1 1 STATE OF NEW JERSEY 2 CASINO CONTROL COMMISSION 3 - - - - - - - - - - - - - - - - - - - 4 5 PUBLIC MEETING NO. 07-11-21 6 7 - - - - - - - - - - - - - - - - - - - 8 9 Wednesday, November 21, 2007 10 Atlantic City Commission Offices 11 Joseph P. Lordi Public Meeting Room - First Floor 12 Tennessee Avenue and Boardwalk 13 Atlantic City, New Jersey 08401 14 10:30 a.m. to 5:05 p.m. 15 16 17 Certified Court Reporter: Darlene Sillitoe 18 - - - - - - - - - - - - - - - - - - - - - - - - - - - 19 20 ATLANTIC CITY COURT REPORTING, LLC 21 CERTIFIED SHORTHAND REPORTERS AND VIDEOGRAPHERS 22 1125 ATLANTIC AVENUE, SUITE 416 23 ATLANTIC CITY, NEW JERSEY 08401 24 (609) 345-8448 www.accourtreporting.com 25 2 1 2 B E F O R E : 3 CASINO CONTROL COMMISSION: LINDA M. KASSEKERT, CHAIR 4 MICHAEL A. FEDORKO, VICE CHAIR MICHAEL C. EPPS, COMMISSIONER 5 RALPH G. FRULIO, COMMISSIONER WILLIAM T. SOMMELING, COMMISSIONER 6 PRESENT FOR THE CASINO CONTROL COMMISSION: 7 DARYL W. NANCE, ADMINISTRATIVE ANALYST DANIEL J. HENEGHAN, PUBLIC INFORMATION OFFICER 8 OFFICE OF THE GENERAL COUNSEL: 9 DIANNA W. FAUNTLEROY, GENERAL COUNSEL/EXECUTIVE SECRETARY 10 LEONARD J. DIGIACOMO, ASSISTANT GENERAL COUNSEL MARY WOZNIAK, ASSISTANT GENERAL COUNSEL 11 STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL SETH H. BRILIANT, SENIOR COUNSEL 12 BERNADETTE T. FRIGEN, PROGRAM SUPERVISOR CLAIRE FRANK, PROGRAM SUPERVISOR/SENIOR EEO 13 COORDINATOR 14 DIVISION OF LICENSING DORIS MANZANO, SECRETARIAL ASSISTANT/INTERPRETER 15 DIVISION OF GAMING ENFORCEMENT: 16 DEPUTY ATTORNEYS GENERAL BRIAN BISCIEGLIA, DEPUTY ATTORNEY GENERAL 17 JAMES FOGARTY, DEPUTY ATTORNEY GENERAL 18 19 20 21 22 23 24 25 3 1 A P P E A R A N C E S : 2 ITEM NO. 7 MARY WOZNIAK, ASSISTANT GENERAL COUNSEL JAMES FOGARTY, DEPUTY ATTORNEY GENERAL 3 TIMOTHY J. LOWRY, ESQ. FOR: HARRAH'S OPERATING COMPANY, ET AL 4 ITEM NO. 8 CLAIRE FRANK, PROGRAM MANAGER 5 JAMES FOGARTY, DEPUTY ATTORNEY GENERAL NICHOLAS CASIELLO, JR., ESQ. 6 FOR: MGM MIRAGE 7 ITEM NO. 10 LEONARD J. DiGIACOMO, ASSISTANT GENERAL COUNSEL 8 STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL 9 YVONNE G. MAHER, ACTING DIRECTOR MARYJO FLAHERTY, DEPUTY ATTORNEY GENERAL 10 STERNS & WEINROTH, PC 11 BY: PAUL M. O'GARA, ESQ. AND: GRAIG P. CORVELEYN, ESQ. 12 FOR: TROPICANA ENTITIES 13 MICHAEL & CARROLL BY: GUY S. MICHAEL, ESQ. 14 COOPER LEVENSON 15 BY: LLOYD D. LEVENSON, ESQ. AND: LYNNE KAUFMAN, ESQ. 16 17 18 19 20 21 22 23 24 25 4 1 AGENDA PUBLIC MEETING NO. 07-11-21 2 NOVEMBER 21, 2007, 10:30 a.m. ITEM PAGE VOTE 3 1 Ratification of the minutes of 16 17 October 31, 2007 4 2 Remand for hearings 21 applications 17 17 Grant 11 license applications 17 18 5 Consideration for applications for initial and/or renewal of casino key 6 employee licenses and for qualification: Mary J. Volturo, Director of Surveillance 18 19 7 for Trump Taj Mahal Associates, LLC Joseph C. Watson, Vice President of 18 19 8 National Marketing for Boardwalk Regency Corporation 9 Consideration of qualification of 19 20 Heather R. Rollo in connection with the 10 gaming related casino services industry license of Progressive Gaming International 11 Corp., pursuant to NJAC 19:51-1.14B(h) 3 Stipulations of settlement and consent agreement: 12 a) Panayota Plamantouras (07-0437-ER) 20 22 b) Ja'Mee L. Johnson (06-0488-ER) 20 22 13 c) David K. Banks (07-0192-EA) 20 22 d) Michael A. McClendon (07-0623-EA) 20 22 14 e) David R. Miller (07-0689-EA) 20 22 f) Gregory Robertson (07-0657-EA) 20 22 15 g) Movita C. Terrell (07-0340-EA) 20 22 h) Wilbert Vincent, Jr. (07-0676-EA) 20 22 16 i) Rasheeda A. Anderson (07-0328-EA) 20 22 j) Andre A. Owens (07-0138-EA) 20 22 17 4 Initial decision in State v. Mark J. 23 24 Mutko (05-0486-RC) 18 5 Application for suspension of: a) Sean R. Martin (07-0690-RC) 25 27 19 b) Jeffrey J. Ebert (07-0714-RC) 25 27 c) Austin P. Johnson-Brown, Jr. 25 27 20 (07-0718-RC) d) Robert A. McEwen (07-0717-RC) 25 27 21 e) Paul F. Parks, Jr. (07-0716-RC) 25 27 f) Matthew R. Weyler (07-0713-RC) 25 27 22 g) Joseph Wishnick (07-0715-RC) 25 27 6 Petition of Caremark PCS Health, LP, for adj. 23 an exemption from CSI licensure (PRN 1910707) (VP Total Rewards Externalization and 24 International Marketing) (PRN 3110706) 25 5 1 CONTINUED AGENDA PUBLIC MEETING NO. 07-11-21 2 NOVEMBER 21, 2007, 10:30 a.m. ITEM PAGE VOTE 3 7 Petition of Harrah's Operating Company, 28 29 Inc. (HOC), Marina Associates, Atlantic 4 City Showboat, Inc., Bally's Park Place and Boardwalk Regency Corp. for a waiver of 5 qualification for an officer of HOC 8 Consideration of the qualification of 33 34 6 Daniel J. Taylor to serve as a member of MGM Mirage's Board of Directors in 7 connection with casino license of Marina District Development Company, LLC 8 9 Petition of Diamond Gaming, LLC and 35 36 Trump Taj Mahal Associates (d/b/a Trump Taj 9 Mahal Casino Resort) for approval of "Diamond Roulette" pursuant to NJAC 19:47-8.4 10 (PRN 2480706) 10 Petition of Adamar of New Jersey, Inc., 37 11 for renewal of its casino license and casino hotel alcoholic beverage license and 12 Other matters (RN 2140705; and Consideration of the application of Tropicana 13 Casinos and Resorts, Inc., (formerly known as Wimar Tahoe Corporation) for plenary 14 qualification as a holding company of Adamar of New Jersey, Inc. 15 11 Petition of Marina District Development 30 32 Company, LLC, for a waiver of the qualification 16 requirement for Mary Siero, an officer of Boyd Gaming Corporation (PRN 2760701) 17 18 19 20 21 22 23 24 25 6 1 E X H I B I T S : 2 ITEM NO. 2 DESCRIPTION EVD 3 4 EL-1 Remand for hearings 21 license X applications 5 EL-2 Grant 11 licenses X 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (Exhibits retained by Commission.) 25 7 1 I N D E X : 2 WITNESS: Direct Cross Redirect Recross 3 4 WILLIAM J. YUNG, III 5 By Mr. O'Gara 73, 95 6 By Ms. Maher 80 7 8 JOHN G. JACOB 9 By Mr. O'Gara 97 153 10 By Ms. Flaherty 106 154 11 12 MARK GIANNANTONIO 13 By Mr. Levenson 156 237 14 By Ms. Maher 181 15 16 17 18 19 20 21 22 23 24 25 8 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 Memorandum, 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 X to Richard Carrettare 16 D-15 DGE Memorandum, 8-14-07, Michael Scotten X to Richard Iannacone 17 D-16 DGE Memorandum, 8-14-07, Lauren Massara X to Richard Iannacone 18 D-17 Fred Buro Interview Outline by Thomas X 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 CONTINUED: E X H I B I T S : 9 1 Division No. Description EVD 2 D-26 Revised Agenda, 6-7-07, Indiana X 3 Gaming Commission D-27 LexisNexis Article, 9-13-07 X 4 D-28 Evansville Courier and Press, 9-13-07 X D-29 Evansville Courier and Press, 8-12-07 X 5 D-30 Letter, 9-23-07, William J. Yung, III, to X Lonna Willingham 6 D-31 Chart of Violation Numbers/Chart of X Violations 7 D-32 Louisiana Gaming Control Board Notice of X Recommendation of Administrative Action, 8 12-27-05 D-33 Louisiana Gaming Control Board Notice of X 9 Recommendation of Administrative Action, 3-8-06 10 D-34 E-mail, 5-9-06, Kelly Duncan to Vivian Raby X D-35 Louisiana Gaming Control Board Notice of X 11 Decision and Order, 6-20-06 D-36 Louisiana Gaming Control Board Notice of X 12 Decision and Order, 8-15-06 D-37 Louisiana Gaming Control Board Order, X 13 10-17-06 D-38 Letter, 1-26-06, Nevada Gaming Control Board X 14 to William J. Yung, III, D-39 Park Cattle Company's Amended Counterclaim, X 15 6-15-07 D-40 DGE Interview Report, 1-11-07, X 16 Re: Marvin Cato D-41 DGE Interview Report, 7-11-07, X 17 Re: Charles Cato D-42 Rainbow Capital Requirements Ownership X 18 Information D-43 Letter, 3-20-07, William J. Yung, III, to X 19 Marvin Cato D-44 Letter, 8-7-02, Thomas A. Ryder to Ken Ibsen X 20 D-45 Letter, 10-9-02, Paul S. Pilecki to Thomas X A. Ryder 21 D-46 Letters, 11-1-02, Paul S. Pilecki to Thomas X A. Ryder 22 D-47 Consent to Assessment of Civil Money Penalty X 5-23-03, Re: Greenville Riverboat 23 D-48 Letter, 5-27-03, Alma Angotti to Paul X Pilecki 24 D-49 Copy of Check 100475160, Huntington X National Bank 25 10 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 Investigation Report, 8-16-07 X 4 D-52 Commission Opinion, 7-13-83, Re: Bally's X Manufacturing 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. Marquez 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 11 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 12 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 11 Hughes, Re: Rumors of Layoffs A-36 E-mail of 6-27-07, Tama Hughes to Carol X 12 Defoor, Mitch Schwefel, Dianna Fauntleroy, Re: AC Press Letter 13 A-37 E-mail of 7-3-07, Tama Hughes to Carol X Defoor and George Homa, Re: Self Report, 14 Task Force Personnel and Response A-38 E-mail of 7-3-07, Tama Hughes to Carol X 15 Defoor and George Homa, Re: Task Force Summary A-39 E-mail of 7-6-07, Tama Hughes to Carol X 16 Defoor, Mitch Schwefel, Richard Handzo, Re: RIF advisement 17 A-40 E-mail of 7-6-07, Tama Hughes to Carol X Defoor, Mitch Schwefel, Richard Handzo, 18 Re: RIF A-41 E-mail of 7-18-07, Tama Hughes to Carol X 19 Defoor, Mitch Schwefel, Richard Handzo, Re: RIF Advisement 20 A-42 E-mail of 7-18-07 Tama Hughes to Carol X Defoor, Mitch Schwefel, Richard Handzo, 21 Re: RIF A-43 E-mail of seven 20 seven, Tama Hughes to X 22 Carol Defoor, Andy Fiorentino, Mario DeGuiseppe, Re: Slot Tech Impact Analysis 23 A-44 E-mail of 7-20-07, Tama Hughes to Carol X Defoor, Mitch Schwefel, Rich Handzo, 24 Re: Revised RIF advisement A-45 E-mail of 7-20-07, Tama Hughes to Carol X 25 Defoor, Mitch Schwefel, Rich Handzo, Re: Reductions 13 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 14 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 X A-78 Photograph X 14 A-79 Photograph X 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.) 15 1 (Public Meeting 07-11-21 was commenced 2 at 10:30 a.m.) 3 MR. NANCE: I'd like to read an opening 4 statement: 5 This is to advise the general public 6 that in compliance with Chapter 231 of the 7 Public Laws of 1975 entitled the "Open Public 8 Meetings Act," the New Jersey Casino Control 9 Commission on October 16th, 2006, filed with 10 the Secretary of State at the State House in 11 Trenton an annual meeting schedule. On October 12 16th, copies were mailed to the Press of 13 Atlantic City, the Newark Star Ledger. 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 or 17 distracting to the Commission. 18 The use of cellular telephones in the 19 public meeting room while the Commission is in 20 session is prohibited. 21 Any members of the public who wish to 22 address the Commission will be given the 23 opportunity to do so before the Commission 24 adjourns for the day. 25 Please stand for the Pledge of 16 ITEM NO. 1 1 Allegiance. 2 (The flag salute was recited.) 3 CHAIR KASSEKERT: Good morning. 4 MR. NANCE: Good morning. 5 The matters discussed in closed session 6 were: Employee and enterprise license matters. 7 The Commissioners approved the October 8 31, 2007, closed session minutes. 9 Litigation update regarding: Warren 10 Lackland and Lewis M. Springer, Jr., versus 11 State of New Jersey, Casino Control Commission; 12 Gloria Ford versus the State of New 13 Jersey, Casino Control Commission, et al.; 14 Tyron J. Floyd versus the Casino Control 15 Commission and Sand Hotel Casino; 16 Husain versus Casino Control Commission, 17 et al.; 18 And in the matter of petition of SD for 19 removal from the voluntary self-conclusion 20 list. 21 Item No. 1, ratification of the minutes 22 of October 31st, 2007, public meeting. 23 COMMISSIONER SOMMELING: Move to 24 approve. 25 VICE CHAIR FEDORKO: Second. 17 ITEM NO. 2 1 CHAIR KASSEKERT: The motion has been 2 made and seconded. All in favor? 3 (Ayes.) 4 CHAIR KASSEKERT: Opposed? 5 (No response.) 6 CHAIR KASSEKERT: Motion carries. 7 MR. NANCE: Item No. 2, application for 8 employee and casino service industry licenses. 9 This agenda item will be entered as Exhibit 10 List 1 and 2. 11 Exhibit List 1 consists of 21 12 applications for initial and/or renewal of 13 casino key or employee licenses. 14 The Division has objected to licensure. 15 COMMISSIONER FRULIO: Motion to remand 16 for hearings. 17 VICE CHAIR FEDORKO: Second 18 CHAIR KASSEKERT: The motion has been 19 made and seconded. All in favor? 20 (Ayes.) 21 CHAIR KASSEKERT: Opposed? 22 (No response.) 23 CHAIR KASSEKERT: Motion carries. 24 MR. NANCE: Exhibit List 2 consists of 25 11 applications for initial and/or renewal of 18 ITEM NO. 2 1 casino key and casino employee licenses. 2 Staff and the Division has recommended 3 that these licenses be granted. 4 COMMISSIONER FRULIO: Motion to grant 5 applications. 6 VICE CHAIR FEDORKO: Second. 7 CHAIR KASSEKERT: The motion has been 8 made and seconded. All in favor? 9 (Ayes.) 10 CHAIR KASSEKERT: Opposed? 11 (No response.) 12 CHAIR KASSEKERT: Motion carries. 13 MR. NANCE: For consideration are the 14 following applications for initial and/or 15 renewal of casino key employee licenses and for 16 qualification: For Mary J. Volturo, Director 17 of Surveillance for Trump Taj Mahal Associates, 18 LLC; and Joseph C. Watson, Vice President of 19 National Marketing for Boardwalk Regency Corp. 20 Staff and the Division have recommended 21 that these applications be granted. 22 COMMISSIONER FRULIO: Motion to grant 23 initial renewal and key licenses and for 24 qualification. 25 VICE CHAIR FEDORKO: Second. 19 ITEM NO. 2 1 CHAIR KASSEKERT: Motion is made and 2 seconded. This is a roll call vote. 3 MR. NANCE: Commissioner Sommeling? 4 COMMISSIONER SOMMELING: Yes. 5 MR. NANCE: Commissioner Epps? 6 COMMISSIONER EPPS: Yes. 7 MR. NANCE: Commissioner Frulio? 8 COMMISSIONER FRULIO: Yes. 9 MR. NANCE: Vice Chair Fedorko? 10 VICE CHAIR FEDORKO: Yes. 11 MR. NANCE: Chair Kassekert? 12 CHAIR KASSEKERT: Yes. 13 MR. NANCE: The record will reflect that 14 the motion is unanimous. 15 For consideration is the qualification 16 of Heather R. Rollo in reconnection with the 17 gaming related casino services industry license 18 of Progressive Gaming International Corp., 19 pursuant to NJAC 19:51-1.14B(h). 20 Staff and the Division have recommended 21 that this application be granted. 22 COMMISSIONER FRULIO: Motion to find 23 Heather R. Rollo plenarily qualified in 24 connection with the gaming related casino 25 service industry license of Progressive Gaming 20 ITEM NO. 3 1 International, Corp. 2 VICE CHAIR FEDORKO: Second. 3 CHAIR KASSEKERT: The motion has been 4 made and seconded. All in favor? 5 (Ayes.) 6 CHAIR KASSEKERT: Opposed? 7 (No response.) 8 CHAIR KASSEKERT: Motion carries. 9 MR. NANCE: Item No. 3, stipulation of 10 settlement and consent agreements. 11 When I call your name, please come 12 forward, stand behind this middle table, 13 spreading across the room so that you may be 14 seen: Panayota Plamantouras, Ja'mee Johnson, 15 David Banks, Michael McClendon, David Miller, 16 Gregory Robertson, Movita Terrell, Wilbert 17 Vincent, Jr., Rasheeda Anderson, and Andre 18 Owens. 19 CHAIR KASSEKERT: Has everyone whose 20 name been called come forward at this time? 21 I'm going to ask that you each state 22 your name for the record, beginning with you, 23 sir. 24 MR. BANKS: David Banks. 25 MR. VINCENT: Wilbert Vincent. 21 ITEM NO. 3 1 MR. MILLER: David Miller. 2 MR. McCLENDON: Michael McClendon. 3 CHAIR KASSEKERT: Thank you. 4 Let me ask if any of the individuals 5 that just came in, are you here for 6 stipulations? 7 Thanks, Bernadette. 8 (Conferring.) 9 CHAIR KASSEKERT: Come forward. 10 MS. FRIGEN: That is 3a. 11 CHAIR KASSEKERT: Okay. 3a. So you're 12 Mr. Plamantouras? Sir? 13 MR. NANCE: Come. 14 (Conferring.) 15 MS. FRIGEN: Doris, could you help this 16 gentleman? 17 MS. MANZANO: No, that's not him. 18 MS. FRIGEN: He can have a seat. And 19 when I'm done my matter, we can go back and see 20 what that's about. 21 CHAIR KASSEKERT: Thanks, Bernadette. 22 Thank you. 23 All right. In a moment we are going to 24 vote on the stipulations which you've agreed to 25 with the Division of Gaming Enforcement. 22 ITEM NO. 3 1 I'm going to ask at this point if any of 2 you wish to be heard on your matter. You don't 3 wish have to say anything if you don't want to. 4 Does anybody wish to be heard? 5 FROM THE FLOOR: No. 6 CHAIR KASSEKERT: Okay. Thank you. 7 MR. BISCIEGLIA: Thank you. Good 8 morning, Chair, Commissioners. 9 The Division has nothing to add and we 10 ask that the stipulations of settlement be 11 adopted as submitted. 12 CHAIR KASSEKERT: Thank you. 13 Any questions? 14 VICE CHAIR FEDORKO: Motion to grant 15 stipulations. 16 COMMISSIONER EPPS: Second. 17 CHAIR KASSEKERT: The motion has been 18 made and seconded. All in favor? 19 (Ayes.) 20 CHAIR KASSEKERT: Opposed? 21 (No response.) 22 CHAIR KASSEKERT: Motion carries. 23 Thank you very much for coming. Good 24 luck. 25 FROM THE FLOOR: Thank you. 23 ITEM NO. 4 1 FROM THE FLOOR: Thank you. 2 MR. NANCE: Item No. 4, initial decision 3 in State versus Mark Mutko. 4 Mr. Ingis? 5 MR. INGIS: Good morning, Madame Chair, 6 Commissioners. 7 Before you today is an initial decision 8 of Commissioner Sommeling which recommends the 9 revocation of Mr. Mutko's casino service 10 employee registration and also the prohibition 11 of employment by a casino licensee in any 12 capacity. 13 I note the presence of Brian Biscieglia 14 for the Division, and I would ask if Mr. Mutko 15 is present or represented today? 16 Apparently not, although he was 17 represented by counsel below, Mark Roddy. I 18 have not received any indication of whether Mr. 19 Roddy was scheduled to appear, but no 20 exceptions were filed in this case. 21 CHAIR KASSEKERT: Okay. 22 Mr. Biscieglia? 23 MR. BISCIEGLIA: Thank you. 24 As Mr. Ingis has stated, no exceptions 25 have been filed in this matter, and we ask that 24 ITEM NO. 5 1 the initial decision be adopted as written. 2 Thank you. 3 CHAIR KASSEKERT: Thank you. 4 Any questions? 5 VICE CHAIR FEDORKO: Motion to adopt the 6 initial decision and revoke Mr. Mutko's casino 7 service employee registration and prohibit him 8 from employment by a casino licensee in any 9 capacity. 10 COMMISSIONER FRULIO: Second. 11 CHAIR KASSEKERT: The motion has been 12 made and seconded. All in favor? 13 (Ayes.) 14 CHAIR KASSEKERT: Opposed? 15 (No response.) 16 CHAIR KASSEKERT: Motion carries. 17 MR. NANCE: Item No. 5, application for 18 suspension for Sean Martin, Jeffrey Ebert, 19 Austin Brown, Jr., Robert McEwen, Paul Parks, 20 Jr., Matthew Weyler, and Joseph Wishnick. 21 Miss Frigen? 22 MS. FRIGEN: Good morning, Madame Chair, 23 Commissioners. 24 I would bring to your attention with 25 respect to Jeffrey Ebert, we have been in 25 ITEM NO. 5 1 communications with his attorney, Joseph Levin 2 who advised they are not contesting the 3 application for suspension. They are reserving 4 the right to a final hearing on this complaint. 5 Let me ask whether any of the other 6 individuals who were just named are present or 7 represented? 8 Apparently they are not. 9 CHAIR KASSEKERT: Thank you. 10 Mr. Biscieglia?. 11 MR. BISCIEGLIA: Thank you. 12 If I may, Commissioners, may we handle 13 Item A separately from the -- 14 CHAIR KASSEKERT: Sure. 15 MR. BISCIEGLIA: From the other items. 16 In regard to Mr. Martin, Item a, the 17 only thing the Division would add is that this 18 is currently pending a court date in the 19 Atlantic City Municipal Court on November 26, 20 2007. 21 In regards to b through g, these 22 applications for suspension are a result of the 23 November 14th arrests made in the Borgata 24 gambling ring that has been much publicized in 25 the news. 26 ITEM NO. 5 1 The individuals involved -- I just want 2 to briefly touch on the charges that have been 3 brought against them. 4 Mr. Jeffrey Ebert was a dealer at the 5 Borgata. He has been charged with criminal 6 usury, second degree, and promoting gambling, 7 third degree. 8 All of the applications for suspension b 9 through g, the Respondents were members of a 10 sports betting ring at the Borgata. In 11 addition, Mr. Ebert also offered to loan 12 betters involved in the ring money at an 13 interest rate in the excess of 50 percent. 14 Mr. Joseph J. Wishnick was a poker room 15 foreperson. He has been charged with promote 16 gambling, third degree. 17 Mr. Austin Johnson-Brown, Jr., was a 18 poker dealer at the Borgata. He was charged 19 with promoting gambling, third degree. 20 Mr. Robert A. McEwen was also a poker 21 dealer at the Borgata. He was also charged 22 with promoting gambling, third degree. 23 Mr. Paul Parks is not employed in the 24 industry at this period. He has been charged 25 with promoting gambling, third degree. 27 ITEM NO. 5 1 And, finally, Mr. Matthew R. Weyler is a 2 bartender at the Borgata, and he has been 3 charged with promoting gambling, third degree. 4 Obviously, these charges are very 5 serious. This is just the beginning of an 6 ongoing investigation, but the seriousness of 7 these charges dictates the suspension of these 8 individuals. 9 Thank you. 10 CHAIR KASSEKERT: Thank you. 11 Any questions of Mr. Biscieglia? 12 Do you want a separate motion on A or -- 13 MR. BISCIEGLIA: No. I just wanted to 14 address them separately. 15 CHAIR KASSEKERT: Address them, 16 separately, 17 MR. BISCIEGLIA: Since B through G -- 18 CHAIR KASSEKERT: Okay. 19 MR. BISCIEGLIA: -- was part of the same 20 series of arrests. 21 CHAIR KASSEKERT: Thank you. 22 COMMISSIONER SOMMELING: Madame Chair, 23 move to suspend the credentials of the parties 24 on record a through g. 25 VICE CHAIR FEDORKO: Second. 28 ITEM NO. 6-7 1 CHAIR KASSEKERT: The motion has been 2 made and seconded. All in favor? 3 (Ayes.) 4 CHAIR KASSEKERT: Opposed? 5 (No response.) 6 CHAIR KASSEKERT: Motion carries. 7 Thank you. 8 MR. NANCE: Item No. 6, petition of 9 Caremark, PCS, Health, Ltd. Partner, has been 10 adjourned. 11 Item No. 7, petition of Harrah's 12 Operating Company, Inc., Marina Associates, 13 Atlantic City Showboat, Inc., Bally's Park 14 Place and Boardwalk Regency Corporation for 15 waiver of a qualification for an officer of 16 HOC. 17 Miss Wozniak? 18 MS. WOZNIAK: Good morning, Chair and 19 Commissioners. 20 I have distributed a draft resolution 21 and Mr. Lowry is here for the Petitioner. And 22 Mr. Fogarty is here for the Division. 23 CHAIR KASSEKERT: Thank you. 24 Good morning, Mr. Lowry. 25 MR. LOWRY: Good morning, Chair, Vice 29 ITEM NO. 7 1 Chair, Commissioners. 2 We relied upon the briefs, and we've 3 reviewed the resolution. No further comment. 4 CHAIR KASSEKERT: Thank you. 5 Mr. Fogarty? 6 MR. FOGARTY: Yes, good morning. 7 I'm pinch-hitting for DAG Adams on this. 8 He filed a letter with you all and this request 9 implicates a Division Director's waiver under 10 85d, and she so concurs in that position. 11 CHAIR KASSEKERT: Thank you. 12 Any questions? From of the parties. 13 COMMISSIONER SOMMELING: No questions, 14 Madame Chair. 15 VICE CHAIR FEDORKO: Make a motion to 16 adopt the draft resolution and waive the 17 qualification requirement pursuant to NJSA 18 5:12-85d(1) as to the Vice President of Total 19 Rewards Externalization and International 20 Marketing for Harrah's Operating Company, 21 subject to the condition in the resolution. 22 COMMISSIONER FRULIO: Second. 23 CHAIR KASSEKERT: Motion has been made 24 and seconded. This is a roll call vote. 25 MR. NANCE: Commissioner Sommeling? 30 ITEM NO. 11 1 COMMISSIONER SOMMELING: Yes. 2 MR. NANCE: Commissioner Epps? 3 COMMISSIONER EPPS: Yes. 4 MR. NANCE: Commissioner Frulio? 5 COMMISSIONER FRULIO: Yes. 6 MR. NANCE: Vice Chair Fedorko? 7 VICE CHAIR FEDORKO: Yes. 8 MR. NANCE: Chair Kassekert? 9 CHAIR KASSEKERT: Yes. 10 MR. NANCE: The record will reflect that 11 the motion is unanimous. 12 MR. LOWRY: Thank you. 13 CHAIR KASSEKERT: You're welcome. 14 MR. NANCE: For your consideration, Item 15 No. 11, petition of Marina Associates 16 Development, LLC, for waiver of the 17 qualification requirement of Mary Siero, an 18 officer of Boyd Gaming Corporation. 19 Mr. DiGiacomo? 20 MR. DiGIACOMO: Chair, Commissioners. 21 Good morning. 22 Mr. Joseph Corbo, who submitted the 23 petition on behalf of the -- Miss Siero, has 24 requested that the Commission consider the 25 matter on the papers. 31 ITEM NO. 11 1 I've shared with him a draft of the 2 resolution in the matter. I've also shared it 3 with Mr. James C. Fogarty who is here for the 4 Division today. 5 I'll allow Mr. Fogarty to speak to 6 whether the Division accepts the resolution. 7 In an e-mail message from Mr. Corbo, he has 8 indicated that he has seen the resolution and 9 would consent to its form and entry. 10 CHAIR KASSEKERT: Thank you. Just know, 11 the Commissioners know, we've moved to Item 11. 12 COMMISSIONER SOMMELING: Yes. 13 COMMISSIONER FRULIO: Yes. 14 CHAIR KASSEKERT: Okay. Mr. Fogarty? 15 MR. FOGARTY: I think I have it. Number 16 11. Ms. Siero. Yes. 17 We have seen the draft resolution that's 18 been prepared. This implicates, again, a 19 waiver request for -- on behalf of the 20 Division's Director with regard to Mary Siero, 21 an officer of Boyd Gaming Corporation. Boyd, 22 of course is a regulated holding company. They 23 act for Borgata. And we do not oppose -- she 24 concurs in the waiver, and I've seen the draft 25 resolution and have no objection to its entry. 32 ITEM NO. 11 1 CHAIR KASSEKERT: Thank you. 2 Any questions? 3 COMMISSIONER FRULIO: Madame Chair, I 4 move to adopt the draft resolution and waive 5 the qualification requirement pursuant to NJSA 6 5:12-85d(1) as to Mary Siero in her capacity as 7 Vice President of IT Operations for Boyd Gaming 8 Corporation, subject to the condition in the 9 resolution. 10 VICE CHAIR FEDORKO: Second. 11 CHAIR KASSEKERT: Motion is made and 12 seconded. This is a roll call vote. 13 MR. NANCE: Commissioner Sommeling? 14 COMMISSIONER SOMMELING: Yes. 15 MR. NANCE: Commissioner Epps? 16 COMMISSIONER EPPS: Yes. 17 MR. NANCE: Commissioner Frulio? 18 COMMISSIONER FRULIO: Yes. 19 MR. NANCE: Vice Chair Fedorko? 20 VICE CHAIR FEDORKO: Yes. 21 MR. NANCE: Chair Kassekert? 22 CHAIR KASSEKERT: Yes. 23 MR. NANCE: The record will reflect that 24 the motion is unanimous. 25 MR. DiGIACOMO: Thank you, 33 ITEM NO. 8 1 Commissioners. 2 MR. NANCE: Item No. 8, consideration of 3 the qualification of Daniel J. Taylor to serve 4 as the member of the MGM MIRAGE board of 5 directors in connection with the casino license 6 of Marina District Development Company, LLC. 7 Ms. Frank? 8 MS. FRANK: Good morning, Chair, 9 Commissioners. 10 Daniel J. Taylor received temporary 11 qualification from the Commission in March of 12 this year. A draft of the resolution of the 13 plenary qualification has been circulated to 14 the parties. 15 Mr. Casiello is here for MGM MIRAGE, and 16 Mr. Fogarty for the Division. 17 CHAIR KASSEKERT: Thank you. 18 Good morning, Mr. Casiello, 19 MR. CASIELLO: Good morning, Madame 20 Chair, Mr. Vice chair, Commissioners. 21 VICE CHAIR FEDORKO: Thank you. 22 MR. CASIELLO: I've read the draft 23 resolution, and I find it acceptable in the 24 form and substance. 25 Thank you. Have a nice Thanksgiving. 34 ITEM NO. 8 1 CHAIR KASSEKERT: You, also. 2 Mr. Fogarty? 3 MR. FOGARTY: We -- under my hand, I 4 signed a letter recommending to you all that 5 Mr. Taylor be qualified for the position of a 6 member of the board of directors of MGM MIRAGE, 7 which, of course, is another holding company of 8 Borgata. 9 I've seen Ms. Frank's draft resolution 10 and have no objection to its entire. 11 CHAIR KASSEKERT: Thank you. 12 Any questions? 13 VICE CHAIR FEDORKO: Motion to adopt the 14 draft resolution and find Daniel J. Taylor 15 qualified to serve as a member of MGM MIRAGE's 16 board of directors. 17 COMMISSIONER SOMMELING: Second. 18 CHAIR KASSEKERT: Motion is made and 19 seconded. This is a roll call vote. 20 MR. NANCE: Commissioner Sommeling? 21 COMMISSIONER SOMMELING: Yes. 22 MR. NANCE: Commissioner Epps? 23 COMMISSIONER EPPS: Yes. 24 MR. NANCE: Commissioner Frulio? 25 COMMISSIONER FRULIO: Yes. 35 ITEM NO. 9 1 MR. NANCE: Vice Chair Fedorko? 2 VICE CHAIR FEDORKO: Yes. 3 MR. NANCE: Chair Kassekert? 4 CHAIR KASSEKERT: Yes. 5 MR. NANCE: The record will reflect that 6 the record is unanimous. 7 CHAIR KASSEKERT: Thank you. 8 MS. FRANK: Thank you. 9 MR. CASIELLO: Thank you. 10 MR. FOGARTY: Thank you. 11 MR. NANCE: Item No. 9, petition of 12 Diamond Gaming, LLC, and Trump Taj Mahal 13 Associates for approval of "Diamond Roulette" 14 pursuant to NJAC 19:47-8.4. 15 Mr. Briliant? 16 MR. BRILIANT: Madame Chair, members of 17 the Commission. 18 As noted in our memorandum to you, we 19 are recommending that this matter be tabled for 20 up to 90 days. That will give Petitioners time 21 to submit additional materials that we 22 requested and time for the staff to evaluate 23 them. 24 The matter is now before you for your 25 consideration. 36 ITEM NO. 9 1 CHAIR KASSEKERT: Thank you. 2 Any questions for Mr. Briliant? 3 COMMISSIONER SOMMELING: No questions, 4 Madame Chair. 5 VICE CHAIR FEDORKO: Motion to table the 6 petition for up to 90 days and authorize the 7 publication of a notice of action to that 8 effect. 9 COMMISSIONER FRULIO: Second. 10 CHAIR KASSEKERT: The motion has been 11 made and seconded. All in favor? 12 (Ayes.) 13 CHAIR KASSEKERT: Opposed? 14 (No response.) 15 CHAIR KASSEKERT: Motion carries. 16 MR. BRILIANT: Thank you. 17 MR. NANCE: Should we -- 18 CHAIR KASSEKERT: We will adjourn until 19 12:30 for Item No. 10, which is the -- which is 20 the Adamar petition. 21 But let me ask, sir? Are you here for 22 the public portion of our meeting? 23 UNIDENTIFIED PERSON: No. 24 CHAIR KASSEKERT: All right. Very good. 25 MR. NANCE: Should we do -- should we do 37 ITEM NO. 10 1 the public portion? 2 MS. FAUNTLEROY: No. 3 CHAIR KASSEKERT: No? Because I have to 4 do it following. Okay. 5 So we'll stand adjourned until 12:30 6 this afternoon. 7 (A recess was taken from 10:46 a.m. to 8 12:56 p.m.) 9 (The proceedings were recommenced at 10 12:56 p.m.) 11 CHAIR KASSEKERT: Thank you. 12 We'll go back on the record since we 13 adjourned from our previous meeting and 14 continue with Item No. 10. 