|
STATE OF ILLINOIS
IN THE ILLINOIS GAMING BOARD |
| |
) |
| IN RE THE DISCIPLINARY ACTION OF: |
) COMPLAINT |
| |
) |
| EMERALD CASINO, INC. |
) DC-01-04 |
COMPLAINT FOR DISCIPLINARY ACTION
The ILLINOIS GAMING BOARD (“Board”) in its Complaint against EMERALD CASINO,
INC. (“Emerald”), the above-named licensee, states as follows:
NATURE OF THE ACTION
1. This action asserts that Emerald has violated the provisions of the Illinois
Riverboat
Gambling Act (the “Act”) and the Board’s Adopted Rules (the “Rules”), which,
among other
things, prohibit holders of Owner’s Licenses and their shareholders, agents and
employees from
engaging in conduct that would discredit or tend to discredit the Illinois
gaming industry or the
State of Illinois.
2. This action is brought pursuant to the Act, 230 ILCS 10/1, et seq., Sections
5(c)(2),
5(c)(5), 5(c)(11) and 5(c)(15), and the Rules, 86 Ill. Adm. Code 3000.1100, et
seq.
3. The Board has all powers necessary to administer, regulate and enforce the
system of
riverboat gambling established by the Act, and its jurisdiction extends to every
person,
association, corporation, partnership, and trust involved in riverboat gambling
operations in the
State pursuant to Section 5(a)(1) of the Act.
4. As the holder of an Owner’s License, Emerald is required to comply with the
Act and the
Rules.
5. As the holder of an Owner’s License, Emerald is also required to, among other
things, (a)
avoid activities that would discredit or tend to discredit the Illinois gaming
industry; (b) give full,
truthful, timely and accurate disclosure of contracts and agreements it enters
into; (c) give full
truthful, timely and accurate disclosure of any material changes to information
provided to the
Board; (d) cooperate fully in the Board’s investigations; (e) seek Board
approval prior to
transferring an ownership interest in itself to any individual or entity; and
(f) maintain suitability
as a licensee.
PARTIES
6. The Board is the state regulatory agency charged with the responsibility of
administering,
regulating and enforcing the system of riverboat gambling established by the
Act. Its jurisdiction
extends under this Act to every person, association, corporation, partnership,
and trust involved
in riverboat gambling operations in the State of Illinois.
2
7. Emerald is an Illinois corporation and is the holder of an Owner’s License
that was
originally issued to the Jo Daviess Riverboat Joint Venture (the “Jo Daviess
Venture”) on July 9,
1992. The Jo Daviess Venture was a 50/50 partnership between HP, Inc. (“HP”) and
Aerie
Management Corporation. On or about April 1, 1994, the Board approved HP’s
purchase of
Aerie Management Corporation’s 50% interest in the Jo Daviess Venture and HP
became the
holder of the Owner’s License. On or about August 12, 1999, HP changed its name
to Emerald
Casino, Inc. For purposes of this Disciplinary Complaint, the Jo Daviess
Venture, HP and
Emerald Casino, Inc. shall be collectively referred to as “Emerald."
FACTS
A. The History of Emerald’s Owner’s License.
8. On July 9, 1992, Emerald was issued a three-year Owner’s License by the Board
for a
riverboat gaming operation in East Dubuque, Illinois. The Board granted
subsequent renewals of
Emerald's Owner's License in July 1995 and July 1996.
9. On December 1, 1994, the Board issued a Disciplinary Complaint against
Emerald for its
failure to obtain prior Board approval to change its equity and debt
capitalization and source of
funds. Emerald had entered into two loan agreements in July 1994 that were not
timely disclosed
to, or approved by, the Board. Emerald was fined $30,000 for these violations.
10. On June 24, 1997, the Board unanimously denied the renewal of Emerald’s
Owner’s
License and issued a Notice of Denial on June 27, 1997. Among the reasons
alleged for the
denial were Emerald’s submission of a non-responsive renewal application,
significant
compliance shortcomings and failure to adhere to the overall requirements of the
Act. Emerald
ceased gaming operations on July 29, 1997.
