Hard to Belive: Nevada actually FINED Seeno family casino $1 million!

Seeno family casino chain fined $1 million over slot machine shenanigans

By Matthias Gafni

Contra Costa Times

Posted: 02/19/2014

 

 

The Seeno family's Nevada casino operations have agreed to pay a $1 million fine, admitting that since 2011 their director of slots used a slot machine key to obtain important competitive data from 10 rival casinos, according to a tentative settlement reached last week by the East Bay developer's company and gaming regulators.

For at least two years, Ryan Tors, a Peppermill Casinos Inc. executive, had been going into competing casinos as part of his job for that casino chain, opening slot machines with an unauthorized key and capturing the diagnostic and payback percentages, according to the proposed settlement filed Feb. 13 -- the same day the Nevada Gaming Control Board filed a three-count complaint against the company co-owned by the Seenos.

In a separate lawsuit, Grand Sierra Resort, a Peppermill rival, sued the Seenos' chain and got a judge to ban Tors from entering any of its properties. Tors has not been criminally charged, according to Reno police, but he is named in the lawsuit, in which the Grand Sierra Resort claims the Reno casino used the proprietary information to gain a competitive advantage.

On Thursday, the Nevada Gaming Commission will vote on whether to accept the fine settlement.

The agreement specifies that there is no evidence Peppermill used rivals' slot machine data to its own advantage, but if any new information arises, it can issue further punishments.

A Seeno spokesman distanced the family from the fine.

"The Seenos were not involved in the incident and have not been involved in the negotiations with the Nevada regulators resolving the matter. The settlement was negotiated and entered into by Peppermill management," said Sam Singer, a spokesman for the family. "This is an issue involving those that have managed the Peppermill casinos before and during the Seenos' ownership. The Seenos' only understanding is that management did not believe they were engaged in inappropriate conduct. The Seenos have since been advised that the conduct did not violate any criminal laws but did violate certain gaming regulations which resulted in the complaint and settlement."

The settlement and lawsuit are the latest legal twists for the powerful Contra Costa County family, who own stakes in seven Nevada casinos in Las Vegas, Reno, Wendover, Henderson and Sparks. William Paganetti Jr. is the president and co-owner of the Peppermill chain; however, various Seeno family members own 15 percent pieces of each casino, adding up to majority control of the individual properties.

Neither the lawsuit nor the settlement mention the Seenos by name, referring only to Tors' affiliation with "management."

"The Board's investigation revealed that Peppermill Casinos' management knew of, approved of, and directed Mr. Tors' conduct of obtaining theoretical hold percentage information from the slot machines of other casinos using a 'reset' key," according to the settlement, which was signed by Paganetti.

The Peppermill Casinos released its own statement: "This is certainly a regrettable situation and the Peppermill apologizes for the obvious lack of judgment on the part of its executive staff. The Peppermill has never been subject to regulatory action in all of its 43 years and does not intend on being subject to censure again."

It would not be the Seenos' first run-in with gambling regulators. In 2002, the gaming board fined Albert Seeno Jr. $775,000 for various character issues, including destroying red-legged frog habitat in a Pittsburg housing development and because family members were consorting with what the gaming board considered "unsavory" characters, such as felons and Hells Angels associates.

The slot machine spying allegations came to light after Grand Sierra Resort filed a lawsuit Aug. 2, 2013, in Washoe County court, asking for more than $30,000 in damages for the theft of trade secrets. On Nov. 15, Washoe County Judge Patrick Flanagan granted the restraining order against Tors.

According to the lawsuit, on July 12, Tors entered Grand Sierra Resort, used a key to open up six slot machines and accessed the "confidential and proprietary information contained within the machines, including each machine's diagnostic screens and payback percentages."

Security agents spotted Tors and detained him, according to the documents. Tors said the slot probing was "part of his employment duties" and he would "visit other gaming establishments to obtain information concerning the marketing strategies of those casinos," according to the lawsuit.

A Grand Sierra Resort attorney and Tors' attorney declined to comment.

The settlement states Tors used the key to access slot machines in at least 10 casinos from Reno to Wendover to Sun Valley and Sparks.

A gambling expert said a slot machine can provide a competitor with a wealth of information, including how often machines pay off players, how often they are played and how much is paid out.

