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GAME BIRDS

"Gambling has more of a history of corruption
than any other industry."

Former Illinois Sen. Paul Simon - June 1997

Sightings from The Catbird Seat

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December 25, 1995

THE GOOD, THE BAD, AND
THE UNSPEAKABLE

In 1995, many ate caviar, some ate crow, and
a few had to settle for humble pie

Up and up and up it goes; when it'll stop, nobody knows. In this kind of market, which was powered along by Internet and pharmaceuticals plays, it's hard to believe there even were losers in '95. The unhappiest investors were those who picked trendy retailers, riverboat gaming, and oil companies. Below, we sketch the extreme ends of the spectrum, all of which kicked off the year at a share price of $5 or better....

WORST AMEX STOCK: Resort Income Investors Inc. was designed as a 12-year self-liquidating real estate investment trust (REIT). Liquidate it did, and how.

The mortgage REIT invests in loans that are secured by property acquired to develop luxury resorts. Most of the stock is owned by the company's directors, Chris and Mark Hemmeter, a father-and-son team who made big bets on riverboat gaming in New Orleans only to see their grand plans run aground in the Mississippi mud (BW--Oct. 16, 1995).

Even worse, the Securities & Exchange Commission began an investigation and the Hemmeters, who resigned in August, were accused in court complaints of squandering company assets. The stock was recently trading at 1 1/8, down from its 52-week high of 10 1/2.

www.businessweek.com/1995/52/b345674.htm

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THE RIVERGATE

Chapter 6

Gambling: the social milieu that tore the rivergate down

by c.b. forgotston

I. Gambling In Louisiana, It's A Tradition!

Louisiana has a long history of gambling.

In south Louisiana where most of the voters are located, gambling is no longer a big moral or religious issue. Louisiana is the first state after Nevada and New Jersey where the governor said he was interested in bringing Las Vegas-style casinos into the State. This excludes gambling casinos on Indian reservations which exist all over the United States. Gov. Edwin Edwards quietly talked about casino gambling during his first term, 1972-1976. On 6 January 1986, during his third term, Gov. Edwards launched a campaign to allow ten to fifteen Las Vegas-style casinos in New Orleans.

Politically it is easy to sell gambling in New Orleans because legislators outside of New Orleans have the attitude that New Orleans is "Sin City." There is nothing you can do to make New Orleans any worse. Dump on New Orleans; it can't hurt. Land-based casino gambling and riverboat casinos in New Orleans did not bother the people in the Bible Belt in northeast Louisiana just so long as it did not cost a lot of state money. This was the mind-set of the State on the eve of the proliferation of gambling in 1986.

To understand the demise of the Rivergate, one must know the players and the chronology of events.

The story hangs on a framework of two governors of Louisiana (Edwards and Roemer) and a mayor of New Orleans (Barthelemy)...

Prior to the 1991 fall elections, under then-Gov. Roemer (1988-1992), the legislature enacted three forms of gambling: lottery, video poker, and riverboat casinos. In 1990, the lottery passed for the first time since the 1890s; in 1991, video poker and riverboat casino gambling were legalized. These were the political tests for casino gambling that sent a message to the politicians; all of the legislators who voted for gambling made it through the 1991 elections without any serious political damage. The fear that the public would vote against the legislator who voted for gambling had kept the proliferation of gambling in check. (Before the 1990s gambling surge, pari-mutuel horse racing, off track betting, and charitable bingo were all legal.)

During then-Gov. Edwards' third term (1984-1988), conservative legislators in the metro New Orleans area -- Orleans and Jefferson Parishes -- could have comfortably voted for the lottery because the public opinion polls showed 75 percent in favor. However, they killed it under then-Gov. Edwards.

At the time there was a concern among some legislators that any such operations in an Edwards administration would be fraught with political problems.

Lottery (1990)

Gov. Buddy Roemer, who came to office in 1988, had a reform image. He ran a campaign opposed to gambling and promised to be anti-gambling. But this promise, like a lot of promises Roemer made, was not fulfilled.

Roemer's efforts at fiscal reform did not succeed. Louisiana still had not pulled out of the oil and gas bust that began in the early 1980s. The lottery was again proposed as a solution to Louisiana's fiscal woes. Conservative legislators who had always opposed the lottery because of Edwin Edwards, not because of gambling, got on board. Roemer rationalized that he did not have to sign or veto the lottery since it was a constitutional amendment. He was merely letting the people decide. A typical political cop-out. By this time, because of his failed fiscal reform effort, Roemer was politically weakened and had lost some of his characteristic cockiness and arrogance. Further, he was plagued by the fact that he had not been elected by a majority of the people. In 1990, the lottery passed with an overwhelming 75 percent popular vote, and general happiness prevailed. The barrier to gambling was broken by the lottery. It appeared clear to the politicians that the public was not opposed to gambling.

Riverboat Casino Gambling (1991)

The people who had been pushing riverboat casino gambling for years and had not gotten anywhere took advantage of the softened attitude toward gambling and presented it as an adjunct tourist attraction. The big players were New Orleanians Warren Reuther, Pres Kabacoff, and Jim Smith. Riverboat casino gambling began as a New Orleans concept but soon became a statewide concept due to political wheeling and dealing.

By a small margin, riverboat casino gambling passed in the legislature, and the anti-gambling governor, Roemer, signed it!

Video Poker (1991)

Representative Peppi Bruneau (Republican, New Orleans) had for years been trying to pass legislation to outlaw "gray market" video poker machines. Bruneau concluded that if we cannot outlaw these machines, then we should regulate and tax them. This is an excellent argument for prostitution, too. Following the approval of the lottery and riverboat casino gambling, video poker squeezed through the legislature. Roemer allowed it to become law without his signature. In retrospect, Roemer has stated that he considers this one of the biggest mistakes of his career as governor.

III. Stage Set For Las Vegas-style Casino Gambling

In 1991, Edwin Edwards defeated his opponent, David Duke, the one-time Ku Klux Klan Grand Wizard. The stage was set for Las Vegas-style casino gambling.

Then-Gov. Edwin Edwards had a well known, well deserved reputation as a gambler. He went to Las Vegas regularly, and he knew all the players there. Since the governor of Louisiana is such a strong force in state politics, when Edwards declared he wanted Las Vegas-style gambling, Louisiana became the focus of the expansion of gambling in the United States. Additionally, the mayor of New Orleans, Sidney Barthelemy, was the only mayor of a major city in the country who indicated a desire to have casino gambling. New Orleans was still in the doldrums, and Barthelemy did not know what else to do to create jobs, nor would he listen to other viable options, such as the Louisiana State University-Tulane University-Charity Hospital Medical Complex in downtown New Orleans, the Port expansion, and the proposed (now developing) research park at the University of New Orleans on the lakefront.

By 1991, the lottery was up and running. There were no major scandals, but it had only been in operation for a year. Not a single riverboat casino had been built. And video poker had not come on line. The state's economy was still down. Louisiana had a governor sympathetic to gambling (Edwards was elected to an unprecedented fourth term, 1992-1996), and New Orleans had a lame duck mayor who had nothing to lose (City Charter limits the mayor to two terms).

In February 1992, Steve Wynn, owner of the Mirage and other casinos in Nevada, came to New Orleans. Wynn, reputed to be the golden-boy of the casino gambling business, quickly pointed out that there had never been a successful "free-standing" (no hotel or restaurants included) casino. He hired people to study the New Orleans market as a gambling center, spent several million dollars, and walked away from it. Wynn said his preference, if he were going to move out of the traditional gambling venue of Nevada, would be a city like Atlanta rather than New Orleans. Atlanta has a much larger population, a stronger economic base, and is an airline hub, which is extremely important in bringing in gamblers from out-of-state. All of his sound reasons have proved why Las Vegas-style casinos won't work in New Orleans.

IV. Daniel Robinowitz, Father Of Land-based Casino Gambling In New Orleans

New Orleans native Daniel Robinowitz, a real estate developer who lives in Dallas, was the father of the casino at the Rivergate site. He had done projects in the New Orleans area (the Uptown Square and the Galleria), which were financial successes for him but disasters for the region. When Edwards started his fourth term (1992), Robinowitz, knowing Edwards' gambling background, had a vision that the time was right to bring Las Vegas-style casino gambling to New Orleans. He conceived the idea of a "free-standing" casino.

Robinowitz needed a big name developer and approached Steve Wynn. Probably because Wynn's appraisal did not fit with what Robinowitz knew he could sell in New Orleans, Robinowitz had only a brief flirtation with Wynn. Robinowitz did not want to get into a fight with the hotel and restaurant people. Within a matter of weeks Robinowitz aligned himself with Chris Hemmeter, an Hawaiian developer.

Chris Hemmeter was reputed to be a very wealthy man. The hotels that he developed in Hawaii received mixed reviews about their success. He was a developer much like Robinowitz -- he got his money off the top and left it to somebody else to manage. Like Robinowtiz, some of his deals went into bankruptcy.

Everything Hemmeter attempted in Hawaii was to be the biggest and the best. He had a reputation for rarely letting the financial consequences affect his development decisions. Robinowitz was probably more comfortable with Chris Hemmeter than Steve Wynn who was more bottom-line oriented.

Prior to New Orleans, Hemmeter had never been involved in gambling developments, another Robinowitz mistake. Once Hemmeter got into the gambling business, he saw money everywhere! Hemmeter's escapades with riverboat casino gambling in New Orleans and in other states and land-based casino gambling in Colorado (all carried out during the time of the New Orleans casino operations) were all financially unsuccessful.

V. Snake Oil And Fairy Dust

A dapper, smooth talking promoter, Hemmeter painted a picture of revitalizing the riverfront and the decaying downtown New Orleans. A billion dollar development! No one in New Orleans had ever done a billion dollar construction project before. Hemmeter said if the legislature legalized gambling in the coming session, he "might" consider a casino in his plan. City Hall and some of the traditional business and civic leadership of the city, lured by revitalization and the number of jobs it was supposed to create, lost sight of the possibility that it could have been a scam. The super snake oil salesman sprinkling fairy dust fooled a lot of people, including some very bright, successful business people.

Two City Councils did not require a financial statement from Hemmeter (it was considered an invasion of privacy). Nor did they require a performance bond.

The Times-Picayune sent reporters to Hawaii to investigate Hemmeter, but they did not turn up anything of significance. Just by luck, I became acquainted with an Honolulu investment banker with some New Orleans connections who knew Hemmeter well. He speculated that Hemmeter did not have great wealth and might even have a negative net worth. He said unless Hemmeter went into bankruptcy, we would never see his financial statement.

VI. The Rivergate Gambled Away

HB-2010

The bill to authorize a land-based casino in New Orleans, HB-2010 (Act 384 of the 1992 Regular Session), may have been the most controversial vote ever taken in the Louisiana House of Representatives. John Alario, then speaker of the House and an ally of Gov. Edwards, demonstrated the power of his position as well as the power of Edwards when he maneuvered the casino bill through the House on Wednesday 10 June 1992. The previous Thursday a similar bill had fallen seven votes shy of the needed 53-vote majority to pass. It was returned to the calendar. On 10 July, HB-2010 did not appear on the regular order of the day (agenda); instead it was taken out of order and was ready for a vote sending a surprise wave over members of the House. Then-Speaker Alario ordered the electronic vote count to begin. At the electronic count of 53, he ordered the vote halted without the customary few seconds lag between the vote count and freezing the vote, which allows for a little gamesmanship (Maginnis 1995, 30).

The legislation specifically defined the location of the land-based casino -- the Rivergate site at the foot of Canal Street. The law did not require the Rivergate to be torn down, and it did not require a new casino to be built. Once the determination was made that Hemmeter's grandiose casino was going to be built, the destruction of the Rivergate was a fait accompli.

The passage of HB-2010 was the formal beginning of the casino and the end of the Rivergate. The City Council, apparently pressured by Mayor Barthelemy, awarded to Chris Hemmeter the lease of the city-owned Rivergate site. Subsequently, the Casino Board awarded Harrah's Jazz the casino operator's license. Harrah's Jazz was a partner of Harrah's and the Jazzville group (all local investors) who came together because they thought they had the best chance of getting the votes on the Casino Board to win the license over Hemmeter. They'd worry later whether they could get along.

Shotgun Marriage

From a practical standpoint the lease-holder (Hemmeter) and the license-holder (Harrah's Jazz) needed each other. There had been such fierce competition for the operator's license that to "marry" the two entities became a significant hurdle. A shotgun marriage was brokered in the governor's mansion! In typical Edwin Edwards fashion, the three factions -- Harrah's, Jazzville, and Hemmeter -- were ordered by Edwards to quickly work it out themselves. The logical thing to do was for Harrah's Jazz to buy out Hemmeter, but he wouldn't budge. All elements felt that each had the political clout to win the land-based casino operator's license. Gov. Edwards had friends representing both Harrah's and Hemmeter, and everyone of the Jazzville group was a friend and political supporter of his. As long as Edwards had friends in each camp, compromise was in his best interest. The gamblers were so hellbent on getting rich quick that they split the pot of gold three ways. Gov. Edwards performed the shotgun marriage and gave them his blessings. Now the three would worry later whether they could get along.

Point Of No Return For The Rivergate

The partnership of Harrah's and the Jazzville group was the point of no return for the Rivergate. It had been reported that Harrah's had an arrangement with the labor unions for exclusive union labor on their next casino that would be constructed. An adaptive reuse project such as the Jazzville group proposed to the Casino Board would not satisfy the unions. Peter Babin, local labor leader, publicly promoted tearing down the Rivergate for the sole purpose to create jobs. This gave further cover for the politicians.

The second fatal blow to the Rivergate came when Hemmeter "married" the Harrah's Jazz partnership. To put the entire Grand Deal together politically, it was necessary to make a lot of smaller deals. In reality, it was constructing a giant building on Louisiana political quicksand!

VII. $825 Million Casino Bankruptcy, Where Did All The Money Go?

A lot of money went to reimburse Hemmeter for pieces of land in the vicinity of the Rivergate that he optioned at exorbitant prices. He seemed to buy into his own snake oil and fairy dust and to believe that the casino was going to be so successful that everything for blocks around would become very valuable. Hemmeter operated on "other people's money." Some of his deals were very cash thin: he might put up $1000 cash for a piece of property that he optioned at $1 million. When the financial deal was closed, the options were exercised with the proceeds from the sale of junk bonds. The inflated land prices took a big chunk of the money. Some of the money was probably spent on "political overhead." It is my understanding that when the junk bonds were sold, all of the parties were made whole for their prior out-of-pocket expenses. The interest rate on the over $400 million in junk bonds was approximately the equivalent of 18 percent. This added substantially to the financial debacle.

Although the entire land-based casino project was estimated at $825 million, the unfinished building on the Rivergate site at the foot of Canal Street represents only approximately $200 million including parking garages. Thus, it appears that of the $825 million total project almost $600 million went to "political overhead." As of the filing of bankruptcy in November 1995, approximately $150 million more was needed to complete the facility.

Included in the "political overhead" was the renovation of the City's Municipal Auditorium (built 1930) for Harrah's temporary casino. It was to be used for only one year; the cost of renovation was $45 million. The temporary casino actually was in operation for less than seven months. Apparently, cost was no object.

In the gambling industry, gross win is determined by the amount of square footage in a casino's gambling area. In Nevada, the average is $2,000 per square foot. In Atlantic City, the win is approximately $3,200 per square foot. On the Mississippi Gulf Coast, it's around $1,270 per square foot. The Municipal Auditorium was renovated on the basis of an $8,000 per square foot win. The casino at the Rivergate site was projected to average $4,000-$5,000 per square foot win.

The latest projections for the bankrupt casino, should it ever be up and running at the Rivergate site, would require 15,500 patrons who lose an average of $70 each, 365 days a year to merely break even. The casino would have to draw annually more patrons than did the Aquarium of the Americas, the Louisiana Superdome, the Flamingo (riverboat casino near the Rivergate site), plus all of the convention delegates who went to the Ernest N. Morial Convention Center in 1996 combined! [On 1 October 1997, the Flamingo ceased operation in New Orleans.]

VIII. Harrah's Jazz Casino, The Chernobyl Of Casino Gambling!

What went wrong with the New Orleans land-based casino will likely go down as one of the all time great business disasters that will be analyzed by students at the great business schools in America. As with most business fiascos, there tends to be something simple that has been over looked. In this case the gambling promoters failed to do a market study. They appeared to have operated under the philosophy "build it and they will come!" Unfortunately for them that works only in the movies.

The demographics of the ten million annual convention and tourist visitors who come to New Orleans were never analyzed by the gambling promoters. The conventioneers (vast majority of these visitors) represent the cream of the crop of the hospitality market. They tend to be well educated and financially well off, the higher socio-economic level. Such individuals tend not to gamble. What draws them to New Orleans is the Vieux Carré, the food, the music, the architecture, and the general ambience of this historic city.

The white elephant building now on the Rivergate site was started in January 1995. The temporary casino at the Municipal Auditorium opened in May 1995, and the whole $825 million project went bust in November 1995. Unfinished and boarded up, Harrah's Jazz Casino is a monument to greed and corruption. The city was left with approximately a $23-million hole in its budget, the state with a $100 million in unrealized revenues, and unsecured creditors owed over $50 million; New Orleans has another political architectural folly!

http://www.tulane.edu/~rivgate/chapter6_text.html

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Edwin Washington Edwards (born August 7, 1927) served as the Democratic governor of Louisiana for four terms (1972–1980, 1984–1988, and 1992 –1996), twice as many terms as any other Louisiana governor has served. Edwards was also Louisiana's first Catholic governor in the twentieth century and perhaps with the exception of Huey P. Long, was Louisiana's most popular governor. A colorful, powerful and legendary figure in Louisiana politics, Edwards was long dogged by charges of corruption.

In 2001 he was sentenced to ten years in prison on racketeering charges. Edwards began serving his sentence in October 2002 in Ft. Worth Texas, and was later transferred to an Oakdale, Louisiana, facility.