11. On August 2, 1997, Emerald exercised its rights and requested an
administrative hearing
regarding the denial of its renewal application. Throughout the pendency of the
administrative
hearing process, Emerald retained its status as a licensee by operation of law.
In 1999, at the
conclusion of the hearings, the Administrative Law Judge concurred with the
Board and
recommended that the Board take final action to deny the renewal of Emerald’s
Owner’s License.
12. Before the Board issued a Final Administrative Order, however, the Illinois
General
Assembly amended the Act by adding a provision that provides, in pertinent part,
that “a licensee
that was not conducting riverboat gambling on January 1, 1998 may apply to the
Board for
renewal and approval of relocation to a new home dock location…and the Board
shall grant the
application and approval upon receipt by the licensee of approval from the new
municipality or
county, as the case may be, in which the licensee wishes to relocate…” 230 ILCS
10/11.2.
Section 11.2 of the Act became effective June 25, 1999.
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13. Pursuant to Section 11.2 of the Act, Emerald applied for renewal of its
Owner’s License
and for the relocation of its riverboat gaming operation to Rosemont, Illinois.
The Board
received Emerald’s Renewal Application on September 24, 1999. As required by the
Act and the
Rules, the Board undertook an investigation of Emerald, its Key Persons and
current and
proposed shareholders. The board denied the renewal of Emerald’s Owner’s License
on January
30, 2001.
B. The Board’s Investigation of Emerald.
1. Emerald’s Representations Regarding the Selection of Rosemont as the
Relocation Site.
14. With regard to Emerald’s decision to seek relocation of its
gaming operations to
Rosemont, Illinois, the Board’s staff repeatedly requested Emerald to disclose
when and how
Emerald first considered and/or chose Rosemont as its proposed location.
15. During the Board’s investigation, Emerald, through its representatives,
shareholders,
directors and Key Persons, including Donald Flynn and Kevin Flynn, continually
and repeatedly
insisted that Emerald never considered Rosemont as a prospective site until
after Section 11.2 of
the Act was passed by the General Assembly on May 25, 1999.
16. On or about October 19, 1999, Marvin Davis of the Davis Companies (“Davis”),
initiated
a lawsuit against Emerald, Donald Flynn, Kevin Flynn and Joseph McQuaid,
Emerald’s Vice
President of Development and Compliance, in the United States District Court for
the Northern
District of Illinois, designated as Case No. 99 C 6822 (the “Davis Lawsuit”). In
its lawsuit,
Davis alleges that in 1998, Emerald agreed to issue sufficient shares to give
Davis a 37.5%
ownership interest in Emerald. Davis also claims that Emerald, through Kevin
Flynn, promised
Richard Duchossois, owner of the Arlington Race Track, an opportunity to
purchase a 20%
ownership interest in Emerald if the license was relocated to Rosemont. Finally,
Davis alleges
that Emerald represented to Michael Colleran, (Vice President of the Davis
Companies), that a
5% ownership interest would be distributed to other unspecified "local"
investors.
17. Kevin Flynn, when questioned during depositions in the Davis Lawsuit and
when
questioned by the Board’s staff, repeatedly insisted that his involvement with
Emerald, if he had
any prior to 1999, was minimal. When questioned further by the Board’s staff
about the Davis
Lawsuit, Kevin Flynn acknowledged that he participated in at least two meetings
on or about
December 1, 1998 concerning ownership interests in Emerald. The participants in
these
meetings were, on the one hand, Kevin Flynn and, on the other hand, Michael
Colleran, David
Filkin (General Counsel to Arlington Race Track), and Richard Duchossois. Kevin
Flynn
represented that no agreements were reached or discussed at the meetings and
denied that he
agreed to sell to either Davis or Mr. Duchossois ownership interests in Emerald
or the option to
purchase ownership interests in Emerald.
