0001 1 STATE OF NEW JERSEY 2 CASINO CONTROL COMMISSION 3 - - - - - - - - - - - - - - - - - - - 4 5 Petition of Adamar of New Jersey, Inc., (Adamar) 6 for renewal of its casino license and other matters 7 (PRN 2140705, 2910706, 2910708) 8 Volume 6 9 - - - - - - - - - - - - - - - - - - - 10 11 Friday, November 30, 2007 12 Atlantic City Commission Offices 13 Joseph P. Lordi Public Meeting Room - First Floor 14 Tennessee Avenue and Boardwalk 15 Atlantic City, New Jersey 08401 16 10:14 a.m. to 11:38 a.m. 17 18 19 Certified Court Reporter: Darlene Sillitoe 20 - - - - - - - - - - - - - - - - - - - - - - - - - - - 21 ATLANTIC CITY COURT REPORTING, LLC 22 CERTIFIED COURT REPORTERS AND VIDEOGRAPHERS 23 1125 ATLANTIC AVENUE, SUITE 416 24 ATLANTIC CITY, NEW JERSEY 08401 25 (609) 345-8448 www.accourtreporting.com 0002 1 B E F O R E : 2 CASINO CONTROL COMMISSION: LINDA M. KASSEKERT, CHAIR 3 MICHAEL A. FEDORKO, VICE CHAIR MICHAEL C. EPPS, COMMISSIONER 4 RALPH G. FRULIO, COMMISSIONER WILLIAM T. SOMMELING, COMMISSIONER 5 PRESENT FOR THE CASINO CONTROL COMMISSION: 6 DARYL W. NANCE, ADMINISTRATIVE ANALYST DANIEL J. HENEGHAN, PUBLIC INFORMATION OFFICER 7 OFFICE OF THE GENERAL COUNSEL: 8 DIANNA W. FAUNTLEROY, GENERAL COUNSEL/EXECUTIVE SECRETARY 9 LEONARD J. DIGIACOMO, ASSISTANT GENERAL COUNSEL STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL 10 11 12 A P P E A R A N C E S : 13 DIVISION OF GAMING ENFORCEMENT: 14 YVONNE G. MAHER, ACTING DIRECTOR MARYJO FLAHERTY, DEPUTY ATTORNEY GENERAL 15 16 STERNS & WEINROTH, PC BY: PAUL M. O'GARA, ESQ: 17 AND: GRAIG P. CORVELEYN, ESQ. FOR: TROPICANA ENTITIES 18 MICHAEL & CARROLL 19 BY: GUY S. MICHAEL, ESQ: AND: JOHN J. MERCUN, ESQ. 20 COOPER LEVENSON 21 BY: LLOYD D. LEVENSON, ESQ. AND: LYNNE KAUFMAN, ESQ. 22 23 24 25 0003 1 I N D E X : 2 WITNESS: Direct Cross Redirect Recross 3 4 MICHAEL LYONS 5 By Ms. Maher 6 6 By Mr. O'Gara 40 59 7 8 9 10 11 E X H I B I T S : 12 Applicant's No. Description EVD 13 A-93 Letter of 11-16-07 to Donna More, Esq., X 14 Tropicana Casinos and Resorts from Brigid Higgins, Esq., Gordon and Silver, LTD, 15 with attached resignation letter Re: Audit Committee 16 A-94 Letter, 11-30-07, to Len DiGiacomo, X 17 MaryJo Flaherty, and Wendy Way from Lynne Kaufman 18 Re: Audit Committee (PRN 2910708) 19 20 21 22 23 24 25 Exhibits retained. 0004 1 (The Special Meeting was commenced at 2 10:14 a.m.) 3 CHAIR KASSEKERT: We'll stand for the 4 Pledge of Allegiance. 5 (The flag salute was recited.) 6 CHAIR KASSEKERT: Good morning. 7 MR. O'GARA: Good morning. 8 MS. MAHER: Good morning. 9 CHAIR KASSEKERT: Let me ask first if 10 there are any procedural matters that need to 11 be brought to our attention at this time. 12 Mr. Michael? 13 MR. MICHAEL: Madame Chair, there's been 14 one additional -- we didn't want the morning to 15 start without another document so there's one 16 additional Exhibit A-93 that has been 17 distributed to the Commission and to the 18 Division. It is a letter to Donna More from 19 Brigid Higgins from Gordon & Silver, relating 20 to the service of Jeff Silver on the audit 21 committee. 22 CHAIR KASSEKERT: Thank you. 23 MR. MICHAEL: And attached to that is 24 also a copy of Mr. Silver's resignation from 25 the Tropicana Casino and Resorts Audit 0005 1 Committee. And we'll move that into evidence 2 at this time. 3 CHAIR KASSEKERT: Any objection? 4 MS. WAY: No objection. Thank you, 5 Madame Chair. 6 CHAIR KASSEKERT: All right. We'll move 7 that into evidence. 8 Any procedural matters? Okay. Are we 9 ready to continue? 10 MS. MAHER: Yes. 11 CHAIR KASSEKERT: Would you like to call 12 your next witness? 13 MS. MAHER: Thank you, Chair. The 14 Division calls Mike Lyons. 15 16 MICHAEL LYONS, having been first duly 17 sworn to tell the truth, testified as follows: 18 19 MR. NANCE: Please state your name for 20 the record. 21 THE WITNESS: Michael Lyons. 22 MR. NANCE: Thank you. 23 CHAIR KASSEKERT: You may proceed. 24 MS. MAHER: Thank you. 25 0006 1 DIRECT EXAMINATION BY MS. MAHER: 2 Q. Mr. Lyons, up until mid-August of 2007, 3 where were you employed, please? 4 A. Tropicana Hotel Casino. 5 Q. And what was your position there? 6 A. Director of Security. 7 Q. How long had you held that position? 8 A. From January 18th. 9 Q. Of 2007? 10 A. 2007. 11 Q. Up to what point, please? 12 A. August 14th, 2007. 13 Q. What happened on August 14th 2007? 14 A. I was terminated. 15 Q. And who terminated you? 16 A. The president at that time, Mark 17 Giannantonio. 18 Q. Were you given any reason for your 19 termination? 20 A. Yeah. Mark advised me that they were 21 going to go in a different direction and at a higher 22 level. 23 Q. And that was the reason? 24 A. That was it. Yes. 25 Q. And who brought you to the property in 0007 1 January of 2007? Who hired you? 2 A. Fred Buro. 3 Q. And were you aware that Fred Buro was 4 also terminated from his position at the Tropicana 5 Atlantic City Casino at approximately the same time 6 you were? 7 A. I believe five days prior. 8 Q. Can you tell us about your employment 9 background which leads up to your position AS Director 10 of Security for the Tropicana Atlantic City, please? 11 Start at the beginning. 12 A. I was a state trooper for 25 years. 13 Worked in Atlantic City both in Division of Gaming 14 Enforcement and also casino intelligence. I retired 15 after 25 years, and then went to work at Trump Marina 16 in Atlantic City as a director of security. Started 17 as an investigator and became the director of 18 security. I stayed there for seven years. I spent a 19 year at the Taj Mahal as a director of corporate 20 training, security in training, and then I left there 21 in 2000 -- middle of 2000. 22 Q. I want to talk a little bit about your 23 state police experience. Where did you start out when 24 you started with the state police? 25 A. I was a road trooper. In several 0008 1 barracks in South Jersey. 2 Q. And how long did you do that? 3 A. Three years. 4 Q. And from road trooper where did you move 5 to? 6 A. I became a station detective, and I 7 stayed in that position for several years. And then I 8 went to narcotics for about a year and a half. I came 9 to Atlantic City when you opened Resorts. Went to the 10 Division of Gaming Enforcement formation. I was just 11 over a year at Resorts, and then I went to casino 12 intelligence which covered the entire city. 13 Q. And from casino intelligence did you 14 make another move before retiring? 15 A. I spent eight years in casino 16 intelligence, and five years as the supervisor for the 17 intelligence bureau south in Bellmawr for South 18 Jersey. 19 Q. And is that post retirement? 20 A. Yes, it is. 21 Q. And it's my understanding that you 22 retired from the state police with the rank of 23 lieutenant; is that correct? 24 A. That's correct. 25 Q. Now I'll take you through a period of 0009 1 time with your experience of Tropicana Atlantic City 2 as Director of Security, and that would be -- well, 3 let me ask you this. When you first came on in 4 January, who did you report to you, please? 5 A. I reported to Fred Buro. 6 Q. Did you report to anyone else other than 7 Fred at that time? 8 A. No. I did not. 9 Q. Did there come a time when you were 10 advised that there was going to be a change in regard 11 to Howard Reinhardt's position? 12 A. I believe Fred told me that he was 13 resigning and Kevin Preston was taking his place. 14 Q. And did you have any interaction with 15 Kevin Preston when he first came on board? 16 A. When he showed up at the property, I 17 did. I had a couple meetings with him and Fred Buro 18 concerning the security staffing. 19 Q. Okay. And what were the meetings in 20 regard to? 21 A. Where we were at. What your 22 responsibilities were on the property. How we were 23 managing at the present time. We lose on a regular 24 basis people through attrition. We were -- for a 25 period of time, we aren't hiring, and I think over a 0010 1 period of maybe three months we lost about 24, 25 2 people. 3 Q. All right. And did you have concerns 4 regarding that ? 5 A. Yes, I did. 6 Q. What were those concerns? 7 A. That we were going to be at certain 8 times understaffed in certain areas of the -- mostly 9 on the hotel side because on the casino side there are 10 mandatory positions and they were always filled. 11 Q. All right. Did you ever discuss these 12 concerns with anyone? 13 A. I had discussions with Fred. And then 14 when Kevin Preston come in, I had discussions with 15 Kevin Preston about it. And we discussed it, and he 16 would sit down and go over what we had, and I would 17 tell him what our needs were. 18 At one point -- after one of the 19 meetings, myself and Kevin went into another room and 20 he had a flip chart, and I guess he was trying to 21 get-- his arms around exactly what we do. It's a 22 little confusing. It's very large. There's a lot of 23 responsibilities. And he was trying to understand it. 24 And as we were going through the chart listing all the 25 officers and responsibilities and the size of the 0011 1 property, he turned around and said, I don't know how 2 do you it. 3 Q. Mr. Preston said that? 4 A. Mr. Preston said that. 5 Q. And what was your response to that? 6 A. I said we manage. 