"It definitely makes it unfair if one person knows what the competition has," said professor David G. Schwartz, director of the Center for Gaming Research at University of Nevada in Las Vegas. "The payback rate, for a lot of casinos, especially in Reno, is something they promote."

The gambling historian said he has never heard of such a scheme and called the fine "significant."


http://www.mercurynews.com/breaking-news/ci_25184559/seeno-family-casino-chain-must-pay-1-million

 

Commission grants license for company exec, despite arrests

Peppermill’s $1M settlement over slot machine spying is finalized

Commission grants license for company exec, despite arrests

The Peppermill in West Wendover.

By Richard N. Velotta (contact)

Thursday, February 20, 2014 - 12:42 p.m.

The Nevada Gaming Commission conducted a meeting today in Las Vegas.

The issue: The commission considered a two-count complaint by the Gaming Control Board against Peppermill Casinos Inc., which owns operations in Reno, Sparks, Henderson and Wendover, for sending out an employee to illegally gather information on the slot machine win percentages of its competitors. The complaint also recommended a $1 million fine.

The vote: 3-0 to approve the settlement and fine, with Chairman Peter Bernhard declaring a conflict of interest and not voting and Commissioner Joe Brown abstaining.

What it means: The commission's approval of the settlement was a formality since Peppermill executives had already signed off on it. Commissioners could have changed the level of the fine and suspended or revoked the Peppermill's license.

The complaint alleged that since 2011, Peppermill employee Ryan Tors had a slot machine "reset" key that allowed him to enter the slots in other competitors to determine the amount of hold — the amount kept by casinos on wagers.

On July 12, hotel security officers at the Grand Sierra Resort in Reno caught Tors using a reset key at their property. An investigation revealed that, beginning at least in 2011, Tors had used the reset key to obtain the information in 10 other casinos in the Reno-Sparks and Wendover areas.

Using a reset key to access information isn't illegal, but the Control Board intends to distribute an industry notice warning licensees not to use it in competitors' properties.

The complaint, drafted by Deputy Attorney General Michael Somps, said Peppermill's management instructed Tors "to use a slot machine reset key to access and obtain theoretical hold percentages information from slot machines belonging to one or more casinos that are competitors."

The stipulation said the casino company cooperated with board investigators in providing records and interviews with executives. Tors was placed on paid leave after the matter was discovered.

Peppermill President William Paganetti Jr., who attended Thursday's hearing, said his casino, one of the largest properties in Reno, did not use the information gained by Tors to change the hold percentage in its slot machines or to gain a competitive advantage over other casinos. The reset key can't access the "brain box" of a slot machine to alter payouts.

Prior to the commission's vote, Paganetti read a statement apologizing for his company's actions, saying he was embarrassed over the Peppermill's inappropriate actions.

"I was dumb as a post for letting this continue," he said. "I want to rebuild my credibility and I pledge to you this conduct will never happen again."

He said he also sent letters to executives of other casinos apologizing for the matter.

The board said, however, it would file another complaint against Peppermill if it found the illegally obtained information was being used to change slot machine hold percentages.

Attorney Frank Schreck, representing the Peppermill, said that while the company admitted that what Tors did was "an unsuitable method of operation," it wasn't illegal. He said the information wasn't used to gain a competitive edge, but to keep up with what a competitor was doing.

"It was abject stupidity on their part," Schreck said of his client.

Commissioner John Moran Jr. said the most difficult part of the decision was determining the level of the penalty. Because of the nature of the incident, Moran said he wasn't sure whether the $1 million fine was too much, too little or if the incident rose to the level of suspending or revoking the company's gaming license.

"It wasn't as if this was a rogue employee going out using the reset key," he said. His biggest concern, he said, was that company management was aware of the practice.

Somps said there was no previous incident to serve as a precedent for setting a $1 million fine. He said the state and the Peppermill agreed that the amount was a penalty that would prevent similar incidents from occurring again.

Control Board Chairman A.G. Burnett on Thursday said the fine was calculated based on the company's reported earnings. He said the board wanted to send a message to the industry discouraging the practice while not bankrupting the company. The amount was reached after discussions among the board members, Somps and representatives of the Peppermill.