18. Kevin Flynn also denied that he had the authority to bind Emerald prior to
June 23, 1999,
the date he was officially appointed as Emerald’s Chief Executive Officer. When
questioned by
the Board’s staff about his attendance and/or participation at four of the five
Emerald board
4
meetings held between April 29, 1997 and April 28, 1999, Kevin Flynn represented
that he was
only present at these meetings because the board meetings of the Flynns’ Blue
Chip Casino were
held in the same office immediately before or after the Emerald board meetings.
Kevin Flynn
was Chief Executive Officer of the Blue Chip Casino until that casino was sold
to Boyd Gaming
in 1999.
19. During the Board’s investigation, Kevin Flynn also denied that he had
discussed or
considered Rosemont as a possible location for Emerald’s gaming operations prior
to 1999.
When questioned by the Board’s staff, Kevin Flynn acknowledged meeting with
Donald
Stephens, the Mayor of the Village of Rosemont, in approximately 1997, but
represented to the
Board that he and Mayor Stephens did not discuss the relocation of Emerald's
license to
Rosemont. Kevin Flynn represented that his sole purpose for the meeting, and the
only subject
discussed at the meeting, was the Blue Chip Casino's gaming operations in
Indiana.
20. When questioned by Board's staff in February 2000, Donald Flynn acknowledged
meeting
with Mayor Stephens one year earlier, but represented to the Board that he and
Mayor Stephens
did not discuss the relocation of Emerald’s license to Rosemont. When questioned
by Board
staff in October 2000, Donald Flynn provided a different account of his meeting
with Mayor
Stephens. On this occasion, Donald Flynn acknowledged meeting with Mayor
Stephens to
discuss the relocation of Emerald's license to Rosemont, but insisted that they
did not meet until
after passage of the legislation in late May 1999.
21. With respect to Kevin Flynn's presence at Emerald board meetings, Donald
Flynn
represented to the Board that the board meetings of Emerald and Blue Chip
Casino, "for the most
part, met at the same time…and Kevin sat in on most of the [Emerald board]
meetings also as a
result of that."
22. During its investigation of Emerald, credible and reliable evidence was
developed by the
Board that some of Donald Flynn's and Kevin Flynn’s material representations to
the Board,
including the representations referenced in this section, were false and
misleading. For example,
Mayor Stephens' corroborated account of the 1997 meeting with Kevin Flynn
provided to the
Board’s staff is materially different than Kevin Flynn's account, in that Mayor
Stephens asserted
that the only subject discussed at the meeting was the relocation of the
Emerald’s riverboat
gaming operation to Rosemont and that the subject of Blue Chip Casino never came
up.
23. Mayor Stephens’ account of the meeting with Donald Flynn was also materially
different
than Donald Flynn’s version of their meeting. Specifically, Mayor Stephens
stated that the
meeting took place prior to the passage of Section 11.2 of the Act and that he
and Donald Flynn
discussed Flynn's desire to operate a casino in Rosemont.
24. With respect to Kevin Flynn's presence at Emerald board
meetings, the Board learned
that, between April 1997 and April 1999, Emerald held five (5) meetings of its
Board of
Directors. Kevin Flynn was present and/or participated in four (4) of those
meetings. Only one
(1) of the five (5) meetings, the Emerald board meeting of April 28, 1999,
coincided with a
meeting of the Blue Chip Casino Board of Directors. Kevin Flynn's articulated
reason for being
5
present at Emerald board meetings prior to becoming Emerald's Chief Executive
Officer in late
June 1999 is not supported by the evidence. This evidence also contradicts
Donald Flynn's
assertions to the Board regarding the reasons for Kevin Flynn's presence at
Emerald board
meetings.
25. Lastly, the participants in the 1998 meetings with Kevin
Flynn, referenced in paragraph
17 above, also provided credible evidence contradicting Kevin Flynn's statements
to the Board as
to what transpired at those meetings. Specifically, Michael Colleran, David
Filkin and Richard
Duchossois asserted that Kevin Flynn acknowledged having agreed to sell to Davis
an ownership
interest in Emerald and to offer an opportunity to purchase a 20% ownership
interest to
Duchossois.