Two men whom Edwards defeated in Louisiana elections, David C. Treen and J. Bennett Johnston, Jr., and a third who was Edwards' protege, John B. Breaux, confirmed in July 2007 that they intend to approach U.S. President George W. Bush about procuring a pardon or commutation for Edwards, who celebrated his 80th birthday in prison in August 2007.

http://en.wikipedia.org/wiki/Edwin_Edwards

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October 10, 2003

Hemmeter
still fighting

The one-time Hawaii resort
developer has come back
to town to see friends
and speak his piece

By Russ Lynch, Star-Bulletin

Former Hawaii developer Chris Hemmeter has battled prostate cancer and Parkinson's disease and is now dealing with a killer cancer affecting the bile duct. For Hemmeter, it's a liver transplant or death and his doctors told him he wouldn't make his 64th birthday.

But in a visit with friends in Honolulu this week, which included a party for that birthday, Hemmeter said his biggest trial was dealing with corrupt politicians in New Orleans.

Hemmeter -- who developed King's Alley and the twin-tower Hyatt Regency Waikiki, [on land leased from Kamehameha Schools/Bishop Estate] as well as luxury resorts such as the Hyatt Regency Waikoloa on the Big Island, now the Hilton Waikoloa Village, and the Westin Maui -- said in an interview that he was upset about the way Louisiana reporters picked on him over his grand plan for a $1 billion casino in New Orleans.

The bottom line to Hemmeter is that while the casino plan failed, it also put Louisiana Gov. Edwin Edwards in federal prison a year ago, to serve a 10-year term for extortion.

And Hemmeter said the luxury resorts he built in Hawaii made real money for him and his family and are now doing well again, despite setbacks under mostly Japanese owners following the burst of the late 1980s Japanese investment bubble.

Hemmeter sold those resorts at big profits, but when he stepped into the murky waters of Mississippi politics he ran aground, leading to the filing of personal bankruptcy by Hemmeter and his wife Patsy in 1997.

It began with the award to the Hemmeter group 10 years ago of a lease for a property designated to house the city's first land-based casino. The 60-year ground lease, worth hundreds of millions of dollars, was awarded because "we had the best plan," Hemmeter said.

Enter Edwards, a keen gambler and, according to Hemmeter and other critics, a corrupt politician. Edwards wanted a piece of the action for himself and his cronies and relatives, Hemmeter said. "He let me know in no uncertain terms that he expected his boys cut in on the deal. We said, no way we could do business like that," Hemmeter said. That's when the rot set in, ending with Edwards ignoring the law that said the land owner, in this case Hemmeter's company, would choose the gaming operator and simply telling Hemmeter that his choice of Caesar's as an operator was not going to be approved.

In the end, Edwards forced through a deal with three companies sharing the business, leaving Hemmeter with about a third of it.

"I ended up as a minority investor and watched my investment go down, down, down," Hemmeter said.

Hemmeter, who had kept his Hawaii developments as individual entities, ended up breaking that rule in New Orleans and consolidating several of his companies and pledging several multimillion-dollar homes as collateral for loans. The first casino, on a temporary location intended to get the business started while a new one was built, closed a few months after it opened in 1995, with Edwards' pick Harrah's going bankrupt and bond-holders unable to recover the $400 million they had invested.

That was about the end of the saga, except for the corruption and extortion federal case against Edwards.

During the selection process, Hemmeter paid for Edwards and other Louisiana officials to make luxury trips to Hawaii.

Hemmeter maintains that was all part of the shakedown and said he was vindicated when it was revealed that federal investigators had bugged his phones for 2 1/2 years and in "tens of hours" of tapes and they were unable to show one incident in which Hemmeter did anything wrong. The experience certainly soured him on the location. "I've never set foot in New Orleans, even to change planes, since 1995," he said.

For now, Hemmeter is looking after his health. He hopes for a liver transplant in the next month or so. He and his family have embarked on a new business, a Western-style restaurant called Saddle Ranch Chop House. The first unit is up and running next to the Universal Studios theme park in Los Angeles and is doing well, particularly late at night when the mechanical-bull rides, music and bands are in full swing, he said.

"We're doing just under $1 million a month in revenues" and that works out to about $250,000 in profits. Planning for four more restaurants in the next two years, Hemmeter said he hopes for eventual profits of more than $10 million a year and a number of potential buyers are paying attention.

"We should be able to get 10-12 times earnings when we sell," he said. The restaurant business is headed by Hemmeter's oldest son, Mark.

Hemmeter is also working on a golf project on the mainland. He said his family businesses have lined up some 400 pay-for-play golf courses that are interested. The idea is to have a couple of holes at each golf course wired for video with half a dozen cameras at each hole. Golfers can turn it on by dropping a $2 token in a slot and later they can go to a Web site and watch the video along with an analysis of their swings.

There will also be a $10,000 prize for a hole in one and the cameras won't let anyone cheat, he said.

Meanwhile, Chris and Patsy Hemmeter are living in a gated community near Bel Air, outside Los Angeles. Second son Chris graduated from Harvard business school and went into a dot-com business. When that failed, he got into the food and beverage distribution business and started a credit card for restaurants, but he wants to get a doctorate and may end up teaching.

Daughter Katie is doing well as an actress and playwright and makes money buying and selling residential real estate, Hemmeter said.

The Hemmeters had a "reverse surprise birthday party" at the Kahala Avenue home of lingerie multilevel marketing moguls Walter and Tiffany James Wednesday night, with a short but elite list of guests invited for what they thought was going to be a video-conference with Hemmeter speaking from the mainland.

Present were three former governors -- George Ariyoshi, John Waihee and Ben Cayetano -- former Mayor Frank Fasi and an array of other Hemmeter friends representing much of the long-time business leadership in the islands.

Guests were delighted when Walter James, who runs UndercoverWear with his wife, confessed that Chris and Patsy Hemmeter were in the house. Hemmeter was welcomed warmly and he said doctors had told him and Patsy that they should not expect him to be around for a 64th birthday party.

One who was completely taken by surprise was Larry Johnson, former chief executive officer of Bank of Hawaii, who had arrived only half an hour earlier on a flight from New York. Johnson said he hadn't showered but his wife Claire told him not to worry because the video link would not detect any body odor.

Thos Rohr, who headed the group that developed the Waikoloa Resort, said the best thing about Hemmeter was that he started at the bottom, as a trainee with Sheraton Hotels here in the early 1960s, and rose to the top, handling deals with hundreds of millions of dollars in the same gracious way he always acted.

Tim Guard, a longtime Hemmeter friend and president of the stevedoring company McCabe, Hamilton & Renny, called the reunion "an evening of smiles."

www.starbulletin.com/2003/10/10/business/story2.html

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November 28, 2003

Developer Christopher Hemmeter
dies at age 64

Pacific Business News (Honolulu)

Christopher B. Hemmeter, a prolific developer who built some of Hawaii's most notable hotels and resorts, died Thursday at his Los Angeles home. He was 64.

Eight months ago he was diagnosed with severe liver cancer. He also had been coping with Parkinson's disease. This was his second bout with cancer.

Sharing memories of his father, son Mark Hemmeter told PBN from Los Angeles, "Thanksgiving was his favorite holiday because it was all about just family. Our whole family was with him yesterday, and it was very peaceful."

Hemmeter came to Hawaii in the 1960s and became a noted developer while still in his 20s, along with partners Henry Shigekane and Diane Plotts. Many credit Hemmeter with creating the concept of a destination resort. He moved to the mainland in 1991 and became a casino developer in Colorado and New Orleans. His most recent venture was a successful restaurant near Universal Studios.

Former President Jimmy Carter, Hemmeter's close friend, told PBN for an October profile: "Chris has the uncanny ability to dream ... then put his concepts into practice for the enjoyment of countless others."

"We are extremely saddened by his passing, but we also rejoice as we reflect upon his life," the family said in a statement Friday. "He stood for all that was good in us and gave unselfishly of his time and energy. He will be greatly missed. His affection and caring for others, his charisma, and his professional accomplishments lead many people to pronounce that he was truly 'larger than life.'"

For his accomplishments, Hemmeter has received numerous awards including being named twice as the Businessman of the Year, Salesperson of the Year, Marketing Man of the Year and Islander of the Year in Hawaii. He was inducted into the American Academy of Achievement in 1979. In 1991 Hemmeter was selected the Independent Hotelier of the World.

Hemmeter's activities went beyond the hotel industry. He was the founder and chairman of the Bank of Honolulu, a director of the First Hawaiian Bank, a director of the National Symphony Orchestra in Washington D.C., a trustee of Punahou School in Honolulu, a member of the Young Presidents Organization, a director of the Carter Center, a director of Morrison Knudsen, a director of Resort Income Investors, and a Trustee Fellow of Cornell University where he received the prestigious Entrepreneur of the Year award granted to Cornell University graduates.

"Hawaii needs to appreciate his contributions to the visitor industry and the state," close Hemmeter friend and retired Bank of Hawaii CEO Larry Johnson told PBN previously. "His legacy will live here forever."

He is survived by his wife of 25 years, Patricia; children Mark and daughter-in-law Lisa, Chris and fiancée Debi, Katie and husband Cully; stepchildren Kelley, Shane, Brendan and wife Brook, and Holli; sister Sally Younge and husband Eric; brother Dr. Mead Hemmeter and wife Mari-Jo; sister-in-law Karen Cook; and six grandchildren, Taylor, Maddy, Annabelle, Austin, Ryan and Quinn.

Private services will be held Sunday in Los Angeles. In lieu of flowers, donations can be sent to the new Christopher B. and Patricia K. Hemmeter Kahaola Hospice Foundation at 1164 Bishop St., Suite 800, Honolulu, HI 96813.

http://pacific.bizjournals.com/pacific/stories/2003/11/24/daily58.html

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December 08, 2002

Dirty Dealing

Indian casinos are making millions for their investors
and providing little to the poor

By DONALD L. BARLETT AND JAMES B. STEELE, Time Magazine

Imagine, if you will, Congress passing a bill to make Indian tribes more self-sufficient that gives billions of dollars to the white backers of Indian businesses - and nothing to hundreds of thousands of Native Americans living in poverty.

Or a bill that gives hundreds of millions of dollars to one Indian tribe with a few dozen members - and not a penny to a tribe with hundreds of thousands of members.

Or a bill that allows select Indian tribes to create businesses that reap millions of dollars in profits and pay no federal income tax - at the same time that the tribes collect millions in aid from American taxpayers.

Can't imagine Congress passing such a bill? It did.

Here's how it happened - and what it means.

Maryann Martin presides over America's smallest tribe. Raised in Los Angeles in an African-American family, she knew little of her Indian ancestry until 1986, when at age 22 she learned that her mother had been the last surviving member of the Augustine Band of Cahuilla Mission Indians.

In 1991, the Bureau of Indian Affairs (BIA) certified Martin and her two younger brothers as members of the tribe. Federal recognition of tribal status opened the door for Martin and her siblings to qualify for certain types of government aid. And with it, a far more lucrative lure beckoned: the right to operate casinos on an Indian reservation.

As Indian casinos popped up like new housing developments across Southern California, Martin moved a trailer onto the long-abandoned Augustine reservation in Coachella, a 500-acre desert tract then littered with garbage, discarded household appliances and junk cars, about 25 miles southeast of Palm Springs. There she lived with her three children and African-American husband William Ray Vance. In 1994, membership in the tiny tribe dwindled from three adults to one when Martin's two brothers were killed during separate street shootings in Banning, Calif. Police said both men were involved in drug deals and were members of a violent Los Angeles street gang.

Subsequently, Martin negotiated a deal with Paragon Gaming, a Las Vegas company, to develop and manage a casino. Paragon is headed by Diana Bennett, a gaming executive and daughter of Vegas veteran and co-founder of the Circus Circus Casino William Bennett. Martin's Augustine Casino opened last July. With 349 slot machines and 10 gaming tables, it's the fifth and by far the most modest casino in the Palm Springs area.

But it stands to make a lot of non-Indian investors - and one Indian adult - rich.

And get this: Martin still qualifies for federal aid, in amounts far greater than what many needy Native Americans could even dream of getting. In 1999 and 2000 alone, government audit reports show, she pulled in more than $1 million from Washington - $476,000 for housing, $400,000 for tribal government and $146,000 for environmental programs.

It wasn't supposed to be this way.

At the end of the 1980s, in a frenzy of cost cutting and privatization, Washington perceived gaming on reservations as a cheap way to wean tribes from government handouts, encourage economic development and promote tribal self-sufficiency. After policy initiatives by the Reagan Administration and two U.S. Supreme Court rulings that approved gambling on Indian reservations, Congress enacted the Indian Gaming Regulatory Act in 1988. It was so riddled with loopholes, so poorly written, so discriminatory and subject to such conflicting interpretations that 14 years later, armies of high-priced lawyers are still debating the definition of a slot machine.

Instead of regulating Indian gambling, the act has created chaos and a system tailor-made for abuse. It set up a powerless and underfunded watchdog and dispersed oversight responsibilities among a hopelessly conflicting hierarchy of local, state and federal agencies. It created a system so skewed, only a few small tribes and their backers are getting rich, that it has changed the face of Indian country. Some long-dispersed tribes, aided by new, non-Indian financial godfathers, are regrouping to benefit from the gaming windfall. Others are seeking new reservations, some in areas where they never lived, occasionally even in other states, solely to build a casino. And leaders of small, newly wealthy tribes now have so much unregulated cash and political clout that they can ride roughshod over neighboring communities, poorer tribes and even their own members.

The amount of money involved is staggering. Last year 290 Indian casinos in 28 states pulled in at least $12.7 billion in revenue. Of that sum, TIME estimates, the casinos kept more than $5 billion as profit.

That would place overall Indian gaming among Fortune magazine's 20 most profitable U.S. corporations, with earnings exceeding those of J.P. Morgan Chase & Co., Merrill Lynch, American Express and Lehman Bros. Holdings combined.

But who, exactly, is benefiting?

Certainly Indians in a few tribes have prospered. In California, Christmas came early this year for the 100 members of the Table Mountain Rancheria, who over Thanksgiving picked up bonus checks of $200,000 each as their share of the Table Mountain Casino's profits. That was in addition to the monthly stipend of $15,000 each member receives. But even those amounts pale beside the fortunes made by the behind-the-scenes investors who bankroll the gaming palaces. They walk away with up to hundreds of millions of dollars.

Meanwhile, the overwhelming majority of Indians get nothing. Only half of all tribes, which have a total of 1.8 million members, have casinos. Some large tribes like the Navajo oppose gambling for religious reasons. Dozens of casinos do little better than break even because they are too small or located too far from population centers.

The upshot is that a small number of gaming operations are making most of the money. Last year just 39 casinos generated $8.4 billion. In short, 13% of the casinos accounted for 66% of the take. All of which helps explain why Indian gaming has failed to raise most Native Americans out of poverty. What has happened instead is this:

A LOSING HAND.

Revenue from gaming is so lopsided that Indian casinos in five states with almost half the Native American population-Montana, Nevada, North Dakota, Oklahoma and South Dakota-account for less than 3% of all casino proceeds. On average, they produce the equivalent of about $400 in revenue per Indian.

Meanwhile, casinos in California, Connecticut and Florida, states with only 3% of the Indian population, haul in 44% of all revenue, an average of $100,000 per Indian. In California, the casino run by the San Manuel Band of Mission Indians pulls in well over $100 million a year. That's about $900,000 per member.

THE RICH GET RICHER.

While federal recognition entitles tribes to a broad range of government benefits, there is no means testing. In 2001, aid to Indians amounted to $9.4 billion, but in many cases more money went to wealthy members of tribes with lucrative casinos than to destitute Indians. From 1995 to 2001, the Indian Health Service, the agency responsible for looking after the medical needs of Native Americans, spent an average of $2,100 a year on each of the 2,800 members of the Seminole tribe in Florida. The Seminoles' multiple casinos generated $216 million in profits last year, and each tribe member collected $35,000 in casino dividends. During the same six years, the health service spent an annual average of just $470 on each of the 52,000 members of the Muscogee (Creek) Nation in Oklahoma, whose tiny casinos do little more than break even.

BUYING POLITICIANS.

Wealthy Indian gaming tribes suddenly are pouring millions of dollars into political campaigns at both state and federal levels. They are also influencing gaming and other policies affecting Native Americans by handing out large sums to influential lobbying firms. In 2000 alone, tribes spent $9.5 million on Washington lobbying. Altogether they spend more to influence legislation than such longtime heavyweights as General Motors, Boeing, AT&T, or even Enron in its heyday.

GAMING TRIBES AS EXCLUSIVE CLUBS.

Tribal leaders are free to set their own whimsical rules for admission, without regard to Indian heritage. They may exclude rivals, potential whistle-blowers and other legitimate claimants. The fewer tribe members, the larger the cut for the rest. Some tribes are booting out members, while others are limiting membership. Among them: the Pechanga Band of Mission Indians in Riverside County, Calif., whose new Las Vegas-style gaming palace, the Pechanga Resort & Casino, is expected to produce well over $100 million in revenue.

GOLD RUSH.

Since only a federally recognized tribe can open a casino, scores of groups-including long-defunct tribes and extended families-have flocked to the BIA or Congress seeking certification. Since 1979, as gambling has boomed, the number of recognized tribes on the U.S. mainland has spiked 23%, to a total of 337. About 200 additional groups have petitioned the bureau for recognition.

Perhaps the most notorious example of tribal resurrection: the Mashantucket Pequots of Connecticut, proud owners of the world's largest casino, Foxwoods. The now billion-dollar tribe had ceased to exist until Congress re-created it in 1983. The current tribe members had never lived together on a reservation. Many of them would not even qualify for government assistance as Indians.

THE IMPOTENT ENFORCER.

Congress created the National Indian Gaming Commission (NIGC) to be the Federal Government's principal oversight-and-enforcement agency for Indian gaming?and then guaranteed that it could do neither. With a budget capped at $8 million, the agency has 63 employees to monitor the $12.7 billion all-cash business in more than 300 casinos and small gaming establishments nationwide.