15 MR. NANCE: Item No. 10, petition of 16 Adamar of New Jersey, Inc., for renewal of its 17 casino license and casino alcoholic beverage 18 matter and other matters; 19 Consideration of the application of 20 Tropicana Casinos and Resorts, Inc., for 21 plenary qualification as a the holding company 22 of Adamar, New Jersey, Inc. 23 CHAIR KASSEKERT: Okay. At this point 24 before we bring Mr. Yung back, let me just ask 25 if there are any procedural matters that need 38 WILLIAM J. YUNG, III 1 to be brought to our attention at this time? 2 Mr. O'Gara? 3 MR. O'GARA: No, ma'am. 4 CHAIR KASSEKERT: Miss Maher? 5 MS. MAHER: No. Thank you. 6 CHAIR KASSEKERT: Could we recall Mr. 7 Yung to the stand, please? 8 Mr. Nance, do we need to reswear him or 9 the proviso that he's under oath from 10 yesterday. 11 MR. NANCE: Yes. 12 CHAIR KASSEKERT: Okay. Very good. 13 THE WITNESS: Okay. 14 CHAIR KASSEKERT: You can have a seat, 15 Mr. Yung. 16 I think we begin now with questions from 17 the Commissioners? 18 VICE CHAIR FEDORKO: Mr. O'Gara? 19 CHAIR KASSEKERT: I'm sorry? Well, 20 we're going to do questions next, and then 21 we'll go back to redirect. 22 Commissioner Epps? Questions? 23 VICE CHAIR FEDORKO: We'll wait. 24 COMMISSIONER EPPS: Mr. Yung, yesterday 25 you testified and you were questioned about 39 WILLIAM J. YUNG, III 1 your ownership of Marriotts. I think you said 2 that Marriott set standards for the hotels and 3 the franchisees have to follow in those 4 standards. Is the accurate? 5 THE WITNESS: Yes, sir. 6 COMMISSIONER EPPS: Okay. Who sets the 7 standards for your casino operation? 8 THE WITNESS: To be honest with you, I'm 9 not so sure I really know what has been set up 10 here. I really don't know. I don't set them. 11 But I don't know if there is such a rating 12 system or something that we use at this 13 property. 14 COMMISSIONER EPPS: Well, I wasn't -- 15 actually, I wasn't referencing this property in 16 particular. You own several casino properties 17 separate from your hotels. What are or how do 18 you set standards for your operations in your 19 casino properties that are not part of larger 20 chains where the standards are dictated by the 21 company? 22 THE WITNESS: Right. We -- you know, I 23 think the main way that we do the -- do the 24 standards is such that we -- we react to the 25 complaints that the people have. I don't 40 WILLIAM J. YUNG, III 1 believe we have set a specific standard for any 2 of our independent properties. 3 COMMISSIONER EPPS: Okay. Now, going 4 back to your testimony about entering New 5 Jersey. You suggested that you were 6 apprehensive about entering New Jersey or the 7 Atlantic City casino market because you had 8 union concerns that you said weren't 9 necessarily concerns in Las Vegas. But when 10 you testified, you seemed to refer to 11 construction concerns like, you spoke to 12 construction -- to difficulty Tropicana had 13 during its construction. So were your concerns 14 from the construction trades or other unions? 15 Which unions were you referencing when you said 16 you had union concerns? 17 THE WITNESS: Right. I had concerns 18 primarily about the operating unions. I just 19 said as an anecdote that the problems 20 that Tropicana had here, Aztar had here when 21 they were building the things were construction 22 union problems. You know, and it just seemed 23 like it -- from my impression, it fit the 24 pattern like it was a tough place to do 25 business because of the unions. 41 WILLIAM J. YUNG, III 1 COMMISSIONER EPPS: But so your concern 2 was unions in general, not any specific union 3 as you looked to enter the New Jersey market? 4 Because at the time you weren't doing any 5 construction or Tropicana wasn't doing any 6 construction. So construction unions -- the 7 building trades probably wouldn't have been a 8 concern. So that's why I'm trying to 9 understand what your union concerns were. 10 THE WITNESS: Right. The -- you know, 11 we did the rooms there, obviously, with union 12 construction. We had no problems with it. 13 We're doing the casino with no problems and the 14 restaurants, no problems. I think a lot of it 15 has to do with who the union contractor is. 16 But when we came here we realized, you know, 17 initially that -- you know, we had no concerns 18 about the construction union simply because we 19 really weren't going to do any major 20 construction right away. So my primary 21 concern -- the only reason I meant -- mentioned 22 the construction unions was the fact that 23 the -- as an anecdotal comment, the problems 24 that Aztar had when they were building the 25 property. 42 WILLIAM J. YUNG, III 1 COMMISSIONER EPPS: Okay. Now, you 2 indicated that the impact of Pennsylvania and 3 the smoking ban hurt revenues and drove further 4 layoffs. Have those layoffs allowed Tropicana 5 to realize a turnaround in your revenue 6 decline. 7 THE WITNESS: We have not acquired a 8 revenue turnaround yet. 9 COMMISSIONER EPPS: Okay. And a 10 significant number of your layoffs occurred 11 early on in your tenure with this new company, 12 Tropicana. Is that fair to say, the first 30, 13 60 days. 14 THE WITNESS: Yes. 15 COMMISSIONER EPPS: Ninety days, maybe. 16 THE WITNESS: Yes. That's correct. 17 COMMISSIONER EPPS: And that would have 18 been the first quarter of this year, pretty 19 much? 20 THE WITNESS: Yes, sir. 21 COMMISSIONER EPPS: Now, your decline -- 22 do you know what the decline was in that first 23 quarter consistent with the layoffs? 24 THE WITNESS: Not right offhand I don't. 25 No. 43 WILLIAM J. YUNG, III 1 COMMISSIONER EPPS: Single digit? Two, 2 four percent? Could that be fair? 3 THE WITNESS: I don't know exactly what 4 it was, but it was less than the second 5 quarter. 6 COMMISSIONER EPPS: Okay. Do you know 7 what the declines in the second and third 8 quarter were? 9 THE WITNESS: The -- yes. The -- I 10 believe the second quarter was about 14 11 percent, I believe. 12 COMMISSIONER EPPS: Okay. So after the 13 significant layoffs, your decline increased. 14 And I thought your testimony was that you 15 thought that because of the layoffs you could-- 16 you could do layoffs to generate a turnaround, 17 but you're actually -- the change went the 18 opposite direction. You laid off people, and 19 you saw a greater decline in your revenues. 20 Do you have any explanation? Or how do 21 you view that? 22 THE WITNESS: Yes. I -- yes. I don't 23 believe that the layoffs had anything to do 24 with the decline in business. The decline in 25 business had -- was primarily due to the 44 WILLIAM J. YUNG, III 1 marketing efforts and the actual -- the 2 dismissal of player development people who 3 should never have been dismissed. 4 COMMISSIONER EPPS: Okay. Now, earlier 5 you also referred to a -- you seem to suggest 6 was a staged sick-out by the union. How do we 7 know that that's what happened, that there was 8 a staged sick-out? 9 THE WITNESS: I think Mark can explain 10 it to you better when he testifies, but my 11 understanding is that on several shifts, 12 especially during the weekends, most of the 13 employees that are required to clean the casino 14 did not, called out sick. And it continued on 15 for -- he can explain to you more, but I think 16 it continued on for a couple months. 17 COMMISSIONER EPPS: Now, if you I 18 understand you, these employees were in the 19 casino public areas? 20 THE WITNESS: Yes, sir. 21 COMMISSIONER EPPS: Okay. And then I 22 believe you testified that the maids came to 23 your aid to relieve the situation? 24 THE WITNESS: Yes. 25 COMMISSIONER EPPS: Aren't the maids and 45 WILLIAM J. YUNG, III 1 the public area attendants in the same union? 2 THE WITNESS: Yes. 3 COMMISSIONER EPPS: Is there strange to 4 you that there would be organized work action 5 but the same union would come to your aid? 6 THE WITNESS: I think it was an 7 organized action by the cleaners. 8 COMMISSIONER EPPS: So you mean a 9 subgroup of the union? 10 THE WITNESS: Yes. Uh-huh. 11 COMMISSIONER EPPS: Okay. Now, I think 12 in your -- when we started talking about your 13 capital expenditures or your plans for capital 14 expenditure, you talked about the work on the 15 rooms and the work on the casino floors you 16 planned to do. And you put it somewhere in the 17 area of 30 -- $30 million. Is that fair? 18 THE WITNESS: When we're finished in 19 February, it would be about $30 million. 20 COMMISSIONER EPPS: Now, are there other 21 expenditures anticipated for 2010? Or is that 22 pretty much it? 23 THE WITNESS: Through 2010? I don't 24 know. We haven't gone out that far. We're 25 just trying to stabilize the situation right 46 WILLIAM J. YUNG, III 1 now. I -- I can tell you through 2008 there 2 won't be any more. After we're completed with 3 this. It's so disruptive to the businesses. 4 And right now we have half of our restaurants 5 shut down. We only -- I think right now -- I 6 think we only have, like, 500 seats in the 7 whole casino because two restaurants are being 8 totally remodeled. So, and we have about one 9 third of half of the casino shut down through 10 remodeling. So at some point we just have to 11 stop the disruptions and let the thing run 12 normally, and the disruptions are part of our 13 downturn, also. 14 COMMISSIONER EPPS: Okay. If you 15 assume-- assume with me, if you will, that that 16 is the extent of the capital expenditures 17 you'll do -- just using my example through 18 2010, that would break out to about $10 million 19 a year in capital expenditures. For the size 20 of your property, do you think that's a 21 significant number? 22 THE WITNESS: Well, I don't think you 23 can say it that way. I don't -- you know, I 24 think for us to plan what we're going to do 25 right now when we're just finishing the first 47 WILLIAM J. YUNG, III 1 major construction, I don't know what we're 2 going to do next. I don't know what we need to 3 do. I think the property's in pretty good 4 shape right now. 5 And I don't think it's fair to say that 6 $10 million a year when we just spent $30 7 million is a fair characterization. I think 8 you need to let us go and get organized and 9 get-- get the thing stabilized, and then we'll 10 see what else we have to do. 11 COMMISSIONER EPPS: Okay. In Q2 or 3 of 12 next year, you're going to have new towers at 13 Borgata, Harrah's, and the Taj. With what 14 you've indicated, rooms and restaurants and 15 improvements on the casino floor, do you think 16 that's enough to keep you competitive with 17 those new attractions? 18 THE WITNESS: Yes. 19 COMMISSIONER EPPS: And then in 2010 or 20 '11 there's going to be added competition as 21 proposed with Pinnacle and Revel -- 22 THE WITNESS: Uh-huh. 23 COMMISSIONER EPPS: And potentially an 24 MG MIRAGE project. 25 THE WITNESS: Uh-huh. 48 WILLIAM J. YUNG, III 1 COMMISSIONER EPPS: How do you see 2 Tropicana getting itself to be in a position to 3 be competitive in that new environment? 4 THE WITNESS: Well, obviously, we have 5 to stay competitive, and we'll do whatever it 6 takes for us to stay competitive. 7 COMMISSIONER EPPS: But -- so you have 8 no idea exactly what you'll do. You'll -- 9 THE WITNESS: No, Commissioner. I'm 10 just trying to get through the situation we 11 have right now. I -- I can't think out three 12 years from now. I have to think out what 13 was -- what's happening now. 14 COMMISSIONER EPPS: Okay. Let's turn to 15 the debt ratio covenants. Do I understand your 16 testimony to say that what actually occurred 17 was a miscalculation? 18 THE WITNESS: What I said is -- what 19 could -- we could have easily cured the debt 20 ratio covenant breach by -- but there was -- we 21 miscalculated a number that I think that could 22 easily have been -- we could have paid down 23 some cash and met the covenant. But I think if 24 you would address that to John Jacob, who is 25 our CFO, I think he can explain it much more 49 WILLIAM J. YUNG, III 1 detailed than I can. 2 COMMISSIONER EPPS: Do you know what's 3 being done to address it? Or should we -- 4 THE WITNESS: I think he's the guy to 5 talk to about it. 6 COMMISSIONER EPPS: Okay. Now, you'll 7 probably give me the same answer, but the 8 covenants were designed to be a little bit more 9 stringent as you going forward. Do you have 10 plans to address the more stringent covenant? 11 THE WITNESS: I think, again -- I think 12 he can answer that much better than I can. 13 COMMISSIONER EPPS: Okay. You testified 14 yesterday that when you came in and you began 15 to look at cuts at Tropicana, you did not have 16 a plan to eliminate high salaries. 17 THE WITNESS: No. I don't believe I 18 said that. I -- not exclusively high salaries. 19 We eliminated quite a few high salaried people. 20 COMMISSIONER EPPS: But yesterday when 21 Ms. Maher asked you if you targeted people who 22 make $150,000 or more, you said no, that wasn't 23 your plan. 24 THE WITNESS: That's true. That's what 25 I said. That is true. 50 WILLIAM J. YUNG, III 1 COMMISSIONER EPPS: But in your sworn 2 interview with the Division when they asked you 3 if you targeted people higher than $150,000, I 4 don't want to mischaracterize it, but your plan 5 was to go after the high salary guys, $150,000 6 and above? 7 THE WITNESS: Well, we went after the 8 people that weren't necessary -- that we felt 9 weren't necessary in the management structure. 10 And there were a lot of people in that 11 management structure that made that kind of 12 money that we didn't feel like we needed. And 13 so we did go after those people. 14 COMMISSIONER EPPS: I'm still not clear 15 what the distinction is where you said you 16 didn't go after high-salary people, but then 17 you said that is who you went after. Could 18 you -- 19 THE WITNESS: Well, we went after 20 everybody who we felt like we did not need to 21 run the -- run the property properly. They 22 were high-salaried people, and they were 23 lower-salaried people. 24 COMMISSIONER EPPS: Okay. So at some 25 point did it change? 51 WILLIAM J. YUNG, III 1 THE WITNESS: No. It was always that 2 way. 3 COMMISSIONER EPPS: Okay. 4 When asked about some of the regulations 5 involved in operating a New Jersey casino, your 6 answer was often that you weren't familiar with 7 regulations or some of the rules, and you 8 referred those to your counsel. I have a 9 couple questions with that. Is she your only 10 counsel for all of your casino operations 11 wherever you are? 12 THE WITNESS: No. Generally we have a 13 local counsel in every jurisdictions we're in. 14 COMMISSIONER EPPS: But as your company 15 you only have her on are there other people in 16 Columbia Sussex that are counsel to you on 17 regulatory issues? 18 THE WITNESS: Just Donna. Uh-huh. 19 COMMISSIONER EPPS: Okay. And so it's 20 her responsibility to be mindful for Columbia 21 Sussex of all the regulatory issues in each 22 jurisdictions where you have casino operations? 23 THE WITNESS: Well, I think she relies 24 on the local counsel we have, also. 25 COMMISSIONER EPPS: Now, and you rely on 52 WILLIAM J. YUNG, III 1 her for your knowledge, so you don't 2 necessarily maintain knowledge or understanding 3 of the various jurisdictions where you operate 4 a company -- you simply rely on her? 5 THE WITNESS: Yes, sir. 6 COMMISSIONER EPPS: Now, do you -- do 7 you function that way in your noncasino 8 properties as well? In jurisdictions where 9 there are regulations or whatever involving 10 your hotel operations, not a casino, do you 11 familiarize yourself with the regulations in 12 various jurisdictions in more detail than you 13 do in the casino jurisdictions? 14 THE WITNESS: In the hotel business, you 15 know, we have various levels of management. We 16 have a vice president of hotel operations, and 17 then he has eight regional vice presidents that 18 each take care of about ten hotels. To be 19 honest with you, there really aren't any 20 regulations in hotel business. 21 COMMISSIONER EPPS: I guess I'm more 22 specifically referring to you. Is your 23 understanding on the hotel side more in-depth 24 than your understanding on the casino side? 25 THE WITNESS: Well, I -- as far as 53 WILLIAM J. YUNG, III 1 regulations go? You know, like I say, the 2 casino side is the only side that has 3 regulations, you know, and the hotels have no 4 regulations. 5 COMMISSIONER EPPS: Okay. But a lot of 6 your answers yesterday seem to be that you 7 didn't know or you weren't familiar with a lot 8 of the issues that were raised, particularly on 9 the casino side. 10 THE WITNESS: Uh-huh. 11 COMMISSIONER EPPS: Is that a personal 12 decision that you don't just involve yourself 13 in those areas? 14 THE WITNESS: Well, you know, I have a 15 lot of people that report to me. There's a 16 various levels of -- of managers who are paid 17 to do those things. We operate over 80 18 properties. We have over almost 40,000 19 employees. I mean, I can't get down and do -- 20 I can't -- I can't answer every complaint. I 21 can't know every regulation. I can't do it 22 all. Okay? We are a lean company, but we're 23 not that lean, and we have to delegate some of 24 this work to other people. I don't know every 25 answer. I'm... 54 WILLIAM J. YUNG, III 1 COMMISSIONER EPPS: Okay. With respect 2 to hiring people and people that you bring 3 under you in your table of organization or 4 within your company, is there a due diligence 5 process that you guys engage in to determine 6 who you are hiring or who you are about to 7 engage in business with so you have some 8 confidence that these are people that you want 9 to be engaged in business with? 10 THE WITNESS: Well, if you are referring 11 to in the casino business to make sure whoever 12 we're dealing with are honest people and not 13 so-called dirty people as far as being 14 criminals or mob related or something like 15 that, we basically always deal with -- we only 16 deal with people who are basically approved by 17 the various gaming commissions. 18 COMMISSIONER EPPS: Okay. Now, what is 19 your independent due diligence process? What 20 process do you go through to make yourself 21 confident that a business partner you may have 22 or someone you may hire within your company is 23 someone that you can be confident that you will 24 get through an evaluation process or a 25 licensing process with? 55 WILLIAM J. YUNG, III 1 THE WITNESS: Well, I only have one 2 partner, and that was the one in Greenville. I 3 have no other partners. When we hire somebody, 4 the HR department that we have runs credit 5 checks on them, runs police checks on them, and 6 does various things to make sure that they're 7 suitable for hiring. 8 COMMISSIONER EPPS: All right. Now, in 9 the last year, your business strategy in 10 Atlantic City, at least seemed to have been, to 11 reduce staff in order to make a revenue 12 turnaround. We've talked about that a little 13 bit briefly here this morning. Your 14 competition didn't seem to have taken that same 15 tack. Is that just a business decision? How 16 do you distinguish your choice of making 17 layoffs as a way to turn around revenue as 18 opposed to other companies who didn't choose to 19 reduce staff in order to see that turnaround? 20 THE WITNESS: We did not reduce staff to 21 turn around business. We basically reduced the 22 staff to get our costs in line with the 23 reduction and the amount of business. We 24 basically focused on that, and we didn't want 25 to get into the big buy of business wars that 56 WILLIAM J. YUNG, III 1 some of the casinos have got deny into. 2 I think that we're at the point right 3 now where we have to change that decision. We 4 have to -- since, you know, we're basically 5 where we're we want to be with employee level. 6 We're going to have to go out, and in order to 7 get this business back, we're going to have to 8 go out and start buying some business to get 9 the revenues back. To at least what the market 10 is. We're definitely -- we definitely didn't 11 spend enough to try to keep some of that 12 business that we lost. 13 There were, again, some of the other 14 reasons were -- is that the gentleman who was 15 running the thing got rid of about six of our 16 highest producer player development on his own 17 and brought in his friends who brought in no 18 business, and that accounts for almost a third 19 of our downturn, and that is one of the reasons 20 he was terminated. 21 COMMISSIONER EPPS: Okay. Now, your 22 competitors have not experienced major revenue 23 losses compared to the revenue losses that 24 you've experienced. 25 THE WITNESS: Correct. 57 WILLIAM J. YUNG, III 1 COMMISSIONER EPPS: And you suggest that 2 is because they, you say, buy the business and 3 you up to this point haven't done that? Does 4 that make up the difference? 5 THE WITNESS: I think it's three things. 6 Number one is, clearly I think the market is 7 down about seven percent. You know, that's -- 8 we lost about another seven percent on stupid 9 business decisions. And we probably lost 10 another four or five percent because we 11 wouldn't buy the business, you know. And I 12 think that's why we're down. 13 And in the last -- last day or two, 14 we've got one of those player development 15 persons back, and we're supposed to find out 16 today about two other ones coming back. And 17 we're going to start a campaign to try to get 18 back these customers who did leave, and we're 19 going to make a concerted effort with that and 20 starting -- I think it starts this Sunday. 21 CHAIR KASSEKERT: When you say "buy 22 back" you mean comps? 23 THE WITNESS: Yes. Uh-huh. 24 COMMISSIONER EPPS: I think that's all I 25 have. 58 WILLIAM J. YUNG, III 1 CHAIR KASSEKERT: Okay. Sort of taking 2 off a little bit about what Commissioner Epps 3 was talking about, and you may have answered 4 this question already, there's a lot of 5 discussion when you came to Atlantic City. And 6 I think you and I even discussed here about 7 your philosophy towards the gaming business and 8 how you make gaming business work. And I think 9 we discussed at the time how Atlantic City is a 10 very different market from some of the other 11 markets. And we talked a little bit about your 12 philosophy. There was a lot of discussion 13 about the issue of comps, that it wasn't your 14 philosophy to do that. As a result of this 15 experience in Atlantic City, have you changed 16 your philosophy? 17 THE WITNESS: Yes. Yeah. It's 18 completely different in it is such a player 19 relationship business that -- 20 CHAIR KASSEKERT: Uh-huh. 21 THE WITNESS: You know, I've learned the 22 lesson the hard way. And -- yeah. It is such 23 a player relation business. We're actively out 24 trying to -- in addition to the ones we've 25 lost, we're trying to hire some other player 59 WILLIAM J. YUNG, III 1 development people, and that's just the way it 2 is here. And we made a big mistake. 3 CHAIR KASSEKERT: I want to talk a 4 little bit about as it relates to New Jersey. 5 Some of the things that have gone on in other 6 jurisdictions and ask you to think a little 7 prospectively rather than retrospectively. 8 And, obviously, in the Division's report they 9 have raised issues about issues and violations 10 that have occurred in other jurisdictions. You 11 know, in Indiana with problems with an 12 unsecured count room, for example. Louisiana. 13 There was some violations in Nevada, and, 14 obviously, we've had some here in New Jersey. 15 How is that impacted and what would you do in 16 the future to assure us and give us a comfort 17 level about ongoing compliance issues and 18 regulatory issues? Because, obviously, you 19 know, all of our jurisdictions are concerned 20 about those kinds of issues, especially when it 21 comes to ensuring that the proper taxes are 22 collected and the programs that, you know, get 23 those taxes, you know, get them accounted for 24 properly. 25 THE WITNESS: Uh-huh. 60 WILLIAM J. YUNG, III 1 CHAIR KASSEKERT: What will you do going 2 forward in terms of compliance? 3 THE WITNESS: Well, I think the main 4 thing that we have to do -- and I think Donna 5 can speak to it much better than I can -- is 6 to-- I think she can explain to the new -- the 7 new compliance techniques that we're 8 instituting. And all I can do is tell you that 9 I'm sure Donna and her staff will work very 10 diligently to make sure that the violations are 11 kept to an absolute minimum and to do the best 12 we can. You know, I think she can speak to 13 that much better than I can. 14 CHAIR KASSEKERT: Fair enough. 15 Commissioner Fedorko? 16 VICE CHAIR FEDORKO: Good afternoon, Mr. 17 Yung. 18 THE WITNESS: Good morning. 19 VICE CHAIR FEDORKO: Yesterday when you 20 were testifying both with your attorney and the 21 Division, a lot of the times they would say to 22 you, you make all the decisions, and you said 23 yeah. With 80 hotels or 80 properties and 24 40,000 employees, how much can you get involved 25 in the day-to-day operation of your business? 61 WILLIAM J. YUNG, III 1 THE WITNESS: Well, you know, I -- you 2 know, I'm a more of a hands-on guy than I think 3 most CEOs. But, you know, I have a -- I have a 4 cadre of about, you know, six or eight people 5 that report to me, and then it goes down into 6 the 38,000 people that we have. So I make the 7 major decisions. I'm responsible for the major 8 decisions. So but as far as making all the 9 decisions, I -- I probably make -- I make all 10 the major decisions, but there are a lot of 11 other decisions that I have -- don't even know 12 about that are being made, you know. 13 VICE CHAIR FEDORKO: In reading the 14 Division's report, D-1, on page 21 there's a 15 statement by Fred Buro. And he said that the 16 decision to realize 30 to $40 million in 17 payroll savings requiring staffing cuts of 7 to 18 800 employees predated the takeover of the 19 property; is that right? 20 THE WITNESS: We -- I think we had 21 scheduled, I think it was -- we were hoping to 22 get, as we said in the prospectus that we 23 handed out to everybody, $58 million for the 24 whole Aztar Corporation, of which I think 25 25 was in the home office. And that would leave I 62 WILLIAM J. YUNG, III 1 think -- what is that, 25? It would leave 33 2 million over the other five properties is the 3 number that we came up with. 4 VICE CHAIR FEDORKO: But that was before 5 you acquired Tropicana? 6 THE WITNESS: Yes. That was during the 7 road show we came up with that number. 8 VICE CHAIR FEDORKO: This is my eighth 9 year on this Commission. With all of the 10 licensing hearings that I've had, I've sat 11 through, I have never seen such negative press 12 as I have with you. Why do you think that is? 13 THE WITNESS: I -- you know, it's very 14 discouraging to see the newspaper article this 15 morning. It's -- you know, we have a lot of 16 good employees. All our employees are good. 17 You know, union, nonunion, they all work very 18 hard, you know. And newspaper articles -- I 19 mean, we were getting -- you know, I think when 20 Mark gets done today, he's got to go back and 21 call a lot of high rollers that are cancelling 22 their reservations, you know, for this weekend. 23 The impact of the union's activities to kill 24 our business is really working, and they-- you 25 know, so they ought to be proud of that. 63 WILLIAM J. YUNG, III 1 You know, it's -- you know, we're going 2 to do the best to get through this. And, you 3 know, I -- it's almost like it's the first 4 community that I've ever come to that tries to, 5 instead of developing jobs, is trying to get 6 rid of jobs. You know? And it's -- I've never 7 seen that before, so. 8 VICE CHAIR FEDORKO: That's all I have. 9 CHAIR KASSEKERT: Commissioner Frulio? 10 COMMISSIONER FRULIO: Yeah. 11 Mr. Yung, you said before that the 12 layoffs would lower costs, and that was a 13 business decision, I guess. But didn't you 14 realize that it would cause lower revenue due 15 to reduction of services which, in turn, causes 16 a loss of customers? Did you at some point say 17 to yourself, there's something deadly wrong 18 with the mathematics here? 19 THE WITNESS: I firmly believe that our 20 layoffs that we made and our reductions in no 21 way affected the service. As I stated before, 22 our service at the property is absolutely a lot 23 better -- it's a lot better now than it was 24 when we took over. 25 COMMISSIONER FRULIO: Okay. Then, do 64 WILLIAM J. YUNG, III 1 you agree that you and your competitors have 2 lost some revenue due to smoking ban and the 3 Philadelphia coming onboard? And but why is it 4 that your property has suffered severely a lot 5 more losses than they? 6 THE WITNESS: Well, I think it's like I 7 said before, it's not only Philadelphia, but 8 it's also we made a lot of poor business 9 decisions on player development people. 10 And the other -- the other thing is that 11 we didn't go out and buy the business. And 12 that was probably a mistake. We should have -- 13 we should have tried to buy some business. But 14 we're going back after it starting now, and you 15 know, go back and buy some business and get 16 some more player development people hired. 17 COMMISSIONER FRULIO: I don't mean to 18 think that you have a crystal ball or whatever, 19 but if you do get relicensed, what would your 20 strategies be, like marketing strategies to try 21 to get the customer back? 22 THE WITNESS: Right. 23 COMMISSIONER FRULIO: To lift those 24 revenues? 25 THE WITNESS: Well, another reason why 65 WILLIAM J. YUNG, III 1 the business was down -- and I forgot -- was 2 the disruptions on the floor. You know, we 3 had-- we had about a third of our casino floor 4 down in the -- geez, I think it was till -- we 5 had it down until June when we got everything 6 completed. So disruption was another part of 7 it. The business strategy is now, is to get 8 the thing -- the rest of the renovation done by 9 the first of March. We're going to get more 10 player development people, and we're going to 11 go out and buy some business. And, you know, 12 that's basically what it is. 13 COMMISSIONER FRULIO: Thank you. 14 CHAIR KASSEKERT: Commissioner 15 Sommeling? 16 COMMISSIONER SOMMELING: Mr. Yung, I 17 know you just said that you expect completion 18 of your new projects to be around March the 1st 19 of '08. 20 THE WITNESS: Correct. 