Applicants' unsavory links 'scrubbed,' investigation finds

Applicants' unsavory links 'scrubbed,' investigation finds
By Brad Bumsted and Mike Wereschagin
TRIBUNE-REVIEW


HARRISBURG — Nine days after then-Gov. Ed Rendell signed the law legalizing casinos, a convicted felon with alleged mob ties formed a company to build a casino for which he had no license on land he did not own.

He bought the land six months later, in December 2004, about the time the state's Gaming Control Board met for the first time. He broke ground on the $400 million casino in July 2006, six months before the first $50 million licenses were awarded.

"You would have to be, I guess, pretty rich or pretty sure that you were going to get a license if you were going to do that," a former investigator for the gaming board told a state grand jury, according to a report it released last week.

The person who was pretty sure, pretty rich or both was Scranton millionaire Louis DeNaples, former owner of Mount Airy Casino Resort in the Poconos.

DeNaples could not be reached. A spokesman for Mount Airy said the casino and officials named in the grand jury report declined comment.

The report provides a glimpse into the inner workings of the gaming board, as officials worked at a frantic pace to award 11 casino licenses in 2006 and make good on Rendell's campaign promise of property tax relief.

The report accuses the board of putting casino applicants ahead of the public. It alleges that controversial information about applicants was "scrubbed" from reports and that supervisors thwarted investigators as they looked into casino owners' backgrounds.

Investigators checking into Presque Isle Downs in Erie found casino associates with alleged mob ties and convictions for gambling, tax evasion, theft and murder. All of it was left out of Presque Isle's final suitability report. Supervisors told investigators not to interview certain employees, blocked requests for information and, after the license was awarded, told them to back off because if they found anything else, "it would make the board look bad," according to the grand jury report.

A spokeswoman for Presque Isle could not be reached.

The grand jury recommended no criminal charges, but said DeNaples' casino bid "was treated differently almost from the start."

According to the report, Donald Shiffer, a gaming board lawyer assigned to vet one of DeNaples' competitors, took an early and persistent interest in DeNaples' application.

Though repeatedly told he wasn't assigned to look into Mount Airy, Shiffer tried to insert himself into DeNaples' licensing process, according to the grand jury. Shiffer exchanged dozens of phone calls with DeNaples' daughter, Lisa DeNaples, who now owns the resort, according to the report.

Board member Ray Angeli brought Shiffer into closed-door meetings about Mount Airy. Witnesses told the grand jury Shiffer would hand notes to Angeli, and whisper in his ear during the hearings. "Everybody knew he was there for Louie DeNaples," according to grand jury testimony.

Angeli could not be reached.

Shiffer left the gaming board in August 2007, eight months after DeNaples got a license. He claimed his practice would be "absolutely unrelated to gaming," and went to work for a law firm representing Mount Airy — even getting an office in the casino, the grand jury said. He became the casino's vice president and general counsel.

The Mount Airy spokesman reiterated there would be no comment from anyone at the casino.

The grand jury cites nine individuals, mostly lawyers, who left the board to work for casinos or law firms representing them.

The report shows the board operating in a gray area, "a landscape between something criminal and something inappropriate," said Christopher Borick, a political science professor at Muhlenberg College in Allentown.

Although the grand jury makes 21 recommendations to improve the board, "the problem is it's after the fact — the genie is out of the bottle," Borick said.

One license remains unawarded, and it must go to a harness race track; another, for a stand-alone casino, may be available but it's tied up in litigation.

"I don't think it's ever too late to get it right," said Rep. Kerry Benninghoff, R-Centre County.

Sen. Jane Orie, R-McCandless, who is filing a bill to address the grand jury recommendations, said the information the panel unearthed could be used against casino owners in annual license renewals and potentially, in new appeals by losing applicants.

The hurried atmosphere at the control board to license casinos by December 2006 was aimed at getting property tax relief rolling -- a key initiative of Rendell's. His hand-picked chairman, attorney Tad Decker, drove the staff toward a nonnegotiable date for license awards.

It was in this climate that Louis DeNaples won a license despite a 1978 felony conviction for fraud.

The state's gambling law prevented barring people with a conviction more than 15 years old, though the grand jury said the board still should have considered DeNaples' conviction. In DeNaples' application, top board officials deleted information about alleged ties to organized crime, infuriating casino investigators, according to the grand jury.

DeNaples was charged with perjury in January 2008, accused of lying about reputed mob connections. The charges were dropped in return for DeNaples bowing out of the casino.

Last week, the perjury charges against DeNaples were expunged in Dauphin County court.