The New Jersey Casino Control Commission, by contrast, has a $59 million budget and a staff of 720 to monitor 12 casinos in Atlantic City that produce one-third the revenue. The NIGC has yet to discover a single major case of corruption-despite numerous complaints from tribe members.

THE WHITE MAN WINS AGAIN.

While most Indians continue to live in poverty, many non-Indian investors are extracting hundreds of millions of dollars-sometimes in violation of legal limits-from casinos they helped establish, either by taking advantage of regulatory loopholes or cutting backroom deals. More than 90% of the contracts between tribes and outside gaming-management companies operate with no oversight. That means investors' identities are often secret, as are their financial arrangements and their share of the revenue.

Whatever else Congress had in mind when it passed the regulatory act, presumably the idea was not to line the pockets of a Malaysian gambling magnate, a South African millionaire or a Minnesota leather-apparel king.

FRAUD, CORRUPTION, INTIMIDATION.

The tribes' secrecy about financial affairs-and the complicity of government oversight agencies-has guaranteed that abuses in Indian country growing out of the surge in gaming riches go undetected, unreported and unprosecuted. Tribal leaders sometimes rule with an iron fist. Dissent is crushed. Cronyism flourishes.

Those who question how much the casinos really make, where the money goes or even tribal operations in general may be banished. Indians who challenge the system are often intimidated, harassed and threatened with reprisals or physical harm. They risk the loss of their jobs, homes and income.

Margarite Faras, a member of the San Carlos Apache tribe, which owns the Apache Gold Casino in San Carlos, Ariz., was ousted from the tribal council after exposing corruption that led to the imprisonment of a former tribal leader. For three years, Faras says, those in control mounted nighttime demonstrations at her home, complete with loudspeakers. They initiated a boycott of her taco business, telling everyone she used cat meat. They telephoned her with death threats.

Says Faras: "I don't know what else to say, other than it's been a nightmare."

Copyright © 2002 Time Inc. All rights reserved

December 15, 2002

TIME Special Investigation:

INDIAN CASINOS, Part 2

TIME Discloses 'Staggering' Expenditures
by Tribes Seeking Political Favors

TIME's DONALD BARLETT and JAMES STEELE have uncovered 'a financial-political scandal of stunning proportions,' Columnist William Safire Wrote in The New York Times

New York - Washington often ignores the needs of poor Native Americans while assisting newly-wealthy tribes who dump staggering amounts of money into political campaigns, lobbying and state ballot initiatives, TIME charges in a major investigation of Indian casinos.

This week, TIME publishes the second and final report after a year-long investigation by the Pulitzer prize winning team of TIME Editors-at-Large Donald Barlett and James Steele.

Indian political power is greatest in California, where Indian gaming revenue-$4 billion and growing - is set to surpass all the casinos in Las Vegas, TIME reports. "As the profitability and size of Indian casinos has grown, so has friction between the gaming ventures and surrounding communities," Barlett and Steele conclude. Also, "Washington often rewards rich tribes and penalizes poor ones by distributing funds based on historical practices rather than need. A tribe with a profitable casino often gets more money per capita than a tribe without one."

TIME discloses "staggering" expenditures to secure political favors, while Congress has slashed the Bureau of Indian Affairs to the point that the General Accounting Office calls it understaffed without coherent guidelines. TIME reports:

--Federal funding of Native American programs climbed from $5.3 billion to $9.4 billion, a 77% increase, from 1993-2001, according to an Office of Management and Budget report.

--Indian tribes have contributed $8.6 million to federal candidates since 1993.

--In 1996, during President Clinton's second run for office, 86% of $1.9 million went to Democrats.

--In 2002, with President George W. Bush in the White House, 56% of $1.4 million has gone to Republicans.

--In 2000-2001, tribes spent $20 million lobbying Congress on such issues as preserving the tax-free status of casinos. Sovereign tribes pay no state or local taxes.

TIME's cover story last week, "Wheel of Misfortune: Look Who's Cashing In at Indian Casinos," presented part one. William Safire devoted his Thursday column in The New York Times to TIME's investigation: "The poorest of our aboriginal Americans are getting poorer, while non-Indians get rich hiring lobbyists to get federal recognition of a tribal front for the sole purpose of buying land to build a casino," Safire wrote.

"It is a financial-political scandal of stunning proportions," Safire concluded.

"Under the cover of helping the 28% of Indians now mired in poverty, financial vultures and highly paid, revolving-door lobbyists are ripping off the U.S. taxpayer."

In part two, TIME focuses on tribes wielding political influence. "At the state level small Indian tribes with immensely profitable casinos are exerting an even more disproportionate clout" than in Washington, report Barlett and Steele. TIME's examples include:

--CALIFORNIA's Casinos Contribute Less Towards the Cost of Local Government Services Than in Connecticut: In this year's re-election campaign, Gov. Gray Davis picked up more than $1.8 million from California tribes, which operate 48 casinos in the state -- with perhaps two-dozen more on the way. Davis has negotiated compacts that provide for voluntary tribal contributions to a fund to help local communities defray the cost of government services near casinos. California officials estimate the tribes will pay about $100 million a year into the fund. By contrast, Connecticut collected $332 million last year from its two Indian casinos, Foxwoods and the Monhegan Sun. If California tribes were paying at the same rate-25% of slot revenue-the state would collect between $800 million and $1 billion.

TIME's story also covers casinos operated in California by tribes such as the Rumsey Band of Wintun Indians and its Cache Creek Indian Bingo & Casino. While the casino will take in an estimated $150 million this year, the 44-member tribe also will receive approximately $4,457 from the BIA's tribal priority allocations (TPA).

– CONNECTICUT's Eastern Pequots Used a Lobbyist Related to the White House Chief of Staff: Last June, Bush appointees in the Bureau of Indian Affairs recognized the Eastern Pequots, a southeastern Connecticut tribe with casino hopes. The tribe and its investors paid $525,000 to Ronald Kaufman, a Republican lobbyist who is the brother-in-law of White House chief of staff Andrew Card. "The BIA's recognition came amid widespread opposition," TIME reports, and questions about the tribe's authenticity.

– FLORIDA's Chief of the Seminoles Was Suspended Last Year: The Seminoles won Supreme Court approval for gaming everywhere, TIME reports. Last year individual members received gaming dividends of $36,000; two casinos in Hollywood and Tampa made a combined profit of $216 million, a return of 85%. In 2000, the tribe doled out $275,000 to Democrats. The Seminoles have broken ground for a new complex with Hard Rock Cafe International. Seminole Chief James E. Billie was suspended last year pending an audit of questionable tribal financial dealings, which is still ongoing. His $330,000 salary was the highest of any elected official in Florida. He was responsible as tribal head for the purchase of a corporate jet and a minifleet of helicopters.

Four-hundred members of the Miccosukee Tribe in Florida, whose Miccosukee Resort and Gaming Center rakes in an estimated $75 million a year, will collect $2,858 in BIA TPA's (funds given to tribe members). In the 2003 budget, by contrast, North Dakota's Turtle Mountain Chippewas (28,000 members) will receive on average $154 each.

TIME's investigation shows that while the federal Department of Housing and Urban Development (HUD) over the past four years handed out housing funds to Florida Seminoles averaging $2,800 a member - while the tribe's five casinos generated nearly $1 billion in revenue.

--MISSISSIPPI's Choctaws Spend the Most on D.C. Lobbyists: Mississippi's Choctaw (8,800 members) are the biggest spenders: $11 million distributed to Washington lobbying firms since 1997, most to Jack Abramoff, a top Republican Party fundraiser. The Choctaw Tribe's Silver Star Hotel & Casino rakes in profits of about $100 million a year with a return on revenue of 41%, according to TIME. Over the past five years, "federal agencies have lavished $245 million on the Choctaw," TIME reports.

In 2001, the Choctaw collected $50.4 million, or $5,700 a member, while the Navajos (with no casinos) averaged $900 for each it their 260,000 members. TIME reports that HUD gave the Choctaws an average of $5,900 per member, while the country's largest tribe, the Navajo, with no casinos and a 52% unemployment rate, got much less-- $1,500 per member.

--TEXAS's Kickapoo Ousted Their Casino Head This Fall: The Kickapoo Traditional Tribe of Texas ousted Isidro Garza Jr. -- who ran the Lucky Eagle Casino - this fall. The casino's beneficiaries, tribe members charge, were primarily Garza's immediate family and tribal allies, including his friend, chief Makateonenodua, according to TIME.

Although neither the Eagle Pass, TX casino nor the Indian Gaming Commission will release data, TIME estimates the casino's gross revenue at more than $25 million a year.

"Not a penny has trickled down to the tribe's 470 adult members," according to TIME. Garza's salary was rumored to be at least $500,000. (Federal aid to the tribe has amounted to $10.6 million in recent years.)

Tribal members over the past several years tried to enlist government support, making a litany of charges that money was being skimmed. The Bureau of Indian Affairs passed the buck, TIME reports, saying it wasn't an "investigative arm" of the government.

Garza denies all the charges, and insists he only spent personal funds, his cut of casino profits. "I have a contract with the tribal council," Garza tells TIME, "that compensates me for a percent of the profit of the casino." He would not tell TIME how much: "I think that's between the council and us."

Two years ago, tribe member Jususita Salazar moved from her two-room house, which was in the path of the planned expansion of the Lucky Eagle Casino seven miles southeast of Eagle Pass. Makateonenodua promised to build a new house for the elderly grandmother. But the 100,000 square-foot project ran out of money; tribe members charge it was siphoned off by Kickapoo leaders, according to TIME.

Salazar has left her two-bedroom with electricity and plumbing for a one room hut. "I never got the reimbursement for my home...I am now worried that one day I will be homeless," Salazar tells TIME.

TIME also reports how George W. Bush's efforts as governor helped lead to the shutting down earlier this year of the Speaking Rock Casino & Entertainment Center near El Paso, on the reservation of the Tigua, also known as the Ysleta del Sur Pueblo tribe.

At the time he launched the campaign, Bush said, "There ought not to be casino gambling in the state of Texas, any shape or form of it."

Time Magazine

Copyright © 2002 Time Inc. All rights reserved.

For more Dirty Deals for Indians, GO TO > > > The U.S. Bureau of Indian Affairs

April 4, 2002

Advocates Of Casinos
Spent Big On Lobbying

CasinoMagazine.com

Mainland investors who want to open two casinos on O'ahu spent more money touting their agenda before lawmakers at the start of this legislative session than any other group, state Ethics Commission records show.

Marketing Resource Group, of Lansing, Mich., reported spending $108,679 on lobbying through January and February, the period covered by lobbyist expenditure reports due at the commission yesterday.

The company is a public relations firm employed by investors in a Detroit casino called MotorCity, and last year set up an organization of supporters here called Holomua Hawai'i, named after the Hawaiian word for progress.

The casino investors include Marian Illitch, whose family owns the Detroit Tigers baseball team and Little Caesars pizza chain. They want to build casinos in Waikiki and Leeward O'ahu, and Holomua Hawai'i collected petition signatures from 25,000 Hawai'i residents who support gambling.

The group also produced a video in which economists and others argue that gambling would create jobs, provide more government revenue, and boost the state economy.

But others said they fear gambling could increase crime and corruption, and lawmakers roundly rejected a bill that would authorize the casinos, leaving it very unlikely that the state will legalize gambling this year.

Marketing Resource Group could also be fined for failing to disclose its lobbying activities to the Ethics Commission for the previous reporting period, from May to December.

Commission executive director Dan Mollway said organizations that employ lobbyists and refuse to file reports could be fined up to $500, but most comply voluntarily. [Catbird: Guess that's the high cost of doing business in Hawaii!]

Marketing Resource Group could not be reached for comment yesterday. The firm's Hawai'i lobbyist, John Radcliffe, said he did not know why the report was missing, but that it had been lost in a Michigan snow storm when it was first mailed. The report was due at the commission by the end of January.

Another group that wants to legalize gambling, the Coalition for Economic Diversity, reported spending $9,832 lobbying during the previous period and said it spent less than $10,000 in January and February.

The group is backed by Sun International Hotels Ltd., which wants to build a $1 billion resort and casino at Ko Olina in Leeward O'ahu.

Hawaiian Airlines reported spending $8,300 on lobbying during January and February. Hawaiian, which sought to merge with rival Aloha Airlines, had reported spending more than $140,000 on lobbying during the previous period.

But Hawaiian later said it had mistakenly inflated that figure by including payments for work other than lobbying. In an amended report, Hawaiian said it really spent only $8,250 on lobbying during the May-December period.

The company had initially reported paying more than $83,000 to lobbyist Lyn Anzai, wife of state Attorney General Earl Anzai, whose office was investigating whether the merger would be legal.

The amended report reflects no lobbyist payments between May and December to Lyn Anzai, who is also Hawaiian's general counsel. The report for January and February said Anzai was paid $2,043 for lobbying during that period.

See also: Sun International Hotels

January 10, 2002

Churchill Downs Names 25 Lawmakers
to Whom It Sent Donations

By Joseph Gerth and Haukebo, The Courier-Journal

FRANKFORT, KY - Churchill Downs yesterday released a list of 25 lawmakers to whom the horse-racing company's political action committee gave large contributions in the days immediately before the 2002 General Assembly.

That list includes most Jefferson County legislators and several legislative leaders from around the state who sit on key committees that could consider racing-related bills. The track, however, did not disclose the names of legislators to whom Churchill Downs, Inc. president Thomas Meeker, chairman Carl Pollard or other Churchill Downs officials gave donations in recent days.

Checks sent to legislators last week totaled $15,500. In the past three months, Churchill Downs has donated nearly $50,000 to legislators.

House Speaker Pro Tem Larry Clark said yesterday that he thought that the last-minute contributions came too late. He returned a $1,000 campaign gift from Meeker. . . .

Churchill Downs would like the General Assembly to allow race tracks around the state to install slot machines. It is also seeking approval of a tax increment financing plan that would help pay for multimillion-improvements at the track.

Churchill Downs released the list after a story in yesterday's Courier-Journal that said the company's political action committee had increased its spending dramatically on political campaigns in recent months.

The newspaper reported that the political action committee used Federal Express to rush contributions to legislators last week so they could deposit the checks in campaign accounts before the session began....

Since September, Churchill Downs has given $48,500 to legislators and the state Democratic and Republican parties. In all, 45 of the 138 legislators received contributions ranging from $500 to $1,000. Some of them also received $1,000 gifts from Churchill Downs board members....

Rep. Perry Clark, D-Louisville, said he would certainly keep the $500 the track sent him. "Think it will influence my vote?" he asked. "Absolutely not."

Perry Clark said that accepting the money now is no more corrupting that accepting on a month or a year before the legislative session began. "If you're not going to accept this, maybe you shouldn't accept any contributions," he said.

BUT OTHERS said accepting the money just didn't feel right.

Sen. Bob Leeper, R-Paducah, said he sent back the $1,000 from Churchill Downs' PAC.

House Minority Floor Leader, Jeff Hoover, of Jamestown, said he received a check from Churchill Downs chairman Pollard on Monday - the day before the session began - and returned it because it came too close to the beginning of the session. Pollard also is chairman of Churchill Downs' PAC....

$ $ $

How soon we forget...

From The Washington Post, Online:

LAWMAKERS OR LAWBREAKERS?

KENTUCKY

An FBI investigation into corruption in the Kentucky Legislature nets more than a dozen lawmakers beginning in 1992. The sting, dubbed Operation BopTrot, involves legislators who accepted bribes and other illegal inducements to support horse-racing legislation.

They include:

House Speaker Don Blanford pleads guilty after 1992 indictment on charges of extortion, racketeering and lying. He is sentenced to 64 months in prison and fined $10,000.

Sen. John Hall pleads guilty to conspiracy and other charges stemming from 1992 indictment in Operation BopTrot.

Rep. Clay Crupper pleads guilty after 1992 indictment and is fined $10,000 on charges of interstate travel in aide of racketeering.

Rep. Ronny Layman is indicted in 1992 on charges of conspiracy to commit extortion and lying to the FBI. He pleads guilty and is sentenced to three months of home detention and community service.

Rep. Bill McBee is sentenced to a 15-month prison term for his role in Operation BopTrot.

Rep. Jerry Bronger is indicted in 1992 and later pleads guilty to charges that he accepted $2,000 in exchange for blocking legislation that would hurt harness race tracks. He is sentenced to 10 months in prison.

Sen. Helen Garrett is charged in 1992 with taking a $2,000 bribe from a track in exchange for helping pass legislation. She pleads guilty and receives four years probation.

Sen. David LeMaster is indicted in 1993, and is acquitted of extortion and racketeering, but convicted of lying. He is sentenced to a year in prison and fined $30,000.

Sen. Art Schmidt pleads guilty after 1993 indictment for withholding fact that he took a $20 cash payment from another senator tied to Operation BopTrot. He is sentenced to probation and fined $2,500.

Sen. Patti Weaver pleads guilty after 1993 indictment charging that she promised to help another lawmaker find a job in exchange for support of legislation. She is sentenced to weekend incarceration, probation and community service and is fined $10,000.

Sen. Virgil Pearman pleads guilty after 1993 indictment charging that he took an illegal $3,000 campaign contribution. He is sentenced to three months in a halfway house and probation and is fined $5,000.

Rep. Bill Strong pleads guilty after 1993 indictment charges that he took an illegal $3,000 campaign contribution and did not deposit the money into his campaign fund. He is sentenced to three months in a halfway house and probation and is fined $3,000.

Sen. Landon Sexton pleads guilty after 1994 indictment charging that he took an illegal $5,000 cash campaign contribution. He is sentenced to 15 consecutive weekends in jail, home detention for two months and probation for two years. He is also fined $5,000.

Rep. Richard Turner pleads guilty to a 1993 charge that he filed a false campaign finance report. Charges that he took an illegal $3,000 cash campaign contribution are dropped.

Sen. John Rogers is sentenced in 1994 to 42 months in prison after conviction on charges of extortion, conspiracy, attempted extortion, mail fraud and lying to the FBI.