Control Board records show the win percentage on slot machines statewide in 2013 was 6.4 percent.
It was the second seven-figure fine levied by the commission in two months. In January, the board levied a record $5.5 million fine against C.G. Technology for failing to supervise an employee taking illegal sports wagers.
•••

The issue: The commission conducted a suitability hearing and considered the licensing of Todd McTavish, senior vice president, general counsel and chief compliance officer for Austin, Texas-based Multimedia Games.

The vote: 5-0 to approve the licensing of McTavish.

What it means: The commission picked up where the state Gaming Control Board left off when it recommended approval of licensing for McTavish.

Bernhard and Commissioners Tony Alamo and John Moran Jr. had concerns about some of McTavish’s trouble with the law and his failure to disclose them when he was investigated by the Control Board.

As a high school student, McTavish was arrested in the vandalism of a school. While in college as a student athlete at Penn State University, he was accused of being involved with a group of students manufacturing phony identifications.

In 1993 in Michigan, he was arrested on a count of illegal sale of controlled substances for allegedly selling steroids to a friend.

He also was arrested on a count of disorderly conduct after an incident at a Michigan bar in 1995 and months later was accused of being involved in a disturbance at a friend’s home. Those charges were dismissed.

Months after that, he pleaded guilty to driving while intoxicated in Tennessee and has since had numerous traffic violations and speeding tickets.

“This is a tough one,” Bernhard said, noting that McTavish would be placed at a high level of responsibility as a company’s compliance officer. He said he reluctantly supported the licensing.

McTavish, whose company is a supplier of slot machines at the Orleans and is looking to expand within the state, was supported at the meeting by Multimedia CEO Patrick Ramsey.

http://www.vegasinc.com/business/2014/feb/20/gaming-commission-oks-license-businessman-despite-/

Nevada lawsuits' impact may ripple through gaming

The controversy outlined below bears watching, yet it is interesting to note that this partnership owns 6 'casinos' and

employ about 5,000 workers

Remember how Massachusetts Gambling Proponents proclaim 20,000 jobs will be created?

Whittemore, Seeno lawsuits' impact may ripple through Nevada gaming, politics
Written by Martha Bellisle

Bay Area builders Tom Seeno and Albert Seeno Jr. are partners with Bill Paganetti in the Peppermill Resort Spa Casino and five other Nevada casinos.

Wit and work made lobbyist, Harvey Whittemore, 'an institution'

Some might say it’s just a legal battle between rich, powerful men.

But the court fight ensuing between one of Nevada’s most high-profile lobbyists, Harvey Whittemore, and the owners of the Bay Area’s largest home-building company, Tom Seeno and Albert Seeno Jr., could threaten the network of business, philanthropy and influence that both have worked their entire lives to create.

Competing lawsuits between Whittemore and the Seenos make accusations that could ultimately land someone in prison. They include claims of embezzlement, racketeering and threats of murder and physical violence. If any of the claims prove true, they also could result in the loss of several valuable and coveted licenses — including the gaming license for the casinos run by the Peppermill. The Seenos are minority partners in the gaming in the gaming empire and are listed on the gaming license.

The Seenos claim Whittemore stole funds from their shared business, the Wingfield Nevada Group. If that claim is true, it could cost Whittemore his license to practice law and curtail his ability to raise funds for philanthropy and political candidates — something he is known for throughout the state, giving big contributions to some of the state’s most politically connected candidates.

Sam McMullen, a Las Vegas lawyer and lobbyist who has known Whittemore for decades, said Whittemore has always been willing to step up and organize political fundraisers. And he has done it across party lines, he said.

“As long as I’ve known him, Harvey has been a force in Nevada politics,” McMullen said. “It will be a loss if he was no longer active. He has done a great deal for Nevada.”

For example, since 2008, he had donated $51,000 to U.S. Senate Majority Leader Harry Reid, D-Nev., but he’s also donated $27,600 to U.S. Sen. Dean Heller, a Republican from Carson City.

Whittemore and his wife, Annette, are equally as well-known in the state for their philanthropy. The couple started the Whittermore Peterson Institute for Neuro-Immune Disease in Reno after their daughter was diagnosed with chronic fatigue syndrome. They host an annual gala to raise money to support the institute’s research.

