1 1 STATE OF NEW JERSEY 2 CASINO CONTROL COMMISSION 3 - - - - - - - - - - - - - - - - - - - 4 5 Petition of Adamar of New Jersey, Inc., (Adamar) 6 for renewal of its casino license and other matters 7 (PRN 2140705, 2910706, 2910708) 8 Volume 1 9 - - - - - - - - - - - - - - - - - - - 10 11 Tuesday, November 20, 2007 12 Atlantic City Commission Offices 13 Joseph P. Lordi Public Meeting Room - First Floor 14 Tennessee Avenue and Boardwalk 15 Atlantic City, New Jersey 08401 16 12:14 a.m. to 4:17 p.m. 17 18 19 Certified Court Reporter: Darlene Sillitoe 20 - - - - - - - - - - - - - - - - - - - - - - - - - - - 21 ATLANTIC CITY COURT REPORTING, LLC 22 CERTIFIED SHORTHAND REPORTERS AND VIDEOGRAPHERS 23 1125 ATLANTIC AVENUE, SUITE 416 24 ATLANTIC CITY, NEW JERSEY 08401 25 (609) 345-8448 www.accourtreporting.com 2 1 AGENDA SPECIAL PUBLIC MEETING 2 NOVEMBER 20, 2007, 12:14 p.m. 3 MATTERS HEARD: 4 The petition of Adamar of New Jersey, Inc., for renewal of its casino license and Casino Hotel 5 Alcoholic Beverage License and other matters (PRN 2140705); 6 Consideration of the application of Tropicana Casinos 7 and Resorts, Inc., formerly known as Wimar Tahoe Corporation, for plenary qualification as a holding 8 company of Adamar of New Jersey, Inc.; 9 Division of Gaming Enforcement (the Division) v. Tropicana Casino and Resorts, Inc., Tropicana 10 Entertainment, LLC, Adamar of New Jersey, Inc, (d/b/a Tropicana Atlantic City) Docket No. 07-0646-VC, 11 alleging violation of NJAC 19:45-1.11(c) (audit committee complaint); 12 Petition of Tropicana Casinos and Resorts, Inc., 13 Tropicana Entertainment, LLC, Ramada New Jersey Holdings Corporation, and Adamar of New Jersey, Inc., 14 for declaratory relief with respect to NJAC 19:45-1.11(c)2 and other audit committee issues (PRN 15 2910708) 16 17 18 19 20 21 22 23 24 25 3 1 2 WILLIAM J. YUNG, III By Mr. O'Gara 30 3 By Ms. Maher 73 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4 1 E X H I B I T S : 2 Commission No. Description EVD 3 C-1 Entities and Qualifiers Report, 11-16-07 X C-2 CHAB License Report, 11-20-97 X 4 C-3 EEBOP, 11-9-07 X 5 Division No. Description EVD 6 D-1 Division Report X D-2 DGE Report to Commission X 7 D-3 DGE Financial Report to Commission X D-4 DGE to Commission X 8 D-5 DGE Sworn Statement of Fred Buro, 9-25-07 X D-6 DGE Sworn Statement of William J. Yung, III, X 9 9-27-07 D-7 DGE Sworn Statement of Donna More, 10-1-07 X 10 D-8 DGE Sworn Statement of Tama Hughes, 10-2-07 X D-9 DGE Sworn Statement of Michael S. Lyons, X 11 10-5-07 D-10 DGE Sworn Statement of William J. Yung, III, X 12 9-27-07 D-11 Memordam, 8-29-07, Richard Iannacone to X 13 Richard Carretta, Richard Handzo D-12 E-mail, 9-5-07, Ted Mitchel to George Clark X 14 D-13 DGE Memorandum, 10-5-07, Richard Iannacone X to Wendy Way 15 D-14 DGE Memorandum, 8-14-07, Richard Iannacone to Richard Carrettare 16 D-15 DGE Memorandum, 8-14-07, Michael Scotten to Richard Iannacone 17 D-16 DGE Memorandum, 8-14-07, Lauren Massara to Richard Iannacone 18 D-17 Fred Buro Interview Outline by Thomas Hollinger, 8-14-07 19 D-18 Casino Services Agreement, 1-3-07 X D-19 Service Agreement, 1-3-07 X 20 D-20 Letter, 4-17-07, Lynne Kaufman to X Dorothy Turi 21 D-21 Letter, 9-18-07, MaryJo Flaherty to Lynne X Kaufman 22 D-22 Letter, 5-2-07, William J. Yung, III, to X Len DiGiacomo and Dorothy Turi 23 D-23 Letter, 7-23-07, Larry King to Dorothy Turi X D-24 E-mail, 3-9-07, Dorothy Turi to Antoinette 24 Hill D-25 DGE Interview Report, 8-6-07, Joseph X 25 Stratman 5 1 2 Division No. Description EVD 3 D-26 Revised Agenda, 6-7-07, Indiana X Gaming Commission 4 D-27 LexisNexis Article, 9-13-07 X D-28 Evansville Courier and Press, 9-13-07 X 5 D-29 Evansville Courier and Press, 8-12-07 X D-30 Letter, 9-23-07, William J. Yung, III, to X 6 Lonna Willingham D-31 Chart of Violation Numbers/Chart of X 7 Violations D-32 Louisiana Gaming Control Board Notice of X 8 Recommendation of Administrative Action, 12-27-05 9 D-33 Louisiana Gaming Control Board Notice of X Recommendation of Administrative Action, 10 3-8-06 D-34 E-mail, 5-9-06, Kelly Duncan to Vivian Raby X 11 D-35 Louisiana Gaming Control Board Notice of X Decision and Order, 6-20-06 12 D-36 Louisiana Gaming Control Board Notice of X Decision and Order, 8-15-06 13 D-37 Louisiana Gaming Control Board Order, X 10-17-06 14 D-38 Letter, 1-26-06, Nevada Gaming Control Board X to William J. Yung, III, 15 D-39 Park Cattle Company's Amended Counterclaim, X 6-15-07 16 D-40 DGE Interview Report, 1-11-07, X Re: Marvin Cato 17 D-41 DGE Interview Report, 7-11-07, X Re: Charles Cato 18 D-42 Rainbow Capital Requirements Ownership X Information 19 D-43 Letter, 3-20-07, William J. Yung, III, to X Marvin Cato 20 D-44 Letter, 8-7-02, Thomas A. Ryder to Ken Ibsen X D-45 Letter, 10-9-02, Paul S. Pilecki to Thomas X 21 A. Ryder D-46 Letters, 11-1-02, Paul S. Pilecki to Thomas X 22 A. Ryder D-47 Consent to Assessment of Civil Money Penalty X 23 5-23-03, Re: Greenville Riverboat D-48 Letter, 5-27-03, Alma Angotti to Paul X 24 Pilecki D-49 Copy of Check 100475160, Huntington X 25 National Bank 6 1 CONTINUED: E X H I B I T S : 2 Division No. Description EVD 3 D-50 DGE Investigation Report, 9-10-07 X D-51 DGE Invesstigation Report, 8-16-07 X 4 D-52 Commission Opinon, 7-13-83, Re: Bally's X Manufacuring Corp. 5 D-53 Letter, Guy S. Michael to Mitchel Schwefel X D-54 Legal Representation Agreement, 2-19-07 X 6 D-55 Letter, 12-28-06, John J. Mercun to Len X DiGiacomo and Raymond J. Marquz 7 D-56 Letter and petition, 6-1-07, Lynne Kaufman X to Commission 8 D-57 Letter, 6-1-07, Dorothy Turi to Hon. Linda X M. Kassekert 9 D-58 Letter and Amended Petition, Lynne Kaufman X to Commission 10 D-59 Letter, 6-14-07, Dorothy G. Turi to Hon. X Linda M. Kassekert 11 D-60 E-mail, 7-10-07, to Commission X with attachments 12 D-61 DGE Qualifier Report, 10-30-07 X 13 Applicant's No. Description EVD 14 A-1 Equal Employment Business Opportunity Plan X A-2 E-mail, 2-15-07, Tama Hughes to Bruce Ladd, X 15 Re: Response to 2-14-07 Inquiry A-3 E-mail, 2-22-07, Tama Hughes to Bruce Ladd, X 16 Re: Followup on 2-14-07 E-mail A-4 E-mail of 2-22-07, Bruce Ladd to Tama Hughes,X 17 Re: Acknowledges Receipt of E-mail A-5 E-mail of 3-9-07, Bruce Ladd to Tama Hughes, X 18 Re: Provide List A-6 E-mail of 3-9-07, Tama Hughes to Bruce Ladd, X 19 Re: List of Expected Terminations A-7 Expected Terminations X 20 A-6 Letter e-mailed of 3-15-07, Dianna X Fauntleroy to Tama Hughes, Re: Proposed 21 Terminations, Casino Division A-7 E-mail of 3-15-07, S. Cooper to Tama Hughes, X 22 Re: Letter Proposing a Termination A7a E-mail of 3-29-07, Bruce Ladd to Tama Hughes,X 23 Re: FYI A-9 E-mail of 3-15-07, Tama Hughes to Fred Buro, X 24 Re: Revised that Tama Will Contact Ms. Fauntleroy 25 7 1 CONTINUED: E X H I B I T S : 2 Applicant's No. Description EVD 3 A-10 E-mail of 3-29-07, Bruce Ladd to Tama Hughes, X Re: "Please don't forget my stats" E-mail 4 A-11 E-mail of 3-30-07, Rose Williams to Tama X Hughes, Re: Numbers 5 A-12 E-mail Series of 3-30-07, Chris Costanzo to X Tama Hughes, Re: HR Metrics Grid 6 A-13 E-mail of 3-30-07, Chris Costanzo to Tama X Hughes, Re: HR Metrics Grid 7 A-14 E-mail of 3-30-07 from Tama Hughes to Bruce X Ladd, Re: Two-monthly Update Summary Report 8 A-15 E-mail of 4-2-07 from Tama Hughes to Scott X Griffin, Re: RIF Breakdown 9 A-16 E-mail of 4-2-07, Tama Hughes to Bruce Ladd, X Re: With Attached Memo Detailing Breakdown 10 In Staff Reduction A-17 E-mail of 4-3-07, Tama Hughes to Bruce Ladd, X 11 Re: Explanation for Discrepancy A-18 E-mail of 4-4-07, Tama Hughes to Bruce Ladd, X 12 Re: Self Report A-19 E-mail of 4-30-07, Tama Hughes to Bruce Ladd, X 13 Re: Limousine Services A-20 Letter of 5-3-07, Bruce Ladd to Mike Lyons, X 14 Re: Approval of Amended Security Submission A-21 E-mail of 5-4-07, Tama Hughes to Bruce Ladd, X 15 Re: RIF A-22 E-mail of 5-15-07, Tama Hughes to Carol X 16 Defoor, Re: Notice of Upcoming Terminations A-23 E-mail of 5-17-07 from Tama Hughes to Carol X 17 Defoor, Re: Notice of Upcoming Terminations A-24 E-mail of 5-17-07 from Tama Hughes to Carol X 18 Defoor, Re: Hotel Cage A-25 E-mail of 5-25-07 from Tama Hughes to X 19 Dorothy Turi Re: Qualifier Information A-26 Letter of 5-31-07, Tama Hughes to Chair X 20 Kassekert Re: Proposed Terminations, Slot Department 21 A-27 Letter of 5-25-07, Tama Hughes to Dorothy X Turi Antoinette Hill, Re: Qualifier Information 22 A-28 E-mail of 6-1-07, Carol Defoor to Tama X Hughes, Re: Two Month Update Summary Report, 23 HR Metrics Grid A-29 E-mail of 6-1-07, Tama Hughes to Carol X 24 Defoor, Re: Two Month Update Summary Report, HR Metrics Grid 25 8 1 CONTINUED: E X H I B I T S : 2 Applicant's No. Description EVD 3 A-30 E-mail of 6-1-07, Carol Defoor to Jim X Fehon/CCC, Re: Two Month Update Summary 4 Report, HR Metrics Grid A-31 E-mail of 6-1-07, Tama Hughes to Carol X 5 Defoor, Re: Breakdown of Terminations by Reason, Total 804 6 A-32 E-mail of 6-5-07, Tama Hughes to Carol X Defoor, Re: Termination Numbers Explanation 7 About HR Metrics Grid Numbers A-33 E-mail of 6-7-07, Tama Hughes to Dorothy X 8 Turi, Re: Qualifier letters A-34 E-mail of 6-12-07, Tama Hughes to Carol X 9 Defoor, Mitch Schwefel, Rich Handzo, Re: Staff Reductions 10 A-35 E-mail of 6-21-07, Carol Defoor to Tama X Hughes, Re: Rumors of Layoffs 11 A-36 E-mail of 6-27-07, Tama Hughes to Carol X Defoor, Mitch Schwefel, Dianna Fauntleroy, 12 Re: AC Press Letter A-37 E-mail of 7-3-07, Tama Hughes to Carol X 13 Defoor and George Homa, Re: Self Report, Task Force Personnel and Response 14 A-38 E-mail of 7-3-07, Tama Hughes to Carol X Defoor and George Homa, Re: Task Force Summary 15 A-39 E-mail of 7-6-07, Tama Hughes to Carol X Defoor, Mitch Schwefel, Richard Handzo, 16 Re: RIF advisement A-40 E-mail of 7-6-07, Tama Hughes to Carol X 17 Defoor, Mitch Schwefel, Richard Handzo, Re: RIF 18 A-41 E-mail of 7-18-07, Tama Hughes to Carol X Defoor, Mitch Schwefel, Richard Handzo, 19 Re: RIF Advisement A-42 E-mail of 7-18-07 Tama Hughes to Carol X 20 Defoor, Mitch Schwefel, Richard Handzo, Re: RIF 21 A-43 E-mail of seven 20 seven, Tama Hughes to X Carol Defoor, Andy Fiorentino, Mario 22 DeGuiseppe, Re: Slot Tech Impact Analysis A-44 E-mail of 7-20-07, Tama Hughes to Carol X 23 Defoor, Mitch Schwefel, Rich Handzo, Re: Revised RIF advisement 24 A-45 E-mail of 7-20-07, Tama Hughes to Carol X Defoor, Mitch Schwefel, Rich Handzo, 25 Re: Reductions 9 1 CONTINUED: E X H I B I T S : 2 Applicant's No. Description EVD 3 A-46 E-mail of 7-20-07, Tama Hughes to Carol X Defoor, Re: Slot Tech Impact Analysis 4 Undertaking and Assignment A-47 E-mail of 7-24-07, Tama Hughes to Fred Buro, X 5 Re: Rumors of Reduction A-48 E-mail of 8-6-07, Tama Hughes to Dianna X 6 Fauntleroy, Re: Tropicana Slot Tech Impact Study A-49 E-mail Series of 8-7-07, Re: Impact Study X 7 Submission A-50 E-mail of 8-7-07 Tropicana to submission, X 8 Re: August 7th Tropicana Atlantic City Proposed Department Layoffs and 2007 FTEs 9 A-52 E-mail of 8-10-07, Dianna Fauntleroy to Tama X Hughes, Re: Potential Department Layoffs 10 A-53 E-mail Series of 8-10-07, Dianna Fauntleroy, X Re: Potential Department Layoff, Clarification 11 A-55 E-mail Series of 8-14-07, Re: Qualifier X Notification 12 A-56 E-mail of 8-18-07, Tama Hughes to Dianna X Fauntleroy, Re: Proposed Staff Reductions 13 Security-Relief Rovers A-57 E-mail of 8-18-07, Dianna Fauntleroy to X 14 Tama Hughes Re: Reply proposed security Reductions 15 A-58 E-mail of 8-18-07, Tama Hughes to Dianna X Fauntleroy, Re: Reply to Item 34 16 A-59 E-mail of 8-18-07 Dianna Fauntleroy to X Tama Hughes, Re: Reply to Item 35 17 A-60 E-mail and letter of 8-18-07, Tama Hughes X to Dianna Fauntleroy, Re: Proposed 18 Tropicana Security Department Reductions A-61 E-mail Series of 8-23-07, Dianna Fauntleroy X 19 to Tama Hughes, Re: Tropicana Security Staffing Violation 20 A-62 E-mail 8-29-07, Tama Hughes to Dianna X Fauntleroy, Re: Request for meeting to 21 A-63 E-mail and Letter 9-5-07, Tama Hughes to X Dianna Fauntleroy, Re: Proposed Reductions 22 A-64 E-mail Series of 2-22-07, Tama Hughes to X Bruce Ladd, Re: Revised RIF List 23 A-65 E-mail 2-27-07, Tama Hughes to Bruce Ladd, X Re: Staffing Reduction Advisory 24 A-66 E-mail of 8-20-07, Tama Hughes to Carol X Defoor, Re: Tropicana Security Staffing 25 Violation 10 1 CONTINUED: E X H I B I T S : 2 Applicant's No. Description EVD 3 A-67 E-mail of 5-3-07, Len DiGiacomo to Lynne X Kaufman, Re: Morgan and Brugler 4 A-68 E-mail of 5-3-07, Len DiGiacomo to Lynne X Kaufman, Re: Brugler 5 A-69 E-mail 5-10-07, Lynne Kaufman to Dorothy X Turi, Re: Audit Committee 6 A-70 E-mail of 5-15-07, Guy Michael to Dorothy X Turi, Re: Tropicana Confirmations/Status 7 A-71 E-mail 6-14-07, Lynne Kaufman to Dorothy X Turi, Re: Audit Committee 8 A-72 E-mail of 6-14-07, Lynne Kaufman to Dorothy X Turi, Re: Audit Committee 9 A-73 E-mail of 6-14-07, Dorothy Turi to Lynne X Kaufman, Re: Audit Committee 10 A-74 E-mail of 6-14-07, Dorothy Turi to Lynne X Kaufman, Re: Audit Committee 11 A-75 E-mail of 6-18-07, Len DiGiacomo to Lynne X Kaufman, Re: Audit Committee 12 A-76 E-mail of 6-19-07, Dorothy Turi to Lynne X Kaufman, Re: Audit Committee 13 A-77 Chart, Second Level Casino Floor Plan A-78 Photograph 14 A-79 Photograph A-80 Chart, Tropicana Termination/Turnover X 15 Summary 1-31-7 to 10-31-07 16 17 18 19 20 21 22 23 24 25 (Exhibits retained.) 11 1 2 CASINO CONTROL COMMISSION: LINDA M. KASSEKERT, CHAIR 3 MICHAEL A. FEDORKO, VICE CHAIR MICHAEL C. EPPS, COMMISSIONER 4 RALPH G. FRULIO, COMMISSIONER WILLIAM T. SOMMELING, COMMISSIONER 5 PRESENT FOR THE CASINO CONTROL COMMISSION: 6 DARYL W. NANCE, ADMINISTRATIVE ANALYST DANIEL J. HENEGHAN, PUBLIC INFORMATION OFFICER 7 OFFICE OF THE GENERAL COUNSEL: 8 DIANNA W. FAUNTLEROY, GENERAL COUNSEL/EXECUTIVE SECRETARY 9 LEONARD J. DIGIACOMO, ASSISTANT GENERAL COUNSEL STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL 10 DIVISION OF GAMING ENFORCEMENT: 11 YVONNE G. MAHER, ACTING DIRECTOR 12 DEPUTY ATTORNEYS GENERAL MARYJO FLAHERTY, DEPUTY ATTORNEY GENERAL 13 14 15 16 17 18 19 20 21 22 23 24 25 12 1 A P P E A R A N C E S : 2 LEONARD J. DiGIACOMO, ASSISTANT GENERAL COUNSEL STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL 3 YVONNE G. MAHER, ACTING DIRECTOR 4 MARYJO FLAHERTY, DEPUTY ATTORNEY GENERAL 5 STERNS & WEINROTH, PC BY: PAUL M. O'GARA, ESQ. 6 AND: GRAIG P. CORVELEYN, ESQ. FOR: TROPICANA ENTITIES 7 MICHAEL & CARROLL 8 BY: GUY S. MICHAEL, ESQ. 9 COOPER LEVENSON BY: LLOYD D. LEVENSON, ESQ. 10 AND: LYNNE KAUFMAN, ESQ. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 13 1 (The special meeting was commenced at 2 12:14 p.m.) 3 CHAIR KASSEKERT: Good afternoon. 4 MR. NANCE: This is to advise the 5 general public that in compliance with Chapter 6 231 of the public laws of 1975 entitled the 7 "Open Public Meetings Act," the New Jersey 8 Casino Control Commission on October 17 and 9 November 15, 2007, filed with Secretary of 10 State at the State House, Trenton, New Jersey, 11 a notice of this hearing. On October 17, and 12 November 15, 2007, copies were mailed to 13 subscribers. 14 Members of the press will be permitted 15 to take photographs and we would ask that this 16 be done in a manner which is not disruptive to 17 the Commission and which does not interfere 18 with the public's right to observe the hearing. 19 The use of cellular telephones in the 20 public meeting room while the Commission is in 21 session is prohibited. 22 Would everyone please stand for the 23 pledge of allegiance. 24 (The flag salute was recited.) 25 MR. NANCE: Good morning. 14 1 CHAIR KASSEKERT: Good afternoon. 2 MR. NANCE: Good morning. The matters 3 to be considered today are: The petition of 4 Adamar of New Jersey, Inc., for renewal of its 5 casino license and Casino Hotel Alcoholic 6 Beverage License and other matters (PRN 7 2140705); 8 Consideration of the application of 9 Tropicana Casinos and Resorts, Inc., formerly 10 known as Wimar Tahoe Corporation, for plenary 11 qualification as a holding company of Adamar of 12 New Jersey, Inc.; 13 Division of Gaming Enforcement versus 14 Tropicana Casino and Resorts, Inc., Tropicana 15 Entertainment, LLC, Adamar of New Jersey, Inc, 16 (d/b/a Tropicana Atlantic City) Docket No. 17 07-0646-VC, alleging violation of NJAC 18 19:45-1.11(c) (audit committee complaint); 19 Petition of Tropicana Casinos and 20 Resorts, Inc., Tropicana Entertainment, LLC, 21 Ramada New Jersey Holdings Corporation, and 22 Adamar of New Jersey, Inc., for declaratory 23 relief with respect to NJAC 19:45-1.11(c)2 and 24 other audit committee issues (PRN 2910708). 25 CHAIR KASSEKERT: Thank you. 15 1 Could I ask counsel to enter their 2 appearances, please? 3 Mr. O'Gara? 4 MR. O'GARA: Hi. Paul O'Gara. My 5 colleague Graig Corveleyn for the Applicants, 6 Respondents, and Petitioners of all types. 7 And my co-counsel will -- I'll allow 8 them to introduce themselves. 9 MR. MICHAEL: Guy Michael, Michael & 10 Carroll and on behalf of the same Paul just 11 described. 12 MR. LEVENSON: Lloyd Levenson and Lynne 13 Kaufman. Same people, also. 14 CHAIR KASSEKERT: Thank you. 15 Ms. Maher? 16 MS. MAHER: Good afternoon. Yvonne 17 Maher and MaryJo Flaherty on behalf of the 18 Division of Gaming Enforcement. 19 CHAIR KASSEKERT: Thank you. 20 Today the Commission begins its hearing 21 on the petition of Adamar New Jersey, Inc., 22 better known as Tropicana, for renewal of its 23 casino license and casino hotel alcoholic 24 beverage license. We will also consider other 25 matters relating to that renewal, particularly 16 1 the application of the casino's new owner, 2 Tropicana Casinos and Resorts for plenary 3 qualification as it emerging from the interim 4 casino authorization process. 5 The Commission has conducted several 6 prehearing conferences there have helped 7 establish the framework for this proceeding, 8 including consolidating matters for 9 disposition, outlining the standards for 10 relicensure and qualification, and specifying 11 the burden of proof. Consequently, there is no 12 need to detail these matters any further here. 13 In addition, we addressed last Thursday 14 certain motions bearing on the parameters of 15 these proceedings that will also guide this 16 process. 17 Before continuing the public portion of 18 these proceedings, the Commission will convene 19 a closed session as permitted consistent with 20 the Open Public Meetings Act. Rather than 21 clearing the public meeting room, we will 22 retire to separate quarters and return here 23 briefly. 24 And I now move that we hold such a 25 closed session. 17 1 VICE CHAIR FEDORKO: Second. 2 CHAIR KASSEKERT: Is there a second? 3 COMMISSIONER FRULIO: Second. 4 COMMISSIONER SOMMELING: Second. 5 CHAIR KASSEKERT: The motion has been 6 made and seconded. All in favor? 7 (Ayes.) 8 CHAIR KASSEKERT: Opposed? 9 (No response.) 10 CHAIR KASSEKERT: Motion carries. 11 (A recess was taken from 12:17 to 12:42 12 p.m.) 13 CHAIR KASSEKERT: We'll now go back on 14 the record. 15 Mr. Nance? 16 MR. NANCE: The matters discussed in 17 closed session were: Individual qualifier 18 issues. 19 CHAIR KASSEKERT: Thank you. 20 I'll now entertain any motions to refer 21 any such matters to a hearing. Is there any 22 motion? 23 (No response.) 24 CHAIR KASSEKERT: Seeing none, we will 25 now address the identification and admission of 18 1 the premarked exhibits. 2 Mr. Nance? 3 MR. NANCE: Chair, Commissioners, the 4 premarked exhibits are as follows: The Casino 5 Control Commission has three exhibits, C-1 6 through C-3. 7 C-1 is the entities and qualifiers 8 report. 9 C-2 is the CHAB report. 10 C-3 is the EBBOP report, regarding 11 Tropicana. 12 The Division has submitted 61 exhibits. 13 They are premarked on the exhibit list as D-1 14 through D-61. 15 The Petitioners have has submitted 79 16 exhibits. They are premarked on the exhibit 17 list as A-1 to A-79. 18 CHAIR KASSEKERT: Thank you. 19 Is counsel satisfied that the list 20 prepared by the Commission staff accurately 21 identify these premarked exhibits? 22 MR. O'GARA: Yes, ma'am. 23 CHAIR KASSEKERT: Mr. O'Gara? 24 Miss Maher? 25 MS. MAHER: Yes, ma'am. 19 1 CHAIR KASSEKERT: Thank you. Very good. 2 Each exhibit will be so identified for 3 the record and should be identified as its 4 corresponding letter. 5 Is there any objections to the admission 6 of these exhibits? And are there any sealing 7 requests? 8 Mr. O'Gara? 9 MR. O'GARA: Yes. No objection, to 10 start with. 11 And with respect to A-77, we'll not 12 offer that one. It's a big chart, and when we 13 have the chart here, we'll do the offering with 14 respect to that. With respect to the remaining 15 exhibits, no objections to their admission. 16 There are sealing requests pending with 17 respect to D-1, D-2, and I believe D-61 is the 18 remaining exhibit which is -- and that's the 19 only request that we have. 20 CHAIR KASSEKERT: D-13? 21 MR. O'GARA: D-13? 22 CHAIR KASSEKERT: D-13. 23 MR. O'GARA: Let me -- oh, yeah. D-13. 24 God forbid, I forgot D-13. And that's a very 25 short exhibit. 20 1 CHAIR KASSEKERT: Thank you. 2 Ms. Maher? 3 MS. MAHER: Thank you, Your Honor. We, 4 the Division, would move to take Exhibits D-14 5 through D-17 -- we are not moving those into 6 admission. 7 CHAIR KASSEKERT: D-14 through 17. 8 MS. MAHER: No. We are not moving 9 those, Your Honor. And we have objected to the 10 sealing requests as noted on our written 11 papers. 12 CHAIR KASSEKERT: Thank you. 13 Tropicana requesting certain portions -- 14 MR. INGIS: Madame Chair, before we 15 begin -- 16 CHAIR KASSEKERT: Yes. 17 MR. DiGIACOMO: This one, through you, 18 Madam Chair, for Mr. O'Gara, I think you asked 19 for a sealing of D-2. 20 MR. O'GARA: If I did, I misspoke, Mr. 21 DiGiacomo. Let me get my act together. No. 22 It's -- 23 MR. INGIS: D-3. 24 MR. DiGIACOMO: D-1 and D-3. 25 MR. O'GARA: And 61. 21 1 MR. DiGIACOMO: Yes. 2 MR. O'GARA: Correct. I misspoke, 3 Chair. My apologies. 4 Ms. Maher, are you -- she's checking. 5 MS. FLAHERTY: That's fine. 6 CHAIR KASSEKERT: We're fine? All 7 right. 8 Tropicana requests that certain portions 9 of the Division's report be sealed, 10 specifically the section of the license renewal 11 report, D-1, entitled "First Class Resort?" at 12 pages 32 to 37 and certain information 13 regarding financial projections contained in 14 the financial report, D-3. 15 The Applicant also seeks to seal D-11, 16 which pertains to patron complaints about the 17 conditions of the casino hotel facility. The 18 Division opposes the sealing applications 19 involving patron complaint material but defers 20 to the discretion of the Commission as to the 21 appropriateness of the sealing request 22 involving financial material. There is also a 23 joint sealing request concerning portions of 24 D-61, Mr. Yung's individual qualifier report. 