Rio ordered to return $471,000 in gambling losses

Rio ordered to return $471,000 in gambling losses
By Steve Green

The administrator of a bankrupt Illinois company won a $471,250 judgment Thursday against a Las Vegas casino after complaining officials at the firm used company funds to pay gambling debts while it was insolvent.

The judgment was entered against Caesars Entertainment Corp.’s Rio hotel-casino in favor of William Brandt Jr., liquidating administrator of Equipment Acquisition Resources Inc. of Palatine, Ill.

Equipment Acquisition Resources (EAR) collapsed in October 2009 after it “engaged in a massive fraud by which it sold equipment at inflated prices and leased the equipment back from various lenders,” Brandt said in court papers.

In hopes of recovering funds for creditors owed $175 million, Brandt in the bankruptcy case filed adversary complaints against several organizations including the Rio, Harrah’s Las Vegas, Wynn Las Vegas and the Luxor — all on and near the Las Vegas Strip.

The complaints say that while managing EAR, executives Sheldon Player, his wife, Donna Malone, and Mark Anstett had EAR send money to the casinos to cover gambling debts and that these payments amounted to “fraudulent transfers” as EAR received nothing of value in return for the money.

A default judgment against the Rio was entered Thursday after attorneys for the casino didn’t respond to the complaint. A similar default judgment for $30,250 is pending against Caesars Entertainment’s Harrah’s Las Vegas, which also has not answered the complaint.

Caesars Entertainment didn’t have an immediate comment on the cases Thursday. If the failure to respond was inadvertent, Caesars attorneys can petition to the court to set aside the default.

Wynn Las Vegas, which allegedly received $1.785 million from EAR, is contesting Brandt’s complaint with its attorneys saying the money at issue was not the property of EAR but rather was compensation to its executives Player, Malone and Anstett.

The Luxor, owned by MGM Resorts International, is also contesting Brandt’s complaint seeking the return of $236,500.

“Malone, Anstett, Player and/or other directors, officers, employees or agents directed that their compensation be paid directly to defendant (Luxor), instead of to them,” an attorney for the Luxor wrote in court papers answering the complaint last week. “Defendant took the transfers in good faith and without knowledge of the alleged voidability of the transfers.

“At or about the time of the transfers, the debtor routinely disregarded its corporate form such that it was essentially operated as the alter ego of Malone, Anstett, Player and/or other directors, officers, employees or agents of the debtor.

“As such, any reasonably equivalent value provided by defendant (Luxor) for the transfers to the debtor, Malone, Anstett, and/or other directors, officers, employees or agents of the debtor, must be viewed as reasonably equivalent value provided to all such parties,” Luxor’s response said.