21 COMMISSIONER SOMMELING: And I'm 22 assuming that because those areas are not 23 completed and up and running now that you'll 24 need additional staff once they are completed 25 in order for those areas to function? 66 WILLIAM J. YUNG, III 1 THE WITNESS: Well, what is -- what is 2 happening right now is the casino's being 3 renovated and the restaurants being renovated. 4 Basically the restaurants, we've basically kept 5 the people on and while the renovations going 6 on. And as soon as the renovations is done -- 7 done, they will just go back to their jobs. 8 But-- actually, the renovations will not bring 9 it any more employees in. The employees will 10 come back when the business comes back. And 11 that's when we'll be able to rehire. 12 COMMISSIONER SOMMELING: And we talked a 13 little bit about, and Commissioner Frulio just 14 alluded it to just a few moments ago, marketing 15 strategies for the casino for the future. Do 16 you have some people onboard at the present 17 time that are putting together a plan, a 18 specific plan as to how you're going to market 19 the property? 20 THE WITNESS: Yes, sir. We do. Mary 21 Tindall and Mark Gianntonio will again explain 22 that. But, yeah, we've -- we sat down over the 23 last week and come up with a plan to basically 24 super size all our offers. And, you know, 25 another thing that was done is under the 67 WILLIAM J. YUNG, III 1 present -- under Fred's reign was that he 2 lowered the comp rate from, I think, 11 percent 3 to eight or seven or eight percent. And we 4 lost business that way. So, yeah. We're going 5 to correct all those things and pretty much get 6 it back to where it was and hire more 7 development people. Yeah. 8 COMMISSIONER SOMMELING: And speaking of 9 hiring, I know that when you had your 10 year-round annual work force in place -- 11 THE WITNESS: Uh-huh. 12 COMMISSIONER SOMMELING: -- that 13 constitutes the bulk of your employees, but do 14 you intend as other casinos have done, 15 including the Tropicana during the past, hire 16 additional personnel during the peak months? 17 THE WITNESS: Yeah. I think we had 18 hired an extra 2 or 300, 400 people. I don't 19 know the exact number, but there is definitely 20 more put on during that period. 21 COMMISSIONER SOMMELING: And do you 22 intend to run the property as a full-fledged 23 property; that is, offering your customers all 24 of the customary amenities that people now 25 experience in Atlantic City casinos such as, 68 WILLIAM J. YUNG, III 1 you know, the casino itself is a superior 2 hotel, retail availability, the entertainment 3 for your customers, is all that in the scheme 4 of Tropicana's new plan for operation? 5 THE WITNESS: Yes. 6 COMMISSIONER SOMMELING: And, lastly, 7 going back to the question of the audit 8 committee. Have you been thoroughly versed on 9 what is required in the audit committee as to 10 the terms of as to what it is required under 11 New Jersey regulation? 12 THE WITNESS: No, I haven't. 13 COMMISSIONER SOMMELING: Is that going 14 to be -- is that issue going to be visited and 15 recompense -- is that issue going to be 16 revisited, and are you going to have an audit 17 committee as has been suggested? 18 THE WITNESS: Yes. I think Donna More 19 can address that issue. But, yeah, we're going 20 to have whatever is required by the New Jersey 21 gaming Commission. 22 COMMISSIONER SOMMELING: That's all, 23 Chair. 24 CHAIR KASSEKERT: Thank you. 25 Commissioner Epps? 69 WILLIAM J. YUNG, III 1 COMMISSIONER EPPS: I need you to go 2 back to an answer you gave us just a minute 3 ago. You said that the community -- and I'll 4 let you say it. 5 THE WITNESS: Uh-huh. 6 COMMISSIONER EPPS: But what I heard 7 from you is this community seems to -- you 8 never have seen a community that wanted to 9 eliminate jobs more than create jobs. Can you 10 please explain that to me. 11 THE WITNESS: Well, I think maybe I 12 misspoke. Maybe I should have said the 13 negative publicity that's surrounding this 14 relicensing or this licensing is, you know, in 15 such a manner that it sends messages, I think, 16 to other businesses who want to come here that 17 you have to be aware of some of the negative 18 things that may happen to you here such as the 19 very -- the negative press. The -- some of the 20 union activities that I think are unfair and 21 unnecessary. So but that's what I meant. 22 COMMISSIONER EPPS: I mean, it -- I'm 23 not going to say it's fair, but isn't it a fair 24 statement that a lot of the reaction that has 25 come to you has been as a result of the 70 WILLIAM J. YUNG, III 1 business decisions that you've made? 2 THE WITNESS: I think that the reaction 3 has come from the union that way. Yes. 4 Uh-huh. 5 COMMISSIONER EPPS: When -- before you 6 entered the Atlantic City market, were you 7 familiar with the Atlantic City environment 8 what goes on here? What Atlantic City is like? 9 Did you familiarize yourself with the 10 jurisdiction that you were entering? The 11 community, Atlantic City itself. Not the 12 business necessarily, but the community that 13 you were coming to be a corporate neighbor in. 14 THE WITNESS: Well, you know, I've been 15 to Atlantic City many times. I mean, I didn't 16 go around and visit neighborhoods or anything 17 like that or talk to a whole lot of people, if 18 that's what you mean. 19 COMMISSIONER EPPS: Well, that's not 20 necessarily what I mean. What I'm asking is, 21 did you have an idea of what you were entering 22 into when you decided to enter the Atlantic 23 City market. 24 THE WITNESS: Yeah. I -- yeah. I knew 25 it was going to be a tough -- it was going -- 71 WILLIAM J. YUNG, III 1 it was not going to be an easy road to hoe. 2 COMMISSIONER EPPS: And the reason I ask 3 that is because -- and I'm not familiar with 4 some of the other jurisdictions that you're in, 5 but -- and I don't know how they differ, and 6 they may be -- there may be -- other than Las 7 Vegas, you may be in places where casino 8 operations happen to exist, but in New Jersey, 9 casino operations and tourism is what we do. I 10 mean, Atlantic City, that's what happens here. 11 And I think there's a culture or an expectation 12 of a casino operation that does what we do. 13 And granted everybody makes business decisions, 14 but I think the expectation has been kind of to 15 do -- to have that as your interest as opposed 16 to, you know, profit or some other business so. 17 Sure, everybody wants to make a project. But 18 generating this engine, which is the casino 19 industry, is what happens here. It is the 20 industry. 21 THE WITNESS: Uh-huh. 22 COMMISSIONER EPPS: And so I'm wondering 23 if you had an appreciation for that entering 24 this market? 25 THE WITNESS: Oh, absolutely. I mean, 72 WILLIAM J. YUNG, III 1 Atlantic City would be -- I mean, it was -- 2 well, you know. It was very depressed. And 3 until the casinos have revitalized much of 4 Atlantic City. It's very important to it. I 5 mean, it's -- I guess the gaming -- the gaming 6 is the number one industry probably in New 7 Jersey, so it's very important in New Jersey 8 and Atlantic City. And I understand that. 9 COMMISSIONER EPPS: Okay. 10 CHAIR KASSEKERT: Okay. Commissioner 11 Fedorko? 12 VICE CHAIR FEDORKO: Mr. Yung, it's been 13 a tough year for the casinos so far here in 14 Atlantic City. Do you see anything in any of 15 your data that would indicate that maybe we've 16 hit rock bottom here and now we're going to 17 start going back up again? 18 THE WITNESS: Well, you know, I -- well, 19 from -- if I'm correct, I think there's still a 20 couple more casinos to open in Philadelphia. 21 And the only hope is they'll fire off of one 22 other than taking much from here. I don't 23 think we're going to get hit with a -- you 24 know, seems to me like logically it's still 25 going to go down a little bit further, a couple 73 WILLIAM J. YUNG, III - redirect 1 more points, I would think, with the other new 2 casinos open. But nothing like it's been 3 already. And you know, it's hard to know how 4 much, really, is the smoking ban. That's a 5 hard thing to figure out. You know, that's 6 part of it. 7 VICE CHAIR FEDORKO: Thank you. 8 CHAIR KASSEKERT: Any other questions? 9 Anything on redirect? 10 MR. O'GARA: Yeah, if I might. 11 CHAIR KASSEKERT: Sure. Okay. 12 13 REDIRECT EXAMINATION BY MR. O'GARA: 14 Q. Just a couple of things. And yesterday 15 in your examination by the Director she asked you 16 about hotels and resorts and if you viewed operating 17 hotels and experience. Among those hotels, are any of 18 them what we would call quote-unquote resort hotels; 19 meaning they are not primarily used just for overnight 20 occupancy? 21 A. Yes, they are. 22 Q. And where are they located? 23 A. Well, we have a Westin resort in the 24 Cayman Islands. We have a Westin resort in St. 25 Martin. A Marriott resort in Hilton Head Island. We 74 WILLIAM J. YUNG, III - redirect 1 have another resort in -- Marriott in Myrtle Beach. 2 Marriott in Hutchinson Island in Florida. We have one 3 out in Santa Monica, and we have a Marriott in Buttes 4 (phonetic) resort in Phoenix, yeah. 5 Q. And these are denominated within the 6 Marriott brand or the Westin brand as resort hotels as 7 opposed to hotels. As they advertise in or promote 8 them? 9 A. Yes. They have the full amenities, you 10 know. A lot of the places, you know, all of them have 11 spas. We have beaches. We have, you know, various 12 other things. And some of the places it's, you know, 13 boat rides or something. We have the Sanibel Island 14 resort that we just bought. And, so, yes. We have 15 many Resorts. And it's a full-fledged resorts. 16 Q. Let me move on with -- there's something 17 I think you just spoke with. It may have been 18 Commissioner -- I don't recall which of the members of 19 the Commission. But we talked about a number. I 20 think maybe it was Commissioner Frulio or -- wrong. 21 Commissioner Fedorko -- about a number that -- 22 VICE CHAIR FEDORKO: People get us mixed 23 up all the time. 24 (Laughter.) 25 MR. O'GARA: Thanks. 75 WILLIAM J. YUNG, III - redirect 1 Q. A certain amount of savings you knew 2 would be realized through Phoenix and -- 3 A. Uh-huh. 4 Q. Just so we understand, what did Aztar 5 have in Phoenix? I mean, it wasn't an operation of 6 any type, was it? 7 A. No. They -- they just had -- the way 8 Aztar ran their operations, every casino was totally 9 independent and did whatever they wanted. And 10 basically it was just overhead in Phoenix that, you 11 know, they did no accounting or anything. 12 Q. It was just corporate -- literal 13 corporate -- people like Mr. Haddock and other senior 14 executives? 15 A. Right. 16 Q. And costed out at 25 million bucks? 17 A. Yes. 18 Q. Let me turn now to something else the 19 Director asked you about with respect to your 20 relationship, in Mississippi. And you indicated 21 Mississippi is the only place you have a partner? 22 A. That's correct. 23 Q. And, in fact, there is allusion in some 24 Missouri materials about both your partner and about a 25 prior partner he had or prior association he had with 76 WILLIAM J. YUNG, III - redirect 1 something called "Premiere." Was Premiere a part of 2 this deal when you got into it? 3 A. No. 4 Q. And you never had any associations with 5 that? 6 A. I never heard of Premiere. No. 7 Q. With respect to the Messrs. Cato, I 8 believe were their name. Do you know, are they 9 licensed by the Mississippi Gaming -- or qualified or 10 hold a credential from the Mississippi Gaming 11 Commission? 12 A. Yeah. Both of them are licensed. 13 Q. And were they licensed the whole time 14 you were dealing with them? 15 A. I don't think the younger Cato was 16 licensed, but he recently got licensed. 17 Q. All right. And in that regard, have you 18 always felt that as a matter of someone in this 19 business in a jurisdiction comfortable dealing with 20 someone who is licensed by the commission in that 21 jurisdiction? 22 A. Yes. 23 Q. With respect to the Grant Thorton 24 matter, so there's -- I want to make sure there's no 25 confusion. That was a matter in which Grant Thorton 77 WILLIAM J. YUNG, III - redirect 1 approached you. They were marketing tax advice 2 people? 3 A. Correct. 4 Q. And during the course of the litigation 5 you've had with Grant Thorton, are you the only person 6 who received similar advice who had disallowed 7 deductions by the IRS? 8 A. No. I think there were several -- 9 several parties. 10 Q. And when you became -- you had advice 11 from your attorney and your accountants and as well as 12 an opinion from their attorneys and you determined to 13 do this? 14 A. Yes. I did. 15 Q. Have you had any tax accounting 16 training, or were you just -- 17 A. No. I don't. Uh-uh. 18 Q. And when you were notified by the IRS 19 and after you found out, you satisfied fully all the 20 obligations, and with the exception of the 21 calculations of interest and what's going on? 22 A. Yes. 23 Q. And you instituted the litigation 24 against Grant Thorton? 25 A. Yes. 78 WILLIAM J. YUNG, III - redirect 1 Q. And you have declined to sign a secrecy 2 agreement with them so that you can't discuss this 3 with anyone? 4 A. That's right. 5 Q. Now, there was a question I think just 6 asked one of the Commissioners about -- Commissioner 7 Epps -- about legal staff and whatever. At the 8 property here in New Jersey, do you have a lawyer, a 9 full-time lawyer who is the lawyer for Adamar 10 Tropicana of New Jersey? 11 A. Yes. 12 Q. And with respect to what we'll call your 13 "corporate headquarters" located in northern Kentucky, 14 Miss More is your general counsel at the Tropicana 15 Entertainment? 16 A. Yes. 17 Q. And has she recently also hired another 18 lawyer who will be joining her? 19 A. Yes. 20 Q. With respect to the player development 21 people, you said you are making a change. These are 22 people who previously worked there who you are 23 bringing back, who you think that they can add 24 something to the property? 25 A. Oh, it's -- yes. It's -- it's like a 79 WILLIAM J. YUNG, III - redirect 1 third of our loss on the players that were terminated. 2 The player development people that were terminated. 3 Q. And -- 4 MR. O'GARA: Can I just take one moment, 5 Chair? 6 CHAIR KASSEKERT: Sure. 7 (Conferring.) 8 Q. The last thing I want to inquire you, 9 you were asked by the Commissioners, you understand 10 that there are obligations with respect to compliance 11 and audit committee and independent supervision and 12 certain departments in Tropicana here in New Jersey. 13 I mean, you've been told that? 14 A. Yes. 15 Q. And you, the CEO, is it your intent that 16 you want to comply with that? 17 A. Absolutely. 18 Q. Are you hands-on going to organize that? 19 Or is somebody responsible for doing that who reports 20 to you? 21 A. No. I -- it would seem to me like Donna 22 will be the one doing that. 23 Q. And you expect it to be done? 24 A. Absolutely. 25 Q. And you expect it to be done when you 80 WILLIAM J. YUNG, III - recross 1 got in this business; correct? 2 A. Yes. 3 Q. You said that you're kind of hands-on, 4 but you have 40,000 -- 38,000, 40,000 employees and 5 people who report to you. To the degree they have 6 their obligations and they don't meet them, is it your 7 intention to hold them accountable? 8 A. Yes. 9 MR. O'GARA: I have no other questions. 10 CHAIR KASSEKERT: Miss Maher, redirect? 11 MS. MAHER: Thank you. 12 CHAIR KASSEKERT: Recross. I'm sorry. 13 14 RECROSS-EXAMINATION BY MS. MAHER: 15 Q. Just a few things, Mr. Yung. 16 A. Yes. 17 Q. I want to address the debt level with 18 you in just a few questions. As of June 30th of 2007, 19 did the Tropicana have 512.7 million with an 20 additional -- 21 CHAIR KASSEKERT: Excuse me, Miss Maher, 22 could you just speak a little bit louder? 23 MS. MAHER: I'm sorry. 24 CHAIR KASSEKERT: Thanks. 25 MS. MAHER: Usually I don't get that 81 WILLIAM J. YUNG, III - recross 1 request. 2 CHAIR KASSEKERT: He's -- today is his 3 birthday, and he's getting older so. 4 (Laughter.) 5 FROM THE FLOOR: Happy birthday. 6 MS. MAHER: I'll start over. 7 Q. As of June 30th is 2007, did the 8 Tropicana have a 512.7 million with an additional 13.2 9 million in accrued interest owed to CSE Holdings, 10 which is a subsidiary of Columbia Sussex? 11 A. I have no idea. 12 Q. You're not aware of that? 13 A. No. 14 Q. Who would have that or be familiar with 15 that information? 16 A. I think John Jacob may be familiar with 17 it, but I am sure -- 18 Q. I'm going to ask you a couple follow-up 19 questions, and just to see. And, if not, we'll throw 20 that to him. Are you aware there was an approximate 21 additional -- or was it an original approximately 360 22 million of that amount and an additional 144 million 23 borrowed at the closing related specifically to the 24 Aztar merger? 25 A. You'd have to ask him. I don't know. 82 WILLIAM J. YUNG, III - recross 1 Q. So you're not aware of that. Okay. 2 Are you aware are there any payments on 3 that debt that are going to be made during the 4 forecast period? 5 A. You'd have to ask him that. 6 Q. Okay. So you're not familiar with any 7 of that at all? 8 A. That's right. 9 Q. All right. I want to follow up on one 10 of the things that you said in response to -- I 11 believe it was Commissioner Fedorko's question. You 12 indicated that you were quote-unquote where you want 13 to be with employee levels right now; is that correct? 14 A. Yes. 15 Q. And you recall answering one of the 16 questions and making that response? 17 A. Yes. Uh-huh. 18 Q. I want to refer you back to an issue 19 regarding the management service agreements. Are you 20 familiar with the management service agreements that 21 the Tropicana has with Aztar and that Columbia Sussex 22 has with Aztar? 23 A. No 24 Q. You're not familiar that Tropicana has a 25 casino services agreement with Aztar through which it 83 WILLIAM J. YUNG, III - recross 1 provides services to Aztar's subsidiaries? 2 A. I don't know the -- no. I'm not -- 3 there may be one, but I don't know what the details 4 are. 5 Q. Okay. And there's also one with 6 Columbia Sussex which deals with services as well. To 7 provide hotel services to Aztar? 8 A. There may be one, but I don't know the 9 details. 10 Q. Okay. Are you -- and is it correct that 11 in May of 2007 you confirmed in writing with outside 12 counsel's representation that these agreements that 13 you had would not be implemented in New Jersey and 14 would not be effective until approved by the 15 Commission? 16 A. I'm sorry. I can't remember that. 17 Q. Okay. You don't recall confirming that 18 in writing? 19 A. Somebody may have put something in front 20 of me that I signed, but I don't -- I don't recall 21 doing that. No. 22 Q. You're not familiar with the management 23 services agreements at all? 24 A. No, I'm not. 25 Q. You talked initially about some 84 WILLIAM J. YUNG, III - recross 1 consolidation. 2 A. Yes. 3 Q. Consolidation of services? 4 A. Yes. 5 Q. Do those relate at all to the management 6 services agreement? 7 A. I don't know. 8 Q. What are you talking about when you talk 9 about consolidation then? 10 A. What I was talking about is typically 11 when we do a hotel and casino that we bring in -- we 12 centralize the accounting, purchasing, payroll 13 functions into the home office and don't do them at 14 the property. 15 Q. Okay. And are these done through 16 management services agreements with -- for instance at 17 Columbia Sussex in the home office? Is that how 18 that's accomplished? 19 A. I don't know. 20 Q. You don't know at all how that's 21 accomplished? 22 A. No. 23 Q. When you do these consolidation of 24 services, does that take jobs away from the facilities 25 in question? For instance, if you consolidated 85 WILLIAM J. YUNG, III - recross 1 services from the Tropicana Atlantic City facility, 2 payroll, accounting, things of that nature, would that 3 eliminate jobs at the Tropicana facility? 4 A. If it was allowed to be done, it would. 5 Yes. 6 Q. And how -- what do you mean by if it was 7 allowed to be done? 8 A. Well, I don't believe it's permitted in 9 New Jersey, so. 10 Q. Well, if these management service 11 agreements were approved, would it be your 12 understanding that it would be allowed? 13 A. Well, I guess if they're approved, 14 they're allowed. Yes. 15 Q. All right. Are you planning to submit 16 them to the Commission for further approval or for 17 approval? 18 A. I don't know what the plan is right now, 19 to be honest with you. 20 Q. So you don't know if you're going to 21 continue your progress or interest in consolidating 22 these services and taking positions away from the 23 Tropicana Atlantic City? 24 A. I'd like to think about that a little 25 bit longer. 86 WILLIAM J. YUNG, III 1 Q. So the answer is you don't know. 2 A. Yes. 3 Q. But it's possible? 4 A. It's possible. 5 Q. And further jobs could be eliminated? 6 A. Yes. 7 (Conferring.) 8 MS. MAHER: Thank you. 9 CHAIR KASSEKERT: Any other questions? 10 Commissioner Epps? 11 COMMISSIONER EPPS: Yeah. A couple 12 questions based on the redirect and cross. The 13 player development people that you referred to, 14 the players who left as a result, do you have 15 any idea that you guys track? Do you know 16 where they went? 17 THE WITNESS: I think some of these 18 gentlemen are going to be up later will tell 19 you. But I know where one of them was going, 20 to the Hilton. And I don't know where the 21 other two that were -- look like we're going to 22 get back -- I don't know where they went. 23 COMMISSIONER EPPS: Not the employees. 24 The players that -- because you suggested the 25 employers -- 87 WILLIAM J. YUNG, III 1 THE WITNESS: Oh. 2 COMMISSIONER EPPS: The players 3 apparently left your company. 4 THE WITNESS: Right. 5 COMMISSIONER EPPS: Where did the 6 players go? 7 THE WITNESS: Where they went to play? 8 COMMISSIONER EPPS: Do you know? 9 THE WITNESS: What I can tell -- no. I 10 don't know exactly where they went to play. 11 But I can tell you that when we were only able 12 to keep like a third of their players with us, 13 you know, most of them went with them. I don't 14 know where they went. 15 COMMISSIONER EPPS: Now, are they with-- 16 is it your understanding that they were -- they 17 weren't playing at Trop because Trop was their 18 favorite place. 19 THE WITNESS: Right. 20 COMMISSIONER EPPS: Just because their 21 guy was there. 22 THE WITNESS: That's correct. 23 COMMISSIONER EPPS: And so you think if 24 you get that guy back -- 25 THE WITNESS: Right. 88 WILLIAM J. YUNG, III 1 COMMISSIONER EPPS: -- they'll come back 2 with them? 3 THE WITNESS: Right. 4 COMMISSIONER EPPS: Okay. The 5 intercompany debt question, I believe, is a 6 matter between Columbia Sussex, which is you; 7 right? 8 THE WITNESS: Right. 9 COMMISSIONER EPPS: And Aztar, which is 10 you? 11 THE WITNESS: Right. 12 (Laughter.) 13 COMMISSIONER EPPS: But you don't know 14 the terms of the agreement? 15 THE WITNESS: No. 16 COMMISSIONER EPPS: And then the 17 management services agreement between your two 18 companies, you don't know the substance of 19 those agreements, either? 20 THE WITNESS: No. Simply because it 21 really didn't make any difference to me. It's 22 in one pocket or the other. You know, I never 23 went in to get the details of it. It is a 24 legal type document that was done for some 25 legal reason, and I didn't -- you know, I've 89 WILLIAM J. YUNG, III 1 got enough other things to do that I just leave 2 it up to the attorneys and the accountants to 3 do that. 4 COMMISSIONER EPPS: And with all due 5 respect -- 6 THE WITNESS: Uh-huh. 7 COMMISSIONER EPPS: -- what is it that 8 you do that you don't concern yourself with 9 these things? 10 THE WITNESS: What do I do? 11 COMMISSIONER EPPS: Yes. 12 THE WITNESS: Okay. Well, what I do is 13 we -- I'm totally involved in the operation of 14 the hotels, and I'm also in -- and I clearly 15 monitor what's going on at the casinos. And 16 I-- I -- I think if you talk to any of the 17 employees that are to come up here later, I 18 think you'll find out I'm totally involved in 19 most everybody's job that I deal with. It's 20 not that I'm an absentee owner. Believe me, 21 I'm at work six days every week. 22 COMMISSIONER EPPS: And I don't doubt 23 that. The reason I ask the question is -- but 24 there seems to be a lot of areas that are 25 specific to this process that it's crucial for 90 WILLIAM J. YUNG, III 1 you to establish to us that you, being the 2 company, understand and are handling and 3 managing that you have clearly told us that you 4 don't know. Even such that a document that is 5 controlling potentially, a direction of the 6 company was placed before you and you signed 7 it, and you may not even know what it said. 8 THE WITNESS: Well, you know, certainly 9 that could possibly be because I sign about a 10 hundred documents a day. 11 COMMISSIONER EPPS: Without knowing or 12 understanding the documents? 13 THE WITNESS: I trust the people who -- 14 COMMISSIONER EPPS: Trust the people 15 under you? 16 THE WITNESS: When they place these 17 documents in front of me to sign that they're 18 doing the right thing. I can't read every 19 everything and do -- I can't do everything. 20 COMMISSIONER EPPS: Okay. 21 CHAIR KASSEKERT: Anything else? 22 Commissioner Sommeling? 23 COMMISSIONER SOMMELING: Mr. Yung, I 24 would assume that you would know what the 25 debt-to-equity ratio is for your whole company? 91 WILLIAM J. YUNG, III 1 You'd have an idea what that figure was? 2 THE WITNESS: Of Tropicana? 3 COMMISSIONER SOMMELING: Well, Tropicana 4 is one, but on both sides of the ledger. 5 THE WITNESS: Well, I think that, you 6 know, we -- I, you know -- with the Columbia 7 Sussex thing, it's so all capitalized, I never 8 really paid any attention to it. It's got 9 plenty of money and everything. And the 10 debt-to-equity ratio on Tropicana I'm aware of. 11 The covenants. 12 COMMISSIONER SOMMELING: That's all. 13 CHAIR KASSEKERT: You testified and 14 we've talked a little bit about your change in 15 philosophy, hopefully a change in regulatory 16 compliance. 17 THE WITNESS: Uh-huh. 18 CHAIR KASSEKERT: Are there any other 19 changes that as a result of this hearing and 20 this experience in Atlantic City you think 21 you're going to do with your company moving 22 forward that you can tell us about today? 23 THE WITNESS: Well, obviously, the most 24 important thing that we have to do right now is 25 to try to stabilize the ship. I mean, it -- we 92 WILLIAM J. YUNG, III 1 have -- we've got to get more business back. 2 You know, I think we're a good corporate 3 citizen. And, you know, I obviously -- we -- I 4 think we have good employee morale. And, you 5 know, I think the main thing is to get the -- 6 for the company's sake to get the, you know, 7 the bed bugs and everything else, headlines out 8 of the people's minds so that we can, you know, 9 maintain all our jobs here and be a very 10 successful company. 11 CHAIR KASSEKERT: What about you 12 personally? As the CEO? 13 THE WITNESS: In this community? 14 Well, I think that I need to be -- I'm 15 typically here about every three or four weeks. 16 And I probably am going to be coming here more 17 often to make sure everything is running right. 18 Although I'm sure with the people we have in 19 place now that it's going to be done right. 20 Uh-huh. 21 CHAIR KASSEKERT: Thank you. 22 Commissioner Sommeling? 23 COMMISSIONER SOMMELING: Mr. Yung, I 24 just have one more question with respect to the 25 employees. 93 WILLIAM J. YUNG, III 1 Now, at some point down the road, 2 Tropicana is going to be negotiating with the 3 unions. We have unions in Atlantic City. 4 THE WITNESS: Right. 5 COMMISSIONER SOMMELING: In the casinos. 6 I'm assuming that you don't do those 7 negotiations personally. 8 THE WITNESS: No, I don't. 9 COMMISSIONER SOMMELING: But who would 10 be doing those negotiations on behalf of 11 Tropicana? 12 THE WITNESS: Probably a -- a labor 13 lawyer in town. I don't know who it would be. 14 COMMISSIONER SOMMELING: No one from 15 your staff? Someone would have to be -- 16 THE WITNESS: Well, yeah. I'm sure Mark 17 would be -- Mark, the general manager, will be 18 involved in it. And I'm sure Donna will be 19 involved in it in some cases, and I'll be 20 involved in it, also. 21 COMMISSIONER SOMMELING: And this is 22 something that casinos in Atlantic City have 23 gone through since -- almost since day one, the 24 process of negotiating with the unions as they 25 grew in Atlantic City along with the casinos. 94 WILLIAM J. YUNG, III 1 THE WITNESS: Uh-huh. 2 COMMISSIONER SOMMELING: So really, in 3 reality, that's no surprise to you that we have 4 strong unions on this side of the gaming 5 venues. 6 THE WITNESS: No. No. It's no 7 surprise. 8 COMMISSIONER SOMMELING: And I imagine, 9 casino -- besides your legal staff, that you'd 10 have other people that would be involved in the 11 union negotiations from the union, the 12 employees represent -- the representatives of 13 the union employees within Tropicana. 14 THE WITNESS: Well, I'm sure the union 15 will bring some of those people involved in it 16 on their side, yeah. 17 COMMISSIONER SOMMELING: And you're all 18 set to go forward with this when the time 19 comes? 20 THE WITNESS: Yes. 21 CHAIR KASSEKERT: Anything else, Mr. 22 O'Gara. 23 MR. O'GARA: Yeah. Just one thing. 24 Because I think I may have misunderstood 25 Commissioner Epps. I didn't get the same 95 WILLIAM J. YUNG, III - redirect 1 answer that he didn't get. 2 3 REDIRECT EXAMINATION BY MR. O'GARA: 4 Q. With respect to the note you're being 5 asked about, if Tropicana owes Columbia Sussex money, 6 and it's on certain terms, you're aware that you -- 7 some of your money got lent to this Trop deal? 8 A. That's correct. 9 Q. And you know roughly how much money 10 you're owed? 11 A. I know roughly what it is. Yeah. 12 Q. And you're aware of that, and you're 13 aware there are terms of that, and you on both sides 14 of the deal have the right to modify those terms if 15 you had to or whatever else has to be done? 16 A. That's correct. 17 Q. But as to the exact agreement itself, 18 you're not familiar with the details of those loan 19 agreements or the schedules or how things are put? 20 A. That's correct. 