25 Finally, Tropicana requests the sealing 22 1 of the first two paragraphs of Page 3 of D-13, 2 a memorandum from Richard M. Iannacone, 3 Supervising State Investigator to Deputy 4 Attorney Wendy Way, dated October 5th, 2007. 5 The Division does not oppose this request. 6 Preliminarily, I note that the 7 Tropicana's reliance upon Section 74d of the 8 Casino Control Act in furtherance of its 9 sealing request of financial data is misplaced. 10 In resolving sealing requests made during 11 casino license hearings, the Commission applies 12 the principles enunciated by the Appellate 13 Division in the seminal case of In Re: Nigris, 14 242, New Jersey Super, 623 in the Appellate 15 Division, 1990. The Court in Nigris recognized 16 that certain information and data submitted to 17 the Commission are presumed to be confidential 18 pursuant to Section 74 of the Act. The Court 19 concluded, however, that confidentiality 20 requirements set forth in Section 74 are 21 applicable to the ordinary administrative 22 activities of the Commission but not to 23 contested hearings. Rather, hearings before 24 the Commission are subject to the provisions of 25 the Administrative Procedure Act. In this 23 1 regard, the Court in Nigris held that in 2 contested case proceedings, the Commission must 3 weigh the requesting party's privacy interests 4 against the public interest in full disclosure. 5 The Court further observed that, while the 6 privacy interests of the applicants are 7 dominant in uncontested administrative matters, 8 allowing public access to the evidence which 9 the Commission bases its decisions is paramount 10 in contested case proceedings. This is 11 essential to foster public confidence and trust 12 in the casino regulatory system. 13 Accordingly, the burden rests with the 14 sealing proponent to identify specific 15 information requiring sealing and to articulate 16 the undue harm which would allegedly be caused 17 by public access to such material. 18 Ordinarily, financial projections are 19 among the limited matters properly subject to 20 sealing in a casino license hearing. However, 21 in this particular case, with the legitimacy 22 and continued viability of the license 23 applicants 200 -- 2007 forecasts have been 24 called into question as a result of the 25 technical default announced recently by TCR, 24 1 caused by its failure to satisfy one of the 2 covenant ratio tests under its credit facility, 3 Credit Suisse, sealing would not be appropriate 4 for these specific forecasts. 5 After discussions with our legal staff, 6 Tropicana has withdrawn the sealing request as 7 to the 2007 projections. There will be 8 testimony and other evidence adduced regarding 9 what measures will be taken to cure the 10 technical default and to ensure future 11 compliance in all respects with the credit 12 facility. Significantly, our evaluation of the 13 accuracy of the 2007 financial projections will 14 be an integral component of the Commission's 15 decision making process on the contested issue 16 of financial stability. 17 Accordingly, consistent with the 18 analysis employed in the Nigris decision and 19 the Commission precedent, the public access to 20 this highly relevant information outweighs any 21 countervailing privacy concerns. In accordance 22 with our established practice, however, the 23 financial forecasts for 2008 onward should be 24 sealed. 25 Applying the same analysis, I find no 25 1 valid basis for sealing the patron complaint 2 material contained in D-1 and D-11. Clearly, 3 as we stated during last week's motion hearing, 4 this information is clearly relevant with 5 respect to the affirmative license criterion of 6 business ability. As such, absent a compelling 7 privacy interest, this material should not be 8 shielded from public view. In my judgment, 9 Tropicana has not demonstrated that a balancing 10 of interests requires the sealing of this 11 relevant information. 12 Finally, Tropicana seeks to seal certain 13 personal and proprietary information contained 14 in D-61, Mr. Yung's individual qualifier 15 report, and the aforementioned two paragraphs 16 of D-13. I believe that this relief is 17 warranted under the circumstances. 18 And for these reasons, I move the 19 following: First, to deny the request to seal 20 D-11 and select portions of D-1; 21 Second, grant the sealing requests for 22 financial projections in D-3 as to 2008 onward; 23 And, three, grant the sealing requests 24 for select portions of D-61, Mr. Yung's 25 individual qualifier report, and D-13. And I 26 1 so move. 2 Is there a second? 3 COMMISSIONER SOMMELING: Second. 4 CHAIR KASSEKERT: The motion has been 5 made and seconded. All in favor? 6 (Ayes.) 7 CHAIR KASSEKERT: Opposed? 8 (No response.) 9 CHAIR KASSEKERT: The motion carries. 10 Okay. Thank you. 11 Are there any other procedural matters 12 that need to be brought to our attention at 13 this time? 14 MR. O'GARA: Not that I'm aware of. 15 MS. MAHER: No. 16 CHAIR KASSEKERT: Very good. We're now 17 set for opening statements. 18 Counsel, would you like to proceed? 19 MR. O'GARA: Yes. Chair, members of the 20 Commission, we're here today on two matters and 21 a third that's been consolidated. The two 22 principal matters are the renewal of the 23 license of Adamar, which is Tropicana, for the 24 statutory period, the plenary qualification of 25 the holding company of Tropicana, Tropicana 27 1 Entertainment and, in fact, its principle, 2 William J. Yung, III. 3 The consolidated matter is a matter 4 involving the audit committee procedures, which 5 is consolidated because it's properly a part of 6 the overall evaluation of audit committee 7 issues that is in your report. We would 8 suggest to you that there are a number of 9 issues that are raised in this report, and they 10 are issues which are fairly raised, and we are 11 fairly prepared to address. 12 We believe that those issues, which 13 include one that you referred to, Chair, which 14 has to do with a -- as you correctly described 15 it a technical event of default as opposed to a 16 default having occurred with respect to a 17 leverage ratio in a debt covenant in the debt, 18 issues with respect to the audit committee and 19 its functioning and the role that it has, 20 issues that are raised in the Division report 21 regarding the operations of the Tropicana, Mr. 22 Yung's operational philosophy, how Mr. Yung 23 financed this, all these things are things 24 which we are fully prepared to address fully 25 and frankly. 28 1 And the way that we will do that is not 2 only through the 70-odd exhibits which you 3 enumerated and have been submitted into 4 evidence but through testimony and principally 5 through the testimony of William J. Yung, III. 6 There is a real coincidence of all these 7 questions centering eventually on, you know, 8 who makes these decisions, who's in charge and, 9 in fact, ultimately who owns this. And all of 10 that is embodied in a single person. And that 11 person is going to take an oath in front of you 12 and answer all the questions. I'm going to 13 have a very long and candid conversation with 14 Bill Yung in this room, and you'll all be privy 15 to it. 16 You'll also have the benefit that most 17 people don't as they listen to conversations, 18 although the proceedings don't allow you to 19 until the end, you're free to interrupt, and in 20 the end you can certainly take up anything you 21 would have really interrupted me. If you 22 really passionate, feel free to interrupt me. 23 And I think when you've heard form him 24 and from Ms. More who'se going to address many 25 issues which what I call quote-unquote 29 1 compliance issues and how that's done and from 2 the financial staff, we'll have resolved those 3 issues and satisfied you that, number one, this 4 company is deserving of its plenary 5 qualification and have a license for its 6 facility here in Atlantic City renewed, and 7 we'll be able to discuss that with you in some 8 length after we've heard all the evidence you 9 will hear in this room. 10 Thank you. 11 CHAIR KASSEKERT: Thank you. 12 Thank you. I'm assuming that the other 13 counsel aren't goes to going to make -- 14 MR. O'GARA: I think one's enough; 15 right? You're satisfied with one. 16 CHAIR KASSEKERT: One's enough. 17 Absolutely. 18 Miss Maher? 19 MS. MAHER: Thank you, Chair, members of 20 the Commission. Good afternoon. 21 Tropicana Casino and Resorts, 22 Incorporated, seeks plenary qualification 23 between the Casino Control Commission as a 24 holding company of the New Jersey casino 25 licensee, Adamar of New Jersey which conducts 30 1 business as the Tropicana Casino and Resorts, 2 Tropicana, Atlantic City. Plenary 3 qualification is also sought for Tropicana 4 Entertainment Holdings, LLC, Tropicana 5 Entertainment Intermediate Holdings, LLC, and 6 Tropicana Entertainment, LLC, which are 7 subsidiaries of Tropicana and holding and 8 intermediary companies of Adamar. Columbia 9 Sussex Association, an affiliate of Tropicana, 10 seeks finding of suitability as an entity 11 qualifier and financial source. All of the 12 above companies are owned directly or 13 indirectly by William J. Yung, III, or family 14 trusts which he has established. Adamar, which 15 owns and operates the Tropicana Casino and 16 Resorts, Tropicana, Atlantic City, has applied 17 to the Casino Control Commission for renewal of 18 its casino and CHAB licenses. 19 Pursuant to those applications, the 20 Division has conducted a lengthy and thorough 21 investigation, and pursuant to that 22 investigation has a number of serious concerns 23 about this Applicant which it has placed before 24 the Commission in its various reports. This 25 serious concern does not rise out of one area 31 1 but is a result of a combination of factors 2 which impact on the Applicant's ability to 3 fulfill its statutory and regulatory duties 4 under the Casino Control Act. It is the sum of 5 many things from many areas which raise a 6 common theme, a common concern. 7 That concern is rooted in the statue at 8 Section 74d, which says simply this, that an 9 applicant for casino license shall be required 10 to establish by a clear and convincing evidence 11 that they have sufficient business ability and 12 casino experience as to establish the 13 likelihood of creation and maintenance of a 14 successful, efficient casino operation. 15 Related to this as well are the 16 statutory policies that the applicant is 17 required to establish and maintain an approved 18 hotel which is in all respects a first-class 19 facility of exceptional quality which will help 20 restore Atlantic City as a resort, tourist, and 21 convention destination. Now more than ever 22 with increased competition from Pennsylvania as 23 well as other jurisdictions is this statutory 24 mandate of particular concern. 25 These concerns grow from a corporate 32 1 climate, and Tropicana Casino level conduct of 2 operations which showed that there is a 3 fundamental disregard for regulatory 4 requirements and ongoing due diligence 5 requirements. Furthermore, these are not 6 merely general concerns but are manifested in 7 concrete examples which the Division has laid 8 out before the Commission. 9 First, failures to proceed in a timely 10 and effective manner before New Jersey 11 regulators with regard to necessary approvals 12 for managed services agreements. 13 Secondly, the failure to establish an 14 independent audit committee, an important and 15 necessary requirement under the New Jersey 16 regulations for a period of six months, a 17 requirement that was incumbent upon the 18 Applicant to fulfill despite their arguments 19 that they had dialog with the regulators for a 20 protracted period of time over the issue. 21 Dialog or not, they simply did not comply. 22 Thirdly, Tropicana's conduct with 23 respect to its casino operations in six other 24 gaming jurisdictions, Illinois, Indiana, 25 Louisiana, Mississippi, Missouri, and Nevada, 33 1 which include regulatory violations at both 2 state and federal levels resulting in penalties 3 or citations, staffing and workforce reduced by 4 regulators, litigations against other gaming 5 regulators, and casino operators, among others, 6 failure to respond to regulators in timely 7 manner and lack of due diligence. 8 Fourthly, the filing of regulatory 9 complaints against the Tropicana Atlantic City, 10 which include failing to establish an audit 11 committee, failure to notify regulators about 12 termination and employment of officers at both 13 the corporate and casino levels as well as 14 failures to obtain temporary qualification for 15 certain officers prior to their assumption of 16 their duties, and failure to maintain minimum 17 staffing requirement for the Tropicana Atlantic 18 City's security departments. 19 Fifthly, the layoffs. The Division 20 alleges in its report that the Tropicana 21 Atlantic City has laid off one quarter of its 22 workforce from January of 2007 to August of 23 2007, not even one year's time period. The 24 Division's concern in this area should come as 25 no surprise to this Commission since in the 34 1 spring of 2007 the Commission became involved 2 in this issue as well. Concern about the lack 3 of forethought with these layoffs and how they 4 would impact the Tropicana Atlantic City -- 5 Tropicana Atlantic City's ability to comply 6 with the regulations, for example, reduction of 7 four locksmiths to one, 23 slot techs to 16. 8 Concern about the sheer number after numerous 9 layoffs which occurred from January of 2007 10 until the summer and then August of 2007 when 11 the Tropicana, Atlantic City, indicated it 12 would lay off 320 more people, including 70 13 people in the security department which raised 14 grave concern about the safety and security of 15 hotel and the casino facilities and its 16 patrons. And only after, as Mr. Young himself 17 put it "pressure from the gaming Commission," 18 did the Tropicana reduce that number to 40. 19 Concerns about notification to the regulators 20 and the fact that the Tropicana still cannot 21 tell the regulators with any certainty exactly 22 how many people they have laid off. People, 23 not full-time, not full-time equivalents, but 24 people who are laid off and impacted. 25 And, finally, there's concern about how 35 1 the layoffs impact the Tropicana, Atlantic 2 City's, ability to be a first-class resort. 3 How its affecting the condition of the hotel 4 and its casino. 5 Which leads us to the sixth area, the 6 numerous patron complaints from the Tropicana, 7 Atlantic City's, own files. These complaints 8 evidence the impact that the layoffs have had 9 on the condition of the property and shown that 10 there is true concern about the Tropicana's 11 ability to create and maintain a successful, 12 efficient casino operation. 13 The Division's investigation has 14 provided a look into the Tropicana's past, 15 their history in other jurisdictions, and more 16 importantly their conduct in Atlantic City over 17 the last ten months. This look into the past 18 gives us -- gives this Commission a glimpse of 19 the future and shows why the Division has 20 serious concerns about this applicant's ability 21 to comply with their mandated Statutory and 22 regulatory requirements under the Casino 23 Control Act. 24 The Division maintains that this hearing 25 is the time for the Tropicana to come forward 36 1 to address these concerns, to show the 2 Commission and the community that they have the 3 ability to give the attention and concern that 4 is required to the New Jersey regulations and 5 regulators. 6 To address these areas, to show as us, 7 Tropicana, that you do have at ability to 8 maintain a successful casino operation, that 9 you are operating a first-class facility, to 10 help Atlantic City maintain its reputation as a 11 resort, tourist, and convention destination. 12 Show us, Tropicana, by clear and convincing 13 evidence that you have indeed have earned the 14 privilege of being granted a casino license. 15 CHAIR KASSEKERT: Thank you. 16 MS. MAHER: Thank you. 17 CHAIR KASSEKERT: Before proceeding with 18 testimony, I notice that both the parties have 19 multiple attorneys, not only at counsel table 20 but in the audience. Ideally each side would 21 have one attorney examine all the witnesses, 22 but I realize that the parties may have planned 23 their cases differently. Nevertheless, only 24 one attorney from each side should examine a 25 particular witness and only objections raised 37 WILLIAM J. YUNG, 1 by that attorney during the course of the 2 witness' examination will be recognized. 3 Further, if there's a point of general 4 applicability that is to argued, I would ask 5 that only one attorney per side may participate 6 in that discussion. 7 So with that, Mr. O'Gara, please call 8 your first witness. 9 MR. O'GARA: William J. Yung, III. 10 CHAIR KASSEKERT: Mr. Yung, you can come 11 forward. Mr. Nance will swear you in. 12 13 WILLIAM J. YUNG, was duly sworn to 14 testify in this matter. 15 16 MR. NANCE: Please state your name for 17 the record. 18 THE WITNESS: William John Yung. 19 MR. NANCE: Thank you. You may be 20 seated. 21 CHAIR KASSEKERT: You may proceed. 22 23 DIRECT EXAMINATION BY MR. O'GARA: 24 Q. Good afternoon, Mr. Yung. 25 A. Good afternoon. 38 WILLIAM J. YUNG, 1 Q. I'm going to ask you a lengthy series of 2 questions, and during the course of that I undoubtedly 3 will refer to you as "Bill" as opposed to Mr. Yung. 4 Do you have any objection to that? 5 A. No, I don't. 6 Q. Mr. Yung, what did you do to start your 7 professional career when you got out of school? 8 A. Well, when I got out of school, in 9 Cincinnati, I was A1 for the draft, and I basically 10 couldn't -- nobody would hire me so -- because I was 11 draft eligible. So then I taught school for about a 12 year until my wife got pregnant, and then, relieving 13 from the draft, and then I went to work for Andrew 14 Jergens Company. Jergens lotion, Jergens soap. And I 15 worked there for about three years. During that time, 16 they taught me how to do industrial engineering, which 17 is time study, time work, time measurement, job 18 measurement. And after -- after three years there, I 19 went to a company called Interchemical -- 20 Interchemical Corporation or Inmont. And started 21 there as a time study, industrial engineer for about 22 six months. And then I went on to supervising part of 23 the factory. We made carbon paper, ribbons. And I 24 think that company is out of business right now. 25 Q. Was this in the area around Cincinnati, 39 WILLIAM J. YUNG, 1 northern Kentucky? 2 A. Yes. It was in Cincinnati. 3 Q. And is that where you're from, that part 4 of the country? 5 A. Yes. 6 Q. At some point in your professional 7 career, did you make a determination that you wanted 8 to be in business for yourself? 9 A. Yes, I did. You know, basically right 10 out of -- right out of high school, I decided that, 11 you know, I wanted to get into business for myself, so 12 I started different companies. I started an antenna 13 company. I even had a go-cart track. So I was in 14 many different things as a businessman and an 15 entrepreneur. 16 Q. Did there come a period of time when you 17 were introduced to the hotel and hospitality business? 18 A. Well, the -- in about -- about 1971, 19 '72, I finally got into the hotel business with a Days 20 Inn in Richwood, Kentucky, I think we were, like, the 21 first or second licensed Days Inn franchisee. 22 Q. Did you acquire an existing structure? 23 A. Did I acquire? 24 Q. Acquire a hotel and put a Days Inn flag 25 on it or did you -- 40 WILLIAM J. YUNG, 1 A. No, no. I -- actually, I actually 2 constructed it myself. We -- you know, we start out 3 on pretty much a shoestring. And I did the electrical 4 work myself, the storefronts. Did a lot of the 5 concrete work and, you know, painting and, you know. 6 So I did a lot of it myself. 7 Q. And from that first hotel, did you then 8 begin to focus your efforts on the hotel and 9 hospitality business? 10 A. Yes, I did. I think six months after it 11 was opened, we expanded the motel and then kept 12 expanding right on, continually on for the next 30 13 years. 14 Q. And Days Inn, is it -- within your 15 business, is that a full service, limited service? 16 What kind of hotel were those first couple of 17 franchises? 18 A. Those were limited-service hotels. 19 Q. And, eventually, did you have the 20 opportunity or did you determine to move on into the 21 full-service hotel business? 22 A. Yes, I did. After about owning and 23 building about 16 Days Inns, we went into -- we moved 24 up to Holiday Inns and started to buy Holiday Inns. 25 And we even built some Holiday Inns. And then we 41 WILLIAM J. YUNG, 1 moved on up to Radissons, and then eventually we moved 2 up to Marriotts, Hiltons, Westins, Sheratons, that 3 type. 4 Q. And you said -- when was it you built 5 the first Days Inn? 6 A. '72. 7 Q. And you continue in that business with 8 Columbia Sussex, which is an affiliate of Tropicana; 9 is that correct? 10 A. Correct. 11 Q. At present how many hotels do you own 12 and operate? 13 A. About eight. 14 Q. And how many of those are licensed by 15 Marriott? 16 A. About 40. 17 Q. And in terms of Marriott licensees in 18 North America, are you among the larger? 19 A. I'm the largest licensee of Marriotts in 20 the world. Full service. 21 Q. And we've heard, and these reports 22 reference, family trusts you control. You control 23 those trusts. And through your own ownership, are you 24 the person who owns those hotels? 25 A. Yes. 42 WILLIAM J. YUNG, 1 Q. Now, as a Marriott licensee, does 2 Marriott set standards and set policies of what they 3 expect to remain a Marriott licensee? 4 A. Yes, they do. In fact, all the brands, 5 the Hiltons, the Sheratons, Westins, all have their 6 own quality assurance brands. 7 Q. So -- 8 A. And specifications. 9 Q. So we have them from Marriott. We have 10 them from Starwood, we have them from Hilton, and you 11 have to meet those kind of standards? 12 A. Yes. That's correct. 13 Q. And have you had any history of running 14 afoul or having any of your hotels found substandard? 15 A. Well, occasionally, when you're in 16 remodeling, you tend to have -- get lower scores 17 and -- but, generally speaking, I think over my -- my 18 period of time -- I can't remember everything, but 19 there may have been one or two. But, you know, but we 20 corrected the issues. Whatever it was and went on 21 from there. 22 Q. Have you continued through the present 23 to be -- acquire additional Marriott licenses? 24 A. Yeah. We're -- we're acquiring 25 Marriotts, and other brands, all the time. In the 43 WILLIAM J. YUNG, 1 last few months we acquired a Sanibel Harbor resort in 2 Fort Myers, Florida, and a Hilton in Washington DC, 3 and a Hilton in Sacramento. 