SEARCH NEWS:

 

Missouri Regulators Say They'll Revoke Licenses of Station Casinos

The Commission is holding a two-day public hearing into bonuses that Station paid its former lawyer, Michael Lazaroff. Lazaroff, who was a partner in a major St. Louis law firm and Missouri's top gaming lawyer, pled guilty in June to federal charges of fraud and election law violations.

The fraud charges stem from his failure to share with his firm about $500,000 in bonuses from Station, and from his submission of false bills to clients, including Station. As part of a plea bargain, Lazaroff, whose sentencing is set for Oct. 3, agreed to cooperate with the Commission's investigation of the bonuses.

Station's top two officials - chief executive Frank Fertitta III and chief financial officer Glen Christenson - were among those subpoenaed to testify today. Last night, however, the company announced that at least seven of the executives would not testify.

"Michael Lazaroff is an admitted and repeated liar," Charles W. German, a lawyer for Station, said in last night's statement. "He now has every motive to lie in an effort to reduce his sentence. We simply won't be a party to that kind of proceeding."

Station is a Las Vegas company that dominates the locals market there. But it's also invested about $500 million in Missouri, where it owns the largest gaming complex in Kansas City and one of the major casinos in the St. Louis area.

The company has operated in Missouri since riverboat casinos first opened in the state in May 1994. Until the last year, Station had a good relationship with the Commission, which usually granted its requests for expansions.

But that relationship has turned into war, with the Commission this morning invoking the ultimate sanction against the company. The trouble in Missouri could also have implications in Nevada, because state regulators typically pay close attention when licensees run afoul of authorities in other jurisdictions.

Station's problems began with its effort to buy the Flamingo Hilton, a smaller competitor in Kansas City. The Commission pressured Hilton Hotels to sell the Flamingo after improper payments were disclosed in connection with Hilton's getting approval for a casino from Kansas City authorities.

In processing Station's application to buy the Flamingo (which was ultimately sold to Isle of Capri Casinos), the Commission became concerned about the bonus payments to Lazaroff. Its lengthy investigation has apparently focused on whether Lazaroff had improper contacts with Robert Wolfson, who until last year was chairman of the Commission.

Jason Ader, the senior gaming analyst at Bear Stearns, reported from Kansas City this morning that Lazaroff testified that he did not use any of the Station bonus money to pay off public officials, including the Commission. Lazaroff testified all morning.

The questions being asked of Lazaroff "are heavily weighted against Station Casinos," Ader reported.

In addition to a preliminary order revoking Station's licenses, the Commission also moved to revoke the gaming licenses of Fertitta, Christenson and some of the other Station executives. The company has 30 days to request a hearing on the revocations. If they stick, Station could then appeal to federal court.

Also today, Ader reported, the Commission indicated it would deny a licensing application filed by William W. Warner, Station's vice president of finance. Warner is a key member of a management group that Station said in July would buy its two Missouri casinos.

Station said then that it wanted to sell the Missouri properties in order to concentrate on continued expansion in Las Vegas. But its sudden announcement that it would leave the Missouri market was believed to be related to the Lazaroff investigation.

In the same July 20 announcement, Station also disclosed that Fertitta and Christenson had recently received subpoenas to testify before a federal grand jury in the western district of Missouri. The grand jury is believed to be investigating Lazaroff.

Ader said in his update this afternoon that if the Warner group is unable to buy the Missouri casinos, other companies are likely to bid for them.

Lazaroff's firm had represented Wolfson in various business deals before Wolfson became chairman of the Commission, when the Commission was formed in 1993. The Las Vegas Sun reported that Lazaroff testified this morning that if it were not for his relationship with Wolfson, Station probably wouldn't have received a gaming license in Missouri.

"His relationship with Wolfson probably got Station a hearing, though Station then won a license on the merits," the Sun said in paraphrasing Lazaroff's testimony.

< Gaming News