2. Emerald Improperly Begins Construction in Rosemont and Fails to
Disclose
Agreements Relating to Rosemont.
26. The Application for Renewal of Emerald's Owner’s License required, with
respect to
certain responses, that Emerald, “describe in detail what steps licensee has
taken to verify the
accuracy” of those responses. Additionally, Emerald was asked to “[d]escribe
licensee’s
negotiations and dealings with any and all communities in which licensee has
initiated steps to
locate its gaming operation.” Emerald was also asked to “[s]ubmit any agreements
between
licensee and municipality(ies) regarding funds, revenues or other benefits to be
derived from this
license.” On September 24, 1999, Emerald submitted its Application for Renewal
of its Owner’s
License to the Board.
27. On September 30, 1999, the Board’s staff held a meeting with representatives
of Emerald,
including Walter Hanley, its General Counsel, and John McMahon, its Senior Vice
President,
Chief Financial Officer and Treasurer. At that meeting, the Board’s staff asked
whether Emerald
had begun construction at the Rosemont site (the “Site”). The Emerald
representatives
responded by stating that Emerald did not own or lease any land in Rosemont and
construction
was not yet a part of Emerald’s costs. During the same meeting, the Board’s
staff instructed both
Emerald representatives that Emerald should be “over-inclusive” in its
submissions to the Board
including, but not limited to, all contracts and agreements with or involving
Emerald.
28. Emerald, on or about October 18, 1999, without giving notice to, or seeking
prior
approval from, the Board, began construction of a casino at the Site based, in
part, on prior
agreements reached with the Village of Rosemont that had not been disclosed to
the Board.
29. On October 19, 1999, the Board’s staff sent a letter to Emerald requesting,
among other
things, that Emerald update any information Emerald had regarding agreements
reached with
governmental entities. Subsequent to this request, on October 29, 1999, Emerald
represented
only that, “Updating information regarding (Emerald’s) … governmental
agreements, …will be
provided when available.”
30. On January 31, 2000, Board staff sent another letter to Emerald expressly
requesting “a
listing of all written and/or oral contracts, arrangements, work orders, change
orders,
engagements, hires, commissions of work, requests for performance, exchanges of
mutual
6
promises, letters of intent, etc. entered into since July 1, 1999 by Emerald.”
Despite this
unambiguous request, Emerald failed to disclose to the Board the letter
agreements and letter of
intent set forth in paragraph 31 below.
31. Documents submitted to the Board by the Village of Rosemont on September 11,
2000,
establish that Emerald had entered into various letter agreements with Rosemont
between July
1999 and December 1999 regarding construction at the Site. These documents
include: (1) a
Letter of Intent dated July 21, 1999; (2) a letter agreement dated August 2,
1999; (3) a letter
agreement dated August 26, 1999; and (4) a letter agreement dated December 1,
1999. Each of
these letter agreements was executed by Mayor Donald Stephens on behalf of the
Village of
Rosemont and by Joseph McQuaid on behalf of Emerald. Emerald did not produce any
of these
letters to the Board nor did Emerald provide the Board with any information
regarding the above
listed agreements with the Village of Rosemont until December 2000, more than
one year after
commencing construction and only after the Board had obtained these letters and
this information
from the Village of Rosemont in September 2000.
32. The July 21st Letter of Intent demonstrates that as of July 21, 1999,
Emerald and
Rosemont had reached certain agreements regarding the construction of a casino
at the Site. By
its own terms, the July 21st Letter of Intent was “intended to memorialize key
terms that have
been agreed to which are to be incorporated into a Lease and Development
Agreement.”