January 22, 2002

Moderate chance for gambling
in isles, study finds

Deutsche Bank says 9 states are debating gambling this year

By Richard Borreca, Honolulu Star-Bulletin

Hawaii, Maryland and Ohio are all rated as having a "moderate" chance of expanded gambling in 2002, according to a Deutsche Bank study. Florida, which has a highly successful lottery, Kansas and New Hampshire are ranked as "low."

New York, Kentucky and Pennsylvania are all rated as having a "high" chance, the study says.

Hawaii is the only one of the nine that does not now allow gambling, casinos or lotteries.

Meanwhile, the Michigan-based Ilitch group has been lobbying local community and labor groups, saying two casinos on Oahu would generate an additional $43 million in state taxes annually.

John Radcliffe, lobbyist for the Michigan group, has been showing a video presentation to the Building Trades Council, Hotel Workers, AFL-CIO and the Hawaii Government Employees Association but so far has been unable to secure any public commitments of support.

"The interest is high, but the willingness to take the risk and say OK is not nearly as high," he said.

He estimates that if the state permitted two casinos to operate on Oahu, they would generate $435 million, and the owners would be willing to give the state a minimum of 10 percent of the net earnings in tax payments.

Sun International Resorts, which is pitching a $1 billion development at Ko Olina, has also been meeting with community groups and tourism officials, according to a spokesman for the group.

Jim Boersema said Sun calculates the Ko Olina development would bring in new taxes of $85 million a year, including general excise, property, income and a special casino revenue tax.

"We are projecting a minimum 5,000 direct jobs at the resort and another (9,000) to 10,000 indirect jobs," Boersema said.

Both gambling proposals, however, have lacked a strong show of support in the Legislature and were hurt earlier this month when U.S. Sen. Daniel Inouye came out against any form of legalized gambling in Hawaii.

Deutsche Bank researchers Mark Mutkoski, Joel Simkins and Joshua Attie note there is wide acceptance of gambling in Hawaii, as long as it happens somewhere else....

The report concludes that Hawaii is suffering from the post-Sept. 11 recession but still may not want to be drawn into a quick-fix solution such as gambling.

"Despite the perversely favorable backdrop for approval in 2002," the report said, "we believe that Hawaiians hold a NIMBY (not in my back yard) attitude and are still more comfortable flying to Las Vegas to gamble, rather than having casinos in their own state.

"We believe that politicians may not be willing to take a knee-jerk approach towards gaming in an election year," the report concluded.

January 9, 2002

The developer of a proposed Hawaii casino says
he wouldn't mind if residents were excluded

By Richard Borreca, Honolulu Star-Bulletin

The gambling debate is heating up as the opening of the state legislative session approaches, with a developer who wants to build a $1 billion casino-resort saying he would not mind if local gamblers were excluded from his project.

Gov. Ben Cayetano, meanwhile, reiterated his support for a single casino in Hawaii but also repeated his belief that the issue of gambling should be decided by voters in a ballot question in the November election.

"This is one of those issues which is very, very big," Cayetano said yesterday. "There's no question that if gambling is approved in Hawaii, whether it be a single casino or multiple casinos, that it will have some impact, not only on our growth but perhaps our way of life."

Sun International Hotels president Butch Kerzner is proposing a $1 billion development for Oahu at Ko Olina. The company has developed massive resorts in the Bahamas and South Africa. The Bahamas development, Atlantis, has revitalized the entire tourism industry there, Kerzner said.

Bahamian residents are not allowed to gamble in the casinos and, in an interview yesterday, Kerzner said he would have no objection to keeping the Ko Olina casino for non-Hawaii residents only. "That sort of decision should be a local decision," he said. "Our model is to go after the resort market -- that is a big enough market and we believe we can make it a bigger market."

Cayetano said he thought it would be best to put the gambling issue before voters by asking for a constitutional amendment that either approved or forbade gambling in Hawaii.

"I've always favored a referendum, you know, but we don't have one except for the calling of the constitutional ... question," he said.

Asked if he would vote in favor of allowing gambling, Cayetano said: "Yes, I would."

The long-debated issue of legalizing gambling in Hawaii continues to divide people.

While Cayetano supports it, fellow Democrat U.S. Sen. Daniel Inouye called gambling "one of the worst things we can do for the state of Hawaii."

"Saying that gaming would save us and bring about the funds we need for education and for economic development, I see that as a cop out," he said, adding that it ignores the crime and poverty that results from gambling.

Going into the 2002 legislative session that begins next Wednesday, some leaders are doubtful any gambling measure will be approved.

House Speaker Calvin Say (D, Palolo Valley-Kaimuki) pointed to the membership of the Judiciary Committee, which would have to approve any gambling measure, noting well over half of the 17 members are on the record as opposing legalized gambling. "I asked chair (Rep. Eric) Hamakawa to schedule any gambling bill he wants for a hearing, just to get it out of the way. If the votes are not there in passing it, it's pau."

Senate President Robert Bunda (D, Wahiawa-Haleiwa-North Shore) said his proposed resolution for a study of gambling's social and economic impact failed to win approval last year. "It didn't make it, so we'll just wait until the House comes over with their proposal, if any," said Bunda, who supports putting the issue before the voters.

- The Associated Press contributed to this report.

For more, GO TO > > > Sun International Hotels

From CITIZENLink, by Ronald A. Reno:

Gambling and Political Corruption

Gambling "has more of a history of corruption than any other industry," former Illinois Senator Paul Simon testified at the opening meeting of the National Gambling Impact Study Commission in June 1997.

Indeed, Simon's statement has abundant basis in fact. Gambling-related political corruption became so widespread in the 1800s that every state in the union eventually outlawed lotteries and all other forms of gambling. Today, history appears to be repeating itself. The recent wave of gambling expansion in the United States has spawned another epidemic of political corruption.

Two former West Virginia Senate Presidents were sentenced to prison for taking money from gambling interests. One was charged with soliciting $15,000 from a casino company to help pass a bill that would have allowed casinos in the state. The other was convicted for accepting an illegal $10,000 payment from gambling interests.

 Nineteen Arizona legislators and lobbyists were caught on videotape taking money after agreeing to vote for legalized gambling. Six lawmakers eventually accepted plea bargains; another was convicted of conspiracy for taking $25,000 from an undercover agent.

 Three Hilton Hotels executives ---- one a board member ---- resigned in the wake of an investigation regarding the corporation's attempts to obtain a riverboat license in Kansas City, Missouri. Hilton allegedly paid $250,000 to a business headed by the former chairman of the Kansas City Port Authority, whose approval Hilton needed to lease city property for the casino. The former chairman later cast the deciding vote awarding Hilton the lease.

 Missouri's House Speaker of 15 years resigned in 1996 in the wake of a federal investigation induced by charges of gambling-related dealings. According to media reports, the ex-speaker demanded that a gambling company direct payments of $16 million toward the ex-speaker's friends and business associates in order to secure a casino license in the state.

 In Kentucky, 15 state legislators were eventually convicted or pled guilty to charges stemming from Operation Boptrot, an FBI investigation centering on influence peddling and bribery involving the state's horse racing industry.

 The FBI launched a two-year investigation into the activities of more than a dozen Louisiana legislators suspected of accepting bribes from gambling interests. One former state senator, who chaired the senate committee overseeing gambling matters, has been convicted of racketeering-related charges in the investigation. A representative who sat on a similar committee in the Louisiana House resigned after admitting to using his influence to help two organized-crime-controlled video poker companies in exchange for gifts.

 Seventeen South Carolina lawmakers were convicted of or pled guilty to charges related to a federal sting operation labeled "Operation Lost Trust." The investigation centered around allegations that legislators accepted gambling money in exchange for pro-gambling votes on horse racing legislation.

 In 1997, the former chairman of the Indiana House Ways and Means Committee was indicted on charges of bribery, perjury and filing false finance reports. The charges stemmed from allegations that the former chairman took bribes from the lead engineering firm in a riverboat casino project in the state.

 Four of Atlantic City's last seven mayors have been found guilty of or pleaded guilty to corruption charges.

Copyright © 1997 Focus on the Family.
All rights reserved. International copyright secured.

From CITIZEN.link: http://www.family.orgcforum/

May 29, 1998

Gambling in the Heartland

An Overview of Some of the Consequences
Associated with Casino Gambling in
Illinois, Indiana, Iowa, and Missouri

Addiction -- The number of Gamblers Anonymous meetings in Illinois has more than doubled since the advent of casinos, to more than 50. In St. Louis, the number of GA meetings has increased from 2 to 19 in the last few years, while a GA telephone hotline in the area now handles 600 calls per month. In Iowa, the percentage of Iowa adults who had experienced a gambling problem more than tripled after the introduction of riverboat casinos.

ATMs -- Eight of the 10 busiest ATMs in Iowa are located inside casinos. The casino machines dispense twice as much per transaction ($80 to $90) as machines at other locations ($40-$50).

Bankruptcy -- The Des Moines Register reported that Iowa counties with casinos or racetracks had a bankruptcy rate 21% higher than the state average. Bankruptcies in Iowa increased by nearly 100% between 1991 and 1997, despite a robust economy. Further, nine of the 12 Iowa counties with the highest per-capita bankruptcy rates have a gambling facility within their borders or in an adjacent county.

The St. Louis Post-Dispatch noted the connection between casinos and record rates of bankruptcy in that area: "(Bankruptcy attorneys) are seeing more people gamble their way into bankruptcy ... T.J. Mullin, who has handled more personal bankruptcy cases than any other lawyer here, says he has counted $1.5 million in gambling debts among his clients between January and (October, 1996)."

The paper quotes a St. Louis bankruptcy trustee who said that at least five of the 45 debtors she sees on an average day will admit to having significant gambling debts. She added, "When I started in 1991, there was almost no gambling debt."

A 1997 study of bankruptcies in northwestern Indiana found that 18 percent were attributable to gambling. Twenty-one percent of Gamblers Anonymous members surveyed in Illinois reported having filed bankruptcy.

Credit -- More than 20% of casino revenues in Illinois come from in-house credit extended by casinos. The average casino player using credit from Illinois casinos borrows more than $5,600 per month to bet. Further, overdue payments to Illinois casinos now account for 6% of total casino winnings.

Also, Illinois casinos have begun to go after spouses' assets for gambling debts incurred by their partners, according to the Chairman of the Illinois Gaming Board.

A survey of gamblers and non-gamblers in Iowa found that 43% of gamblers had at least three credit cards, versus 19% of non-gamblers. Thirty-four percent of gamblers had credit card debt in excess of $5,000, versus 14% of non-gamblers.

Crime -- The U.S. Attorney's office for Iowa's southern district reported eight cases in 1996 in which suspects said they used stolen credit cards or embezzled from their employer to gamble. Each of the thefts involved more than $25,000, and almost all involved thefts from government-insured financial institutions. Prior to 1996, the office handled about one gambling-related case per year.

"Several armed robberies have been reported in the parking lots of (Kansas City, Mo.) casinos since they first opened in 1994," according to the Kansas City Star. Other violent crimes in Kansas City related to the casinos include a restaurant owner who was trailed home, robbed, and murdered after winning $3,000 at a casino, and a woman convicted of killing her husband to obtain life insurance money to cover her gambling debts.

Expansion -- Iowa became the first state to allow riverboat casinos in 1991, with loss limits of $5 per bet and $200 per riverboat excursion. Three years later, under heavy pressure from casino interests, the legislature voted to drop the betting limits and also to permit slot machine gambling at race tracks.

Illinois legislators agreed to permit riverboat casinos with the stipulation that there be a $500 loss limit. However, at the last minute the loss limitation was dropped "accidentally," according to the bill's sponsor, though legislators were still under the impression that it existed when they voted for passage. Since passage of the riverboat casino bill, gambling interests in Illinois have pushed for dockside gambling, land-based casinos and slot machines at race tracks.

Gambling interests enticed Missouri voters in 1992 to allow betting on card games aboard riverboats that cruised on the Missouri and Mississippi Rivers, with numerous limiting stipulations. Among those were requirements that the riverboats devote 50% of their floor space to non-gambling, family-oriented activities and that the boats must conduct cruises.

In 1994, gambling proponents unleashed a $15-million public relations campaign to win another referendum legalizing slot machine gambling on board the boats. Gambling proponents have succeeded in effectively abolishing many of the initial regulations, including the floor-space requirement, the requirement that boats actually cruise, and even the requirement that boats be located on the rivers. They have continued to push for even further concessions, including a lifting of betting limits and an elimination of the requirement that trained maritime crews be on board the gambling boats.

Licensing Efforts -- Two well-connected Republic party insiders were promised $20 million if they were successful in securing an Illinois casino riverboat license for a Nevada company.

Lobbying -- Gambling lobbyists in Illinois have included a former governor, former director of state police, former state attorney general, two former U.S. attorneys, former Chicago mayor, and dozens of former state legislators--including a Senate president and House majority leader.

The 23 gambling lobbyists working the Iowa legislature in 1998 included four past legislative leaders and three former governor's aides.

Local Businesses -- Iowa State University researchers surveyed businesses in Clinton, Iowa, to determine how they had been affected by the presence of a riverboat casino. Twelve percent reported business had increased, while 29% reported a decrease. Sixty percent said they had witnessed no change.

More than half of business owners in Illinois riverboat casino towns reported either a negative effect or no effect on their businesses from the presence of casinos. Only 3% of respondents reported that their businesses had been "helped a lot" by the casinos.

Political Contributions -- Gambling interests and industry lobbyists in Illinois gave nearly $2.5 million to elected officials and state party organizations in 1995 and 1996. Gambling industry political contributions far exceeded those of any other industry in Illinois during that period.

Political Corruption -- Missouri's House Speaker of 15 years resigned in 1996 in the wake of a federal investigation induced by charges of gambling-related dealings. According to media reports, the ex-speaker demanded that a gambling company direct payments of $16 million toward the ex-speaker's friends and business associates in order to secure a casino license in the state.

Also in 1996, three Hilton Hotel executives resigned in the wake of an investigation into the corporation's attempts to obtain a riverboat license in Kansas City, Mo. Hilton allegedly paid $250,000 to a business headed by the former chairman of the Kansas City Port Authority, whose approval Hilton needed to lease city property for the casino. The former chairman later cast the deciding vote awarding Hilton the lease.

In 1997 the former chairman of the Indiana House Ways and Means Committee was indicted on charges of bribery, perjury and filing false finance reports. The charges stemmed from allegations that the former chairman took bribes from the lead engineering firm in a riverboat casino project in the state.

Poor -- Seven percent of Illinois casino gamblers surveyed reported annual incomes of less than $10,000. Those gamblers on average lost 4.5% of their total income to the casinos.

Profits -- Illinois riverboat casino owners have made extraordinary profits on their investments. For instance, in the first three years of operation, the 11 owners of the Empress River Casino in Joliet netted $178 million. Their initial investment was less than $12 million.

Referenda Spending -- Missouri casino interests spent nearly $15 million on two 1994 referenda--one failed, one successful--to allow full-scale casino gambling on riverboats. Opponents spent $395,000.

Regulation -- Numerous gambling regulators in the Midwest have left their posts to work for the gambling industry. In Iowa, the former chief administrator for the Iowa State Racing and Gaming Commission left to become an executive for President Riverboat Casinos.

The former top administrator of the Illinois Gaming Board became an executive with a company that manages an Illinois casino. At least three other former Illinois Gaming Board employees, including the board''s former chairman and a former chief legal counsel, have since represented gambling companies with interests in the state.

Also, the executive director of the Illinois Gaming Board used his position to link a Nevada casino operator with a state group seeking a casino license. The two parties formed a partnership, which now operates one of the most profitable gambling boats in the state.

Retirees -- Retired individuals account for 31% of Illinois riverboat casino visits, according to a survey of 13,000 riverboat patrons.

"Slot Club" Members -- "Slot club" members comprise one-third of Illinois casino patrons, yet account for nearly 59% of total casino visits. Thus ""slot club"" members patronize casinos nearly three times as often as other casino gamblers.

Suicide -- The Illinois Council on Compulsive Gambling reports that it is aware of more than 20 suicides related to gambling in Illinois.

A survey of nearly 200 Gamblers Anonymous members in Illinois found that 66% had contemplated suicide; 16% had attempted to kill themselves.

Recent gambling-related suicide victims in the Midwest have included a 19-year-old Iowa college student, a retired couple in Illinois, a former St. Louis police officer, and two St. Louis-area mothers in their early 40s.

Tourism -- A survey of Illinois riverboat gamblers found that 85% lived within 50 miles of the floating casino at which they were gambling.

A study by Iowa State University reported that 94% of gamblers at the Prairie Meadows and Casino in Des Moines came from within the state; nearly two-thirds came from the county in which the racetrack is located.

A survey of gamblers at a Kansas City, Mo., casino found that 88% lived within 45 minutes of the casino.

Violations -- A St. Louis area casino was fined $250,000 in 1997 for allowing a 12-year-old girl to gamble on a slot machines. 43

In March a Gary, Indiana, riverboat agreed to pay a $120,000 fine after acknowledging that the casino tried to cover up an employee theft of $300,000 worth of casino chips in order to avoid taxes.

An Aurora, Illinois, riverboat casino was fined $150,000 after allowing a 12-year-old boy to play craps for three hours.

Last year, the Iowa Racing and Gaming Commission levied a $250,000 fine against a southeast Iowa casino for surveillance violations, including giving false information to state agents. The case stemmed from the investigation of a casino patron who committed suicide outside of the casino. The victim, who had a blood alcohol level of .24 at the time of his death, was allowed to continue gambling--eventually losing about $10,000--despite showing signs of intoxication....

Copyright © 1998 Focus on the Family.
All rights reserved. International copyright secured.

THE UPAC SECURITY BULLETIN

By the United People Against Crime. 40 Solar St.,
Bel-Air Village, Makati, Philippines, Aug. 21, 2000

THE CONNECTION BETWEEN GAMBLING
AND ORGANIZED CRIME

There is a very strong connection between organized gambling — whether legal or illegal — and organized crime. In fact, some criminologists believe that organized gambling has its roots in organized crime.

Secondly, there is a strong connection between gambling and street crime. There is abundant statistical data to support the assertion that the crime rate rises almost immediately in areas where new gambling outlets have been established.