7 Q. Do you recall when that meeting was? 8 A. I believe he was there two or three 9 weeks, and I know that wasn't the first meeting I had. 10 It was probably maybe the second or third meeting I 11 had with him. 12 Q. So you had a couple -- at least two 13 meetings with Mr. Preston to discuss security issues 14 with him? 15 A. Two or three. Yes. 16 Q. Now, I want to talk about something that 17 occurred in June of 2007, and that being Glenn Koehler 18 being brought to the Tropicana Atlantic City. Do you 19 recall that? 20 A. Yes, I do. 21 Q. And were you informed prior to him 22 coming to the Tropicana about the fact that he would 23 be there? 24 A. Fred Buro told me he would be there the 25 day before or maybe two days before he was coming in, 0012 1 and he would be in -- 2 Q. Okay. 3 A. -- to assist in any way possible. 4 Q. And so you didn't really get too much 5 advance notice. Would that be fair to say? 6 A. No. 7 Q. And Fred Buro told you he was coming? 8 A. Yes, he did. 9 Q. Did Fred Buro tell you why he was coming 10 to the property? 11 A. To do an evaluation of the security 12 department. 13 Q. And were you given any reason as to why 14 he was coming to do this evaluation? 15 A. No, I was not. 16 Q. And did you have any particular reaction 17 to the fact that someone was being brought in from 18 outside to do an assessment of security? 19 A. No. I knew that they were concerned 20 about the staffing levels because of discussions with 21 Fred. So it wasn't a surprise. And it's -- I wasn't 22 upset by it, no. 23 Q. And what did you understand your role 24 was to be when Mr. Koehler came to the property to do 25 his evaluation? 0013 1 A. To supply him with all the information 2 he requested to make his evaluation of the department. 3 Q. Now, when Mr. Koehler arrived, did you 4 meet with him initially? 5 A. Yes, I did. 6 Q. And did he tell you at that time why -- 7 did Mr. Koehler tell you why he was there? 8 A. Yes. He said he was making an 9 evaluation of the security department, and it was for 10 Mr. Yung, and the report, when it was complete, was 11 going to go to Mr. Yung. 12 Q. He said that to you specifically? 13 A. Yes, he did. 14 Q. Now, once he arrived, what did you do in 15 terms of familiarizing him with the property and 16 helping him gather the information to help him make 17 this assessment? 18 A. Well, I supplied him with the documents 19 I thought he should have concerning our minimum 20 staffing levels. 21 Q. Now, what documents would those be, 22 please? 23 A. Well, they're our submissions to the 24 Commission and the DGE on our staffing levels on the 25 casino floor, our mandatory positions. And from there 0014 1 then it would be our internal controls, I believe that 2 he received a copy even -- I don't know right, after I 3 met with him. And he met with Carol before and she 4 supplied him with some documents of requirements from 5 the Commission and the rest was basically our security 6 department's operation as to staffing, 7 responsibilities. 8 There was areas I -- I think that he 9 didn't understand. I would try to fill him in, such 10 as table drops, how labor intensive they were. Bill 11 changers, how many people were required to do them, 12 the bill changers. And tried to give him as much 13 information as possible so he could include the 14 evaluation of the department. 15 Q. Do you think he understood some of those 16 things that you're talking about, the drops and the 17 jackpots and the fills and how important security is 18 to those functions, particularly on a busy night in 19 the casino? 20 A. Well, they have them in Vegas as we have 21 here. And I'm not sure they have the volume, and 22 that's what I was trying to get across to him. Our 23 drop teams -- table drop teams start at 6:00 in the 24 morning, and there's -- we have five teams of two 25 officers on each team. We have two bill changer teams 0015 1 with three officers. So there's 16 people right there 2 that are required, starting at 5:30, 6:00 in the 3 morning and go until they're finished. 4 Q. And did you try to communicate all this 5 to him? 6 A. Yes, I did. 7 Q. Do you think, based on his response to 8 you, that he understood and was using that as part of 9 his evaluation? 10 A. I believe he understood it. Whether it 11 had an impact on how he wrote his report, I can't 12 answer that. 13 Q. Okay. Now, also as part of the process 14 did you take him -- walk him around the property, show 15 him the property? 16 A. Yes. We went through the tower. We 17 went through the perimeter areas, the parking garages. 18 It's an extremely large property, as you're aware, 19 four towers, over 22,000 rooms. I think we have over 20 10,000 parking spaces. We have separate garages. We 21 have surface lots. And, as I say, it's a bad part of 22 town, a crime section of town, and we deal with it on 23 a regular basis. 24 Q. Well, in that regard let me ask you 25 this. Did you ever discuss the street crime, Atlantic 0016 1 City street crime issues with Mr. Koehler and how it 2 impacted your security issues? 3 A. Yes, I did. I also advised him that 4 because of the layout of our property, there was a lot 5 of ways to enter in our property into -- into the 6 hotels. And the concern that we should have security 7 in each tower, in the garages. And the patrols 8 facilitated that, to cover the garage areas. 9 Q. So you discussed that issue with him, 10 and it had an impact -- 11 A. Yes. 12 Q. Now, you also took him to some other 13 properties, is that correct? 14 A. Yes, I did. 15 Q. What which properties did you take him 16 to? 17 A. I took him to the Borgata, and I also 18 took him to the Trump Taj Mahal. 19 Q. And did you choose these two properties 20 for any particular reason? 21 A. Of the properties in the city, they are 22 probably the two most comparable in the sense of size. 23 They -- neither has as many rooms. They're not as 24 broken up as we are as far as the towers go, but 25 layouts -- I don't want to say similar, but at least 0017 1 something to compare it to. Something in the same 2 ballpark. 3 Q. Okay. 4 A. They are actually both a little bit 5 smaller, I think room size, square footage size, 6 parking size. 7 Q. Okay. Just to give them -- and why -- 8 A. To get a feeling for what we're dealing 9 with as far as the other properties. And one of his-- 10 his concerns is, early on, that he seemed to think 11 that we had a lot of standing posts or fixed posts. 12 And his question was, well, why do you have them? I 13 tried to explain to him that the positions with 14 juveniles, with gambling, one of the issues at the 15 Tropicana is that there's access to the -- to the 16 casino floor, and we let juveniles use the aisles but 17 not going into the gaming areas. And we do that 18 because you have no access without using the casino 19 floor, and I tried to explain it to him. 20 Q. And did he understand -- 21 A. That this is why we have the fixed post 22 for the people watching the juveniles. I thought he 23 understood it once I explained it to him, and then I 24 took him to the other property and showed him the same 25 set-up, those were -- in other words, a little less -- 0018 1 more -- their flow was a more restricted, the way they 2 were set up, and so at least when he made mention, he 3 said, why do you see less officers here? And I said, 4 that's because of the layout of the floor. 5 Q. Okay. Now, did he give you any 6 recommendations regarding the standing posts or the 7 fixed posts at the time you were taking him through 8 the various -- through the Tropicana and discussing 9 with him and showing him the various properties? 10 A. No, I did not. 11 Q. And did you -- you became aware by a 12 review of his report later that he did make some 13 recommendations concerning that; is that correct? 14 A. Yes, he did. 15 Q. Okay. And do you recall what he was 16 that was? What that recommendation was? 17 A. He thought that we could go back to the 18 Commission and request that we could eliminate some of 19 the fixed posts. He didn't think they were necessary. 20 Did he understand it? I thought he did. But now 21 maybe. 22 Q. What makes you say that? 23 A. Because they are very -- you can't just 24 arbitrarily say, well, we don't need that position 25 anymore. We don't need that position anymore. That's 0019 1 tough to do and handle the problems that we have. 2 Q. Okay. Now, I want to actually show you 3 a copy of the report. I believe it's D-65 in 4 evidence. Do you recognize -- do you recognize that 5 document? 6 A. Yes, I do. 7 Q. And what is that, just for the record? 8 A. That's an inter-office memo from Glenn 9 Koehler to Kevin Preston, reference Tropicana Atlantic 10 City security, and it's his evaluation of the 11 department. 