Although Emerald submitted its Renewal Application on September 24, 1999,
Emerald did not
submit the July 21st Letter of Intent to the Board or disclose the letter
agreements reached
between Emerald and Rosemont until December 2000, more than one year after
commencing
construction and only after the Board had obtained these letters and this
information from the
Village of Rosemont in September 2000.
33. On February 10, 2000, Emerald submitted to the Board a fully executed copy
of the Lease
and Development Agreement between Emerald and Rosemont. The Lease and
Development
Agreement contained many of the same key terms originally memorialized in the
July 21st Letter
of Intent and reduced to writing the other agreements Emerald and Rosemont
reached during
their ongoing negotiations between July 1999 and February 2000.
34. In addition to Emerald’s failure to timely disclose the above–listed
agreements reached
between Emerald and Rosemont, certain terms contained in the Lease and
Development
Agreement tend to discredit the Illinois gaming industry and/or the State of
Illinois. For
example, the Agreement allows the Village of Rosemont to waive the requirement
that Emerald
first obtain the necessary regulatory approval from the Board prior to
commencing construction
of the casino. The Agreement also commits Emerald to fund the construction of a
parking garage
addition, even though Emerald did not have sufficient financing dedicated to do
so, and fails to
provide Emerald with the ability to exercise appropriate supervision or control
over the
management of the contractor or subcontractors for the casino and parking garage
construction
project.
35. On February 22, 2000, the Board questioned Emerald’s representatives about
what, if
any, authority Emerald had relied on in commencing construction on the Site
without informing
7
the Board or seeking Board approval. On or about February 29, 2000, Emerald
informed the
Board that it had ceased all construction activities at the Site as of that
date.
3. Emerald’s Failure to Timely and Fully Disclose and/or Seek Approval
for the
Sale and Purchase of Shares in Emerald.
36. On September 21, 1999, Emerald submitted a letter to the Board that had
attached to it a
list of shareholders. The list included the names of 63 individuals and one
trust. One of the
names on the list was that of “Vito Salamone”. Next to each name was a number
reflecting the
number of “shares” and another number reflecting “percentage.” The letter
accompanying the
list did not disclose how any of the individuals or the trust had acquired the
ownership interests
reflected on the list. The letter also indicated that, “Additional names will be
added to the list in
the future.” Emerald did not request Board approval for the acquisition of
shares by, or the
transfer of shares to, any of the listed individuals.
37. On September 30, 1999, Emerald sent another letter to the Board. In this
letter, Emerald
advised the Board that it had “decided not to accept [a particular individual’s]
application to be
one of our shareholders.” The letter explained, generally, the circumstances
surrounding the
company’s decision with respect to that individual. The letter also included,
however, a
statement that, “The following individuals should also be deleted from the list:
Howard Warren,
Anne O’Laughlin Scott, Richard Forsythe, and Russell Steger.” The letter
provided no
explanation with respect to why these individuals, all original shareholders,
“should also be
deleted” from the shareholder list provided by Emerald on September 21, 1999.
This letter again
failed to provide to the Board any information regarding how the individuals on
the September
21st shareholder list had acquired their shares. Emerald did not request Board
approval for the
acquisition of shares by, or the transfer of shares to, any of the listed
individuals.
38. On October 4, 1999, Emerald sent another letter to the Board regarding its
shareholders.
In this letter, Emerald listed all shareholders who were either “minority
persons” or females.
This list did not indicate how any of the listed individuals had acquired their
shares. Emerald did
not request Board approval for the acquisition of shares by, or the transfer of
shares to, any of the
listed individuals.
39. On October 19, 1999, the Board’s staff sent a letter to Emerald, expressly
requesting a
“comprehensive statement of changes in the capitalization of Emerald.” Emerald’s
response on
October 29, 1999, disclosed only that certain shares had been acquired or sold,
without providing
any of the required details to the Board or seeking prior Board approval. In
addition, the October
29, 1999 letter included another list of Emerald shareholders. Vito Salamone’s
name was no
longer on the list. Instead, the name “Joseph Salamone” appeared on the list. No
explanation
was provided by Emerald regarding this change.