Finally, there is a strong connection between gambling and political corruption. Pervasive political corruption is often a manifestation of sub rosa collusion between politicians and organized crime. Our conclusion is that the Philippines should tread cautiously in considering whether to legalize additional forms of gambling, lest its underdeveloped democratic institutions be overwhelmed by crime and corruption.

UPAC's first assertion is that there is a strong connection between gambling and organized crime. Gambling is a magnet for organized crime. And there is no way to keep crime syndicates out of gambling operations.

Take the example of Las Vegas, Nevada which was built primarily with Mafia money. During World War II, Las Vegas was a jerkwater town in the middle of the desert. It was Meyer Lansky, the financial genius of Charlie "Lucky" Luciano's New York-based Mafia family, who conceived of transforming Las Vegas into a gambling mecca controlled by the mob. Lansky realized that an area with legalized gambling offered the Mafia far more profits and far less crooked overhead than its illegal gambling operations elsewhere.

The Mafia had learned how lucrative legalized gambling could be from their experience in Havana. In 1938, Lansky had set up a deal with Cuban President Fulgencio Batista to transform Havana into a gambling mecca through mob control of its casinos. Batista, whose ascent to the presidency had been financed by the mob, was preoccupied with amassing riches, so he was pliable to the demands of his Mafia cronies……as long as there was something in it for him. He transferred control of Havana's casinos from the Cuban military to the American La Cosa Nostra.

Thus, the Mafia cashed in on its investment in Batista and financed its Las Vegas expansion with the profits from the Havana casinos.

In 1941, Lansky persuaded the flamboyant mobster Ben "Bugsy" Siegel to be the mob's point man in Las Vegas. Through the Mafia's influence, Nevada became the first state in modern US history to legalize casino gambling, and the only state to legalize prostitution.

After World War II had ended, Lansky bankrolled Bugsy Siegel with $6 million in mob money to build the Flamingo hotel and casino. When the Flamingo proved to be profitable after one year, the Mafia went full scale into Las Vegas hotel-casino operations.

Nevada state officials set up strict rules to keep the mob out of Las Vegas, but to no avail. The Mafia simply used fronts to exercise ownership and control from behind the scenes. Lansky and the New York families controlled the Flamingo, the Thunderbird and the Sands. Moe Dalitz and the Cleveland mob set up the Desert Inn. The Sahara and the Riviera were controlled by the Chicago mob. The Dunes was controlled by Raymond Patriarca, New England's top Mafia boss. Caesar''s Palace had a Roman legion of Mafia investors, including Jimmy Hoffa and the Teamsters Union.

Las Vegas gambling operations provided the Mafia with a mother-lode which they used to bankroll criminal operations and acquire strategic investments in other parts of America and the world.

The FBI's persistent efforts subsequently broke the mob's grip on Las Vegas. However, astute law enforcers caution that it is naïïve to believe that the ties between the casinos and the mob have been "cleaned up." Lt. Loren Stevens, head of the Intelligence Bureau of the Las Vegas Metropolitan Police Department, says "cleaned up is a matter of definition. You're always going to have politicians involved, and you're always going to have mob involvement in gambling. There's just too much money."

It is important to note that the premise that legalizing gambling would undercut illegal gambling has been proven false. This lesson has been born out in US congressional investigations of Mafia involvement in gambling.

For example, William Jahoda, a gambling director for the Chicago mob who turned state witness, testified that legalized gambling was a boon to Mafia gambling operations: "Any new form or expansion of state-controlled licensed gambling always increased our market share."

When the state abandons its role as a regulator and instead becomes an aggressive promoter of gambling, the whole pie becomes bigger, and so does the mob's slice of the pie. No wonder that, according to newspaper reports on the "Jueteng Summit," the local jueteng lords appeared to be just as eager as their government buddies to have jueteng-like gambling operations legalized.

In East Asia, the closest equivalent to Las Vegas is the former Portuguese colony of Macau. The legalization of gambling and prostitution (as in Las Vegas), combined with the awarding of monopoly control over gambling to a group of businessmen alleged by international security experts to have been high-ranking members of the 14-K, Sun Yee On, and Luen Kung Lok triads, resulted in Macau becoming a haven for world-class criminals, terrorists, counterfeiters and spies.

Martin Booth, an internationally recognized expert on triads (Chinese mafia) writes: "Macau is in essence a triad city." The conservative British magazine, the Economist, labels Macau as "Gangsterland."

Time Magazine's April 20, 1998 article Tales from the Dragonhead reads, "Today Macau has become the Casablanca of the 1990s, a crossroads of international criminals and the money laundering capital of Asia." Hong Kong's Next Magazine estimates that 70% of all Macau policemen are triad associates. Martin Booth writes that Macau's casinos are ideal laundromats for the illicit proceeds of criminal activity: every month, as much as $2 billion may be laundered through Macau's casinos.

The Connection Between Gambling and Street Crime

UPAC's second assertion is that there is a strong connection between gambling and street crime. There is abundant statistical data to support this premise. A 1996 US News & World Report analysis revealed that crime rates in US casino communities were 84% higher than the national average. (1)

University researchers concluded that the state of Wisconsin experiences an average of 5,300 additional major crimes and 17,100 minor crimes per year due to the presence of casinos in Wisconsin. (2)

The San Jose, California police department reported a significant increase in crime in the area surrounding a new cardroom within a 1-year period after its opening: narcotics offenses rose by 200%, property crimes increased by 83%, auto thefts by 21%. Before casinos were introduced in Black Hawk, Colorado, police were receiving an average of 25 calls for assistance per year. After casinos opened in Black Hawk, calls for police assistance skyrocketed to 15,000 to 20,000 per year. A study published by The American Journal of Economics and Sociology found that crimes against property rise by 112% when a state operates a lottery.

How do we explain that statistical evidence consistently shows a rise in crime in locales where new gambling operations are established? It's not just because gambling is a magnet for organized crime. Many people become seriously addicted to gambling; and many of these "pathological gamblers" turn to crime to finance their gambling habit. Also, gambling also creates a "something for nothing" mentality which fosters crime.

The Connection between Gambling and Political Corruption

UPAC's third assertion is that there is a strong connection between gambling and political corruption. In the 1800s, gambling-related political corruption had become so pervasive in America that every state eventually outlawed lotteries and all other forms of gambling. Alas, the lessons of history are often forgotten by succeeding generations. The latter 1990s witnessed a wave of gambling expansion, which fueled another epidemic of political corruption in the US.

For example, 19 Arizona legislators and lobbyists were caught on videotape taking money after agreeing to vote for legalized gambling.

Four of Atlantic City, New Jersey's last seven mayors were found guilty of gambling-related corruption.

In Kentucky, the FBI's Operation BOPTROT led to the conviction of 15 state legislators on gambling-related corruption charges.

Two former West Virginia Senate Presidents were sentenced to prison for receiving bribes from gambling personalities.

There are numerous other examples of gambling-related political corruption----not mere rumors, but bona fide cases resulting in convictions.

Joseph Yablonsky, the former agent-in-charge for the FBI's Las Vegas, Nevada district office, stated that the relationship between politicians and the Mafia in Las Vegas was "incestuous."

He revealed that powerful Nevada Senators Pat McCarran and Paul Laxalt had attempted to intervene to halt the FBI's investigations, on the grounds that they were damaging Nevada's economy.

Yablonsky complained, "In other words, we let the wiseguys take over, as long as it's good for our economy, right? We get a piece and they get a piece."

Yablonsky gave valuable insights into the relationship between gambling and political corruption. In America, before it was legalized in Nevada, the casino business was always based on bribery of public officials. Only through large-scale bribery of officials could large-scale illegal gambling operations exist in the first place. When casino operations were legalized, the same sub rosa relationship continued to exist between mobsters and corrupt politicians.

Conclusions

The Philippines, which does not yet have mature democratic institutions to check gambling-related organized crime and corruption, should be very cautious in considering whether to allow a similar expansion of gambling activities here. America has survived and flourished in spite of its serious problems. But it has mature democratic institutions to check the power of organized crime and corruption. Philippine institutions, at this stage of their evolution, may be overwhelmed by the sheer power of organized crime and corruption....

RIVERBOAT CASINO SALES CAUSE WORRY

Owners in trouble often sell problems
for profits, critics say

CHICAGO (AP), 08/01/01- When state regulators found gambling mogul Jack Binion unfit to run a riverboat casino in Illinois, he left - after selling the casino for $465 million.

He's not alone. Across the country, riverboat casino owners in trouble with state regulators have found profit in their problems. Faced with heavy fines or the loss of their licenses, they've simply sold their operations to other, less-troubled companies.

"It's a pattern that is disturbing," said the Rev. Tom Grey, executive director of the National Coalition Against Legalized Gambling.

"Now we've got regulatory bodies that are acting as Laundromats."

Players International, tainted in a scandal involving former Gov. Edwin Edwards in Louisiana, got out of its jam with a $425 million sale to Harrah's Entertainment.

And Station Casinos, in hot water with Missouri regulators over allegations against a former company lawyer, left the state after selling to Ameristar Casinos for $488 million.

The buyouts are not illegal, and no authorities other than state regulators have investigated the deals. Casino operators say it's only fair that they walk away with a fair price for their investment.

"We still live in a country where government cannot take away people's property without due process," said Frank Fahrenkopf, president and CEO of the American Gaming Association....

But Grey and other critics say allowing casino operators to sell their problems sends a dangerous message.

"It says you can screw up, sell at a profit and keep in the gambling business," Grey said....

Casino companies aren't escaping allegations entirely - Players was fined $10.2 million after federal prosecutors claimed executives funneled money to Edwards and his son to get a Louisiana gambling license. The former governor was found guilty of extortion.

Players agreed to leave the state and pay the fine. In return, regulators approved the buyout.

Station Casinos paid a $1 million fine and sold its riverboats in Missouri after a former lawyer was accused of trying to influence the regulatory board's former chairman.

Station and Horseshoe still own casinos outside the states where they ran into trouble.

On the Web: National Coalition Against Legalized Gambling : http://www.ncalg.org/

* * *

From The Buying of the President 2000, by Charles Lewis and the Center for Public Integrity . . .

GAMBLING is another issue on which Republicans do not exactly practice what they preach. When he was the RNC's chairman, Haley Barbour declared, "It is not my place to be judgmental about issues when it comes to allowing people to support us."

Little wonder: Barbour, according to an account in the Washington Post, owned shares in a firm that received $15,000 a month in consulting fees from Video Lottery Technologies, Inc., a Montana-based lottery and gaming machine company that later changed its name to Powerhouse Technologies, Inc.

Barbour's successor apparently prefers not to be "judgmental" either. "It is not talked about very much as I go around the country," Jim Nicholson told the Center. "Again, it is a legal business."

Last year, the National Gambling Impact Study Commission, authorized by Congress in 1996 to study gambling and its effects, reported that more than 125 million Americans gamble. Of that number, the commission found, an estimated 7.5 million adults are either problem gamblers or pathologically addicted to gambling.

And children are becoming addicted to gambling at a greater rate than adults: Last year, 1.1 million adolescents from twelve to eighteen years old were pathological gamblers.

The industry, meanwhile, is booming as never before, with Internet gambling, convenience-store gambling, video poker, and the proliferation of more than two hundred fifty casinos on Indian reservations nationwide.

Twenty-five years ago, gambling was legal in only a handful of states; today, some form of it is permitted in forty-seven states. The gambling industry employs more than 600,000 people nationwide and generates revenues of more than $50 billion annually.

Casinos rake in four times as much as the motion pictures, four times as much as spectator sports, and twice as much as the music industry.

In the early 1990s the gambling industry reacted to the threat of higher taxes and greater federal regulation by becoming a major force in the Republican Party. In 1995 the industry created a Washington presence, the American Gaming Association, and picked Frank Fahrenkopf, a former chairman of the RNC, to run it at a salary of $800,000 a year.

"I don't think the vast majority of the American people share that view if you're a candidate for the office and you take [gambling money] that you're doing something inherently wrong," Fahrenkopf told the Center in 1996. "Let's face it, everyone has the right to have their own view of what's moral and what's not moral."

One of the American Gaming Association's hired-gun lobbyists is Donald Fierce, a former business partner and colleague of Haley Barbour's at the RNC.

The industry has also dramatically increased its political contributions to both parties and candidates. Since 1995 to 1998 gambling interests have contributed more than $5.2 million in soft money to the Republican Party and more than $4.9 million in soft money to the Democratic Party.

The industry's investment has paid off. To cite just one case in point, in 1998 two Senators who enjoy substantial financial support from gambling interests- Majority Leader Trent Lott and Minority Leader Tom Daschele- stopped legislation that would have eliminated federal tax deductions on all gambling losses from reaching the Senate floor.

Gambling interests also have been generously "comping" politicians. Stephen Wynn, the chairman of Mirage Resorts, Inc., is perhaps the most powerful figure in the gambling industry. The Mirage houses a mini-campaign headquarters, with telephone banks used for polling and get-out-the-vote drives.

Since 1991, Wynn and his companies have contributed more than $1 million in soft money (including $250,000 in July 1999) to the Republican Party. He's hosted political fund-raising events at the Mirage with such leading Republicans as Barbour, Dole, Gingrich, and McConnell, sometimes flying them to Las Vegas in his corporate jet.

Gingrich, on one trip to Las Vegas, dined with Wynn privately and attended a breakfast fund-raiser the next morning. The House had already passed the legislation that created the National Gambling Impact Study Commission and would have given it the power to subpoena gambling-industry executives. In front of Las Vegas contributors, though, Gingrich publicly promised that he would try to take away the commission's subpoena power, and, with a helping hand in the Senate from Trent Lott, he did.

Some Republicans are troubled that their party is so eagerly rolling its dice on the gambling industry. "I start to see all these guys, people whom I had known, many who were out giving- quote 'the pro-family speeches,' that 'we are the Republican Party, we're pro-family,' [and now] we're working for the gambling interests," Representative Frank Wolf, a Republican from Virginia told the Center.

"They have attempted to corrupt the process up here. There's a gambling caucus on Capitol Hill. Twenty years ago a Member of Congress wouldn't have had a gambling caucus. Twenty years ago a Member of Congress wouldn't have taken [gambling-industry money], wouldn't have wanted to be in the room with a gambler, and now there's a gambler caucus. Now, they don't call it gambling; they call it gaming. But gaming is kind of the respectable name for it. It's gambling."

Wolf is so disheartened by his party's coziness with gambling interests that he's spoken with party officials about it.

"Congressman Wolf has a very strong view ... ," Nicholson told the Center.

"I respect him, and I respect his views. But the rank-and-file people around the country, or even the activists and the members of my RNC, rarely ever bring up the subject." ...

McCain Grills Officials on Mohegan Deal

By Sean P. Murphy, Boston Globe Staff, 7/26/2001

WASHINGTON - Focusing on the huge profits some investors now take from Indian-owned casinos, an angry Senator John McCain yesterday grilled two government officials on the deal-making behind the Mohegan Sun casino in Connecticut and on the Clinton administration's last-minute recognition of the Nipmuc tribe of Central Massachusetts.

In his questioning, McCain made clear his concern that non-Indian investors at the Mohegan Sun casino dodged federal law to get hundreds of millions of dollars in extra profits that rightfully belonged to the tribe.

''Do you find that disturbing? Outrageous, even?'' McCain asked Montie Deer, the chairman of the National Indian Gaming Commission, a panel established to enforce a strict limit on casino profits for non-Indian investors.

Deer responded that he was not in office when the Mohegan deal was approved by the commission.

Later, under questioning from Senator Daniel Inouye, Deer acknowledged legal ''loopholes'' in the Indian Gaming Regulatory Act of 1988, which have been exploited by ''innovative'' lawyers working on behalf of investors.

''So it could be that tribes are paying more [to investors] than they should?'' asked Inouye, the chairman of the Senate Indian Affairs Committee.

''Under the act, yes,'' Deer answered.

''Are there measures to be taken so Indian Nations are not snookered?'' Inouye asked.

Deer answered that he hoped tribes would have lawyers astute enough to avoid such pitfalls. It was up to Congress to close the loopholes, Deer said, possibly through an amendment to the law.

McCain pinpointed the Mohegan tribe's relationship with a group of investors known as Trading Cove Associates, a syndicate headed by international gambling mogul Sol Kerzner, creator of Sun City in South Africa.

In 1988, Congress recognized that some tribes were so poor that they might agree to give as much as 90 percent of any profits to their non-Indian investors.

Congress set 30 percent as the maximum profit margin for those investors, though in exceptional circumstances the tribes could grant up to 40 percent. The Indian Gaming Commission was charged with enforcing that limit by approving contracts between tribes and investors who would also act as casino general managers.

The Mohegan tribe made its deal with Trading Cove Associates, which originally proposed to develop both a casino and an on-site hotel in exchange for the development rights.

But before submitting the proposal to the National Indian Gaming Commission, Trading Cove withdrew the hotel component. The commission approved maximum compensation for Trading Cove in 1995 anyway - an arrangement worth close to $500 million, to be paid over seven years.

After the casino opened, Trading Cove and the tribal leadership agreed on a ''buyout'' whereby the tribe would take over direct management of the casino. Nevertheless, the tribe promised to pay Trading Cove in full, as if Trading Cove had continued as general manager.

But with Trading Cove no longer managing the casino, the National Indian Gaming Commission lost authority to enforce restrictions on Trading Cove's share of profits.

That was the ruling of the commission's general counsel in 1998.

As a result, Trading Cove could then negotiate for profits above the maximum set by Congress. And it did so by selling the hotel rights back to the tribe for as much as $450 million, according to interviews and documents reviewed by the Globe.

Trading Cove, in all, will receive an estimated $1 billion from the tribe. Trading Cove lawyers and Mohegan tribal leaders declined comment yesterday, but they have said their deal complied with all laws and that Trading Cove's compensation was fair.

Yesterday, after setting out the details of that deal, McCain asked Deer if such an arrangement was normal. ''No, it is not normal,'' Deer said.

