Meetings & Information


Thursday, December 12, 2013

Mass. Gaming chairman calls casino lawsuit 'completely false'

No one is questioning the Gam[bl]ing Commission's handling of the Plainridge Crime, why the information was known in April and withheld.

No one is questioning why AG Martha Coakley....

is sweeping it under the rug while grandstanding on other issues....campaigning for higher office.

Mass. Gaming chairman calls casino lawsuit 'completely false'

(NECN: Peter Howe, Boston) - Massachusetts Gaming Commission chairman Stephen P. Crosby is firing back at a lawsuit against him filed Thursday by casino giant Caesars Entertainment, contending it’s based on a "completely false" representation of how he oversees investigators whose negative findings on Caesars led Suffolk Downs to push Caesars out of a $1 billion East Boston casino plan this autumn.

The suit, filed in U.S. District Court in Boston, contends Caesars was unfairly and illegally treated at several stages in the commission’s review of its participation in the Suffolk Downs casino plan, to the point that its 5th and 14th amendment due process and equal protection rights were violated. The suit seeks to have the negative report nullified, as well as cash damages from Crosby, whom they sue both personally and in his official capacity as Gaming Commission chairman. Caesars also contends Crosby has a fatal conflict of interest because of connections to a part-owner of land where Caesars rival Wynn Resorts wants to build a casino.

In an interview taped for Thursday evening’s "Broadside with Jim Braude" on NECN, Crosby said: "This is a high-stakes business. There's big money involved, big personalities involved. There's big passions involved, and we have talked about that: There are very likely to be lawsuits coming out of this."

Caesars was pushed out as Suffolk Downs’ casino partner and 4 percent investor in the Suffolk Downs casino in October, three weeks before a key Nov. 5 vote in East Boston and Revere, after Gaming Commission investigators flagged questions about Caesars debt levels, management, and connections to a hotel partner – Gansevoort Hotel Group – with an executive allegedly linked to the Russian mafia.

In the suit, Caesars said it invested more than $100 million developing the casino plan.

"Chairman Crosby and members of the commission's staff have made untrue and misleading statements about (Caesars) and their affiliates … and tortiously interfered with plaintiffs' relationship with Suffolk Downs and right to fair consideration in the gaming suitability process. This caused and continues to cause plaintiffs to suffer reputational and economic injury." The suit also contends that Gaming Commission officials violated laws allowing them 30 days to respond to and fix problems flagged in the investigation before making them public, and assert that a consultant working for the commission concluded it would not recommend Caesars be deemed unsuitable to hold a casino license.

Saying their suitability application was handled very differently from Wynn in Everett and MGM in Springfield and others, with an insistence on a suitability hearing before voters voted on the plan – in other cases voters voted before knowing the commission’s suitability decision – Caesars lawyers from Ropes & Gray LLP argued: "Defendant Crosby has intentionally and wrongfully singled out Plaintiffs for adverse treatment relating to their protectable and legitimate interests in the fair and impartial consideration of plaintiffs’ suitability to participate as a partner in the (Suffolk) application for a (casino) license."

It appears from the lawsuit one of Caesars’ chief concerns is getting the negative report "is a nullity, entitled to no force or effect," so that it won’t create controversy in other states and countries as Caesars pursues other casino and slots parlor projects and as it tries to sell bonds and stock to investors.

"It is premised on a completely false assumption," Crosby said, "which is that I exercised some kind of control over our investigations bureau's investigation of Caesars. That's false." Crosby said the bureau, run by former prosecutor Karen Wells, operates independently of the commissioners and chooses when to report what to them as it reviews casino and slots parlor applicants.

In a prepared statement issued by spokeswoman Elaine Driscoll, the commission said: "The lawsuit filed by Caesars is without merit. The Investigations and Enforcement Bureau (IEB), comprised of seasoned investigators, acts independently to protect the public interest. The IEB is ultimately responsible for the report it presents to the Commission. The facts in that report are the basis for the IEB's recommendation. Chairman Crosby had no role in the investigation, report or recommendations. As this is now pending litigation, neither Chairman Crosby nor the Commission will comment further on this matter."

The Caesars suit also contends Crosby is fatally conflicted in his ability to fairly judge who should win the Eastern Massachusetts casino license because a former business partner and longtime friend, Paul Lohnes, is part-owner of the land on the banks of the Mystic River in Everett where Wynn Resorts wants to build the casino. The Boston Globe has reported that the Lohnes group paid $8 million for the land in 2009 and was to sell it to Wynn for $70 million, contingent on Wynn winning the casino license. That would put Crosby in the position of potentially casting a vote that determines whether his friend and onetime financial backer, Lohnes, makes millions of dollars.

But Crosby said back in August, he recused himself from participating in any discussions about what price Wynn should pay for the land, and cleared with the Ethics Commission how he should proceed. Crosby did not make that recusal public until Dec. 5, after a report in the Globe, and has said that was in part because he didn’t want to tip off the existence of a separate federal investigation into whether there is a hidden owner of the Everett land, Charles Lightbody, a Revere businessman who has been convicted of assault and identity theft and connected with a massive stolen-property ring. With Crosby recusing himself, the four other commissioners are meeting at 1 p.m. Friday to review and presumably vote on a new purchase deal negotiated by Wynn with the land owners.

"According to the Globe," Crosby said, "Wynn is negotiating it down to fair market value. He could sell the property to the casino owner; he could sell it to Wal-Mart. But he doesn’t get any premium for being the casino operator, which means me giving him the benefit is gone." Put another way, Crosby is saying the Gaming Commission will make sure the deal is changed so that how Crosby votes on who gets the Eastern Massachusetts casino license – Wynn in Everett or Mohegan Sun in Revere, successor to Caesars and Suffolk Downs as the casino developer – has no impact on how much money Lohnes makes on his land investment.

Crosby reiterated Thursday that while he was paid a salary and occasional performance bonuses during the 1983-90 period he and Lohnes worked together at a cable-television-magazine business, and sales grew significantly, he reaped no capital-gain profit when they sold it in 1990. "The business grew, but it essentially went sideways," Crosby said in an off-camera interview. "We didn’t make any money on it."

Crosby said the review of the casino proposals will occur entirely in public, according to a 197-item index, and he is confident he can prove to voters and citizens he can fairly evaluate whether Wynn Everett or Mohegan Revere should win the casino license.

"Every word that I utter on this will be streamed live on the Web and said in public, and I believe that fair and reasonable people will see that I am being objective about this, and that the incredible transparency of the process does indeed protect the public interest," Crosby said.

With videographer Scott Wholley

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