21 Q. But you know it's you that owes you 22 money, and that money's there, and you control what 23 happens with respect to it 24 A. That's correct. 25 Q. Okay. 96 1 MR. O'GARA: Thank you. 2 CHAIR KASSEKERT: Miss Maher? Anything 3 else? 4 MS. MAHER: No. Thank you. 5 CHAIR KASSEKERT: Mr. Yung, you may step 6 down. 7 Mr. O'Gara, you can call your next 8 witness. 9 MR. O'GARA: Yeah. I don't know how to 10 tell you this, but I think my next witness went 11 to the little boys' room. Donna is going to go 12 get him. 13 (Laughter.) 14 (A brief pause was taken.) 15 CHAIR KASSEKERT: We can go back on the 16 record. 17 Mr. O'Gara? 18 MR. O'GARA: Yeah. 19 CHAIR KASSEKERT: Oh, I thought you 20 might have left. 21 MR. O'GARA: No problem. 22 Mr. Nance, I think you need to swear the 23 witness. 24 25 JOHN G. JACOB, was duly sworn to testify 97 JOHN G. JACOB - direct 1 in this matter. 2 3 MR. NANCE: Please state your name for 4 the record. 5 THE WITNESS: John Jacob. 6 MR. NANCE: Thank you. You may be 7 seated. 8 CHAIR KASSEKERT: You may proceed. 9 DIRECT EXAMINATION BY MR. O'GARA: 10 Q. Mr. Jacob, you're chief financial 11 officer of Tropicana Entertainment? 12 A. That's correct. 13 Q. And how long have you had that job? 14 A. Since August of this year. 15 Q. Okay. And you are located -- your 16 office is located where, and where do you work? 17 A. Kentucky. 18 Q. And you directly report to Mr. Yung? 19 A. Correct. 20 Q. And you're familiar, then, with the 21 financial affairs of Tropicana Entertainment? 22 A. That's correct. 23 Q. And you also have some familiarity with 24 the relationship it has with financial affairs of 25 Columbia Sussex Corporation? 98 JOHN G. JACOB - direct 1 A. Correct. 2 Q. And you've had a chance to see and you 3 were part of the information that is embodied in the 4 Division report on financial matters? 5 A. Uh-huh. Yes. 6 Q. All right. Before we get to that, let 7 me turn first to something that Mr. Yung testified 8 about in questioning about you, and that is what is 9 referred to as the event of default and the 10 consequences in terms of the covenant of the credit 11 agreement or the term loan with respect to Tropicana. 12 You are familiar with that? 13 A. I am. 14 Q. Okay. First of all, can you tell us 15 what, in fact, was -- what precipitated this event of 16 default? What was it, and what was the covenant that 17 was violated? 18 A. Okay. Well, we have two primary 19 financial covenants in our credit agreement. One is a 20 leverage test, which is a calculation of debt to 21 profitability. And the other one is an interest 22 coverage ratio that just measures really, again, our 23 profitability or relationship to our interests 24 expense. And going into the third quarter, the first 25 covenant was 7.50 times for leverage and 1.50 coverage 99 JOHN G. JACOB - direct 1 for interests. And based on the performance of the 2 company, we knew that it would be a tight test. That, 3 you know, we felt we would make it, but we would just 4 sneak by. And one of the ways that we were going to 5 help make that happen was to actually pay down some 6 debt at the end of September. And, in fact, we made a 7 $40 million debt pay-down. And as we went through the 8 closing process for the third quarter -- you know, 9 some of the numbers changed. We were putting together 10 our final or revised S4. Some of the numbers actually 11 in the second quarter turned up unfavorably in terms 12 of profitability result. And at the end -- 13 unfortunately, you know, the last Monday, the day we 14 were going to issue our compliance certificate, we 15 also found out that some of the cost savings numbers 16 that we were going to include in profitability as 17 permitted under our loan agreement were overstated by 18 about $2 million. So we immediately made that 19 correction. And when we filed our compliance 20 certificate with Credit Suisse, you know, we were 21 underneath the covenant. And I think it's been 22 previously stated, had we known that on September 23 30th, we could have paid down debt another $15 million 24 and been in compliance. 25 Q. All right. As a result of that, does 100 JOHN G. JACOB - direct 1 that mean you have had discussions with Credit Suisse? 2 A. Yes. Last week we initiated discussions 3 with Credit Suisse, who is the administrative agent 4 for our credit facility. 5 Q. And was that negotiation -- were those 6 negotiations with respect to modifying the covenant 7 and correcting the existence in the event of default? 8 A. That's correct. 9 Q. And, number one, are they amenable to 10 these discussions? 11 A. Yes. Yes. 12 Q. And have you begun the discussions, 13 initiated them? 14 A. We have initiated the discussions. One 15 of the first steps that the company is engaged in is 16 to actually perform a reforecast of the business, and, 17 you know, with a high degree of confidence. And then 18 upon putting that forecast together, negotiate with 19 the lenders on, you know, a set of covenants that, you 20 know, the company could live under and, you know, 21 return to focusing on operating the business. 22 Q. So you had indicated in your testimony 23 that you thought you would get by this covenant. Does 24 that mean when you look to the fourth quarter, it 25 would probably be another, let's try to get by kind of 101 JOHN G. JACOB - direct 1 thing? 2 A. Certainly it was going to be tight 3 through the fourth quarter. And, quite honestly, it 4 was going to require, you know, a significant 5 improvement in operational performance as we went into 6 the first quarter of next year, and the covenants 7 themselves actually tightened. 8 Q. So these discussions with respect to, 9 number one, considering the marketplace and what 10 you've seen has happened, forecasts, and then 11 covenants that will make it able for the company to 12 realistically meet these on a long-term? 13 A. That's correct. 14 Q. And has the bank indicated a willingness 15 and amenability to those discussions? 16 A. Yes. 17 Q. And do you have a -- you're a banker. 18 So are you confident, highly confident, whichever of 19 those bank words you want to use, that you'll be able 20 to reach a resolution? 21 A. Yes. I'm confident. 22 Q. All right. And do you anticipate a time 23 table it takes to get that done? 24 A. Well, I think, you know, putting the 25 forecast together, you know, negotiating a change in 102 JOHN G. JACOB - direct 1 pricing, you know, all of that, I would estimate it 2 would probably be most if not the remaining of the 3 fourth quarter and, you know, for the -- from the 4 company's standpoint, since we're not in need of 5 utilizing the revolver on our credit facility, there's 6 certainly no sense of urgency or anything on that. 7 And I think you have the holidays coming in. So I 8 think it will just, you know, take the balance of this 9 quarter. 10 Q. And what we'll then see is an amended 11 credit agreement test modified so that looking at 12 realistically where you see you are today and 13 forecasting based on that, the company has no problems 14 with the covenant test? 15 A. That's correct. 16 Q. And maintains its revolver? 17 A. Uh-huh. That's right. 18 Q. And at present you have sufficient cash 19 in the company that you don't feel you need to have 20 the revolver in the next few weeks? 21 A. That's correct. 22 Q. Okay. When you say you have to give 23 them new forecasts, what will you be doing in the way 24 of forecasting. What will you be trying to achieve 25 here? 103 JOHN G. JACOB - direct 1 A. Well, I think in looking at some of the 2 previous forecasts and so forth, I'm not sure we had 3 fully reflected in some of the influences and the 4 effects that, you know, Bill has talked to previously. 5 So I think, for us, we're going to have to go back and 6 really reforecast from the bottom up, property by 7 property, and make sure that, you know, those items 8 are highly achievable you know, taking the pluses and 9 the minuses and then, you know, be able to support 10 that and submit that to our bank group. 11 Q. Share them with everybody here. By that 12 I meant the Commission and the Division not 13 necessarily everyone in the building. 14 A. Yes. Obviously, that could have an 15 effect on, you know, bottom prices and everything else 16 in the market. So we'd want to be careful. 17 Q. In terms of the preparation of the 18 forecasts that were given to the Commission and 19 Division, were you involved in the direct preparation 20 of those forecasts? 21 A. Not in the direct preparation, but I did 22 look over the final result. 23 Q. And with respect to those, do you feel 24 that they contain some degree of optimism that perhaps 25 isn't warranted? 104 JOHN G. JACOB - direct 1 A. Certainly in hindsight that would seem 2 to be the case. But at the time, in looking at prior 3 year results, looking at the forecast that was used to 4 kind of set the covenants and so forth, it didn't seem 5 like a lot of the assumptions or a lot of the 6 projected results seemed unreasonable at the time. 7 Q. And what you've looked at so far in '07, 8 does that indicate to you that the performance was 9 less than the forecast? 10 A. Yes. 11 Q. And, again, what do you attribute it to 12 being lower than the forecast? 13 A. I think, you know, a combination of 14 issues, one of which was the fact that when the 15 covenants were originally set the forecasts were 16 originally set, the company was intending to make a 17 Casino Queen acquisition. That certainly would have 18 helped the results of the company. 19 I think the effects on revenue from 20 competition in several of our jurisdictions, not to 21 mention Atlantic City, you know, has had a negative 22 influence on that. Especially in an industry are 23 where, you know, the margin on any kind of incremental 24 revenue is just so high that it had a magnifying 25 effect on profitability. 105 JOHN G. JACOB - direct 1 Q. As you look forward to discussions with 2 the bank and towards the questions you'll answer from 3 anybody else here, are you satisfied that both 4 Tropicana Entertainment and Adamar's company here has 5 the ability to, you know, meet all its payrolls, pay 6 all its taxes? 7 A. I do. 8 Q. And sufficient funds to maintain its 9 casino operations? 10 A. Yes. 11 Q. And sufficient liquidity to deal with 12 things that might happen that we can't anticipate if 13 there would be storms and you were shut for two days 14 and those kind of things, you have the liquidity to 15 deal with all that? 16 A. We do. 17 Q. And your relationship with your bank, 18 you've discussed with us, you were able to discuss the 19 terms of these covenants, and they're willing to and 20 negotiate with you and arrive at covenants that work 21 for them and work for you? 22 A. That's correct. 23 MR. O'GARA: I don't have any other 24 questions. 25 CHAIR KASSEKERT: Mary Jo? Are you -- 106 JOHN G. JACOB - cross 1 MS. FLAHERTY: Yes. I'm sorry. 2 CHAIR KASSEKERT: Ms. Flaherty, you may 3 proceed. 4 MS. FLAHERTY: Okay. Thank you, 5 Commissioners. 6 7 CROSS-EXAMINATION BY MS. FLAHERTY: 8 Q. Mr. Jacob, good afternoon. 9 A. Good afternoon. 10 Q. I would like to address with you first 11 the submissions with regard to the renewal. With 12 regard to those, why was Tropicana unable to meet 13 Division's August 1st deadline for the submission of 14 the information for the renewal? 15 A. I believe that, you know, pulling the 16 information together from all the different properties 17 reforecasting it, while at the same time, you know, 18 trying to meet some of its, I can say almost newly 19 public requirements, put quite a strain on the entire 20 organization and in particular the finance 21 organization. And it was really a matter of trying to 22 balance, you know, all the balls without submitting 23 something that we didn't, you know, feel highly 24 confident in terms of the quality of the document so. 25 Q. As the process continued, did you -- 107 JOHN G. JACOB - cross 1 were you informed by your staff that there were some 2 gaps and inconsistencies in the information that had 3 come to us? 4 A. I knew that they were working and 5 responding to some concerns. 6 Q. Uh-huh. Why weren't the final forecasts 7 completed until late October of this year in terms 8 of -- 9 A. I think based on getting the 10 information, getting it incorporated, having -- you 11 know, getting files signed off from everyone, that 12 took longer than anticipated. And, again, that timing 13 was kind of real time with us approaching the third 14 quarter and looking at our credit agreement and 15 evaluating and spending a lot of time in, you know, 16 what kind of debt pay-down should be done. So we had 17 many, many priorities. But certainly that was one 18 that was a high priority to us, and we should have 19 been able to get it to you on a more timely basis. 20 Q. What steps have you taken to ensure that 21 there will be timely complete submissions in the 22 future? 23 A. Well, I think one of the first steps we 24 took -- and this occurred about a month after I 25 joined -- in evaluating our staff within the Tropicana 108 JOHN G. JACOB - cross 1 finance group at corporate who would be the group to 2 submit that, it was clear to me that there had been 3 some turnover, some -- some terminations for cause, 4 and the company had some severe staffing shortages. 5 And in a probably two-month time period we hired a 6 comptroller and three or four accountants, and what is 7 really a five- or six-accountant department, and so we 8 really staffed up as soon as we, you know, sat down 9 and looked at what our needs were. And were able to 10 bring in some quality -- quality staff. 11 Q. And that's the side of the staff for the 12 connection with the resorts side of the company? 13 A. Yes. 14 Q. And what assurances can you give as to 15 future compliance in terms of -- in terms of you and 16 your reaction to requests and our needs? 17 A. Yeah. I guess the assurance I can give 18 is that we consider it the -- you know, the highest 19 priority, you know, the utmost importance. And we 20 believe now that we're staffed accordingly that we can 21 meet our commitments. And if we find any indication 22 that that's not the case, then we'll go out and add 23 more resources to our department. 24 Q. Okay. Now, did the Tropicana Atlantic 25 City forecast 28 million reduction in costs and 109 JOHN G. JACOB - cross 1 expenses for 2007? 2 A. That sounds -- I know there were 3 reductions, but if it was 28 million. 4 Q. Okay. Of that amount, would that have 5 included 17.7 million in reduction in payroll for 6 2007? 7 A. Payroll would have been the majority of 8 it. Yes. 9 Q. As of August of this year, had Trop AC 10 instituted operational changes which resulted in a net 11 reduction in personnel of 678 employees, according to 12 the financial analysis? 13 A. That number sounds approximately right. 14 Yeah. 15 Q. Is that number of employees accurate? 16 A. I would have to go back to the sheet 17 that we're using, but -- because I -- we tend to track 18 dollars and not talent in our group. 19 Q. But in terms of the actual staffing at 20 the casino and the changes from the period of time 21 from January to August, is the 678 number, in terms of 22 a net reduction, accurate? 23 A. I don't think I have the information to 24 say that for sure. 25 Q. Does that conflict with other reduction 110 JOHN G. JACOB - cross 1 in force numbers that have been supplied to the 2 Commission and Division? For example, yesterday the 3 testimony with regard to A-80? 4 A. I -- I don't have a basis to say one way 5 or the other. On that count. 6 Q. Well, I believe that A-80, which is the 7 chart that was submitted during the course of Mr. 8 Yung's testimony, show that there were approximately 9 900 employees as a reduction in force. 10 A. On a actual basis. Okay. 11 Q. And that would have been for a slightly 12 longer period because that chart went to October; is 13 that correct? 14 A. (No verbal response.) 15 Q. Now, would the net decrease of that 16 number of employees as reflected in the information 17 that you submitted, represent approximately $22.7 18 million in salaries? 19 A. That sounds approximately correct. 20 Q. Okay. And as a result, is that how much 21 in salaries was saved for 2007 at the Tropicana AC? 22 A. I think it depends on when those -- 23 those reductions were actually put in place. 24 Q. But that was -- that was what you 25 forecasted; right? So do you know if you met the 111 JOHN G. JACOB - cross 1 forecast for the year? 2 A. I believe on the reductions that we came 3 in close to that number, but some of it was, I think, 4 pushed out. 5 Q. I'm not sure. Can you explain that? 6 A. In terms of the timing and what we were 7 expecting as it relate -- compared to some of the 8 calculations we did for our credit committee -- or 9 credit facility compliance. I just think the timing 10 of some of it was later. 11 Q. Longer than you anticipated? 12 A. Longer than we thought. Yeah. 13 Q. Do you know a firm number with regard to 14 layoffs at the Trop AC for 2007 at this point? 15 A. I would go with the numbers supplied -- 16 Q. That number -- 17 A. -- to the Commission. 18 Q. -- in A-80 or the number that was in the 19 financial forecast? 20 A. I would go on a actual head -- or actual 21 employee basis with the A-80. 22 Q. Okay. Which would be the number that 23 was in A-80? 24 A. Yes. That. 25 Q. Okay. 112 JOHN G. JACOB - cross 1 To your knowledge, are there any further 2 staff reductions planned at this time? 3 A. Not to my knowledge. 4 Q. Now, is there a $292 million note 5 payable from Adamar, which operates the Trop AC, to 6 Aztar? Does that remain a liability on the books? 7 A. I'm not certain. 8 Q. So you're not -- aware of that 9 obligation or how it's been reclassified? 10 A. I'm not. 11 Q. Did Trop AC meet its forecast for the 12 first nine months of 2007? 13 A. It did not. 14 Q. Were the actual net revenues 15 approximately 11.8 million lower than forecasts? 16 A. That sounds too low, actually. 17 Q. Okay. Was -- would that -- I believe 18 that that was what your forecast stated, though. 19 A. Okay. 20 Q. And do you think you did better than 21 what the forecast says? 22 A. No. I think we did worse than what the 23 forecast was. 24 Q. Okay. Was gross operating profit for 25 Trop AC lower than forecasted for 7.4 million for that 113 JOHN G. JACOB - cross 1 period? 2 A. For the nine months? 3 Q. Yes. For the nine months. 4 A. That sounds too low. I think we missed 5 by a little bit more than that. 6 Q. Okay. Does it, therefore, appear 7 unlikely that Trop AC will be able to achieve its 8 forecasted net revenues and GOP for 2007? 9 A. That's correct. 10 Q. For the whole year? 11 And for the first nine months of 2007, 12 was gross operating profit below the 2006 level? 13 A. Yeah. I believe it was. Yes. 14 Q. Okay. Now, are costs and expenses at 15 Trop AC projected to decrease for 2008 because the 16 operational changes will be in effect for the entire 17 year? 18 A. Yes. I believe it is. And some of that 19 is just because when we looked at '07, we kind of 20 baked in some of the cost savings, a factor year to 21 year, we're showing improvements off that base. 22 Q. And a large amount of that savings will 23 be in salaries as well over the prior year? 24 A. Correct. 25 Q. Now, as a result of the significant 114 JOHN G. JACOB - cross 1 reduction in staffing, as well as the inability to 2 meet forecasts for the first nine months of 2007 as 3 shown by the actual net revenue and GOP, isn't it 4 questionable whether Trop AC can maintain and grow its 5 revenue and GOP to the levels that had been forecasted 6 for the entire period? 7 A. I defer some of that to Kevin or Mark, 8 but we are going through a reforecast to evaluate that 9 very issue. 10 Q. But you don't think that you'll meet the 11 forecasts that you have submitted to us? 12 A. Certainly not for this year. And I 13 think we'd have to evaluate next year as well. 14 Q. Will Trop AC be able to achieve its 15 forecasted cash flow to moderations for this year in 16 that the results for the first nine months were lower 17 than expected? 18 A. I wouldn't expect that. 19 Q. Is excess cash at Trop Atlantic City 20 upstreamed to Aztar into its cash management system? 21 A. It is. 22 Q. Now, for 2007 will Tropicana AC spend 23 34.6 million for capital expenditures, mostly to 24 complete the hotel rooms that have been discussed as 25 well as the casino floor? 115 JOHN G. JACOB - cross 1 A. I believe it will. It depends a little 2 bit on what rolls over into 2008. The project in 3 total is about $30 million, and I think through nine 4 months at this property, we had -- we had spent about 5 15. So I think it will be somewhere between -- 6 yeah -- 15 to 25 million through the end of the year. 7 Q. And I think the number that I had as of 8 June was 13.1 million on the renovations. Would that 9 be correct? 10 A. That sounds about right. Yeah. 11 Q. And similar has been done since the end 12 of summer to bring us up to -- 13 A. Right. Or else there's been some other 14 money spent on capital. 15 Q. Now, when was the current refurbishment 16 of the Tropicana in terms of the hotel rooms and its 17 casino floor planned? Was that under the prior owners 18 or was that under the current -- 19 A. I -- I don't know. 20 Q. -- management? 21 A. -- the answer to that. 22 Q. Now, are capital expenditures forecasted 23 to decline in 2008 at the Tropicana AC and to be 24 primarily for maintenance? 25 A. Yeah. And I think -- and we've had a 116 JOHN G. JACOB - cross 1 wide variety of investor questions on this as well. 2 Q. Uh-huh. 3 A. We have between the completion at 4 Atlantic City and some of the specific property -- or 5 projects that are our other jurisdictions, I think we 6 have about 30 million of specific either maintenance 7 or improvement projects planned that have been 8 identified. Other than that, you know, we -- we've 9 been estimating two percent maintenance -- two percent 10 of revenue maintenance Capex, kind of in our 11 forecasting more recently, absent the identification 12 of more specific larger projects. It's really a 13 matter of, you know, having, you know, operations 14 identify those. And as they do, we'll bake them into 15 the forecast. 16 Q. Okay. Now, for 2009 and 2010, there 17 was-- for 2009 a decline in the Capex expenditures -- 18 you know, expenditures that were forecasted and for 19 2010 they were about at same as what you said for '9. 20 Do those amounts represent about 1.5 percent of the 21 net revenues in each of those years? 22 A. That's correct. 23 Q. What was the thought -- and I think you 24 just explained the thought process for that. Now, 25 were those figures well below what Trop AC has spent 117 JOHN G. JACOB - cross 1 for its Capex in terms of historical standards? 2 A. I don't know the answer to that. 3 Q. Okay. Now, for the five-year period 4 ending December 31st, 2010, would Trop AC's actual and 5 forecasted expenditures to be a total of approximately 6 6.9 percent of actual forecasted net revenue for that 7 five-year period? 8 A. Uh-huh. 9 Q. Now, for that -- now, for the four-year 10 period that's going to end December 31st, 2010, is 11 Tropicana AC forecasting that it's going to upstream a 12 significant amount of funds in each year to Aztar and 13 ultimately to Trop Entertainment; is that correct? 14 A. That's correct. 15 Q. Now, most of those funds go to pay 16 acquisition debt? 17 A. Correct. 18 Q. Can those results, the intention to 19 upstream those large amounts of money in each year, be 20 achieved in light of these significant staffing 21 reductions? 22 A. I believe the staffing reductions that 23 were consistent with, you know, the cost actions that 24 were assumed in the take, and I believe that would 25 contribute to ultimately the profitability and hence 118 JOHN G. JACOB - cross 1 the cash flow available to upstream. 2 Q. How about the low level of capital 3 expenditures forecasted for 2010? Would that impact 4 on your ability to meet the forecasted debt 5 repayments? 6 A. Certainly a lower Capex level would make 7 more cash available. 8 Q. But how would it affect the business in 9 terms of being able to draw customers in to reference 10 the revenues that you have if you have lower Capex? 11 A. Well, I think the way we are looking at 12 Capex was just trying to take an estimate of what the 13 maintenance Capex was. In terms of specific, you 14 know, property improvement spending, we were adding 15 that in as we became available to it. Or we -- we 16 became aware of it. 17 Q. Now, have you made any changes to the 18 forecasted capital expenditures since you submitted 19 the forecast to the Division? 20 A. Not for this property. 21 Q. Did Tropicana and Tropicana 22 Entertainment know about the regulatory requirement 23 relating to capital expenditures to establish 24 financial stability? 25 A. Not until after the fact. 119 JOHN G. JACOB - cross 1 Q. Are you now aware of the Commission's 2 financial stability regulations mandating the five 3 percent of net revenue for capital expenditures be 4 made as a minimum requirement? 5 A. We are. 6 Q. And how did you learn of that 7 requirement? 8 A. I think when it was brought to our 9 attention as it related to this document. 10 Q. Now, can you explain why you weren't 11 previously aware of that requirement? 12 A. Well, to be honest, in my instance, I'm 13 new to the industry, so it really is my oversight. 14 Q. And how do you intend to address the 15 regulatory requirements with regard to Capex in terms 16 of the Commission's regulation? 17 A. Well, I believe first and foremost, you 18 know, as it relates to the forecast, certainly it's -- 19 yeah. It's an easy enough change. It's really 20 probably spending more time more closely with the 21 property and the general manager and the VP of finance 22 here, and make sure that we do a better job 23 identifying, you know, specific projects that they may 24 have planned. 25 Q. Okay. And in that regard, what was the 120 JOHN G. JACOB - cross 1 input of the Tropicana Atlantic City into the 2 submitted forecasts? 3 A. I believe the profitability forecasts, 4 the revenue forecasts was initially submitted by all 5 of our properties. And I think, you know, there were 6 certain costs savings that were added into that 7 product. I think as it relates to the Capex 8 specifically, we tried to get some of the specific 9 current projects we are aware of in and then try to 10 put something in that reflected, you know, some level 11 of maintenance capital required. 12 Q. Can you describe the nature and extent 13 of any of the discussions that you had with Trop AC 14 financial personnel with regard to the projects? 15 A. I can't specifically. 16 Q. Would that mean that you didn't really 17 have any discussions with them? 18 A. No, I didn't. I'm certain that people 19 who worked with me -- 20 Q. Okay. 21 A. -- worked for me did. 22 Q. Did you have -- have you had any 23 discussions regarding the capital expenditure needs of 24 the Trop of Atlantic City with the financial and 25 operational personnel in preparing to appear here or 121 JOHN G. JACOB - cross 1 in preparing with regard to this proceeding? 2 A. I haven't specifically as it relates to 3 this proceeding, but I do have discussions as the need 4 arises as specific projects, you know, come up and we 5 go through the internal approval process. 6 Q. Do you also discuss the staffing needs 7 with them in terms of the financial impact of that? 8 A. Yeah. I'm aware of the staffing levels 9 in our organization. Yeah. 10 Q. Now, did Tropicana Entertainment also 11 have a net loss for 2007 of approximately $7.5 12 million? 13 A. Correct. 14 Q. And was that primarily a result of the 15 net interest expense on the debt used to finance the 16 merger? 17 A. Yes. 18 Q. And will the loss be greater than 19 forecasted for the full year in light of the results 20 from for the first nine months of 2007 at Trop 21 Atlantic City? 22 A. Yes. 23 Q. Now, for 2008 EBITDA projected to 24 increase due to significant reductions in operating 25 expenses including at the Trop AC? 122 JOHN G. JACOB - cross 1 A. The rollover affected some of the 2 actions taken this year. Yes. That's a contributor. 3 Q. Now, for the years of the forecast, 2006 4 through 2010, are 48.6 percent and then later on going 5 down to 44.6 percent of Trop Entertainment's net 6 revenues to be generated by Trop Atlantic City? 7 A. That sounds right. Yes. 8 Q. So during the forecast period, Trop AC 9 remains the most significant component of Trop 10 Entertainment's operations. Would that be correct? 11 A. Correct. 12 Q. Now, for the years of the forecast, does 13 cash flow from operations expected to increase at each 14 year in terms of Tropicana Entertainment's operations? 15 A. Correct. 16 Q. And for the years of the forecast, which 17 end December 2010, does Trop Entertainment expect to 18 make substantial payments on the term loan? 19 A. Yes. 20 Q. And can you give us a percentage amount 21 of approximately how much of those payments will be 22 funded by Trop Atlantic City? 23 A. Well, certainly I think it would -- the 24 easy answer is what -- you know, it's percentage 25 relationship of its profitability, EBITDA, I think 123 JOHN G. JACOB - cross 1 would translate to its inherent EBITDA pay-down. 2 Q. And what would that be? 3 A. Probably be in that 48 percent range. 4 Q. Okay. Now, is there any interplay with 5 regard to staffing reductions whether the Tropicana 6 Atlantic City or Tropicana Las Vegas or the operation 7 in Indiana and the funds available to pay down 8 acquisition debts? 9 A. I'm sorry. Could you repeat that? 10 Q. Yes. Is there any relationship between 11 the staffing reductions at Tropicana Atlantic City as 12 well as Tropicana Las Vegas and Indiana in terms of 13 its operation and funds available to pay down 14 acquisition debt? 15 A. No. 16 Q. Now, during the five-year period ending 17 December 2010, does Tropicana Entertainment forecast 18 payments on any of its debt other than the term loan, 19 which has net borrowings of approximately $1.3 billion 20 at this point? 