1 1 STATE OF NEW JERSEY 2 CASINO CONTROL COMMISSION 3 - - - - - - - - - - - - - - - - - - - 4 5 PUBLIC MEETING NO. 07-12-12 6 7 - - - - - - - - - - - - - - - - - - - 8 9 Wednesday, December 12, 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 7:21 p.m. 15 16 17 Certified Court Reporter: Darlene Sillitoe 18 - - - - - - - - - - - - - - - - - - - - - - - - - - - 19 20 ATLANTIC CITY COURT REPORTING, LLC 21 CERTIFIED COURT 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 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 MARY WOZNIAK, ASSISTANT GENERAL COUNSEL 10 STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL DENIS CORBETT, SENIOR COUNSEL 11 E. DENNIS KELL, ASSISTANT GENERAL COUNSEL SETH H. BRILIANT, SENIOR COUNSEL 12 LON E. MAMOLEN, SENIOR COUNSEL BERNADETTE T. FRIGEN, PROGRAM SUPERVISOR 13 14 DIVISION OF GAMING ENFORCEMENT: YVONNE G. MAHER, ACTING DIRECTOR 15 DEPUTY ATTORNEYS GENERAL 16 JACK ADAMS, DEPUTY ATTORNEY GENERAL BRIAN BISCIEGLIA, DEPUTY ATTORNEY GENERAL 17 TIMOTHY C. FICCHI, DEPUTY ATTORNEY GENERAL MARYJO FLAHERTY, DEPUTY ATTORNEY GENERAL 18 JAMES FOGARTY, DEPUTY ATTORNEY GENERAL R. LANE STEBBINS, DEPUTY ATTORNEY GENERAL 19 WENDY WAY, DEPUTY ATTORNEY GENERAL 20 21 22 23 24 25 3 1 A P P E A R A N C E S : 2 ITEM NO. 3 STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL JACK ADAMS, DEPUTY ATTORNEY GENERAL 3 TIMOTHY J. LOWRY, ESQ. FOR: HARRAH'S OPERATING COMPANY, MARINA 4 ASSOCIATES, ATLANTIC CITY SHOWBOAT, INC., BALLY'S PARK PLACE AND BOARDWALK REGENCY 5 CORPORATION 6 ITEM NO. 5 STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL LOUIS ROGACKI, DEPUTY ATTORNEY GENERAL 7 COOPER LEVENSON BY: LLOYD D. LEVENSON, ESQ. 8 FOR: WARDROBE MANAGEMENT, INC. 9 ITEM NO. 6 DENIS CORBETT, SENIOR COUNSEL WENDY WAY, DEPUTY ATTORNEY GENERAL 10 TIMOTHY J. LOWRY, ESQ. FOR: ATLANTIC CITY SHOWBOAT, INC. 11 ITEM NO. 13 DENIS CORBETT, SENIOR COUNSEL 12 FREDERICK J. McDONOUGH, DEPUTY ATTORNEY GENERAL 13 FOX ROTHSCHILD, LLP BY: MARIE JIACOPELLO JONES, ESQ. 14 FOR: SPIEL MANUFACTURING, ULC/GTECH CORP. 15 ITEM NO. 14 LEONARD J. DiGIACOMO, ASSISTANT GENERAL COUNSEL 16 MARYJO FLAHERTY, DEPUTY ATTORNEY GENERAL WOLF BLOCK 17 BY: GILBERT BROOKS, ESQ. FOR: RESORTS INTERNATIONAL HOTEL, INC. 18 AND RIH ACQUISITION NJ, LLC 19 ITEM NO. 15 MARY WOZNIAK, ASSISTANT GENERAL COUNSEL JACK ADAMS, DEPUTY ATTORNEY GENERAL 20 STERNS & WEINROTH BY: PAUL M. O'GARA, ESQ. 21 FOR: HARRAH'S ENTERTAINMENT, INC., AND APOLLO HAMLET HOLDINGS, ET AL. 22 ITEM NO. 16 MARY WOZNIAK, ASSISTANT GENERAL COUNSEL 23 JAMES FOGARTY, DEPUTY ATTORNEY GENERAL STERNS & WEINROTH 24 BY: PAUL M. O'GARA, ESQ. FOR: TRUMP PLAZA ASSOCIATS, TRUMP TAJ 25 MAHAL ASSOCIATES, AND TRUMP MARINA ASSOCIATES 4 1 (Continued) A P P E A R A N C E S : 2 ITEM NO. 17 E. DENNIS KELL, ASSISTANT GENERAL COUNSEL 3 TIMOTHY C. FICCHI, DEPUTY ATTORNEY GENERAL PATRICIA M. WILD, ESQ. 4 FOR: RESORTS INTERNATIONAL HOTEL, INC. 5 ITEM NO. 18 E. DENNIS KELL, ASSISTANT GENERAL COUNSEL TIMOTHY C. FICCHI, DEPUTY ATTORNEY GENERAL 6 FREDERICK CUNNINGHAM, ESQ. FOR: TRUMP MARINA ASSOCIATES, LLC 7 ITEM NO. 20 SETH H. BRILIANT, SENIOR COUNSEL 8 TIMOTHY C. FICCHI, DEPUTY ATTORNEY GENERAL LYNNE LEVIN KAUFMAN, ESQ. 9 FOR: MARINA DISTRICT DEVELOMENT COMPANY, LLC 10 ITEM NO. 27 LEONARD DiGIACOMO, ASSISTANT GENERAL 11 COUNSEL STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL 12 YVONNE G. MAHER, ACTING DIRECTOR MARYJO FLAHERTY, DEPUTY ATTORNEY GENERAL 13 STERN WEINROTH BY: PAUL M. O'GARA, ESQ. 14 AND: GRAIG P. CORVELEYN, ESQ. FOR: ADAMAR OF NEW JERSEY, INC., ET AL. 15 16 17 18 19 20 21 22 23 24 25 5 1 AGENDA PUBLIC MEETING NO. 07-12-12 2 DECEMBER 12, 2007, 10:30 a.m. ITEM PAGE VOTE 3 1 Ratification of the minutes of 11 12 November 15, 2007 4 2 Applications for employee and casino service industry licenses: 5 32 applications remanded for hearings 12 12 19 applications granted 13 13 6 Consideration of the application of 13 14 Jennifer H. Weissman for a casino key 7 employee license and for qualification as Vice President of Marketing - Regional for 8 Bally's Pak Place, Inc, Boardwalk Regency Corporation, Marina Associates and Atlantic 9 City Showboat, Inc. 3 Petition of Harrah's Operating Company, 14 17 10 Inc., Marina Associates (d/b/a Bally's Atlantic City) and Boardwalk Regency Corp., 11 (d/b/a Caesars Atlantic City) for the issuance of a temporary casino key employee 12 license to Alyce Parker, pursuant to NJSA 5:12-89(e) and to permit her pursuant to 13 NJAC 19:43-2.6 to assume the duties and exercise the powers of Vice President of 14 Public Affair for the Atlantic City Operations without first having been qualified 15 (PRN 3230701) 4 Stipulations of settlement and consent agreements: 16 a) Mohammad Y. Khan (04-0802-EA; 17 19 05-0213-ER) 17 b) Cheryl M. Brantley (07-0675-EA) 17 19 c) Robert C. Stanton (07-0595-EA) 17 19 18 d) William W. McHenry, Jr. (07-0476-EA) 17 19 e) James S. O'Neill, Jr. (07-0210-RC) 17 19 19 f) Jaye O. Simmons (07-0132-EA) 17 19 5 Motion of Wardrobe Management, Inc., 19 21 20 (t/a Absecon Cleaners) to withdraw its nongaming casino service industry license 21 application (05-0720-SI) 6 Stipulation of settlement in State v. 21 23 22 Atlantic City Showboat, Inc. (07-0321-VC) 7 Initial Decision of renewal application 23 25 23 of Dana V. White (07-0003-ER) 8 Petitions for early reapplication: 24 a) Robert E. Jackson (07-0568-RA) 25 28 b) Bernard Peraino (07-0597-RA) 28 30 25 6 1 CONTINUED AGENDA PUBLIC MEETING NO. 07-12-12 2 DECEMBER 12, 2007, 10:30 a.m. ITEM PAGE VOTE 3 9 Reconsideration of Commission orders due to non-compliance of conditions therein: 4 a) Michael G. Anthony (07-0039-NC) 31 33 b) Charles F. Carter (07-0203-NC) 31 33 5 c) Robert D. Collins, Jr. (07-0046-NC) 31 33 d) Shudong Cui (07-0205-NC) 31 33 6 e) Alexandria J. Dows (07-0160-NC) 31 33 f) Willie J. Haye, Jr. (07-0154-NC) 31 33 7 g) Angela Justiniano-Nomah (07-0151-NC) 31 33 h) Jamie K. Sheppard (07-0317-NC) 31 33 8 i) Joseph J. Spataro (07-0063-NC) 31 33 10 Applications for suspension: 9 a) Anthony J. Albano, Jr. (07-0705-RC) 33 40 b) Yorel L. Browne (07-0704-RC) 33 40 10 c) Brian R. Gaganzer (07-0703-RC) 33 40 d) Maria D. Rivera (07-0727-RC) 33 40 11 e) Frank J. Varra (07-0542-RC) 33 40 f) Eric P. Williams (07-0726-RC) 34 40 12 Sworn 35 11 Consideration of forfeiture orders in 40 43 13 State v.: a) Adamar of New Jersey, Inc., et al (07-0535-VC) 14 b) Bally's Park Place, et al (07-0351-VC) c) Trump Taj Mahal Associates, et al (07-0391-VC) 15 d) Trump Taj Mahal Associates, et al (06-0482-VC) e) Marina District Development LLC, et al 16 (07-0111-VC) f) Marina District Development LLC, et al 17 (07-0392-VC) g) Marina District Development LLC, et al 18 (07-0390-VC) 12 Preliminary hearing concerning the 43 44 19 Exclusion of Robert M. Short 13 Petition of Spielo Manufacturing, ULC, 45 49 20 and GTech Corporation for waver of qualifications (PRN 2750702) 21 14 Amended joint petition of Resorts 49 51 International Hotel, Inc., and RIH Acquisition 22 NJ, LLC, for approval of the transfer of ownership interest in various entity 23 qualifiers (PRN 2040703) 15 Petition of Harrah's Entertainment, Inc., 52 57 24 and Apollo Hamlet Holdings, et al, for approvals pursuant to NJAC 19:43-2.8 (PRN 3400704) 25 7 1 CONTINUED AGENDA 2 PUBLIC MEETING NO. 07-12-12 DECEMBER 12, 2007, 10:30 a.m. 3 ITEM PAGE VOTE 16 Petition of Trump Plaza Associates, Trump 57 62 4 Taj Associates and Trump Marina Associates for approval of a material transaction 5 (PRN 3410701) 17 Petition of Resorts International Hotel, 62 65 6 Inc., (d/b/a Resorts Atlantic City) for an amendment to its operation certificate 7 (PRN 3400702) 18 Petition of Trump Marina Associates, LLC, 65 67 8 (d/b/a Trump Marina Hotel Casino) for an amendment to its operation certificate 9 (PRN 3400708) 19 Proposed adoption of amendments to NJAC 67 68 10 19:45-1.1, 1.18, and 1.54 (suspicious, Unscanned, and unverified gaming vouchers 11 20 Petition of Marina District Development 68 70 Company, LLC (d/b/a Borgata Hotel, Casino 12 and Spa) for an amendment to its operation certificate to permit a temporary expansion 13 of its casino floor (PRN 3130705) 21 Proposed amendments to NJAC 19:45-1.40B 71 72 14 (Funding and transfers of annuity slot jackpots) 22 Proposed publication and temporary 72 73 15 adoption of amendment to NJAC 19:45-1.33 23 Proposed publication and temporary 73 74 16 adoption of amendment to NJAC 19:45-1.3 (immediate implementation of internal controls) 17 24 Proposed publication of amendments and new 74 75 rule for "Fire Bet" in craps 18 25 Proposed adoption of amendments and new 75 76 rule for Bad Beat payouts in poker 19 26 Proposed adoption of resolution concerning 76 77 closed sessions for public meetings scheduled 20 for the Year 2008 27 Petition of Adamar of New Jersey, Inc., 78 118 21 (Adamar) for renewal of its casino license, and other matters (PRNs 2140705, 2910706) 22 Consideration of the application of Tropicana Casinos and Resorts, Inc., formerly 23 known as Wimar Tahoe Corporation, for plenary qualification as a holding company of Adamar 24 of New Jersey, Inc.; 25 8 1 CONTINUED AGENDA PUBLIC MEETING NO. 07-12-12 2 DECEMBER 12, 2007, 10:30 a.m. ITEM PAGE VOTE 3 27 Division of Gaming Enforcement (the 119 122 Division) v. Tropicana Casino and Resorts, 4 Inc., Tropicana Entertainment, LLC, Adamar of New Jersey, Inc., (d/b/a Tropicana Atlantic 5 City) Docket No. 07-0646-VC alleging violation of NJAC 19:45-1.11(c) (audit committee complaint); 6 And Petition of Tropicana Casinos and Resorts, Inc., Tropicana Entertainment, LLC, 7 Ramada New Jersey Holdings Corporation and Adamar of New Jersey, Inc., for declaratory 8 relief with respect to NJAC 19:45-1.11(c)2 and other audit committee issues (PRN 291708) 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 9 1 E X H I B I T S : 2 ITEM NO. 2 DESCRIPTION EVD 3 4 EL-1 Remand for hearings 32 license X applications 5 EL-2 Grant 19 licenses X 6 ITEM NO. 27 7 A-95 Response to the Proposed Conditions X 8 11-3007 9 A-96 Press Release, 12-5-07 10 Re: "Tropicana in Compliance with 11 Financial Covenants in its Credit Facility" 12 D-69 Letter, DGE to Chair Kassekert, 12-6-07 X 13 Re: Conditions recommended by Division 14 15 16 17 18 19 20 21 22 23 24 25 (Exhibits retained by Commission.) 