Limited plea to avoid 'litigation vortex': Casino
back in spotlight - Feb 2013
Packer's casino company, Crown Limited, has applied
to have legal action against it in the Nevada Supreme
Court dismissed on the basis it risks being ''swept
further into the vortex of a massive litigation involving
dozens of parties and will be unjustly required to
take part in litigating matters in which they have
wide-ranging litigation, alleging fraud, relates to
Crown's failed $US250 million ($240 million) investment
in Fontainebleau - a 63-storey Las Vegas ''destination
casino resort'' which filed for bankruptcy in mid
to Fontainebleau's lenders, as much as $US400 million
worth of cost overruns was hidden from the resort
in order to keep finance flowing.
Limited acquired a minority interest in Fontainebleau
in June 2007. Around the same time, a banking syndicate
agreed to lend $1.85 billion to the project run by
Miami-based developer Jeffrey Soffer.
was drawn against the loan from that date until April
2009, when Bank of America, as agent for the lenders,
declared default under the loan agreement. Two months
later Fontainebleau filed for bankruptcy. The incomplete
shell of the 63-storey building remains a massive
ugly eyesore on the Las Vegas skyline.
to court documents, by mid-2008 Fontainebleau's main
principals had allegedly calculated the project was
$US300 million over budget, but did not inform the
lenders as they were obliged to do.
is alleged that instead, to conceal these excessive
costs, the ''borrowers submitted fraudulent draw requests''
on the loan ''that contained falsified information
regarding anticipated costs and budgets''.
that had loaned about $US800 million to the failed
project have targeted Crown with the allegation that
Crown defendants had ''agreed and conspired with the
Fontainebleau defendants to continue to misrepresent
the financial status of the project'' when Crown allegedly
found out about the cost overruns.
its submission to the Nevada court on Friday, Crown
said it had suffered and would ''continue to suffer
reputational damage from insufficiently pleaded allegations
allegations have come to light while Crown's Macau
joint venture, Melco Crown, has been embroiled in
an investigation by Taiwanese authorities into allegations
a subsidiary illegally circumvented the country's
tight foreign-exchange controls to allow high-rollers
to funnel $170 million of gambling funds to Macau.
Victorian casino regulator says it is ''actively monitoring''
the investigation by Taiwanese authorities while it
undertakes a mandatory review of Crown's suitability
to continue holding its casino licence.
NSW casino regulator is also conducting a probity
check on Crown, which is seeking to increase its stake
in a rival casino operator, Echo Entertainment.