21 A. No. I think it would -- it would focus 22 on paying off the term loan. 23 Q. And is the vast majority of the term 24 loan amount related to the acquisition of Aztar? 25 A. Yes. 124 JOHN G. JACOB - cross 1 Q. And is it correct that no interest will 2 be paid on the senior subordinated notes that were 3 issued with regard to the acquisition during the 4 forecast period? 5 A. Are you -- 6 Q. The 960 million? 7 A. Interest is being paid on that. 8 Q. Okay. But no other payments will be 9 made? 10 A. No. 11 Q. Okay. And is it correct that you 12 forecast no borrowings under the revolver during the 13 projected time period? 14 A. That's correct. 15 Q. Now, does Tropicana Entertain forecast 16 an increase in its cash balance as of the end of this 17 year? 18 A. I'd have to turn to that -- I would -- 19 let me find that. 20 It appears that versus where we were 21 from the end of September to where we projected here 22 to be at the end of December that it would -- it would 23 be pretty -- pretty flat -- 24 Q. Okay. 25 A. -- to where we are now. 125 JOHN G. JACOB - cross 1 Q. How about 2006 to 2007? 2 A. I -- looking at this, it would suggest 3 that it's a significant increase in cash. 4 Q. Now, for the years 2008, 2009, 2010 does 5 the Tropicana forecast that it will have relatively 6 minimal Capex expenditures at all of its properties, 7 pretty much maintenance? Would that be accurate? 8 A. Well, I think -- I think our issue right 9 now is, we've put in two percent of revenue purely 10 kind of a maintenance Capex. 11 Q. Uh-huh. 12 A. And it's -- because I think, as Bill had 13 mentioned earlier, we haven't really taken a step back 14 and tried -- attempted to forecast our big projects. 15 And, you know, we may not even know what they are at 16 this point in time. So what we've tried to do is put 17 a placeholder in for what we know we're going to spend 18 on just, you know, purely maintenance, maintenance 19 related items. 20 Q. Now, where would the funding for any 21 other project come from? Would that reduce the amount 22 that you would pay down on the debt that you planned? 23 Or would you have additional borrowings to do any 24 major construction? 25 A. Well, I think we'd have to evaluate 126 JOHN G. JACOB - cross 1 where we are at that given point in time. Obviously, 2 we would have to make any mandatory pay-downs on the 3 term loan. Absent that, we probably would want to use 4 our own cash flow to fund Capex. But if it was a -- 5 if it was a timing issue and, you know, we wanted the 6 project to get done and, you know, we had, you know, 7 revolver availability, obviously, we would consider 8 that as well. 9 Q. Now, I have some questions with you with 10 regard to your management arrangements. Management 11 fee arrangements. 12 A. Okay. 13 Q. Now, there are no projected management 14 fees to be paid under the forecasts in terms of the 15 Tropicana Atlantic City operation. Would that be 16 correct? 17 A. That's correct. 18 Q. Now, there had been an agreement that 19 was entered January the 3rd, 2007, which is not 20 effective and that related to Tropicana Entertainment 21 and went through Aztar to Tropicana AC. Now, was that 22 agreement based upon a proportion of its net operating 23 revenues compared to other owned or managed properties 24 or operations? 25 A. I -- I don't recall the exact 127 JOHN G. JACOB - cross 1 calculation on it, but I believe it was related to the 2 centralization of shared services. 3 Q. Now, is there also another agreement 4 that had been in effect with regard to management with 5 Columbia Sussex that related to Tropicana Atlantic 6 City? 7 A. Not that I'm aware of directly. 8 Q. And you wouldn't be aware of the fee 9 that was to be paid under that agreement? 10 A. Of -- well, the one agreement I'm 11 thinking of, I think the fee could have possibly have 12 been, I think somewhere in the range of $40,000 a 13 month. 14 Q. So approximately half a million dollars 15 a year? 16 A. Yeah. 17 Q. Now, was Tropicana Atlantic City to pay 18 approximately 50 percent of the management fees 19 charged by Columbia Sussex to Aztar subsidiaries as 20 under that agreement? Would that be accurate based on 21 that -- 22 A. I don't have -- I would have to go back 23 and look. I'm not familiar. 24 Q. Now, if the casino services management 25 agreements do become effective in New Jersey, does it 128 JOHN G. JACOB - cross 1 intend that the various operations would be relocated 2 to Kentucky? 3 A. I think -- I think the one that was 4 being evaluated was in -- in -- similar to other 5 properties, whether it would make sense to move some 6 shared services like accounts payable, some payroll 7 function and centralize those in Kentucky. 8 Q. Now, has any decision been made in that 9 regard whether you want to pursue that? 10 A. No. In my time here, we've had so many 11 other issues to look at that we've -- we haven't even 12 addressed that. 13 Q. Okay. Moving on to some property 14 issues. Have you agreed to sell the Vicksburg, 15 Mississippi, property? 16 A. We have. 17 Q. And can you provide details as to that 18 sale, the amount of debt to be paid down, the amount 19 of proceeds which will be realize with that? 20 A. Yeah. I think the gross proceeds are 35 21 million. I don't know exactly what kind of commission 22 we're paying on that, but whatever the net amount is 23 will go correctly to pay down our term loan. 24 Q. The term loan. And how will the 25 Vicksburg sale affect loan guaranties and the ability 129 JOHN G. JACOB - cross 1 to service your debt going forward? 2 A. Well, I think, you know, they have a 3 certain, you know, trailing 12 months EBITDA 4 performance that when we go to reset covenants, we'll 5 make certain is adjusted out upon the -- you know, the 6 time of sale. Which, I think, we believe is sometime, 7 you know, by the middle of next year. 8 Q. The Vicksburg recently loaned Tropicana 9 Entertainment several million dollars under those 10 guaranties; is that correct? 11 A. That would just -- yeah. That would be 12 the -- probably the upstreaming of whatever cash flow 13 they generated. 14 Q. But you did that in the loan format 15 rather than a direct upstream; correct? 16 A. I'd have to go back and check on that. 17 Q. Now, in regards to there's been some 18 mention of the sale of the Quarter. Can you set forth 19 what your plans might be in that regard? 20 A. Well, I think what we've said to our 21 lender base is that, you know, being where we are with 22 our credit agreement that we would evaluate, you know, 23 all options available to us to, you know, either 24 generate compliance or now, you know, move to solve, 25 you know, our amendment process. So I think we would 130 JOHN G. JACOB - cross 1 evaluate everything. 2 Q. Do you view it as likely, a likely 3 occurrence? Or not? 4 A. Specifically as it relates to the 5 Quarter? 6 Q. Yes. 7 A. In my opinion? 8 Q. Yes. 9 A. No. 10 Q. And would a sale have an impact on 11 earnings of the Tropicana Atlantic City? 12 A. The sale of the Quarter? 13 Q. Yes. 14 A. It would. 15 Q. And, in your view, how would it affect 16 the operation of the Tropicana Atlantic City? 17 A. I don't have a view on that. I'm not 18 close enough to the operations. 19 Q. Would it affect -- the sale of the 20 Quarter, would that affect your ability to service 21 debt? The term loan? 22 A. It would, but conversely you'd have less 23 debt to service from the proceeds of the sale. 24 Q. Do you know what the construction costs 25 of the Quarter was? 131 JOHN G. JACOB - cross 1 A. I do not. 2 Q. Now, there was also mention yesterday of 3 the possible addition of a new tower. Are you aware 4 of discussions with regard to that at the Tropicana 5 Atlantic City? 6 A. I've heard that discussed, yeah. 7 Q. And would you know how many rooms would 8 be estimated in terms of the potential new tower? 9 A. I don't. 10 Q. And would you have any idea of the cost 11 of construction of the tower in terms of what you'd be 12 considering? 13 A. No. 14 Q. And my next question would be, if you 15 know the answer, would the rooms that would be 16 constructed be sufficient to produce revenues to pay 17 the cost of the construction of the rooms? Would that 18 be your goal? 19 A. Certainly. 20 (Laughter.) 21 Q. Now, on August 30th of 2007, did Moody's 22 Investors Service credit rating agency downgrade a 23 number of its ratings related to Tropicana 24 Entertainment's long-term debt? 25 A. I believe that's right. Yes. 132 JOHN G. JACOB - cross 1 Q. And was that based on Moody's assessment 2 of Tropicana's Entertainment creditworthiness? 3 A. That's correct. 4 Q. And did the change in the ratings result 5 from Tropicana Entertainment's having a higher 6 leverage ratio and a lower interest coverage ratio 7 than having projected at the time when the ratings 8 were assigned? 9 A. That's correct. 10 Q. Now, can you explain how the ratings 11 were affected in terms of the performance over the 12 period since the acquisition of Aztar? 13 A. Well, I believe in looking at how the 14 covenants were originally set and recognizing that 15 Casino Queen acquisition didn't go through, so, you 16 know, right off the block, I think that, you know, 17 operating performance wasn't where, you know, it was 18 originally projected to be. The fact that the company 19 did not perform up to, I guess, the implicit forecasts 20 that were in the covenants -- 21 Q. Uh-huh. 22 A. -- in the first half of the year. And 23 then with our call in the -- you know, for the second 24 quarter, I think Moody's December accumulated all that 25 information, looked at really not our current 133 JOHN G. JACOB - cross 1 covenants, but the step down in covenants at the end 2 of the first quarter and projected out that they 3 thought that there was a, you know, higher degree of 4 risk that the company wouldn't meet those covenants. 5 And I think that's what led to their downgrade. 6 Q. So it was the fact that you didn't 7 acquire the Casino Queen and the performance at your 8 various facilities, including Atlantic City Trop? 9 A. Yeah. In terms of being tied to our 10 covenants. Yes. 11 Q. Uh-huh. Now, I know that Mr. O'Gara's 12 asked you about this, and as set forth in our 13 financial analysis, the Tropicana Entertainment's 14 total debt ratio for 2007 was going to be close to the 15 maximum permitted under the credit facility. And, as 16 noted, you wound up violating the covenants; correct? 17 A. (No verbal response.) 18 Q. Now, specifically, how could you have 19 avoided the noncompliance? What would it have taken 20 in terms of dollar amount to pay down? 21 A. On September 30th this year, we paid 22 down debt $40 million. If we had paid debt down $55 23 million, we'd be in compliance right now. 24 Q. And you discussed the actions that 25 you've taken in light of the technical default, and 134 JOHN G. JACOB - cross 1 what right now is the status of negotiations? Where 2 were you with the lenders? 3 A. Well, we've had an initial discussion 4 with Credit Suisse, our administrative agent. Our 5 first step now is to go back and prepare a new 6 forecast, a highly competent forecast, really for the 7 next three years with a strong focus on the rest of 8 '07 and 2008. And with that go back and negotiate 9 with them for covenants relating to, obviously, there 10 will be some kind of pricing adjustment in terms of 11 the spreads that we pay. And that's -- we're in the 12 early stages of that process. 13 Q. So you anticipate that there will be an 14 amendment to your current agreement with the lenders? 15 A. I do. 16 Q. And do you think that the lenders will 17 require certifications going forward? 18 A. In terms of covenant compliance and so 19 forth? 20 Q. Yes. 21 A. Yes, I do. 22 Q. And do you believe that the tests will 23 be more stringent given your need to meet regarding 24 your financial situation? 25 A. I don't think it will be as tight as it 135 JOHN G. JACOB - cross 1 is now. No. 2 Q. And that's something you'll negotiate 3 for? 4 A. Correct. 5 Q. And what options would you pursue to 6 remain in compliance on a continuing basis with regard 7 to your covenants? 8 A. Well, I believe, you know, assuming that 9 the covenants that exist will be similar to the ones 10 that exist now. But, you know, primarily leverage and 11 coverage, I think, you know, our -- our greatest 12 opportunities in that are over time to evaluate will, 13 you know, debt pay-downs, you know, makes sense in 14 order to, you know, stay within a leverage -- a 15 leverage test. I think we will continually evaluate 16 asset acquisitions or asset divestitures if, yeah, 17 it's something that makes sense from an operational 18 standpoint and also makes sense from a -- from a, you 19 know, covenant compliance standpoint. 20 Q. Could you also make capital 21 contributions, if necessary? 22 A. Certainly. 23 Q. And what flexibility do you have with 24 regard to borrowings under the revolver in terms of 25 the covenants? At what level would the borrowings 136 JOHN G. JACOB - cross 1 still be available to you without further affecting 2 your covenants at this point? 3 A. Well, at this moment, there -- our 4 revolver is not available to us. But once this, you 5 know, is reset, I would expect that our full facility, 6 however that's defined, will be available to us. 7 Q. Now, with regard to some of the 8 intercompany debt questions, I want to go over those 9 with you. Mr. Yung's referred them to you. 10 A. Uh-huh. 11 Q. As of June 2007, did Tropicana have 12 approximately $512 million with an additional $13 13 million in accrued interest owed to CSC Holdings, 14 which is a subsidiary of Columbia Sussex? 15 A. Yes. That sounds correct. 16 Q. Now, was most of that money, $360 17 million, you know, originally with regard to the 18 acquisition, and at the time of closing an additional 19 $144 million, basically incurred as a result of the 20 Aztar acquisition? 21 A. Correct. 22 Q. And so that would be the -- by far the 23 vast majority of these intercompany debts? 24 A. That's correct. 25 Q. Are any payments on that debt to be made 137 JOHN G. JACOB - cross 1 during the forecast period through 2010? 2 A. I don't believe so. No. 3 Q. And will the debt continue to accrue 4 interest? 5 A. It will. 6 Q. And are the interests in principal 7 payments due on those loans to mature in 2018? 8 A. I believe 2018 is correct. 9 Q. And is Tropicana's plan that the debt 10 eventually will be paid through distributions 11 upstreamed through Tropicana Entertainment? 12 A. Yes. I think there's a certain leverage 13 test or level that we have to meet before we could 14 even contemplate that. 15 Q. Okay. And is there any problem in 16 keeping these loans on the books for that period of 17 time without payment? 18 A. I don't believe so. 19 Q. Now, are you aware of recently submitted 20 information in a quarterly report to the Commission 21 and Division? 22 A. On? 23 Q. With regard to the performance of the 24 Tropicana Atlantic City, its quarterly report? 25 A. Okay. 138 JOHN G. JACOB - cross 1 Q. Have you been advised of an error with 2 respect to that submission? 3 A. Not that comes to mind. 4 Q. All right. Then you couldn't describe 5 it for us; correct? 6 (Laughter.) 7 Q. If you're not aware of it? 8 A. Is there an amount? I mean -- 9 Q. $19 million? 10 A. Oh. Oh. There -- I know that 11 adjustment was made, and I -- I guess what threw me is 12 I'm not sure I would have characterized it as an 13 error, but I believe that -- 14 Q. Uh-huh. 15 A. That during the first year after an 16 acquisition, there's a variety of opening balance 17 sheet adjustments that get made, and one of the things 18 that was pushed down to Atlantic City, I believe, is 19 an amortization of intangibles such as customer list 20 and so forth. The reason why it doesn't register more 21 highly with me is being a noncash issue would fall 22 outside our EBITDA performance definition. And, 23 obviously, the last couple weeks we've been very 24 EBITDA performance focused. 25 Q. Okay. It wasn't a problem, though, when 139 JOHN G. JACOB - cross 1 it was initially submitted? It showed up above the 2 EBITDA line, the cost of services? 3 A. Oh, that may be. And then it moved 4 below it? 5 Q. Right. 6 A. Yeah. Okay. 7 Q. Now, has that situation been corrected? 8 A. Yeah. I believe that we're all in 9 agreement how it should be classified going forward. 10 Q. So you're satisfied that this type of 11 problem won't occur again? 12 A. We've put as many controls in place as 13 we can to avoid it. 14 Q. Now -- now, I understand that there are 15 certain arrangements whereby tax liabilities relating 16 to what would eventually flow up to Mr. Yung might be 17 reimbursed by some of Tropicana Entertainment or its 18 affiliates. Would that be accurate? 19 A. I believe that we have the ability to 20 move cash upward to meet tax obligations. 21 Q. Now, are those amounts reflected in the 22 forecast? 23 A. I know at one point there was some -- 24 some omission of that. Or either that or we had just 25 included it in the overall cash amount available to 140 JOHN G. JACOB - cross 1 flow upward. 2 Q. And how would those funds flow? 3 A. I think they would flow with, you know, 4 the rest of -- the rest of the cash. And really 5 it's -- once it was up at the Tropicana Entertainment 6 level, I believe what happens is we make specific 7 requests on behalf of, you know, Mr. Yung or any tax 8 liabilities and move it in installments then. 9 Q. Okay. And where would those funds 10 originate? 11 A. Well, I think they would originate at 12 the properties. 13 Q. And does that affect your financial 14 flexibility in any way? The use of those proceeds for 15 those tax reasons? 16 A. I don't believe so. 17 Q. Now, does Tropicana Las Vegas service a 18 $440 million loan? 19 A. Does Tropicana -- 20 Q. Las Vegas? 21 A. Yes. 22 Q. It services the $440 million loan? 23 A. Yes. 24 Q. Is the Tropicana Las Vegas to be 25 redeveloped? 141 JOHN G. JACOB - cross 1 A. The company has plans to redevelop. 2 Q. And can you describe the redevelopment 3 plans from a financial point of view? 4 A. Well, I think that, you know, there's an 5 overall project cost. I think that has yet to be 6 finalized. And, you know -- upon, you know, getting 7 full plans and costs that we, the company, would have 8 to go out and, you know, finance a significant portion 9 of that, in part to take out the existing $440 million 10 loan and then the cost to redevelop. 11 Q. But that's going to be a major project 12 with multibillion dollar investment; correct? 13 A. I believe that's right. 14 Q. And is the Tropicana Las Vegas operation 15 or its debt or the debt on its property reflected on 16 Tropicana Entertainment's consolidated results? 17 A. Yes. 18 Q. It is? 19 A. On Tropicana Entertainment? 20 Q. Yes. 21 A. Yes. 22 Q. Now, will the financing arrangements for 23 the Tropicana Las Vegas project rely in any way on the 24 Atlantic City operations? 25 A. I don't believe so. 142 JOHN G. JACOB - cross 1 Q. As a result of the redevelopment of the 2 Tropicana Las Vegas and the related debt which would 3 be incurred, will Tropicana Las Vegas be able to 4 upstream funds to Tropicana Entertainment or 5 Tropicana? 6 A. I think that will depend on what that 7 final capital structure looks like for that deal. But 8 I would assume that it would be tapped into that 9 specific project. 10 Q. And so you're not really anticipating 11 any large degree of funds to come from Tropicana Las 12 Vegas for the foreseeable future for this three- or 13 four-year period. Would that be accurate? 14 A. I think whatever funds came from Las 15 Vegas would be used to service the other specific 16 debt. 17 Q. The debt on the property which is going 18 to be redeveloped? 19 A. Correct. 20 Q. And based on that situation, will 21 Tropicana Atlantic City continue to carry the burden 22 of funding the debt payments related to the Aztar 23 acquisition? 24 A. Certainly it will continue the burden 25 in-- yeah -- in the sense of the percentages that were 143 JOHN G. JACOB 1 laid out here. 2 Q. Approximately 44, 47 percent? 3 A. Correct. That's correct. 4 MS. FLAHERTY: That's all I have. 5 Thank you, Commissioner. 6 CHAIR KASSEKERT: I think we're just 7 going to take a brief ten-minute break. 8 THE WITNESS: Thank you. 9 (A recess was taken from 2:56 to 3:26 10 p.m.) 11 CHAIR KASSEKERT: We'll go back on the 12 record. 13 We'll now move to questions from the 14 Commissioners. 15 Commissioners Eps? 16 COMMISSIONER EPPS: Yes. I'll start 17 with the covenant issue and your discussions 18 with Credit Suisse regarding the renegotiating 19 the covenants going forward. 20 You said that you're going to submit to 21 them new forecasts? 22 THE WITNESS: That's correct. 23 COMMISSIONER EPPS: Would they be 24 different than the forecasts that you submitted 25 to us that -- which we're reviewing now? 144 JOHN G. JACOB 1 THE WITNESS: Yes, Commissioner, it 2 would. 3 COMMISSIONER EPPS: So that these are 4 going to change? 5 THE WITNESS: That's right. 6 COMMISSIONER EPPS: You're going submit 7 them to us as well? Will we get copies of the 8 new forecasts? 9 THE WITNESS: I believe that's our 10 intention. 11 MR. O'GARA: Certainly. 12 THE WITNESS: Simultaneously, 13 Commissioner. 14 COMMISSIONER EPPS: Now, you suggested 15 that the process, once you submit your new 16 forecasts that you work out the terms of the 17 covenants, we'll take some time, but 18 potentially the rest of the fourth quarter. Is 19 there another covenant test between now and 20 then? 21 THE WITNESS: No. There's one at 22 December 31 that would be due on March 31. 23 Consistent with our public reporting 24 requirements. 25 COMMISSIONER EPPS: Would your new 145 JOHN G. JACOB 1 arrangement make that one go away? 2 THE WITNESS: That's correct. 3 COMMISSIONER EPPS: Okay. 4 THE WITNESS: I think the time frame of 5 the reporting will be similar. I believe the 6 covenant level will change. 7 COMMISSIONER EPPS: So it would be the 8 new covenant that would be reportable? 9 THE WITNESS: That's correct. 10 COMMISSIONER EPPS: Okay. Your 11 forecasts show year-over-year EBITDA growth. I 12 think you testified earlier that you're not 13 likely to hit '07. 14 THE WITNESS: That's correct. 15 COMMISSIONER EPPS: Are you confident 16 that you will hit '08 and the others going 17 forward. 18 THE WITNESS: I believe we'll be very 19 confident of the numbers that we put forth in 20 our new forecasts. 21 COMMISSIONER EPPS: New forecasts. 22 THE WITNESS: Reflecting kind of the 23 realities of where we are now and some of the 24 revenue and profit leverages that we have to 25 generate the business forward. 146 JOHN G. JACOB 1 COMMISSIONER EPPS: Okay. There was 2 significant increase projected between '07 and 3 '08, but as we get -- heard from Mr. Yung, 4 there's no significant changes to your 5 facility, particularly in Atlantic City, that 6 are projected to have happen other than the 7 rooms and casino restaurant events that you're 8 going through now. How do you anticipate 9 hitting that? Or how did you anticipate 10 hitting that forecasts with no other changes? 11 THE WITNESS: Well, I believe the 12 biggest levers would have been, you know, some 13 increase in revenue while at the same time 14 getting the rollover full year effect of the 15 cost reductions that have been enacted. 16 COMMISSIONER EPPS: So those factors, 17 you would think it would be enough to meet that 18 target? 19 THE WITNESS: I believe so. Yes. 20 COMMISSIONER EPPS: Based on the 21 testimony, it doesn't seem that you have very 22 many capital expenditure plans that are 23 significant beyond maintenance other than 24 something potentially in Las Vegas. Is that 25 fair to say? 147 JOHN G. JACOB 1 THE WITNESS: I believe we haven't 2 identified any other than the, you know, five 3 or six currently that we have in the process. 4 And by that I mean, you know, big projects 5 beyond just, you know, typical maintenance. 6 Beyond that we've had discussions on Las Vegas. 7 But really in terms of going into 2008, 2009, 8 we have not sat down with the properties and 9 really gone through in a lot of detail any big 10 projects they have coming forward. We will. 11 We just haven't done that as part of our 12 budgeting process yet. 13 COMMISSIONER EPPS: Now, if you are able 14 to do that, that changes both your forecasts 15 and your -- and your Capex plans and all of 16 that. And that, I guess, it would be 17 resubmitted to us as well? 18 THE WITNESS: That's correct. 19 COMMISSIONER EPPS: Okay. The 20 intercompany note that we've discussed, that 21 potentially could carry out through -- what 22 term? 23 THE WITNESS: 2018? 24 COMMISSIONER EPPS: Okay. 2018. And 25 you indicated that what was -- how was that 148 JOHN G. JACOB 1 going to be paid? 2 THE WITNESS: Well, I know the way it's 3 structured right now is it has -- it accrues 4 interest, and I think at some point in the 5 future, if we were able to get below a certain 6 leverage level, which I think was four times on 7 our, you know, credit facility that we might 8 have the opportunity to pay down on that. But 9 right now our credit facility would prohibit 10 that. And in any event, the whole thing comes 11 due at maturity. So there's no mandatory 12 payments before then. 13 COMMISSIONER EPPS: Should we be 14 concerned about unpaid interest over that long 15 period of time? What is the liability? 16 Potential liability? Do you know? 17 THE WITNESS: I haven't calculated it 18 out, but certainly it would be, you know, a 19 relatively large number given that it started 20 at 500, 512 million. 21 COMMISSIONER EPPS: But you don't think 22 we should be concerned about that, all that 23 interest accruing all that length of time? 24 THE WITNESS: I believe looking at the 25 forecast, I think the value of the Tropicana 149 JOHN G. JACOB 1 entity would certainly suggest that there's 2 value to, you know, pay that obligation back. 3 COMMISSIONER EPPS: I believe that you 4 testified that part of the reason for the 5 covenant event was that the cost savings 6 weren't quite realized as originally projected. 7 THE WITNESS: That's correct. 8 COMMISSIONER EPPS: What was the source 9 of that cost savings? 10 THE WITNESS: Well, specifically, our 11 credit agreement allows us to take cost savings 12 actions that occurred in 2007 and treat them as 13 if they had occurred on January 1st. So, for 14 example, if we had took an action on June 30th 15 for a million dollars, they would allow us to, 16 for covenant reporting purposes, add, you know, 17 250,000 to the first quarter and $250,000 to 18 the second quarter as if that -- you know, 19 event had happened on January 1st. 20 In the case of our September compliance 21 calculations, we had assumed that we had 22 approximately -- I think the number was, you 23 know, $17 million in these types of add-backs 24 permissible under the agreement. And what we 25 came to find out was that some of the cost 150 JOHN G. JACOB 1 savings actions we had taken, which are 2 primarily position eliminations, we actually 3 had hired back or are going to hire back. So 4 we excluded them from the calculations. And 5 that, you know, we were so tight to the 6 covenant that that $2 million moved us from 7 right above the covenant to right below it. 8 COMMISSIONER EPPS: So you didn't lay 9 off enough people? 10 THE WITNESS: No. We classified 11 positions as having been eliminated that were 12 actually either hired back or were going to be 13 hired back. So we took them off the list of 14 cost savings. 15 COMMISSIONER EPPS: Well, if you had 16 effectuated more layoffs or kept them off the 17 books, then you would have met your covenant 18 that you anticipated as cost saving? 19 THE WITNESS: If we had taken up more 20 cost savings actions, yeah. The number would 21 be higher and, you know, we wouldn't have had 22 the adjustment. 23 COMMISSIONER EPPS: So when you set up 24 your loans or these arrangements early on in 25 your process, you anticipated that there would 151 JOHN G. JACOB 1 be significant staff reduction which would 2 allow you to save money? 3 THE WITNESS: Yeah. I believe in the S4 4 in the road show there were always some 5 assumptions. I think Bill had mentioned some 6 numbers earlier related to the Phoenix 7 headquarters and so forth that they knew would 8 occur, and they wanted to set the covenants 9 such that, you know, they could, you know, 10 incorporate that into our performance. 11 COMMISSIONER EPPS: Some of those were 12 Atlantic City positions; correct? Anticipated? 13 THE WITNESS: I believe some of them 14 were. Yes. 15 COMMISSIONER EPPS: And these were 16 anticipated before you actually took over 17 management of the actual company to make an 18 assessment as to what your needs actually were. 19 Is that fair to say? 20 THE WITNESS: You know, I can't really 21 say that exactly. I wasn't here. But 22 certainly they were included in the S4 -- 23 COMMISSIONER EPPS: In the road show. 24 THE WITNESS: -- that was filed in June. 25 COMMISSIONER EPPS: Well, they are also 152 JOHN G. JACOB 1 included in the road show going to -- 2 THE WITNESS: Yeah. In broad terms, 3 yeah. There were some savings assumed in the 4 road show. That's correct. 5 COMMISSIONER EPPS: So there were some 6 savings assumed in the road show as a result of 7 cutting staff before you took over management 8 of the company to determine whether or not in a 9 management or an operating function they could 10 actually be sustained? 11 THE WITNESS: I believe that the road 12 show that was -- yeah. It was in December of 13 '06. The presentation. 14 COMMISSIONER EPPS: I don't think I have 15 anything. 16 CHAIR KASSEKERT: Any questions? 17 Commissioner Fedorko? 18 VICE CHAIR FEDORKO: No. 19 CHAIR KASSEKERT: Commissioner 20 Sommeling? 21 COMMISSIONER SOMMELING: No. 22 CHAIR KASSEKERT: Anything on redirect? 23 MR. O'GARA: Just one thing. 