $211,400 at the casino, the 8th Circuit said.

``The ruling said the casino checked on Armstrong's bank balance three times as his credit authorization inched toward $100,000 and that the balance was between $4,000 and $6,000 on a couple of occasions.

``...A few days later, Armstrong spent $16,800 in cash and was issued $126,000 in markers at Harrah's.

``...The U.S. District Court reversed the good faith ruling and the casino appealed, contending it had no reason to suspect Armstrong was insolvent.

``The casino said it had information that Armstrong spent $41,900 in cash at Harrah's during 1994 and that he had a net loss of $14,800 to show for those wagers. `Information that a person has recently gambled away large amounts of money is not an indication of financial stability,' the 8th Circuit said.

" ... Harrah's was in actual possession of information that should have warned it that Armstrong was in financial straits," the 8th Circuit said. The court noted that the casino was aware of a federal tax lien against Armstrong, but never investigated the circumstances..."

< Gaming News