McCain, becoming more animated, wanted to know if Deer thought it was ''disturbing'' or ''outrageous.''

''You know, hindsight is a great thing,'' Deer replied. ''I wasn't there when this happened. I think the law was followed as written in the act.''

Deer began to cite a section of the law concerning the Gaming Commission's limited authority over the termination of contracts. But the senator cut him off, saying he was concerned the deal violated the spirit of the law. Deer answered that the Mohegan's leader approved the deal and was well represented by lawyers.

Tribal sources, meanwhile, told the Globe that Trading Cove got more money because the leadership calculated that the matter was too expensive to litigate and could delay expansion of the casino and construction of the hotel.

McCain then pressed for details concerning the Clinton administration's recognition of the Nipmucs and two other tribes just before the president left office.

On his final day in office, Kevin Gover, Clinton's head of the Bureau of Indian Affairs, reversed the findings of the bureau's staff to recognize the Chinook tribe of Oregon. The staff had determined that the Chinook did not meet the criteria for recognition as a tribe.

Similarly, Michael Anderson, while serving as acting head of the Bureau of Indian Affairs on Clinton's last day, overruled staff findings and recognized the Duwarmish tribe of Washington state. He also gave preliminary recognition to one band of the Nipmucs of central Massachusetts.

The Nipmucs have signed a contract with an investor to build a casino, possibly along the Massachusetts-Connecticut border.

Questioned by McCain, Sharon Blackwell, deputy commissioner of the Bureau of Indian Affairs, noted that tribal recognition is granted at the discretion of the bureau's director, but said she was not prepared to give details on the Chinook and Nipmuc decisions.

McCain shot back that he intended to get such answers....

* * *

This is my unofficial effort to provide basic information about the Oneida Nation of Wisconsin, a Native American group near my town of Appleton, Wisconsin. I'm white, but have been very impressed with members of the Oneida Tribe in Wisconsin that I know personally and offer this page in tribute. This work is very early in its development; more will be added later as I obtain additional information. Please send comments to http://jeff@jefflindsay.com/.

~ ~ ~

GAMBLING CONTROVERSY LOOMS OVER ONEIDA

While the introduction of gambling on the reservation has been hailed as a great economic blessing to the Tribe, I have had comments from several Oneida members indicating that legalized gambling may have been an even greater curse. With millions of dollars now being controlled by leaders of the Tribe, there are many opportunities for corruption, abuse, and contention.

Some members wonder where all the money is going, while others are dismayed at the divisiveness that has been created. Apparently there have been some significant intra-tribal conflicts over use of the money. (In my opinion, any source of funds that relies on human greed and stupidity is not going to strengthen its recipients.)

Here is an example of one comment:

"I have seen the Casino literally divide the clans and set friends and relatives against each other in bitter never-ending battles over money. The fact of the matter is that there is very little distribution of the money to the people. It does not trickle down to the little people. Furthermore the Casino created more jobs for white people than it did for Oneidas."

Legalized gambling on the Oneida reservation, which has meant millions of dollars for the Oneida Tribe, received the support of the State because of the tax money it is supposed to bring to Wisconsin State coffers.

There's just one problem: the Oneida casino isn't paying taxes on their take. Nearly $5 million are still owed, and the Oneida Tribe is expected to miss a "final" deadline on Jan. 5, 2001. With the State of Wisconsin threatening to shut down the casino, the Tribe now claims that they are willing to pay as long as they can direct how the money is spent.

Sure wish I could do the same with my taxes!

Native American gambling establishments can be viewed as a pretty clever way of taking revenge on the white man. How else can you get busloads of people descended from former enemies to come willingly to your door and drop thousands of dollars over and over - and even think they are having fun?

It's sad to see so many lives and marriages wrecked by gambling - I know of quite a few in Appleton - but can I blame the Oneidas for taking advantage of American stupidity?

~ ~ ~

FOR A GLIMPSE OF SOME BIG GAME BIRDS
(AND A PEEK INSIDE SOME OF THEIR NESTS) -

JUST POINT YOUR RACE-TRACK FIELD GLASSES
IN THIS DIRECTION

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\/

\/

Ash Resnick - Former Director of Operations at the Aladdin Hotel.

From Land and Power in Hawaii, by George Cooper and Gavan Daws:

ORGANIZED CRIME

On Maui, two men who allegedly ran large-scale illegal gambling and were reputed syndicate leaders - Yujiro "Tani" Matsuoka and Takeo Yamauchi - and one who helped run gambling - Stanley T. "Banjo" Tamura - invested in real estate, sometimes in association with high government officials.

The evidence for this involvement comes mainly from the court probate files of Matsuoka and Tamura, who were murdered in the mid-1970s.

Tamura, a Maui County employee since 1951, was for many years chief teller for the Maui County Finance Department. He was reputed to have simultaneously been one of the island's chief organizers of illegal sports betting. Reportedly he ran betting operations from his county office....

Tamura was murdered in 1975. He was found in his home in Wailuku, dead from multiple stab wounds. As of the mid-1980s the crime remained officially unsolved.

Police believed the killing was syndicate-related, possibly an execution for not paying off sufficiently to an Oahu syndicate group or not meeting some other kind of obligation....

Matsuoka, a former tailor who became a professional gambler, was referred to in various criminal proceedings in the 1970s as either the number one or the number two man in running organized crime on Maui. When Nappy Pulawa was being tried in 1974, he called Matsuoka "the Maui boss" for the syndicate, who served as a receiver of gambling and protection money.

Matsuoka was found shot to death in a canefield in 1978. This crime also remained officially unsolved as of the mid-1980s....

After Matsuoka's death, FBI agents interviewed Takeo Yamauchi. He reportedly told them Matsuoka had been the "boss" of gambling on Maui. But the better estimate, according to law enforcement authorities, was that in fact Yamauchi was the boss....

In 1978, in a Las Vegas gaming authority proceeding, a similar appraisal of Yamauchi was made. At issue was the application of Irving "Ash" Resnick to direct casino operations in the Aladdin Hotel. The Nevada Gaming Board turned Resnick down.

According to United Press International the decision was based in part on allegations that Resnick "associated with undesirables in organized labor and with Hawaii underworld figures, including Takeo Yamauchi, described by authorities here [Las Vegas] as Maui's most powerful organized crime figure."

(Resnick's application was later granted by a higher commission. Included in testimony on this occasion were favorable letters about Resnick from Hawaii State Sen. Duke T. Kawasaki, Honolulu Mayor Frank F. Fasi, and Gov. George R. Ariyoshi.)

* * *

OBITUARIES

January 23, 1989

LAS VEGAS FIGURE IRVING (ASH) RESNICK

LAS VEGAS (AP) - Irving (Ash) Resnick, a longtime gaming figure credited with luring high rollers to the Las Vegas Strip, died Wednesday. He was 72.

Resnick died of heart failure at Humana Hospital Sunrise after being hospitalized after a long bout with cancer.

His forte was bringing gamblers to Las Vegas casinos for high-stakes gambling, and he organized the first junkets that later became a fixture of the casinos.

Resnick's Las Vegas career spanned four decades and included stints at Caesars Palace, the Aladdin, the Dunes, the Tropicana, the old El Rancho and Thunderbird hotels and most recently the Maxim Hotel.

He was credited with starting the first baccarat game at the Dunes. Baccarat is now featured at most Strip hotels.

In 1974, Resnick was convicted of income tax evasion while employed at Caesars Palace. The government alleged that Resnick skimmed more than $300,000 from Caesars and failed to pay taxes on it.

The decision was later overturned.

See also: Ken Mizuno

Ben Cayetano - (D) Governor of Hawaii.

January 25, 2001

DEVELOPER WANTS APPROVAL TO
BUILD CASINO AT KO `OLINA

by Kevin Dayton and Tanya Bricking, The Honolulu Advertiser

When Gov. Ben Cayetano traveled to the Bahamas last year, he met with executives from an international hotel and casino company that is now proposing a new 1,500-room resort at Ko `Olina that would include gambling.

The gambling proposal by Sun International Hotels Ltd. appears to have little hope of approval by the state Legislature this year. Although Cayetano said yesterday he is willing to listen to the plan, he has long opposed casinos in Hawai`i and isn't promising to support Sun's proposal.

Cayetano was in the Bahamas Dec 9-13 visiting the Atlantis Resort, a facility owned by Sun International that boasts the largest aquarium in the world. Kim Murakawa, Cayetano's press secretary, said the governor's main purpose for the trip was to visit the aquarium, but Cayetano was informed at the time that Sun would propose a development in Hawai'i.

Cayetano was accompanied on the taxpayer-financed trip by his former chief of staff, Charles Toguchi, who is now a lobbyist for Sun, and by public relations executive Jim Boersma, who has represented Sun for about a year.

Boersma said the governor, Toguchi and he had dinner with Sun executives, but that as far as Boersma knows, Cayetano did not discuss gambling with the executives.

Sun is proposing two bills that would allow developers to compete for a license for a single casino in West O'ahu. The operations would be overseen by a gaming commission and pay a wagering tax of 12% to the state.

Under the bills, the state would be guaranteed a minimum take of $32 million to $42 million a year for the first three years, with $30 to $40 million going into a scholarship program for college-bound students who maintain grades of a B-minus or better, Boersma said.

The proposal will be introduced in the Senate by Senate President Robert Bunda, D-22nd (Wahiawa, Waialua, Sunset Beach), and in the House by Rep. Nathan Suzuki, D-31st (Salt Lake, Moanalua).

State lawmakers have rejected one gambling proposal after another in the last decade, most recently killing a measure last February that would have legalized shipboard gambling.

Most lawmakers said they remain opposed to all forms of gambling. . . . Only two of the state's 76 representatives and senators said they would vote to legalize casino gambling. One is Suzuki, and the other is House Tourism Committee Chairman Jerry Chang, D-2nd (S. Hilo), who has agreed to hold a hearing to consider Suzuki's bill....

Boersma said a media campaign will kick off with newspaper advertisements at the end of this week to make a case for the gambling proposal.

Ko `Olina denies involvement

No one at Ko `Olina has talked to anyone about a casino at the resort, said Sheila Donnelly-Theroux, whose Sheila Donnelly & Associates company speaks for Ko `Olina.

Ko `Olina originally was conceived as a $3 billion resort project with condominiums, single-family homes, hotels and stores fronting manmade lagoons.

Financing for Ko `Olina collapsed in the early 1990s as Japanese backers of the project ran into difficulty, and only a fraction of the project was completed.

"Nobody at Ko `Olina is part of any group or has talked to anybody about a casino," she said....

Dorothy Bobilin, president of Hawaii's Coalition Against Legalized Gambling, said a casino would "open the floodgates" for other forms of gambling. She said her opposition is based on more than moral ground, that it focuses on social and economic problems she said gambling could bring.

"Look at the ripple effect of the Kahapeas and Sias in the world," she said of former Honolulu housing official, Michael Kahapea, a high-stakes gambler who stole nearly $6 million in city money for his Las Vegas gambling adventures, and bankrupt local financier Sukamto Sia, who left millions of dollars in gambling debts....

'There is no free lunch'

The problem for the anti-gambling group is that lobbyists have a lot more money to develop a public relations campaign to sell people on the idea of a casino, said Ira Rohter, associate professor of political science at the University of Hawaii as well as a Green Party member and gambling opponent.

"It's one of those things based on the myth of revenues coming in," he said.

"It looks like free money. It turns out there are a lot of social costs. There is no free lunch, you know?"...

* * *

See also: Sun International Hotels

Bob Miller - Ex-Governor of Nevada; Director, Zenith National Insurance Corp.

From The Conspirators: Secrets of an Iran-Contra Insider, by Al Martin:

U.S. GOVERNMENT NARCOTICS TRAFFICKING (Part II)

Another interesting Iran-Contra/CIA narcotics trafficking connection ... was the trafficking points in Nevada and Arizona....

In the Nevada connection, Governor Miller was dogged with allegations for years about Iran-Contra profiteering.

Eventually, it got to the point that Miller decided not to run again for Governor of Nevada.

An interesting connection into all this is that Nevada is a place similar to Florida - but on a smaller scale. It's a place where government-sponsored cocaine trafficking and government-sponsored fraud meet because of Nevada corporation laws.

It's where a lot of shell corporations were formed. In order to do this, George Bush had to have control of the Nevada Secretary of State's office....

Before becoming governor of the state, Miller was the Secretary of State of Nevada. He was dogged with allegations about missing corporate documents when Congress tried to subpoena them.

When Miller moved into the Governorship, look who becomes the new Secretary of State of Nevada.

The infamous, sinister, dreaded Frankie Sue DelPapa, a longtime minion of George Bush. One of George's personal secretaries in the past, DelPapa, who was considering running for Governor, was then forced to withdraw from the race under renewed allegations of Iran-Contra involvement vis-a-vis certain fraudulent entities in Nevada - the substitution of corporations.

She personally substituted corporate records and actually substituted officers, principals and directors in the Hellenic Seafood case and the Cosmos Investment Group case.

The fraud was egregious. The problem is that it was regarded as a regional issue. Some of the alternative papers like the Contact newspaper did an extensive expose' of this and documented how Miller linked to DelPapa, and DelPapa's linked to the Republican National Committee and to George Bush.

Also there were the underlying links of the corporations in question to George, Jr., Jeb, and Neil. They did a wonderful expose' of it.

But nobody in the mainstream media would pick it up, since it was considered as a minor regional issue within the greater Iran-Contra picture....

* * *

From The Money and The Power: The Making of Las Vegas and Its Hold on America, by Sally Denton and Roger Morris:

. . . It was in Binion's Horseshoe in the 1970s that Texas narcotics dealer Jimmy Chagra laundered tens of millions of dollars in drug profits at the tables - money, as A. Alverez put it, "black as pitch."

It was there too, in 1979, that a deal was cut for hit man Charles Harrelson to assassinate U.S. District Judge John Wood as Wood prepared to preside over Chagra's drug trafficking trial in San Antonio.

That same year, a customer in the Horseshoe, having lost all his money, turned rowdy and claimed to have been cheated; he was hustled out of the casino and shot in the head point-blank with a 9 mm revolver - a weapon found that night in the casino vault. When the FBI opened a bribery probe of city detectives on the scene and of officials in the office of Clark County district attorney Bob Miller, and ultimately a murder investigation of Binion, they could find no witness willing to testify.

Miller, son of a Chicago mobster and strip-joint owner, would go on to become governor of Nevada in 1989. . . .

As always, the lights of the Strip - and now its well-paid corporate publicists - seemed to dazzle the rest of the country, many visiting journalists oblivious to the reality behind the neon. In 1994, in a cover story typical of much of the coverage of the moment, Time declared Las Vegas "an All-American city," what it called "the new American hometown."

The toll hardly stopped at the edge of the valley. The Nevada that Las Vegas casinos now dominated cheated still had one of the highest per capita and median incomes in the nation, statistics that reflected the vast wealth of Las Vegas but said nothing about the actual distribution of income, much less power. Thus it also had one of the highest proportions of bankruptcy in the United States, as well as one of the worst high school dropout rates. Despite graduate schools, buildings, and other monuments named after some of the city's most infamous predators, its system of higher education remained relatively starved and neglected, as always by the ruling mega-resorts, which drew the preponderance of employees from the ranks of those with a high school education or less, and most of their top executives from out of state.

Even beyond gambling's stranglehold, there might have been other sources of revenue to address the state's needs. By the nineties, in an ironic reprise of the Comstock boom, Nevada led all states in gold and silver production, though with the same piracy and colonial exploitation in public policy. A "sort of informal agreement since 1989" had existed "between the casino and mining industries to respect each other's interests regarding tax policy," as Nevada historian Eugene Moering recorded in 1999. "Nevada has once again served as a bank where mining companies have used their under-taxed profits ... to fund mining operations in other states and nations."

Not surprisingly, the governor presiding over the mining-gambling collusion and much else was Bob Miller, the son of Riviera mobster. With the rise of the former Clark County district attorney to the Governor's Mansion in 1988, the last figment of any ostensible separation between politicians and gamblers was erased. The man who had been in a blind-trust casino partnership with Allen Dorfman and others, who had been less than zealous to prosecute the depredations at Binion's Horseshoe, was the Strip's own - enjoying "political support from nearly every major casino owner in the state," as Moehring noted, and on any issue of importance doing their bidding." . . .

~ ~ ~

In the last presidential election of the twentieth century, the national political power of the city - long wielded for the most part discreetly, if not covertly - came dramatically into the open. Unlike the millions of gamblers who went to Las Vegas seeking a windfall, the 1996 candidates, Clinton and Bob Dole, seemed to beat the proverbial Las Vegas odds. Both parties, in equal measure, raked in gambling money as never before, gratefully taking official record contributions of more than $5 million and millions more generated from its collateral business and influence. But much of the real game remained hidden, and the house would be the only winner in the end.

If the Strip had once quietly given Jack Kennedy a valise with a million dollars at one of the Rat Pack parties at the Sands, if Marcello had made his secret payoffs to Lyndon Johnson and Hughes to Richard Nixon through poker-faced middlemen, if Reagan had taken their campaign backing by way of Sunbelt and Teamster proxies, if Laxalt only a few years before had given up a run for the White House because of the city's taint, now the passing of the cash was one more public show.

In June 1995, with some fanfare, Senator Dole went to Shadow Creek - Wynn's 320-acre, $48 million private golf course, a guarded preserve where the staff was sworn to secrecy and the few guest players, required to have a minimum credit line of $100,000 at one of the Wynn casinos, were served caviar of the fairway. But Dole had no trouble getting in. At a $5,000-a-plate luncheon, where the guests included Frank Fertitta and Blake Sartini of the Station Casinos, Binion's son Jack, and other wealthy Las Vegans, Dole raised a half-million dollars. In 1994, Wynn had hosted a breakfast that gave the GOP another $540,000 at one sitting, though the cash from both events was only a fraction of the more than $7 million Las Vegas interests put into local races throughout the country, as well as "soft money" coffers of both parties over the early nineties.