4 Q. Now, as your hotel business grew, did 5 there come a point in time when you also developed 6 business interests in conjunction with that in the 7 gaming industry in the United States? 8 A. Yes. About -- I think it's about 15 9 years ago, we bought the Del Web, High Sierra in Lake 10 Tahoe and got into the gaming business then. 11 Q. And that was your -- Lake Tahoe that 12 High Sierra, which is now known as -- 13 A. The Horizon. 14 Q. Was your first casino investment? 15 A. That's right. 16 Q. And that was done through Columbia 17 Sussex? 18 A. I think we had a subsidiary doing it. 19 Yes. 20 Q. And thereafter, did you develop 21 additional or require additional properties which 22 offered casino gaming? 23 A. Yes. We added two in Greenville, 24 Vicksburg. 25 Q. That's Mississippi, sir? 44 WILLIAM J. YUNG, 1 A. Mississippi. Baton Rouge. One in 2 Laughlin. And another one in Lake Tahoe, the old -- 3 the Caesars Tahoe, which we renamed the MontBleu. 4 Q. All right. And they were, in fact, 5 smaller casino operations? 6 A. Yes. Very much smaller than the 7 Tropicana, but, yes. The one in Baton Rouge was a 8 fairly significant casino. 9 Q. Now, in 2006 did you become aware of the 10 possibility that Aztar Corporation might be available 11 for acquisition? 12 A. Well, I saw it in the news -- newspaper 13 that there were a couple buyers -- I think three 14 buyers going after it at that point. 15 Q. And did you develop an interest in 16 acquiring Aztar? 17 A. Well, not at first. I really didn't 18 want to get involved, you know, specifically, I really 19 didn't want to get involved because of New Jersey. 20 Q. And what was your hesitation about it? 21 A. Well, you know, New Jersey just has a 22 bad reputation for such strong militant unions. And 23 it was a thing that I really didn't want to get 24 involved in. 25 Q. And how did you come to wind up as a 45 WILLIAM J. YUNG, 1 bidder for Aztar? 2 A. Well, at that time Fred Buro was working 3 as our marketing vice president, and from being up 4 here, he kept pushing the idea that I ought to really 5 look at Atlantic City because it had really changed. 6 I hadn't been up here for three or four years, so he 7 got me up to come up here, and we spent a day or two. 8 And I had seen that it had changed and improved a lot. 9 And then I got interested in doing the deal. 10 Q. Now, at the time that this -- this is 11 not the first investment you've made in New Jersey, 12 however? 13 A. No. I have -- in New Jersey I have -- I 14 have a hotel for about 15 years. 15 Q. And where is that located? 16 A. It's the Newark Sheraton at the airport. 17 Q. Okay. So you took a look at, along with 18 Fred -- and Fred had been working for you for how 19 long, sir? 20 A. About two years. 21 Q. And you already had smaller gaming 22 operations, came to Atlantic City. Were you aware of 23 anything else that Aztar owned at that time? 24 A. Well, sure. We were aware of the Las 25 Vegas property and the other three properties that 46 WILLIAM J. YUNG, 1 they had, Evansville, Laughlin, and Caruthersville. 2 Q. And after this look and your 3 discussions, what did you determine to do? 4 A. Well, I thought there were a lot of up 5 side opportunities that the -- you know, Atlantic City 6 was a property that was -- it is so hard to develop up 7 here that I felt like it was fairly secure from other 8 competition. 9 Obviously, like a lot of people, we 10 really underestimated the impact of Pennsylvania, but 11 then the property in Las Vegas had tremendous up side 12 potential for development. And so -- but the other 13 properties were nice properties, also. 14 Q. So you determined to enter the fray and 15 make a bid for Aztar? 16 A. Yes, I did. 17 Q. And at the time you bid, were there 18 other bidders? 19 A. Yeah. There were -- I think -- all 20 told, I think there were three besides myself. And 21 then I think it was Colony, Ameristar, and Pinnacle, 22 and then it got down to Pinnacle and myself. 23 Q. And ultimately your bid was accepted? 24 A. Yes. 25 Q. Do you recall the amount of your bid? 47 WILLIAM J. YUNG, 1 Either per share or gross dollars? 2 A. It was like $2 difference or something 3 like that. 4 Q. Above the Pinnacle bid? 5 A. Two dollars, I think, over the Pinnacle 6 bid. 7 Q. And was that bid accepted by the Aztar 8 board? 9 A. Yes, it was. 10 Q. And in conjunction with that, did you 11 have to apply and make application for interim casino 12 authorization in New Jersey? 13 A. Yeah. Offers made applications in all 14 the states other than Missouri. 15 Q. And let's just now focus, if we can, in 16 New Jersey. In conjunction with that, you filled out 17 applications and you, in fact, came here to a hearing 18 and testified in conjunction with that interim 19 authorization; is that correct? 20 A. Yes. That's correct. 21 Q. And roughly that same time, did you use 22 all your own money to buy this, Bill? 23 A. Yes. Well, I borrowed money besides my 24 own investment for a down payment. 25 Q. Yeah. But you invested your own money, 48 WILLIAM J. YUNG, 1 but you had to borrow a significant amount? 2 A. Yes. 3 Q. And in conjunction with those 4 borrowings, did you have to go out and meet with 5 potential investors, do a quote-unquote road show? 6 A. Yes, I did. 7 Q. Now, in conjunction with both the road 8 show -- and coincident in time, the road show and your 9 interim authorization application are occuring roughly 10 at the same time. Is that fair to say? 11 A. I think that the interim authorization 12 was happening about a month -- about a month or six 13 weeks earlier than the road show. 14 Q. Okay. Roughly compact in time. 15 In conjunction with the interim 16 authorization request, you testified in front of this 17 body? 18 A. Yes, I did. 19 Q. And did you give testimony about what 20 your expectation was with respect to staffing and what 21 you saw going on and whether or not there would be any 22 changes at the Tropicana? 23 A. Yes, I did. Originally coming in here, 24 I thought that the attrition level at the casino was 25 about 300 people a year, and I thought that would -- I 49 WILLIAM J. YUNG, 1 could do it with that and the consolidation practices 2 that I had hoped to put together, which would -- we 3 typically centralize the purchasing, accounting, 4 payroll, and that. And in our home office. So I 5 thought with the attrition and the consolidation that 6 that would be adequate. 7 But right from the beginning, we started 8 getting hammered by loss of revenue from Pennsylvania. 9 And, you know, I guess, in retrospect, I should have 10 maybe added a caveat in there that, you know, if 11 Pennsylvania really impacts us, we're going to have to 12 make some layoffs. But I didn't say that. And, you 13 know, I probably should have. But Pennsylvania has 14 had a real impact on us. 15 Q. So is it fair to characterize what you 16 just said that the information you gave you believe to 17 be accurate, but if you give it today, you would add 18 that caveat that you might have to have layoffs? 19 A. Yes. That's correct. 20 Q. Now, in the course of the road show, 21 were you asked questions by investors about staffing 22 and what would happen? 23 A. Yes. They -- I think the -- the program 24 or the presentations that we made had -- had cuts in 25 there. In the presentations. 50 WILLIAM J. YUNG, 1 Q. Okay. And, in fact, let me ask you, 2 have you ever used the expression "low-hanging fruit" 3 in conjunction with your efforts in Tropicana? 4 A. I didn't use it a whole lot. I think 5 Rich Fitzpatrick used it a lot, and Fred used it a 6 lot. But I don't use that term. 7 Q. Okay. And in regard to how you saw 8 this, and you said there would be certain 9 consolidations you thought would be realized, did you 10 come to realize that you couldn't just on your own 11 consolidate certain functions with respect to casino 12 operations in New Jersey? 13 A. Yeah. Later on I found out we couldn't 14 do that. 15 Q. So at present you have not done that; is 16 that right? 17 A. That's right. 18 Q. And while you may seek to do it, you 19 realize that requires approvals that you don't yet 20 have. 21 A. That's correct. 22 Q. So your anticipated benefit from that, 23 you could not have and have not realized? 24 A. That's correct. 25 Q. Let me also ask you. When you looked at 51 WILLIAM J. YUNG, 1 this, and when you just told the Commission with 2 respect to how you saw things, do you have an 3 operating philosophy that you applied to your hotel 4 business that you, Bill Yung, as CEO and owner bring 5 to this business as well? 6 A. Well, I think our operating philosophy 7 is to give the best service in the most efficient 8 manner. 9 Q. And in making those decisions, are you 10 always right in every decision you make, Bill? 11 A. No. Obviously not. Everybody's not 12 always right. But, no, I've made a lot of mistakes. 13 Q. And let's take a look at a couple that 14 were mentioned. In point of fact, as you progressed 15 down the road from where you started, I think you've 16 indicated the first one was that you thought you could 17 do this with attrition and more fulsomely should have 18 realized and said that it would involve layoffs? 19 A. That's correct. 20 Q. Now, with respect to an issue that came 21 up over the course of time of certain staffing levels, 22 after you made decisions, have you come to find out 23 that perhaps some of them weren't correct and revised 24 those decisions? 25 A. Yes. When I think that we went too 52 WILLIAM J. YUNG, 1 deeply on the cuts in the casino, like the slot 2 attendants and we -- the operators basically told me 3 that we had cut too deep and the service was going 4 bad, and we brought the -- brought them right back. 5 Q. All right. Let me ask you right now 6 because it's become kind of appocrafull thing here. 7 How many locksmiths worked at the Tropicana? 8 A. Four. 9 Q. And is there ever there a point there 10 were less than four? 11 A. I don't think so. I think four is as 12 low as we got. 13 Q. So to the degree if there was a 14 locksmith, it wasn't something that any cut that you 15 made, that Bill Yung said one locksmith. There's 16 four, to the best of your knowledge? 17 A. Well, there's four. Yeah. Which is 18 four more than I've ever heard of so -- 19 Q. But you -- 20 A. Typically my mindset on that was none of 21 our casinos have locksmiths. And, you know, this was 22 just something I've never seen before. And that's how 23 that got -- 24 Q. And after you became familiar with a 25 understanding what it is they had to do in the lock 53 WILLIAM J. YUNG, 1 box thing here, you came to realize that's what's 2 required? 3 A. That's correct. 4 Q. Uh-hum. In the course of your having 5 been in the hotel business, have you ever gotten 6 patron complaints at any of the Marriotts? 7 A. Yeah. We get complaints all the time. 8 I mean, that's the normal course of business. Every 9 hotel will get complaints. The more well-run hotels 10 get less, and the poorer-run hotels get more. 11 Q. Okay. So you're aware -- you know what 12 the exhibit and what the director referred to, certain 13 patron complaints that have been taken from your files 14 that are here before the Commission? 15 A. Yes. 16 Q. Do you have, based on your experience, 17 any idea if there's any relationship between patron 18 complaints and either the number of patron complaints, 19 gross number, and the size of the hotel or the number 20 of occupancy rate or anything, is there any 21 corporation relation that you're aware of from your 22 experience to that effect? 23 A. Well, obviously, the more rooms you 24 have, the more rooms you rent, the more complaints 25 you're going to get. You know, somebody running a 54 WILLIAM J. YUNG, 1 60-room hotel is obviously going to get a lot -- 2 should get a lot less than somebody running a 3 2200-room hotel. 4 So the amount of complaints we got 5 typically -- the complaints that we've got in the 6 Tropicana basically on the cleanliness issue was a 7 situation where the union decided that there was going 8 to be a sick-out, and for -- for about a three-week 9 period, half the people wouldn't show up for work. 10 And we did get some cleanliness problems during that 11 period of time. The maids at the hotel agreed -- and 12 they're allowed -- to come in and help out. And they 13 basically solved the problem. And then when the 14 cleaners saw that, you know, their job was getting 15 done by somebody else, then they decided to come back 16 to work. And then the issue went away. 17 But the amount of complaints we have 18 compared to a -- compared to the amount of rooms that 19 we have rented is minuscule. We -- when we start to 20 get some complaints, we made a -- did a study with 21 the-- with the various wholesalers who have on-line -- 22 they rank the different casinos in Atlantic City on 23 where the customers would prefer to go. And we -- 24 Q. Excuse me, when you say "on-line," what 25 are we talking about, what kind of on-line service? 55 WILLIAM J. YUNG, 1 A. Well, on the internet a lot of people 2 book their rooms through the internet, through 3 Travelocity, Orbitz, Xpedia. And so each one of those 4 internet companies have a rating system on how they 5 rate the various casinos in Atlantic City. And the 6 Tropicana, and from the period of time that we're 7 talking about, has always ranked second or third best 8 casino in Atlantic City in where they would like to 9 come back. So I think the issue of cleanliness is 10 just -- is just -- it's not accurate other than for 11 that three-week period when we had the deliberate slow 12 down. 13 Q. Is it a concern to you to try to 14 minimize complaints and have happy patrons? 15 A. We always do. We always do. When we 16 first got to the Tropicana, I know I -- when I was -- 17 went there to meet Bob Haddock (phonetic) one time, I 18 guess I went to the wrong place, and I got into the 19 waiting line where everybody else waits to get in 20 line. And, you know, I got in line there. And I 21 waited there about a half an hour, and the people in 22 front of me were all -- you know, they were 23 complaining that, you know, like, it happens this way 24 every time they were saying. 25 So -- so anyway the first thing we did 56 WILLIAM J. YUNG, 1 when we got to the Tropicana is we eliminated the 2 45-minute wait time to no wait time to one minute. 3 And we also cut down on all -- you know, it got so bad 4 at the Tropicana before we got there, that they built 5 a bar to take care of the people who were waiting in 6 line. So the next thing we did was to cut the wait 7 time drastically on waiting for lines in the -- the 8 restaurants. So the service level at the Tropicana is 9 vastly superior and the cleanliness is much better 10 than it was when we took over. 11 Q. And in conjunction with, you know, your 12 stated philosophy, is this what you do with your 13 Marriotts and your Hiltons and your Westins as well? 14 A. It's the same thing we always do. 15 Q. Now, Mr. Yung, let me take you forward a 16 little bit on the same theme, and that is, when you 17 got to the Tropicana, did you see that there were any 18 immediate needs in terms of capital expenditures? 19 A. Yes. When we got there, we -- we looked 20 at the various things that needed to be done. And the 21 rooms in -- I believe it was the south tower. And I 22 think they were, like, 18 years old. They had never 23 been touched for 18 years. And so we spent 15 or $16 24 million renovating those rooms. We also went ahead 25 and -- 57 WILLIAM J. YUNG, 1 Q. If I might interrupt, you said "never 2 been touched," was this the first renovation of those 3 rooms since the initial construction of the tower? 4 A. Yes, sir. That's right. 5 Then we -- the casino was so dated that 6 we've -- we went ahead and we got half of the casino 7 renovated. And presently now we're working on the 8 restaurants and the rest of the casino 9 Q. So you've told us, I think it was 16 10 million, roughly, on the south tower? 11 A. Yes. 12 Q. And looking at what you're doing now, 13 what you've done, starting with the 16 million and 14 what you're doing now, that let's say that takes us 15 into 2008, what's the kind of committed budget we have 16 or Capex there? 17 A. Well, it would be close to $30 million. 18 Q. And is there more that you'd like to do? 19 A. Yeah. But, to be truthful, the 20 property, you know, once we're done, is going to be in 21 really pretty good shape. And then it will be a lot-- 22 we won't have to do the -- you know, the large amount 23 that we did this time. 24 Obviously, we're builders, and we'd like 25 to develop more, and -- but one of the problems that 58 WILLIAM J. YUNG, 1 we have up here on selling our rooms, we have one of 2 the probably -- I think the largest hotel -- is the 3 fact that when we sell our cash rooms, because there's 4 no real way to entice or keep the people here, we lose 5 about two-thirds of our cash rooms to go someplace 6 else and play and don't play with us. So, you know, 7 we'd like to build more rooms here, but there has to 8 be a mechanism in which that you can tie into those 9 people with, you know -- you give us $50, and we'll 10 give you a hundred dollars' worth of play or something 11 to get them into our floor. And that would be 12 something that would help us. Because we're -- we're 13 developers and builders, and we'd like to build 14 another tower here so -- 15 Q. So you're looking at marketing 16 initiatives that get higher yield off of these rooms 17 if you're going to do any kind of costly construction? 18 A. That's correct. 19 Q. Mr. Yung, during the time you were 20 making the adjustments that you talked about with the 21 staff, whether it be layoffs or attrition, did you 22 regularly communicate with people that were here on 23 the ground in Atlantic City? 24 A. Yes. 25 Q. And were they free to disagree with you? 59 WILLIAM J. YUNG, 1 A. Yes. 2 Q. And did you have occasions when they 3 disagreed with you? 4 A. Yes. 5 Q. And what's the standard by which you 6 make a decision when you have somebody on the ground 7 who says, look, I think this, Bill, or you say I think 8 this. How do you make your decision? What do you 9 measure in terms of ultimately making that decision? 10 A. Well, I think if somebody disagrees with 11 me, if they can use logical means and common sense 12 thing, well, what's happening? For instance, the slot 13 payoffs. We had gone from, like, 10 minutes to 30 or 14 40 minutes on slot payoffs. Then, you know, when they 15 say that, I say, well that's poor service. We can't 16 have that. And so I agree to go ahead and bring the 17 people back. You know. 18 Q. And, likewise, you -- let me ask you 19 right now. Looking at your staffing now, do you 20 anticipate there's going to be any further reductions 21 of the force at the Tropicana? 22 A. If the business stays the same, we're 23 fine right now. And, obviously, you know, we're 24 instituting some new -- we've basically held back on 25 marketing programs. We've still done some, but we are 60 WILLIAM J. YUNG, 1 starting in the next week doing very aggressive 2 marketing programs, and this should increase the 3 business. Increases the business, we're going to need 4 to bring more people back. 5 Conversely, if things get worse again, 6 you know -- everything is fluid. You know, if the 7 business even gets worse than what it is now, there's 8 a good chance we would have to make layoffs. But I 9 don't think it's going to get any worse. I, you know, 10 with the marketing programs we're doing now, I think 11 we should be bringing people back. 12 Q. And if you were to have the kind of 13 recovery, not only in your place but citywide, that 14 brings back some of this increase in market share, you 15 would then expand to meet the business? 16 A. So long as we could come up and -- come 17 up with a program that we could tie down the 18 cash-buying room customers. 19 Q. All right. Let me turn to another area, 20 Mr. Yung, and that is, you know, your relationship 21 with this body and with other regulators. 22 A. Okay. 23 Q. Let me ask you very candidly. Have you 24 ever in the privacy of your own office, seated with 25 people who directed report to you expressed 61 WILLIAM J. YUNG, 1 frustration with casino regulators? 2 A. Probably. Yes. Uh-huh. 3 Q. Can I take that as a yes? 4 A. Yes. Yes. 5 Q. Okay. Was that intended for public 6 consumption? 7 A. No. No. It was -- I intended it to 8 stay in the office. 9 Q. So if you happen to be at a particular 10 moment frustrated with a regulator or your lawyer, 11 you'll say what you have to say, but you don't intend 12 to publish it? 13 A. No. That's correct. 14 Q. Have you ever with respect to this 15 Commission, the Nevada Gaming Commission, the Missouri 16 Commission, or Illinois ever offered a public remark 17 about what your views are about how they conduct their 18 affairs? 19 A. No. 20 Q. Would you? 21 A. No. 22 Q. Why not? 23 A. I -- you know, I think -- you know, 24 there are certain rules and laws that you follow, and 25 you have to follow them. You know, that is one of the 62 WILLIAM J. YUNG, 1 reasons why I hired Donna More is because we knew when 2 we got up here, and we're starting to deal with 3 regulators here and Indiana and Illinois that we would 4 have to get somebody who would know how to keep us 5 compliant and make us -- make sure that we follow the 6 rules. And that's why we hired Donna More. 7 Q. Let me ask you. Have you ever -- in 8 that regard, other than perhaps having a moment of 9 frustration and said something to someone in the 10 privacy of your own office, have you ever directed 11 anyone to just disregard what a regulatory body said, 12 be it this one or any other? 13 A. No. Never. 14 Q. Would you? 15 A. No. Never. 16 Q. You got into this business, you 17 understood it was regulated? 18 A. Yes. 19 Q. Subjected yourself to that? 20 A. Yes, I have. 21 Q. And in conjunction with the procedures 22 today, have you been interviewed with the Division of 23 Gaming Enforcement? 24 A. Yes. 25 Q. Do you recall how many times? 63 WILLIAM J. YUNG, 1 A. I'm sorry. 2 Q. Do you recall, once, twice? 3 A. Well, once this time and once the last 4 time. 5 Q. And when they wanted to set up a time 6 for an interview, did you make yourself available? 7 A. Yes. 8 Q. How quickly? 9 A. Whenever they wanted me here, I came. 10 Q. You came. 11 A. Yes. 12 Q. You understand that that's part of the 13 business, that you have to -- 14 A. Yeah. I understand that's part of the 15 business. 16 Q. Now, with respect to a couple of the 17 issues that we're going to discuss during the course 18 of -- one of them involving the audit committee and 19 independent member and supervision of surveillance and 20 internal audit, you recognize there's an obligation to 21 comply with that regulation? 