24 CHAIR KASSEKERT: Sure. 25 153 JOHN G. JACOB - recross 1 REDIRECT EXAMINATION BY MR. O'GARA: 2 Q. The loan that Commissioner Epps referred 3 to, the Columbia Sussex and the intercompany loan, the 4 company that lent the money is entirely owned by Mr. 5 Yung? 6 A. That's correct. 7 Q. And the company that borrowed the money 8 is entirely loaned owned by Mr. Yung? 9 A. That's correct. 10 Q. So while it's due in 2018 with accrued 11 interest, Mr. Yung can in his sole discretion, if he 12 has to, waive any conditions or do whatever has to be 13 done with respect to one company or the other. That's 14 solely his decision. 15 A. Correct. 16 Q. There's no other creditor? 17 A. No. 18 MR. O'GARA: Okay. Thank you. 19 CHAIR KASSEKERT: Ms. Flaherty? 20 Anything on recross? 21 MS. FLAHERTY: Yes. Just one question. 22 CHAIR KASSEKERT: Sure. 23 24 RECROSS-EXAMINATION BY MS. FLAHERTY: 25 Q. With regard to the negotiations with 154 JOHN G. JACOB - recross 1 Credit Suisse, do you anticipate there will be an 2 increase in the interest spread as a result of that? 3 A. I do. 4 Q. And what would be the impact in terms 5 financially of the company and it's license and 6 forecasts? 7 A. Well, I believe the impact will be 8 whatever that spread is will have an effect on the 9 $1.3 billion of debt outstanding under the credit 10 agreement currently. And, obviously, that will be 11 something that we factor into our forecasts and any 12 future, you know, debt pay-downs that we agree to with 13 our creditors. 14 Q. Do you agree the effect of that will be 15 significant? 16 A. Yeah. I think it would be significant. 17 Q. Can you give us any details in which 18 way? 19 A. Well, you know, what we're asking -- 20 what we're talking about now has yet to be negotiated. 21 So I don't know that I really want in this forum to go 22 any further than that. 23 MS. FLAHERTY: Okay. Thank you. 24 CHAIR KASSEKERT: Anything else? 25 Commissioners? 155 1 CHAIR KASSEKERT: You may step down. 2 THE WITNESS: Thank you. 3 CHAIR KASSEKERT: You can call your next 4 witness. 5 MR. O'GARA: I just need a moment. 6 CHAIR KASSEKERT: Sure. 7 MR. O'GARA: You're done with me. I 8 mean, you get another witness, but you're done 9 with me for a while. 10 MR. LEVENSON: That's the good news. 11 The bad news -- 12 CHAIR KASSEKERT: The bad news is it's 13 you. 14 MR. O'GARA: I didn't want to give you 15 the other half. 16 CHAIR KASSEKERT: You made it so simple. 17 MR. LEVENSON: Starting to sweep out 18 there. 19 CHAIR KASSEKERT: I know. 20 MR. LEVENSON: A lot of dust out there, 21 I noticed. 22 Mark Giannantonio, please. 23 CHAIR KASSEKERT: Mr. Giannantonio, Mr. 24 Nance will swear you in. 25 156 MARK GIANNANTONIO - direct 1 MARK GIANNANTONIO, was duly sworn to 2 testify in this matter. 3 4 MR. NANCE: Please state your name for 5 the record. 6 THE WITNESS: Mark Giannantonio. 7 MR. NANCE: Please spell your name for 8 the record. 9 THE WITNESS: G-i-a-n-n-a-n-t-o-n-i-o. 10 MR. NANCE: Thank you. 11 CHAIR KASSEKERT: You may proceed, Mr. 12 Levenson. 13 14 DIRECT EXAMINATION BY MR. LEVENSON: 15 Q. Mr. Giannantonio, without scaring 16 anybody with this question, where were you born? 17 A. In this city; Atlantic City. 18 Q. And did you matriculate all through the 19 Atlantic City school systems? 20 A. St. Michael's and then Atlantic City 21 High School. 22 Q. Did you graduate from Atlantic City 23 High? 24 A. Yes. 25 Q. With better grades than my son just got 157 MARK GIANNANTONIO - direct 1 today? 2 A. I hope so based on the question. 3 VICE CHAIR FEDORKO: Well, what are 4 they? 5 MR. LEVENSON: What are they? Actually, 6 advance placement Latin he got an A, but I'm 7 stopping there. 8 Anyway. 9 Q. And you continued on locally in college? 10 A. Yes. 11 Q. You went to Stockton College? 12 A. Correct. 13 Q. And am I correct -- we'll go through 14 this kind of quickly, your background, if we might. 15 You actually started in Resorts as a room service 16 waiter. 17 A. That's correct. Well, I was a -- while 18 in Stockton I was a room service waiter. 19 Q. Okay. And then you after you finished 20 college, you stayed in the industry? 21 A. Yes. 22 Q. And you went to Golden Nugget, 23 Tropicana, did a short stint at Trump Marina, came 24 back to Tropicana. And how long have you now been to 25 Tropicana the last time? 158 MARK GIANNANTONIO - direct 1 A. Going on 20 years. 2 Q. And without going through all your jobs 3 at Tropicana -- because I know you've had a lot of 4 different jobs as you moved up the chain -- in year 5 2000 did you become the Vice President of the Hotel 6 Operations and Marketing Administration? 7 A. That's correct. 8 Q. And then when the new -- Mr. Yung took 9 over and his company, did you become the executive 10 Vice President of Operations? 11 A. Yes. 12 Q. Okay. And, more recently, what are you 13 now? 14 A. President and COO. 15 Q. And when did that occur? 16 A. In August. Middle of August. 17 Q. August of this year? 18 A. Yes. 19 Q. 2007. 20 Now, previous to your taking on that 21 position, what was the structure at Tropicana as far 22 as the leadership at the property? 23 A. At my level there were two positions. 24 Fred Buro was the president, and I was the Executive 25 Vice President of Operations. Essentially, Fred 159 MARK GIANNANTONIO - direct 1 oversaw the casino and all the aspects of the casino, 2 and I oversaw hotel, food and beverage, and noncasino 3 departments. 4 Q. So, actually, even though there was 5 different titles, you were Executive Vice President, 6 and he was Chief Operating Officer that was in charge 7 of the casino side, and you were in charge of the 8 hotel side? 9 A. Yes. 10 Q. Then you both -- or each reported up, 11 eventually, to Mr. Yung; is that correct? 12 A. Yes. 13 Q. Now, since August of 2007 when you 14 became the President and COO, is there the same type 15 of organization? Or now are you basically -- not 16 basically -- are you in charge of the casino side and 17 the hotel side? 18 A. Yes, I am. 19 Q. And is that consistent with the way that 20 you understand the other casinos in town operate? 21 A. That's correct. 22 Q. And just give us a moment on basically 23 the table of organization from yourself locally up to 24 Mr. Yung. How does it go on -- 25 A. Sure. I report up to two individuals, 160 MARK GIANNANTONIO - direct 1 Bob Little on the casino side, and Jim Barracca on the 2 hotel side. They, in turn, report up to two people 3 who report to Mr. Yung. 4 Q. Who are those two people that report to 5 Mr. Yung. 6 A. On the casino side is Kevin Preston. 7 The hotel side is Stan Clayton. 8 Q. And then Mr. Yung is, obviously, at the 9 top? 10 A. Right. 11 Q. Now, we've heard a lot about layoffs. 12 We've heard a lot about problems that were occurring 13 in the casino, in the hotel, and the whole project 14 with regard to the union and the like. Since you're 15 really the first witness that's taken the stand that's 16 there on site every single day, probably more days 17 than you want to recall, tell us about what was going 18 on, from your vantage point, as a result of union 19 activities and the layoffs? 20 A. Well, you know, I guess any time a 21 company takes over another company, and particularly 22 at the magnitude and size and scale that was involved 23 here, you know, it's not really an easy process for 24 the people that are involved with it. There tends to 25 be some anxiety on the ground at the properties. And 161 MARK GIANNANTONIO - direct 1 you know, what's in it for me? Or you know, am I 2 going to be here when it's all said and done? And 3 that's the reality of it. I'm sure many of you were 4 aware of that. 5 The reality of it was overall, you know, 6 it was -- it was a difficult period of time. We've 7 made -- it's never easy making reductions. And, I 8 guess, from my vantage point, the frustration has 9 been, I guess, the inaccuracy of how things have been 10 reported. And that's why, you know, we kind of wanted 11 to get that information out yesterday as to what was a 12 layoff, what was a resignation, voluntarily, what was 13 a termination, and then what was the add backs, 14 because I think there were so many numbers thrown 15 around here. 16 You know, we -- we evaluated -- and this 17 is how I feel. Mr. Yung and the people that I 18 reported to evaluated every department very carefully 19 and certainly looked where we could, without affecting 20 service, streamlining the operation. You know, call 21 it right size. And in many, many cases we've actually 22 improved our operations, and I can certainly get into 23 that. In the case of, for example, the public area 24 staff, we didn't -- there wasn't a reduction day one. 25 It took months and analysis to figure out, what are we 162 MARK GIANNANTONIO - direct 1 going to do with the operation here? And, I mean, the 2 fact of the matter is, you know, to read about in 3 today's Press something so egregious as to bed bugs 4 which, of course, was one case, and it was never 5 substantiated. There was not a case of bed bugs in 6 that guest room. And these other allegations that -- 7 that occurred back in March, it's very difficult as an 8 operator to continue to try to motivate a staff of 9 3700 and move forward as you're moving forward taking 10 three steps back. 11 So just getting back to the public area 12 department, we did make cuts in public areas, and it 13 was through -- after very detailed analysis. And I 14 was involved with those analysis. And, essentially, 15 the analysis went as -- as follows. You know, we've 16 looked at the amount of square footage that someone 17 cleans, and we basically said, okay, we think we can 18 have somebody do more square footage. It's basic, you 19 know, mathematics. In addition, we knew that the 20 smoking ban had been implemented, which I can tell 21 you, from a cleanliness standpoint helped us 22 instantly. You didn't have ashes all over the slot 23 machines and cigarette butts all over the place and 24 things of that nature. 25 Secondly, while we knew going into it, 163 MARK GIANNANTONIO - direct 1 we knew it was going to be difficult even for the 2 management in the department, when you're accustomed 3 to managing in a certain way, it is very difficult in 4 any case when you're making changes to -- for managers 5 to just automatically go from X amount of employees to 6 X amount of employees and think that we're not going 7 to have problems. Clearly, the one thing that we did 8 not anticipate is the -- I guess, is the degree of 9 call-outs that we received at the property on a busy 10 Saturday night. You know, whatever the staff was 11 scheduled, there were Saturdays in the very beginning 12 that we had almost half of staff call out. I know 13 that that's been refuted, but that's the reality. I 14 was on the ground, and I lived with it. 15 I know that it took a little time for 16 employees to get accustomed. You know, we make it 17 very basic. We tell people to find dirt and clean it. 18 And, you know, there were some people that were 19 accustomed to look at a slot machine. They were 20 cleaning the chrome that was already beautifully 21 shined, and they were still doing it. So we had to 22 kind of correct those individuals and train them and 23 provide the better equipment and things of that 24 nature. 25 And then the other thing that we didn't 164 MARK GIANNANTONIO - direct 1 anticipate was the degree of -- and I'm certainly not 2 pinpointing figures, but the degree of sabotage here 3 at the property where we had urinals filled with sand. 4 I mean, I don't think our customers were filling our 5 urinals with sand. Or toilet paper rolls that were 6 jammed into commodes. I mean, I'm pretty sure -- I 7 don't think it was the customers that were doing it. 8 Q. In any event, before these layoffs, you 9 were not suffering sand in urinals and toilet paper 10 rolls down toilets? 11 A. Correct. 12 Q. And when -- just, and I'm not going to 13 belabor this, but just so the Commission is clear. 14 When someone was cleaning the clean and shiny chrome, 15 was there dirt that was right there that wasn't being 16 taken care of? 17 A. There was. Yeah. And, you know, it 18 took some time. And, you know, after a bit of time, 19 we really started to get it -- the one thing that 20 helped us was that as we were experiencing so many 21 call-outs and so many people out for various reasons, 22 we had a support staff from the housekeeping 23 department to come in. And the reality of it is, once 24 we were able to attain -- I'll use the term FTE, but 25 in this case 81 FTE, 81 FTEs or 81 40-hour shifts or 165 MARK GIANNANTONIO - direct 1 81 40-hour period, once we were able to attain that, 2 we were -- we were able to keep the place clean. And 3 it took a little while. It took some weeks to get 4 that done. And you know, certainly it was a very 5 rough period of time. We got a lot of bad press. We 6 got a lot of bad publicity. I know the morale was 7 low. 8 But the reality of it is it's behind us, 9 and we need to move forward and forge ahead because we 10 do have 3700 employees that come in every day that 11 really work their rear ends off to make it the 12 finest-- I believe in my heart the finest 13 establishment in Atlantic City. 14 Q. All right. And just to clean up this 15 one area -- no pun intended -- clean up this one area. 16 But with half the staff, cleaning staff, 17 calling out, obviously a cleanliness issue arises when 18 you have half the number of people that are supposed 19 to come in on a particular Saturday night and clean, 20 and they are not there? 21 A. Yeah. I mean, you have to then 22 prioritize what's going to get done. You know, you 23 may not pick up the trash as frequently, but you try 24 to get the bathrooms as clean. We had some crisis 25 periods of times where, you know, we just all tried to 166 MARK GIANNANTONIO - direct 1 pitch in and tried to get the job done. 2 Q. Now, there were -- they are a part of 3 this record -- is some 71 customer complaints. You 4 reviewed them, I'm sure, did you not? 5 A. I did. 6 Q. And did you go back and recently check 7 how many of those 71 customers have come back to the 8 Tropicana? 9 A. Yeah. Essentially it was 71 accounts 10 tied to 66 complaints from the period of March through 11 August. And I just want to put things in context. 12 That's 66 written complaints on -- during that time 13 frame 369,000 plus room nights. To give you a little 14 feel for how many people we have at the property on a 15 daily basis, it's about 12,000 people daily. So, you 16 know, I've been -- I've overseen the hotel for, I 17 guess, seven or eight years. And, you know, the 18 numbers -- except for those few weekends that we had 19 or periods of times where we really had some 20 difficulty, the numbers were -- are really minuscule. 21 If you put things in context of the big picture. 22 The fact is based on these 66 23 complaints, I checked every single account. These 24 were customers that were casino customers. I checked 25 their account. About 93 percent never wavered in 167 MARK GIANNANTONIO - direct 1 their frequency to the property. As a matter of fact, 2 so, in other words, if they complained March 17th, and 3 they came two times a week for every week or whatever 4 their frequency was, it just continued to be that way 5 up until the last week or whenever I checked it. The 6 other seven percent, it appears that we may have lost. 7 Which I'm not so sure -- I mean, could just be a 8 normal pattern as well, but -- 9 Q. Okay. The Quarter. Fantastic. It's 10 beautiful. It's a great place to shop. A great place 11 to eat. I assume you would agree with that? 12 A. Yes. 13 Q. However, it's been in the papers, it's 14 been said publicly that the attraction of the Quarter 15 and then the casino and its fluidity to move people 16 from the Quarter to the casino basically is something 17 that you believe needed improvement; is that correct? 18 A. That's correct. 19 Q. Okay. Why don't we just -- we have a 20 casino floor plan here that we can take a look at. 21 MR. LEVENSON: And each of the 22 Commissioners have a copy of this, a small 23 rendition. It is difficult to see. 24 CHAIR KASSEKERT: Is this part of the 25 Division's report or -- 168 MARK GIANNANTONIO - direct 1 MR. NANCE: Did you move that in? 2 CHAIR KASSEKERT: It's one of your 3 exhibits? 4 MR. O'GARA: It's -- 5 MR. LEVENSON: It's an exhibit. 6 MR. NANCE: A-77. That wasn't move in. 7 MR. LEVENSON: Pardon me? 8 MR. NANCE: It wasn't move in. 9 MR. LEVENSON: All right. I offer A-77. 10 MS. MAHER: No objection. 11 CHAIR KASSEKERT: No objection. Thank 12 you. 13 With no objection, we'll move that into 14 evidence. 15 MR. LEVENSON: Oh, I'm sorry. I thought 16 you all had it. 17 CHAIR KASSEKERT: That's okay. 18 COMMISSIONER EPPS: Simple as that is. 19 MR. LEVENSON: See this one letter, and 20 the one that's in front of you. That's the 21 trick. Why don't I -- 22 A. This will put into context the 30 23 million in capital expenditure. 24 MR. LEVENSON: Should we put it closer 25 to you? 169 MARK GIANNANTONIO - direct 1 COMMISSIONER EPPS: No. No way. 2 (Laughter.) 3 CHAIR KASSEKERT: I'm fine. 4 A. The reality of it is when we built the 5 Quarter and spent the 260 million that it took to 6 build the Quarter Aztar had made a decision not to 7 renovate the casino floor. For right or for wrong, 8 the bottom line is, when we opened the Quarter, you 9 walked into the Quarter. You saw the beauty of the 10 Quarter and the excitement. But then you walked into 11 the casino, and you were just -- you were sent back 12 into the '80s. So what Mr. Yung has provided and what 13 we began immediately was we renovated the south tower 14 rooms, 500 rooms in the south tower. 15 Q. When was the last time they were 16 renovated? 17 A. They were never renovated. 18 Q. Never. So that goes back to what year? 19 A. '88 or something like that. So those 20 rooms started January. They ended Memorial Day 21 weekend. At the same time we were renovating the 22 south tower casino, and just to give us a guys of a 23 point of, this here is Tango's Lounge. 24 MR. LEVENSON: Excuse me. Commissioner 25 Epps has a question. 170 MARK GIANNANTONIO - direct 1 COMMISSIONER EPPS: Where was the 2 Quarter? 3 THE WITNESS: The Quarter is over here. 4 COMMISSIONER EPPS: Okay. 5 A. This is the layout of the casino. 6 Q. That's an important question. I'm 7 sorry. I should ask that. Why don't you show them -- 8 give them an idea -- 9 A. Carmine's is over here, and you are 10 walking down and -- 11 COMMISSIONER EPPS: That's the -- 12 THE WITNESS: Okay. Here you're walking 13 through the Quarter, and you hit Tango's 14 Lounge? Everybody familiar with Tango's. And 15 here's the fountain. 16 CHAIR KASSEKERT: Uh-huh. 17 A. If you come through here, and you walk, 18 this is where the all palm trees are. This is the 19 south tower casino. It's the highest grossly slot 20 area that we have. And, frankly, it just looked like 21 it was the 1970s. So we did a full renovation on that 22 area, began in January and opened, I guess, it was 23 around June. 24 Q. Would -- sorry. 25 A. Total, total renovation in four phases. 171 MARK GIANNANTONIO - direct 1 No question it had an impact on our revenue at the 2 time. But we had to get it done. I think Mr. Yung 3 saw the need for it, as many of us did. 4 Q. You said no question it had an impact on 5 revenue, meaning while you were under construction a 6 negative impact? 7 A. Correct. 8 Q. Now, what is now there in that spot? 9 A. Well, it's slot machines, but it's 10 totally renovated. It looks more like the Quarter 11 now. 12 The other things we have currently going 13 is are our Seaside restaurant, which is about 350 14 seats, we closed that right after Labor Day and 15 totally -- total gut of the restaurant and renovation. 16 So that's that will be open, hopefully, by Friday. 17 We're hoping to get it by this weekend. 18 Also the very popular Il Verdi 19 restaurant has been closed as well and is going to 20 open about the middle of December. 21 Q. Stop right there, because I just want to 22 give some further information about that. Il Verdi 23 was built and opened about when? 24 A. In '81. 25 Q. In 1981. Was it ever other than light 172 MARK GIANNANTONIO - direct 1 bulbs or maybe some wallpaper -- was it ever really 2 updated? 3 A. No. Never. 4 Q. So in 26 years -- under Mr. Yung's 5 direction that has been closed -- is that also gutted? 6 A. Correct. 7 Q. And to be opened in December? 8 A. Yes. Just getting back to the quality 9 of this. This Seaside Cafe is a casual restaurant. 10 People go in and out of there. But now the dining 11 experience will be, while it will be -- it will feel 12 like a gourmet restaurant, but you'll be able to get 13 and in and out fairly quickly. And that's the 14 quantity of this restaurant, so -- and Il Verdi, it 15 will give the look and feel of a New York style 16 Italian restaurant. Very, very elegant. Well done. 17 The other thing that we just completed a 18 few weeks ago, when we're speaking about the flow of 19 traffic, the one thing that we needed to get people 20 from the Quarter to the gaming floor, we added two 21 table pits here. And it's called F zone. It's 22 basically, if you're familiar with the property, it's 23 where our palm trees are. And that really has opened 24 up a line of sight, so it used to be all slot 25 machines, hightop slot machines. Now it's tables and 173 MARK GIANNANTONIO - direct 1 it's full of action. Very exciting. And then you can 2 see through -- right through to the north tower when 3 you're looking forward. 4 Q. So when people are walking by there, 5 instead of just seeing a bunch of hightop slot 6 machines, they're seeing people crowded around tables, 7 having fun, and that I presume is the attraction that 8 you're looking for to get people to come from the 9 Quarter into the casino? 10 A. Correct. 11 And then, finally, and probably the most 12 tangible piece of this is the renovation of the north 13 tower gaming area. You know, I've heard Bob Little 14 call it a hangar. Basically, that's what it looked 15 like. You know, on a mid-week period, the darn thing 16 would look like an Air Force hangar. Very vacant when 17 it wasn't busy. And what we're doing is adding a 18 center bar. 19 MR. LEVENSON: I think these -- these 20 haven't been submitted, either, Daryl? 21 MR. NANCE: No. 22 MR. LEVENSON: Could I offer A-78 and 23 A-79. 24 MR. MICHAEL: They are -- 25 MR. LEVENSON: Do you have those there? 174 MARK GIANNANTONIO - direct 1 MR. NANCE: Yeah. A-78. What is that? 2 MR. LEVENSON: It's the more outside one 3 without people -- well, they both have people. 4 The larger people are on A-79. 5 (Laughter.) 6 UNIDENTIFIED PERSON: Bartender in A-79. 7 MR. LEVENSON: One has the word 8 "Tropicana." That's A-78. 9 MR. NANCE: Okay. 10 A. These are just renderings of what the 11 center bar will look like. The table game area will 12 be a more of a semi-circle around this center bar. 13 Really adding a lot of excitement. They'll have 14 plasmas inside and throughout the casino. And then 15 this will -- this is a rendering of the interior. You 16 know, you've seen these throughout Las Vegas and even 17 here in Atlantic City. But it certainly will 18 hopefully help draw customers into the casino and help 19 drive more gaming revenue for us. So these are some 20 things that are on the drawing board that -- 21 Q. You can have a seat. 22 But you also mentioned -- well, you 23 didn't mention -- I'm going to ask you to mention -- 24 the restaurant Wellington's? What is going on with 25 the restaurant Wellington's? 175 MARK GIANNANTONIO - direct 1 A. Apparently, Wellington's is being 2 utilized -- because it was closed September so that we 3 could satisfy the needs of the customers that go into 4 the Seaside because we need a volume -- we needed 5 somewhere to do volume coverage during this period of 6 time. That also is being renovated. It's getting all 7 brand-new kitchen equipment which, you know, basically 8 we used to put patchwork on kitchen equipment for 9 years and years. And what we've been allowed to do is 10 to replace a lot of the -- and that's -- what we talk 11 about the 30 million. There's a lot of capital 12 projects that are small projects. But when I say 13 "small" could be a hundred thousand that we're doing 14 more frequently now, so. 15 Q. And, also, I know these individually may 16 sound kind of unimportant, but I remember when I was 17 chatting with you in preparation for this, you were 18 listing for me certain things that are now being done 19 at the property under Mr. Yung's ownership that 20 weren't done under the previous ownership. I know you 21 know what I'm talking about, so why don't you just 22 tell us. 23 A. Yeah. I mean, just to give you a view 24 in my opinion of how things have changed at the 25 property. I think it really started when Kevin 176 MARK GIANNANTONIO - direct 1 Preston came on board and Bob Little. You know, 2 there -- there really has been a change in that the 3 support from corporate is just apparent now. They're 4 here on property more frequently. The employees know 5 them. And I think, for example, we had employee 6 meetings where we had meeting, come in, this was about 7 a month and a half ago. We did a series of three 8 meetings which really helped with employee morale. It 9 was really what the doctor ordered right at that time. 10 And it just helps to turn things. You know, we've had 11 a difficult period of time, and that really gave us a 12 really good shot in the arm. 13 And the other things that I think many 14 employees would say at the property is that on the 15 hotel operations side, we were able to do -- and this 16 never got reported, but we were making fundamental 17 changes to our operations almost immediately when it 18 came to improving service. For example, at the front 19 desk. Like every other hotel in town, at peak 20 check-in there might be a 40-inute wait to check in. 21 And almost overnight the hotel operation staff, in 22 addition to the staff at the Columbia Sussex, was 23 really able to turn that around, put in new systems, 24 and get people checked in. And it, you know, it -- it 25 was remarkable how customers noticed that improvement. 177 MARK GIANNANTONIO - direct 1 Q. And what is -- just it used to be 40 2 minutes. Now what is it, approximately? 3 A. It's -- you know, might take a minute 4 and a half to check in, now. 5 The other thing was immediately we used 6 to have two towels in every room. Now we have four. 7 Doesn't sound like much, but guests notice it. We had 8 one bottle of shampoo. In January of '07 we had three 9 bottles. Bottle of shampoo, conditioner, and lotion. 10 Again, it's the little stuff. Nobody really knows 11 about. You know, I've even read where we only had -- 12 we had no amenities in the guest room. Well, I mean, 13 I guess anything is possible, but I can tell you since 14 January, we've had three bottles of amenities in the 15 guest rooms. 16 Q. What about -- what about the beds, just 17 as an example? 18 A. We replaced our beds with a Westin 19 version of the Heavenly bed. It's a Euro-style 20 pillowtop mattress. 21 And, again, these are the things that, 22 when I was evaluating the situation prior to the 23 merger, you know, and I think, you know, talking to 24 some of my staff Ann Lasal and some other people, 25 these were areas were we knew we were going to see 178 MARK GIANNANTONIO - direct 1 some improvement. They were going to help us to get 2 to places that we weren't getting to before. And the 3 proof of it is -- and I think Mr. Yung had mentioned 4 it yesterday is, if you look at these internet 5 wholesalers, four or five years ago on Trip Adviser, 6 we were ranked -- and, of course, it's hotels -- hotel 7 casinos, and just hotels. We were ranked 27. And I 8 think we are now ranked, like, 10th. But when it 9 comes to casinos, we're, like, third. So there's been 10 a huge improvement in the way that our scores from -- 11 from the internet and wholesale world has been 12 impacted. And I can see that. Because, you know -- 13 it's a lot of it has to do with the amenities that we 14 offer. 15 Q. And even the quality of the food. I 16 mean, you were mentioning to me something about the 17 beef? 18 A. Yeah. We -- 19 Q. All this costs money, I presume? 20 A. In all of our gourmet rooms we put into 21 place certified Black Angus beef, which is something 22 that we never did before. 23 Q. Now, obviously, from what we've heard, 24 there was a level -- and I think you just testified to 25 it earlier -- that morale was a bit suffering during 179 MARK GIANNANTONIO - direct 1 the early part of 2007. Tell us, you know, as now 2 chief operating officer since August of this year -- 3 tell us about the morale of the employees at the 4 hotel. 5 A. Well, you know, I think a hundred times 6 better than it was. I mean, I think that it's the 7 things like what occurred at today's paper that sets 8 it back. You know, just talking to employees, they -- 9 they believe that we had a bed bug. And to be honest 10 with you, you know, bed bugs are -- they travel on 11 luggage. People don't notice -- know that. But they 12 only come into your hotel through a piece of luggage. 13 And they come from states that have high humidity. 14 And any hotel is suspect to bed bugs. But the case 15 that was reported in today's paper that said bed bugs 16 in the Atlantic City Press was -- is not true. It was 17 not substantiated. And it's a shame because, you 18 know, the press should be an advocate to the city. 19 Q. So, in other words, bed bugs don't get 20 born in the -- 21 A. It's not because you're dirty, let's put 22 it this way. You could have -- you could travel to 23 Disney and come back with a bed bug and have it in 24 your house. So it's just that way. 25 Q. And have you had a series of employee 180 MARK GIANNANTONIO - direct 1 meetings, and is that how you are able to gauge the 2 morale of recent times? 