After the Shadow Creek golf outing, Wynn personally would go on to raise more than another $1 million for Dole, including some $90,000 from his family and Mirage, Inc. employees, and Wynn's close friend and associate John A. Moran became Dole's finance chairman. . . .

In a long-standing tradition going back to the Syndicate's support of Nixon as well as Kennedy in 1960, and of both presidential candidates in almost every subsequent race, Wynn's presence and money in support of the Democrat as well as his earlier backing of the Republican surprised no Strip insiders. Within weeks of addressing Nevada Republicans and extolling Dole as a "good, solid-thinking man," Wynn was also promising to raise six-figure donations for Clinton.

The bipartisanship coincided not simply with Clinton's early lead in the polls, but apparently with a golf game in May 1996 when Governor Miller arranged for the president and Wynn to play together at the Congressional Country Club in Washington. "I'm just one of those fence-jumpers," the owner of the Mirage joked with a local reporter afterward. "I just see which way the wind's blowing."

True to form, within days of the Green Valley luncheon there were reports from Wynn's corporate spokesman that the casino executive was still supporting Dole as well. . . .

For more, GO TO > > > The Catbird Seat, Part II: Riscorp ; Zenith National Insurance Corp

Chris Hemmeter - From Honolulu Star-Bulletin, 11/1/99, by Richard Borreca:

Hawaii Land: The Source of Power,
the Pot of Gold at Rainbow's End

At the time of statehood, ownership was concentrated,
with fewer than 100 owners holding half of all the land.

Hawaii's dream and nightmare dovetailed into one: develop the land, make every parcel as valuable as possible.

"Ten years from now I envision Honolulu to be largely concrete and steel, with some coconut trees sprinkled throughout," boasted Lowell Dillingham, developer of the Ala Moana Center, in 1961. . . .

While commercial real estate was valuable, it was the tourism boom that echoed through the new high-rise canyons of Waikiki. Jumbo hotels- built to match the lumbering jumbo jets which began coming regularly in 1970.

Between 1968 and 1971, 17,140 hotel rooms were created in Waikiki . . .

The Kalakaua Avenue view of Diamond Head was first blocked by the 1970 Holiday Inn, with its 650 rooms rising 25 stories high. Today, the hotel is called the Hawaiian Waikiki Beach Hotel.

But perhaps the building boom's crescendo sounded in 1974, when young developer Chris Hemmeter blew up the Biltmore Hotel to build the first super-block, the Hemmeter Center and the adjacent King's Alley.

The hotel was the Hyatt Regency . . .

* * *

Honolulu Star-Bulletin, 10/9/99, by Peter Wagner: Grand Developer Down But Not Out - He blew into town, built an empire and lost it in New Orleans. Somewhere along the way, Chris Bagwell Hemmeter became an icon among Hawaii developers and set a new standard for lavish "fantasy" resorts.

His legacy in Hawaii, a mixed bag of opulence and elegance, includes the Hyatt Regency Waikiki, Hyatt Regency Waikoloa, Hyatt Regency Maui, Westin Maui, Westin Kauai, King's Alley in Waikiki and Hemmeter Corporation Center in downtown Honolulu.

Hemmeter was 22 and just out of Cornell University when he arrived in Hawaii in 1962 to become assistant manager at the Royal Hawaiian Hotel (which sits on land leased from Bishop Estate). ... He parlayed a $10,000 loan from his parents first into retail stores, then restaurants, before turning his energy to resort developments.

Hemmeter's high-flying fortunes began to plunge in 1995 with two Chapter 11 bankruptcies and a Chapter 7 personal bankruptcy filed in 1997, brought on by the failure of Mississippi gambling boats and an $800 million casino in New Orleans.

The personal bankruptcy, a liquidation now being closed in Los Angeles, showed $847,000 in assets and $87 million in debts.

"We bet the whole company on our project in New Orleans, based on the advice and counsel of the investment community and everybody else involved, and it didn't work out," he said Thursday from his Los Angeles home. "I guess that's what risk-takers do."

But Hemmeter, who turns 60 Monday, is hard to keep down. He and his son, Mark Hemmeter, are developing a $225 million hotel, lodge and casino in Black Hawk, Colo. "Jackpot Springs" is due to open in two years.

For more, GO TO > > > Broken Trusts; Dirty Money, Dirty Politics & Bishop Estate; Office of the U.S. Trustee vs Harmon: Witness Diane Plotts

Dan Inouye - U.S. Senator (D) from Hawaii, called by some Hawaii's "Political Godfather".

AllPolitics:
FISCAL 1997 PORK TOTALS: Per Capita, Per State, June 9, 1997:

Rank: #1 - Hawaii

Population: 1,183,723

Pork/per Capita: $131.01

Pork Dollars: $155,078,000

(For comparison: Michigan ranked at the bottom of the pork barrel with a Population of 9,594,350, with Pork/per Capita of $0.96, for total Pork Dollars of $9,594,350.)

* * *

ABC News, 2/2/97, by James Walker: The King of Pork . . . "Dan Inouye is the second largest industry in the state of Hawaii," says Richard Borreca of the Honolulu Star-Bulletin.

That's because in just the last five years, Inouye has brought home almost half a billion in federal tax dollars. The senator has mastered the recipe for pork: one part seniority, mixed with a choice assignment on a powerful spending committee....

Pork Barrels at Sea

When local historians wanted to build a replica of a Polynesian canoe, they went to Sen. Inouye and he delivered.

Two million dollars in federal funds and the Hawaii`iloa was built- all 57 feet, 17 thousand pounds of it. The goal was to show how the first Hawaiians sailed to their new home.

Donald Duckworth of Bishop Museum is an admirer of Inouye's ways. "Certainly out here, we admire and respect Senator Inouye's translation of our needs."

But what some call need, others call waste.

How does a boondoggle like this get funded anyway?

Read Between the Lines

Sen. John McCain, R-Ariz, says it's because some lawmakers slip requests for special projects into huge appropriations bills that no one is likely to scrutinize.

McCain claimed he knew nothing of the Polynesian canoe. "Many times we don't know what's in these bills until after they're signed into law."

Inouye also used a 203-page military-appropriations bill to get a company a 30-year monopoly on the cruise business in Hawaii.

"You give one company a monopoly to cruise the very beautiful islands of Hawaii, the consumers are going to pay, and clearly, far in excess of what they otherwise would if there was competition," said Sen. McCain.

Senator Inouye declined ABC News' request for an interview.

Meanwhile, the pork projects keep flowing into Hawaii.

And Senator Inouye keeps spending your money....

* * *

Honolulu Star-Bulletin, 10/28/96, by Ian Y. Lind: Isle Woman Part of Campaign Probe - Former resident Nora Lum figures in congressional investigation into '92 finances. Congressional investigators have renewed a probe of former Hawaii resident Nora T. Lum, and a 1992 campaign project which she headed, because of their links to Democratic National Committee fund-raiser John Huang and former DNC official Melinda Yee.

David Bossie, staff investigator for Rep. Dan Burton, said last week that investigators are "extremely interested" in Lum's association with Huang and Yee in the Asian Pacific Advisory Council (APAC-Vote), a DNC project that operated out of offices in Torrance, Calif, during the fall of 1992.

Bossie said APAC-Vote is drawing new scrutiny because its "cast of characters" included Huang, then an officer of the Indonesian-owned Lippo Bank in Los Angeles; the late Secretary of Commerce, Ron Brown, then chairman of the DNC; and Melinda Yee, an assistant to Brown at the DNC and national director of Asian Pacific American affairs for the 1992 Clinton-Gore campaign.

Following the 1992 elections, Brown was appointed secretary of commerce and named Huang and Yee to key positions in the department....

Huang and Yee have been ordered to testify in a lawsuit by the conservative organization, Judicial Watch, which wants to know whether Commerce Dept trade missions were used to raise funds for the Democratic Party....

APAC-Vote officially opened its office on Sept 9, 1992, the same day then-candidate Bill Clinton announced the formation of the Asian Pacific American Committee for Clinton-Gore, whose roster included Sen. DAN INOUYE, Sen. DAN AKAKA, Rep. PATSY MINK, and then-Gov. JOHN WAIHEE. . . .

Dan Lasater - From: The Secret Life of Bill Clinton: . . . Dan Lasater -- the Dixie Godfather, and the friend of and provider for the Clinton brothers. . . .

PATTY-ANNE SMITH was sixteen years old when she fell under the ruinous influence of Dan Lasater, friend and patron of the Clinton brothers. ... Her nicknames were Muffin and Precious. She was still a child, but not for long.

"I was a virgin until two months after I met Dan Lasater. He plied me with cocaine and gifts for sexual favors and I finally gave in and slept with him," she said in a police statement . . . At the time Lasater was 40 . . . Under his tutelage she soon became addicted to hard drugs. . . .

Lasater arranged for a corrupt doctor to give her "a pelvic examination and prescribe birth control pills." Once on contraceptives, she was made available to Lasater's business colleagues, including Arkansas State Senator George Locke. In the end Patty-Anne fled Arkansas after it was explained to her that he planned to use her as a semi-prostitute to "entertain."...

~ ~ ~

Dan Lasater is a talented entrepreneur. . . . By the time he was 30 he was the owner of the Ponderosa steakhouse chain in Ohio and Indiana, with annual sales of more than $300 million. Cashing in his equity for around $15 million, he turned to horse racing and soon became the most successful breeder and racer of thoroughbreds in the world.

With stables of 80 horses in Florida and Kentucky, he was the leading money winner three years in succession -- 1974, 1975, and 1976 -- netting a total of $10 million in prizes . . . But according to a police statement by one of his employees, Lasater's success with the horses was achieved by "putting in the boot" -- fixing the races.

It was at the Oaklawn Race Track in Hot Springs that Lasater first befriended Virginia Kelley, the mother of Governor Clinton, and began to close his vice around the First Family of Arkansas.

Collecting governors was one of his business specialties. In early 1983 he bailed out Governor John Y. Brown of Kentucky with $300,000 cash in a paper sack at the Lexington airport. At the time Brown was desperately trying to stay one step ahead of the IRS. He had withdrawn $1 million out of a Florida bank without a "cash transient" report.

"I just took care of John Y.'s money problems," Lasater told his colleague Michael Drake....

~ ~ ~

Lasater moved into the bond business in 1980. A brief business partnership with Senator George Locke was dissolved, because of enveloping SEC violations, before Lasater embarked on his own as Lasater & Company. One former broker told me that he never witnessed enough authentic business to justify the existence of Lasater's office...

He suspected that Lasater was "shuffling money." By the mid-1980s, Little Rock was a hub of petty racketeering and fly-by-night securities trading. The target: small, deregulated thrifts that had been neglected by the big firms on Wall Street. "You have no idea how crazy it was here in the mid-eighties," said Ron Davis, a former Lasater broker.

"At one point there were 54 investment houses in Little Rock. There were 4,000 brokers working in this city. In 1987 we did more institutional sales than any other city in the world, and that includes New York, London, and Tokyo. You had used car dealers signing up making a $1 million a year in commissions."

For investigators attuned to the methods of organized crime, the Lasater empire looked suspiciously like a laundromat for tens of millions of dollars of drug profits. Nor was this an idle hunch. In 1977 Lasater had lost a Lear jet in Santa Marta, Columbia, after it was confiscated by the Colombian authorities on suspicion of narcotics trafficking. . . .

Among the passengers on the jet was Jamiel "Jimmy" Chagra, viewed as one of the most dangerous mob bosses in the United States. . . .

Edwin Edwards - Former Governor of Louisiana who was convicted in May, 2000, on charges he rigged the state's riverboat gambling licensing process. His son Stephen and three other men also were convicted.

Frank J. Fahrenkopf, Jr. - Frahrenkopf served as Chairman of the Republican Party during Ronald Reagan's presidency. He is currently the President and CEO of the American Gaming Association, and co-chairs the Commission on Presidential Debates.

From PBS Frontline:

EASY MONEY

An Interview with Frank Fahrenkopf

Frontline: Tell me about the Arthur Anderson Job Study. What did it tell you?

Fahrenkopf: One of the arguments that anti-gaming activists have made for years, is that gambling tends to be ... cannibalistic. That when it comes into a community, it doesn't create any new wealth ... it just takes money away from other business. ... Arthur Anderson did a macro economic study of the United States ... and found that is not the case. ... the disposable of the income of the American people has gone up dramatically, and gaming is only taking a very, very small part of that. ... And, in fact, what it has done ... it has actually helped other businesses. Now, that's not to say, that if a casino comes into a community and opens up and it has wonderful restaurants that, you know, some guy who's had a family restaurant down the road for a hundred years, hasn't been able to compete. ... But that's no different than if a new mall comes into a community. ... When that new mall comes into a community, that old theater that was once there; the old shoe store; the old restaurant are likewise going to suffer. I mean, it happens to be a free market, capitalist system....

Frontline: Critics who have looked at that study say, " Arthur Anderson -- that's the same firm these guys have been using for years. Those are made-up numbers because they were paid to make the study."

Fahrenkopf: Of course they're going to say that. What we say is, fine-- take a look at the Arthur Anderson numbers. If you think they're wrong, show where they're wrong. ... For a long time, the opponents used economic models that were created by a couple of university professors that ... led to the conclusion that the social costs of gaming exceeded the economic benefit. You don't need to rely on economic models anymore. Go to where the rubber meets the road, where we've had gaming in some of these jurisdictions. . . .

Frontline: [Las Vegas] was always called Sin City for a reason. They were all the sins that you could do in one single place. . . .

Fahrenkopf: But, you know, I've lived in a couple places around the country. There are prostitutes in New York. There are prostitutes in Orlando. There are prostitutes in Miami. There are prostitutes in a lot of places. Ant that's also an industry that's been around a long, long time. And, as to whether or not it's more attractive to places where there's gambling, inherently, than there where are other-- I mean, many military bases there's not a lot of gambling going on, but you'll find a lot of prostitutes around military bases where you have large numbers of men. . . .

Frontline: Tom Grey says, "You people are predators. You're predators." Are you predatory?

Fahrenkopf: That's part of the cannibalization argument that he's constantly making. I always say to Tom, "Tom, it's easy to say that, but put your money where your mouth is -- from the standpoint, what evidence do you have? Let's put it up. ... But, again, the anti-gaming people represented by Frank Wolfe and the Tom Greys of the world ... it's primarily moralistic. Now, they changed their tune. They learned, about three or four years ago, that arguing that it's unmoral to gamble-- that wasn't selling with the American people.

Most American's resent other religious leaders or other-- trying to tell them what they should or should not do. . . .

I'm a Knight of Malta in the Catholic church. I mean, I don't need Tom Grey or some other people in religion telling me what's right or wrong. You know? ...

Golden Nugget - From Den of Thieves, by James B. Stewart:

Above the Law

In the spring of 1984, one of Michael Milken's earliest and most important clients, Golden Nugget, the casino company headed by Milken's friend Stephen Wynn, secretly had begun accumulating shares of MCA Inc., the owner of Universal Studios. The goal was a possible takeover.

By the end of July, Golden Nugget had acquired well over two million shares, and MCA's shares rose from about $38 to $43. By August, however, Wynn and Milken had decided the deal wasn't feasible. Golden Nugget wanted out of its huge position at the highest possible price, but if word leaked out, the share price would quickly plunge. Nevertheless, Wynn told The Wall Street Journal in October that Golden Nugget owned just under 4% of MCA and intended to hold the stock "for now."

It had been a tricky situation, and Milken had again called on [Ivan] Boesky for help. Boesky bought huge chunks of Golden Nugget's position at the high market price, and Milken promised to guarantee him against loss. Because of Boesky's interest, the continued high volume of trading, and the fact that Drexel was handling the accumulation, an MCA takeover seemed more likely than ever to close observers.

As other buyers stepped in in anticipation of a takeover, Boesky began sell his position in smaller trades so as not to attract attention. Boesky did sustain losses, but Golden Nugget got out at a high price, guaranteeing its continued loyalty to Milken.

The scheme worked like a charm. . . .

J. Edgar Hoover - Former F.B.I. Director.

From The Money and the Power: The Making of Las Vegas and Its Hold on America, by Sally Denton and Roger Morris:

An Enemy Too Far Within

As attorney general, Bobby Kennedy immediately began the attack on Hoffa and elements of organized crime left out in the McClellan Hearings - "the insidious rot," as one account described it, "he'd identified as infesting the nation's innermost core."

On entering Justice, he asked advice from the retiring Anslinger, who had quietly aided and influenced the McCellan inquiry just as he had Kefauver's. While he had peremptorily dismissed Nevada's requests for similar help only months before, Anslinger now bought Bobby "a thick black book with data on eight hundred hoodlums," as one witness described it.

The volume, like most of the agency's files, amounted to a genealogy of the FBN's old, deeply institutionalized construct of the "Mafia," generally obscuring with vulgar Italian stereotypes the multi-ethnic character of organized crime and the wider corruption around it, and not incidentally diverting attention from key narcotics traffickers used and protected by the government in covert operations. . . .

From its rogue's gallery, Bobby and his new staff ... quickly designated forty men as investigative priorities. The names included Giancana, Trafficante, Hoffa, and others linked to gambling, Las Vegas, and the Teamsters, though, from the vantage point of the Strip, notably missing was Lansky or any of his major associates.

It would come to be known as the "hit list."

The substance as well as brash style collided head-on with J. Edgar Hoover, already threatened and flaring at a thirty-five-year-old superior at the Justice Department who was also the president's brother, campaign manager, and soon principal adviser on foreign as well as domestic issues. As the second most powerful man in the executive branch and arguably the most influential attorney general ever, Bobby posed a challenge to Hoover and his FBI like no other in the director's more than forty years as a federal bureaucrat.

By 1961, some believed it hardly mattered whether Hoover had been blackmailed for homosexuality, transvestitism, or other personal proclivities. His ties to figures on the fringe and beyond were blatantly open, men like liquor tycoon Lewis Rosenstiel, Joe Kennedy, Del Webb, Rosselli, the Murchisons of Texas, Marcello associate Dub McClanahan, and Pratriarca associate Irving "Ash" Resnick, many of them regular companions at San Diego's notorious mob hangout, the Hotel Del Charro.