22 A. Yes, I do. 23 Q. And did you -- are you personally the 24 person who is doing the interface to get that done? 25 A. No. I really -- I didn't have anything 64 WILLIAM J. YUNG, 1 to do with that. That was Donna -- I think Donna was 2 handling that. 3 Q. And what's your direction to Donna about 4 how to handle it? Would you want it done or what? 5 A. Well, you know, Donna knows a lot more 6 than I do about how -- you know, what needs to be done 7 with the regulators. And, you know, she sort of has 8 free reign just to make sure we're in compliance. 9 Q. So you've never said, hey, don't do this 10 or don't do this? 11 A. No. 12 Q. Does it affect you one way or the other? 13 A. Well, I mean, obviously if we didn't 14 follow the rules, it would affect me. But I just let 15 Donna handle that. 16 Q. Now, in the course of the Division 17 report and your statements there's allusion to the 18 fact that, you know, perhaps you denigrated your 19 Atlantic City asset or you saw it as inferior to your 20 Las Vegas asset in conjunction with Tropicana. If we 21 look at Aztar as you bought it, what was the greatest 22 development opportunity you had? 23 A. Las Vegas clearly is the most -- is the 24 biggest development opportunity. 25 Q. And why is that and not this the 65 WILLIAM J. YUNG, 1 greatest development opportunity? 2 A. Because in Las Vegas there is an 3 opportunity to build something so spectacular and so 4 large, that it would, you know, it would be something 5 like three or four times what this property can do, 6 and so that is when it would be fully developed. So 7 that's -- that's why that is the best development 8 opportunity. This would be the second best because we 9 would want to build a tower, you know, to develop 10 here. 11 Q. How much land do you own out in Las 12 Vegas? 13 A. I think it's 35 acres. 14 Q. Is much of that undeveloped? 15 A. Well, it's all operates as the 16 Tropicana, Las Vegas right now. But the plan would be 17 to basically level just about the whole thing. Maybe 18 leave one tower. 19 Q. And here you have a more fully developed 20 and attractive asset. Is that it? 21 A. You do. And you have an asset basically 22 for our company, it's half -- at least half of our 23 company. So it is a -- you know, it's the key asset 24 right now that we have. And it's very vital to us. 25 And we're not going to do anything that's going to 66 WILLIAM J. YUNG, 1 harm it or allow the -- its earning capacity to 2 diminish. 3 Q. So your view is that one represents a 4 greater development opportunity but one is of greater 5 value at present to your company? 6 A. That's correct. I mean, this -- this 7 one does three times the amount of business that the 8 Las Vegas does. You know, so -- 9 Q. So your investment, when you made it, 10 you looked at Las Vegas, and you looked at Atlantic 11 City? 12 A. Those were -- 13 Q. Was Atlantic City an afterthought to 14 you? 15 A. Well, no. It wasn't an afterthought. 16 It was -- it was right in the front of my thoughts 17 with the possible, you know -- you know, problems that 18 we may have, you know, dealing with the unions. 19 Q. Now, Mr. Yung, in conjunction with the 20 company and also in conjunction with your personal 21 report, there is allusion to litigation you've engaged 22 in with something called the Park Cattle Company? 23 A. Yes. 24 Q. Is this a beef company? 25 A. No. Park Cattle is a land company, and 67 WILLIAM J. YUNG, 1 they do have farms, but they also own the water 2 company in Lake Tahoe. They are, you know -- they're 3 a big landowner in South Lake Tahoe. 4 Q. And, in fact, do they own the land 5 underneath of your hotels? 6 A. They own both pieces of land underneath 7 the Horizon and the MontBleu. 8 Q. And have you been engaged in litigation 9 with them over their role as landlord and yours as 10 tenant, meaning Tropicana or Columbia -- 11 A. Yeah. 12 Q. -- with respect to the Horizon? 13 A. Yes, we have. 14 Q. And what -- just generally, what's the 15 nature of that litigation? 16 A. Well, the nature of the complaint is 17 they had a family dispute and, you know, they fired 18 their brother, and they hired an outside company who 19 decided to try to break our lease on the property. 20 Q. And is that presently in litigation? 21 A. It's presently in litigation. 22 Q. And with respect to the other property, 23 the MontBleu which used to be Caesars Tahoe, prior to 24 your acquiring it, was Park Land [sic] Company also in 25 litigation with your predecessor over issues? 68 WILLIAM J. YUNG, 1 A. Yes. They -- they -- they were in 2 litigation, I believe, with Harrah's or Caesars doing 3 the same thing. 4 Q. And prior to the time that you acquired 5 it, was that litigation settled? 6 A. Well, it was going to be resolved the 7 time we took over. 8 Q. And has it been? 9 A. Yes. It has. 10 Q. All right. Also, again, if I can 11 venture off into something that just involves you and 12 only tangentially the company, are you presently 13 engaged in litigation with Grant Thorton? 14 A. Yes, we are. 15 Q. What is Grant Thorton, first of all? 16 A. Grant Thorton -- I guess it used to be a 17 big-eight accounting firm. I guess, I don't know what 18 they are -- big five now. They are one of the major 19 accounting firms. And that's -- 20 Q. -- what gave rise to your litigation 21 with Grant Thorton? 22 A. Our litigation with Grant Thorton is 23 that they gave us -- they gave us a poor accounting -- 24 and I guess you could say accounting advice and tax 25 advice on -- on bringing money back from our resort in 69 WILLIAM J. YUNG, 1 the Cayman Islands. We -- in the Cayman Islands, we 2 have a very successful Westin down there. And it 3 accumulates cash. And they came to us one day and 4 said that, you know, we have -- we have this -- this 5 procedure in which we feel like it is a legal 6 nontaxable way to repatriate your money with paying 7 only a minimum of taxes. And I had it -- I took it -- 8 we gave the proposed -- 9 Q. First of all, let me interrupt you. 10 A. Yes. 11 Q. They approached you? 12 A. Yes. They approached us. 13 Q. You didn't ring up Grant Thorton looking 14 for particular tax advice? 15 A. No. No. They came -- sought us. And 16 we -- I took it over to our counsel, who -- it was 17 very complicated. I mean, I could not understand it. 18 And so I gave it to our counsel and our accountants, 19 and they gave us an opinion that it was nontaxable and 20 legal. And on that advice we went ahead and did the-- 21 did the procedure. 22 Q. Grant Thorton also furnished you with 23 opinion from their counsel that it was permissible 24 under the service -- IRS regulations? 25 A. Yes, they did. 70 WILLIAM J. YUNG, 1 Q. So you had the legal opinion from 2 counsel that had been retained by Grant Thorton. 3 A. We had Grant Thorton's opinion that it 4 was legal. And -- and we also -- our attorney signed 5 off on it, too. 6 Q. So you had entered into the transaction? 7 A. Entered into it. A few years later, the 8 IRS questioned it. We wound up settling with -- and 9 settling with the IRS and paid back interest and some 10 penalties. 11 Q. As well as the tax liability? 12 A. As well -- well, yes. And as well as 13 the tax liability. And we have since filed suit 14 against Grant Thorton for, you know, the -- the 15 penalties, and basically that's it. 16 Q. Were there other people who employed a 17 similar strategy from Grant Thorton who had the same-- 18 A. Well, we didn't know that. But 19 apparently they were out peddling this proposal to 20 many people. And, yeah. That's -- we weren't the 21 only one. 22 Q. And have you had discussions with Grant 23 Thorton where they've made an offer, endeavored to 24 settle with you? 25 A. Yeah. They've offered to settle with 71 WILLIAM J. YUNG, 1 us, but it wasn't a satisfactory number. 2 Q. And assuming the number, was there also 3 an agreement that they wanted you to sign that you 4 found would be difficult to you? 5 A. Yes. They wanted us to sign a secrecy 6 agreement that we couldn't tell anybody about this, 7 and we refused to do it. 8 Q. I want to turn with you now to -- away 9 from more of your personal affairs. And I assume this 10 tax advice was given to you and your trusts and your 11 spouse. Is that who the taxpayers were? 12 A. Well, it was given to me and the 13 management of my company and not my wife. 14 Q. Okay. But she's kind of stuck on your 15 return, though; right? 16 A. Yes, she is. 17 Q. So I want to turn you away from your 18 personal money affairs, if I could now, and towards 19 those of the company and something which the Chair 20 alluded to during her opening remarks and during the 21 sealing motion, and that is, recently did you receive 22 notice from Credit Suisse as the administrative agent 23 that there had been a technical event of default with 24 respect to the Tropicana term loan? 25 A. Well, no. We -- we -- we notified them. 72 WILLIAM J. YUNG, 1 Q. Okay. 2 A. And -- 3 Q. So this is a self report? 4 A. Yes. Uh-huh. We -- there was 5 actually -- there was a miscalculation that we caught 6 too late. We could have cured the -- 7 Q. Let me back you up. 8 A. Yeah. 9 Q. For the benefit of the people who aren't 10 right inside to your loan. It involved a covenant to 11 your loan? 12 A. Yes. It does. 13 Q. And is it fair to say the covenants are 14 promises you make to them and say this is what we'll 15 do, and we'll maintain this. We'll do this. We'll do 16 that type of thing; right? 17 A. Yes, it is. 18 Q. And what type of covenant was this? 19 A. This was a debt ratio coverage. 20 Q. Commonly called leverage covenant? 21 A. Leverage covenant. 22 Q. All right. And what does it, in 23 essence, require you to do? 24 A. Well, it requires us -- basically, you 25 know, what we say we're going to do, we estimate how 73 WILLIAM J. YUNG, 1 much money we're going to make. And then if we don't 2 make that much money, it requires -- we break a 3 covenant because we have more leverage than we said we 4 would have. 5 Q. And is there a way if you're -- and you 6 compute this internally using numbers; right? 7 A. Correct. 8 Q. Now, if, in fact, you're aware as you 9 look at your numbers that you're about to breach this 10 covenant, is there a way that you could cure it to 11 avoid a breach? 12 A. Yes, there is. And this covenant we 13 found the mistake too late. And it was a -- it was a 14 monetary amount. I think it was, like, $15 million we 15 could have paid, and it would have cured -- we 16 wouldn't have gone into the covenant breach. 17 Q. So had you correctly calculated this and 18 looked and said, we're going to miss the ratio, you 19 could make a prepayment of principal of $15 million, 20 and then the ratio would be recalculated, and you'd be 21 fine? 22 A. That's correct. Uh-huh. 23 Q. Had you done that -- does the company 24 have cash reserves in excess of $15 million? 25 A. Yeah. I think the company has, like, 74 WILLIAM J. YUNG, 1 $110 million. 2 Q. So having, as they say, driven through 3 the covenant -- 4 A. Uh-huh. 5 Q. -- what do you do now? 6 A. Well, we -- it is a chance for the 7 lenders to get a higher rate of interest from me when 8 we go back and negotiate a new set of covenants. You 9 know, they give me a new set of covenants to meet that 10 we agree to, and then I pay them a higher interest 11 rate. 12 Q. And have you initiated through your CFO 13 those discussions with the bank? 14 A. Yes. We have. Yeah. We should make -- 15 right. We've started it already. 16 Q. And do you anticipate that you'll reach 17 this agreement with little difficulty? 18 A. We shouldn't have any problems at all. 19 Q. And with that, as we've talked about 20 Pennsylvania and the impact, and clearly it impacted 21 Tropicana's revenue and other people. As you look at 22 that and try to rebuild and see what happens in the 23 market, you mentioned you have cash reserves in the 24 company. Do you have sufficient reserves and 25 liquidity and flexibility to make if through, as this 75 WILLIAM J. YUNG, 1 market tries to rebound? 2 A. Absolutely. 3 Q. And are you committed to using those if 4 you have to do it? 5 A. Absolutely. 6 Q. Now, the other thing, and I think that 7 the -- correct me if I'm wrong, but I think the 8 covenant issue was brought to light during your 9 earnings announcement or your announcement for the 10 Quarter. And you also discussed the possibility of 11 being able to monetize assets for further flexibility. 12 A. That's correct. 13 Q. And can you describe for us a little bit 14 about, you know, what kind of asset you would monetize 15 and how that would give you flexibility if you needed 16 it? 17 A. Well, what we said, one of -- we made an 18 announcement on the earnings call that we had signed 19 an agreement to sell a Vicksburg casino, and I think 20 one of the -- one of the analysts asked me about what 21 are some of the other mone -- whatever you call it. 22 What other properties could you do to sell to pay down 23 debt? And I mentioned about the Quarter because, you 24 know, we're not really in the rental business. I 25 mean, it's a great facility. And so long as the new 76 WILLIAM J. YUNG, 1 operator would run it correctly, it would be, you 2 know, it would give us cash to pay down the debt and 3 also still have the traffic from the Quarter. We have 4 since pretty much decided that we're not going to sell 5 the Quarter. So that's sort of a moot issue right 6 now. 7 Q. But the theory, so that we understand 8 it, is that the Quarter wouldn't go anywhere when you 9 sell it. It's pretty well attached to the building; 10 right? 11 A. That's correct. It has to stay there. 12 Q. So you would not own it, but the traffic 13 it draws you would be free to lure into your core 14 business? 15 A. That's correct. 16 Q. With respect to casino hotels, and is 17 there anybody else who has monetized an asset like 18 these before? Doesn't own one of these kind of 19 ancillary, mall-type facilities? 20 A. Well, I think Sheldon Adelson out at the 21 Venetian sold off his retail -- retail facility there. 22 It seemed to me like it was a billion dollars or 23 something like that. 24 Q. That would be the Grand Canal Shops 25 inside the Venetian, which did -- as much as he 77 WILLIAM J. YUNG, 1 constructed -- your predecessor did. He sold and took 2 the building, and the stores stayed there? 3 A. Correct. 4 MR. O'GARA: Could I have a moment? 5 CHAIR KASSEKERT: Sure. 6 MR. O'GARA: Excuse me, you all. Excuse 7 me, you all. 8 Q. I'm going to now go off into one more 9 area, which I think you expect I'm going to ask you 10 about, and that is when you acquired Aztar, they had 11 an asset in Missouri. 12 A. Correct. 13 Q. And you determined at the time of the 14 closing that you would not purchase that asset; is 15 that correct? 16 A. That's correct. 17 Q. And part of that related to some 18 dealings you had with the staff of the Missouri Gaming 19 Commission? 20 A. That's correct. 21 Q. And what was your determination? Why 22 did you decide not to go forward with -- purchasing 23 that particular asset? 24 A. Well, I think the main reason was we 25 didn't want to deal with Missouri. And the second 78 WILLIAM J. YUNG, 1 issue was it was a very small asset. It was, like, $6 2 million and needed -- and there was a ready and 3 willing buyer out there really trying to get it, which 4 was the Isle of Capris, and so we just sold it. 5 Q. And that was after you had discussions 6 with the staff, and you thought that the process you 7 went through in Missouri didn't justify -- the cost of 8 that didn't justify the $6 million asset? 9 A. That's correct. 10 Q. Did you have any doubt that the 11 information you had given to the people in Missouri 12 was correct just like you gave the people here was? 13 A. No. 14 Q. And if it had been a very, very valuable 15 asset, maybe the size of the Trop, would you have 16 maybe reached a decision that you would have go ahead 17 and wade through that process? 18 A. I'm sure we would have. 19 Q. But that was your decision. You 20 withdrew? 21 A. During the -- that's correct. 22 Q. During the course of this relicensing 23 hearing, Bill, or the lead-up or run-up whatever you 24 call it, there's been a lot of publicity and 25 contention between you and some of the organized labor 79 WILLIAM J. YUNG, 1 in your workforce. Is this anything you went looking 2 for? 3 A. No, it's not. 4 Q. And has it had some effect on your 5 business? 6 A. You know, it's hard to say you can 7 really quantify how much effect it has had. But it's 8 clearly had some effect on the business. You know, 9 every day when you see an article from the -- not 10 every day, but maybe once a week or more, from the AC 11 Press that is clearly biased towards the unions, it's, 12 you know -- just in there ripping us. It has -- you 13 know, sometimes that absolutely printing false 14 information like the building is falling down and the 15 place is filthy. You know, when you go through that 16 after -- after you get beaten down so many times with 17 that, people start to believe the lie, you know. And 18 so, you know, it's clearly hurt us, and it's hurt our 19 employees. You know, hopefully it doesn't drive 20 business down any more. You know, we would have to 21 let go more employees, you know. 22 Q. Are you looking to try to answer these 23 questions today -- stem some of that and move on? 24 A. We hope -- we hope so. We hope that 25 once we get through this, we can go on and run our 80 WILLIAM J. YUNG, 1 business and, you know, try to make the Trop even 2 better than it is right now. 3 MR. O'GARA: I don't have any other 4 questions. 5 CHAIR KASSEKERT: Okay. Thank you. 6 Miss Maher? 7 MS. MAHER: Your Honor, may we have a 8 short break, please? 9 CHAIR KASSEKERT: Certainly. We'll 10 recess. Ten minutes? 11 MS. MAHER: Thank you. 12 MR. O'GARA: Fine. 13 (A recess was taken from 1:55 to 2:20 14 p.m.) 15 CHAIR KASSEKERT: Thank you. We'll go 16 back on the record. 17 Ms. Maher, are you ready to proceed with 18 your cross? 19 MS. MAHER: I am, thank you. 20 CHAIR KASSEKERT: Very good. 21 22 CROSS-EXAMINATION BY MS. MAHER: 23 Q. Good afternoon, Mr. Yung. 24 A. Good afternoon. 25 Q. Mr. Yung, you indicated on your direct 81 WILLIAM J. YUNG, 1 examination -- what I'm going to do first is take you 2 through some questions based your direct examination 3 and then perhaps go into some other area. 4 You've indicated that you've been in the 5 hotel business for a number of years now; is that 6 correct? 7 A. That's correct. 8 Q. Some 30 years; is that correct? 9 A. About 35. 10 Q. All right. And you indicated that you 11 bought your first casino or gaming property about 15 12 years ago; is that correct? 13 A. That's correct. 14 Q. And that would be the Horizon in Lake 15 Tahoe? 16 A. Correct. 17 Q. Is there any particular reason that you 18 decided to get into the gaming industry or the casino 19 industry when you bought that? 20 A. Well, I think that we bought it because 21 typically when we started with Days Inns, it was very 22 low volume of business, and then when we went to 23 Holiday Inns, it was more business, more sales. And 24 then when we went to the Marriotts and everything, it 25 was more sales. And this is a business that just 82 WILLIAM J. YUNG, 1 added more sales than the businesses we were in, and 2 we thought that we could, because there's more sales 3 there, we could make more money. 4 Q. Okay. Were you aware at the time that 5 you bought it, obviously, that it was a regulated 6 industry? 7 A. Yes. 8 Q. And that you were going to have to deal 9 with regulators? 10 A. Yes, I did. 11 Q. Okay. Now, would it be fair to say that 12 the Tropicana in Atlantic City is your largest 13 operation to date? 14 A. Yes. 15 Q. So would it also be fair to say that you 16 have very little experience in operating a casino 17 operation of this size and nature? 18 A. It's -- of this size, it's the biggest 19 one I've operated, yes. 20 Q. And are you aware, I assume, when you 21 bought it and decided to make the purchase? 22 A. Yes. 23 Q. What did you do to prepare yourself for 24 that, to prepare your company for that, to prepare 25 yourself for a resort location of this size and this 83 WILLIAM J. YUNG, 1 nature? 2 A. Well, you break it down into segments. 3 The -- you know, basically you have a hotel, food and 4 beverage operation, which is very typical of what we 5 do now. That was not going to be any different. The 6 amount of gaming volume is -- was a lot higher than 7 what I've ever dealt with before. However, you know, 8 it's -- you know, you have a -- you know, it's just 9 more tables, more slot machines. The same controls 10 and the same procedures are in effect whether it's a 11 casino that does 100 million or 400 million. 12 Q. So there's no difference between 13 operating a large resort casino of this magnitude 14 versus your smaller operations? Is that what you're 15 saying? 16 A. I'm saying it just -- you use the same 17 procedures, and it's just bigger. 18 Q. So you did nothing in particular to 19 prepare yourself for this experience, then? 20 A. No. 21 Q. You indicated when you were initially 22 considering the decision to buy the Aztar property in 23 2006 that you didn't want to get involved in New 24 Jersey; is that correct? 25 A. Correct. 84 WILLIAM J. YUNG, 1 Q. You were hesitant to get involved in New 2 Jersey. 3 A. Correct. 4 Q. And this is because what you -- I'll 5 quote you, "strong militant unions" in New Jersey? 6 A. Yes. 7 Q. Did you also have any concerns about New 8 Jersey regulators? 9 A. No. 10 Q. None at all? 11 A. None at all. 12 Q. You had not heard anything about 13 regulation in New Jersey, had no concern about 14 regulation in New Jersey? 15 A. Didn't hear a thing about it. 16 Q. What gave you the pause or gave you the 17 concern about the strong militant unions in New 18 Jersey? Why did you feel that way? Where did you get 19 this? 20 A. I think we've heard it over the years. 21 The -- you know, the Northeast is very strong union 22 area. I've heard of -- I've heard of stories when 23 they built the Tropicana. I heard the unions during 24 the construction of the Tropicana, it almost broke the 25 company because of the costs and the -- some of the 85 WILLIAM J. YUNG, 1 tactics that the union used. It was -- Tropicana was 2 just on the brink of going bankrupt building this 3 property. 4 Q. All because of the unions? 5 A. The unions had a big part of it. Yeah. 6 Q. Now, did you have any contact with the 7 unions for your Newark Sheraton at the airport 8 operation? So you did have some New Jersey 9 experience; correct? 10 A. We contacted -- you mean during building 11 it or operating it? 12 Q. Either. 13 A. I don't know whether we, you know -- 14 it's -- we built it about 20 years ago. I don't think 15 we had much contact other than maybe with steel 16 workers at the Newark property. 