10 1 (Public Meeting 07-12-12 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 11 ITEM NO. 1 1 Allegiance. 2 (The flag salute was recited.) 3 CHAIR KASSEKERT: Good morning. 4 MR. NANCE: Good morning. The matters 5 discussed in closed session were employee and 6 enterprise license matters. 7 The Commissioners approved the November 8 21st, 2007, closed session minutes. 9 Litigation updates regarding: Warren 10 Lackland and Lewis M. Springer, Jr., versus the 11 State of New Jersey, and the Casino Control 12 Commission; 13 Gloria Ford versus the State of New 14 Jersey, the Casino Control Commission, et al.; 15 Tyrone J. Floyd versus the Casino 16 Control Commission and the Sands Hotel Casino, 17 et al.; 18 Husain versus the Casino Control 19 Commission, et al.; 20 And in the matter of petition of SD for 21 removal from the voluntary self-exclusion list. 22 Item No. 1, ratification of the minutes 23 of November 21, 2007, public meeting and 24 special meeting minutes of November 15th, 2007. 25 COMMISSIONER SOMMELING: Move to 12 ITEM NO. 2 1 approve. 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. 2, applications for 10 employee and casino service industry licenses. 11 This agenda item will be entered as Exhibit 12 List 1 and 2. 13 Exhibit List 1 consists of 32 14 applications for initial and/or renewal of 15 casino key and casino employee licenses. 16 The Division has objected to licensure. 17 COMMISSIONER FRULIO: Motion to remand 18 for hearings. 19 VICE CHAIR FEDORKO: Second. 20 CHAIR KASSEKERT: The motion has been 21 made and seconded. All in favor? 22 (Ayes.) 23 CHAIR KASSEKERT: Opposed? 24 (No response.) 25 CHAIR KASSEKERT: Motion carries. 13 ITEM NO. 2 1 MR. NANCE: Exhibit List 2 consists of 2 19 applications for initial and/or renewal of 3 casino and key and casino employee license. 4 The staff and the Division has 5 recommended that these licenses be granted. 6 COMMISSIONER FRULIO: Motion to grant 7 applications. 8 VICE CHAIR FEDORKO: 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 MR. NANCE: For consideration is the 16 application of Jennifer H. Weissman for casino 17 key employee license and for qualification as 18 Vice President of Marketing, Regional, for 19 Bally's Park Place, Inc., Boardwalk Regency 20 Corp., Marina Associates, and Atlantic City 21 Showboat, Inc. 22 Staff and the Division have recommended 23 that this application be granted. 24 COMMISSIONER FRULIO: Motion to grant 25 initial key answer license and for 14 ITEM NO. 3 1 qualification. 2 VICE CHAIR FEDORKO: Seconded. 3 CHAIR KASSEKERT: Motion is made and 4 seconded. 5 Do you need -- do you want to say 6 anything, Mr. Adams? 7 MR. ADAMS: I don't. 8 (Laughter.) 9 MR. ADAMS: Just prepared. Just in 10 case. 11 CHAIR KASSEKERT: Thank you. 12 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 Item No. 3, Petition No. 3230701 of 15 ITEM NO. 3 1 Harrah's Operating Company, Inc., Marina 2 Associates, Atlantic City Showboat, Inc., 3 Bally's Park Place, Inc., and Boardwalk Regency 4 Corp. is requesting the issuance of a temporary 5 casino key license -- excuse a -- temporary key 6 employee license to Alyce Parker pursuant to 7 NJSA 5:12-89(e) and to permit her pursuant to 8 NJAC 19:43-2.6 to assume the duties and 9 exercise the powers of Vice President of the 10 Public Affairs for the Atlantic City operations 11 without first having been found qualified. 12 CHAIR KASSEKERT: Good morning, Mr. 13 Lowry. 14 MR. LOWRY: Good morning, Chair, Vice 15 Chair, members of the Commission. 16 Tim Lowry, for the record. 17 We rest on the papers. We have nothing 18 further to add. We've reviewed the draft 19 resolution. We consent. 20 I'd also like to introduce you to Alyce 21 Parker. Alyce is certainly no stranger to 22 Atlantic City, and she's -- I think she's going 23 to do a fine job. 24 CHAIR KASSEKERT: Thank you. 25 Mr. Adams? Where did he go? Want to 16 ITEM NO. 3 1 come back up? Or is -- 2 MR. ADAMS: Sure. Why not? 3 (Laughter.) 4 CHAIR KASSEKERT: Rest on your papers? 5 MR. ADAMS: I'm not sure exactly what 6 the situation is, but we don't oppose it. 7 CHAIR KASSEKERT: I'm assuming you do 8 not oppose it. 9 (Laughter.) 10 CHAIR KASSEKERT: Thank you very much. 11 Let me ask if there are any questions. 12 COMMISSIONER FRULIO: Nope. 13 COMMISSIONER SOMMELING: No questions, 14 Madame Chair. 15 COMMISSIONER FRULIO: Motion to approve 16 petition and issue a temporary casino key 17 employee license to Alyce Parker and permit her 18 to assume the duties and exercise the powers of 19 Vice President of Public Affairs for the 20 Atlantic City operations without first having 21 been found qualified. 22 CHAIR KASSEKERT: Is there a second? 23 COMMISSIONER EPPS: Second. 24 COMMISSIONER SOMMELING: Second. 25 CHAIR KASSEKERT: Motion has been made 17 ITEM NO. 4 1 and seconded. This is a roll call vote. 2 MR. NANCE: Commissioner Sommeling? 3 COMMISSIONER SOMMELING: Yes. 4 MR. NANCE: Commissioner Epps? 5 COMMISSIONER EPPS: Yes. 6 MR. NANCE: Commissioner Frulio? 7 COMMISSIONER FRULIO: Yes. 8 MR. NANCE: Vice Chair Fedorko? 9 VICE CHAIR FEDORKO: Yes. 10 MR. NANCE: Chair Kassekert? 11 CHAIR KASSEKERT: Yes. 12 MR. NANCE: The record will reflect that 13 the motion is unanimous. 14 CHAIR KASSEKERT: Thank you. 15 MR. LOWRY: Thank you. 16 VICE CHAIR FEDORKO: Did you a good job. 17 COMMISSIONER FRULIO: You did. Your 18 parents should be very proud. 19 MR. NANCE: Item No. 4, stipulations of 20 settlement and consent agreements for: 21 Mohammad Kahn, Cheryl Brantley, Robert Stanton, 22 William McHenry, Jr., James O'Neill, Jr., and 23 Jaye Simmons. 24 CHAIR KASSEKERT: Has everyone -- 25 MR. NANCE: If I called your name, 18 ITEM NO. 4 1 please come forward and stand behind the center 2 table so that you may be seen. 3 CHAIR KASSEKERT: Has everyone whose 4 name has been called come forward? 5 I'm going to ask that you each state 6 your names for the record, starting with you, 7 ma'am. 8 MS. BRANTLEY: Cheryl Brantley. 9 MR. STANTON: Robert Stanton. 10 MR. KHAN: Mohammad Kahn. 11 CHAIR KASSEKERT: Okay. In a moment 12 we're going to vote on the stipulations which 13 you've agreed to with the Division of Gaming 14 Enforcement. I'm going to ask at this point if 15 any of you wish to be heard on your matter. 16 You don't have to say anything if you don't 17 want to. 18 Does anyone wish to be heard? 19 (No response.) 20 CHAIR KASSEKERT: Thank you. 21 Mr. Biscieglia? 22 MR. BISCIEGLIA: Thank you, Chair. 23 Good morning, Chair, Vice Chair, 24 Commissioners. 25 The Division has nothing further in this 19 ITEM NO. 5 1 and ask that the stipulations be adopted as 2 submitted. 3 CHAIR KASSEKERT: Thank you. 4 Any questions? 5 COMMISSIONER SOMMELING: Move to approve 6 the stipulations, Madame Chair. 7 VICE CHAIR FEDORKO: Second. 8 CHAIR KASSEKERT: The motion has been 9 made and seconded. All in favor? 10 (Ayes.) 11 CHAIR KASSEKERT: Opposed? 12 (No response.) 13 CHAIR KASSEKERT: Motion carries. 14 Thank you very much for coming. Good 15 luck. 16 MS. BRANTLEY: Thank you. 17 MR. NANCE: Item No. 5, motion of 18 Wardrobe Management, Inc., to withdraw its 19 nongaming casino service industry license 20 application. 21 Mr. Ingis? 22 MR. INGIS: Good morning, Madame Chair, 23 Commissioners. 24 This is a petition to permit the 25 withdrawal of nongaming casino service industry 20 ITEM NO. 5 1 license. Lloyd Levenson is here on behalf of 2 Wardrobe Management, Inc. 3 CHAIR KASSEKERT: Mr. Levenson. 4 MR. LEVENSON: I have nothing further to 5 add to the request to withdraw. The Division 6 supports it, but, obviously, they can speak for 7 themselves. And I ask that you -- unless you 8 want me to speak for you. I already have 9 spoken for him. No. 10 Anyway, seriously, the application to 11 withdraw has been made. The business has been 12 sold so there is no need for a casino service 13 industry license. So we request that you 14 approve the withdrawal. 15 CHAIR KASSEKERT: Thank you. 16 Mr. Rogacki? 17 MR. ROGACKI: On October 29th the 18 Division filed a letter in support of the 19 withdrawal. In a rare occurrence, I agree with 20 Mr. Levenson and -- 21 CHAIR KASSEKERT: It is Christmas. 22 MR. ROGACKI: And support the motions. 23 (Laughter.) 24 CHAIR KASSEKERT: Thank you. 25 Any questions? 