12 Q. Have you seen this document prior to 13 today? 14 A. Yes. 15 Q. When did you first see this document? 16 A. I requested it from Kevin -- from Glenn 17 Koehler about two weeks -- I was told it was done. I 18 called him. I didn't get a call back. And I finally 19 e-mailed him, and he sent it to me a couple days 20 later. E-mailed it to me. 21 Q. So you received it -- 22 A. It was approximately a month. 23 Q. A month after its date? 24 A. After -- I believe after he left. I 25 believe it's an about a month after he left. 0020 1 Q. Okay. And when you -- and you reviewed 2 it at that time; is that correct? 3 A. Yes, I did. 4 Q. Okay. Now, I'm going to have you look 5 at the second page of the report. And there's a 6 paragraph near the bottom that starts, "It is my 7 understanding." Could you read that, please? 8 A. "It is my understanding that the CCC and 9 the DGE have absolutely no interest or concern for 10 security coverage of nongaming areas." 11 Q. Okay. Now, Mr. Koehler has testified, 12 and I believe you heard him yesterday, that you told 13 him this? 14 A. Yes. I heard him testify. 15 Q. Did you tell him that? 16 A. No, I did not. 17 Q. Can you explain what you told him in any 18 regard to this area? 19 A. I told him that the casino has mandatory 20 positions whereas the hotel or the exterior does not 21 have mandatory positions. But it doesn't mean that we 22 treat them any less differently as far as having 23 security present. He may have misunderstood what I 24 was trying to express to him. I would have to assume 25 that because I never said there was no interest from 0021 1 the DGE or the CCC. 2 Q. So you never said that to him? 3 A. No. 4 Q. Now, I also want to talk about something 5 else that Mr. Koehler discussed yesterday, and that is 6 the reassignment of personnel to the perimeter and 7 parking garage areas. 8 Mr. Koehler testified that he told you 9 specifically that he recommended reassigning personnel 10 to the garage and the perimeter areas. Did he ever 11 tell you that when you were speaking to him during his 12 evaluation and assessment of the property? 13 A. No, he did not. 14 Q. Did he ever say anything about 15 assignment of personnel to the perimeter and garage 16 areas? 17 A. Well, when we walked the area, he asked 18 where people were at and what their responsibilities 19 were. He may have said, well, you should have 20 people -- more people here or have more people there, 21 but that was the extent. He made no -- more asking. 22 Q. More -- I'm sorry? 23 A. He was asking -- 24 Q. Okay. 25 A. -- where -- were they were at and what 0022 1 were their responsibilities. 2 Q. He never said to you, you should 3 reassign people to the parking garage and the 4 perimeter or exterior areas? 5 A. No, he did not. 6 Q. Okay? So that -- so, obviously, that 7 follows that he would not have suggested to you where 8 you could reassign these people from as well? 9 A. Right. 10 Q. Since he never made that; correct? 11 A. That's correct. 12 Q. Now, there came a time, obviously, when 13 Mr. Koehler finished his evaluation; is that correct? 14 A. Yes, it is. 15 Q. Okay. And how long did he spend with 16 you there? 17 A. He come in on a Monday, so he started 18 Tuesday, Wednesday, wrapped up Thursday. Thursday 19 afternoon probably around 2:00 or 3:00, and he told me 20 he was going to leave Friday. I believe Friday 21 morning. 22 Q. Okay. Now, when he had wrapped up his 23 evaluation, did you take him around to talk to some 24 various people before he left? 25 A. I took him to the executive offices to 0023 1 see Fred Buro. I arrived there. Fred was in a 2 meeting. I went in and introduced him to Tama Hughes, 3 corporate counsel. 4 Q. And why did you take him up there? Why 5 did you do that? 6 A. Basically just so he could say, you 7 know, I'm here. I finished my job, and I'm ready to 8 go. That's it. Just say hello and good-bye to Mr. 9 Buro. 10 Q. So you initially sat down with Miss 11 Hughes; is that correct? 12 A. That's correct. 13 Q. And who was there with you? 14 A. Myself, Tama Hughes, and Glenn Koehler. 15 Q. Okay. And did Mr. Koehler say anything 16 to you and Miss Hughes about his recommendations on 17 the property based on the assessment he had performed? 18 A. The statements he made was that his 19 recommendation was he was going to -- would be to add 20 security. 21 Q. I'm sorry? 22 A. Add staff to the security department. 23 That was his recommendation. 24 Q. And he told that to both you and Miss 25 Hughes? 0024 1 A. Yes. 2 Q. And did he say anything specific 3 regarding adding staff? 4 A. No, he did not. 5 Q. He just said that his recommendation was 6 that you add security staff? 7 A. That's correct. 8 Q. Okay. Now, how long -- would you 9 estimate, how long did you spend talking to Miss 10 Hughes, you and Mr. Koehler? 11 A. Four or five minutes. 12 Q. And once you finished that conversation, 13 where did you go? 14 A. I went into Mr. Buro's office. 15 Q. And, again, what was the purpose of 16 taking Mr. Koehler into Mr. Buro's office? 17 A. Again just to say he was here, he's 18 finished the job, and he's heading home. 19 Q. And what was -- what was discussed at 20 that time? 21 A. Same thing. How did it go? Did you see 22 everything? Was there anything you didn't get to see 23 or, you know, any documents you need? And he said no. 24 He got everything he needed. 25 And during the conversation he said my 0025 1 recommendation would be to add security staff. 2 Q. So he said the same thing again to Mr. 3 Buro? 4 A. Correct. 5 Q. That his recommendation was to add 6 security staff? 7 A. Correct. 8 Q. Did he -- again, did he give any 9 specifics or did he just say recommendation was to add 10 security staff? 11 A. Just the recommendation to add staff. 12 Q. Okay. And again, how long did that 13 conversation last? 14 A. Again, four, five minutes. 15 Q. It's shortly thereafter Mr. Koehler 16 left; correct? 17 A. He left the next day. 18 Q. Okay. And did he indicate to you how 19 he-- how he was going to prepare his report or what 20 the process with him would be? You'll get a copy, 21 anything like that? 22 A. He did tell me I would get a copy. No 23 mention how he would prepare the report. No, he -- 24 Q. Did you take any action based on Mr. 25 Koehler's recommendations that you add security staff? 0026 1 A. Well, we were already down in the 2 patrol. We were down to one person through attrition. 3 And I talked to Fred shortly thereafter and told him 4 it was serious. We needed people to patrol the 5 garages, and he said, well, go ahead and hire them. 6 Q. So did you hire some people? 7 A. Yes, we did. 8 Q. Now, at some point then did a confusion 9 arise over this report when it was received and what 10 you -- the action you took in hiring? 11 A. Fred called me into his office. Again, 12 somewhere in -- maybe about a month later. And Kevin 13 Preston was already on board and in the property. And 14 when I went up to Fred's office, Kevin was there. And 15 he -- I guess the questions -- I'm not sure exactly 16 how it came about -- was you're hiring people. 17 Q. Who said that? 18 A. Either -- I guess it was Kevin because 19 Fred knew I hired these security patrol. I added 20 them. I added to it. Then the question was, well, 21 why? I said, well, we needed them. And then he -- 22 I'm not sure who mentioned the report, I guess said 23 Kevin says the report recommends that you should be 24 cutting people instead of hiring them. 25 So this is when we got on the phone with 0027 1 Glenn Koehler with the conference call. It was 2 myself, Kevin and Fred Buro, and we got ahold of him 3 on the phone, and we went over the report. He had a 4 couple questions, and I said to him I had a couple 5 questions about cutting -- what he was recommending, 6 cutting. And we had a short discussion about that. 7 And I assume that because Fred wasn't comfortable with 8 him doing so on the phone, he just cut me off, said 9 don't ask any more questions. And shortly thereafter, 10 that phone call was terminated. 11 Q. What was discussed during this phone 12 call? 13 A. The staffing levels and the cuts. And 14 my question was -- my question to him, I believe, 15 well, he was cutting the report writers. 16 Q. Okay. Now, you're looking at Page 3 of 17 the report? 18 A. Yes, I am. Yes, I am. 19 Q. Okay. 20 A. And he had five there. We had one per 21 shift. So my question was, we need five report 22 writers. I mean, in some fashion he kind of tried to 23 explain we have back-ups to them, so you don't need 24 any, so you get rid of five people. 25 Q. Okay. 0028 1 A. The same way with the tower. In that my 2 understanding at the time was that was the hotel 3 towers and we have -- he said we have six people 4 assigned there on day shift, which was incorrect. And 5 I kind of tried to explain it to him, that that's not 6 even an accurate description of the towers. And, 7 again, we could have gone on and argued it, but that's 8 where Fred finally said no. 9 Q. So -- 10 A. I was cut off. 11 Q. So you were trying to discuss this 12 recommendations with him? 13 A. Yes. Uh-huh. 14 Q. Did you feel his recommendations were 15 valid? 