Added to Hoover's reactionary obsession with leftists, his abuses of bureaucratic power, and his ceaseless self-protection and -promotion, it all led to an institutioonal as well as personal intersection of interests between the FBI and the Syndicate. Like its ugly counterparts around the world, including most notably the Soviet KGB exposed in later revelations after the collapse of the USSR, the FBI was in fact a mediocre political police, intent on repression of dissent, allowing organized crime and public corruption to flourish.

In the bureau's New York office, which was by the 1950s a parody of Hoover's multiple manias, he had assigned four hundred agents to communism, ten to organized crime....

Ken Mizuno - Japanese "whale" and Yakuza-connected money-launderer and racketeer.

From The Money and the Power: The Making of Las Vegas and Its Hold on America, by Sally Denton and Roger Morris:

... Outwardly, Ken Mizuno had been one of the more notorious Asian high-rollers along the Strip in the 1980s. When the former baseball star moved to open a gourmet Japanese restaurant and health spa in the Tropicana and applied for a liquor license, even the usual desultory investigation uncovered his long-standing associations with the Yakuza, Japanese organized crime.

Initially, the Clark County commission had denied Mizuno the license; but in a subsequent session a few weeks later - a distant echo of Bugsy's experience with the same body - the commissioners promptly reversed themselves. For nearly a decade Mizuno would be one of the city's leading international citizens, attended by his own personal hostess at the Mirage, where he gambled hundreds of millions.

Then, in the 1990s, wealthy Tokyo investors pressured Japanese police to implicate Mizuno in a $853 million golf club pyramid scheme. His fall was mourned by casinos where he had been known as a "whale" for his $100,000-a-hand bets at baccarat, and Mizuno eventually ended up in a Japanese jail. His fall was long in coming.

In 1991, the small U.S. Customs office in Las Vegas received warnings about Mizuno from the Customs attaché at the U.S. Embassy in Tokyo. Las Vegas agents began to trace not the gambler's links to the Yakuza, or the massive expatriation of funds to foreign organized crime - one of the city's thriving industries, and to law enforcement a more familiar pattern - but rather than pouring into Las Vegas of hundreds of millions through foreign criminal combines.

At one point following a path from the Federal Reserve Bank in San Francisco to the Las Vegas Strip with bills bound in casino wrappers, the Customs agents traced an enormous traffic. While Mizuno had a locker at Shadow Creek next to Steve Wynn's, and was a popular high-tipping man-about-town, he was bringing in as much as $220 million through bank channels, wire transfers, and other means that escaped currency reports.

There were additional indicators that he transferred to southern Nevada as well as much of the remainder of his $800 million take from the Tokyo fraud - altogether hundreds of millions more than even he wagered at Las Vegas tables.

As the investigations continued, many of the trails led to the luxury Mirage. Mizuno's girlfriend turned out to be working in the "international department" of the casino. The high roller himself was "said to have ... dropped upwards of $75 million in two years" at the Mirage tables.

Often met by a Mirage limousine at a private landing strip when he returned from trips abroad, and then whisked to the casino behind darkened windows, arrangements that defeated Customs surveillance, Mizuno went on to buy from his close friend Wynn a personal DC-9 jet later seized by Customs authorities and implicated in the massive financial crimes they suspected.

Agents as well as at least one prosecutor familiar with the accumulating evidence came to believe that looming behind Mizuno was the shape of a vast new criminal investment in, and thus control of, the new mega-resorts going up on the Strip, casinos like Treasure Island and others supposedly funded entirely by Wall Street investment in their new corporate proprietors. Even the sums visible in Mizuno's "gambling" - a minimum of $150 million by one account at a time when Kerkorian had purchased both the Desert Inn and Sands for $167 million - made the Customs calculus only too plausible.

Early in the investigation, the small five-man Customs office in Las Vegas had been overwhelmed by the magnitude of the traffic, the intricacy and sophistication of the means, the network of legitimate institutions around and behind the crimes, and not least by the obdurate secrecy and refusal of casinos to share more than the minimally required information. As agents told their stories later, they could not even enter a casino to observe Mizuno, much less interview employees, without encountering the house's heavily armed force of security retainers. . . .

But when the beleaguered Las Vegas agents asked their superiors for the obvious support a major investigation required - more personnel, undercover money, and authority to go to the top of what they termed under the federal racketeering statute "the continuing criminal enterprise" they saw in and behind Mizuno - their requests were effectively denied, buried or put off in organizational delays, never openly rejected with any individual liability or record but quietly stifled by bureaucratic device.

Eventually Customs would seize more that $60 million in Mizuno's assets, including golf courses in the Las Vegas Valley and Palm Springs, real estate and other assets in Clark County. By most measures it might have seem a success - the largest single non-narcotics money-laundering case in American history. But agents on the inside knew, as one described it, that it was only "the tip of an iceberg here in the middle of the desert."

The agents never knew why they had been called off before following the case to its conclusion....

"We were at the edge of unraveling Las Vegas," a Customs agent in Nevada would say of the Mizuno case....

For more, GO TO > > > Predators in Paradise; Yakuza Doodle Dandies

Pacific Islands - From Pacific Islands Report, by Pacific Islands Development Program/East-West Center - Center for Pacific Islands Studies/University of Hawai`i at Manoa:

RUSSIAN MAFIA USING PACIFIC REGION
TO LAUNDER MONEY

Paris, France (Feb. 14, 1999 - AFP) -- Russian organized crime is increasing using the Pacific region as a base for laundering its ill-gotten gains, the Organization of Economic Cooperation and Development (OECD) Financial Action Task Force (FARF) said last week.

"A heavy concentration of financial activity related to Russian organized crime has been observed, specifically in (Western) Samoa, Nauru, Vanuatu and the Cook Islands," the FATF said in an annual report on money laundering.

It cited "an increasingly common scheme whereby apparently American middlemen are used to open accounts or charter banks in one of the locations" to hide the Russian origin of the money after local authorities became suspicious at the high level of Russian activity in the region.

The Russian mafia are also looking for "potential alliances" with drug traffickers in Central and South America and the Caribbean . . .

There is also concern over the rise in internet gambling, which generates nearly $1.5 million a month in the Pacific region and is seen as "another potential vulnerability for money laundering and financial crime."

Such electronic casinos offer clients virtual anonymity, making the source of their cash all the harder to trace.

Elsewhere in the Asia-Pacific region, the report said, the principal sources of criminal funds are human trafficking, drug trafficking, gambling and organized crime.

South Asia is a particular focus for money laundering activities as it is home to several major international banks as well as being a transshipment point for drugs from Afghanistan, Iran, Myanmar, Thailand and Laos.

In South Asia, money laundering through gold transactions is particularly popular, either through a gold dealer who provides gold in exchange for cash and checks received by the presenter, or through a cash transaction in one country which is completed by a gold deposit to the owner in another country.

But as elsewhere in the world, electronic payment transactions are also a cause for concern, along with the increasing use of accountants and lawyers to help set up and manage accounts set up to launder the proceeds of criminal activity. . . .

For more, GO TO > > > Broken Trust ; What Price Waterhouse?

Red Mafiya - From Red Mafiya : How the Russian Mob Has Invaded America:...

Blending financial sophistication with bone-crunching violence, the Russian mob has become the FBI's most formidable criminal adversary, creating an international criminal colossus that has surpassed the Colombian cartels, the Japanese Yakuzas, the Chinese Triads, and the Italian Mafia in wealth and weaponry. . . .

With activities in countries ranging from Malaysia to Great Britain, Russian mobsters now operate in more than 50 nations. They smuggle heroin from Southeast Asia, traffic in weapons all over the globe, and seem to have a special knack for large-scale extortion. The Russian mob has plundered the fabulously rich gold and diamond mines in war-torn Sierra Leone, built dazzling casinos in Costa Rica with John Gotti Jr., and through its control of more than 80 percent of Russia's banks, siphoned billions of dollars of Western government loans and aid, thereby exacerbating a global financial crisis that toppled Wall Street's historic bull market in August 1998. . . .

More ominously, U.S. intelligence officials worry that Russian gangsters will acquire weapons of mass destruction such as fissionable material or deadly, easily concealed pathogens such as the smallpox virus ... and sell these deadly wares to any number of terrorist groups or renegade states.

In North America alone, there are now 30 Russian crime syndicates operating in at least 17 U.S. cities, most notably New York, Miami, San Francisco, Los Angeles, and Denver. The Russians have already pulled off the largest jewelry heist and insurance and Medicare frauds in American history, with a net haul exceeding $1 billion. They have invaded North America's financial markets, orchestrating complex stock scams, allegedly laundering billions of dollars through the Bank of New York, and coolly infiltrating the business and real estate worlds....

"The Russians didn't come here to enjoy the American dream," New York State tax agent Roger Berger says glumly.

"They came here to steal it."...

Resorts International, Inc. - From Atlantic City Magazine, May, 1998 by Michael Pollock -

Long before Sun International bought Resorts,
Atlantic City's pioneer gaming company
painted the town green.

IT WAS THE PERFECT BLENDING: A former paint company in search of a fortune, and a formerly swell seaside resort in search of a paint job. When Resorts International, Inc. married Atlantic City for richer or for poorer, it was the wedding of the century.

The ceremony took place 20 years ago this month, with entertainer Steve Lawrence throwing out the ceremonial first dice. But it all truly began with the checkered history of a paint company. The Mary Carter Paint Co. was a small manufacturer of house paints, with its main plant located in Matawan, New Jersey. For the executives who headed the company, manufacturing paint was about as exciting as watching it dry.

In the 1960s, Mary Carter was searching for a new identity. It bought 3,000 acres in the Bahamas. In 1967, Mary Carter opened the Paradise Island casino, and a year later, the company dripped its last drop of semi-gloss latex.

Resorts International was born in 1968.

The former paint company had a lot going for it, including a thirst for green and a backbone that was anything but canary yellow. Of course, in those days, the white-shoe firms on Wall Street, and the blue-chip members of corporate America had little interest in the casino business. The prevailing view of gaming was that it was sordid and mob-tainted, and in reality, it seemed nearly impossible, anywhere, to enter the casino business without rubbing shoulders with someone who had alleged ties to organized crime. That was apparently the case in the Bahamas, according to the New Jersey Division of Gaming Enforcement.

In 1941, a man named Wallace Groves was convicted of mail fraud. That conviction would never have warranted a footnote to a footnote in history had Groves not sold 3,000 acres of Bahamas real estate to a group of Florida investors in 1961, who in turn sold the land to the Mary Carter Paint Co.

Mary Carter was a partner with Wallace Groves in the operation of the Bahamian Club casino until 1967, when it opened its Paradise Island casino, under the direction of casino manager Edward Cellini, whom the company inherited from its partnership with Groves. Cellini, it turned out, was the brother of a known associate of Meyer Lansky, the infamous mob kingpin.

All these vague charges set the stage for the first regulatory hearings in New Jersey. The state had an arduous task ahead of it 20 years ago. Most of the public and media believed that casinos and "unsavory characters" were interconnected and inseparable. In 1977, then Gov. Brendan Byrne stood on the Boardwalk and sent a message to organized crime: "Stay the hell out of Atlantic City." It was a message that few took seriously.

A year later, the state had a casino operating on the Boardwalk. Byrne was back in town to cut the ribbon on the new Resorts International. Resorts President I.G. "Jack" Davis predicted that "it will be the busiest casino in the world." Talk about understatement. Within seven months of its opening, the former Mary Carter Paint Co. reported a 1,600 percent increase in profits over the previous year.

But a casino that was taking in $600,000 a day, that had lines stretching from the Boardwalk to Parsippany, had yet to be licensed. And we're not talking about a driver's license. Resorts was in line to be the first casino outside Nevada to hold a plenary license. With names like Cellini, Groves, and others popping up, this would be no easy task. The real rub was that the state Division of Gaming Enforcement was objecting to licensure. Here was an arm of the state Attorney General's office claiming that this company had no business operating in New Jersey. The division's case was presented by G. Michael Brown, who would later become director of the agency.

Simplifying such a complex case is risky business, but here is what it boiled down to: "Mickey" Brown argued that Resorts was all too willing to do business with the likes of Groves, Cellini, and others. "You do not have to do business with people like that. You choose to," he said in his opening statement.

Resorts, represented by famed criminal attorney Raymond Brown, argued that it had improved and upgraded its accounting and internal controls systems, that it had fired or suspended all employees who might be viewed as less-than-reputable. And it produced affidavits from reputed organized crime figures that disputed similar affidavits given to the division.

When all was said and done, the Casino Control Commission voted to license the company. Not all of its executives were allowed to enter the promised land of licensure, and not all the companies that followed fared as well. Top executives at some companies had to sever all ties to the businesses they had built. That was the lesson that regulators imparted in the Resorts matter: that bad apples can be severed from the tree, allowing the tree to live.

The old Resorts International, Inc. is gone. It has been swallowed up, spit out, and swallowed again. Its subsequent owners have included Donald Trump, Merv Griffin, and now Sun International Ltd.

But the company once known as the Mary Carter Paint Co. taught all of us a great deal before it departed for corporate heaven: that casinos can do more than survive in an urban seaside town; they can be wildly successful.

That there is a place for gaming companies within the portfolios of institutional investors.

That even successful properties can make missteps, and seek the protection of bankruptcy court....

See also: Sun International Hotels Ltd.

Solomon Kerzner - International casino magnate.

From Weekly Mail & Guardian, Johannesburg, South Africa, 11/17/95:

Police Move Closer to Sol

Sol Kerzner has severed his links with his South African business just as a police investigation into alleged corruption draws to a close. . . .

UNTOUCHABLE Sun King Sol Kerzner withdrew from his South African company this week as an eight-year-long criminal investigation into allegations of corruption against him drew to a close.

Kerzner resigned as chairman of Sun International (Bophuthaswana), the main Sun International (SI) operation which runs Sun City, in favour of foreign interests.

SI has 17 resorts in South Africa and 11 more in France, the Caribbean, the United States and Indian Ocean islands.

Since 1987, the Transkei police and later the Port Elizabeth police have been investigating charges against Kerzner in connection with the payment of a R2-million bribe to former Transkei ruler Chief George Matanzima.

The payment, which Kerzner admitted to the Harms Commission, was made to secure sole gambling rights in the Transkei. Some years later, a Supreme Court judgement and a subsequent military government decree overturned these rights, limiting SI to sole rights in only a section of the territory. [Sound familiar, Hawaii Governor Ben Cayetano?]

Kerzner has appeared untouchable in the matter of the criminal investigation. The former Transkei government tried unsuccessfully for years to have him extradited. In December last year, President Nelson Mandela's office dismissed speculation that a secret deal had been made to help Kerzner avoid prosecution...

Kerzner has retained high-level connections in both the previous and current governments. He was a friend of former Bophuthatswana president Lucas Mangope, in whose territory he made the foundations of his fortune, the Matanzima brothers in the Transkei, and the late Ciskei ruler, Lennox Sebe. He attended Deputy President Thabo Mbeki's 50^th birthday and was an honored guest at Mandela's inauguration last year. [Sound familiar, Bill Clinton?]

Kerzner's company appears to have used unorthodox ways of securing gambling rights in the Ciskei and Transkei.

In Feb 1987, military intelligence office Brigadier Marthinus Deyzel and Western Cape businessman Tonie Botha approached then Ciskei president Lennnox Sebe to discuss the carving up of gambling rights in the territory. Around the same time, Botha, Deyzel and the Jalc companies set up a scheme to use Jalc as a front company for military intelligence, using Jalc to gather information in the homeland states and neighboring countries.

Botha, Deyzel and Sebe negotiated a three-way split of gambling rights in the Ciskei between the homeland government, SI and Lenton Investments (Ciskei), in which Jalc had an interest.

Justice Louis Harms later found that Lenton received gambling rights from the then Ciskei government "valued in excess of $20-million in return for something which could not be explained."

Just two months after Ciskei handed over the gambling rights, SI executives moved into Lenton as directors and by Jan 1988 Lenton was an SI subsidiary. Jalc director Chris van Rensburg was apparently still involved with Lenton years after SI took it over as he signed a Lenton document in July 1991.

The Harms inquiry was later told that those involved in this deal boasted that Sebe had fallen for it "hook, line and sinker".

Last month it emerged in KwaZulu-Natal that a new gambling consortium, Africa Sun International, in which SI is involved, is linked to people close to the provincial government.

They include Mangosuthu Buthelezi's son "Zuzi", Finance MEC Snezele Mhlungu, ANC stalwart Walter Sisulu and former aide to FW de Klerk ...

* * *

Weekly Mail & Guardian, 8/8/96:

In the Laager of Cover-up

The Kerzner/Holomisa imbroglio gives ground for concern about the this fabric of our still-fragile society. The issue of corruption, while troubling, is not the most worrying factor. It is rather the effect a succession of these sorts of rows is having on the character of the ruling party.

South Africa has much to be grateful for where the African National Congress (ANC) is concerned - liberation, for a start. And it is no detraction from that debt of gratitude to observe that our government is not greatly experienced and deserves time to come to terms with the huge problems it has inherited.

Unfortunately - as is often the case where those new to power are concerned - the ANC has shown itself to be highly sensitive to criticism, which it resents with a bitterness that smacks of vanity. When the flak flies, it retreats into the laager so familiar to the past: taking refuge behind the covered wagons of party "unity", firing denials and angry denunciations at the circling press. In the course of these heated battles, it is in danger of forgetting the journey on which it embarked.

It needs to be said to the ANC that it still enjoys huge reserves of goodwill in the country. Much can be expected by it in terms of public understanding and forgiveness. If a donation of R-2 million by Sol Kerzner was accepted for party funds, the ANC could expect criticism [sound familiar, DNC?] . . .

If, as Holomisa has suggested, Thabo Mbeki and Nelson Mandela did canvass the possibility of "doing something about" the case pending against Kerzner, we would gulp, but put it down to the extraordinary times we found ourselves in during the build-up to the 1994 elections and the ANC's transformation from a liberation organisation to a political party.