21 ITEM NO. 6 1 VICE CHAIR FEDORKO: Motion to grant the 2 petition and permit Wardrobe Management, Inc., 3 to withdraw its application for a license as a 4 nongaming casino service industry pursuant to 5 NJAC 19:41-8.6 subject to the conditions in the 6 order. 7 COMMISSIONER FRULIO: Second. 8 CHAIR KASSEKERT: The motion has been 9 made and seconded. All in favor? 10 (Ayes.) 11 CHAIR KASSEKERT: Opposed? 12 (No response.) 13 CHAIR KASSEKERT: Motion carries. 14 Thank you. 15 MR. LEVENSON: Thank you. 16 MR. ROGACKI: Thank you. 17 MR. NANCE: Item No. 6, stipulation of 18 settlement in State versus Atlantic City 19 Showboat, Inc. 20 Mr. Corbett? 21 MR. CORBETT: Good morning, Chair, 22 Commissioners. 23 In this -- in this matter, the casino 24 licensee admits the regulatory violations and 25 agrees to a penalty of $50,000. 22 ITEM NO. 6 1 Ms. Way is here for the Division and Mr. 2 Lowry for the casino licensee. 3 CHAIR KASSEKERT: Thank you. 4 Good morning, Miss Way. 5 MS. WAY: Good morning, Madame Chair. 6 We just ask on the behalf of the 7 Division that you approve this settlement. 8 CHAIR KASSEKERT: Thank you. 9 Mr. Lowry? 10 MR. LOWRY: Yes. The same. We reviewed 11 the stipulation of settlement, and we ask that 12 you approve. 13 Thank you. 14 CHAIR KASSEKERT: Thank you. 15 Any questions? 16 COMMISSIONER SOMMELING: No questions, 17 Madame Chair. 18 VICE CHAIR FEDORKO: Motion to approve 19 stipulation of settlement and impose a civil 20 penalty of $50,000 against Atlantic City 21 Showboat, Inc., for violation of Commission 22 regulations regarding internal controls. 23 COMMISSIONER FRULIO: Second. 24 CHAIR KASSEKERT: The motion has been 25 made and seconded. All in favor? 23 ITEM NO. 7 1 (Ayes.) 2 CHAIR KASSEKERT: Opposed? 3 (No response.) 4 CHAIR KASSEKERT: Motion carries. 5 Thank you very much. 6 MS. WAY: Thank you. 7 MR. LOWRY: Thank you. 8 MR. NANCE: Item No. 7, initial decision 9 of renewal application of Dana White. 10 Mr. Corbett? 11 MR. CORBETT: Is Dana White or anyone 12 representing Dana White in the hearing room 13 today? 14 (No response.) 15 MR. CORBETT: I don't see the 16 Respondent -- the Applicant, Chair. 17 CHAIR KASSEKERT: Okay. I'll hear from 18 Mr. Biscieglia, then. 19 MR. BISCIEGLIA: Thank you. 20 The Division did file an exception to 21 this initial decision. The Division took no 22 exception to the findings in regard to 23 disqualification and waiver. 24 The Division did take an exception to 25 the finding that Miss White -- a finding of 24 ITEM NO. 7 1 good cause allowing her to work in a 2 noncredential position. It's the Division's 3 position that that finding is inconsistent with 4 the rest of the initial decision. The initial 5 decision speaks at length of the incredible 6 testimony given by the Respondent during the 7 course of the hearing. And also of her lack of 8 candor and forthrightness in dealing with her 9 criminal matters. It's the Division's position 10 that any positives that she showed in regards 11 to fulfilling her PTI obligations as a support 12 of a finding of good cause are overweighed and 13 overruled by the fact of her lack of candor and 14 her very disingenuous testimony during the 15 course of the hearing. 16 In regards to the exceptions filed by 17 the Respondent, it's the Division's position 18 that they are basically irrelevant. They are-- 19 they speak to no mistake of law or fact by the 20 hearing examiner, and they are merely a 21 recitation of the facts that were already given 22 during the course of the hearing. 23 Thank you. 24 CHAIR KASSEKERT: Thank you. 25 Any questions for the Division? 25 ITEM NO. 8 1 Is there a motion? 2 COMMISSIONER SOMMELING: Madame Chair, I 3 move to adopt the initial decision and deny 4 Dana White's casino employee license renewal 5 application; however, find good cause is found 6 pursuant to Section 106c of the Act to allow 7 Miss White to be employed in a noncredential 8 hotel position. 9 CHAIR KASSEKERT: Is there a second? 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 COMMISSIONER EPPS: I'm opposing this 16 because I don't support the good cause 17 position. 18 CHAIR KASSEKERT: Okay. The motion 19 passes four to one. 20 MR. NANCE: Item No. 8, petition for 21 early reapplication of Robert E. Jackson and 22 Bernard Peraino. 23 Miss Frigen? 24 MS. FRIGEN: Good morning, Madame Chair, 25 Commissioners. 26 ITEM NO. 8 1 The first case we have is regarding 2 Robert Jackson. Mr. Jackson? 3 For your consideration is his petition 4 seeking permission to reapply early for a 5 license registration and/or a noncredential 6 hotel employment. 7 By letter dated September 27th the 8 Division has objected to this petition in its 9 entirety. 10 CHAIR KASSEKERT: Thank you. 11 Mr. Jackson, is there anything you'd 12 like to say today? 13 MR. JACKSON: No. Not at all, Your 14 Honor. 15 CHAIR KASSEKERT: Okay. Mr. Biscieglia? 16 MR. BISCIEGLIA: Thank you. 17 The Commission has the Division's letter 18 regarding this issue. Mr. Jackson's casino 19 employee license was revoked on October 20th of 20 2004 after he failed to request a hearing after 21 the filing of a revocation complaint by the 22 Division. 23 He was indicted on July 8th, 2004, for 24 second degree distribution of CDS and for 25 promotion gambling, third degree. Mr. Jackson 27 ITEM NO. 8 1 was allegedly with selling amounts of cocaine 2 in amounts of more than one-half ounce and also 3 involved in a book-making operation in which he 4 was receiving more than $1,000 in bets a day. 5 On May 27th, 2005, Mr. Jackson was 6 convicted of the CDS charge and the promote 7 gambling was dropped as a result of the plea 8 bargaining. 9 The Division opposes this current motion 10 based upon the fact of the very serious 11 criminal charges, one involving promoting 12 gambling, and the fact that the conviction is a 13 little bit more than two years old -- well 14 short of, well, excuse me -- he's been 15 disqualified well less than five years. 16 Based on these facts, the Division 17 respectfully asks if the that the motion be 18 denied. 19 Thank you. 20 CHAIR KASSEKERT: Let me ask if anyone 21 has in questions. 22 COMMISSIONER SOMMELING: No questions, 23 Madame Chair. 24 COMMISSIONER EPPS: Madame Chair, I move 25 that we deny Mr. Jackson's permission to 28 ITEM NO. 8 1 reapply early for casino employee license -- a 2 casino service employee registration but grant 3 him permission to work as a noncredential motel 4 employee. 5 CHAIR KASSEKERT: Is there a second? 6 COMMISSIONER SOMMELING: Second. 7 CHAIR KASSEKERT: The motion has been 8 made and seconded. All in favor? 9 (Ayes.) 10 CHAIR KASSEKERT: Opposed? 11 VICE CHAIR FEDORKO: No. 12 CHAIR KASSEKERT: Mr. Fedorko votes no. 13 Motion passes by a four/one vote. 14 Thank you very much for coming. 15 MR. JACKSON: Thank you. 16 MS. FRIGEN: If you have any questions, 17 you can stay. 18 MR. JACKSON: Thank you. 19 MS. FRIGEN: Let me ask whether Bernard 20 Peraino is represented or represented? 21 Apparently, Mr. Peraino is not here 22 today. For your consideration is his petition 23 seeking permission to reapply early for a 24 license registration and/or noncredential hotel 25 employment. 29 ITEM NO. 8 1 Similar to the last case, the Division 2 has objected to this petition in its entirety. 3 CHAIR KASSEKERT: Thank you. 4 Mr. Biscieglia? 5 MR. BISCIEGLIA: Thank you. 6 On October 21st, 2001, the Respondent 7 was granted a casino employee license with the 8 condition that he had to report to the Division 9 regarding IRS payments, the IRS as a result of 10 liabilities. This order was vacated on August 11 25th of 2004 as a result of him not cooperating 12 with the Division's prior conditions. He was 13 also arrested twice during the settlement 14 process. 15 The Petitioner has been arrested several 16 times since 2004, most seriously a July 15th, 17 2004, conviction for a disqualifying offense of 18 fraudulent use of a credit card and a July 19 31st, 2005, conviction, once again for 20 fraudulent use of a credit card. 21 He was sentenced to four years in prison 22 on January 31st, 2005, and he was released on 23 June 20th, 2007, into the intensive supervision 24 program. He still has the outstanding tax 25 issues. 30 ITEM NO. 8 1 The Division's made several attempts to 2 contact him regarding these issues. He has not 3 returned any of the several messages the 4 Division has left on his telephone and has not 5 responded to certified letters seeking him to 6 contact the Division to settle this matter. 7 So based on the criminal activity set 8 forth, including two disqualifying convictions, 9 and continuing noncooperation, the Division 10 must oppose this petition. 11 Thank you. 12 CHAIR KASSEKERT: Thank you. 13 Any questions? 14 COMMISSIONER SOMMELING: Madame Chair, 15 move to deny Mr. Peraino permission to reapply 16 early for a casino employee license, a casino 17 service employee license registration but to 18 grant him permission to work early as a 19 noncredential hotel employee. 20 VICE CHAIR FEDORKO: Second. 21 CHAIR KASSEKERT: The motion has been 22 made and seconded. All in favor? 23 (Ayes.) 24 CHAIR KASSEKERT: Opposed? 25 (No response.) 31 ITEM NO. 9 1 CHAIR KASSEKERT: Motion carries. 2 MR. NANCE: Item No. 9, reconsideration 3 of Commission orders due to noncompliance of 4 conditions therein for: Michael Anthony, 5 Charles Carter, Robert Collins, Jr., Shudong 6 Cui, Alexandria Dows, Willie Haye, Jr., Angela 7 Justiniano-Nomah, Jamie Sheppard, and Joseph 8 Spataro. 