Caesars accuses state gaming czar of cashing in IOU
Claims bias doomed casino bid
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John Wilcox
OLD TIES EYED: The owner of the proposed casino site in Everett apparently invested in a company formerly owned by Massachusetts Gaming Commission Chairman Stephen Crosby.
Friday, March 14, 2014
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The owner of the proposed Everett casino site apparently lost on his investment in a company once owned by Massachusetts gaming czar Stephen Crosby, according to a Gaming Commission report.
Now lawyers for Caesars Entertainment are citing that as the reason for the state’s unflattering background check on the Las Vegas gambling giant that caused Suffolk Downs to drop Caesars as its partner, throwing their East Boston bid into chaos.
A transcript of a Feb. 26 hearing reviewed by the Herald shows Caesars lawyer Joan Lukey telling a judge that Everett site owner Paul Lohnes “invested or loaned” in Crosby’s company, “saving it and Mr. Crosby from financial ruin,” and that Crosby was “biased against Caesars and (Suffolk Downs) from the beginning” due to his friendship with, and debt to, Lohnes.
“We also know facts about whether he was paid back or not, which would be relevant to this court,” Lukey said, adding that said facts became known after Caesars filed its amended complaint, so can’t yet be specified in court.
Lukey and Caesars declined to comment. The Herald has learned that part of Lukey’s basis is a Gaming Commission report released Dec. 16 that says Crosby solicited Lohnes to invest in his publishing company in 1983, and that the company was sold in 1990 after it “experienced only limited success.”
“While records have been lost, it appears that Lohnes did not recoup his investment, neither was he entitled to any recoupment according to the terms of his loan,” reads the report, which explored the background of Wynn Resorts and the ownership history of the Everett land Wynn would build on if the commission grants it the sole Boston-area casino license.
The Gaming Commission report goes on to say Crosby and Lohnes have had limited contact with one another since 1990, meeting “purely socially” no more than 10 times over the past 23 years and were together at a May 2012 dinner party at the home of a mutual friend.
Crosby declined to comment on the loan repayment, citing the ongoing litigation. Lohnes could not be reached for comment.
“As we have said before, this lawsuit filed by a disappointed party is groundless and we are confident that we will prevail,” commission spokeswoman Elaine Driscoll said. “We look forward to responding to the allegations at the appropriate time. In the meantime, we will continue to mount a vigorous defense.”
Former state Inspector General Gregory Sullivan, research director at the Pioneer Institute, who’s called for Crosby to recuse himself from the Boston-area casino vote due to his ties to Lohnes, said Caesars appears to be laying the groundwork to claim Crosby wants to pay Lohnes back by voting for the Everett casino.
“If Caesars could demonstrate that there’s an unpaid obligation outstanding by Crosby to Lohnes, then that would be strong evidence of the fact that there was a conflict,” Sullivan said. “Lohnes’ loan and/or his ownership interest would represent the quid, and the awarding of the casino would be the quo.”
Crosby recused himself from the commission’s Dec. 13 vote on Wynn’s land option, which reduced the sale price from $75 million to $35 million, which the commission considered fair market value.
http://bostonherald.com/news_opinion/local_coverage/2014/03/caesars_accuses_state_gaming_czar_of_cashing_in_iou
Now lawyers for Caesars Entertainment are citing that as the reason for the state’s unflattering background check on the Las Vegas gambling giant that caused Suffolk Downs to drop Caesars as its partner, throwing their East Boston bid into chaos.
A transcript of a Feb. 26 hearing reviewed by the Herald shows Caesars lawyer Joan Lukey telling a judge that Everett site owner Paul Lohnes “invested or loaned” in Crosby’s company, “saving it and Mr. Crosby from financial ruin,” and that Crosby was “biased against Caesars and (Suffolk Downs) from the beginning” due to his friendship with, and debt to, Lohnes.
“We also know facts about whether he was paid back or not, which would be relevant to this court,” Lukey said, adding that said facts became known after Caesars filed its amended complaint, so can’t yet be specified in court.
Lukey and Caesars declined to comment. The Herald has learned that part of Lukey’s basis is a Gaming Commission report released Dec. 16 that says Crosby solicited Lohnes to invest in his publishing company in 1983, and that the company was sold in 1990 after it “experienced only limited success.”
“While records have been lost, it appears that Lohnes did not recoup his investment, neither was he entitled to any recoupment according to the terms of his loan,” reads the report, which explored the background of Wynn Resorts and the ownership history of the Everett land Wynn would build on if the commission grants it the sole Boston-area casino license.
The Gaming Commission report goes on to say Crosby and Lohnes have had limited contact with one another since 1990, meeting “purely socially” no more than 10 times over the past 23 years and were together at a May 2012 dinner party at the home of a mutual friend.
Crosby declined to comment on the loan repayment, citing the ongoing litigation. Lohnes could not be reached for comment.
“As we have said before, this lawsuit filed by a disappointed party is groundless and we are confident that we will prevail,” commission spokeswoman Elaine Driscoll said. “We look forward to responding to the allegations at the appropriate time. In the meantime, we will continue to mount a vigorous defense.”
Former state Inspector General Gregory Sullivan, research director at the Pioneer Institute, who’s called for Crosby to recuse himself from the Boston-area casino vote due to his ties to Lohnes, said Caesars appears to be laying the groundwork to claim Crosby wants to pay Lohnes back by voting for the Everett casino.
“If Caesars could demonstrate that there’s an unpaid obligation outstanding by Crosby to Lohnes, then that would be strong evidence of the fact that there was a conflict,” Sullivan said. “Lohnes’ loan and/or his ownership interest would represent the quid, and the awarding of the casino would be the quo.”
Crosby recused himself from the commission’s Dec. 13 vote on Wynn’s land option, which reduced the sale price from $75 million to $35 million, which the commission considered fair market value.
http://bostonherald.com/news_opinion/local_coverage/2014/03/caesars_accuses_state_gaming_czar_of_cashing_in_iou
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