16 A. No. Not at all. 17 Q. Okay. And I'll back up and go through 18 that in a minute, but at a certain point were you 19 getting anywhere with the conversation? 20 A. No. And I believe that's why Fred 21 probably just kind of indicated don't ask any more 22 questions and just cut it short. 23 Q. All right. Did anyone have a copy of 24 this report in front of them during this conversation? 25 A. I believe I did. 0029 1 Q. Okay. Do you know if Mr. Preston had a 2 copy of this report? 3 A. I don't know. But I think he said he 4 was familiar with the report. 5 Q. During this conversation -- 6 A. Yes. 7 Q. -- was it your understanding that this 8 report and its recommendation to cut staff is what 9 prompted Mr. Preston's questions because you were 10 hiring? 11 A. I believe that was it. 12 Q. And -- 13 A. Yes. 14 Q. And was that the impetus for the phone 15 call? 16 A. To be exact, I'm not sure. Because when 17 we went into the room it was, well, you are hiring, 18 and we're supposed to be cutting, and then the phone 19 call was made. 20 Q. Okay. And at the end of the phone call, 21 how did it end? What direction did you get from 22 either Mr. Preston or Mr. Buro when you left the room? 23 A. At that point, the phone call was 24 finished, and the meeting was terminated with no 25 direction. There was no we'll cut them or follow that 0030 1 or -- there was no direction along that line. 2 Q. Did -- what happened after that 3 regarding your security staffing levels, though? Did 4 you get any further directions? 5 A. Just prior to, I believe, Fred's 6 termination, which was August 6th or 7th, somewhere in 7 there, I guess about two weeks prior to that I was 8 called up to Fred's office and told that we were going 9 to go through -- have more cuts because there was an 10 evaluation made with the Tropicana being compared to 11 Showboat, the Showboat had 109 officers, 108 officers, 12 and so it was a comparable property, and we were way 13 too overstaffed. 14 Q. And what was your -- so what did Fred 15 say that you had to do then? 16 A. Well, first thing we did was utilize 17 George Rodgers. He was the -- I think he was the 18 Executive Director of Analysis. And he sat down with 19 me over a period of time and did a comparison between 20 the Showboat and the Tropicana to show that there 21 wasn't an apples-to-apples situation. It was more of 22 a apples to oranges. It was much larger. The volumes 23 were much greater. I think the only thing that may 24 have been close was the revenue, but that was what 25 George was doing. He was the analyst. I supplied the 0031 1 numbers. 2 Q. Okay. And did you have to make cuts 3 though? 4 A. Not at that point in time. I went back 5 to Fred. We discussed it. He saw the report that 6 George Rodgers did. I believe he went to Kevin 7 Preston. I don't know -- I can't say he argued my 8 position, but I think he may have backed up not 9 cutting, and I'm not sure how he dealt with Kevin 10 Preston. I wasn't privy to it. 11 Q. Okay. And then shortly after that, were 12 you terminated? 13 A. Well, when Fred was, within the week I 14 was, also. And then I found out a week later that 15 they were requesting 70 cuts to get down to Showboat's 16 numbers. Then they went to 50, and then I heard they 17 ended up cutting 33. 18 Q. Now, I want to talk a little bit about 19 this report again. Eventually -- you didn't receive 20 it right away? 21 A. No, I did not. 22 Q. How long after Mr. Koehler left the 23 property did you actually get a copy of this? 24 A. It was just about a month. 25 Q. And how is it that you -- what did you 0032 1 have to do to get a copy of the report? 2 A. I asked Fred about it, and he said, 3 well, just contact Mr. Koehler and request of copy of 4 it. 5 Q. And did you -- 6 A. And I did. As I said earlier, I called 7 him, got a voice mail. Left a message requesting it. 8 Didn't hear anything for three or four days. I then 9 sent an e-mail. And then within two of or three days 10 of that he e-mailed me a copy of the report. 11 Q. Were you aware if Mr. Buro had a copy of 12 the report prior to that? 13 A. No, he did not. 14 Q. Did you share a copy of the report with 15 Mr. Buro once you received it? 16 A. Yes, I did. 17 Q. What was your reaction to this report 18 when you read it based on what Mr. Koehler had told 19 when you were at the property? 20 A. He was surprised. 21 Q. Who was surprised? 22 A. Fred Buro. 23 Q. Were you? 24 A. Yes, I was. 25 Q. Why were you surprised? 0033 1 A. It was completely contrary to what he 2 told me that he was going to recommend, and that was 3 to add security staff. Here he's cutting 20 security 4 staff. 5 Q. Okay. I just want to take you through a 6 little bit of this report. If you would please turn 7 to the first page. He indicates first recommending 8 eliminating the report writer positions; is that 9 correct? 10 A. Correct. 11 Q. What was your reaction to that based on 12 your experience? 13 A. The purpose of the report writers -- in 14 a property the size of Tropicana, it's twofold. One 15 is you want the quality of the report. And the other 16 is the fact that the incidents happen all over the 17 property, including casino floors, including fixed 18 post. And you just can't take somebody from a fixed 19 post and say now you're going to do this report 20 because -- not all the reports, but I would say a 21 great percentage of the reports there's follow up to 22 some degree. You're dealing with the victim, dealing 23 with the situation, dealing with an injury, dealing 24 with an arrest. And it's not just somebody sitting 25 there writing a report. They may end up spending two, 0034 1 two and a half hours with an incident if there's an 2 arrest involved. Or serious injury, we actually send 3 people to the hospital with some guests or patrons who 4 get hurt. So to use a person from a fixed -- you 5 know, use anybody, you can't just use anybody. 6 And that was decided that this is was 7 the best way to deal with the situation. It was also 8 from risk management's point of view that a quality 9 report would save them down the road, a lot of issues 10 as far as liability concerns where we're getting 11 accurate information, also. And a lot of times you 12 end up having to get tapes from the incident that 13 would have to be documented, stored as evidence. And 14 the report writers are trained to do all this. And to 15 take somebody just off the floor and say you're doing 16 the next report just doesn't work. 17 Q. Okay. Let's go to the second page, 18 please? 19 A. Okay. 20 Q. The next recommendation regards 21 something you talked about and touched on a little bit 22 earlier, and that is the fixed posts. And, 23 apparently, what Mr. Koehler was recommending here was 24 to eliminate these fixed posts and have the officers 25 in these posts rove about the gaming floor. Is that 0035 1 your understanding of what he's recommending on Page 2 2? That second large paragraph there. 3 A. (Reviewing.) Well, again, when we went 4 over this with him when he was at the property. He 5 never gave me any indication that he wanted to 6 eliminate them. And I thought he understood the 7 purpose of them. And to just say we're going to 8 eliminate these five posts or five people and put them 9 out in the garage, you just can't do it. 10 Q. Okay. 11 A. If you did, it should be by submission. 12 You could, if you decided you come up with another 13 better plan on the casino floor whereas a 14 reconfiguration of the casino floor, you could then go 15 back to the Commission and create a petition and say 16 we'd like to change this post or eliminate this post. 17 They would review it, and they would make that 18 decision. It wouldn't be on us. We couldn't it do 19 it. 20 Q. Okay. 21 A. Just arbitrarily say we move people 22 around, we couldn't do that. 23 Q. Okay. Now, one of the things is he 24 suggests at present there is a total of six officers 25 assigned to the Quarter. It's suggested that these 0036 1 six people be eliminated and the officers assigned as 2 relief officers be assigned to the Quarter whenever 3 they are free. Do you agree with that position? 4 A. No. I do not. 5 Q. What's the problem with that position? 6 A. The relief officers are basically -- 7 what they do. They give relief to the people who are 8 on the fixed posts throughout the property, not just 9 there, through every position gets a relief. They 10 have two half-hour breaks a day. And depending on the 11 number of people you have on that shift, you'll have 12 four or five relief people. That's their function for 13 the day. They'll rotate through all these positions 14 so everybody gets their breaks, including their own. 15 So when you come down to it, if you're breaking five 16 or six people, you're talking five or six hours and 17 then their own break time. So where these relief 18 people were going to come from to go staff another 19 position, I have no idea. 20 Q. So this simply wasn't feasible in your 21 mind? 22 A. No, not at all. 23 Q. Give your -- 24 A. It's not feasible, and I believe we went 25 over some of these situations. 