9 Miss Frigen? 10 MS. FRIGEN: Let me ask for the record 11 whether any of these individuals is present or 12 represented here today? Apparently not. 13 It's not really surprising. Subsequent 14 to them being licensed, or in the case of Miss 15 Dow be permitted to retain her registration, 16 they have failed to comply with conditions that 17 were imposed as part of an agreement with the 18 stipulation of settlement of the Division and 19 subsequently in the Commission's order. Each 20 has also failed to attend a conference to 21 address noncompliance. 22 These matters are brought before you for 23 reconsideration. 24 CHAIR KASSEKERT: Thank you. 25 Mr. Biscieglia? 32 ITEM NO. 9 1 MR. BISCIEGLIA: Thank you. 2 All of the individuals involved in this 3 had -- involved in the noncompliance -- have 4 been given several chance to comply by both the 5 Division and the Commission. The process 6 includes the Division sending a letter to ask 7 them about the matter which was not responded 8 to. 9 The Commission then scheduled the 10 persons for settlement conferences at various 11 times which were not attended by the persons. 12 Finally, they were given notice of 13 today's meeting, which they have failed to 14 attend and really today the people have shown 15 if they cannot attend the public meeting, which 16 is really their last chance to explain 17 themselves in the situation, the Division is 18 left with no other alternative than to ask that 19 the respective motions granting their licenses 20 be vacated. 21 Thank you. 22 CHAIR KASSEKERT: Thank you. 23 Any questions? 24 COMMISSIONER SOMMELING: No questions, 25 Madame Chair. 33 ITEM NO. 10 1 COMMISSIONER FRULIO: Madame Chair -- 2 I'm sorry. 3 Based upon their non-compliance with 4 conditions set forth in their respective 5 orders, I move to vacate the existing orders 6 and deny their respective license applications. 7 VICE CHAIR FEDORKO: Second. 8 COMMISSIONER FRULIO: Further -- 9 VICE CHAIR FEDORKO: Oh, I'm sorry. 10 COMMISSIONER FRULIO: Further, revoke 11 the casino license service employee 12 registrations held by Miss Dows, Miss 13 Justiniano-Nomah, and Miss Sheppard. 14 VICE CHAIR FEDORKO: Second. 15 CHAIR KASSEKERT: The motion has been 16 made and seconded. All in favor? 17 (Ayes.) 18 CHAIR KASSEKERT: Opposed? 19 (No response.) 20 CHAIR KASSEKERT: Motion carries. 21 MR. NANCE: Item No. 10, application for 22 suspension for: Anthony Albano, Jr., Yorel 23 Browne, Brian Goganzer, Maria Rivera, Frank 24 Varra, and Eric Williams. 25 Miss Frigen? 34 ITEM NO. 10 1 MS. FRIGEN: Madame Chair, 2 Commissioners. 3 I'm aware that Mr. Eric Williams is 4 present. Let me inquire whether any of the 5 other individuals who were just named are 6 present or represented? No? 7 Okay. So the first five individuals are 8 not here. Mr. Williams is present. I would 9 ask him to have a seat. 10 Also, I would note that Mr. Williams in 11 connection with this matter has provided the 12 Commission with some reference letters and some 13 other documentation. The staff -- we sent that 14 to you as well as providing a copy to the 15 Division. 16 Since this is a matter brought by the 17 Division, I would ask Mr. Biscieglia to provide 18 you for the basis for seeking suspension. 19 CHAIR KASSEKERT: Thank you. 20 Mr. Biscieglia? 21 MR. BISCIEGLIA: Thank you. 22 The Respondent was arrested on October 23 4th, 2007, and charged with theft of movable 24 property, contrary to NJSA 2C:20-3. While 25 playing poker at the Tropicana, a patron who 35 ITEM NO. 10 1 was sitting next to the Respondent got up and 2 left the table leaving behind a fannie pack 3 bag. This bag contained a cell phone, an Apple 4 I-Pod, a bus ticket, and car keys. The 5 Respondent took the bag and left the casino. 6 He was detained by security after 7 reentering the casino, at which time he turned 8 over the bag that he had taken. 9 Thank you. 10 CHAIR KASSEKERT: Thank you. 11 Mr. Williams, is there anything you'd 12 like to say today? 13 MR. WILLIAMS: Yes. 14 CHAIR KASSEKERT: You need to stand up 15 and be sworn, then. 16 17 ERIC P. WILLIAMS, having been first duly 18 sworn to tell the truth, testified as follows: 19 20 MR. NANCE: Please state your name for 21 the record. 22 MR. WILLIAMS: Eric Williams. 23 MR. NANCE: Thank you. 24 You may be seated. 25 CHAIR KASSEKERT: Mr. Williams, what do 36 ITEM NO. 10 1 you want to say today? 2 MR. WILLIAMS: First, yes, I made a 3 mistake due to my drinking problem. But I hope 4 my whole life is not measured by this. I've 5 worked and lived in Atlantic City for 17 years 6 by being responsible. I retained an attorney. 7 Right here. To take care of this legal matter. 8 Okay. And I will -- he's requesting that and 9 I'm requesting that a deferment or a 10 probationary status for four to six months for 11 the legal matter. 12 I'm getting help through AA, and this is 13 a continuing progress. I believe she submitted 14 to you the brochures. Okay. 15 I submitted several letters of 16 characters of reference from people who know me 17 over the years, and I believe in being 18 responsible by working. And these people know 19 me from at work and outside of work. I have no 20 family here. And I only rely on my friends and 21 my job. 22 I've been a waiter for -- for two jobs, 23 and it takes a lot of responsibility to 24 maintain it. And I maintain myself as being a 25 stable person. I've worked for seven years at 37 ITEM NO. 10 1 the Sands Casino before they closed down and 11 2 years at Caesars. And at the same time after 3 the Sands I was at Borgata for four years, and 4 I'm still at Caesars and both places. Okay. 5 I need to be gainfully employed. I 6 guess I -- yes, I made one mistake. But I hope 7 it is not a major flaw because I have -- 8 through my job I pay my child support, which is 9 out of state, and it's also maintains medical 10 insurance. His mother has an unstable work 11 history. 12 As I've mentioned before, I've 13 maintained myself as a stable person and being 14 responsible. I believe in being a contributor 15 to Atlantic City by working hard. Yes. And 16 I've never been involved in any criminal matter 17 nor have I planned to or attempt to any illegal 18 activities in Atlantic City or anywhere. I 19 hope, I appeal to this Commission that I'm a 20 responsible person, to grant a deferment or 21 temporary probation for a short period. 22 CHAIR KASSEKERT: Let me ask if any of 23 the Commissioners have any questions? 24 COMMISSIONER EPPS: What's the State's 25 position on deferment? 38 ITEM NO. 10 1 MR. BISCIEGLIA: A deferral would also 2 lead rise to a suspension action that the 3 credential take place while the criminal 4 charges are finally resolved and came back to 5 the settlement process. 6 COMMISSIONER EPPS: Do you understand 7 that, Mr. Williams? 8 THE WITNESS: Not a hundred percent. My 9 attorney asked me -- again, we ask for time to 10 try to ask for a deferment or a probation so 11 that I can keep working. Until my legal 12 matter's take care of. Because of the legal 13 system takes time. He explained to me this is 14 my first time. It's a -- it's a minimum 15 degree, and I had no intention of stealing 16 anyone's fannie pack. I was drinking, and I 17 understand I have that problem. 18 I have been a patron at Tropicana poker 19 room many, many times. I play -- I don't 20 gamble outside of my means. I play small two, 21 four poker game. And I've worked in the casino 22 restaurant service for 17 years as a waiter, 23 and I've returned many personal items both 24 monetary, personal items. And I've had either 25 turn it to them or turned it to my manager. 39 ITEM NO. 10 1 And I just hope my life is not measured 2 on this, because only thing I have is my job. 3 I have no family here, and I rely on my 4 friends. And they believe in me and my 5 sincerity. They invited me to their homes and 6 to all the social gatherings. 7 CHAIR KASSEKERT: Commissioners Epps? 8 COMMISSIONER EPPS: Well, here's the 9 problem. The casino license is a privilege and 10 not a right. 11 MR. WILLIAMS: I understand this. 12 COMMISSIONER EPPS: What happened was, 13 apparently, this stuff was found at your house. 14 So it's not like you didn't do it. I mean, you 15 said you didn't have any intention to do it, 16 but you did it, and that's the problem. And 17 for us to let you continue to work and maintain 18 a license while violating the basis of that 19 privilege would be inconsistent. 20 So with that, I have to move to suspend 21 the credential. 22 CHAIR KASSEKERT: Is there a second? 23 VICE CHAIR FEDORKO: Second. 24 COMMISSIONER SOMMELING: Second. 25 CHAIR KASSEKERT: The motion has been 40 ITEM NO. 11 1 made and seconded. All in favor? 2 (Ayes.) 3 CHAIR KASSEKERT: Opposed? 4 (No response.) 5 CHAIR KASSEKERT: Motion carries. 6 We're going to suspend your credential. 7 Miss Frigen will explain to you what happens 8 next in terms of the hearing process, but I 9 encourage you to take advantage of that 10 process. 11 COMMISSIONER EPPS: Madame Chair, I move 12 to suspend the credentials of Item 10a through 13 e. 14 VICE CHAIR FEDORKO: Second. 15 CHAIR KASSEKERT: The motion has been 16 made and seconded. All in favor? 17 (Ayes.) 18 CHAIR KASSEKERT: Opposed? 19 (No response.) 20 CHAIR KASSEKERT: Motion carries. 