Trying to prod the bankrupt Emerald Casino into submitting a plan showing how it will divest its assets, state gambling officials threatened Monday to reopen hearings that could rip away Emerald’s main asset–a state casino license.
The administrative hearings, which began last year but were abruptly stopped by the Illinois Gaming Board after it reached a settlement with Emerald, were expected to air dirty laundry about the politically connected casino investor group, including allegations of mob ties and chronic deception.
In a court filing made in the federal bankruptcy case involving Emerald, the Gaming Board contends it can reopen the hearings because Emerald is reneging on the agreement by not submitting its reorganization plan.
A month ago the board warned that the settlement was in jeopardy because Emerald wasn’t holding up its end of the bargain, potentially throwing the status of Illinois’ 10th casino license into disarray.
Emerald attorneys said the investor group “is abiding by all applicable laws and obligations.”
“Emerald has acted appropriately in this process,” said James Sprayregen, who is representing Emerald in the bankruptcy case.
At the center of the debate is Emerald’s reorganization plan, which was a requirement in the agreement and is expected to lay out Emerald’s plan for selling its assets and how it would divide the proceeds for its investors and–if there is any left over–for the state.
The plan is aimed at ensuring that Emerald’s investors, some of whom allegedly lied to state officials, do not profit from the sale but merely recover their investment. After the investors are “made whole,” the state was expecting to receive the balance, which has been estimated as high as $500 million.
According to the Gaming Board, as part of its agreement with Emerald the casino group was required to have had the reorganization plan approved by Dec. 17, but the board has yet to see a proposal. In the court filing, Gaming Board attorneys said the board may announce at the board’s Jan. 21 meeting “its view that the agreement is void,” which would set the stage for reopening the hearings.
“If the settlement agreement is void,” the filing continued, “the Gaming Board could resume the disciplinary proceeding in which the board seeks to revoke the owner’s license held by Emerald.”
Besides not submitting its reorganization plan, Gaming Board attorneys also have complained that Emerald has been touting Rosemont, its original site, to potential buyers, even though the board has maintained that there are no guarantees it will allow the casino to be located there. They have also said Emerald has failed to keep its promised to sell itself in a “fair, open and competitive” process.
Most notably, according to Gaming Board attorneys, Emerald has focused solely on obtaining the highest dollar amount for its assets and ignored all of the other regulatory concerns, such as whether the firm is connected to organized crime.
“The best offer does not necessarily mean the offer that is the most money,” board attorney Robert Shapiro said.
The Village of Rosemont is opposed to the settlement and, in response, forced the casino to file for bankruptcy.
But Gaming Board officials hope the prospect of resurrecting the administrative hearings will be enough to get Emerald to comply and Rosemont to back down.
The hearings began in May after the board refused to allow Emerald to operate a casino in Rosemont, accusing principals of providing false information to the board and selling casino shares to investors with ties to organized crime.
In addition, Shapiro attempted to link Rosemont and at least one casino investor, Donald F. Flynn, with an attempt to sell a small interest in the casino to “local investors” allegedly tied to organized crime.
The stock sales “sealed the deal between friends of [Rosemont Mayor] Donald Stephens and Emerald Casino and ensured the infiltration of organized crime into its operation,” he said.
“Emerald Casino knew exactly what it was doing.”