40. On November 17, 1999, the Board’s staff sent a letter to Emerald requesting
a detailed
explanation of the various transfers of Emerald’s shares referenced in the
October 29, 1999 letter.
Emerald responded, on December 2, 1999, by providing the Board with copies of
share purchase
agreements showing sales by Donald Flynn (the “Flynn Share Transfers”) to
certain individuals
(the “Proposed Flynn Shareholders”) and sales of shares by Emerald (the “Emerald
Share
8
Transfers”) to certain minority and women investors (the “Proposed Minority
Shareholders”).
Emerald, however, again failed to seek the Board’s approval for either the Flynn
Share Transfers
or the Emerald Share Transfers.
41. On December 2, 1999, Emerald also disclosed that Donald Flynn had purchased
shares in
Emerald from six of the original Emerald investors – Howard Warren, Anne
O’Laughlin Scott,
Richard Forsythe, Russell Steger, Barton Love and Peer Pederson. Three months
after the fact,
Emerald identified the basis for its one line statement in its September 30,
1999 letter to "delete"
four of these individuals from the list of shareholders. Neither Emerald nor
Donald Flynn,
however, sought prior Board approval for any of Donald Flynn’s purchases of
these shares from
the original investors.
4. Emerald’s Failure to Conduct A Proper Investigation of its Proposed
Shareholders or to Exercise Appropriate Supervision or Control over the
Management of the Contractor or Subcontractors for the Casino and
Parking Garage Construction Project.
42. During the pendency of its application for renewal of its Owner’s License,
as noted
above, Emerald submitted to the Board various lists of proposed shareholders. In
submitting
these lists to the Board, however, Emerald failed to perform appropriate
investigation or due
diligence with respect to the proposed shareholders. For example, in response to
a question in
the application form regarding the accuracy of Emerald’s responses, Emerald
acknowledged that,
“The Company has delivered to each of its shareholders a Personal Disclosure
Form 1 (“PDF-1”)
and/or PDF-1 update materials in the form provided… [t]he Company does not
review the PDF-1
or update materials of its shareholders.” Similarly, with respect to whether he
knew anything
about the Proposed Flynn Shareholders, Donald Flynn advised the Board that he
did not know
anything about them because, “[i]f they were willing to come up with the money,
I didn’t really
care.”
43. Emerald’s failure to conduct any investigation or due diligence regarding
the Proposed
Flynn Shareholders resulted in, among other problems, the inclusion of Vito
Salamone as a
proposed shareholder in Emerald. Vito Salamone has been identified as having
connections with
known members and associates of organized crime.
44. Emerald’s failure to conduct any investigation or due diligence regarding
the Proposed
Minority Shareholders resulted in, among other problems, an agreement to sell
shares in Emerald
to the Sherri Boscarino Trust. The grantor of the trust, Sherri Boscarino, is
the wife of Nick
Boscarino. Nick Boscarino is an individual who has been identified as a known
associate of
organized crime. Mr. Boscarino maintains personal relationships and business
associations with
certain individuals who have been identified as known associates of organized
crime, including,
but not limited to, William Daddano Jr. Similarly, the failure to undertake
appropriate due
diligence resulted in the proposed sale of Emerald shares by Donald Flynn to
Joseph Salamone,
the brother and business partner of Vito Salamone, who, as noted above, has been
identified as
having associations with known members and associates of organized crime.
9
45. Emerald also represented to the Board, in its Business Entity Application
for Renewal,
that no one with any financial interest in Emerald was a public official or a
relative of any public
officials. In so doing, however, Emerald failed to disclose that two of the
Proposed Flynn
Shareholders were public officials and one of the Proposed Flynn Shareholders
was related to a
public official.
46. During the course of its investigation, the Board learned that one of the
subcontractors
who had been working on the Site was D&P Construction (“D&P”). The owner of D &
P,
Josephine DiFronzo, is married to Peter DiFronzo and is the sister-in law of
John DiFronzo,
individuals who have been identified as known members of organized crime.