21 MR. NANCE: Item No. 11, consideration 22 of forfeiture orders in: State versus Adamar 23 of New Jersey, Inc., et al.; Bally's Park 24 Place, Inc., et al; Trump Taj Mahal Associates, 25 et al; Trump Taj Mahal Associates, et al; and 41 ITEM NO. 11 1 Marina District Development Company, et al, 2 which has three complaints. 3 Miss Frigen? 4 MS. FRIGEN: Good morning, Madame Chair, 5 Commissioners. 6 We're doing a little housekeeping here. 7 For your consideration are these 8 complaints that the Division filed seeking 9 forfeiture of money presently being held by 10 these casinos that were retained due to the 11 patron involved either being underage or on the 12 self-exclusion list at the time they had 13 gambled. 14 We have received a letter from 15 respective casino counsel interposing no 16 objections to the forfeiture actions, and we do 17 have a couple people who expressly waived their 18 right to the hearing. The majority simply did 19 not respond at all, so those matters are 20 brought before you for final action. 21 CHAIR KASSEKERT: Thank you. 22 Mr. Stebbins? 23 MR. STEBBINS: Thank you. Madame Chair, 24 Vice Chair Fedorko, members of the Commission. 25 Miss Frigen is right. This a 42 ITEM NO. 11 1 housekeeping matter of sort. It involves seven 2 cases, but the equivalent of 55 individual 3 people named in collective complaints and in 4 excess of $25,000 is going to be forfeited 5 here. 6 And I think it's appropriate to speak to 7 Miss Frigen's good work, particularly on Item 8 11g and Item 11b which encompass 38 separate 9 respondents which require the service and 10 follow up with all of that that goes into it. 11 With that said, I encourage you to enter 12 the appropriate orders so that we can clear the 13 decks here. 14 Thank you. 15 CHAIR KASSEKERT: Thank you. 16 Any questions? 17 COMMISSIONER SOMMELING: No questions, 18 Madame Chair. 19 COMMISSIONER EPPS: Madame Chair, due to 20 their being underage on the date of the 21 winnings or on the self-exclusion list, the 22 money theoretically won by the individuals 23 cited in the seven complaints is forfeited and 24 the respective casinos are required to remit 25 the forfeited money to the Commission in 43 ITEM NO. 12 1 accordance with NJSA 5:12-71.3c, so I move that 2 that occur. 3 COMMISSIONER SOMMELING: Second. 4 VICE CHAIR FEDORKO: Second. 5 CHAIR KASSEKERT: The motion has been 6 made and seconded. All in favor? 7 (Ayes.) 8 CHAIR KASSEKERT: Opposed? 9 (No response.) 10 CHAIR KASSEKERT: Motion carries. 11 Thank you. 12 MR. NANCE: Item No. 12, preliminary 13 hearing concerning the exclusion of Robert M. 14 Short. 15 Miss Frigen? 16 MS. FRIGEN: Before we hear from the 17 Division, let me inquire whether Mr. Short is 18 present or represented here today? 19 Apparently, he is not. 20 CHAIR KASSEKERT: Mr. Stebbins? 21 MR. STEBBINS: Thank you. 22 Members of the Commission, you have 23 before you an exclusion petition seeking 24 preliminary placement in this instance. It 25 involves an individual who showed up at Trump 44 ITEM NO. 12 1 Taj Mahal, passed a check there that turned out 2 to be no good, and he was convicted here in New 3 Jersey, and I believe in Virginia as well, for 4 that activity. 5 Appropriate to place him on the 6 exclusion list, and I would encourage you to 7 enter the appropriate order. 8 Thank you. 9 CHAIR KASSEKERT: Thank you. 10 Any questions? 11 COMMISSIONER SOMMELING: No questions, 12 Madame Chair. 13 VICE CHAIR FEDORKO: Motion to grant the 14 Division's request for a preliminary order 15 placing Robert M. Short's name on the exclusion 16 list pending the final outcome of the petition 17 for final exclusion. 18 COMMISSIONER FRULIO: Second. 19 COMMISSIONER EPPS: Second. 20 CHAIR KASSEKERT: The motion has been 21 made and seconded. All in favor? 22 (Ayes.) 23 CHAIR KASSEKERT: Opposed? 24 (No response.) 25 CHAIR KASSEKERT: Motion carries. 45 ITEM NO. 13 1 Thank you. 2 MR. STEBBINS: Thank you. Happy 3 Holidays. 4 CHAIR KASSEKERT: Same to you. 5 MR. NANCE: Item No. 13, petition of 6 Spielo Manufacturing, ULC, and Gtech 7 Corporation for waiver of qualification. 8 Mr. Corbett? 9 MR. CORBETT: Chair, members of the 10 Commission, this matter is the petition of 11 Spielo service industry applicants, Spielo 12 Manufacturing and Gtech Corporation, for waiver 13 of the qualification of Mediobanca. 14 Miss Jones is here for the Applicant, 15 and Mr. McDonough for the Division. 16 CHAIR KASSEKERT: Thank you. 17 Good, morning, Miss Jones. 18 MS. JONES: Good morning, Chair and 19 Commissioners. Marie Jones from Fox Rothschild 20 here on behalf of Spielo Manufacturing and 21 Gtech Corporation. 22 As indicated, before you is the petition 23 for waiver of Mediobanca S.p.A. an Italian 24 investment company that holds 5.34 percent of 25 Lottomatica, the ultimate parent company of 46 ITEM NO. 13 1 Spielo and Gtech. Mediobanca is registered 2 with the Italian stock exchange, CONSOB, as an 3 investment company, and that registration is 4 similar to that of investment companies in the 5 US. Mediobanca has certified as to that, and 6 we provided to you in the petition various 7 information regarding the CONSOB regulations. 8 In addition, Mediobanca is registered as 9 a bank in Italy and is appropriately licensed 10 and regulated by them. 11 Based on these two sets of regulations 12 and the fact that there are similarities 13 amongst the investment company laws in Italy 14 and the US we believe that Mediobanca fits 15 within the catchall provision of a bank or 16 institutional investor and that it would be 17 appropriate to waive them as such. Mediobanca 18 is a passive investor and has also certified to 19 that. 20 I'll be happy to address any questions 21 you have. 22 CHAIR KASSEKERT: Thank you. 23 Mr. McDonough? 24 MR. McDONOUGH: Yeah. Good morning. 25 I filed on October 17th a response to 47 ITEM NO. 13 1 this petition in which we concur with the 2 arguments made by Miss Jones. We believe that 3 the multiple levels of regulation to which this 4 company is subject in Italy would justify your 5 finding that they fit within the catchall 6 category of the phrase "institutional investor" 7 as its defined in the statute. 8 They are regulated on several different 9 levels. Miss Jones has explained them to you. 10 They are regulated by the Italian counterpart 11 of the SEC, CONSOB. They're also regulated as 12 a bank by the Central Bank of Italy. Miss 13 Jones has attached to her petition relevant 14 sections of the Italian legislation that 15 regulates Mediobanca. 16 We are all also of opinion, if you 17 chose, you could also find them to be waivable 18 under section sub b4 of the regulations in that 19 they have demonstrated an inability to control 20 the licensee here due to the relatively small 21 nature of their holdings, only 5.34 percent. 22 And so on either basis we would support a 23 waiver. 24 Thank you. 25 CHAIR KASSEKERT: Thank you. 48 ITEM NO. 13 1 And I think I agree more with your 2 second argument than with where are first 3 argument given the fact that I don't believe we 4 found in the petition any proofs to show that 5 Mediobanca is regulated in the manner 6 consistent with the regulations set forth in 7 the Investment Company Act of 1940. 8 But let me ask if the Commissioners have 9 any questions. 10 COMMISSIONER SOMMELING: No questions, 11 Madame Chair. 12 CHAIR KASSEKERT: No? 13 (Conferring.) 14 CHAIR KASSEKERT: Any questions? Mr. 15 Epps, do you have any questions? 16 COMMISSIONER EPPS: No. Madame Chair, I 17 agree with you, and I'm not sure we're ready to 18 move down that path in this matter. I don't 19 know that this is the case to do that. 20 So, therefore, I would move that we 21 grant and deny in part the petition, find the 22 Mediobanca S.p.A. is not an institutional 23 investor as defined by NJSA 5:21-27.1; but 24 grant Mediobanca S.p.A. a waiver of 25 qualification pursuant to NJAC 19:51-1.14(b)(4) 49 ITEM NO. 14 1 based on its inability to control Lottomatica, 2 Spielo Manufacturing, ULC, and Gtech 3 Corporation subject to the conditions in the 4 order. 5 COMMISSIONER SOMMELING: Second. 6 CHAIR KASSEKERT: The motion has been 7 made and seconded. All in favor? 8 (Ayes.) 9 CHAIR KASSEKERT: Opposed? 10 (No response.) 11 CHAIR KASSEKERT: Motion carries. 12 MR. McDONOUGH: Thank you. 13 MS. JONES: Thank you. 14 MR. NANCE: Item No. 14, amended joint 15 petitions of Resorts International Hotel, Inc., 16 and RIH Acquisition, LLC, for approval of the 17 transfer of ownership interests in various 18 entity qualifiers. 19 Mr. DiGiacomo? 20 MR. DiGIACOMO: Chair, Commissioners. 21 Good morning. Mr. Gilbert Brooks on behalf of 22 the Petitioners. Miss Mary Jo Flaherty on 23 behalf of the Division of Gaming Enforcement. 24 I've had the opportunity to share with 25 counsel a draft of the proposed resolution. I 50 ITEM NO. 14 1 believe that they are prepared to consent to 2 its form and entry. Obviously, you can ask the 3 parties. 4 CHAIR KASSEKERT: Thank you. 5 Mr. Brooks, good morning. 6 MR. BROOKS: Good morning. 7 Madame Chair, the only other thing I 8 would mention is, we did amend this petition. 9 We amended the joint petition to exclude the 10 reference to Colony Management partners for the 11 relief that sought in connection with the 12 petition because of the fact that that entity 13 has not yet been declared a qualifier of the 14 licensee. 