0037 1 One of the things I noticed Glenn 2 Koehler never did was write anything down. I am 3 assuming he had a lot of experience or he knew exactly 4 what I was telling him because he never took one note 5 the time I was with him. 6 Q. The whole time? 7 A. The whole time. 8 Q. Next page, please. He indicates -- at 9 the top of the page, he indicates: Regarding the 10 hotel towers, there currently is a officer assigned to 11 each tower 24/7. It is understood that the problems 12 in the hotel generally occur during the swing and 13 graveyard hours. During day shift there is 14 considerable employee activity (i.e. maids, et cetera) 15 on the hotel towers. The continuous coverage on day 16 shift could be eliminated with random patrols being 17 conducted by the relief officers. 18 Again, do you think that this is a 19 feasible proposal? 20 A. No, it's not. 21 Q. Why not, please? 22 A. Well, the relief officers would not be 23 available to do those patrols. And the fact that -- 24 and I'm not sure. I know where some of this comes 25 from because I found out after the fact that there is 0038 1 hardly any problems because you have activity during 2 the daytime shifts. Well, somewhere along the way it 3 come out that this information was gathered through 4 risk management that there was no crime during the 5 daytime at the hotel. And I went back to risk 6 management, Frank Harrison and asked him. Did Glenn 7 Koehler ever talk to you about the situation in the 8 hotels with crime? And he said he never mentioned a 9 word to him. 10 Q. Okay. 11 A. So how it came from Frank Harrison or 12 risk management, I have no idea. 13 Q. And, again, this is a feasible proposal? 14 A. No, it's not. 15 Q. Why? 16 A. Well, you don't have the relief officers 17 to put in the towers to do that. And we have a lot of 18 situations in the hotel. Our capacity is in most 19 cases -- and I believe my numbers are pretty much on 20 the money -- I think we run 95 percent capacity on 21 most days, and you're talking several thousand people 22 in those hotels. And we have all kinds of situations, 23 and you need -- you can't have somebody running from 24 the -- another position, another post to take care of 25 a situation up in the towers. You know, you go from 0039 1 one tower to another tower, it takes you five or six 2 minutes to get there. Maybe longer. Depends on 3 what's going on. 4 Q. Okay. 5 A. So it's not practical when you have you 6 have to have people assigned to these positions. 7 Q. And finally puts a note in here that the 8 garages and exterior areas have very, very limited 9 security coverage. This could prove to be a serious 10 liability and should be considered as a possible 11 reassignment of personnel. And, again, you've 12 answered this before, but did he ever indicate or 13 express anything to this when he was speaking to you? 14 A. No, he did not. 15 Q. Did he ever tell you that quote-unquote 16 reassign personnel to these areas? 17 A. No, he did not. 18 Q. Did he ever raise these areas being a 19 serious liability? 20 A. No, he did not. 21 Q. When was the first time you had seen any 22 anything of this nature in this report? 23 A. That's correct. 24 Q. Thank you. 25 (Conferring.) 0040 1 MS. MAHER: Thank you. I have no 2 further questions. 3 CHAIR KASSEKERT: Cross-examination? 4 MR. O'GARA: Please. 5 6 CROSS-EXAMINATION BY MR. O'GARA: 7 Q. Mr. Lyons, just a couple things. In 8 your direct when we were talking about the issue and 9 the Director asked you the Division and Commission had 10 no concern about nonfloor posts, meaning nonmandatory 11 positions? 12 A. Yes. 13 Q. And you thought that perhaps that was a 14 misunderstanding. Is that fair? Or you he just 15 didn't ask you about that or what? 16 A. No, we discussed it. 17 Q. Yeah. 18 A. So either he misunderstood what I was 19 telling him or didn't understand. 20 Q. Or discarded it? 21 A. Well, he puts it there, so he didn't 22 discard it. He maybe didn't understand what I was 23 trying to express to him. 24 Q. And I think I -- and this isn't a trick 25 question. If I understand you correctly, what you 0041 1 said was with the relief officer thing, it's simple 2 math that if there's five guys, and they have to cover 3 40 hours, there's no hours left, so they couldn't do 4 what's said in there; is that correct? 5 A. That's correct. 6 Q. Okay. You mentioned that -- and I'm not 7 trying to jump around, orient yourself to, it's after 8 he's done. You had a conversation with Tama Hughes 9 with him, and he gave you an indication that he 10 thought you needed some people. 11 A. Correct. 12 Q. The same thing to Fred. 13 A. Correct. 14 Q. And you said that -- I think you said 15 earlier than that -- and I'm trying to get it right 16 timewise. You had spoken with Kevin. Aside from him, 17 meaning Kevin Preston, who had gone over some security 18 stuff with you and said, yeah, it's a lot of stuff. I 19 don't know how you do it? 20 A. Correct. 21 Q. That conversation with Kevin was that 22 before all of this evaluation was done? Roughly? Or 23 at the same time? 24 A. It was close. I'm not sure exactly. I 25 can't say for sure whether it was right after or right 0042 1 before. 2 Q. But it's not while he was there. It was 3 before -- 4 A. No, it wasn't while he was there. 5 Q. Okay. And in that conversation did you 6 think Kevin Preston was open-minded in speaking with 7 you and listening to you? 8 A. Yes, I did. 9 Q. And when you had -- after the -- the 10 report's done and you got a copy of the report, if you 11 look at it, I believe it's addressed to Kevin; 12 correct? 13 A. Yes, it is. 14 Q. To your knowledge, it's not addressed to 15 Bill Yung -- or you don't know if Bill Yung ever saw 16 it, do you? 17 A. I have no idea if he ever saw it. 18 Q. But when you had the meeting and Kevin 19 was there and Fred and you, and you got to the phone 20 with him. Fair to say you were kind of surprised that 21 it said cuts after you had a discussion and thought he 22 said you needed some people? 23 A. Correct. 24 Q. Is it fair to say that Kevin was 25 somewhat confused? Because he had heard what you said 0043 1 and looked at the report and saw that you had some 2 issues with it? 3 A. I would think so. And, plus, he had 4 only been there a couple weeks, so I guess he was 5 surprised about a lot of things that were going. 6 Q. And after that, was he open-minded in 7 his talks with you are? 8 A. Yes, he was. 9 Q. Fair-minded with you? 10 A. Yes, he was. 11 Q. Do you believe Kevin has a fair view of 12 this and tried to take a fair view of this and tried 13 to understand the confusion that was going on? 14 A. I think so. Yes. 15 Q. You held this job at Trump Marina and 16 then at Trop, and I assume that at both places you had 17 been a supervisor of some type; right? Security? 18 A. Yes. 19 Q. Just honestly tell me. Do you think 20 that position, either the person who has to be the 21 either reporting or overseeing person that as New 22 Jersey people, a New Jersey casino, do you think it's 23 important that that person have some kind of law 24 enforcement experience and some kind of experience and 25 understanding of the kind of issues you face in 0044 1 Atlantic City? 2 A. I would think so, yes. Because you 3 interact with law enforcement here. You interact 4 with -- I mean, there's a lot of crime, and I think 5 you should have an understanding of it. I mean, you 6 don't have to be a policeman forever to do that, no. 7 Q. No. You know, law enforcement 8 background, the guy you report to, you think it's 9 pretty good feature that they have some understanding 10 of that kind of stuff to oversee this kind of stuff; 11 correct? 12 A. Yes. 13 MR. O'GARA: I don't have any other 14 questions. 15 CHAIR KASSEKERT: Questions from the 16 commissioners? 17 Commissioner Fedorko? 18 VICE CHAIR FEDORKO: Mr. Lyons, you were 19 here yesterday and listened to the testimony of 20 Mr. Koehler? 21 THE WITNESS: Yes. 22 VICE CHAIR FEDORKO: What did you think 23 of everything he said? 24 THE WITNESS: I'm not sure -- I don't 25 want to say he's lying. I think he may be 0045 1 confused about some issues. I -- I wouldn't 2 want to categorize what. 3 VICE CHAIR FEDORKO: Do you think -- is 4 it fair to say it was full of inaccuracies? 5 His testimony. 6 THE WITNESS: There was some inaccurate 7 statements made. Yes. 8 VICE CHAIR FEDORKO: When he came out 9 here and he talked to you, did he tell you his 10 report was going to be suggestions? 11 THE WITNESS: No. No, he did not. 12 VICE CHAIR FEDORKO: Did he say it was 13 going to be recommendations? 