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Madigan alleges casino mob ties

March 26, 2004


Illinois Attorney General Lisa Madigan laid out her case Thursday that the taint of organized crime has sullied Rosemont, putting pressure on the state's Gaming Board to reject the northwest suburb as a casino site.

Donald E. Stephens, Rosemont's mayor since 1956, was until 2002 a partner in a trade show company allegedly linked to the mob and forced out of its business relationship with a New York City convention center, Madigan alleged.

She also charged that Stephens "boasted" he controlled 5 percent of the stock in a failed Rosemont casino venture, and that shares in that firm, Emerald Casino Inc., went to a partner in his trade show business and another allegedly mob-linked man to whom Stephens had tangential ties through a bank that does business with Rosemont.


July 1997: The Silver Eagle Casino in East Dubuque shuts its doors because of competition from Iowa riverboats.
June 1999: Former Gov. Ryan signs legislation to allow transfer of the dormant license to Cook County.
July 1999: Owners of the Silver Eagle license tell the Illinois Gaming Board they plan to move to Rosemont and use the name Emerald Casino.
January 2001: Gaming Board votes to revoke Emerald's license, citing mob links to Emerald investors and a construction contractor building its casino in Rosemont. Board also alleges company executives misled board investigators about casino plans.
June 2002: Emerald is hauled into U.S. Bankruptcy Court, halting license revocation hearings. Talks to settle the case ensue.
November 2003: After several months of being close to a deal, Emerald and Gaming Board agree to a settlement, allowing Emerald's license to be auctioned off. The auction proceeds are to be used to pay Emerald's creditors, with leftover proceeds to go to the state.
March 2003: Gaming Board picks Isle of Capri to take over license and operate a casino in Rosemont, prompting an outcry from lawmakers and Attorney General Lisa Madigan.


The accusations -- met by a swift rebuke from Rosemont -- came as the state Senate voted narrowly to fire the Gaming Board over the Rosemont decision and replace it with new members. They also could spark the Gaming Board to tap Des Plaines or Waukegan to replace Rosemont as a casino site or sink hopes altogether that the state's 10th casino will be up and running soon.

"There appear to be connections that Don Stephens and the city of Rosemont had to organized crime," Madigan said during an afternoon news conference. "It certainly is something that needs to be looked at, and it is something that whoever the operator of the casino is -- if that casino is going to be located in Rosemont -- they'll have to show how they're going to be able to overcome any influence of Don Stephens and potentially any influence of organized crime."

Robert Stephenson, a Rosemont attorney, said Madigan's charges would be refuted by former U.S. Deputy Attorney General Eric Holder, named Tuesday by Gov. Blagojevich as a special investigator into the casino matter. "When he looks at all this, he will conclude Ms. Madigan's allegations are totally baseless," Stephenson said. "They border on the absurd."

Madigan also took aim at Isle of Capri Casinos, the company the Gaming Board picked by a 4-1 vote last week to bring gambling to Rosemont. Isle's CEO, Bernie Goldstein, was disciplined by the board in 1993 for an alleged slot-machine scam with another company he once owned. Goldstein and the firm paid $255,000 in fines.

Other gaming-related fines totaling nearly $700,000 in Mississippi and Missouri also were connected to Goldstein or Isle, Madigan said. She also criticized the company's financial condition.

In response, Isle officials pointed to their company's track record of being licensed in several states.

All the allegations were detailed in a nine-page letter Madigan sent to the Gaming Board asking it to explain why it rejected its staff's recommendation that Des Plaines get the casino instead of Rosemont. They are important because Madigan struck the settlement deal that allowed Emerald's license to be auctioned, and the Gaming Board can reject a casino proposal if it deems it could negatively impact the integrity of gaming statewide.

"We're dealing with a different standard here," said Madigan's chief deputy, Barry Gross. "In gaming, there should be no taint. And if there is a taint, people can't have confidence."

The case against Rosemont



Isle and six other companies were able to bid for Emerald's license because Emerald agreed to auction it off rather than face allegations of wrongdoing leveled by the Gaming Board in 2001. Madigan's letter made public previously undisclosed information about Emerald and Rosemont that likely would have come out sooner had Emerald not agreed to the auction.

"Specifically, [the Gaming Board] was prepared to offer testimony showing (1) how contractors with organized crime connections were used in the construction of Emerald's facilities and (2) how Mayor Stephens boasted that 5 percent of the Emerald stock was his," she wrote. "To accomplish the transfer of shares to friends of Mayor Stephens, [Emerald principal owner] Donald Flynn was forced to sell a large block of his shares," which effectively cost him $4 million.

"The only explanation for that series of transactions is that [Flynn] had to provide shares for friends of Mayor Stephens. Will a different licensee be able to say 'no' to Mayor Stephens?"

One of the allegedly mob-linked people who bought stock in Emerald is Nick Boscarino, who owned a trade show equipment rental business with Stephens and relatives of reputed deceased Chicago Outfit member William "Potatoes" Daddano. The stock was held in a family trust, Madigan wrote, after Boscarino's wife, Sherri, was introduced to Emerald's senior vice president at a party hosted by Stephens at a vacation home in Delavan, Wis.

Stephenson, the Rosemont lawyer, noted the party was a fund-raiser for former Gov. George Ryan and that more than 200 people attended. The Boscarino stock "wasn't done as a favor to the mayor in any way shape or form," he said. Also, Stephens publicly broke ties with Boscarino in December 2001 after Boscarino was implicated in an insurance scam involving Rosemont.

Still, Madigan wrote, "Mayor Stephens was a 25 percent shareholder of American Trade Shows Inc. In addition to Boscarino and Stephens, other shareholders included William Daddano III, Lou Daddano and John Daddano, all reputed members of organized crime." Patrick A. Tuite, an attorney representing Boscarino, said his client and the Daddanos had no connections to the mob.

Madigan connected the other allegedly mob-linked investor in Emerald, Joseph Salamone, to Stephens through their dealings with a suburban bank.

"Although the Emerald subscription documents suggest that his brother Vito was originally intended to receive the shares, evidence establishes that those documents were later altered," she wrote. "Joseph and Vito share a common background -- they own a restaurant and coffee houses that are frequented by members of organized crime. Law enforcement officials report that gambling and drug trafficking take place at these locations.

"Joseph Salamone was involved in a secret deal to share his investment with others including Rocco Suspenzi, the vice chairman of Parkway Bank & Trust Co. Rosemont funds are deposited in Parkway Bank and the bank loaned Rosemont $15 million to finance the construction" of a parking garage Rosemont built for Emerald.

Stephenson denied Stephens knew Salamone. He also said all shareholders in Emerald knew they were subject to Gaming Board review and approval.

What's next?

Madigan did not rule out another vote by the board on the winning bidder. She also said she wouldn't hesitate to resume legal action to revoke Emerald's license -- a process that could take several years -- if the board continued to support a Rosemont casino without addressing her concerns.

Gaming Board Chairman Elzie Higginbottom said the board at its next meeting on April 8 would name a secondary bidder for the license under the terms of the Emerald settlement pending in U.S. Bankruptcy Court. Should Rosemont be deemed unfit to host a casino, the license could move to Waukegan or Des Plaines.

"We have a very professional staff," Higginbottom said. "I'm sure all of the facts regarding this proposal will come out and the Gaming Board will make a suitability determination accordingly."

Meanwhile, lawmakers in Springfield were trying to plot his board's demise.

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