15 We have had a chance to review the 16 resolution, and I would indicate for the record 17 that it is acceptable to the Applicant. 18 CHAIR KASSEKERT: Thank you. 19 Miss Flaherty? 20 MS. FLAHERTY: Yes, Chair, 21 Commissioners. 22 We submitted a letter report dated 23 December 3, 2007, and in regard to the relief 24 requested in the petition as amended, we have 25 no objection to that. And we agree with the 51 ITEM NO. 14 1 resolution and its language. 2 Thank you. 3 CHAIR KASSEKERT: Thank you. 4 Any questions? 5 COMMISSIONER FRULIO: Move we adopt the 6 draft resolution and grant the relief requested 7 in the amended joint petition to the extent set 8 forth in the findings and rulings and subject 9 to the conditions in the resolution. 10 VICE CHAIR FEDORKO: Second. 11 CHAIR KASSEKERT: Motion 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 CHAIR KASSEKERT: Thank you. 52 ITEM NO. 15 1 MR. BROOKS: Thank you very much. 2 MR. NANCE: Item No. 15, petition of 3 Harrah's Entertainment, Inc., and Apollo Hamlet 4 Holdings, et al, for approvals pursuant to NJAC 5 19:43-2.8. 6 Miss Wozniak? 7 MS. WOZNIAK: Good morning, Chair and 8 Commissioners. 9 Mr. O'Gara is here for the Petitioners 10 and Mr. Adams for the Division. 11 CHAIR KASSEKERT: Thank you. 12 Good morning, Mr. O'Gara. 13 MR. O'GARA: Good morning. 14 This is our petition, and it refers back 15 to the approvals that were granted on the 16th 16 of November with respect to the acquisition of 17 all the equity interests in Harrah's 18 Entertainment by the Apollo Hamlet and TPG 19 Hamlet entities. And specifically as to the 20 CMBS financing piece. That the CMBS financing 21 involves separate financing of both the 22 existing Showboat and Harrah's Marina 23 facilities. And as part of that, it was 24 represented to you and included, I think, in 25 your approvals that that transaction would 53 ITEM NO. 15 1 occur in several steps. It was contemplated 2 that they would occur contemporaneously. 3 However, in order to accomplish the tax 4 efficiency, which has been agreed upon by all 5 the parties, both governmental and private, 6 certain of those steps have to occur spacially 7 timewise apart from others. And this is with 8 respect to two of those steps. 9 And the first is a transfer of a 48.66 10 percent interest in Marina Associates, which is 11 Harrah's, from HAC to PROPCO. You'll recall 12 PROPCO. PROPCO is presently -- has no members 13 other than HAC. It has no officers and 14 directors. So it's a shell. It will be moved 15 there in turn for a note somewhere north of 16 $900 million. 17 The second step is with regard respect 18 to the Showboat. It would recaptialize the 19 Showboat. The Showboat would create two 20 classes of common stock, both a voting and a 21 nonvoting stock. They would be transferred -- 22 they will be created and still owned by Ocean 23 Showboat. Ocean Showboat would then transfer 24 the nonvoting equity to the Showboat PROPCO, 25 which is owned by Ocean Showboat, a sole 54 ITEM NO. 15 1 member, in return for a $500 million note. 2 505, I believe. 3 These steps are just acheived. They 4 stopped it. At the time of closing, assuming 5 all else moves in conjunction with CMBS 6 financing, there are 1e or 14 more steps that 7 occur, and then when they concluded -- and 8 they'll happen simultaneously. What will 9 happen is, as described and as you approve, 10 Showboat, the operating assets of Showboat, 11 will be owned by new AC Showboat. The real 12 estate will be owned by Showboat PROPCO, both 13 of which are indirectly owned by HAC and by the 14 Hamlet/Apollo entities, and they'll be a true 15 lease between the two. Likewise, the same 16 thing happens with Marina Associates. 17 We seek this approval only because these 18 transfers actually are specifically covered by 19 the Act and, while one might read them as to be 20 embodied within your approvals, after speaking 21 with Mr. Adams and Miss Wozniak, it's clear 22 that this clarifies any question with respect 23 to them. 24 I might also add that if for some 25 reason, you know, Showboat wanted to be part 55 ITEM NO. 15 1 of -- each these is a reversible transaction. 2 No one owns anything here except Harrah's. So 3 this is simply a sole owner moving interests 4 around, and it still accommodates the need to 5 do for the tax efficiencies, both for the state 6 and federal tax consequences of the 7 transaction. 8 CHAIR KASSEKERT: Thank you. 9 Mr. Adams? 10 MR. ADAMS: Yes, Chair, Commissioners. 11 First of all, there's nothing happening 12 here that we didn't anticipate. It's just that 13 it's happening sooner than we thought. There's 14 no qualifiers that are implicated by any of 15 this. No entities that we're not already 16 familiar with who are that hadn't already filed 17 something with us. So on this interim basis, 18 we don't see a problem with going forward. Of 19 course, we have to approve it under the 20 regulations. We have reviewed the proposed 21 regulation and do not object to the entry of 22 it. 23 CHAIR KASSEKERT: Thank you. 24 Let me ask if there are any questions of 25 the Commissioners? 56 ITEM NO. 15 1 COMMISSIONER SOMMELING: No questions, 2 Madame Chair. 3 CHAIR KASSEKERT: Let me just put a 4 couple of remarks on the record so that it is-- 5 it's clarified. 6 This matter is before us pursuant to 7 NJAC 19:43-2.8, which requires prior Commission 8 approval to issue or transfer any security or 9 interest in a casino licensee, and I want to 10 state that today our findings today are of a 11 limited scope and purpose. Preapproval 12 assurance of the transferee is qualified, and 13 that the casino licensees will remain 14 financially stable after the transfer. 15 I want to make clear that it is not our 16 purpose or intent to posit on any potential tax 17 implications of the proposed transfers or on 18 the merits of the Petitioners' interpretation 19 of the applicable tax law. And that is a 20 determination ultimately for the Division of 21 Taxation. 22 That being said, I move to adopt the 23 draft resolution and to approve the proposed 24 issuance of securities by Atlantic City 25 Showboat, Inc., and the transfer thereof and 57 ITEM NO. 16 1 the transfer of interest of Marina Associates 2 based upon and to the extent set forth in the 3 rulings, findings, and conditions in the 4 resolution, and I so move. 5 Is there a second? 6 COMMISSIONER FRULIO: Second. 7 COMMISSIONER SOMMELING: Second. 8 VICE CHAIR FEDORKO: 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 Thank you. 16 MR. ADAMS: Thank you. 17 MR. NANCE: Item No. 16. Petition of 18 Trump Plaza Associates, Trump Taj Mahal 19 Associates, and Trump Marina Associates for 20 approvals of material debt transaction. 21 Miss Wozniak? 22 MS. WOZNIAK: Commissioners, Mr. O'Gara 23 again for the Petitioners and Mr. Fogarty for 24 the Division. 25 CHAIR KASSEKERT: Thank you. 58 ITEM NO. 16 1 MS. WOZNIAK: And I have distributed a 2 draft resolution. 3 CHAIR KASSEKERT: Thank you. 4 Mr. O'Gara? 5 MR. O'GARA: Yes, ma'am. 6 First of all, you are missing -- Mr. 7 Juliano is here, Mr. Burke, Mr. Picus and Mr. 8 Fusco, all from the company and all of whom are 9 familiar to you. 10 This petition seeks approval of material 11 debt transaction and also of the requisite 12 approvals necessary to issue what the Act 13 defines as "securities," which would be the 14 guaranties, the liens, and the various things 15 the company finances. 16 Essentially, it is a refinancing of an 17 existing Morgan Stanley credit facility in a 18 gross amount of approximately $500 million. It 19 is with -- the refinancing is with Beal Bank, 20 and I'd add that, as stated in the petition, 21 the lender will be Beal Bank. And Mr. Fogarty 22 in his report alluded to the fact that the Beal 23 Bank and Beal Bank Nevada -- Beal Financial 24 Services is the holding company, a bank holding 25 company. Two units, Beal Bank Texas, which is 59 ITEM NO. 16 1 an SSB, which a state chartered savings bank, 2 and Beal Bank Nevada, Inc., which is a -- also 3 a chartered thrift. Within the savings bank 4 worlds, there's thrifts and savings banks, both 5 of which are banks with lending licenses and 6 qualified for an exception as lenders. The 7 administrative collaterally, the loss of Beal 8 Bank SSB, so there won't be another entity. 9 This replaces the existing Morgan 10 Stanley loans. It's in the same amount. The 11 company goes forward with this because it's on 12 terms which they view as more favorable. 13 Specifically, it extends the maturity date of 14 the loans, both loans, out through 2012 and, in 15 fact, has no leverage covenants, which are an 16 issue which everyone deals with in this kind of 17 market. 18 And we would ask that you grant these 19 approvals. And it is our hope that this 20 transaction will close prior to the end of the 21 year. 22 CHAIR KASSEKERT: Thank you. 23 Let me ask if there are any questions? 24 COMMISSIONER SOMMELING: No questions, 25 Madame Chair. 60 ITEM NO. 16 1 CHAIR KASSEKERT: We'll hear from the 2 Division. 3 Mr. Fogarty? 4 MR. FOGARTY: Yes, good morning. 5 I filed a letter dated December 10, 6 2007, not objecting to your approval of the 7 transaction Mr. O'Gara just described as a 8 material debt transaction and to the exemption 9 as a banking institution of Beal Bank, the 10 proposed lender. 