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Gaming Board Rebukes Station Official

CARSON CITY, NEVADA – Aug. 22, 2000 -- The state Gaming Control Board says casino executive Mark Brown orchestrated an undercover campaign to discredit Clark County Commissioner Lance Malone to punish him for his vote in favor of a rival casino and then lied and used threats to hide his involvement.

The board filed a six-count complaint Monday against Station Casinos seeking a fine that could range up to $600,000 for failing to adequately supervise Brown, who is executive vice president of government affairs for the gaming company.

The complaint, drafted by Senior Deputy Attorney General Jeffrey Rodefer, reveals new details in the controversy that has been bubbling since January when Malone changed his mind and voted to permit construction of a neighborhood casino by the Boyd Gaming Group in Spring Valley. Station Casinos had opposed the project since it owned land near the Spring Valley site.

In October Station Casinos contributed $40,000 to Malone's re-election campaign, with Palace Station, Boulder Station, Texas Station and Sunset Station each putting up $10,000. Then in November Station raised another $80,000 at an event at the Sunset Station for the county commissioner. But in January Malone turned around and voted against the company on the zoning issue.

Brown then hatched a plan for an anonymous campaign flier questioning Malone's honesty. During the course of the controversy, Brown lied to FBI and his superiors and threatened Malone with an FBI investigation, the gaming complaint says.

Station Casinos has 20 days to answer the complaint and can ask for a hearing to contest the allegations. Brown is now seeking to be licensed by the state as a key employee of Station Casinos.

Station issued a statement saying it "erred in this matter, and we apologize. We look forward to working with the (gaming control) board to bring closure to this matter."

Brown could not be reached for comment Monday or this morning.

The U.S. attorney's office and the Clark County district attorney's office have declined to prosecute Brown. The Secretary of State's office is still investigating a complaint that distributing anonymous campaign material may be a violation of the law.

That complaint was filed against Brown by Mike Sullivan of Paladin Advertising. After Malone's voting flip-flop, Brown met with Tom Skancke, who runs a public relations firm that is on a $5,000 a month retainer from Station Casinos.

They agreed on a two-pronged campaign -- first to help a citizens group in Spring Valley to appeal the decision of the Clark County Commission and second to "educate the voters" on the 'lack of trustworthiness" of Malone through newspaper advertisements, direct mail, bumper stickers, billboards and an Internet website.

On Feb. 10 Station Casinos closed a deal to buy 90 acres for a new casino project just a few miles from Boyd's proposed casino site. The land purchased by Station Casinos is grandfathered in for the purposes of casino construction in the Spring Valley township.

Station Casinos paid Skancke $13,080 for postage fees incurred by Passkey. And Station paid $17,458 for legal services provided by Hayes.

Four days after that, Brown met with Malone at Malone's request at the Palace Station. Brown warned Malone about the political flier that would be distributed if he did not withdraw from the election. Malone said he interpreted Brown's statement as a threat.

The mailer "You Just Can't Trust Lance Malone" was sent to 39,000 residents in Malone's district on March 9. It said Malone took more than $100,000 in contributions from Michael Gaughan, Barbary Coast, Gold Coast, Triple Five Developments, Station Casinos, Boyd Gaming, Fiesta Casino and the Hughes Corp.

In May Station Casinos completed its internal investigation, which concluded the language on the mailer could be misleading. Brown, at an investigative hearing of the state Gaming Control Board, admitted to agents that the contributions did not total $100,000 and that some of the companies identified did not contribute to the Malone campaign.

During the internal investigation by the casino, Scott Nielson, general counsel and executive vice president for Station Casinos, specifically asked Brown if the company was involved in the mailer. Brown, according to the gaming complaint, said the company was not involved but that Skancke was the responsible party.

On March 9 Brown met with Grant Ashley, special agent in charge of the FBI in Las Vegas. Brown, according to the complaint advised Ashley that based on hearsay Malone had been offered additional campaign funds by one of the developers for the Spring Valley casino and that Malone had played golf with the developer the week before the vote.

Ashley told Brown that cases of political corruption must pass a very high standard to ensure the reputations of innocent public officials were not damaged by mere innuendo and rumor. The FBI agent told Brown to carefully consider these accusations and to contact him if Brown came up with any direct information of wrongdoing.

A day later Malone filed a civil suit against Passkey claiming the campaign laws have been violated. Brown, in press statements, denied any involvement by Station Casinos. On March 11, Brown met with Malone who was wearing a hidden tape recorder.

The complaint said, "At the meeting (March 11) Brown threatened Commissioner Malone with an FBI investigation and further publicity as means to force Commissioner Malone into dismissing the lawsuit against Passkey Systems, et all." Brown also told Malone he had a meeting scheduled with the FBI and that he would "go to bat" for Malone to get the law enforcement agency off his trail.

On March 12, Malone, his wife Rosemary and his lawyer Don Campbell met with FBI agents who agreed to conduct an investigation. The following day, Malone called Brown twice at his home. The FBI monitored both calls.

"During the first telephone conversation, Brown continued to threaten Commissioner Malone to 'back off' of the lawsuit or face political repercussions," the gaming complaint said. Brown promised if the suit was dropped, the mailer would be discontinued.

During the second call, Malone told Brown he was going forward with the suit. Brown threatened a countersuit and more mailers about Malone's honesty.

On March 17, Brown was asked by FBI Agent Ashley to meet him. There were two agents present, and Ashley left the session. Brown was questioned for two hours, and he lied about his involvement and that of Station Casinos in the flier. Brown told the FBI agents he believed labor unions might be involved. Then he said Skancke was the only one responsible.

Brown also lied about his March 11 meeting with Malone until agents informed Brown they had listened to the tape recording. Then Brown acknowledged he used the threat of a FBI investigation to coerce Malone into dropping the suit. Station Casinos was subpoenaed in the Malone suit against Passkey System to produce records. All executives in Station were told to submit any documents. Brown did not reveal the company paid for the flier. Malone later dismissed the suit.

Later Station discovered an invoice for $25,000 for consulting services from Skancke. And there was a second invoice for $40,040 that included Skancke's monthly retainer of $5,000 as well as $21,440 in legal fees for Hayes.

Finally on April 11, Brown admitted his full involvement to Nielson. After that Station Casinos started an internal investigation, headed by John Pasqualotto, director of compliance for the gaming company.

Gaughan then filed suit against Brown, Skancke, Station and the Fiesta Hotel Corp., saying he was defamed by the flier. Station completed its investigation and concluded that Brown was not truthful to the executive management of the company.

The complaint said the conduct of Brown "brought discredit to the state and the gaming industry." It said the company should have known about the misconduct of Brown due to the numerous reports published in the media.

"This lack of institutional knowledge and control by Station Casinos demonstrates a failure to exercise sound discretion in supervising the activities of Brown to ensure compliance with the law and to prevent incidents that might tend to reflect on the repute of the state of Nevada and the gaming industry in violation" of state regulations.

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