(Page 2 of 3)


They’ve also been longtime, generous supporters of the University of Nevada, Reno, contributing to the university’s athletic programs. They have supported the UNR Foundation and were major contributors to the Mathewson-IGT Knowledge Center, said John Carothers, vice president for development at the University of Nevada, Reno Foundation.

“It’s sad, what’s happening,” Carothers said.

Seeno lawyer Kent Robison said they have been in contact with federal officials and the Reno and Sparks police departments. He would not discuss the details of those talks.

On Thursday, FBI agents served subpoenas to Whittemore’s businesses and associates at sites throughout Nevada. They stem from allegations that Whittemore used employees to funnel campaign contributions to candidates. And on Friday, Reid and U.S. Rep. Shelley Berkley said they were giving back or donating to charities thousands of dollars in contributions that the Whittemore family had given to their campaigns.

Phil Pattee, assistant bar counsel for the Nevada State Bar Association, said “the matter is under investigation,” but declined to talk further about the claims made against Whittemore.

Whittemore’s lawsuit against the Seenos claims that they used threats of violence and death and hired burly thugs to collect his assets, including jewelry, homes and vehicles.

Whittemore filed a complaint with the Reno Police Department in March 2011, saying he was told by a third party that someone in the Seeno family planned to harm him physically, according to Reno police Lt. Mohammad Rafaqat. But Whittemore said he did not want the police to conduct a criminal investigation, Rafaqat said.

Whittemore told the police that he only wanted to document the alleged threats, Rafaqat said.

Bill Paganetti, the majority stockholder at the Peppermill, is a partner with the Seenos and Nat Carasali in the Peppermill and five other casinos in Nevada. Paganetti said he believes Whittemore’s claims were an effort to raise questions whether they are “suitable” to hold a Nevada gaming license.

(Page 3 of 3)


“It is so transparent what he is trying to do that a blind man with a stick could see it,” Paganetti said. “He doesn’t care about the collateral damage he is causing.”

Gaming licensees can lose their licenses if they are charged with crimes, according to Mark Lipparelli, chairman of the Gaming Control Board.

The casinos licensed under the Seenos, Paganetti and Carasali employ about 5,000 workers. Paganetti is the majority stockholder in the Peppermill, and the Seenos are minority stockholders.

Lipparelli said he could not comment on the Whittemore and Seeno cases, but said “we are always monitoring the activities of licensees.”

Under Nevada law, a person seeking a gaming license must first undergo a background check to ensure that their record is clean, but they also must maintain a clean criminal record to retain that license, Lipparelli said.

“To obtain the license, an applicant must look good,” Lipparelli said. “But if they do a dastardly deed after they secured the license, we would file a complaint and we could take their license away. We could call them in and say, ‘You did this, and we as a board do not believe you are suitable anymore.’”

A licensee always has the obligation to maintain their suitability, he said.

If a gaming license is owned by a partnership and only one partner committed a crime, that person would have to be pushed out of the group, Lipparelli said. But if the Gaming Control Board finds that all of the partners were involved in illegal deeds, the license itself would be pulled.

The Seenos have not been accused of any crimes by federal or state officials.

Do casinos cause crime?

Or do they just attract criminals?

Repeat Offender Arrested; Now he Faces Rape and Kidnapping Charges

A Reno man, already targeted by police for being a repeat offender, is now in custody on suspicion of kidnapping and sexually assaulting a woman on Wednesday.

Larry Sykes, 38, was arrested Friday morning at the Peppermill Casino Resort on numerous charges, including first degree kidnapping, battery and sexual assault.

His arrest comes after a women reported being kidnapped and assaulted on Wednesday at a residents on the 600 block of South Virginia Street.

Upon further investigation by detectives assigned to the Sex Crimes/Child Abuse Unit, Sykes was identified by witnesses to the crime.

The suspect was identified as, Larry Sykes a 38-year-old Reno resident, and a Target of the Northern Nevada Repeat Offender Program.

Patrol Officers, the Crime Suppression Team and Detectives assigned to ROP attempted to located and arrest Sykes and on the morning of December 24, 2010 Patrol Officers located Sykes at the Peppermill.

Sykes was arrested for 1st Degree Kidnapping, Battery with the Intent to Commit Sexual Assault, and Sexual Assault. His bail was raised to $100,000