11 I also have received Mr. O'Gara's 12 request for sealing. It's precise. It's 13 minimal. And it comports, in my view, with the 14 law and established practice, so I have no 15 objection to the sealing, either. 16 I anticipate there might be questions, 17 so I'll sit down and wait. 18 CHAIR KASSEKERT: Sure. 19 Questions? 20 COMMISSIONER EPPS: Mr. O'Gara, clearly 21 you've indicated that there will be no leverage 22 covenants, which is a benefit to the Trump 23 organization. How does this impact the ability 24 to move forward with the Taj tower and -- 25 MR. O'GARA: It -- the same financing is 61 ITEM NO. 16 1 in place. The money is all available. And 2 it's my understanding that you're looking at 3 '08, '09 phase openings, it doesn't change it 4 at all. In fact, you have the same draw funds 5 available, so there's no restriction or no 6 issue at all. 7 CHAIR KASSEKERT: Any other questions? 8 COMMISSIONER FRULIO: What's the current 9 status of the construction on the Taj tower? 10 MR. O'GARA: I assume it's being 11 constructed. 12 (Laughter.) 13 MR. O'GARA: You walk down the 14 Boardwalk, they're working. So I think 15 they're -- my understanding is -- I was told by 16 the gentleman behind me that the schedule is, 17 as it's been represented, as you anticipate. 18 COMMISSIONER FRULIO: Really? Okay. 19 Thanks. 20 CHAIR KASSEKERT: Any other questions? 21 COMMISSIONER SOMMELING: Madame Chair, 22 move to adopt the draft resolution and approve 23 the transaction in accordance with NJAC 24 19:43-4.3. 25 VICE CHAIR FEDORKO: Second. 62 ITEM NO. 17 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. O'GARA: Thank you. 8 CHAIR KASSEKERT: Thank you. 9 MR. O'GARA: Thank you. 10 MR. NANCE: Item No. 17, petition of 11 Resorts International Hotel, Inc., for 12 amendment to its operations certificate. 13 Mr. Kell? 14 MR. KELL: Good morning, Madame Chair, 15 Commissioners. 16 Patricia Wild is here on behalf of 17 Resorts in this matter. Deputy Attorney Tim 18 Ficchi for the Division. 19 And I've circulated a draft resolution 20 in this matter. 21 Thank you. 22 CHAIR KASSEKERT: Thank you. 23 Good morning, Ms. Wild. 24 MS. WILD: Good morning, Madame Chair, 25 members of the Commission. 63 ITEM NO. 17 1 Pat Wild here on behalf of the Resorts, 2 International Hotel. 3 This petition was necessitated because 4 we have made a business decision to cease the 5 operation of our casino simulcasting facility 6 as of -- actually as of New Year's Eve, the 7 close of gaming day New Year's Eve. And that 8 means that we are changing our floor 9 configuration and basically changing around 10 some of the numbers to represent space that was 11 formerly satellite simulcast will now be casino 12 gaming space. So we have reviewed the proposed 13 resolution, and we ask that you adopt it as 14 proposed. 15 CHAIR KASSEKERT: Thank you. 16 Miss Wild, is there any specific reason 17 why you're going to end simulcasting at 18 Resorts? 19 MS. WILD: We just determined that it 20 was not part of -- it was not -- it was not 21 really bringing anything to the bottom line, to 22 be honest with you. And at this time there has 23 been a determination -- we are at the end of 24 the HUB contract right now. 25 CHAIR KASSEKERT: Uh-huh. 64 ITEM NO. 17 1 MS. WILD: If we continued with the HUB 2 contract, we would have been locked in for some 3 period of time, so we thought this was the 4 opportune time to make that decision. 5 CHAIR KASSEKERT: Thank you. 6 Mr. Ficchi? 7 MR. FICCHI: Good morning, Madame Chair, 8 Commissioners. 9 The Division has reviewed the draft 10 resolution and has no objection to it being 11 adopted by the Commission. 12 CHAIR KASSEKERT: Thank you. 13 Any questions? 14 COMMISSIONER SOMMELING: No questions, 15 Madame Chair. 16 VICE CHAIR FEDORKO: Move to adopt the 17 draft resolution and approve the petition of 18 Resorts International Hotel, Inc., for an 19 amendment to its certificate of operation and 20 casino hotel alcoholic beverage license to 21 permit the reconfiguration and expansion of its 22 gaming floor subject to the conditions in the 23 resolution. 24 COMMISSIONER FRULIO: Second. 25 CHAIR KASSEKERT: The motion has been 65 ITEM NO. 18 1 made and seconded. All in favor? 2 (Ayes.) 3 CHAIR KASSEKERT: Opposed? 4 (No response.) 5 CHAIR KASSEKERT: The motion carries. 6 Thank you, 7 MS. WILD: Thank you. 8 MR. NANCE: Item No. 18, petition of 9 Trump Marina Associates, LLC, for amendment to 10 its operation certificate. 11 Mr. Kell? 12 MR. KELL: Madame Chair, Commissioners. 13 Fred Cunningham is here on behalf of the 14 petitioner in this matter, and Tim Ficchi is 15 still at the table for the Division. 16 CHAIR KASSEKERT: Thank you. 17 MR. KELL: Again, I have circulated a 18 draft resolution. 19 CHAIR KASSEKERT: Thank you. 20 Mr. Cunningham? 21 MR. CUNNINGHAM: Yes. As indicated 22 earlier by my colleague from Resorts, we are 23 looking to change our floor to eliminate 24 simulcasting and incorporate that area into the 25 casino floor itself. 66 ITEM NO. 18 1 Some time ago the Marina took advantage 2 of the provision in the simulcasting 3 regulations to expand its floor beyond the 4 80,000 square foot that it was otherwise 5 entitled to under the room calculation. Since 6 then, there's been a number of right-sizing 7 changes to the casino floor, and we're now 8 operating with slightly less than 80,000 square 9 feet and no longer need the simulcasting to 10 support that -- that area, that gaming floor. 11 And as indicated earlier, the end of the 12 HUB agreement just made it a timely opportunity 13 to review the need for simulcasting in our 14 facility. So I have nothing else. 15 CHAIR KASSEKERT: Thank you. 16 Mr. Ficchi? 17 MR. FICCHI: Again, Madame Chair, 18 Commissioners, I'm -- the Division has no 19 objection to the adoption by the Commission. 20 Thank you. 21 CHAIR KASSEKERT: Thank you. 22 Any questions? 23 COMMISSIONER SOMMELING: No questions, 24 Madame Chair. 25 VICE CHAIR FEDORKO: Motion to adopt the 67 ITEM NO. 19 1 draft resolution and approve the petition of 2 Trump Marina Associates, LLC, for an amendment 3 to its certificate of operation to permit the 4 reconfiguration and expansion of its gaming 5 floor subject to the conditions in the 6 resolution. 7 COMMISSIONER FRULIO: Second. 8 CHAIR KASSEKERT: The motion has been 9 made and seconded. All in favor? 10 (Ayes.) 11 CHAIR KASSEKERT: Opposed? 12 (No response.) 13 CHAIR KASSEKERT: Motion carries. 14 MR. FICCHI: Thank you. 15 MR. CUNNINGHAM: Thank you. 16 CHAIR KASSEKERT: Thank you. 17 MR. NANCE: Item No. 19, proposed 18 adoption of amendments to NJAC 19:45-1.1, 1.18, 19 and 1.54. 20 Mr. Kell? 21 MR. KELL: Madame Chair, Commissioners, 22 these amendments would define the terms 23 "suspicious," "unscanned," and "unverified" 24 gaming vouchers and establish procedures for 25 casino licensees to follow when such vouchers 68 ITEM NO. 20 1 are presented for redemption. 2 The amendments were temporarily adopted 3 July 23rd, 2007, and published on August 6th, 4 2007. No public comments were received and the 5 staff recommends that you adopt the amendments 6 as published. 7 CHAIR KASSEKERT: Thank you. 8 Any questions? 9 COMMISSIONER FRULIO: Move to adopt as 10 published. 11 COMMISSIONER EPPS: Move to adopt as 12 published. 13 COMMISSIONER SOMMELING: Second. 14 CHAIR KASSEKERT: The motion has been 15 made and seconded. All in favor? 16 (Ayes.) 17 CHAIR KASSEKERT: Opposed? 18 (No response.) 19 CHAIR KASSEKERT: Motion carries. 20 MR. KELL: Thank you. 21 MR. NANCE: Item No. 20, petition of 22 Marina District Development Company, LLC, for 23 amendment to its operation certificate to 24 permit a temporary expansion of its casino 25 floor. 69 ITEM NO. 20 1 Mr. Briliant? 2 MR. BRILIANT: Good morning, Madame 3 Chair. 4 Miss Kaufman is here on behalf of 5 Borgata. Mr. Ficchi is hear on behalf of the 6 Division. And we have circulated a proposed 7 resolution among the parties. 8 CHAIR KASSEKERT: Thank you. 9 Good morning, Miss Kaufman. 10 MS. KAUFMAN: Good morning, Chair and 11 Commissioners. 12 Before you is the petition for temporary 13 expansion of the casino floor to hold a poker 14 tournament. We have previously conducted these 15 type of tournaments in a ballroom that was 16 smaller but because, fortunately, the 17 popularity, we needed a larger area. 18 I've reviewed the draft resolution. I 19 have no objections. 20 We also have our director of security, 21 Michael Schultz, here as well as our principal 22 inspector Stan Strictland if you have any 23 questions. 24 CHAIR KASSEKERT: Thank you. 25 Any questions for Mr. Ficchi? 70 ITEM NO. 20 1 COMMISSIONER SOMMELING: No questions, 2 Madame Chair. 3 CHAIR KASSEKERT: Mr. Ficchi? 4 MR. FICCHI: Madame Chair, 5 Commissioners. 6 The Division has reviewed this matter 7 and also reviewed the draft resolution and 8 would have no objection to the Commission 9 adopting the resolution in full. 10 Thank you. 11 CHAIR KASSEKERT: Thank you. 12 Any questions for Mr. Ficchi? 13 COMMISSIONER FRULIO: Madame Chair, move 14 to adopt the draft resolution and approve the 15 petition of Marina District Development 16 Company, LLC, for an amendment to its 17 certificate of operation and casino hotel 18 alcoholic beverage license to permit the 19 reconfigurations and expansion of its casino 20 floor subject to the conditions in the 21 resolution. 