3 A. Well, I mean I just see it. I'm on the 4 floor a lot. You know, I talk to a lot of our 5 employees. As our executive staff, we got a great 6 executive staff. I mean, you know, Kevin, Bob, and 7 Jim Barracca, you know, we're out there. That's what 8 we're doing. We're not -- we're not managers in 9 offices. You know, we have a vested interest to make 10 this property the best that it can be. For me, you 11 know, I was born and raised here. I don't want to see 12 the Tropicana, you know, certainly have a bad name. 13 This is a great property. 14 Q. Now, in your interactions with Mr. 15 Little and Kevin Preston, and particularly Mr. Yung, 16 are they open to listening to your view about what 17 should or should not be done at the property? 18 A. Yes. To give you a example of that, 19 where we did have shortfall in service with slot 20 jackpot pay-out times, you know, talking to Bob and 21 Kevin, we presented to Mr. Yung, you know, this is the 22 situation that we're in. And we were table to hire 23 back immediately slot attendants that helped with that 24 service and get that -- get that response time back 25 where it needed to be. 181 MARK GIANNANTONIO - cross 1 Q. Do you believe that you are getting the 2 personnel and the support that you believe is 3 necessary to run an operation -- casino hotel 4 operation successfully in Atlantic City from 5 corporate? 6 A. I believe we are. Yes. 7 Q. Just, I guess one last question. 8 Because there's been talk about people who were making 9 150,000 or above and no longer there or whatever. You 10 may not have the exact number, but approximately how 11 many people are working at the hotel casino that are 12 making that much and above? 13 A. I mean, it's probably about ten or so. 14 MR. LEVENSON: I don't have any further 15 questions. 16 CHAIR KASSEKERT: Miss Maher, cross? 17 18 CROSS-EXAMINATION BY MS. MAHER: 19 Q. Good afternoon. 20 A. Good afternoon. 21 Q. Could you pronounce your name for me 22 again? 23 A. Diannantonio. 24 Q. Mr. Diannantonio. Thank you. 25 Just so I can clear up a few things and 182 MARK GIANNANTONIO - cross 1 understand your position there and where you've come 2 and how you've gotten to that point, how long have you 3 been with the Tropicana Atlantic City since what year? 4 Please. 5 A. Since I began in 1988, and I left for a 6 short period of time. Came back in 1989. 7 Q. And you've been there since 1989 then? 8 A. Yes. 9 Q. When you came back in 1989, what was 10 your position? 11 A. I was in food and beverage. I was food 12 and beverage operations analyst where I did all the 13 analysis for the department, of labor, menu pricing, 14 costs, things of that nature. 15 Q. And how long were you in that position? 16 A. About two years. 17 Q. And then what position did you move to 18 from that, please? 19 A. From there I spent about two years in Il 20 Verdi as assistant maitre d'. And after being in 21 there, making a lot of money in Il Verdi, I just 22 figured I better put my degree to work, and I went 23 to-- I moved to a senior financial analyst in the 24 finance department. 25 Q. And your degree is in what, please? 183 MARK GIANNANTONIO - cross 1 A. Economics. 2 Q. And so you moved from the maitre d' 3 position to what position? 4 A. Senior financial analyst. 5 Q. Okay. And what did you do in that 6 position, please? 7 A. All the analysis that -- ad hoc analysis 8 that needed to be done. The budget for the year, you 9 know, any type of analysis that was asked. At the 10 time I think we were planning the west tower 11 renovation -- or west tower. And helped to complete 12 the white paper for that. 13 Q. How long did you stay in that position? 14 A. I guess it wasn't too long of a period 15 of time. I guess it was probably less than a year. I 16 got promoted as to the Executive Director of Casino 17 Customer Service. 18 Q. And what did you do in that position, 19 please? 20 A. Well, that's where I began to manage the 21 rooms and the yield of the rooms along with all the 22 call centers. 23 Q. Along with all the what? 24 A. Call centers. Outbound and inbound 25 phone calls. 184 MARK GIANNANTONIO - cross 1 Q. How long were you in that position? 2 A. I guess about five years. 3 Q. And, I'm sorry. I'm not adding this up 4 very well. Where did you move from then, to what 5 position? 6 A. I -- where are we at now? 7 MR. LEVENSON: I have it written down. 8 A. I guess I was then Executive Director of 9 Marketing Administration. 10 Q. And what did you do in that position? 11 A. Similar -- similar things. Still had 12 all those responsibilities. Did more casino analysis 13 and also made -- had a telemarketing team for high 14 level casino customers. 15 Q. And from there? 16 A. From there I was appointed Assistant 17 Vice President, Hotel Operations and Marketing 18 Administration. 19 Q. And what did you do in that position? 20 A. Oversaw the hotel and kept my previous 21 responsibilities. 22 Q. Regarding marketing? 23 A. Yes. 24 Q. And is that the position that you were 25 in when Mr. Yung took over the operation? 185 MARK GIANNANTONIO - cross 1 A. No. I was then Vice President of Hotel 2 Operations. I had a little promotion after that. 3 Q. All right. And, again, you dealt with 4 the hotel side of the casino or hotel side of the 5 operation, I should say? 6 A. Not really. You know, when you're 7 responsible for yield in the hotel, I was as involved 8 on the casino side as I was on the hotel side. 9 However, from an operations standpoint, my 10 responsibilities, luckily, are alined with the hotel 11 operations. 12 Q. Were you say you're familiar with the 13 hotel operations than you are the casino side or the 14 casino operations? Would that be fair? 15 A. I think I'm equally familiar. 16 Q. And then in 2007 -- January 2007, that's 17 when you held the title of VP of the Administration 18 and Marketing; is that correct? 19 A. January 2007 I was Executive Vice 20 President of Operations. 21 Q. Okay. And that's when Mr. Yung came in? 22 A. Yes. 23 Q. Okay. And then your proceed position to 24 your position now came in August of 2007? 25 A. That's correct. 186 MARK GIANNANTONIO - cross 1 Q. Now, I want to talk to you about the 2 layoffs a little bit. And I'm going to hand you 3 what's been marked as Exhibit A-80. 4 A. Sure. 5 Q. And that's been floating around a little 6 bit during the course of this hearing. And are you 7 familiar with that document? 8 A. I am. 9 Q. And how is it that you're familiar with 10 that document? 11 A. My HR person put that together. 12 Q. Put that together at your request? 13 A. Yes. 14 Q. And who is your HR person that put that 15 together? 16 A. Tina Tartaglio. Or one of her 17 employees. I'm not sure. 18 Q. And what information did they use to put 19 that together? 20 A. Well, it's basically a termination 21 turnover summary. So what it does, it goes back and 22 extracts when someone leaves on their RIF, what was 23 the reason for leaving? Was it a layoff? Was it a 24 termination? Was it a resignation? Things of that 25 nature. And for the purpose of just hoping to have 187 MARK GIANNANTONIO - cross 1 everybody on the same page, I guess. 2 Q. Okay. And that was why that document 3 was put together for the purpose of having everyone on 4 the same page? 5 A. Yes. 6 Q. Was it put together for the purpose of 7 this particular hearing? 8 A. No. It was -- I think put together a 9 while ago. 10 Q. And when was it put together? 11 A. Maybe a couple weeks ago. This says 12 11-14. 13 Q. And it was put together for what purpose 14 then? 15 A. Just to have me going into it knowing 16 what the numbers were and have everybody being on the 17 same page. 18 Q. Okay. 19 A. Because I've seen so many different 20 numbers there. There were 900 layoffs -- 21 Q. Exactly. 22 A. Exactly. 23 Q. So at this point we've seen a lot of 24 different numbers. A lot of different numbers have 25 been thrown around by a lot of different people. Are 188 MARK GIANNANTONIO - cross 1 these the numbers? 2 A. Well, I would say these are the numbers. 3 Absolutely. 4 Q. This is -- this is the number? 5 A. Yes. 6 Q. These are the definitive numbers in 7 terms of layoffs? 8 A. Correct. 9 Q. In terms of voluntary terminations -- or 10 voluntary resignations, terminations? 11 A. Firings. 12 Q. Firings, if you will. 13 A. And hire backs. 14 Q. And hire backs. 15 A. Yes. 16 Q. But we've gone over those numbers, 17 again, but I don't know how many people have been laid 18 off from January 2007 to October 31st 2007? 19 A. 500. 20 Q. And how many have voluntarily left? 21 A. 443. 22 Q. How many were terminated for cause or -- 23 A. 376. 24 Q. And then how many hired back? 25 A. 422. 189 MARK GIANNANTONIO - cross 1 Q. And that gives us a net number of what, 2 please? Net number of total terminations, please? 3 A. About -- it's 1319. 4 Q. And then would you agree with me, I 5 believe, you came up with the net terminations of -- 6 A. 897. 7 Q. -- of 897; is that correct? 8 A. Correct. 9 Q. And that's not on there, but I think 10 that's the figure that I came up with subtracting the 11 numbers. 12 A. Well, you know, it's -- it's a little -- 13 little leading. It's 897. But it's -- you know, it's 14 certainly not terminations. If you resign, it's a 15 resignation. 16 Q. Well -- 17 A. I'm just saying, you know, it's 18 turnover. So I just want to make sure we're all on 19 the same page here. 20 Q. People that have -- that no longer are 21 employed at the Tropicana, I guess we could say? 22 A. Yes. Correct. 23 Q. Do you know in January of 2007 what 24 number you started with? 25 A. Yes. 190 MARK GIANNANTONIO - cross 1 Q. What number would that be? 2 A. 4,400 -- 4,424. 3 Q. 4,000 -- 4,424. And where did you get 4 that number, please? 5 A. From an employee roster count. 6 Q. And that was January -- January 1, 2007? 7 A. Yeah. I think it was January 1. 8 Q. Thereabouts? Okay. 9 Now, you -- 10 A. I think the take over was January 3rd 11 so. 12 Q. Okay. Now, you've indicated, I believe, 13 that you -- regarding the layoffs, you and Mr. -- I 14 think you said you and Mr. Yung evaluated every 15 department very carefully? 16 A. No. I didn't say that. I said myself 17 and the people that I work with. 18 Q. Okay. I'm sorry. 19 Did you interface all with Mr. Yung 20 during the layoffs. 21 A. During the layoffs? Yes. 22 Q. Okay. 23 A. He was on property. 24 Q. When did you first know or when did you 25 first get the direction that there needed to be 191 MARK GIANNANTONIO - cross 1 layoffs. There were too many people working here. We 2 need to reduce costs? When did you first get that 3 directive? 4 A. You know, we started talking about it 5 right after January 3rd. 6 Q. Who is "we"? 7 A. The people that I knew I was going to 8 report to. Jim Barracca, Mr. Stan Clayton. You know, 9 people that were on the property after -- you got to 10 realize, the merger -- this was such a significant 11 merger. And the reality of this is -- this property 12 made up of a very high percentage of Aztar. So, you 13 know, there were, you know, concerns about just 14 getting on the ground and making sure that things went 15 pretty smoothly. 16 Q. No. And I appreciate and understand 17 that. But I guess my question is this. When -- when 18 did you first get the directive there needs to be 19 layoffs. Start evaluating. 20 A. Well, you know, I was asked to stay on 21 board. I can't recall the exact date, but I guess, 22 you know, I -- I knew in my own mind, you know -- I 23 read about Mr. Yung, and certainly had some contacts 24 with regard to the people that I would be reporting 25 to. And, you know, during that time frame, I was 192 MARK GIANNANTONIO - cross 1 trying to help them get acclimated with our own 2 property, the systems, what numbers we do. It's 3 pretty monumental. You're taking a hotel that does 4 over 7,000 room nights. They want to know, you know, 5 their first thing really isn't asking you, you know, 6 what kind of bodies are you going to cut? They want 7 to know what kind of revenue. You know, those that 8 the are the kind of things we talk about as well. 9 Q. I understand that. But my question is 10 still this. At some point, someone had to communicate 11 to you -- 12 A. Yes. 13 Q. -- that layoffs needed to be made. That 14 they wanted to make layoffs. Am I right or wrong on 15 that? 16 A. You are. 17 Q. When was that communicated to you? 18 A. I don't know. Exact date. 19 Q. Can you give me a month? 20 A. I mean, I -- I can tell you it was -- we 21 talked about it the day after the merger took place. 22 Q. So in -- 23 A. January 4th, I guess it was. 24 Q. And who is "we"? 25 A. The people that I -- the person that I 193 MARK GIANNANTONIO - cross 1 reported to at the time. 2 Q. Which was? 3 A. Jim Barracca. 4 Q. And what did Jim Barracca say to you in 5 regards to the issue of layoffs? 6 A. I have no idea. It just -- we, might 7 have spent a little time on it. It wasn't a big 8 discussion. I think the first department that we 9 looked at was engineering. 10 Q. And -- 11 A. So, you know, I guess if you're question 12 is, were we talking about public areas or food and 13 beverage? No. We weren't talking about any of that. 14 You know, we would talk about operational issues. And 15 then we might get to, you know, let's sit down and 16 talk about facilities. Walk me through how many 17 people you have and so forth. 18 Q. Well, at what point did you understand 19 that there -- that Mr. Yung wanted a number of layoffs 20 to occur? 21 A. I mean, I may not be getting your 22 question. It could have been -- I think I had a sense 23 there were going to be some reductions prior to 24 January 3rd, but I had more of a sense on January 4th. 25 Q. And were you ever given any direction? 194 MARK GIANNANTONIO - cross 1 For example, this is how much, this is the dollar 2 amount that we want -- 3 A. Never. 4 Q. To lay off? 5 A. I never heard -- 6 Q. You never heard that? 7 A. No. Not -- I mean, certainly not back 8 then. I've heard it more recently. 9 Q. Well, back then were you ever directed, 10 here's X amount of dollars. We want to cut in 11 salaries. 12 A. No. 13 Q. There's $22 million in salaries we want 14 to cut/? 15 A. No. 16 Q. Let's start. How do we do? How do we 17 accomplish that? 18 A. No. 19 Q. How do we move forward? 20 A. That came, I guess, on the road show, 21 which I certainly wasn't privy to. I wasn't part of 22 the organization or no one ever said to me, hey, 23 listen, Mark, we need to cut 30 million. Give me your 24 ideas. That never occurred. 25 Q. What was your role in the layoff 195 MARK GIANNANTONIO - cross 1 procedure then. 2 A. Well, you know, my role was to basically 3 give them an understanding of our operations. You 4 know, because again, coming into a property of this 5 magnitude, every operation is different. Every 6 employee does a different function. And basically 7 help them understand -- not only me, but many 8 people -- many people that work for me. Have them 9 spend time with the operations and -- so, in other 10 words, at the same time you're asking me about the 11 layoffs, we had people that were looking at ways, how 12 we could, you know, facilitate improvements as well. 13 Q. When you say you evaluated every 14 department very carefully, was that in conjunction 15 with the layoffs? Did you evaluate departments where 16 the layoffs should occur? 17 A. No. 18 Q. And whether they should occur in each 19 department? 20 A. No. Many departments weren't even 21 touched. Housekeeping was never touched. There were 22 many, many departments that were not touched. Valet. 23 Q. What departments were touched in the 24 layoffs? 25 A. Just the ones that coming to mind, I 196 MARK GIANNANTONIO - cross 1 guess, the engineering department. Public areas 2 department. I'm trying to think through. I guess on 3 the food and beverage side, there was some shipping 4 and receiving individuals. 5 I mean, there was -- forgive me. I'm 6 just having a little mental break. 7 Q. Uh-huh. 8 A. But, you know, different departments. 9 Q. Okay. And how did you make the 10 decisions -- or who made -- well, let me ask you. Let 11 me back up. 12 Who made the decisions to make the 13 layoffs in these various departments where the layoffs 14 were made? 15 A. Well, I think the first thing is that 16 folks that were the new folks coming in had to have an 17 understanding of what took place. And, you know, it 18 was my job, and my Vice President of food and beverage 19 job, and other people to say this is what we do. This 20 is why we do it. This is how we do it. And 21 determine, you know, productivity levels and things of 22 that nature. Where we thought we could change to -- 23 and have -- pick up some efficiencies without 24 affecting service, you know, that was where we tried 25 to -- that's where we looked at. 197 MARK GIANNANTONIO - cross 1 Q. Okay. And who was it -- who made the 2 final recommendation that we need to lay off ten 3 people in the -- 4 A. Well, I would work with Jim Barracca who 5 was my immediate boss. He reported to Stan Clayton, 6 and then, I guess, there was a general discussion 7 maybe between Stan and Mr. Yung. And that's -- I 8 mean, it was -- that's basically how it happened. 9 Q. And who made the final decision, who 10 said, all right. Sixteen -- 23 slot attendants to 16. 11 Four locksmiths to one>. 12 A. That's really a hard question. 13 Q. Three cleaners to two? 14 A. That's a hard question to answer -- 15 Q. Who made those decisions? 16 A. -- because, you know, it could have went 17 as high as Mr. Yung, or it could have occurred from 18 Mr. Clayton who reports directly to Mr. Yung. The 19 problem is, I'm not in the room in Kentucky to say who 20 made that final decision, so I don't know who. You 21 know. 22 Q. Okay. 23 A. And then I know they certainly listen to 24 me. I mean, you know, it's not like I was sitting 25 there saying, okay. If I felt that there was a need 198 MARK GIANNANTONIO - cross 1 to speak up and say this is why we do it here, or this 2 is why we need to do it here, you know. 3 Q. So you -- would it be fair to say, 4 though, that you participated in the evaluation of the 5 various departments. You had nothing to do with the 6 layoff decisions? 7 A. No. I think -- I just said the 8 opposite. I was a part of it. Let's put it this way, 9 you know, the reason why the cuts in public areas took 10 so long is because we -- you know, I have -- I'm a 11 numbers guy. I need to know if what we're about to do 12 is going to make sense, and is it going to work? And 13 I think I said earlier, the number that we put into 14 place, if everybody shows up to work, the place is 15 clean. Or if we get 81 40-hour shifts, then our 16 property is clean. And that's why we're clean today. 17 Q. Now -- 18 A. Because we're getting 81 FTEs. 19 Q. Let me ask you about the slot attendants 20 layoffs, when the layoffs were reduced. Did you have 21 any role in the initial decision? 22 A. I was -- Fred, that was Fred's 23 department. 24 Q. Okay. So you did not have any -- 25 A. Any role. 199 MARK GIANNANTONIO - cross 1 Q. -- input into that decision? 2 A. I had a role in bringing some people 3 back. 4 Q. All right. Did you -- you did not have 5 any role in the initial decision to make those 6 layoffs? 7 A. No. 8 Q. What about, for instance, the proposal 9 to take four locksmiths to one, did you have any input 10 into that? 11 A. It was Fred's department. Not really. 12 Q. Would -- what department would you say 13 that the bulk of the layoffs came in? 14 A. You know, I don't know. I mean, I guess 15 I've seen numbers. I'm sure I just -- off the top of 16 my head, it could be 50/50 hotel/casino. I don't have 17 the figure with me. 18 Q. Okay. You were talking about the union 19 activities and the layoffs. There's been talk about 20 this call-out or this sick-out regarding the union. 21 Are you familiar with that? 22 A. Yes. 23 Q. And how are you familiar with it? 24 A. Like I said, I was, you know, on the 25 property when it was occurring. 200 MARK GIANNANTONIO - cross 1 Q. Okay. And how do you know that it was 2 an actual sick-out that the union was actually -- 3 A. Well -- 4 Q. -- organizing this and -- 5 A. You know, I'm not saying -- 6 Q. -- doing this activity? 7 A. I'm not saying they're organizing. I'm 8 going to tell you what occurred. If on a Saturday 9 night half your staff calls out or a very high number 10 of the percentage of your staff calls out, that is an 11 extraordinary item that occurs. And, believe me, 12 somebody like me is going to know about it. 13 Q. Okay. Uh-huh. 14 A. You know, I'll get a phone call. Hey, 15 just wanted you to know. We're having a problem. 16 Everybody that we thought was coming in at 4:00, half 17 of them just called out. Things of that nature. 18 Q. So you're just basing that on the 19 numbers involved and the timing involved. You don't 20 know of any particular -- you don't have any other 21 particular information regarding organized Local 54 22 unions call-out or sick-out or things of that sort? 23 A. I don't have anything of that nature. 24 Other than I can tell you that we had an 25 extraordinarily amount of call-outs. A high amount of 201 MARK GIANNANTONIO - cross 1 call-outs. 2 Q. You indicate -- you talk about some 3 sabotage? 4 A. Yes. 5 Q. Okay. And you had -- you indicated, did 6 you not, the you did not anticipate the degree of 7 sabotage that occurred? 8 A. Right. 9 Q. What was the degree of sabotage? How 10 prevalent was it? Where did it occur? 11 A. It was pretty prevalent. It was things 12 as basic as -- not graffiti, but very horrible 13 writing. You know, Columbia Sussex blah, blah, blah, 14 blah, blah. And, you know -- 15 Q. Where at? Like on the walls on the 16 facility? 17 A. Yeah. Throughout the facility. 18 Q. Okay. And how of much of this did you 19 see and how long of a time period did it occur? 20 A. You know, it was about a six-week period 21 I would say, something like that. 22 Q. Did it cause actual damage to the 23 property? 24 A. Well, yeah. If you got to repaint or 25 replace wallpapers, things of that nature. 202 MARK GIANNANTONIO - cross 1 Q. I'm sorry. How long of a period did it 2 occur over? 3 A. I said six weeks. You know, sabotage 4 occurs all the time. I mean, it just -- but we 5 certainly saw spike -- 6 Q. But this was more -- 7 A. Yeah. I think between March and April. 8 You know, May, you know, those were the months that 9 things really, you know, kind of heated up. 10 Q. And basic -- would you agree that this 11 may have been in response to the layoffs? 12 A. Yes. 13 Q. What efforts did you take to find out 14 who was doing the sabotage or address the sabotage? 15 A. Well, we had certainly security keep an 16 eye on things a little more frequently. And walk into 17 a men's bathroom. All of the urinals were filled with 18 sand. I mean, it's -- that's -- real damage is 19 caused. You know, you lose that bathroom for a while. 20 You have to snake all of the drains and things like 21 that. 22 Q. Did you ever call the police? Report it 23 to the police? Make -- did you take any efforts like 24 that? 25 A. I'm not sure if we did that. I don't 203 MARK GIANNANTONIO - cross 1 know. 2 Q. You don't know? 3 A. I don't know. 4 Q. Who would have been the person to do 5 that if that would have been done? 6 A. Well, it could have been a department 7 head. It could have been director of security at the 8 time. 9 Q. Okay. You don't know if that was done 10 or not, though? 11 A. I'm not sure. 12 Q. You talked -- you talked about the 13 customer complaints. Were you familiar with the 14 customer complaints prior to the Division's report, 15 prior to this hearing? I mean, did you familiarize 16 yourself and keep up on that prior to this becoming an 17 issue here? 18 A. Well, let's put it this why. I guess 19 the issue is that Carolyn Chun had these customer 20 complaints. Some of these complaints I was copied on, 21 some of which I was not. But I will tell you when 22 we-- when I am made aware of a complaint, we address 23 it immediately. We rectify it immediately. We have a 24 system in place that, you know -- we, you know, if 25 it's me personally calling the customer and 204 MARK GIANNANTONIO - cross 1 apologizing to keep the customer here. And I think 2 and that's why I -- to be honest with you, that's why 3 I think we had a high degree of success with those 4 customers because they were coded. Those customers 5 were coded to our player development staff, and they 6 did a good job of rectifying some of it. 7 Q. These customers complaints that were 8 issued in the Division's report, you looked at the 9 Division's report and went back and reviewed the 10 complaints? 11 A. I did. 12 Q. And do you recall contacting any of 13 those customers following up on any of that, taking 14 any specific action with regard to this particular 15 group? 16 A. Well, the only thing I can think of is 17 if I was copied on an e-mail of a complaint, I would 18 have either forwarded on to the Executive Director 19 Hotel Operations or the Vice President of Food and 20 Beverage to immediately rectify it. That's how we 21 handle complaints at the Trop. 22 Q. And you indicated that you checked and 23 93 percent of these people, I think you said, never 24 wavered in their frequency to the property; is that 25 correct? 205 MARK GIANNANTONIO - cross 1 A. That's correct. 2 Q. What kind of check did you conduct? Did 3 you call them? 4 A. I went into -- no. I didn't. They all 5 had accounts. I looked them up on the casino system. 6 Q. Okay. 7 A. But I was not aware that there was a 8 booklet of these complaints. 9 Q. Oh, you weren't -- 10 A. Well, I was not aware that -- I guess 11 Fred asked Carolyn to keep a booklet of complaints. 12 Q. When did you become aware of that? 13 A. I guess when it was -- I don't know. A 14 week or two -- week or two ago. 15 Q. When you became aware of that -- and you 16 were aware that it's Carolyn Chun had these 17 complaints; is that correct? 18 A. Yes. 19 Q. Did you ever speak to her regarding 20 those complaints? 21 A. I just said, you know, I'd like to see 22 the complaints. 23 Q. Okay. And did you ask her if she 24 provided them to the Division or not? 25 A. She told me. I didn't ask. 206 MARK GIANNANTONIO - cross 1 Q. When did the renovation of the south 2 tower start? 3 A. January. Beginning of -- second week in 4 January. 5 Q. Okay. And that was something that was 6 initiated by Mr. Yung in his takeover, or had that 7 project been budgeted for and planned prior to Mr. 8 Yung's takeover? 9 A. That was part of the master plan with 10 Aztar. 11 Q. Okay. So that was something that had 12 already been initiated prior to this -- 13 A. Yes. 14 Q. -- to this, I guess, administration? 15 A. Yeah. 16 Q. Okay. And that continued as planned; is 17 that correct? 18 A. Correct. 19 Q. Now, the renovation of the slot area. 20 You talked about the one slot area that was open? 21 A. Yes. 22 Q. That was open; is that correct? 23 A. That's correct. 24 Q. And that's the one that comes directly 25 down from the Quarter? 207 MARK GIANNANTONIO - cross 1 A. Pretty much so. It's, you know, just 2 right in -- right all this area. 3 Q. And when did that renovation -- when was 4 that renovation completed? 5 A. I think June. 6 Q. And so that's been open June, July, 7 August through current; correct? 8 A. Correct. 9 Q. Have you noticed any increase in revenue 10 or any change in revenue since that slot area has been 11 opened? 12 A. You know, it's hard to say because we've 13 had so many factors weighing in on our revenue. You 14 know, certainly Pennsylvania and smoking have, you 15 know, had more of an impact. Some of the items that I 16 think, I guess were self inflicted, were the degree of 17 revenue lost, slot revenue lost by the elimination of 18 slot player development. It -- you know, my 19 estimation, that's costing us about 2.3 million per 20 month who in slot revenue. 21 We also, when I took over, it was pretty 22 apparent to me that the -- how customers were issued 23 comps had been tightened so significantly, so if you 24 were brought down by a limo every week, that you came 25 down to Manhattan, in many cases we do not provide 208 MARK GIANNANTONIO - cross 1 that service. So, you know, that really hurt -- that 2 hurt our customers. And I think, in a sense, they 3 left -- some of them left as a result of that. We 4 also had a cut in cash back from -- pretty substantial 5 cut. I'd rather not talk about the percentages since 6 this is public, but very substantial cut in cash back. 7 And then we also had our air junket 8 program eliminated, I think back in May. Equates to 9 about another million a month. So these are things 10 that we're addressing now, Kevin and I and Bob Little 11 are addressing. 12 Q. So in response to my question whether 13 the renovations of that slot area increased revenue, 14 the answer is basically, you don't know. 15 A. Let's put it this way. You know, well, 16 we do know. We know our win-per-unit and so forth. I 17 wasn't really responsible for those numbers back when 18 the net completion of that, when that completion of 19 that area was done. So when I took over sometime in 20 August, I can tell you exactly what the win-per-unit 21 in that area is, but I can't answer that question of 22 how it was in June so it was -- 23 Q. How long has it been since you've been 24 responsible for it? 25 A. I think it -- 209 MARK GIANNANTONIO - cross 1 Q. Has it increased in revenue? 2 A. Yes. We shifted a lot of business from 3 other areas of the floor into that area. 4 Q. So you're not getting any new business 5 distributed from that area. You're just shifting from 6 other areas to that area? 7 A. And I think it's probably an unfair 8 question because when you're a road business -- and I 9 can tell you one thing. The wave of bad press that we 10 had last week, it certainly -- the wave of bad press 11 that we had this morning is -- easily a ten percent 12 shot to our revenue on a daily basis. So, you know, 13 when I got here, we had six or eight customers that 14 called and cancelled their reservations. I don't know 15 what that number's up to. There's so many shifting 16 things that are moving, it's hard to say. 17 Q. Well, as a matter of fact, would you 18 agree that you're -- and how -- as of June, was that 19 the only renovation that was completed other than the 20 south tower? Was there any other renovation that were 21 completed by June? 22 A. The rooms were. 23 Q. Pardon? 