17 Q. Did you have any problem with the unions 18 at that time? 19 A. Oh, I think it was just the steel 20 workers. And, no, I don't think we had any problems 21 with them. 22 Q. Any operational problems with the unions 23 in the Newark Sheraton facility? 24 A. We don't have any unions in the Newark 25 Sheraton operations. 86 WILLIAM J. YUNG, 1 Q. Now, at the same time you were acquiring 2 the Tropicana, Atlantic City, with this purchase with 3 Aztar, you were also acquiring the Las Vegas 4 Tropicana; is that correct? 5 A. That's correct. 6 Q. Did you have any concerns about the Las 7 Vegas unions? 8 A. Concerns -- in what -- what do you mean? 9 What concern? 10 Q. Well, you were concerned about coming 11 into New Jersey as a jurisdiction because of the 12 "strong militant unions" in New Jersey. 13 A. Yeah. 14 Q. Did you have that similar or same 15 concern in Las Vegas? 16 A. No. 17 Q. And why not? 18 A. It -- it doesn't have the reputation of 19 the strength that it does in New Jersey. 20 Q. Have you had any trouble with the unions 21 in Las Vegas since your purchase? 22 A. Not like this union, no. 23 Q. What do you mean "not like this union"? 24 Is that a yes or no? 25 A. We haven't had work slow-downs, 87 WILLIAM J. YUNG, 1 sabotage. We had none of that with the -- with the 2 unions in Las Vegas. 3 Q. When you indicated that the -- that Fred 4 Buro kept pushing in marketing, kept pushing the idea 5 of buying in Atlantic City; is that correct? 6 A. That's correct. 7 Q. So was he specifically targeting your 8 purchase of Aztar geared toward buying the Tropicana, 9 Atlantic City? 10 A. Well, since I think he was from here, he 11 came from here, and he used to run a casino here, he 12 wanted for us to get back in there. And I think he, 13 you know -- he really wanted to run it and try to 14 resurrect his name from the situation he had when he 15 was let go of the other time up here. 16 Q. So would it be fair to say the Atlantic 17 City property initially was your main interest or the 18 Las Vegas property? Because there was some confusion 19 on that issue, I think. 20 A. No. No. I think they were both of 21 interest, but I think as far as the most developable 22 possible income that you can make, the Las Vegas 23 property was clearly a larger interest to me than -- 24 than Atlantic City. 25 Q. It was a larger interest to you? 88 WILLIAM J. YUNG, 1 A. Yes. Uh-huh. 2 Q. Does that still continue today? 3 A. Yes. 4 Q. You indicated that you underestimated 5 the impact of Pennsylvania on your revenues; is that 6 correct? 7 A. Yes. 8 Q. In what -- and did you consider it, 9 Pennsylvania, in your considerations to buy the 10 property when you came before the Commission the first 11 time to testify regarding the ICA? Is how -- what had 12 you done to consider Pennsylvania's impact? 13 A. Yes. We did consider Pennsylvania's 14 impact. We looked at the studies that a lot of people 15 had made and, you know. They were talking, you know, 16 minimal amount of impact, three and four percent. But 17 then -- but then the double whammy on the place, on 18 the situation was the smoking ban. And the smoking 19 ban has had probably a third as much of an effect as 20 Pennsylvania has on our business. There's so many of 21 our customers who we've talked to that -- that my 22 impression is that they want to stay at a place where 23 they can smoke. And that, I think, accelerated what 24 everybody thought was going to be the impact. 25 Q. You indicated that initially when you 89 WILLIAM J. YUNG, 1 testified before the Commission that you did not 2 testify that there would be any layoffs, that you 3 figured that the attrition of 300 people a year would 4 be appropriate for the property and that you wouldn't 5 have the layoff; is that correct? 6 A. That's correct. 7 Q. At what point in time did you see that 8 that changed? Did that change immediately upon your 9 coming to the property? 10 A. When we first came, there were several 11 management-type people that went -- went immediately. 12 The impact what almost immediate. And with the 13 Pennsylvania impact, yeah. Almost immediately. 14 Q. So as soon as you acquired the property, 15 you began making layoffs; correct? Began cutting? 16 A. I don't know if -- I would say within 17 30, 60 days. It was -- 18 Q. Very quickly thereafter? 19 A. Very quickly. 20 Q. And at that point it was also your 21 decision or it was also your opinion that's exactly 22 when the Pennsylvania impact hit as well? 23 A. No. I think the Pennsylvania impact 24 started in -- in fact, in November, December when they 25 started opening. 90 WILLIAM J. YUNG, 1 Q. Did you make an initial decision when 2 you took the property to terminate anyone that made a 3 salary over $150,000? 4 A. No. 5 Q. That was not a decision that you made? 6 A. No. 7 Q. Was that, in fact, actually 8 accomplished? Did you terminate high-level employees 9 that were making salaries of over $150,000? 10 A. Some of them. 11 Q. Is there anyone else left on the 12 property that was initially there that's making over 13 $150,000? 14 A. I think so. 15 Q. Who would that be? 16 A. I know it's -- well, I don't know 17 whether they want their salaries said, but I think you 18 can find that out, and you can question somebody else 19 that's here that would know for sure. But I know 20 there are some. 21 Q. But you don't know for sure who they 22 are? 23 A. Yeah. I know some of them. 24 Q. How many are there? 25 A. Well, I don't know that. I don't keep 91 WILLIAM J. YUNG, 1 track of that. 2 Q. You indicated, also, and I think it was 3 put in terms of you went out on the road. You took a 4 road trip trying to borrow money, meet potential 5 investors to make this particular purchase; is that 6 correct? 7 A. Yes, ma'am. 8 Q. What did you tell the investors or 9 potentially investors that you spoke to on the road 10 show regarding that? What representations did you 11 make? 12 A. I think the representations that we made 13 was that the layoffs in all Tropicana, the five 14 properties, would be 58 million, and about 25 of that 15 was at the home office. And then the remaining 32 16 would be spread out over the other five properties. 17 Q. And this is what you told the potential 18 investors? 19 A. Yes. 20 Q. Has that changed at all since you talked 21 to the potential investors? 22 A. It's -- it's probably a little bit 23 higher. It might be -- I had 60, 70, something in 24 that range. 25 Q. Okay. You indicated regarding the 92 WILLIAM J. YUNG, 1 layoffs that you made some layoff decisions that you 2 felt was in error, that you went back and later 3 reversed; is that correct? 4 A. Yes. 5 Q. And specifically we talked about the 6 slot attendants -- or you talked about the slot 7 attendants; is that correct? 8 A. Yes. 9 Q. And do you recall exactly how many slot 10 attendants you initially proposed and did lay off that 11 you had to retract? 12 A. Not specifically, no 13 Q. If I said you took it from 23 down to 14 16, would that sound about right? 15 A. Slot attendants? No, that doesn't sound 16 right. 17 Q. What would be -- what do you think is 18 correct? 19 A. I don't know. 20 Q. And how did you make the decision 21 initially that you were going to lay off these slot 22 attendants? 23 A. I think that we -- I or we -- I think it 24 was just that the business was the declining, so that 25 we had to make cuts over the whole gamut of each 93 WILLIAM J. YUNG, 1 category. 2 Q. So it was just a numbers decision, 3 dollars decision? 4 A. I think so. Yes. 5 Q. So you just went in and -- and when you 6 say "we," who are you talking about? 7 A. Well, I think it's -- primarily, it's 8 me. 9 Q. So it's not we; it's you? 10 A. Yeah. 11 Q. So you decided. And how can you come up 12 with a number? What number did you come up with in 13 dollars that you wanted to cut? 14 A. Well, I never did come up with a number 15 that we had to cut. 16 Q. And then how did you make the decision 17 to make the layoffs? 18 A. Well, I made the decisions according to 19 what I felt that was needed in each category. 20 Q. Did you have a dollar amount in mind? 21 A. Not particularly. I wanted to get into 22 the most efficient operating number. 23 Q. And how you with going to get it to the 24 most efficient operating number? 25 A. By laying off people. 94 WILLIAM J. YUNG, 1 Q. And, again, did you just come up -- how 2 did you come up with the number is my question? Of 3 people to layoff? 4 A. I think some of it's by experience over 5 the years from running other casinos and also from my 6 industrial engineering background. 7 Q. When you decided to make cuts across the 8 board, did that mean every department was going to 9 take some cuts? 10 A. I don't think -- you know, I think that 11 generally it probably was. Yeah. Uh-huh. 12 Q. So you decided every department was 13 going to take some cuts regardless of what the needs 14 in those particular departments were? 15 A. No. I didn't say that. 16 Q. Well, then, how did you decide what got 17 cut in what department? 18 A. I decided what was needed in each 19 department. And these -- that is how I made cuts. 20 Was the excess. 21 Q. And how did you reach the decision what 22 was needed in each department? Did anyone advise you? 23 A. Like I said before, it's my own personal 24 knowledge and experience over life that I've done, 25 running hotels and casinos and restaurants, and my 95 WILLIAM J. YUNG, 1 industrial engineering background. 2 Q. Okay. But you erred when you cut the 3 slot attendants? 4 A. Yes. 5 Q. You didn't factor in how the reduction 6 in service or how the cutting of the slot attendants 7 would affect reduction in service; is that correct? 8 A. I made a mistake. 9 Q. Now, the locksmiths, when you proposed 10 taking four locksmiths down to one. How did you make 11 that decision? 12 A. As I explained before, this was the 13 first time I've ever heard of a locksmith in a casino. 14 Q. Well, then, if you didn't know -- would 15 it be fair to say that you didn't know what a 16 locksmith did in a casino? 17 A. Well, since I never had one, I -- I 18 guess you're right. 19 Q. That would be a fair characterization? 20 A. Yeah. 21 Q. So without knowing what the locksmiths 22 did or what their function was, you just decided to 23 cut them from four to one? 24 A. Well, I -- like I said, I had no 25 locksmiths in any other casino. I didn't see why we 96 WILLIAM J. YUNG, 1 needed to have one here. 2 Q. Did you -- 3 A. Since that time I've been informed that 4 you do need -- it's a requirement, a regulatory 5 requirement to have locksmiths to move slot machines. 6 And now I see the need for them. 7 Q. But you didn't see the need to look into 8 that or research that prior to making the cuts or 9 prior to deciding to make cuts? 10 A. I went from my experience, and I didn't 11 have one in any other casinos, and I did. 12 Q. When you indicated that there was a 13 relationship between patron complaints and the size of 14 the hotel, number of rooms; is that correct? 15 A. Yes. 16 Q. And have you ever gone -- well, let me 17 ask you this. We've gotten the -- the Tropicana, 18 Atlantic City's, file of patron complaints. You're 19 aware of that; is that correct? 20 A. Yes. 21 Q. And are you aware of how many complaints 22 were in that particular file at the time we took 23 possession of it? 24 A. I don't know for sure. 25 Q. Did you ever look at the complaints in 97 WILLIAM J. YUNG, 1 that file? 2 A. I think -- at one point I looked at the 3 number, but I don't know -- I can't remember how many 4 there were. It may have only been -- may have only 5 been eight, but I didn't look at the numbers. 6 Q. So what difference does it make then -- 7 I guess what difference does it make between the 8 relationship between patron complaints and the size of 9 hotels if you don't even know how many patron 10 complaints you had in your file? How could you make 11 any comparison? 12 A. Well, I mean, just logical comparison. 13 If you -- 14 Q. Certainly -- 15 A. If you've got more rooms, you're going 16 to have more complaints. 17 Q. But did you ever take that analysis and 18 use it to say, okay. We've got a number of rooms here 19 in the Tropicana, and based on that ratio, this number 20 of complaints to this number of rooms should not 21 concern me? Did you ever go back and count the 22 complaints and make that calculation? 23 A. We did it compared to our Marriotts, and 24 it was doing better than our Marriotts. 25 Q. But how did you do it if you didn't 98 WILLIAM J. YUNG, 1 count the number of complaints? 2 A. Well, ma'am, they did count the number 3 of complaints. And they gave me the number of the 4 complaints. They gave somebody the number of 5 complaints, and we compared it to a typical Marriott. 6 Based on the number of rooms. And this property 7 performed much better than all our Marriotts did. 8 Q. Based -- and do you have a percentage? 9 Do you have any numbers? Can you quantify that for us 10 in any way? 11 A. I -- I can't perform -- I can't quantify 12 it. I can just -- and I can get you some numbers. 13 But I can tell you that this property performed better 14 than the 35 Marriotts we have. 15 Q. But you can just tell me that today 16 without quantifying in any way or telling me any 17 numbers or any percentages? 18 A. I can't tell you what percentage better 19 it is, but I can tell you it's better. 20 Q. Okay. You indicated that a lot of the 21 cleanliness complaints regarding the Trop -- well, I'm 22 sorry. Let me back up a minute. 23 You indicated, too, that you wanted to 24 improve on things and minimize complaints. You want 25 happy patrons; is that correct? 99 WILLIAM J. YUNG, 1 A. Yes. 2 Q. Did you read the complaints that you 3 got? 4 A. Did I personally read every complaint? 5 No, I did not. 6 Q. Did you read -- 7 A. I can't read all the complaints of my 8 company. You know, I would -- I would think I would 9 be reading a lot of complaints when you have 35,000 10 rooms. 11 Q. Did you read any of them? 12 A. I don't know whether I read any of them. 13 No. 14 Q. Did you have anyone read them? 15 A. Yeah, we have people read them. 16 Q. And what response -- was your response 17 to them? You indicated you want to -- 18 A. Well, would it -- if you can tell me 19 what the number was, I think it was eight or 20 20 complaints on the amount of rooms, they were 21 absolutely minimal on what you would consider in a -- 22 in a hotel that size. 23 Q. So did you take any follow-up action on 24 them? 25 A. Well, yes. We did. When we had the -- 100 WILLIAM J. YUNG, 1 when we got the complaints on the commercial area in 2 there, we brought our vice president of operations, of 3 hotel operations, up here and also Jim Barrack, our 4 regional vice president, and we went into a situation 5 where we had to correct the sabotage and the -- and 6 the work slow-down by the union. 7 We -- the maids, as I said before, 8 decided that they would help, and so we got the place 9 cleaned up in about -- in a few weeks. 10 Q. You indicated that a lot of the problems 11 were because the union decided to have a sick-out; is 12 that correct? 13 A. Yes. 14 Q. Do you know why they decided to have 15 this? What that was in relationship to? 16 A. You'd have to ask them. 17 Q. So the answer would be no, you don't 18 know? 19 A. I don't know why they did it. 20 Q. Okay. What was the date of this? When 21 did it occur? Just roughly. 22 A. March or April time, I think. 23 Q. Would it be possible that it was in 24 response to the layoffs that the Tropicana had been 25 instituting since January of 2007? 101 WILLIAM J. YUNG, 1 A. You mean the sick-outs because of the 2 layoffs? 3 Q. Uh-huh. 4 A. Well, it could be that they went out 5 because of that. 6 Q. You indicated that -- you mentioned 7 internet -- internet companies and their rating 8 systems like Orbitz, Travelocity, things of that 9 nature. 10 A. Xpedia. 11 Q. And you indicated that your Tropicana in 12 Atlantic City has always rated second or third best? 13 A. That's correct. 14 Q. Do you know how many Atlantic City 15 casinos actually participate in those internet type -- 16 A. All of them. 17 Q. Are you sure about that? 18 A. I believe so. 19 Q. What did you do -- you talked about 20 eliminating the wait time to check into the hotel from 21 45 minutes to one minute. What did you do to -- what 22 did you do that improved that? Was it by cutting 23 staff? How did you deal with that? How did you make 24 that better? 25 A. Logically you wouldn't cut staff if you 102 WILLIAM J. YUNG, 1 try to increase the service in that situation. No. 2 We didn't increase staff. We didn't decrease staff. 3 And we didn't add staff. We just managed better, and 4 without any increase in staff, the wait time went down 5 to almost a minute. 6 Q. Do you know if the Tropicana, Atlantic 7 City, has more cash-paying hotel customers rather than 8 comp rooms than other facilities? Do you know what 9 the comparison is? 10 A. Do we have more than other -- 11 Q. More cash-paying hotel customers than 12 comp rooms? 13 A. I think so, and I think -- obviously, we 14 have the most rooms, so that's part of it. 15 Q. You've got the most -- you have more 16 rooms than any other facility in Atlantic City? 17 A. I think so. I think so. 18 Q. Now, you indicated that you've made 19 capital improvements since buying the property; is 20 that correct? 21 A. Yes, ma'am. 22 Q. You've talked about the rooms in the 23 south tower as being 18 years old and being renovated. 24 A. Correct. 25 Q. Would it be correct to say that was a 103 WILLIAM J. YUNG, 1 continuation of room work that was already in process 2 progress from the prior owners? 3 A. No. 4 Q. That work was on the books when you 5 bought the property and was a continuation? 6 A. The work was planned. It hadn't been 7 started. 8 Q. You indicated, too, that you lose about 9 two-thirds of the cash -- or you lose about two-thirds 10 of your cash rooms. They go play somewhere else, and 11 you want to rectify that. 12 A. Correct. 13 Q. How would you go about doing that? 14 A. The way we do in other jurisdictions is 15 that they permit us to, for instance, you have a 16 program that we do in several of our hotel casinos is 17 that, you know, buy $50, and we'll give you $100 of 18 play. That typically gets them into the floor. And 19 because you gave them $50 of free play. So that's 20 something -- if we could do something like that in New 21 Jersey, it would help get more of our cash-paying 22 people into our casino. 23 Q. Okay. And that's what you're talking 24 about by increasing your marketing programs? 25 A. No. No. That's -- that's something 104 WILLIAM J. YUNG, 1 that I know that's -- I think we're working on in New 2 Jersey. But, no. We're talking about some other 3 marketing plans that we've turned in requests to the 4 Commission that would allow us to do next week. 5 Q. And what -- you said that you wouldn't 6 be having further layoffs if business stays the same; 7 is that correct? 8 A. Yes. 9 Q. What if business declines? 10 A. We might have to have more layoffs. 11 Q. Okay. You're aware that you have to 12 follow the regulations, that you have to deal with the 13 regulators in New Jersey as well as other 14 jurisdictions; is that correct? 15 A. Yes. 16 Q. And that's why you hired Donna More; is 17 that correct? 18 A. Yes. 19 Q. And you've never -- it's your testimony 20 you've never directed anyone to disregard what a 21 regulator said? 22 A. Absolutely. 23 Q. So any time that the regulators need 24 cooperation, it's your position that they should 25 cooperate? 105 WILLIAM J. YUNG, 1 A. Absolutely. 2 Q. Did you ever express displeasure with 3 the fact that some of your staff gave information or 4 cooperated with the regulators? 5 A. I might have. Yes. 6 Q. And in what context was that? 7 A. It was at one time I was -- you know, I 8 can't remember all the details. But one time, I was 9 probably talking to Fred Buro, and I said -- I said -- 10 I might have said something about that, you know, I 11 complained about why he talked to the regulators, and, 12 you know, that's -- 13 Q. You were dissatisfied or displeased that 14 he was speaking to the regulators? 15 A. Well, I -- if it wasn't required, why go 16 and speak to the regulators? You know, not that we're 17 trying to hide something. But, you know -- why -- you 18 know, he knew layoffs were an issue. And, you know, 19 that's why I questioned why he needed to talk, if it 20 wasn't required. 21 Q. What if it was required? 22 A. Absolutely come. 23 Q. The audit committee. Are you familiar 24 with the audit committee issue at all? The 25 independent audit committee? 106 WILLIAM J. YUNG, 1 A. Not at all. 2 Q. Not at all? 3 A. Very little. 4 Q. Are you aware that it's a requirement? 5 A. Yes, I am. 6 Q. That it's a fairly significant 7 requirement under the regulations? 8 A. Yes. 9 Q. How do you know that? Who told you 10 that? 11 A. Well, I guess you told me that right 12 here. 13 (Laughter.) 14 Q. Okay. Fair enough, Mr. -- fair enough. 15 Had anyone ever talked to you about that 16 before? 17 A. Well, I -- I know there was an audit 18 committee, and we have a man by the name of Mr. Silver 19 on it, but that's about all I know about it. 20 Q. Did you have any -- in the discussions 21 regarding forming an audit committee, did you have any 22 input in the discussions about what you wanted, whom 23 you wanted, how you wanted to it could be comprised? 24 A. No. 25 Q. And you indicated that Donna More has -- 107 WILLIAM J. YUNG, 1 I think you said free reign to make sure you're in 2 compliance? 3 A. Yes. 4 Q. Do you monitor her? Do you see what's 5 going on? Do you talk to her? Do you dialog with her 6 about that compliance? 7 A. Well, I -- to be honest with you, no. 8 She's very competent woman, and I -- you know, she 9 knows a lot more about it than I do. 10 Q. And you indicated -- I think I wrote 11 this, if we didn't follow the rules, it would affect 12 you. What do you mean by that? 13 A. I'm sorry, I didn't -- 14 Q. You commented in regard to the questions 15 on the audit committee and being noncompliant or 16 allegedly being noncompliant in the rules, if we 17 didn't follow the rules, it would affect me. What do 18 you mean by that? 19 A. Well, obviously, we would get in trouble 20 if we didn't follow the rules. That's what I meant. 21 Q. And you're aware that the allegation is 22 you didn't follow the rules in this case? 23 A. But I really don't know a lot about it, 24 to be honest with you. 25 Q. Do you think it's important as for 108 WILLIAM J. YUNG, 1 you -- and you're the person. You're it. You are the 2 Tropicana. Do you think it's important for you to 3 know something about this, to know about the 4 regulation, to make sure you're in compliance? 5 A. Well, yes. It is. It is my 6 responsibility. 