14 THE WITNESS: The word he used, what 15 little he told me was, a recommendation for 16 adding security staff. 17 VICE CHAIR FEDORKO: Because yesterday 18 he said it was suggestions. 19 THE WITNESS: Well, no, sir. 20 VICE CHAIR FEDORKO: Did you hear him 21 say that? 22 THE WITNESS: No, sir. I heard him say 23 it yesterday. 24 VICE CHAIR FEDORKO: Yesterday. Yeah. 25 THE WITNESS: He didn't say it to me. 0046 1 VICE CHAIR FEDORKO: I asked him 2 yesterday did he take into consideration the 3 area that the Tropicana is located in, this 4 being New Jersey. You got a city 50 miles away 5 where they're averaging more than one murder a 6 day. He told me he took all that into 7 consideration. Yet when I read this report, I 8 don't know that he did. What do you think? 9 THE WITNESS: There's indications that 10 he didn't. But he was told, and he was shown 11 reports. He was shown the criminal activity 12 and the situations we dealt with on a regular 13 basis. The amount of arrests we had, all that 14 was supplied to him. So, again, how he wanted 15 to view it or how he wanted to deal with it, 16 that's -- I'm not sure how you would do that. 17 VICE CHAIR FEDORKO: I'm kind of 18 surprised when you mentioned that he didn't 19 write anything down. Was he talking into a 20 tape recorder or anything? 21 THE WITNESS: No, he was not. 22 VICE CHAIR FEDORKO: I mean, I don't 23 know you know the answer. How was it he was 24 able to remember all this stuff? 25 THE WITNESS: I don't know. I'm 0047 1 assuming he was very good at what he was doing. 2 He had the expertise. But he -- he didn't 3 write anything down. 4 VICE CHAIR FEDORKO: Do you think he has 5 the expertise? 6 THE WITNESS: After reading the report, 7 no. 8 VICE CHAIR FEDORKO: I don't have any 9 other questions. 10 CHAIR KASSEKERT: Commissioner Frulio? 11 COMMISSIONER FRULIO: Mike, I know you 12 noticed that he wasn't taking notes. Did you 13 feel as if he was just, like, going through the 14 motions? 15 THE WITNESS: No. He seemed interested 16 and he didn't ask for much. Most of what he 17 had gotten I made sure he got. 18 COMMISSIONER FRULIO: All right. 19 THE WITNESS: He didn't ask for stats. 20 He didn't ask for a lot of things, but I went 21 and provided them for him. Everybody has their 22 own way of doing things, and I wasn't going to 23 question him of how he was doing it. But I 24 tried to supply as much information to him as 25 possible to let him know what our total 0048 1 operation was and not just, you know, on the 2 casino floor or not just in the hotel or just 3 in the garages. I tried to give him a total 4 overview of everything. 5 COMMISSIONER FRULIO: I noticed also 6 that you took him to the Borgata and the Taj as 7 being comparable with the Trop. Yet in that 8 potential layoffs report it said that Showboat 9 is the most comparable. Were you surprised by 10 that at the time? 11 THE WITNESS: When I first heard about 12 the comparison with the Showboat? 13 COMMISSIONER FRULIO: Yeah. 14 THE WITNESS: I've been in the Showboat, 15 and I know the size of the property. There was 16 no way to use Showboat as a comparison. I'm 17 not sure if Glenn Koehler ever used it, though. 18 He didn't use that as a comparison himself. 19 COMMISSIONER FRULIO: Okay. Thank you. 20 CHAIR KASSEKERT: Let me just follow up 21 on Commissioner Frulio's question. 22 When you were brought in and Kevin 23 Preston discussed with you the comparison to 24 the Showboat, did you -- did you tell Mr. 25 Preston, hey, we went and looked at the Borgata 0049 1 and the Taj because they're the most comparable 2 in terms of size? 3 THE WITNESS: No, because they weren't 4 using Koehler's report. 5 CHAIR KASSEKERT: At all. 6 THE WITNESS: At all in that comparison, 7 to my knowledge. Because the information I got 8 to about the Showboat came from Fred Buro as 9 opposed to Kevin Preston. He told me that 10 Kevin Preston was using that as a comparison. 11 CHAIR KASSEKERT: What did you say to 12 Mr. Buro about that? 13 THE WITNESS: We sat down and discussed 14 it, and that's when he brought George Rodgers 15 in to analyze the situation. And I sat down 16 with George Rodgers for several hours and with 17 the comparison, and there was no comparison. 18 CHAIR KASSEKERT: No comparison. 19 THE WITNESS: Except for revenue. 20 CHAIR KASSEKERT: Commissioner Epps? 21 COMMISSIONER EPPS: When this review 22 began, did you believe that it was strictly a 23 security analysis just how you're staffed and 24 what you need? Was that your belief? 25 THE WITNESS: That was my understanding. 0050 1 Yes. 2 COMMISSIONER EPPS: Did you ever have 3 any impression that this analysis involved 4 money? 5 THE WITNESS: It was never mentioned to 6 me. No. 7 COMMISSIONER EPPS: Did you think that 8 there was a cost savings -- cost-cutting 9 mechanism designed into this evaluation? 10 THE WITNESS: I was not aware of it. 11 COMMISSIONER EPPS: So strictly security 12 assessment to determine whether or not you are 13 adequately securing the facility and all the 14 security needs are met? 15 THE WITNESS: Correct. 16 COMMISSIONER EPPS: And that's what you 17 believed you were engaged in? 18 THE WITNESS: That's correct. 19 COMMISSIONER EPPS: When you got the 20 report, on Page 3, did you recognize under the 21 box, the diagram there. The -- did you see 22 that line? 23 THE WITNESS: Yes, I do. 24 COMMISSIONER EPPS: Did that jump out at 25 you at all? 0051 1 THE WITNESS: Surprised me. Even the 2 percentage, the ten percent reduction in staff 3 and how he came to that conclusion for 4 $400,000. I'm not sure of because in dollars 5 and cents, where would he get those numbers 6 from? He'd have to know the salaries, which he 7 wasn't privy to. So I think -- 8 COMMISSIONER EPPS: Did you give him 9 security guards' salaries? 10 THE WITNESS: No. No. No, I did not. 11 COMMISSIONER EPPS: When you got this 12 report, was it your view as the chief of 13 security at Tropicana that this was optional to 14 you? You could take this and kind of do what 15 you want with it? 16 THE WITNESS: That wouldn't be my 17 decision. 18 COMMISSIONER EPPS: What did -- 19 THE WITNESS: That was up to Fred Buro. 20 And then at that point in time, he was 21 reporting to Kevin Preston, and depending on 22 how they viewed it. That wouldn't be me 23 saying, well, I can't do this or I wouldn't do 24 that. I'd have to sit down with Fred. I would 25 resist changing things, and I would express my 0052 1 opinions to Fred Buro. And at times or at 2 least have discussion with Kevin Preston. But 3 I wouldn't implement that on my own or just say 4 I want to cut. 5 COMMISSIONER EPPS: Did anybody ever 6 indicate to you that any of the stuff in here 7 is left to your discretion because you run the 8 property and you know best how to use your 9 guys, but this is a guide, but you do what you 10 need to do to run the property? 11 THE WITNESS: No. 12 COMMISSIONER EPPS: Did you get the 13 impression that you had that leeway when you 14 got this report? 15 THE WITNESS: I didn't review that 16 report as that in any way of what I could do or 17 what I couldn't do. 18 COMMISSIONER EPPS: How did you review 19 this report? 20 THE WITNESS: It had to be discussed 21 with Fred Buro. And, again, at that point in 22 time Kevin Preston as to his recommendations on 23 what my feelings were about them. 24 COMMISSIONER EPPS: I don't have any. 25 CHAIR KASSEKERT: Commissioner 0053 1 Sommeling? 2 COMMISSIONER SOMMELING: I want to 3 follow up on something that Commissioner Epps 4 just touched on. After you received this 5 report, you then had a conversation with Fred 6 Buro or with Kevin Preston with respect to what 7 the report said and what it was indicated that 8 should happen as far as cuts were concerned? 9 THE WITNESS: Yes. 10 COMMISSIONER SOMMELING: And what was 11 the reaction to that conversation? 12 THE WITNESS: Well, initially, Fred Buro 13 was kind of confused based on what he 14 remembered of our conversation with the 15 recommendation of adding staff. Kevin Preston 16 wasn't aware of that, and so we advised him. 17 But at that point I think he was just open to 18 whatever was going on, and he wanted to get as 19 much information as possible. You have to 20 remember, Kevin was new to the property. And 21 into the company. So, for him to, you know, 22 make decisions or respond, he'd have a 23 difficult time to do that, I think. 24 COMMISSIONER SOMMELING: Did you have 25 any subsequent meetings with regard to security 0054 1 posts as far as making actually increases 2 instead of decreases subsequent to that 3 meeting? 4 THE WITNESS: No. 5 COMMISSIONER SOMMELING: Did you ever 6 have -- or did you ever get knowledge of any 7 other plan to cut not only these security posts 8 which are recommended in Mr. Koehler's report 9 but in other security posts around the property 10 in its entirety? 