24 A. The south tower rooms? 25 Q. Those were the two major renovations 210 MARK GIANNANTONIO - cross 1 that were completed by June? 2 A. Yes. 3 Q. And you haven't seen, in your 4 estimation, any decrease in revenue since -- since 5 those have been completed you can attribute to 6 directly to either of those things? 7 A. The what ones. 8 Q. The slot area? 9 A. Well, no. I mean, I don't think we 10 would have spent a nickle if we thought it was going 11 to decrease revenue. If you look at the return on 12 capital investment, I think the issue is once the 13 properties stabilized, we are going to see an increase 14 in our -- we'll have a return on our investment. The 15 problem is it's hard to quantify now because of some 16 of the things I've mentioned. 17 Q. And when you say the "property is 18 stabilized," what do you mean by that? 19 A. Well, we stopped getting out of the 20 press and, you know, we just operate. You know, 21 really operate and have, you know, pretty normal 22 things go on. And, you know, as opposed to bad press 23 and things that are reported that are not fair. 24 Things like that. 25 Q. There's talk of making some changes in 211 MARK GIANNANTONIO - cross 1 player development. Are you involved in that at all? 2 A. Yes. 3 Q. And what changes are you making in 4 player development? 5 A. Without getting too specific, we're 6 going to bring some staff in. 7 Q. Bring some staff in, bring some more 8 marketing people in? 9 A. Correct. 10 Q. Anything else that you're going to do to 11 improve player development? 12 A. Well, that will be the first thing. 13 We're going to reinstitute an air junket program. And 14 also as Mr. Yung said, talked about spending more on 15 marketing promotions. That should help drive revenue 16 to our property. Because we know once we get them to 17 our property, people -- you know, we service thousands 18 of guests every say. Day. They come and leave very 19 happy. And it's a attribute to our employees. That's 20 what makes them happy. 21 Q. And you talked about morale. Would it 22 be fair to say that morale was very low after your -- 23 after January of 2007 after you began laying a number 24 of people off? 25 A. Not so much in January. I think, you 212 MARK GIANNANTONIO - cross 1 know, the morale became low, you know, March or April. 2 But it certainly wasn't all the departments. For 3 example, at the same time the morale in public areas 4 was fairly low, we probably had the best morale I have 5 ever seen in housekeeping department. So I mean, 6 it's-- it was all over the place. But, you know, the 7 problem is you need to try to keep employees 8 motivated. Try to, you know -- 9 Q. So my question is this, though. In your 10 opinion, did the layoffs affect the morale of the 11 employees? 12 A. I would -- 13 Q. After January, February, March, April, 14 and a number of -- 15 A. Yes. That's a fair question. 16 Q. -- a number of employees had been laid 17 off? 18 A. I think in my opening comment, any time 19 a company takes over another, there's anxiety that is 20 going to occur, and we did have changes here. It's 21 not going to be -- not telling the truth if I thought 22 it wasn't easy. So, yeah. It impacts. 23 (Conferring.) 24 MS. MAHER: Thank you. No further 25 questions. 213 MARK GIANNANTONIO 1 CHAIR KASSEKERT: Let me ask if 2 Commissioners have questions? 3 Commissioner Frulio? Start with you. 4 COMMISSIONER FRULIO: Mr. 5 Diannantonio -- 6 THE WITNESS: Yes. 7 COMMISSIONER FRULIO: First of all, it's 8 always good to see a fellow Stockton alumnae 9 make it in this town. With that, were right 10 about anxieties. When they changed management, 11 I happened to be there at the Golden Nugget 12 when you went to Bally Grand, and you could 13 feel the anxieties. What I want to know is, 14 did you personally feel those same anxieties 15 when there was a change of management here? 16 THE WITNESS: Well, maybe earlier -- 17 early on when you don't know who the company is 18 and so forth. But I think once I got 19 acclimated with the company, and they asked me 20 to stay on, I mean, I -- I didn't have too much 21 anxiety. 22 COMMISSIONER FRULIO: Did you feel the 23 same anxiety -- let's say the same anxiety when 24 you were made COO of an organization that 25 included -- you being a numbers guy -- that 214 MARK GIANNANTONIO 1 included table games and slot machines that you 2 weren't that familiar with? 3 THE WITNESS: Well, I was pretty 4 familiar with it. I just didn't oversee it. I 5 didn't have the anxiety. I still don't. I 6 know we have a great property, and I know we 7 have great employees. So, in my opinion, it's 8 a winning combination. 9 COMMISSIONER FRULIO: Can you give me 10 the definition of a world bet at craps? I'm 11 kidding. 12 (Laughter.) 13 COMMISSIONER FRULIO: There was -- I 14 think from what I have here -- a layoff of 15 20 -- let's say cocktail servers, way back when 16 there. And someone that I know said he went to 17 the Trop to play blackjack, and he waited a 18 long time for a cocktail waitress and got 19 disgusted, left, went to the bar and bought a 20 drink, went back. How do you solve that 21 problem without -- without bringing some of 22 these people back? 23 THE WITNESS: Well, we -- you know, 24 there's always -- you know at peak time, I 25 mean, we could have enough staff at a property. 215 MARK GIANNANTONIO 1 Whether in valet -- you know, you look a 2 property like Caesars, has probably the most 3 challenging valet in Atlantic City. They can 4 have 400 valet attendants. And when they get 5 hit on a Saturday night, they just don't -- the 6 problem is they don't have the capacity and 7 room, where we have more capacity. So, you 8 know, peak time on a Saturday night, you're 9 going to get people sometimes waiting just 10 because a cocktail server could be hustling, 11 doing a great job, and they -- the way they 12 make their rounds, they make their rounds. 13 They may get asked a question over here. They 14 get off beat, and then miss Lloyd. Now he's 15 got to wait for the next pass, so. 16 (Laughter.) 17 THE WITNESS: So I think the staffing on 18 the -- 19 MR. LEVENSON: I could use a vodka right 20 now. 21 THE WITNESS: Staffing on the casino 22 floor is good. I mean, I think, you know, 23 things are starting to really start to click. 24 And they were -- they had -- they have been. 25 COMMISSIONER FRULIO: Is your main focus 216 MARK GIANNANTONIO 1 now or emphasis on player development. 2 THE WITNESS: The main -- okay, focus on 3 top line revenue. You know, our goal -- 4 believe me, our goal is to drive up so much 5 revenue that we could have staff back 6 routinely. I mean, right now we're outpacing 7 the market. If the market's down seven or 8 eight percent, you know, we're down more than 9 that. But a lot of it -- and I think that's 10 what we tried to say here today. A lot of it's 11 for various reasons. Construction. No 12 question. We're -- our seats in the 13 restaurants, half of them are shut down right 14 now. You know, we can't -- just for that 15 reason alone, you can't comp any people because 16 you don't have the seating capacity. You know, 17 we are comping into the Quarter. Thank God we 18 have the Quarter to help us during that time. 19 COMMISSIONER FRULIO: Thank you. I have 20 no other questions. 21 CHAIR KASSEKERT: Commissioner Fedorko? 22 VICE CHAIR FEDORKO: No Stockton jokes. 23 COMMISSIONER FRULIO: All marine jokes. 24 VICE CHAIR FEDORKO: Yeah. Right. 25 (Laughter.) 217 MARK GIANNANTONIO 1 VICE CHAIR FEDORKO: I just have one 2 question, Mr. Diannantonio. You got a public 3 relations problem. What are you going to do to 4 solve it? 5 THE WITNESS: Well, you know, I think 6 our best days lie ahead. And I think for a lot 7 of -- for a little while here, you know, we've 8 been, you know -- I don't want to look 9 backwards. I want to look forwards. I think 10 if we operate the way I know we can operate, 11 things will take care of themselves. I really 12 do believe that. I think that this company is 13 a good company. I think once we are licensed 14 and we operate, you know, we're going to -- a 15 lot of the nay-sayers -- and I'm sure they're 16 out there. And hopefully, you know, we can all 17 get together and work with one common cause 18 here. I -- you know, I think results will fix 19 everything. So, you know. 20 VICE CHAIR FEDORKO: Do you have a 21 public relations person? 22 THE WITNESS: We have an advertising, 23 public relations person. I'll give you an 24 example of this. And, unfortunately, you 25 probably don't -- you're not aware of this, but 218 MARK GIANNANTONIO 1 in the last two weeks, we've done three or four 2 community events in Atlantic City. I'm sure -- 3 I'm probably pretty sure nobody even seen it 4 where we did the tree lighting ceremony at 5 Tropicana. We donated 2500 to Salvation Army. 6 We've donated turkeys. You know, we're not 7 getting -- we don't do it for the press. 8 Believe me. We do it because we want to be a 9 good corporate citizen. 10 But, you know, right now we could be 11 donating a million dollars and still not get 12 the press that, you know -- it's public 13 relations. I know it's going to turn when we 14 get our results in line. That will happen. 15 VICE CHAIR FEDORKO: Okay. Thank you. 16 CHAIR KASSEKERT: Tell me. Just refresh 17 my recollection. You were not in charge of the 18 gaming side of the operations prior to August. 19 So you don't have any first-hand knowledge of 20 the gaming layoffs that occurred. Only the 21 hotel side. 22 THE WITNESS: I mean, you know, of 23 course, I was there. I was aware of some 24 things that was occurring. Sure. 25 CHAIR KASSEKERT: Okay. Post August 219 MARK GIANNANTONIO 1 when you came in to -- to really head up both 2 sides, both the gaming operation side and the 3 hotel operation side, what layoffs occurred 4 post August? 5 THE WITNESS: I think we did some cuts 6 in security. 7 CHAIR KASSEKERT: Okay. And when those 8 security cuts happened, there was obviously 9 concern expressed about having enough security 10 officers on the floor. Did you express any 11 concern about that? 12 THE WITNESS: Well, to be honest, I know 13 that, you know, we absolutely had discussions. 14 And I think when we made the cut, we felt that 15 we could handle the mandatory posts along with 16 the power shift and all the other shifts. And 17 I guess we fell a little short and as a result 18 brought some back. 19 CHAIR KASSEKERT: And you have some -- I 20 believe some citations filed against you -- 21 THE WITNESS: Yes. 22 CHAIR KASSEKERT: -- with respect to 23 that. Okay. And when -- when this occurred, 24 when you felt that -- you felt that things were 25 a little short, who did you go to to get the 220 MARK GIANNANTONIO 1 approval in order to bring those people back? 2 THE WITNESS: Off the top of my head, I 3 don't recall, but probably Kevin Preston or Bob 4 Little. 5 CHAIR KASSEKERT: Okay. So you went to 6 them and said, listen, we're too short. We 7 don't have enough people. We're not covering 8 mandatory posts. We need -- 9 THE WITNESS: Yeah. We just brought it 10 up to the ranks, and that's pretty much how 11 that occurred. 12 CHAIR KASSEKERT: And did they pretty 13 much follow your direction when you made those 14 recommendations? 15 THE WITNESS: Yes. I think we 16 immediately brought some people back. I mean, 17 Tama Hughes and, you know -- I have to tell 18 you, you know, she's all over our compliance 19 issues. And, you know, we did whatever we had 20 to do to just make it right. 21 CHAIR KASSEKERT: Okay. And with 22 respect to the patron complaints, I've been 23 going through the Division's exhibits, and I do 24 see that a number of them are really beyond 25 that March date when you were concerned about 221 MARK GIANNANTONIO 1 there being slow down. I see -- I see 2 complaints from August. 3 THE WITNESS: Sure. 4 CHAIR KASSEKERT: I see complaints from 5 July. How have you been handling the ongoing 6 complaint process? 7 THE WITNESS: Well, again, I looked at 8 that as well. The -- I think the issue was the 9 point I was trying to make was about two-thirds 10 were in that March, April range and a third 11 fell after that. 12 CHAIR KASSEKERT: Uh-huh. 13 THE WITNESS: The bottom line is we 14 are -- that's our business. We're very 15 conscientious on customer complaints and, you 16 know, we want every -- you know, we're doing 17 12, 15,000 customers there a day. We want 18 everybody to come in and leave very happy so 19 that they come back. 20 CHAIR KASSEKERT: Uh-huh. 21 THE WITNESS: And that's why we're 22 running 94 percent occupancy year-round. 23 I don't think we would be doing that if 24 we had -- if you read today's papers, you might 25 think we're a Super 8 Motel. And I would only 222 MARK GIANNANTONIO 1 say if it was true, we wouldn't be running 94 2 percent occupancy. And, you know, I think we 3 would not be having success. 4 CHAIR KASSEKERT: Uh-huh. And -- and I 5 did see one complaint. 6 I know that the newspapers today 7 discussed not only bed bugs, which you've 8 alluded did not happen, but roaches. But the 9 complaint I do see in here about roaches 10 appears from 2005; is that correct? It was pre 11 the takeover. 12 THE WITNESS: I think so. Yes. 13 CHAIR KASSEKERT: Okay. And since then, 14 have you heard about any complaints with 15 respect to any other kind of vermin? 16 THE WITNESS: Not really. No. Thank 17 God. But no. These are big facilities, and 18 you know, I think we're all -- you know, I 19 guess I don't have to say it, but things 20 happen. And, you know, we try to minimize it. 21 We have exterminators there on routine 22 schedules and, you know, it's not an issue. 23 CHAIR KASSEKERT: All right. And that's 24 your plan going forward, that you'll continue 25 to try to address these issues as they come up, 223 MARK GIANNANTONIO 1 knowing that in the hotel business you're going 2 to see things happen from time to time. 3 THE WITNESS: Absolutely. 4 CHAIR KASSEKERT: You're going to see 5 toilets overflow. 6 THE WITNESS: Yeah. 7 CHAIR KASSEKERT: You're going to see 8 things -- 9 THE WITNESS: That's the thing. The 10 toilet overflowing is not the operator. 11 Someone causes a toilet to overflow. And, you 12 know, we unclog 30 toilets a day. 13 CHAIR KASSEKERT: Uh-huh. 14 THE WITNESS: Or more. Whatever. 15 Depends on, you know, the occupancy. But -- 16 CHAIR KASSEKERT: Uh-huh. Or the 17 occupant. 18 THE WITNESS: Yes. 19 CHAIR KASSEKERT: Thank you. 20 Commissioner Epps? 21 COMMISSIONER EPPS: Mark, you were 22 running the hotel for a while before the 23 merger; right? 24 THE WITNESS: Yes. 25 COMMISSIONER EPPS: And we've known -- 224 MARK GIANNANTONIO 1 we've been familiar here at the Commission. 2 Never heard bad things about you. Apparently 3 you were doing a good job. Were you doing a 4 poor job? Because, apparently, what you said 5 is they came in, you changed because you had 6 let people go, and now you're leaner. Were you 7 doing a poor job? 8 THE WITNESS: I don't think so. I think 9 Mr. Yung runs a hotel company, and I think I 10 alluded to, Mr. Epps, you know, one of the 11 things that -- I'll give you an example. Of 12 the people that work with me, when we talk 13 about this merger, we said, you know, how is it 14 going to go? We alluded to the positiveness of 15 the merger. How can we do things more 16 effectively? You know, was I doing a poor job 17 by having one bottle of shampoo in the room? 18 I'm not sure I was. But I'll tell you, I 19 certainly wasn't allowed to put three bottles 20 in or they would be there. 21 COMMISSIONER EPPS: Were you 22 overstaffed? 23 THE WITNESS: Well, you know, if you 24 look at Aztar -- I'll answer it this way. If 25 you look at Aztar the last couple of years, we 225 MARK GIANNANTONIO 1 were -- we had -- we were trimming our -- our 2 head count as well. 3 COMMISSIONER EPPS: But my question is 4 more specific. Not Aztar. Mark was running 5 the hotel. You called the shots. Were you 6 overstaffed? 7 THE WITNESS: Well, it was a hotel and 8 casino, so, you know. 9 COMMISSIONER EPPS: On the hotel side. 10 THE WITNESS: On the hotel side, you 11 know, staffing levels in housekeeping, they're 12 tied to the union's credit system. So we're -- 13 if we're running 94 percent today or 94 percent 14 last year or 94 percent the year before, it's 15 the same amount of bodies. In public areas I 16 can -- I would honestly tell you, you know, 17 when I was running it prior, we had 150 or 18 whatever it was. And we're doing it -- we're 19 keeping the property clean with 81 bodies. But 20 there's no smoking. We've made modifications 21 to the casino floor. Things of that nature. 22 So, and we have good -- very good management 23 so. 24 COMMISSIONER EPPS: So it was right then 25 and it's right now. I don't understand the 226 MARK GIANNANTONIO 1 difference. 2 THE WITNESS: Well, your question was 3 were we overstaffed? I guess -- 4 COMMISSIONER EPPS: I don't know what 5 you're telling me. I don't know if you're 6 telling me you were or not. 7 THE WITNESS: Well, I can tell you we 8 had more staff for various reasons. I mean, 9 you know, and housekeeping we were overstaffed. 10 COMMISSIONER EPPS: So then the cuts 11 that you made were only because smoking went 12 away and other things went away, not because 13 the new attitude came in, and there was a 14 direction from the top that told you to cut 15 staff. Is that what you're telling me? 16 THE WITNESS: I had cut staff prior to 17 Columbia Sussex taking over. 18 COMMISSIONER EPPS: Columbia Sussex took 19 over. You cut staff in hotel. Was it because 20 they told you to or because you decided for 21 business reasons that's what you needed to do? 22 THE WITNESS: No. It was an initiated 23 from them. 24 COMMISSIONER EPPS: Thank you. 25 So you did cut staff compared to what 227 MARK GIANNANTONIO 1 you were running the hotel with in December of 2 '06? 3 THE WITNESS: Yes. But not in every 4 department, so. 5 COMMISSIONER EPPS: I didn't say you cut 6 every department. But you cut on hotel staff. 7 You were running a different hotel. 8 THE WITNESS: Right. 9 COMMISSIONER EPPS: Now, the call-outs. 10 Did they result in personnel action? 11 THE WITNESS: Yes. 12 COMMISSIONER EPPS: What? Terminations. 13 THE WITNESS: Oh, I'm sorry. Sure. 14 Yeah. 15 COMMISSIONER EPPS: You know that for a 16 fact? 17 THE WITNESS: I'm pretty sure we've had 18 terminations as a result of call-outs and 19 things of that nature. 20 COMMISSIONER EPPS: Okay. 21 THE WITNESS: Grievances. I mean, 22 whatever the appropriate action would have been 23 required was taken. 24 COMMISSIONER EPPS: Okay. I mean, I 25 guess what I'm asking, do you think you can 228 MARK GIANNANTONIO 1 specifically state that because there were 2 call-outs in March or April, some of those 3 people were terminated? 4 THE WITNESS: That's hard to say because 5 if you call -- you know, if I'm an employee and 6 I call out in a public areas, you get points 7 for it. And I think you go up to 40 points or 8 whatever. So if it was first call -- 9 COMMISSIONER EPPS: Job action as to 10 that action. But if the person reached their 11 number of demerits, then the process took 12 place? 13 THE WITNESS: Let's put it this way. 14 Whatever the appropriate discipline would have 15 been would have been issued. 16 COMMISSIONER EPPS: Il Verdi. Is that 17 how you pronounce it? 18 THE WITNESS: Il Verdi. 19 COMMISSIONER EPPS: Okay. You're 20 redoing it? 21 THE WITNESS: Yes. 22 COMMISSIONER EPPS: But you worked there 23 in the past, you said? 24 THE WITNESS: Yes. 25 COMMISSIONER EPPS: You made a lot of 229 MARK GIANNANTONIO 1 money there? 2 THE WITNESS: I was kidding. 3 COMMISSIONER EPPS: They were doing good 4 coverage at that time. I believe you. 5 (Laughter.) 6 COMMISSIONER EPPS: They were doing good 7 covers at the time; correct? 8 THE WITNESS: Yeah. Yeah. 9 COMMISSIONER EPPS: How? Full? 10 THE WITNESS: Yes. 11 COMMISSIONER EPPS: And what -- what 12 what's going to be the difference in covers now 13 that you fix it? 14 THE WITNESS: It is not covers. It's 15 quality of customer. You know, with the 16 expansion of the restaurants -- you know, all 17 the restaurants at Borgata, you know, Il Verdi 18 was in need of renovation so that we can -- you 19 know, the customers that we want to go to Il 20 Verdi are the highest of the high. And we need 21 to get more of our fair share of those 22 customers. And one way of doing it is to 23 create a brand-new atmosphere in Il Verdi and 24 making it so special that it's going to stop 25 them -- stop those customers maybe from going 230 MARK GIANNANTONIO 1 to Borgata and things of that nature. 2 COMMISSIONER EPPS: It's going to still 3 be Il Verdi? 4 THE WITNESS: It's going to still be Il 5 Verdi. 6 COMMISSIONER EPPS: Leaving the place 7 and going somewhere else. People leaving the 8 Quarter, were going where? 9 THE WITNESS: People leaving the Quarter 10 were going -- 11 COMMISSIONER EPPS: You said that people 12 leaving the Quarter came through, saw something 13 that wasn't appealing. They walked through and 14 went to another casino. Is that what you're 15 suggesting? 16 THE WITNESS: It's that, and it's just 17 no atmosphere. If you go into the table game 18 area, there's nothing. If you were a table 19 game customer, there's nothing table there. So 20 that's why we're building the center bar. You 21 know, any bar that was ever built in Atlantic 22 City, Taglio, the center bar, they all drive a 23 lot of customers to it because of the 24 excitement. So we're hoping to get a lot of 25 revenue, casino revenue by having a bar dead 231 MARK GIANNANTONIO 1 set in the middle of your casino bar. 2 COMMISSIONER EPPS: The center bar 3 doesn't come from the Quarter, does it? 4 THE WITNESS: No. But just like we 5 opened Tango's and Tiffany's Lounge. People 6 like those types of amenities. 7 COMMISSIONER EPPS: Questions I was 8 trying to understand, the whole foot traffic 9 leaving the Quarter thing and how those people 10 are going to be encouraged to play in the 11 casino. 12 THE WITNESS: Well, it's just going to 13 flow. If you come over to the property, I 14 could show you where he added those two table 15 pits. The lines of sight, Mario Guiseppe, our 16 Vice President of Games, he was right on when 17 he said it's going to improve the lines of 18 sight by having those two table pits, you now 19 could see into an area that you could never see 20 before. So people are no now going to know 21 there are 120 table games that were buried in 22 the north tower, original tower. So it's going 23 to make for a -- sure, is it a magnet? It's 24 not a magnet, but it's hopefully going to help 25 get customers over there. 232 MARK GIANNANTONIO 1 COMMISSIONER EPPS: Okay. The hotel ops 2 changed. 3 THE WITNESS: Yes. 4 COMMISSIONER EPPS: This 40 minutes to 5 one minute. What was it? What is the change? 6 THE WITNESS: Basically it's a 7 combination of checking people in when they 8 arrive. Period. So we check you in. We give 9 you a key, take your luggage. You go, and we 10 tell you to go to your room when we know it's 11 going to be ready. 12 COMMISSIONER EPPS: I guess what I'm 13 asking is, did you put a new system -- is it a 14 new IT system? 15 THE WITNESS: Well, it was a new -- 16 COMMISSIONER EPPS: What took 40 minutes 17 that now takes a minutes? What physically 18 changed? 19 THE WITNESS: Because there was a 20 check-in time. We had a check-in time. Say 21 3:00. We would begin to check people in at 22 once. It would congregate masses of people in 23 the lobby. Once we were able to modify our key 24 systems so that we could time the keys, we 25 could give the key to you and say go to your 233 MARK GIANNANTONIO 1 room at 2, 2:00 or 3:00. We'll be sure it's 2 ready, and check you in at 10:00 in the 3 morning. This way you don't have to go back to 4 the lobby. 5 COMMISSIONER EPPS: I see. 6 With respect to A-80, just in your 7 experience, Mr. -- Mr. Yung called the second 8 column, voluntary terminations, he called them 9 "quits" for euphemism. 10 THE WITNESS: Uh-huh. 11 COMMISSIONER EPPS: In your experience, 12 400 quits in a year in nine months, is that 13 big? Is that high? 14 THE WITNESS: No. You know, I think we 15 probably were getting 3 to 350 -- I don't have 16 the number off the top of my head, but I think 17 resignations and -- it was probably higher than 18 we had been running a little. 19 COMMISSIONER EPPS: Any of those quits 20 you think are attributed to low morale? 21 THE WITNESS: Could be. 22 COMMISSIONER EPPS: Now you said morale 23 is good now? 24 THE WITNESS: I think it is. 25 COMMISSIONER EPPS: Do you think I would 234 MARK GIANNANTONIO 1 get that same answer at Trop? 2 THE WITNESS: If you go to the Trop? 3 I-- I would say yes. 4 COMMISSIONER EPPS: Okay. And the last 5 thing, you said driving revenue in that slot 6 area, things of that nature, Q2 was down; 7 correct? 8 THE WITNESS: Yes. 9 COMMISSIONER EPPS: And that came on 10 line in June. 11 THE WITNESS: Correct. 12 COMMISSIONER EPPS: So July through -- 13 through Q3 that was on-line; right? 14 THE WITNESS: Yeah. 15 COMMISSIONER EPPS: Q3 was down further. 16 Right? So it didn't -- necessarily drop. 17 THE WITNESS: That's what I was trying 18 to say earlier. I mean, there were -- there's 19 other, you know, you put things in proportion 20 of why you're up, down. And, you know, this 21 renovation had their -- everything else being 22 equal, would have really helped us so. 23 COMMISSIONER EPPS: So Q -- we should 24 take from that that Q3 would have been further 25 down but for that coming on line. 235 MARK GIANNANTONIO 1 THE WITNESS: Well, yeah. I'll tell 2 you, I think some of the things that I had 3 mentioned hurt our business significantly. 4 That's really where the numbers -- the decline, 5 if you look at 5 million down in slot revenue, 6 you can quantify -- three and a half million 7 without a doubt. I mean, there's analysis to 8 prove we're down three and a half million out 9 of five because of a reduction in player 10 development and air program. You know, it is 11 what -- the numbers speak for themselves. So 12 you would think if you add back that, you 13 know -- or, you know, have more people 14 networking your property, you're going to do 15 better. 16 COMMISSIONER EPPS: Okay. I think 17 that's all I have. 18 CHAIR KASSEKERT: Commissioner 19 Sommeling? 20 COMMISSIONER SOMMELING: Just -- just 21 I'm curious about the new concourse that you've 22 developed to go into the casino. Is it your 23 experience that you've been in charge of casino 24 and hotel the customers that go into, say, the 25 Quarter would then come back out of the Quarter 236 MARK GIANNANTONIO 1 and go into the casino or vice versa? If you 2 have customers that go to the casino, they 3 would leave the casino to go into the Quarter? 4 THE WITNESS: Well, the -- 5 COMMISSIONER SOMMELING: Are they one 6 and the same customers? Are or are we talking 7 about separate customers here? Those people 8 that come to gamble, those people that come to 9 come for entertainment or dining in the 10 Quarter, or a combination of both? 11 THE WITNESS: I think the issue is when 12 you -- prior to us adding these table pits, if 13 you walk out of the Quarter and just entered 14 our casino, you would see mass slot machines. 15 You would not -- you wouldn't even know that we 16 had tables. You couldn't see them because of 17 the high slots. So the lines of sight were 18 backward. 19 Now we just added 20 table games at the 20 throat of the entrance to the Quarter which 21 will at least say to people, oh, here's where 22 the table games are. And it should help a -- 23 and we opened it two Fridays ago, and they 24 were -- they've been packed since we've opened 25 them. So and you know, we're seeing, you know, 237 MARK GIANNANTONIO - redirect 1 an uptick as a result of it, so. 2 COMMISSIONER SOMMELING: No more 3 questions. 4 CHAIR KASSEKERT: Anything on redirect? 5 6 REDIRECT EXAMINATION BY MR. LEVENSON: 7 Q. I just have one question, because it's 8 difficult to gauge on the floor plan there, but the 9 square footage of the new north tower, bar, table game 10 area, could you tell us what that square footage is? 11 A. It's about 20 -- a little over 21,000. 12 Q. 21,000 square feet? Okay. I just 13 wanted to get some idea of that. 14 MR. LEVENSON: Thanks. I have nothing 15 further. 16 CHAIR KASSEKERT: Anything on recross? 17 MS. MAHER: No, thank you. 18 CHAIR KASSEKERT: Any other questions 19 from the Commissioners? 20 COMMISSIONER SOMMELING: No questions, 21 Madame Chair. 22 CHAIR KASSEKERT: You may step down. 23 Thank you. 24 I think -- well, correct me, Mr. Nance. 25 Correct me what occurs next. I think our next 238 1 special meeting is scheduled for Monday 2 beginning at 10:00, and we'll continue 3 testimony on this matter. 4 MR. NANCE: Right. Then after -- 5 MS. FAUNTLEROY: Adjourn for the 6 evening. 7 MR. NANCE: But I have to close out the 8 meeting from this morning. 9 In accordance with Resolution No. 10 06-12-13-20, the next closed session of the 11 Commission shall be held on Wednesday, December 12 12, 2007, at 9:15 a.m. in the Commission 13 offices. 14 It is now time for the public 15 participation portion of the meeting. 16 CHAIR KASSEKERT: Is there anything 17 anyone from the public that wishes to be heard? 18 (No response.) 19 CHAIR KASSEKERT: Seeing no one, I will 20 close this portion of the meeting and entertain 21 a motion to adjourn. 22 COMMISSIONER FRULIO: Motion to adjourn. 23 COMMISSIONER SOMMELING: Motion to 24 adjourn. 25 VICE CHAIR FEDORKO: Second. 239 1 CHAIR KASSEKERT: The motion has been 2 made and seconded. All in favor? 3 (Ayes.) 4 CHAIR KASSEKERT: Opposed? 5 (No response.) 6 CHAIR KASSEKERT: Motion carries. 7 (Public Meeting 07-11-21 was adjourned 8 at 5:05 p.m.) 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 240 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 22, 2007 23 My Commission Expires on July 10, 2009 24 ID No 2062871 25