Emerald’s failure
to exercise appropriate supervision resulted in work being performed at the Site
by D & P.
COUNT I
47. The Board realleges and incorporates herein by reference paragraphs 1
through 46 above
as paragraph 47 of Count I.
48. Pursuant to Rule 3000.140(a), the holder of an owner’s license shall have “a
continuing
duty to disclose promptly any material changes in information provided to the
Board.
49. Despite its obligations under Rule 3000.140(a) and repeated requests for
information by
the Board’s staff, Emerald, by and through certain of its shareholders,
directors, representatives
and other Key Persons, has engaged in a continuous and repetitive pattern of
failing to disclose
promptly, if at all, material changes in information provided to the Board or
providing false or
misleading information to the Board, including, but not limited to, information
regarding
transfers in and/or agreements to transfer ownership interests in Emerald, the
nature of Kevin
Flynn's role in Emerald’s activities, the status of construction at the Site,
and agreements
between Emerald and government entities or municipalities.
50. By failing to comply with Rule 3000.140, Emerald has failed to maintain its
suitability for
licensure and is subject to revocation of its license pursuant to Section 5(c)
of the Act and
Subpart K of the Rules.
COUNT II
51. The Board realleges and incorporates herein by reference paragraphs 1
through 46 above
as paragraph 51 of Count II.
52. Pursuant to Rule 3000.140(b)(3), the holder of an owner’s license “shall
periodically
disclose…changes in or new agreements, whether oral or written, relating to:…[c]onstruction
contracts.”
53. Despite its obligations under Rule 3000.140(b)(3) and repeated requests for
information
by the Board’s staff, Emerald, by and through certain of its shareholders,
directors,
representatives and other Key Persons, repeatedly failed, from September 1999
through January
10
30, 2001, to provide full, truthful, timely and accurate disclosure of
agreements between Emerald
and the Village of Rosemont relating to construction at the Site.
54. By failing to comply with Rule 3000.140, Emerald has failed to maintain its
suitability for
licensure and is subject to revocation of its license pursuant to Section 5(c)
of the Act and
Subpart K of the Rules.
COUNT III
55. The Board realleges and incorporates herein by reference paragraphs 1
through 46 above
as paragraph 55 of Count III.
56. Pursuant to Rule 3000.140(b)(5), the holder of an owner’s license “shall
periodically
disclose…changes in or new agreements, whether oral or written, relating to:…[a]greements
to
sell…or otherwise transfer or share an ownership interest or interests in a
holder of an Owner’s
License.”
57. Despite its obligations under Rule 3000.140(b)(5) and/or repeated requests
for
information by the Board’s staff, Emerald, by and through certain of its
shareholders, directors,
representatives and other Key Persons, repeatedly failed to accurately, fully
and timely disclose
agreements between Emerald or Donald Flynn, on the one hand, and various
proposed
shareholders, on the other hand, relating to numerous and substantial transfers
of ownership
interests in Emerald.
58. By failing to comply with Rule 3000.140, Emerald has failed to maintain its
suitability for
licensure and is subject to revocation of its license pursuant to Section 5(c)
of the Act and
Subpart K of the Rules.
COUNT IV
59. The Board realleges and incorporates herein by reference paragraphs 1
through 46 above
as paragraph 59 of Count IV.
60. Pursuant to Rule 3000.235(a)(1), “an ownership interest in…a holder of an
Owner’s
license may only be transferred with leave of the Board…Any individual or entity
filing an
application for transfer of any ownership interest in…a holder of an Owner’s
license, must
complete…any…information specifically requested by the Board.”
61. Despite its obligations under Rule 3000.235(a) and/or repeated requests for
information
by the Board’s staff, Emerald, by and through certain of its shareholders,
directors,
representatives and other Key Persons, repeatedly failed, from September 1999
through January
30, 2001, to apply for approval of the transfers of ownership interests in
Emerald (i) between
Donald Flynn and Proposed Flynn Shareholders; (ii) between Emerald and the
Proposed
Minority Shareholders; and (iii) between Donald Flynn and six original Emerald
investors.