11 THE WITNESS: I've never saw the plan. 12 I was told a number, and -- 13 COMMISSIONER SOMMELING: Just stop right 14 there. You were told a number in respect to 15 individual posts being eliminated or certain 16 officers being reduced in certain areas? 17 THE WITNESS: No. Just a number. 18 COMMISSIONER SOMMELING: Just one 19 number. 20 THE WITNESS: The number was we're going 21 to be comparable to Showboat, and the number 22 would have to be in the range of 50 to 70 23 people. 24 COMMISSIONER SOMMELING: And who was it 25 that made that statement? 0055 1 THE WITNESS: That was told to me by 2 Fred Buro, and he told me the number came about 3 through a comparison from Showboat which was -- 4 came from Kevin Preston. 5 COMMISSIONER SOMMELING: Speaking of the 6 comparison, did Mr. Koehler have any knowledge 7 of that comparison, do you think? 8 THE WITNESS: Of the Showboat? 9 COMMISSIONER SOMMELING: Yeah. 10 THE WITNESS: Not to my knowledge. 11 COMMISSIONER SOMMELING: So when he was 12 here, just to go back, not to sound redundant, 13 but you took him to the Borgata and -- 14 THE WITNESS: Right. 15 COMMISSIONER SOMMELING: And where else 16 did you take him? 17 THE WITNESS: Taj Mahal. 18 COMMISSIONER SOMMELING: He never went 19 to Showboat? 20 THE WITNESS: No, he did not. 21 COMMISSIONER SOMMELING: Okay. And 22 after you had these conversations about 23 increasing the staff as vis-a-vis as opposed to 24 cutting the staff, how long after those 25 conversations kind of settled with the 0056 1 management team at Tropicana were you 2 terminated? 3 THE WITNESS: Was I terminated? 4 COMMISSIONER SOMMELING: Yeah. 5 THE WITNESS: Within three weeks. 6 COMMISSIONER SOMMELING: Within three 7 weeks. And it wasn't Kevin Preston that 8 terminated you? 9 THE WITNESS: No, it was not. 10 COMMISSIONER SOMMELING: It was Fred 11 Buro that terminated -- 12 THE WITNESS: No. Fred Buro was already 13 gone. 14 COMMISSIONER SOMMELING: Already gone. 15 Okay. 16 So I take it -- it was your testimony 17 Mr. Diannantonio advised you you were being 18 terminated? 19 THE WITNESS: Yes. He was the 20 president, and he was the one that terminated 21 me. Yes. 22 COMMISSIONER SOMMELING: Just for the 23 record again, what was the explanation of why 24 you were being terminated? 25 THE WITNESS: They were going in a 0057 1 different direction and at a higher level. 2 COMMISSIONER SOMMELING: Is it your 3 considered opinion as an expert in security and 4 having all the experience that you do have in 5 the security -- in the New Jersey casino 6 industry that your recommendations were sound 7 recommendations in order to cover the necessary 8 posts in a complex as large as the Tropicana? 9 THE WITNESS: Yes. 10 COMMISSIONER SOMMELING: No more 11 questions, Madame Chair. 12 CHAIR KASSEKERT: Commissioner Fedorko? 13 VICE CHAIR FEDORKO: What do you think 14 of Mr. Koehler as a security expert? Do you 15 think he's a security expert? 16 THE WITNESS: I don't know enough about 17 his qualifications. I know that he is 18 responsibility as a director of security for 19 two properties in Tahoe. He himself told me 20 they are very small properties compared to the 21 Tropicana. I -- I couldn't say if he's an 22 expert or not. I mean, did he understand our 23 industry here in Atlantic City? And our 24 properties? No, he did not. 25 VICE CHAIR FEDORKO: Were you impressed 0058 1 by this knowledge of security? 2 THE WITNESS: No. Not overly. No. 3 VICE CHAIR FEDORKO: What do you think 4 of somebody who tells something to your face 5 and goes back and writes a report that is 6 totally different -- 7 THE WITNESS: I have a problem with it, 8 but it was out of my hands at that point. 9 VICE CHAIR FEDORKO: Nothing. 10 COMMISSIONER SOMMELING: Chair, just one 11 question. 12 CHAIR KASSEKERT: Sure. 13 COMMISSIONER SOMMELING: Mr. Lyons, 14 also, I just wanted to ask you if you knew at 15 any time that there were other people in the 16 organization, counsel for the Tropicana or 17 other executives that were already in the 18 process of preparing a report, which they in 19 turn were going to submit to the Commission 20 and/or the Division with respect to cuts in the 21 security force at Tropicana? Did you have 22 knowledge of that? 23 THE WITNESS: No. Because I wasn't 24 included. The last three weeks I had no input 25 into any other than the comparison we worked up 0059 1 for our property against the Showboat. After 2 that comparison was done, I had no input into 3 cuts. 4 COMMISSIONER SOMMELING: And, excuse me, 5 just let me go over this one more time. Your 6 last day at Tropicana was the 14th of August? 7 THE WITNESS: Correct. 8 COMMISSIONER SOMMELING: Okay. No more 9 questions. 10 CHAIR KASSEKERT: Anything else? 11 Anything on redirect? 12 MS. MAHER: No. Thank you. 13 CHAIR KASSEKERT: Anything on recross? 14 MR. O'GARA: Two things. 15 16 RECROSS-EXAMINATION BY MR. O'GARA: 17 Q. When you had the initial conversation -- 18 this is when Koehler was here and you met with he and 19 Tama, and he made the suggestion and recommendation 20 about additional people, Tama didn't disagree with 21 that at all, did she? 22 A. No, she did not. 23 Q. And speeding ahead, when you had the 24 phone conversation with Koehler and Mr. Buro, is it 25 fair to say pretty you were surprised what was in this 0060 1 report compared to what he had said to you? Kevin was 2 also -- had no idea what -- what he had said to you or 3 what was in the report and was pretty open-minded? 4 A. No, I don't think Kevin knew what was 5 said to us directly unless Fred told him. Fred may 6 have said he has recommended when he left to add 7 people and now in the report he says cuts, but that's 8 between Fred and Kevin. 9 Q. Besides between he and Kevin, your 10 perception, he seemed -- he knew there was some 11 confusion going on; right? 12 A. Oh, yes, he did. Yes. 13 Q. And in response to that confusion, he 14 was pretty open-minded in talking to you? He didn't 15 say, he's right. And you're right, and -- 16 A. No. We had a discussion after that. 17 Q. And -- 18 A. About staffing. 19 Q. Yeah. And he kind of was at a loss to 20 figure out how you were getting two different stories; 21 right? 22 A. His state -- I don't know. I can't 23 answer that. 24 Q. But it was clear -- 25 A. He was open, and we talked about it, and 0061 1 that was the at the end of it, and we went away. We 2 didn't do the cuts. 3 Q. Yeah. Mr. Lyons, in fair -- he was -- 4 A. Excuse me -- 5 Q. It became apparent to you that you were 6 getting two different stories; right? He figured that 7 out as you were talking; right? 8 A. Correct. 9 Q. And he didn't know anything about the 10 two stories; right? That you could see? 11 A. As far as I know he didn't. Unless, as 12 I say, Fred told him. 13 Q. That would be the way -- 14 A. That would be the complete opposite of 15 what was in the report. 16 Q. Ultimately, after you left and whatever 17 changes were made, are you aware if there were any 18 changes made to security after that? They were done 19 after consultation with the Division and Commission? 20 A. The only number I heard was 33. 21 Q. Uh-huh. 22 A. And then shortly after that went down to 23 31 because somebody told me -- and I forget who -- 24 that they took two shift supervisors and laid them 25 off. And within a week they brought them back again. 0062 1 That's the only thing I know. 2 Q. Only knowledge you know? 3 A. That's it. 4 COMMISSIONER EPPS: Mr. Lyons? 5 CHAIR KASSEKERT: Commissioner Epps? 6 COMMISSIONER EPPS: Can you testify that 7 at one point later you learned that there was a 8 recommendation to terminate upwards of 70? 9 THE WITNESS: If I remember correctly, 10 it was 50 to 70. Somewhere to put us in line 11 with Showboat. 12 COMMISSIONER EPPS: You learned that 13 that later? 14 THE WITNESS: No. I learned that while 15 I was still employed. 16 COMMISSIONER EPPS: While you were still 17 employed. 18 THE WITNESS: Yes. 19 COMMISSIONER EPPS: Who prepared that 20 document? 21 THE WITNESS: I didn't see that. Don't 22 know that. Never saw it. Didn't have any 23 input into it. 24 COMMISSIONER EPPS: Do you know whose 25 recommendation it was going to be? 0063 1 THE WITNESS: No. 2 CHAIR KASSEKERT: Any other questions? 3 COMMISSIONER SOMMELING: Just one last 4 question, Chair. 5 CHAIR KASSEKERT: Commissioner 6 Sommeling? 7 COMMISSIONER SOMMELING: Did Kevin 8 Preston have any conversation with you with 9 regard to having further analysis of security 10 needs in that, in those words? 11 THE WITNESS: No. 12 COMMISSIONER SOMMELING: Did you hear 13 Kevin Preston's testimony at any time during 14 these hearings? 15 THE WITNESS: I believe I did hear -- 16 Wednesday -- Wednesday morning he testified? I 17 think I was here. 18 COMMISSIONER SOMMELING: And generally 19 when I was speaking about with respect to 20 changes in Tropicana were predicated on 21 analysis of whatever, including security, did 22 you hear that part? 23 THE WITNESS: I didn't hear him mention 24 security. 25 COMMISSIONER SOMMELING: No more 0064 1 questions. 