7 Q. But you haven't done that to this point? 8 A. No. 9 Q. You indicated, also -- you talked about 10 the Atlantic City Tropicana being a key asset in that 11 its value was great to you; is that correct? 12 A. Yes. 13 Q. And you were talking about building 14 another tower in Atlantic City; is that correct? 15 A. Yes. 16 Q. Where -- where would this be built? 17 When? Do you have any concrete plans for this? 18 A. We talked to two landowners, and really 19 I really don't want to say where they're at right now. 20 But we have talked to landowners about purchasing 21 their property. 22 Q. Okay. And but you can't say where 23 that's at right now or what your plans are? 24 A. I'd rather not. 25 Q. You indicated -- you've talked about 109 WILLIAM J. YUNG, 1 monetizing your assets; is that correct, as well? 2 A. Yes. 3 Q. And you were talking about selling the 4 Vicksburg casino? 5 A. Yes. 6 Q. Have you made any concrete steps or any 7 real steps towards doing that? 8 A. Yes. 9 Q. Okay. And how much -- how much do you 10 anticipate to realize from that sale? 11 A. Thirty-five million. 12 Q. And what do you plan to do -- how do you 13 plan to use the proceeds? 14 A. Pay down debt -- 15 Q. I'm going to talk to you about some of 16 your casinos in other jurisdictions. You have casinos 17 in all of those jurisdictions; is that correct? 18 A. Yes. 19 Q. And that's something that you've built 20 up over the years; is that correct? 21 A. Yes. 22 Q. Since your initial purchase of a casino 23 15 years ago? 24 A. Yes. 25 Q. I want to talk -- let's talk about 110 WILLIAM J. YUNG, 1 Illinois first. Is it correct that you agreed to 2 purchase the Illinois Casino Queen in April of 2006? 3 A. Yes. 4 Q. And what kind of operation was that, 5 please? 6 A. Riverboat. 7 Q. And that was in St. Louis, Illinois? 8 A. Correct. 9 Q. In March of 2007 was that acquisition 10 agreement terminated? 11 A. Yes. 12 Q. For what reason? 13 A. The delay in getting licensed by 14 Illinois, and the owners wouldn't extend it any 15 longer. 16 Q. Okay. March -- in March of 2007, the 17 acquisition agreement was terminated; correct? 18 A. Yes. 19 Q. And you hadn't gotten the approval 20 process completed for the Illinois; is that correct? 21 A. That's correct. 22 Q. And was it true that the Casino Queen 23 offered you another extension, but you would have had 24 to pay for that; is that correct? 25 A. I don't know for sure. We paid for one 111 WILLIAM J. YUNG, 1 extension. And I'm not sure that they agreed -- I 2 could be wrong, but I don't think there was another 3 offer for an extension. 4 Q. Why was the Illinois Gaming Commission 5 investigation delayed? 6 A. Primarily because one of the owners of 7 the Casino Queen got in trouble with the gaming 8 commission, and for the last two or three meetings, 9 all they dealt with was him. 10 Q. Well, what about the Illinois Gaming 11 Commission's position that Columbia Sussex was not -- 12 did not timely provide information and documentation 13 to complete the investigation? 14 A. I don't know anything about that. I 15 don't think that's correct. 16 Q. So if the Illinois Gaming Commission 17 indicated the investigation was delayed because of 18 that, you would not agree with that? 19 A. I'm pretty sure Donna was our attorney 20 right then in Illinois, and I really don't think 21 that's the case. 22 Q. Are you sure? 23 A. No. I'm not really sure. But 24 typically, we are very prompt in getting information 25 to people. 112 WILLIAM J. YUNG, 1 Q. Are you in litigation with the Casino 2 Queen over their retention of the five million of the 3 initial deposit at this time? 4 A. Yes. 5 Q. Is that litigation ongoing? 6 A. Yes. 7 Q. I want to talk about Indiana next. 8 A. Okay. 9 Q. After the Aztar merger, did you acquire 10 a casino from Aztar in Indiana? 11 A. Yes. 12 Q. And are you aware that in June of 2007 13 the Indiana Gaming Commission took disciplinary action 14 against that casino? 15 A. I think we got fined for something, and 16 I don't know exactly what it was. But I don't know 17 exactly what it was. Was it paid down or something 18 like that? 19 Q. So you're aware that you were fined for 20 something? 21 A. Well, actually we were fined, but it 22 happened on the previous owner's watch. 23 Q. Well, when did you -- when did you 24 acquire that property? 25 A. We acquired it in January. 113 WILLIAM J. YUNG, 1 Q. Okay. Well, are you aware that the 2 there were 14 violations? 3 A. No. I didn't know that. No. 4 Q. And you are aware that the violations 5 stemmed from January of 2007 to April of 2007? 6 A. I -- I think -- yeah. I don't know. 7 Q. Again, you're not aware of what was 8 going on -- 9 A. No. 10 Q. -- with the regulatory process in 11 Indiana; is that correct? 12 A. No. That's not correct. I did not know 13 about the fines. 14 Q. You did not? 15 A. I did not know about all the fines. I 16 knew there was a fine, but I didn't know what it was 17 for. 18 Q. You didn't know what it was for or for 19 what time period? 20 A. I didn't know what -- I knew there was a 21 fine from the turn styles, but that's -- as far as the 22 other stuff, I didn't really know what the fine was 23 for. 24 Q. Would you agree that if the violations 25 occurred from January of 2007 to April of 2007, they 114 WILLIAM J. YUNG, 1 would have been at the time you owned that casino; is 2 that correct? 3 A. That's correct. 4 Q. Do you know if you submitted any plan to 5 regulators as a result of violations? Did you do any 6 follow up regarding the violations? 7 A. No, I don't know. 8 Q. Do you know if you made any personnel 9 changes as a result of the violations? 10 A. I don't know for sure. No. 11 Q. Do you know if Indiana regulators are 12 looking at any staffing reviews or initiating any 13 staffing reviews at casino Aztar? 14 A. Yes. I think they started one in March 15 or something like that. 16 Q. And, again, what -- do you know what 17 this -- would -- why this resulted? Why they did 18 that? 19 A. Yeah. Basically they -- we told them we 20 had to lay off 70 people, and the mayor got upset 21 about it and asked for an investigation. 22 Q. Kind of like what's happening here? 23 A. Well, no. Not really. 24 Q. Did you -- are you aware that the 25 Indiana regulators maintained that your layoffs, that 115 WILLIAM J. YUNG, 1 the layoffs made at casino Aztar were contrary to the 2 representations made prior to acquiring the casino? 3 A. I'm not sure they made that accusation. 4 We've gone back and checked the testimony, and it was 5 never -- there was never anything like that in the 6 testimony. 7 Q. So you would -- you would disagree 8 then -- 9 A. Yes. 10 Q. -- with the Indiana regulators in that 11 regard? 12 A. Yes. Absolutely. Absolutely. 13 Q. Is it your testimony that you didn't 14 make any representations regarding layoffs that 15 made -- 16 A. Well, what I originally said was that 17 initially it looked like we would have to lay off 20 18 people. And then the impact of another casino that 19 was called the French Lick came in, and we lost ten 20 percent of our business. And we saw the need at that 21 point to go to -- let go another 40 or 50 people. 22 Q. So it would be correct to say that you 23 let off more -- you laid off more people than you 24 initially represented to the Indiana Gaming 25 Commission? 116 WILLIAM J. YUNG, 1 A. No. You know -- no. It's not fair, 2 because I said we were going to do initially 20 3 because of consolidation, which they allowed, and we 4 did that. But then there was another thing that came 5 in. And that was all of a sudden you lose ten percent 6 of your business because of another casino, and you 7 have to make adjustments. 8 Q. So you laid off more than you said you 9 thought you would? 10 A. Because of the adjustment in business. 11 Yeah. I mean -- 12 Q. Basically the same thing that's happened 13 here in Atlantic City? 14 A. Yeah. Sort of. It's an adjustment in 15 business. 16 Q. You also operated the Belle of Orleans 17 Riverboat Casino; is that correct? 18 A. Yes. Uh-huh. 19 Q. And is that -- was -- did mid-2000 -- 20 I'm sorry. 21 Was there a litigation regarding that 22 casino, regarding the damages from Hurricane Katrina? 23 A. Yes. 24 Q. What was that, please? 25 A. Well, the boat was severely damaged in 117 WILLIAM J. YUNG, 1 northeastern New Orleans. The boat was put out of -- 2 put out of condition, and we had to get the boat 3 hauled to Mobile to do repairs on the boat. And 4 the -- according to our lease, you know, if we have -- 5 I don't know the legal terms, but according to the 6 lease, that we were allowed to go ahead and move the 7 boat and abrogate the lease. 8 Q. And what was the litigation that 9 followed regarding that? 10 A. Well, I think they're -- the litigation 11 was from the Levy Board who said we still owe some 12 money on the lease. 13 Q. Has that been resolved? 14 A. No. 15 Q. That's still in litigation? 16 A. Yes. 17 Q. Has that riverboat been repaired and 18 reopened for business? 19 A. Yes, it has. 20 Q. And where is that located? 21 A. Amelia, Louisiana. 22 Q. And is it correct that in mid-2006 the 23 Louisiana State Police issued a number of 24 nonadministrative warrants in regard to that casinos 25 operation? 118 WILLIAM J. YUNG, 1 A. The Amelia -- the Amelia? 2 Q. Uh-huh. 3 A. It wasn't in operation then. 4 Q. No. In -- in 2000 -- I'm sorry. I'm 5 sorry. I'm sorry. Strike that. 6 Do you have another riverboat in 7 Louisiana. 8 A. Yes, we do. In Baton Rouge. 9 Q. And where is that? 10 A. Baton Rouge. 11 Q. And, I'm sorry. I misspoke. Is it 12 correct that the Baton Rouge was issued administrative 13 warrants, nonadministrative warrants for the -- 14 A. It may have. I don't know. 15 Q. And in 2006. 16 A. Yeah. It could have been. I don't 17 know. 18 Q. You're not aware of that? 19 A. No. I'm not. 20 Q. And you're not aware of any violations? 21 A. I don't -- I don't really get into that. 22 I leave that to Donna to handle and other people who 23 handle -- who -- the compliance people. 24 Q. Okay. Would it be -- and, again, if you 25 don't know, you don't know. Would it be correct to 119 WILLIAM J. YUNG, 1 characterize the violations in Indiana, Louisiana, 2 were related to staff not following regulations? Do 3 you know anything about that? 4 A. It could have been. Yeah. I don't 5 really know for sure. 6 Q. Did you ever consider the possibility of 7 the importance of checking into that in terms of your 8 regulatory compliance? 9 A. Well, I think if it's a -- some of the 10 comments that were made to me -- from various 11 things -- were they were housekeeping items, if there 12 was a -- you know, a significant issue in the thing, 13 if it was totally significant, I think I would have 14 been made aware of it. 15 Q. So would -- in response to my question, 16 this would be insignificant stuff to you? 17 A. Well, I don't know really what it was, 18 to be honest with you. 19 Q. Okay. In 1996 did you become involved 20 in developing a riverboat in Greenville, Mississippi? 21 A. '96? 22 Q. I'm sorry. 23 A. '96. It could be. Yeah. '96. Uh-huh. 24 Q. And -- I'm sorry. I'm sorry. I think 25 it was 1993. 120 WILLIAM J. YUNG, 1 A. About then. Yeah. 2 Q. Does that sound -- my mistake. I'm 3 sorry. 4 And that is Greenville Company that 5 operated the Lighthouse Point Casino; is that correct? 6 A. Yes. 7 Q. And what percentage do you own in the 8 Lighthouse Point Casino? 9 A. Eighty percent. 10 Q. And who owns the other 20 percent? 11 A. A company called Rainbow Entertainment. 12 Q. How did you become involved with Rainbow 13 Entertainment in developing the Lighthouse Point 14 Casino or operating it? 15 A. They had a site in Greenville, and they 16 supplied the site, and I supplied the boat for the 17 casino. 18 Q. So they hold the rights to the land 19 under the lease of Rainbow does; is that correct? 20 A. No. They -- no, they don't. They just 21 had an option to lease the land, and so we used their 22 option, and then they got a piece of the deal for 23 site. 24 Q. And how many economic interests does 25 Tropicana hold in that, economic? 121 WILLIAM J. YUNG, 1 A. I think economic interest we own 85. 2 Q. And Rainbow owns the other 15 percent? 3 A. I believe so. 4 Q. Now, were you aware that Rainbow had 5 unsuccessfully tried to develop this riverboat 6 operation with another company prior to your coming 7 in? 8 A. I think I did. I think I did. I knew 9 there were some lawsuits between -- in Rainbow amongst 10 the partners. Yeah. I -- yes. I think I did know 11 something about that. 12 Q. And how did you find that out? 13 A. I think it just through the talk -- 14 nothing specific. You know, I think it was just -- it 15 may have been -- may have been even after we started 16 doing the deal with them when we opened the thing. 17 And then, apparently, the lawsuits between the 18 partners in Rainbow -- a judge filed something that we 19 had to pay him the money. So it was disbursed. 20 Q. And that was Premiere Gaming; is that 21 correct? 22 A. I'm not sure what it was. Yeah. 23 Q. How did you initially get involved in 24 this? Who contacted you and got you involved in the 25 Rainbow deal? 122 WILLIAM J. YUNG, 1 A. There was a real estate broker, and I 2 can't remember her name. I think from Cincinnati who 3 brought these people up to see me. 4 Q. And did you meet with the broker and 5 representatives of Rainbow? 6 A. Yes. 7 Q. Who did you meet with from Rainbow? 8 A. I met with Charles Cato and Marvin Cato. 9 Q. And -- 10 A. They were the pri -- they were basically 11 Rainbow. I think they owned most of it. 12 Q. Okay. And you entered into that 13 agreement with them to form Greenville; is that 14 correct? 15 A. Yes. 16 Q. And the litigation that is with Premiere 17 followed after that agreement? 18 A. Yeah. But that went between Rainbow, 19 and we never got involved in it. 20 Q. Were you familiar at all with Premiere? 21 A. No. 22 Q. Familiar at all with its operations or 23 principals? 24 A. Uh-uh. 25 Q. Were you aware that two of the 123 WILLIAM J. YUNG, 1 principals of Premiere, Gilbertson and Finely 2 (phonetic), were involved in 2000 official misconduct 3 matter of a Colorado Gaming official? 4 A. I didn't know anything about it until 5 after we got involved in it. And this is the first 6 time I've ever heard that. 7 Q. That's the first time you've ever heard 8 that? 9 A. Absolutely. 10 Q. You weren't asked that in your sworn 11 interview? 12 A. No. 13 Q. Are you sure? 14 A. Yeah, I'm pretty sure. Yeah. 15 Q. Now, you're familiar with Charles Cato; 16 is that correct? 17 A. Yes. 18 Q. And who is Charles Cato? 19 A. Charles Cato is the son of Marvin Cato, 20 who is a -- who is, I think, the majority owner of 21 Rainbow. 22 Q. And do you know if Charles Cato holds 23 any position or interest in Rainbow? 24 A. No, I don't. Well, he may now. I don't 25 know whether his father has given that to him or not 124 WILLIAM J. YUNG, 1 as a present. I don't know for sure. 2 Q. And this is someone that you're 3 operating a company with; correct? Rainbow? 4 A. No. I've only met Charles Cato one 5 time, and that's the time we came up. And, I mean, we 6 just send him the checks every month. 7 Q. You just send him the checks every 8 month? 9 A. Yeah. 10 Q. Who's operating the facility? 11 A. We are. 12 Q. And who do you just send the checks to? 13 A. I think we sent it to Rainbow, I think. 14 Q. And are you aware that Charles Cato was 15 vice president and treasurer of Rainbow? 16 A. No. 17 Q. You're not aware of that? 18 A. Not really, no. 19 Q. And they're involved in a company that 20 you're operating, and you're not aware of that? 21 A. I'm not aware of that. 22 Q. Are you aware of any Charles Cato's 23 background? 24 A. I have since learned it, a little bit 25 about it. Uh-huh. 125 WILLIAM J. YUNG, 1 Q. And when did you learn anything about 2 it? 3 A. I learned about it about -- about three 4 years ago. 5 Q. And what did you learn? 6 A. I learned he -- he had a suspended 7 driver's license, and he was collared for suspended 8 driver's license. 9 Q. Were you aware that from 2001 to 2004, 10 he had various disorderly persons charges filed 11 against him? 12 A. No. 13 Q. Are you aware of the same situation from 14 1991 to 1995 that he had various criminals matters, 15 various disorderly persons charges filed against him? 16 A. No. 17 Q. Are you aware in 1996 that he filed for 18 bankruptcy? 19 A. I may have known that. Yeah. I may 20 have known that. 21 Q. Are you aware that in 2006 Marvin Cato 22 assigned all his stock in Rainbow to Charles Cato? 23 A. No. I wasn't aware of that. 24 Q. Not aware of that at all? 25 A. No. 126 WILLIAM J. YUNG, 1 Q. Are you aware that that transfer still 2 hadn't been approved by the Mississippi Gaming 3 Commission? 4 A. No. I'm not aware of that. 5 Q. Are you aware that Rainbow 6 administratively dissolved in Mississippi for failure 7 to acquire documentation in early 2007? 8 A. No. I'm not aware of that. 9 Q. Did any of these things concern you in 10 regards for your regulations compliance with 11 Mississippi Gaming Commission? 12 A. Well, I think that we do investigate. 13 Q. Pardon? 14 A. I think we do investigate. 15 Q. Have you done anything to investigate 16 it? 17 A. I haven't personally, no. 18 Q. Have you had anyone undertake any action 19 to begin to investigate it? 20 A. I don't think I've ever directed anybody 21 to do it. No. 22 Q. So you think it does need to be 23 investigated, but you have not taken any action so 24 far? 25 A. Well, I'm not saying we haven't. I said 127 WILLIAM J. YUNG, 1 I haven't directed anybody. There maybe somebody in 2 our office who has done something about that. 3 Q. But you don't know that? 4 A. I don't know that. 5 Q. Do you think it would be important for 6 you to know about that? 7 A. Sure. I think I could find out about 8 it. 9 Q. Did you do any due diligence on Rainbow 10 or Marvin Cato or any shareholders prior to entering 11 into this transaction with Rainbow? 12 A. You know? I really can't remember that 13 or not. I really can't answer that. I really don't 14 remember. 15 Q. You don't remember? 16 A. I don't remember whether we did anything 17 or not. 18 Q. Would it be correct to say that when we 19 asked you this question during your sworn interview, 20 you said, no, you didn't do any due diligence? 21 A. That could be absolutely right. I just 22 don't know what we did with that now with them. 23 Q. Would it be correct to say that in your 24 sworn interview you indicated that you just relied on 25 the Mississippi Gaming Commission's investigation in 128 WILLIAM J. YUNG, 1 this regard? 2 A. Well, they did get licensed so, you 3 know, I guess that we could assume that if Mississippi 4 thought that they were okay, it was okay. 5 Q. And, now, are you also aware of some of 6 the CTRC violations with regard to the Greenville 7 property? 8 A. Yes. 9 Q. What is your understanding of those? 10 A. My understanding is that the -- we did 11 not fill them out for a period of time and -- and it 12 was our chief financial officer who didn't fill them 13 out. And, obviously, we let him go, and we got fined 14 for it. 15 Q. Do you know how long of a period of time 16 it was this dealt with? 17 A. Not really. 18 Q. Would it surprise you if I said for two 19 years Greenville property failed to file any CTRCs? 20 A. If you say it was two years. I don't 21 know for sure. 22 Q. Are you are of the requirements of the 23 currency transaction reporting requirements? 24 A. I hadn't been up till then. And since 25 that has happened, we have hired Deloitte Touche to 129 WILLIAM J. YUNG, 1 basically go ahead and audit them every month to make 2 sure they're being filed. 3 Q. Prior to that were you aware of the 4 requirements? 5 A. No, I wasn't. No. 6 Q. And this was in 2002. Would that be 7 correct? 8 A. Yes. 9 Q. It was in 2002 that the US Treasury 10 advised Greenville that they were evaluating action 11 for willful violations of the Bank Secrecy Act. Does 12 that sound correct? 13 A. Yes. 14 Q. How long had you been -- how long had 15 you owned casinos prior to 2002? 16 A. Probably -- well, I don't know exactly 17 when, but at least ten years. 18 Q. And you weren't aware of currency 19 transaction reporting requirements at all? 20 A. No, I was not. I did not get into the 21 details of accounting. 22 Q. But you're the person that's responsible 23 for the company. You're the main guy; right? 24 A. That's correct. 25 Q. This CFO that was involved in the CTRC 130 WILLIAM J. YUNG, 1 violations, was he let go after this occurred? 2 A. I believe so. 3 Q. Okay. Do you know how this person was 4 hired? Who recommended him? How he came to the 5 facility? 6 A. No, I don't. 7 Q. Do you know what criteria was used in 8 evaluating someone for this type of position? 9 A. No, I don't. 10 Q. Are you aware of what the penalty was 11 that was assessed by -- 12 A. Yes. I believe it was $300,000. 13 Q. 300 -- does 350 sound correct? 14 A. 350. Okay. 15 Q. And you're aware that was because of 16 your failure to file 142 CTRCs between 1997 and July 17 of 2002? 18 A. Yes. 19 Q. And are you aware of what they alleged 20 the willful conduct was, was the willful nature of the 21 conduct are? 22 A. No. 23 Q. You're not aware of that still? 24 A. Well, I don't -- it was not filling out 25 the CTRs, I assume. 131 WILLIAM J. YUNG, 1 Q. None for two years. No CTRC? 2 A. I understand that. That's why we got 3 fined. 4 Q. Do you have a management services 5 agreement with Greenville? 6 A. We may have. I'm not that familiar with 7 it. 8 Q. In 1993 did you make an attempt to 9 develop a riverboat casino in Caruthersville, 10 Missouri? 11 A. Yes. 12 Q. Tell us about that. 13 A. Well, we went -- you know, there was 14 an -- it was going to be a riverboat allowed in that 15 area, and we went down to that site and went ahead and 16 tried to get the riverboat, and we were unsuccessful. 17 Q. And why were you unsuccessful? 18 A. Aztar had actually won the -- won the 19 boat. 20 Q. And based on the fact that Aztar got the 21 license to -- to develop the riverboat casino, did you 22 take any action? Did you file any litigation? 23 A. I think we -- I think we did. I think 24 we did file, yes. 25 Q. Against the Missouri Gaming Commission? 132 WILLIAM J. YUNG, 1 A. I think so. Yes. 2 Q. You're not sure? 3 A. I'm pretty -- I'm pretty sure we did. 4 Q. You did? 5 A. Uh-huh. 6 Q. And what did that litigation involve? 7 Why did you file suit? 8 A. He couldn't understand why, since we 9 offered twice as much to the -- to the city for -- and 10 what we offered to develop basically double what Aztar 11 did that they still gave it to Aztar. 12 Q. Were you upset that the Missouri Gaming 13 Commission decided to investigate Aztar's license 14 application prior to yours? They gave them priority? 