11
62. By failing to comply with Rule 3000.235, Emerald has failed to maintain its
suitability for
licensure and is subject to revocation of its license pursuant to Section 5(c)
of the Act and
Subpart K of the Rules.
COUNT V
63. The Board realleges and incorporates herein by reference paragraphs 1
through 46 above
as paragraph 63 of Count V.
64. Pursuant to Rule 3000.110 (a), a holder of an owner’s license shall be
subject to fines,
suspension or revocation of its license if it, its agents or its employees
engage in activity that
would discredit or tend to discredit the Illinois gaming industry or the State
of Illinois.
65. From September 1999 through the present, Emerald, its agents or its
employees have
engaged in activity which tends to discredit the Illinois gaming industry; to
wit: Emerald, its
agents or its employees have failed to cooperate fully with the Board’s
investigation of Emerald
and its Key Persons.
66. From September 1999 through the present, Emerald, its agents or its
employees have
engaged in activity which tends to discredit the Illinois gaming industry; to
wit: Emerald, its
agents or its employees have failed to fully, truthfully, timely and accurately
disclose information
to the Board, despite Emerald’s continuing obligations under the Rules and
numerous requests by
the Board’s staff.
67. From September 1999 through the present, Emerald, its agents or its
employees have
engaged in activity which tends to discredit the Illinois gaming industry; to
wit: Emerald, its
agents or its employees have sold or proposed to sell shares of its stock to
individuals or entities
who are associated with individuals who have been identified as known members
and associates
of organized crime.
68. From September 1999 through the present, Emerald, its agents or its
employees have
engaged in activity which tends to discredit the Illinois gaming industry; to
wit: Emerald, its
agents or its employees commenced construction of a casino in Rosemont and
expended
approximately $25 million on the construction of the casino without first
obtaining the necessary
regulatory approval from the Board.
69. From September 1999 through the present, Emerald, its agents or its
employees have
engaged in activity which tends to discredit the Illinois gaming industry; to
wit: Emerald, its
agents or its employees entered into an agreement that allows the Village of
Rosemont to waive
the requirement that Emerald first obtain the necessary regulatory approval from
the Board prior
to commencing construction of a casino.
70. From September 1999 through the present, Emerald, its agents or its
employees have
engaged in activity that tends to discredit the Illinois gaming industry; to
wit: Emerald, its agents
or its employees failed to direct, control, manage or supervise the construction
at the Site and, by
12
so failing, allowed work to be completed by an entity that has been identified
as having
connections to known members or associates of organized crime.
71. From September 1999 through the present, Emerald, its agents or its
employees have
engaged in activity which tends to discredit the Illinois gaming industry; to
wit: Emerald, its
agents or its employees executed a lease and development agreement with Rosemont
that
commits Emerald to fund the construction of a parking garage, even though
Emerald did not
have sufficient financing dedicated to do so, and fails to provide Emerald with
the ability to
exercise appropriate supervision or control over the cost or the management of
the contractor or
subcontractors for the casino construction project.
72. By failing to comply with the Rules, Emerald has failed to maintain its
suitability for
licensure and is subject to revocation of its license pursuant to Section 5(c)
of the Act and
Subpart K of the Rules.
SANCTION IMPOSED
WHEREFORE, Emerald Casino Inc.’s Owner's License shall be revoked, said
revocation
to take affect twenty-one (21) days from the date of service of this complaint,
unless an Answer
is filed within that period by the licensee pursuant to Subpart K of the Rules.
VOTED BY THE ILLINOIS GAMING BOARD as of the 30th day of January, 2001.
Submitted by: Approved by:
Illinois Gaming Board
________________________ Date: ______________________
Sergio E. Acosta
Administrator
Illinois Gaming Board
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