2 CHAIR KASSEKERT: Okay. Any other 3 questions? 4 Anything else? 5 MS. MAHER: Nothing further. Thank you. 6 CHAIR KASSEKERT: Mr. O'Gara? 7 MR. O'GARA: No, ma'am. 8 CHAIR KASSEKERT: You may step down. 9 Thank you. 10 Ms. Maher, your next witness. 11 MS. MAHER: The Division rests. Thank 12 you. 13 CHAIR KASSEKERT: Any additional 14 witnesses for you, Mr. O'Gara? 15 MR. O'GARA: No. 16 CHAIR KASSEKERT: Okay. Why don't we 17 take a brief recess. 18 I think we have to deal next with the 19 issue of the expiration of the ICA. So why 20 don't we take just a brief ten-minute recess. 21 Give the court reporter a rest. 22 (A recess was taken from 11:13 to 11:30 23 a.m.) 24 CHAIR KASSEKERT: We'll go back on the 25 record. 0065 1 The next matter under consideration 2 today is the casino and CHAB license lapsing, 3 which technically would occur the end of this 4 month, which is today, November 30th. Both 5 parties have submitted briefs regarding this. 6 I'm going to ask if either of you want to say 7 orally? 8 Mr. O'Gara? 9 MR. O'GARA: Yes, ma'am. 10 I just reiterate, I think it was clear 11 in our brief, which is under the provisions in 12 the Administrative Procedure Act, I think 13 consistent with Section 88 and 95 of the Act 14 that this matter, the application was made. It 15 was fully and complete application. The 16 proceedings with respect to the license are 17 ongoing and continuing. And I think that the-- 18 with that compliance, it is clear under the 19 Administrative Procedures Act that the status 20 quo remains in effect until you render a 21 decision. And I think it was the full 22 intention of the Act, and I think that the 23 legislature in doing that had the full 24 intention of understanding that, in fact, these 25 proceedings that you have no way of knowing 0066 1 whether something takes five days or four days 2 or three days. There's no intention to cause 3 that disruption absent an affirmative or 4 negative decision until there's a decision by 5 the body that's so charged the status quo be 6 interrupted, and I think it's fairly clear and 7 pretty well settled. 8 CHAIR KASSEKERT: Thank you. 9 Ms. Maher? 10 MS. MAHER: I would have to agree with 11 Mr. O'Gara. 12 CHAIR KASSEKERT: Thank you very much. 13 I don't think there's any need for us to 14 recess. We have reviewed the briefs, and since 15 there was a second prehearing conference order, 16 the parties briefed the issue on whether the 17 current casino and CHAB license lapse if the 18 hearing in this matter does not conclude by the 19 license expiration date, which is today. The 20 parties have amplified those arguments today 21 and resoundingly agree that when a current 22 casino license holder timely applies for a 23 renewal and pays all the applicable fees and 24 taxes, the Administrative Procedures Act NJSA 25 52:14-B-11 forestalls a license expiration 0067 1 until the Commission finally determines the 2 renewal application. However, we also must be 3 mindful of Sections 88A and 95 of the Casino 4 Control Act. 5 Section 8A in pertinent part requires 6 the Commission to act upon the renewal 7 application prior to the date of expiration of 8 the current license. Section 95 in pertinent 9 part authorizes the Commission, with the 10 Director's concurrence, to extend the period of 11 any license other than a casino license. 12 The Commission in the past has 13 cautiously relied on the APA, doing so only 14 when justified by administrative needs. For 15 instance, frequently we have convened a single 16 renewal hearing for multiple related casino 17 licensees, each with its own license expiration 18 date but with a common ownership structure 19 which readily lent itself to a unified hearing. 20 In such circumstances, the Commission 21 nevertheless has finished the hearing by the 22 date that the latest affiliated casino license 23 would expire. In so doing, the Commission 24 takes the requisite action, specified in 25 Section 88A by consolidating, before the date 0068 1 that the earliest license expires, all 2 affiliated licenses in a single proceeding to 3 be held prior to the date that the latest 4 license would expire. 5 In this case, the administrative 6 necessity to the Commission is apparent. The 7 hearing commenced on November 20th, 2007 with 8 the reasonable expectation of concluding by 9 month's end. We have just now concluded 10 testimony and summations are yet to come. 11 Moreover, the Commission can certainly point to 12 the January 2, 2008, expiration of TCR's ICA 13 period as the requisite statutory deadline. 14 Thus, the actions we have taken and will take 15 in this matter amply satisfied the requirements 16 of Section 88A. 17 As for Section 95 which deals with the 18 renewal of licenses other than casino licenses, 19 it authorizes the Commission to extend those 20 licenses when appropriate to facilitate the 21 efficient operation of the Commission and the 22 Division. Apparently, Section 95 affords the 23 Commission the power to extend licenses without 24 triggering the contested case hearing process 25 whereby the Commission would determine whether 0069 1 all necessary criteria for the renewal of a 2 license has been established. 3 Although the legislature conferred an 4 extraordinary grant of authority on the 5 Commission through Section 95, it seemingly 6 withheld the authority from the Commission to 7 rely solely on operational efficiencies as the 8 basis to extend the casino license. Rather, 9 the legislature must have intended that only 10 through the hearing process could the 11 Commission address casino relicensure. Thus, 12 to rely on Section 95 to so extend the casino 13 license would be inappropriate. 14 However, Section 95 can hardly be read 15 to foreclose the Commission, when in the throes 16 of a contested case casino relicensing 17 procedure, from availing itself of the APA, 18 which ameliorates the obvious harshness that 19 would arise if the existing Tropicana casino 20 and CHAB licenses were to lapse upon their 21 November 30th, 2007, expiration date. 22 Thus, I move that the Commission find 23 that Tropicana has made timely and sufficient 24 application for the renewal of its licenses so 25 that, consistent with the APA, the current 0070 1 casino and CHAB licenses will not lapse until 2 we render a final determination in these 3 procedures, with the expectation that the 4 Commission would do so next week, but certainly 5 no later than January 2nd, 2008, and I so move. 6 Is there a second? 7 COMMISSIONER SOMMELING: Second. 8 COMMISSIONER FRULIO: Second. 9 CHAIR KASSEKERT: The motion has been 10 made and seconded. All in favor? 11 (Ayes.) 12 CHAIR KASSEKERT: Opposed? 13 (No response.) 14 CHAIR KASSEKERT: Motion carries. 15 MS. FAUNTLEROY: This is a roll call 16 vote. 17 MR. NANCE: This is a roll call vote. 18 CHAIR KASSEKERT: It's a roll call vote. 19 I'm sorry. 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. 0071 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 motion is unanimous. 7 CHAIR KASSEKERT: Very good. 8 Let me set out some scheduling dates for 9 next week. We are going to set closing 10 arguments for Tuesday, December the 4th, 11 starting at 1:30. Right now we are to convene 12 at 10:00. We will come in and -- because we've 13 already noted and sent our notice to the 14 Secretary of State, we will come in and recess 15 at 10:00 until 1:30 to begin oral arguments. 16 Local 54, having been deemed a 17 participant in this proceeding, will be allowed 18 to participate in closing by making a oral 19 statement. And in addition -- in addition to 20 hearing closing arguments, the Commission at 21 that time will also render a decision regarding 22 the pending sealing requests. 23 Are there any other matters that need to 24 be brought to our attention at this time? 25 Miss Kaufman? 0072 1 MS. KAUFMAN: Yes. Tropicana has one 2 more exhibit to enter. I believe it's been 3 marked A-94 and distributed. It's a letter 4 from myself to Len DiGiacomo, Wendy Way, and 5 MaryJo Flaherty regarding some clarification 6 with respect to Jeff Silver's service. 7 Thank you. 8 CHAIR KASSEKERT: Any objection? 9 MS. MAHER: No objection. 10 MS. WAY: No objection. 11 MS. FLAHERTY: No objection. 12 CHAIR KASSEKERT: We'll move that into 13 evidence then. 14 Any other matters that need to be 15 brought to our attention at this time? 16 MR. O'GARA: No, ma'am. 17 CHAIR KASSEKERT: Okay. I will 18 entertain a motion to adjourn. 19 COMMISSIONER SOMMELING: Motion to 20 adjourn. 21 VICE CHAIR FEDORKO: Second. 22 CHAIR KASSEKERT: The motion has been 23 made and seconded. All in favor? 24 (Ayes.) 25 CHAIR KASSEKERT: Opposed? 0073 1 (No response.) 2 CHAIR KASSEKERT: Motion carries. 3 (The Special Meeting was adjourned at 4 11:38 a.m.) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0074 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 30, 2007 23 My Commission Expires on July 10, 2009 24 ID No 2062871 25