15 A. Well, I don't know whether I was upset 16 about that. I think that they -- at that point I 17 assumed they picked them. 18 Q. And what was the basis for your 19 litigation? What was the -- 20 A. I just mentioned to you. It was the 21 fact that we offered twice as much as Aztar and Aztar 22 still got the casino. 23 Q. And what -- what is improper about that 24 that caused you to file suit? 25 A. Well, it would think that the city would 133 WILLIAM J. YUNG, 1 rather have $3 million a year rather than a million 2 and a half. 3 Q. But is that in and of itself basis for a 4 lawsuit? 5 A. I think so. 6 Q. What would that basis be, then? What 7 law was broken? 8 A. The basis is that it was -- it was not 9 using logic and fairness on picking a casino because, 10 you know, as far as the city goes, it gives the city 11 half the money that they thought they were going to 12 have. And, you know, typically the high bidder in 13 this country still gets the deal. 14 Q. Now, when the Aztar merger, you sold 15 some property that you had in Missouri; is that 16 correct? You referenced that earlier? 17 A. Oh, yeah. The Caruthersville. Yeah. 18 Correct. The casino there. 19 Q. And you indicated that there was a ready 20 and willing buyer; is that correct? 21 A. Yes. 22 Q. Okay. Was there some problems with the 23 initial buyer for that property that they were having 24 trouble getting licensed? 25 A. Yes, there was. Yes. 134 WILLIAM J. YUNG, 1 Q. Can you talk about that, please. 2 A. Yeah. The initial buyer was -- and I 3 don't know who they were, but I think he was from 4 Illinois, and also -- and he got turned down. 5 Q. Okay. So it wasn't that simple in terms 6 of having a ready and willing buyer? 7 A. Well, there were two buyers, and so we 8 just went to the second buyer. 9 Q. Now, in 2004 did you attempt again to 10 develop a riverboat in Missouri? 11 A. Buy a riverboat. 12 Q. And you were a winning bidder at an 13 auction; is that correct? 14 A. Right. 15 Q. And, actually, it was October of 2004 16 you were the winning bidder in that auction; correct? 17 A. If you say so. I don't know what the 18 date is. 19 Q. Does that sound about right? 20 A. Could be, yeah. 21 Q. 2004 sound right? 22 A. Could be. Time flies. 23 Q. And about a year later in October of 24 2005, did -- and let me back up a minute. This -- you 25 were the winning bidder in an auction for the 135 WILLIAM J. YUNG, 1 President riverboat; is that correct? 2 A. Correct. 3 Q. And that was to be located in St. Louis, 4 Missouri? 5 A. It was located. 6 Q. In October of 2005 did President write 7 to you in regards to your renewal license application 8 being withdrawn? 9 A. Did who? 10 Q. Did President, the company -- 11 A. Oh, okay. Yes. They wrote to us. They 12 did. 13 Q. What was the content of that letter? 14 A. The content of that letter was that 15 basically they didn't think that I should have 16 withdrawn my application for licensure in Missouri, 17 and that -- and they were going to sue me for 18 withdrawing my license. 19 Q. So it would -- it was correct, then, 20 that you withdrew your license application in 21 Missouri? 22 A. Yes. 23 Q. When did you withdraw it? 24 A. I don't remember I. Don't know what 25 date it was. 136 WILLIAM J. YUNG, 1 Q. How many months prior to getting the 2 letter in October 2005 had you withdrawn? 3 A. I don't know. I don't know. 4 Q. Why did you withdraw? 5 A. Well, it looked like that we probably 6 were not going to get licensed in Missouri. 7 Q. Why not? 8 A. They gave four reasons why, and I wasn't 9 going to get licensed. 10 Q. What were those reasons? 11 A. One reason was my association with 12 Charles Cato, and I explained -- and they mentioned 13 it. And I had -- Charles Cato was the manager of my 14 casino, and which isn't true. I mean, I never -- you 15 know, I met Charles Cato one time in my life. 16 The second thing was -- 17 Q. Well, let me stop you there. 18 A. Uh-huh. 19 Q. If they had a problem with Charles Cato 20 and your relationship with him regarding Greenville; 21 is that correct? 22 A. Yes. 23 Q. What was their problem with Charles 24 Cato? 25 A. They said that he was a felon. 137 WILLIAM J. YUNG, 1 Q. He was a criminal? 2 A. He had a DUI. 3 Q. And they had a problem with that? 4 A. They had a problem with that. 5 Q. Were you even aware of Charles Cato's 6 history at the time you had this license application 7 in to Missouri? 8 A. No, I wasn't. 9 Q. What were the other issues that they 10 were concerned about in Missouri? 11 A. The other issue was the one we talked 12 about today, the Grant Thorton issue with the -- 13 bringing the money back from the Cayman Islands. 14 There was another issue about my Florida 15 residency. 16 Q. And what was that? What did that 17 involve? 18 A. They didn't understand -- they -- I'm a 19 Florida resident, and I -- you know, I live part of my 20 time in Kentucky, Ohio, and Florida, and they couldn't 21 understand that. And that was a problem for them. 22 Q. Why don't we talk about that for a 23 minute. 24 A. Sure. 25 Q. You have a Florida residency? 138 WILLIAM J. YUNG, 1 A. Yes, I do. 2 Q. How often do you stay in Florida? How 3 often do you live in Florida? 4 A. A few weeks a year. 5 Q. What's the purpose of your Florida 6 residency? 7 A. What is the purpose? 8 Q. Why do you have a Florida residency? 9 A. Basically to be a Florida resident. 10 Q. Is there any tax advantage? 11 A. There's tax advantages of being a 12 Florida resident. 13 Q. What are the tax advantages for being a 14 Florida resident? 15 A. Well, they are -- the main tax advantage 16 is that in Kentucky, I have to give -- if there is a 17 state that doesn't have a state income tax, for 18 instance, Nevada, Kentucky can tax me on my income 19 from Nevada. And so that's why I was a -- 20 Q. Oh, so your Florida residency is 21 basically established for tax reasons? 22 A. Correct. 23 Q. And Missouri had a problem with this? 24 A. Yes. 25 Q. What other issues? You mentioned a 139 WILLIAM J. YUNG, 1 couple other things. 2 A. Let's see. Let's see. The last tine is 3 I bought -- out in Atlantic City -- or up in Las Vegas 4 one time, I saw a fountain that I wanted to buy. And 5 it was in the Paris Casino. And I had -- it was such 6 an amount that I had to use my company credit card. 7 And they didn't like the idea that I used my company 8 credit card for making a purchase of that fountain. 9 Q. Well, let's talk about your company 10 credit cards for just a moment. 11 A. Uh-huh. 12 Q. Prior to January 2005, did you have some 13 Columbia Sussex corporate credits cards? 14 A. Yes. 15 Q. Do you recall what they were, which 16 kind? 17 A. American Express. Probably had a Visa. 18 Q. Did you have any corporate or any 19 written internal -- any written internal controls with 20 regards to review of corporate charges on these cards? 21 A. No. I didn't think it was necessary 22 since, you know, I owned a hundred percent of the 23 company. 24 Q. Was there any unwritten procedure? 25 A. No. 140 WILLIAM J. YUNG, 1 Q. How did you deal with these cards and 2 how they were reviewed for corporate charges? 3 A. Well, typically what happens is, Ted 4 Mitchell, our treasurer, he looks at every -- all of 5 my credit cards every month, and he determines what is 6 personal or isn't personal, or he'll ask me a question 7 about it. And for some reason in about a four-month 8 period back there, he didn't get around to doing the 9 thing, and that's what happened. 10 Q. Okay. Well, actually, it was more than 11 a four-month period. Would that be correct? 12 A. I thought it was about four months. 13 Q. Well, my information is that in the last 14 six months of 2003 and the first six months of 2004 15 expenses on your corporate credit cards were 16 improperly accounted for as corporate expenses that 17 were actually personal. Are you aware of that? 18 A. You could be right. I didn't know 19 exactly how long it was. 20 Q. And how was that handled once that was 21 discovered? 22 A. Well, we went ahead and got my -- I went 23 ahead and got a personal credit card. And I no 24 longer -- for personal business I use that personal 25 credit card. 141 WILLIAM J. YUNG, 1 Q. And was there also a matter of the 2 corporate -- the private jet or the corporate jet 3 being used for personal travel? Are you aware of 4 that? 5 A. He always charges me for that. For the 6 reconciliation every month. 7 Q. But in 2003, 2004 weren't there eight 8 flights for which nothing was charged to you regarding 9 that? 10 A. I don't know. 11 Q. You are not aware of that? 12 A. I can tell you that my airplane is used 13 95 percent for corporate business. 14 Q. Okay. Now, the items that were 15 improperly accounted to the corporate credit card, 16 have you repaid those -- or reported those items and 17 paid the taxes on them? 18 A. Yes. We -- in fact, taxes -- the filing 19 wasn't even done before we did that, and we amended 20 and we changed that. 21 Q. And have you adopted now some written 22 procedures and processes to deal with this issue? 23 A. Yes. 24 Q. And what were those? What have you 25 done? 142 WILLIAM J. YUNG, 1 A. Well, like I said, I gave a company 2 credit card -- I have a personal credit card, and any 3 time I use -- I do personal thing, things I put it on 4 a personal credit card. 5 Q. And have you gotten that written 6 procedures as well as in regards to written credit 7 cards? 8 A. I don't know whether it's written, but 9 that's what I do. 10 Q. You're not aware of any written 11 procedures that you've implemented? 12 A. No. With me. No, no. 13 Q. So you understood that Missouri was not 14 going to grant you a license; correct? 15 A. I believe that to be the case. Yes. 16 Q. Based on what? 17 A. Well, the four issues that I -- 18 Q. No. I mean based -- what lead you to 19 believe that they weren't -- did you have dialog with 20 them? Did they tell you? 21 A. Yeah. Yes. 22 Q. And was there a concern on your part 23 that if you were denied a license in Missouri, it 24 would impact you in other jurisdictions? 25 A. Yes, it would. 143 WILLIAM J. YUNG, 1 Q. Any jurisdictions in particular it would 2 impact? 3 A. Well, Louisiana. 4 Q. Why is that? Why? 5 A. I think Louisiana, the issue if you are 6 denied license someplace, you automatically lose your 7 license in Louisiana. 8 Q. So you had to withdraw at that point? 9 A. That's correct. 10 Q. Now, based on your withdraw, did you ask 11 President for return of your monies to you? 12 A. Yes. 13 Q. And because you said you weren't going 14 to get licensed? 15 A. Yeah. The -- we were supposed to use 16 all viable commercial means at getting license, and we 17 felt like we did. And we felt like we needed to be 18 reimbursed for that payment. 19 Q. Did President return the money? 20 A. No. 21 Q. And did litigation follow after that? 22 A. Yes, it did. 23 Q. What's the status of that litigation 24 now? 25 A. Still being litigated. 144 WILLIAM J. YUNG, 1 Q. Now, in January of 2005, during this 2 same time frame, did you file suit against the 3 Missouri Gaming Commission and Casino One, a Pinnacle 4 affiliate in Missouri? 5 A. Yes, ma'am. 6 Q. What did that litigation involve, 7 please? 8 A. It revolved about a situation where 9 statute says that a casino has to be a thousand feet 10 from the center line of the Mississippi River. And 11 they were building their casino, like, 1500 feet away 12 from the Mississippi River. 13 Q. That casino, what -- how close would 14 that casino, that proposed casino, have been to the 15 President riverboat? 16 A. Very close. 17 Q. It would have been impacted your -- 18 A. Severely. 19 Q. -- riverboat; is that correct? 20 A. Correct. 21 Q. So you filed lawsuit? 22 A. Yes. 23 Q. And what is the status of that suit at 24 this time? 25 A. It got denied that we didn't have 145 WILLIAM J. YUNG, 1 standing. 2 Q. Okay. And so is that suit concluded? 3 A. It's done. 4 Q. Were you named in 2006 -- were Columbia 5 Sussex and Wimar Tahoe named as defendants in 6 President's bankruptcy proceedings? Are you aware of 7 that? 8 A. I'm aware that they sued us. Is that 9 what you mean? 10 Q. Yes. 11 A. Yeah. 12 Q. And are you also aware of an issue 13 regarding damages regarding the Cherrick lot? 14 A. Damages? I know we settled that with 15 Pinnacle. We sold them the lot. 16 Q. Okay. But there was an issue regarding 17 a parking lot; is that correct? 18 A. Yes. 19 Q. And that lot was entitled the Cherrick 20 lot? 21 A. Yes. 22 Q. Can you talk about that? What was the 23 Cherrick lot? 24 A. The Cherrick lock was a parking lot that 25 basically was integral to the President casino. And 146 WILLIAM J. YUNG, 1 it -- we owned the lot. And -- what else do you want 2 me to talk about? 3 Q. You owned the lot; is that correct? 4 A. Yes. Uh-huh. 5 Q. And who used the lot primarily? 6 A. Well, the President casino. 7 Q. And at that time -- at the time you 8 bought the lot, what was the charge per car on the 9 lot? 10 A. I think they had a deal with the 11 President casino for $2. 12 Q. Would $1.50 sound right? 13 A. Could be. Yeah. 14 Q. Did you raise the rates over the course 15 of the next several months? 16 A. When -- when we -- it was determined 17 that we could have the President riverboat, yes, we 18 raised the rates since it was our lot. Yeah. 19 Q. So when you had the -- when you it 20 looked like you were going to have the President 21 riverboat so the rate per car in the lot was $1.50; is 22 that correct? 23 A. Yes. 24 Q. When it was determined or you knew that 25 you weren't going to have the President riverboat, was 147 WILLIAM J. YUNG, 1 that when you began to raise the price? 2 A. Yes. 3 Q. And actually the price went from $1.50 a 4 car up to $10 per car? 5 A. On some days. Yes. 6 Q. Now, any of the proceedings with 7 regarding the Cherrick lot have been resolved at this 8 time? 9 A. I -- well, we sold the lot to Pinnacle. 10 Q. Just want to talk about a couple of the 11 Nevada properties. The Lake Tahoe Horizon, are you 12 aware that there were January 2006 regulatory 13 violations levied against that facility? 14 A. No, I'm not aware of that. 15 Q. You're not aware of that? Don't know 16 about it? 17 A. No. 18 Q. Don't know about any issues of that 19 nature? 20 A. No. 21 Q. Are you aware that Nevada regulators are 22 monitoring workforce reductions at the Las Vegas 23 Tropicana? 24 A. I've seen it in the paper. 25 Q. You're not aware of it yourself? 148 WILLIAM J. YUNG, 1 A. No. 2 Q. You've read it in the paper? 3 A. Yes. 4 Q. Are you -- what is your understanding of 5 what they're monitoring and why they're monitoring? 6 A. I don't know. 7 Q. Do you think it's important -- you've 8 indicated that one of the main interests of your 9 acquisition of Aztar was the Tropicana Las Vegas; is 10 that correct? 11 A. That's correct. 12 Q. And you are not interested or aware that 13 Nevada regulators are monitoring the workforce 14 reductions? 15 A. I don't -- and I could be wrong, but I 16 don't know whether they've ever contacted us and told 17 us that. 18 Q. Are you -- you don't know if they've 19 contacted you? 20 A. I don't think so. I could be wrong, but 21 I don't think so. 22 Q. Well, when you read this in the paper, 23 did you take any follow-up action? Were you 24 concerned? 25 A. No. No. Not really. That's -- you 149 WILLIAM J. YUNG, 1 know, I felt like we hadn't done nothing wrong. 2 Q. Have you made any significant layoffs at 3 the Tropicana Las Vegas facility? 4 A. We've made layoff. Yes. We have. 5 Q. And what are -- how many layoffs have 6 you done there? 7 A. I don't know for sure. 8 Q. Can you give us an estimate? 9 A. Guess. If you want me to guess. 10 Q. No. I don't want you to guess. 11 A. No, I don't know. 12 Q. I just want to know if you have any 13 conservative estimate concerning percentage of 14 employees laid off since January of 2007 at that 15 facility. 16 A. I -- I would say 10 to 15 percent. 17 Q. And, again, that's just an estimate that 18 you're coming up with here today? 19 A. Just an estimate. I don't really know 20 for sure. 21 Q. Do you think it's important that you 22 contact Nevada regulators regarding their monitoring 23 your workforce reductions? 24 A. Well, I -- you know, they -- I don't -- 25 you have to ask somebody else. But I, you know, I 150 WILLIAM J. YUNG, 1 wasn't really aware that they were monitoring us, to 2 be honest with you. 3 Q. Okay. Other than what you read in the 4 paper. 5 A. That's correct. 6 Q. And you didn't follow up on what you 7 read in the paper? 8 A. No. 9 Q. Let's talk about the Park Cattle 10 litigation. That involves the Horizon facility in 11 Lake Tahoe; is that correct? 12 A. Correct. 13 Q. Okay. And what is your understanding 14 of-- of that litigation? Why is that -- what is the 15 subject of that litigation? 16 A. Well, the subject of that litigation is 17 that the Park Cattle family got in a family fight. 18 They fired the brother and sued the brother and kicked 19 him out of running it. And they hired some outside 20 people. And the outside people decided that they 21 wanted to get us out of our 33-year lease. And so 22 they started trying to find things wrong with the 23 building to try to get us to abrogate the lease. 24 Q. Is it your -- and basically, they have-- 25 would it be correct to say that they have alleged that 151 WILLIAM J. YUNG, 1 you are not -- that the physical condition of the Lake 2 Horizon property is such that you are in default under 3 the lease? 4 A. Yes. 5 Q. Okay. And did they write you a series 6 of letters from March of 2005 to August of 2005 7 indicating that the physical condition of the Lake 8 Tahoe Horizon Casino parking garage constituted a 9 default under the lease? 10 A. Yes. They wrote those letters. 11 Q. And did they demand that repairs be 12 made? 13 A. Yes, they did. Uh-huh. 14 Q. So they were alleging a default under 15 the lease; is that correct? 16 A. Yes. 17 Q. And is it your position that the only 18 reason that they're alleging this default under the 19 lease is because they want the property? 20 A. That's what the board minutes say. 21 Q. What board minutes? 22 A. Park Cattle. 23 Q. And you have those here today? 24 A. No, I don't have them here today. But 25 we have them in our office. 152 WILLIAM J. YUNG, 1 Q. Have you made any repairs? 2 A. Yes. We -- we replaced the effice on 3 the property. We were planning to do that anyway. 4 But other than that, we made some minor fix-ups. It 5 was as far as the fire department and the health 6 department, and everything else, they gave us a clean 7 bill of health. 8 Q. And those repairs were made in August of 9 2005; is that correct? 10 A. Well, we're still working on the effice 11 right now, but I don't think that we're really doing 12 anything other than the effice right now. Yeah. I 13 think that's it. 14 Q. And has Park Cattle also alleged in a 15 counterclaim regarding some of this litigation that 16 these facilities were not maintained in a first-class 17 condition? 18 A. Yes, they did. 19 Q. Is that what -- what is the status of 20 that litigation? 21 A. I think it's going to trial in January. 22 Q. Okay. So that is ongoing; is that 23 correct? 24 A. Yes. Uh-huh. 25 MS. MAHER: Excuse me just one moment. 153 WILLIAM J. YUNG, 1 (Conferring.) 2 Q. I want to turn to the Atlantic City 3 property and talk about that a little bit more. 4 (Conferring.) 5 Q. I'm sorry. I'm going to actually -- 6 strike that and move to something else. 7 I just want to talk to you about Grant 8 Thorton, if I may for a minute. I know you did talk 9 about that in your direct examination. 10 It is your position that you relied upon 11 Grant Thorton in going forth in this tax shelter. 12 Would that be correct? 13 A. Yes. 14 Q. And you retained outside counsel to look 15 at the -- 16 A. Yes. 17 Q. -- deal as well. Before moving forward. 18 And are you aware that when the IRS 19 assessed the penalty involved in this transaction that 20 they cited a failure to disclose involvement in the 21 transaction and report the dividend as income? Are 22 you aware that those things were alleged, that you 23 were less -- that you failed to disclose it, and that 24 you failed to report the dividend as income? 25 A. You have to ask one of the accounting 154 WILLIAM J. YUNG, 1 people that. I'm sorry. I don't know. 2 Q. You're not aware of the IRS's position 3 regarding that? 4 A. I'm aware of the IRS action, but I don't 5 know the specifics of it. 6 Q. Okay. Were you also aware that the 7 IRS's view was that the transaction was entered to 8 receive tax dividends and reliance on the opinions as 9 insulation from a penalty assessment without 10 performing a due diligence, that the IRS looked at the 11 situation that way when they decided what the penalty 12 is? 13 A. Yeah. I haven't heard it that way, but 14 it's clearly not why we did it. 15 Q. Did it ever occur to you that this might 16 be a deal that was too good to be true? 17 A. Well, I don't do anything that's 18 illegal. And they gave us an opinoin that it was 19 legal and nontaxable, and my attorney said it was all 20 right, too. So, you know, I have to base some 21 decisions on people that are -- well, more 22 knowledgeable in facts and -- you know. So we went 23 ahead and did the deal. 24 Q. The IRS's opinion letter also talks 25 about careless -- careless, reckless, and intentional 155 WILLIAM J. YUNG, 1 disregard by purchasing -- or relying upon the Grant 2 Thorton opinion letter without doing due diligence. 3 Do you have a position with regard to that? 4 A. No, I don't. 5 Q. Do you disagree with the IRS? 6 A. I think you need to ask that the 7 accounting people. I just don't know. 8 Q. But did it ever -- never occurred to you 9 that you might have been a little reckless in reliance 10 on a deal that might look too good to be true? 11 A. No. Not at all. I thought it was legal 12 and nontaxable. Or I wouldn't have done it. 13 Q. Okay. I want to talk about the Atlantic 14 City Tropicana a little bit. And you've talked about 15 the ban or the impact of Philadelphia had; is that 16 correct? 17 A. Yes. 18 Q. On the business. And that you 19 miscalculated that; is that correct? 20 A. Yes. 21 Q. So shortly after buying the property, a 22 number of layoffs occurred; is that correct? 23 A. Yes. 24 Q. How many -- let me ask you this. How 25 many people have you laid off since January -- from 156 WILLIAM J. YUNG, 1 January of 2007 to October of 2007? How many people 2 have you laid off the property? Do you know? 3 A. I mean, these numbers are flying around, 4 and there doesn't seem to be a lot of consistency 5 from -- we have some numbers, and I think you have 6 different numbers. But I -- I saw some numbers the 7 other day, and it looks like, from the net difference 8 of total people -- not FTEs, but total people -- it 9 looks like we have a net less of 500 people. 10 Q. 500 people? 11 A. 500 people. 12 Q. And how are you coming up with the 13 number of 500 people? 14 A. Well, we hired about 500, also. So the 15 net amount, there may have been a thousand go, but 16 there was 500 come back. So -- 17 Q. When did these 500 come back? 18 A. Well, I think we can show you when it 19 was, but it was all during this period of time. 20 Q. Can you tell me now when it was? 21 A. If I could have a piece of paper, I can. 22 But I don't have -- I didn't -- 23 Q. You don't have that with you here? 24 A. I think it's -- somebody has it here. 25 Q. Okay. So you're telling me right now 157 WILLIAM J. YUNG, 1 that as of October 2007, you've laid off 500 people? 2 A. No, I'm not. That's not what I said. I 3 said there's a net decline of 500 people from what 4 we-- in other words, we laid off approximately a 5 thousand people. However, we hired during that period 6 500 back, and so there's a net amount gone about 500 7 people. 8 Q. So you've laid off a thousand people? 9 A. Yes. But we've hired back 500 of them. 10 Q. Okay. Because when we took your sworn 11 statement, you indicated that when you were asked how 12 many employees you laid off since January of 2007, you 13 said, I think the number -- the net number of what we 14 laid off and what we hired back is 600. And then you 15 indicated total terminations was probably between 800 16 and a thousand; is that correct? 17 A. If you say. I can't really remember 18 that. But these numbers change between FTEs and total 19 people, and it's getting confusing. 20 Q. Okay. And what are "FTEs"? 21 A. Full-time equivalents. 22 Q. And how does -- how do they work into 23 factoring the number of the layoffs? 24 A. Well, a full-time equivalent is a person 25 that works 40 hours. And so, let's just say you had a 158 WILLIAM J. YUNG, 1 group of people that worked various number of hours. 2 You know, maybe some people work 16 hours. Some 3 people work 40. Some work 24. So you total up all 4 those hours that the people work, and you divide it by 5 40, and that gives you the full-time equivalent. 6 Q. And is this something that you use in 7 all of your properties? 8 A. I never used it until I got here. 9 Q. Okay. And why did you use it when you-- 10 why did you start using it when you got here? 11 A. That's what they were doing. 12 Q. And so you talk about people laying off, 13 you are talking about full-time equivalent or actual 14 people? 15 A. Actual people. 16 MS. MAHER: I've been handed a piece of 17 paper from counsel that I don't believe we have 18 been provided before; is that correct? 19 MR. O'GARA: Yeah. Let me -- because, 20 if I might, Chair, he said if I looked at 21 something, in contemplation of this, like call 22 it litigation or hearing, we sat down and made 23 up something to go through the numbers. It was 24 done internally. Bill referred to it. The 25 director was asking about it, so I gave Mary Jo 159 WILLIAM J. YUNG, 1 a copy of what it was that he was referring to. 2 No one is hiding the ball here or -- 3 MS. MAHER: No. 4 CHAIR KASSEKERT: No. She's not making 5 that accusation. 6 MS. MAHER: No. Suggesting perhaps it 7 can be marked, and Mr. Yung can refer to it. 8 MR. O'GARA: She's used it. I'm kind 9 enough to give it to her. Paul and Bill made 10 up a document so he can look at it and get some 11 numbers. It was never intended to be offered, 12 but if he referenced it. I just gave it to her 13 so she can see it. 14 MS. MAHER: No. And I appreciate that. 15 I'm not accusing anyone of hiding anything. I 16 think perhaps Mr. Yung would need to refer to 17 this if we were to talk about it, and it would 18 have to be marked. 19 CHAIR KASSEKERT: Marked. I agree. 20 MR. NANCE: A-77. A-77. 21 CHAIR KASSEKERT: Should we get copies? 22 MR. O'GARA: But I have one. I mean, I 23 didn't bring this to be an exhibit. 24 CHAIR KASSEKERT: Understood. 25 MR. O'GARA: But I have just one. And 160 WILLIAM J. YUNG, 1 if we're going to have a long how-it-was-done 2 thing, we got a problem, because there's a lot 3 of people involved. It's a litigation type 4 document. But as to numbers, I think the terms 5 explain it perfectly. But I have no objection 6 to marking it. But I can't give you a whole 7 history at this point. 8 CHAIR KASSEKERT: Understood. 9 MS. MAHER: Do you wish copies made 10 before we continue? 11 CHAIR KASSEKERT: I think that would be 12 a good idea. 13 MR. NANCE: Yes. 14 MR. O'GARA: Gladly. I would have brung 15 them if I knew. 16 CHAIR KASSEKERT: You want to take a 17 quick break, and we'll do that? 18 MS. MAHER: Thank you, Chair. 19 CHAIR KASSEKERT: Sure. 20 (A recess was taken from 3:38 to 4:00 21 p.m.) 22 CHAIR KASSEKERT: We'll go back on the 23 record. Thank you. 24 I've just been handed Exhibit A-80. Let 25 me ask if there was any objections to this, the 161 WILLIAM J. YUNG, 1 entire -- 2 MS. MAHER: None. 3 CHAIR KASSEKERT: Obviously -- 4 MR. O'GARA: To the qualification, I 5 don't want to mislead you. The qualification 6 is that, you know, it was not prepared as an 7 exhibit. It was prepared as work -- 8 CHAIR KASSEKERT: Agreed, Mr. O'Gara. 9 MR. O'GARA: May I know -- 10 CHAIR KASSEKERT: If we add up the 11 numbers, and they add up wrong, we know who to 12 blame. 13 MR. O'GARA: You got that right. 14 CHAIR KASSEKERT: Ms. Maher, you may 15 proceed, 16 Q. Mr. Yung, I hand you what we have had 17 marked and admitted as Exhibit A-80. 18 A. Okay. 19 Q. Could you identify that, please? 20 A. This is a -- a chart of the reduction in 21 labor at the Tropicana, including layoffs 22 resignations, firings, and the number we hired. 23 Q. When was this prepared? 24 A. I don't know. I just saw it yesterday. 25 Q. Did you prepare it? 162 WILLIAM J. YUNG, 1 A. No. 2 Q. Do you have any personal knowledge 3 regarding the numbers in it? 4 A. No. 5 Q. So whoever -- you have no idea who 6 prepared it? 7 A. Well, I think that my attorney prepared 8 it and Martine Antonio, but I don't know for sure. 9 Q. And was this a document that you were 10 referencing earlier when I was asking you questions 11 about the number of layoffs? 12 A. Yes. 13 Q. And this is -- the numbers in this 14 document, were the numbers that you were attempting to 15 quote me? 16 A. Yes. 17 Q. So would it be fair to say that you are 18 adapting this particular documents as the correct 19 representation of the number of employees that have 20 been terminated from the Tropicana from the time 21 period of January 3rd of 2007 to October 31st of 2007? 22 A. Yes. 23 Q. And how is it that your comfortable with 24 this document as being representative? 25 A. Well, I have to trust my attorney and 163 WILLIAM J. YUNG, 1 my-- and the general manager there that, you know, 2 that filled it out that, they've done the right thing. 3 Q. And do you know specifically where the 4 numbers were taken from? 5 A. No. Well, I -- no. I don't know. But 6 I think it's from the probably human relations. HR 7 department. 8 Q. And we have -- if I'm correct here, and 9 I'm not good at math so...one, two, three, four, five 10 categories; correct? 11 A. Yes. 12 Q. The first is "reduction in 13 force/layoff"; correct? 14 A. Correct. 15 Q. And that would be people who have been 16 played off pursuant to the Tropicana's reduction in 17 force initiative; correct? 18 A. Correct. 19 Q. And that number is what? 20 A. 500. 21 Q. Now, the next one is a number that 22 reflects "resigned/voluntary terms"? 23 A. Quit. 24 Q. So someone who just -- 25 A. Quit. 164 WILLIAM J. YUNG, 1 Q. Okay. And that number is what, please? 2 A. 443. 3 Q. And that would be the for the time 4 period of January 2007 to October of 2007? 5 A. Correct. 6 Q. Less than a year's time period. About 7 10 months? 8 A. Correct. 9 Q. Does that seem to be an unusually high 10 number of people who have resigned or voluntarily left 11 for that time period, to you, in your experience? 12 A. No. With this many employees, as I was 13 talking to you earlier, my initial thought was that 14 three or 400 were going to resign anyway or quit 15 through attrition. And that's what I was hoping, you 16 know, that would happen here. 17 Q. Well, when you say three or 400 would be 18 taking care of through attrition initially, did you 19 just talk -- were you just considering resignation or 20 voluntary layoffs, or were you also considering people 21 who would be fired for cause? 22 A. No. I figured on the -- on what I was 23 thinking about were the ones who quit. 24 Q. Okay. So when you figured your 25 attrition number that you talked about earlier as 300, 165 WILLIAM J. YUNG, 1 you didn't factor in anyone that had been fired for 2 cause, either? 3 A. No. 4 Q. Okay. And then the next category is 5 "involuntary terminations"; is that correct? 6 A. Firings. 7 Q. People who got fired for cause? 8 A. Correct. 9 Q. And what is that number? 10 A. 376. 11 Q. When you were initially talking about 12 that 300 number back at the beginning of the process 13 and at the beginning of your testimony, and in your 14 testimony to the Commission regarding the ICA, you 15 didn't factor in that people would be fired during 16 this same time frame as well when you came up with 17 your 300 number? 18 A. I'm getting confused on the time period. 19 Q. When you came before the Commission and 20 figured that you would lose approximately 600 people-- 21 A. Oh, a year ago, okay. 22 Q. You would lose approximately -- 23 A. A year ago. 24 Q. You were only factoring that on 25 voluntary resigned or terminated? 166 WILLIAM J. YUNG, 1 A. A year ago I don't think I ever gave a 2 number in front of this Commission on how many I 3 thought it would be. 4 Q. Well, you talked about -- you gave us a 5 number. You talked about 300 through attrition. 6 A. You mean today. 7 Q. Today. 8 A. Today, I did. Yes. 9 Q. Okay. And you never talked about that 10 prior to the Commission before or anyone else before? 11 A. You talking about in the last week or 12 two? Or whatever. 13 Q. No. When you initially presented 14 yourself for the ICA. 15 A. Okay. 16 Q. And you did not indicate that there 17 would be any layoffs; is that correct? You did not 18 propose that. You did not indicate coming in that you 19 would be laying off people? 20 A. Correct. 21 Q. And you figured there that the 300 22 people you would lose pursuant to attrition would 23 adequately address the staffing needs; is that 24 correct? 25 A. I thought it would -- yes. I did. 167 WILLIAM J. YUNG, 1 Uh-huh. 2 Q. And you found out later that you were 3 incorrect about that? 4 A. Yes. 5 Q. And you're saying to me right now that 6 that 300 people number -- that 300 person number you 7 only factored in people that would resign or 8 voluntarily leave? You didn't factor in people that 9 would be fired as well? 10 A. That's correct. 11 Q. Why is that? 12 A. I figured that the workforce would 13 probable -- would probably be lowered more than 300. 14 Q. That -- I'm sorry. I don't understand. 15 A. Well, I thought the firings would add 16 more to it. 17 Q. Right. So why didn't you factor in the 18 firings to that number as well? 19 A. Well, I -- you know, I -- you know, 20 firings, you don't know exactly how many there's going 21 to be. And on layoffs you can sort of count on how 22 many you're going to lay -- you've got control over 23 that. You don't have any control over firings. 24 Q. Wait a minute. Wait a minute. When you 25 factor -- you figured 300 people through attrition. 168 WILLIAM J. YUNG, 1 You're saying, hey, that seems about right because, 2 look, the resigned voluntary terms here is 443. 3 A. Right. 4 Q. That's about right, you're saying? 5 A. Right. 6 Q. But you're saying to me that when you 7 figured your attrition number, you didn't also figure 8 in people that would be fired. Why not? That's 9 something that happens during the normal course of 10 business. 11 A. I don't know what to tell you. You 12 know, it's -- I figured we were going to lay off 13 approximately 300 people and that would come by 14 attrition. I figured there were probably going to be 15 some more in firings. 16 Q. And you didn't factor that number in, 17 though? 18 A. What do you mean, I didn't factor it in? 19 To what? 20 Q. To your 300. You just told me the only 21 thing you figured into your 300 person calculation was 22 were people that left voluntarily. 23 A. Well, okay. So they're going to be in 24 there. 25 Q. No. That's not what you said, though. 169 WILLIAM J. YUNG, 1 My question is because if you add these two numbers 2 together, it's far greater than the number you would 3 have normally figured that would have been handled 4 through attrition. It's over double that. 5 A. Well, what I meant by "attrition" is the 6 amount of people that would voluntarily quit. 7 Q. And you didn't factor in people that 8 would be fired? 9 A. No. 10 Q. And then the next column is "total 11 terminations"; is that correct? 12 A. Yes. 13 Q. That would be adding all these columns 14 together? 15 A. Correct. 16 Q. And that would be 1300 -- 1,319 people. 17 A. Right. 18 Q. And then you indicate you had hired back 19 422? 20 A. Right. 21 Q. Now, again, my math is not good, but if 22 I am correct, that gives you a total number of 23 terminations of nearly 900, 897. Does that sound 24 correct? If I subtract 422 from 1,319. 25 A. So what's your question? It's 170 WILLIAM J. YUNG, 1 approximately -- 2 Q. Total terminations. From January 3 2000 -- 4 A. From firings, quits, and reductions, 5 it's about 900 people. 6 Q. Correct. 7 A. Right. 8 Q. And you indicate -- does it seem to you 9 that -- you've indicated that the resigned voluntary 10 terminations number did not seem to be an unduly large 11 number to you; correct? 12 A. Not with 5,000 people. 13 Q. And how many people did you have 14 initially? 15 A. About 5,000. 16 Q. Would 4,155 sound correct? 17 A. I don't know for sure. But I thought it 18 was 5,000. 19 Q. Wouldn't -- if taking the number of 20 4,155 employees when you started in January of 2007, 21 over ten percent of your workforce -- 22 A. Full-time. 23 Q. -- resigned? 24 A. Full-time employees? Full-time 25 equivalents? 171 WILLIAM J. YUNG, 1 Q. People. 2 A. People. Okay. 3 Q. How many people? 4 A. So what's your question? 5 Q. If you take -- if you had -- if you take 6 it as correct that you had 4,155 employees when you 7 started your ownership of the Tropicana -- 8 A. Uh-huh. 9 Q. -- and within ten months, 443 resigned 10 or left voluntarily, you've lost ten percent of your 11 workforce? 12 A. That's true. 13 Q. They just left? 14 A. That's true. 15 Q. And you don't think that's a 16 significant -- 17 A. No. 18 Q. Or large? 19 A. No. 20 Q. You nearly -- and nearly ten percent 21 were voluntarily terminated as well; is that correct? 22 Again, working on those numbers? 23 A. "Voluntary" you mean quit? 24 Q. No. 25 A. Ten percent quit. About eight percent 172 WILLIAM J. YUNG, 1 were fired. 2 Q. Okay. And over ten percent were laid 3 off then. With that 500 number? 4 A. Yes. 5 Q. Your workforce has been decreased by 6 approximately a quarter as the Division maintains. 7 A. It could be. I don't know exactly what 8 the number is, but it's been significantly reduced. 9 Q. Well, are you -- it looks like we do 10 know exactly what the numbers are. 11 A. No, we don't. Because we don't know 12 what the total is to give begin with. 13 Q. You don't know what the total is to 14 begin with? 15 A. Well, I'm sorry. I don't have that 16 those facts right with me. But if you've got a number 17 there, I can do the arithmetic for you. 18 Q. You didn't come prepared today to talk 19 about how many employees you started with? 20 A. I have no idea what's in your mind or 21 what questions you're going to ask me. I'm not a mind 22 reader. I don't what you're going to ask me. 23 Q. But you're the person in charge of the 24 layoffs; right? You're it. It stops with you; right? 25 A. Yes. 173 WILLIAM J. YUNG, 1 Q. And you're making the decisions who to 2 layoff and how to -- 3 A. No. I'm making number decision. I 4 don't make the decision who goes. 5 Q. But you're making the numbers decisions? 6 A. I think generally. Yes. Uh-huh. 7 Q. And in making those decisions, you 8 didn't know or don't know today how many employees you 9 started off with? 10 A. Not specifically. I do not know that. 11 Sorry. 12 Q. Okay. Now, in August of 2007, would it 13 be correct that you proposed that 320 more people be 14 laid off; is that correct? 15 A. I think so. Yes, we talked to the 16 Commission on that. Yeah. 17 Q. Okay. 320 more people; correct? Than 18 you had already laid off previously? 19 A. Yes. 20 Q. What drove this? Why did you at that 21 point propose to layoff 320 more people? 22 A. The business was really declining. Very 23 quickly. 24 Q. Okay. And so based on numbers, again, 25 to get -- recoup the money from the business, you 174 WILLIAM J. YUNG, 1 proposed these layoffs? 2 A. Yes. 3 Q. And did you dialog with the regulators 4 regarding these layoffs? 5 A. Yes. 6 Q. You were required to dialog with the 7 regulators; correct? 8 A. I'm not sure if that's right. 9 Q. And what was the reaction? 10 A. I -- during the meeting they -- the one 11 that I was there, they -- you know, they listened to 12 me, and they really didn't say anything. So I think 13 they kept their counsel to themselves. 14 Q. Would it be fair to say that the 15 regulators did not have a positive reaction to your 16 320 layoffs? 17 A. I don't think anybody likes to hear 18 there needs to be more layoffs. I would think that, 19 yeah, you're probable accurate that they probably 20 didn't like that. I would say so. 21 Q. And you understood that to be the case. 22 Would that be correct? 23 A. I don't know whether I understood that 24 to be the case or not. I never really thought about 25 it. 175 WILLIAM J. YUNG, 1 Q. Well, what was your opinion? Did the 2 regulators react badly to the proposed 320 layoffs? 3 A. I don't know. You know, I don't know 4 whether they reacted badly. They may have reacted 5 badly on their own counsel, but they were -- you know, 6 they didn't scream or holler or do anything. You 7 know, they were polite to me. And, you know, we went 8 on with the business. 9 Q. Well, less than a month later, however, 10 this proposed 320-person layoff was reduced to 40; 11 correct? 12 A. I'm not sure. I'm not sure about that 13 number. 14 Q. You're not sure about that? 15 A. No. I'm not sure. 16 Q. You're the guy, though; right? You're 17 in charge of layoff. You -- 18 A. I also run 85 other properties, too. I 19 don't know every other detail. 20 Q. Okay. 21 A. I have other people, you know, vice 22 presidents of casino and hotels and everything. 23 Accounting. You know, I -- I'm sorry. I'm just not a 24 super person that knows every detail. 25 Q. Would it be fair to say that the number 176 WILLIAM J. YUNG, 1 of layoffs were significantly reduced a month later? 2 Number of proposed layoffs were significantly reduced? 3 A. I think so. Yes. 4 Q. Are you aware of that? 5 A. I think so. Yes. Yes. 6 Q. But you're not sure of the numbers? 7 A. I'm not sure of the numbers. 8 Q. I want to talk about the 320 that were 9 proposed, 70 of those employees were to be reduced in 10 the security department; is that correct? 11 A. I believe so. 12 Q. And what made you decide that it would 13 be appropriate to reduce 70 positions in the security 14 department? 15 A. I think the rationale on that was that 16 there were approximately 105 that were required to 17 cover all the things by the regulators. And that what 18 we did is put about 15 more people on top of that and 19 came down to that number. 20 Q. Down -- that you would reduce it by 70? 21 A. Right. 22 Q. Did you make any comparisons to any 23 other properties? 24 A. Yeah. 25 Q. In what properties were -- 177 WILLIAM J. YUNG, 1 A. I think we did with Harrah's. 2 Q. Showboat; is that correct? 3 A. I think so. Yes. 4 Q. Now, is it your position that Showboat's 5 comparable in size to the Tropicana? 6 A. No. 7 Q. It isn't? 8 How is it that you could compare -- and 9 you testified earlier, correct, that Tropicana has the 10 largest hotel casino facility in the city; is that 11 correct? 12 A. Yes. 13 Q. How can you compare what you need 14 security officer wise at the Tropicana to the 15 Showboat? 16 A. Well, you have requirements that the 17 casino Commission requires, and then you -- you put 18 people in those positions. And then you put people in 19 other positions that you feel that are necessary to 20 do. 21 Q. But what does that have to with how many 22 security officers or security guards the Showboat had? 23 A. Well, it's a -- it's fairly comparable 24 property. It's one of the few properties we could get 25 some information on. 178 WILLIAM J. YUNG, 1 Q. And is that why you used that property 2 just because you could get some information on it? 3 A. Yeah. Uh-huh. Yes. 4 Q. Okay. Thank you. 5 MS. MAHER: Nothing further. Thank you 6 CHAIR KASSEKERT: Okay. Let me ask you. 7 I know that the Commissioners have questions, 8 and it is 20 after 4:00. My recommendation 9 would be that we break now. And, 10 unfortunately, Mr. Yung, we're going to need 11 you to come back tomorrow. 12 THE WITNESS: Okay. 13 CHAIR KASSEKERT: We have our regularly 14 scheduled public meeting scheduled for 10:30 15 tomorrow morning. Giving the Commissioners a 16 break and time to set up, let me ask if a 12:30 17 start time for the Tropicana portion that is on 18 the agenda tomorrow would be agreeable? 19 MR. O'GARA: Fine. 20 MS. FLAHERTY: Yes, ma'am. 21 CHAIR KASSEKERT: Okay. Why don't we 22 recess now? 23 I don't think we -- do we need to have a 24 motion to adjourn or just recess it? 25 MR. NANCE: Recess. 179 1 CHAIR KASSEKERT: Yes? Motion to 2 adjourn. I'm sorry? 3 MS. FAUNTLEROY: You should adjourn 4 because tomorrow -- 5 CHAIR KASSEKERT: Because tomorrow we 6 have a public meeting anyway. 7 All right. Let me ask you if there's a 8 motion to adjourn? 9 COMMISSIONER SOMMELING: Motion to 10 adjourn. 11 VICE CHAIR FEDORKO: Second. 12 CHAIR KASSEKERT: The motion has been 13 made and seconded. All in favor? 14 (Ayes.) 15 CHAIR KASSEKERT: Opposed? 16 (No response.) 17 CHAIR KASSEKERT: Motion carries. 18 (The special meeting was adjourned at 19 4:17 p.m.) 20 21 22 23 24 25 180 1 2 C E R T I F I C A T E 3 4 5 I, DARLENE SILLITOE, a Certified Court 6 Reporter and Notary Public of the State of New 7 Jersey, certify that the foregoing is a true 8 and accurate transcript of the proceedings. 9 10 11 I further certify that I am neither 12 attorney, of counsel for, nor related to or 13 employed by any of the parties to the action; 14 further that I am not a relative or employee of 15 any attorney or counsel employed in this case; 16 nor am I financially interested in the action. 17 18 19 DARLENE SILLITOE CCR 20 License No XI01023 21 22 Dated: November 20, 2007 23 My Commission Expires on July 10, 2009 24 ID No 2062871 25