22 VICE CHAIR FEDORKO: Second. 23 CHAIR KASSEKERT: The motion has been 24 made and seconded. All in favor? 25 (Ayes.) 71 ITEM NO. 21 1 CHAIR KASSEKERT: Opposed? 2 (No response.) 3 CHAIR KASSEKERT: Motion carries. 4 Thank you. 5 MS. KAUFMAN: Thank you. 6 MR. FICCHI: Thank you. 7 MR. NANCE: Item 21, proposed amendment 8 to NJAC 19:45-1.40b. 9 Mr. Briliant? 10 MR. BRILIANT: Madame Chair, this is a 11 proposal that would provide slot system 12 operators with additional flexibility when 13 funding an annuity jackpot with treasury 14 securities. The proposed amendments would 15 permit up to $1,000 of each annual annuity 16 jackpot payment to be funded with cash. Any 17 such cash funding would be required to be 18 placed into trust, together with all required 19 treasury securities, within 180 days after the 20 jackpot is won. 21 CHAIR KASSEKERT: Thank you. 22 Any questions? 23 COMMISSIONER SOMMELING: No questions, 24 Madame Chair. 25 COMMISSIONER EPPS: Move to approve for 72 ITEM NO. 22 1 publication. 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: The motion carries. 9 MR. BRILIANT: Thank you. 10 CHAIR KASSEKERT: Thank you. 11 MR. NANCE: Item No. 22, proposed 12 publication and temporary adoption of amendment 13 to NJAC 19:45-1.33. 14 Mr. Mamolen? 15 MR. MAMOLEN: Good morning, Madame Chair 16 and Commissioners. 17 This matter is before you for both 18 publication and temporary adoption. It 19 concerns the reporting and investigation of 20 incidents of negative poker revenue, that is 21 any negative poker revenue at any one poker 22 table as reported on the master gaming report. 23 It also provides for the allowing of an 24 adjustment to the reported revenue on that 25 report. 73 ITEM NO. 23 1 Again, it's before you for both 2 publication and temporary adoption. 3 CHAIR KASSEKERT: Thank you. 4 Any questions for Mr. Mamolen? 5 COMMISSIONER SOMMELING: No questions, 6 Madame Chair. 7 Move to approve for publication and 8 temporary adoption. 9 VICE CHAIR FEDORKO: Second. 10 COMMISSIONER EPPS: 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. 23, proposed 18 publication and temporary adoption of amendment 19 to NJAC 19:45:-1.3. 20 Mr. Mamolen? 21 MR. MAMOLEN: This is another item for 22 both publication and temporary adoption, and it 23 would allow for the exclusion of certain 24 internal controls governing disbursements of 25 cash gifts. Those are complimentaries. And 74 ITEM NO. 24 1 those issuing -- those using electronic 2 control -- electronic credit transfer systems. 3 Effectively it would make changes to these 4 internal controls subject to the 15-day review 5 period. 6 CHAIR KASSEKERT: Thank you. 7 Any questions? 8 COMMISSIONER SOMMELING: No questions, 9 Madame Chair. 10 VICE CHAIR FEDORKO: Approve for 11 publication and temporary adoption. 12 COMMISSIONER FRULIO: Second. 13 CHAIR KASSEKERT: The motion has been 14 made and seconded. All in favor? 15 (Ayes.) 16 CHAIR KASSEKERT: Opposed? 17 (No response.) 18 CHAIR KASSEKERT: Motion carries. 19 MR. NANCE: Item No. 24, proposed 20 publication of amendments and new rule for 21 "fire Bet" in craps. 22 Mr. Mamolen? 23 MR. MAMOLEN: This matter is now before 24 you for publication. As you recall, several 25 meetings ago we temporarily adopted regulations 75 ITEM NO. 25 1 for Fire Bet, and this is the side wager in 2 craps whereby a player is betting certain -- 3 that that at least four individual points are 4 made before a shooter sevens out. 5 No problems have been reported. It's 6 only been tested at one casino, and we believe 7 it's ready for publication at this time. 8 CHAIR KASSEKERT: Thank you. 9 Any questions? 10 VICE CHAIR FEDORKO: Move to approve for 11 publication. 12 COMMISSIONER FRULIO: Second. 13 CHAIR KASSEKERT: The motion has been 14 made and seconded. All in favor? 15 (Ayes.) 16 CHAIR KASSEKERT: Opposed? 17 (No response.) 18 CHAIR KASSEKERT: Motion carries. 19 MR. NANCE: Item No. 25, proposed 20 adoption of amendments and new rule for Bad 21 Beat payouts in poker. 22 Mr. Mamolen? 23 MR. MAMOLEN: This is matter is before 24 you for final adoption. This is the Bad Beats 25 in the poker room for certain high valued 76 ITEM NO. 26 1 losing hands. The regulations provide for a 2 good deal of latitude for each casino licensee 3 to divise its own rules and procedures with 4 certain requirements regarding distribution and 5 reporting and tabulation of a tote board and so 6 forth of the amount of bad beat jackpot on a 7 daily basis. 8 It was just one comment received during 9 the comment period from the Division of Gaming 10 Enforcement which does not interpose an 11 objection. 12 CHAIR KASSEKERT: Thank you. 13 Any questions? 14 COMMISSIONER SOMMELING: Move to adopt 15 as published. 16 COMMISSIONER FRULIO: 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 MR. MAMOLEN: Thank you. 24 CHAIR KASSEKERT: Thank you. 25 MR. NANCE: Item No. 26, Chair, 77 ITEM NO. 26 1 Commissioners, presented for adoption is a 2 proposed resolution which will permit the 3 Commission to hold a closed session prior to 4 the commencement of each scheduled 2008 5 meeting. 6 CHAIR KASSEKERT: Any questions on the 7 schedule for next year? 8 COMMISSIONER FRULIO: Move to adopt the 9 draft resolution. 10 COMMISSIONER EPPS: Second. 11 VICE CHAIR FEDORKO: Second. 12 CHAIR KASSEKERT: The motion has been 13 made and seconded. All in favor? 14 (Ayes.) 15 CHAIR KASSEKERT: Opposed? 16 (No response.) 17 CHAIR KASSEKERT: Motion carries. 18 Thank you very much. 19 We will recess now until 2:00 p.m. when 20 we'll come back to consider Item 27. 21 Thank you. 22 (A recess was taken from 11:22 a.m. to 23 4:15 p.m.) 24 25 78 ITEM NO. 27 1 2 back on the record. You may be seated. 3 I understand that the record needs to be 4 opened for the admission of some exhibits? 5 Mr. DiGiacomo? 6 MR. DiGIACOMO: I'm not sure who has 7 them, Chair. I thought that they were going to 8 be presented today. If that's not the case, 9 then we'll proceed without them. 10 CHAIR KASSEKERT: All right. Let me 11 remind people what they were. The newest 12 financial press release, the response by the 13 Applicant to the Division of Gaming 14 Enforcement's conditions, and the Division's 15 responses? 16 MR. NANCE: Chair, this is Item No. 27. 17 CHAIR KASSEKERT: Yes. 18 MR. NANCE: For the record. 19 MR. O'GARA: To the degree that they are 20 mine, I believe two of them are, I'd move their 21 admission. I think the conditions -- I have 22 the response to conditions. I have the press 23 release. 24 Is the third one mine, too, Mr. 25 DiGiacomo? 79 ITEM NO. 27 1 CHAIR KASSEKERT: It would be the -- 2 MS. FLAHERTY: That was supplied by the 3 Division. 4 CHAIR KASSEKERT: Supplied by the 5 Division of Gaming Enforcement. 6 MR. O'GARA: Okay. 7 CHAIR KASSEKERT: Any objection? 8 MR. O'GARA: No. 9 MS. FLAHERTY: No objection. 10 CHAIR KASSEKERT: Okay. Moved into 11 evidence. And I will call -- I will close the 12 record formally now. 13 Let me just ask if there any other 14 procedural matters that need to be brought to 15 our attention at this time? 16 MS. MAHER: No, thank you. 17 MR. O'GARA: No. 18 CHAIR KASSEKERT: Okay. Let me also 19 just say a formal executed opinion will be 20 issued in this matter today, but I have some 21 remarks to make and a motion to make. They are 22 quite lengthy. 23 Today's decision comes at the end of an 24 exhaustive and extensive review of the record 25 with respect to Tropicana, Aztar, and its 80 ITEM NO. 27 1 parent company Columbia Sussex. We have taken 2 over eight days of testimony, entered over a 3 hundred exhibits, reviewed binders full of 4 sworn interviews, and had the benefit of the 5 Division of Gaming Enforcement's investigation 6 and report. 7 All of this testimony and analysis takes 8 us back to the standards required in the Casino 9 Control Act which we must apply in order to 10 determine whether an applicant is to be 11 licensed; in this case, whether Tropicana and 12 its owner have proven by clear and convincing 13 evidence that it is qualified to be licensed by 14 the State of New Jersey to operate a casino 15 hotel. This is a high bar, and utilizing the 16 criteria found in Section 84 of the Act 17 includes requirements such as: One, financial 18 stability, integrity, and responsibility; two, 19 the integrity of financial backers; three, good 20 character, honesty, and integrity; four, 21 sufficient business ability and casino 22 experience as to establish the likelihood of 23 creation and maintenance of a successful, 24 efficient casino operation; and, five, the 25 suitability of the casino and related 81 ITEM NO. 27 1 facilities subject to NJSA 5:12-83, ensuring 2 that the facility is one that is superior 3 first-class and of exceptional quality. 4 The question for this Commission today 5 is whether Tropicana has proven that it has met 6 these standards by a clear and convincing 7 evidence, and my review of the record is that 8 they have failed woefully to meet this burden. 9 Regarding business ability, efforts were 10 undertaken to strip this facility of the means 11 to make it a success. Staffing was slashed in 12 pursuit of profit. Cleanliness was disregarded 13 in order to meet a predetermined bottom line. 14 Customer service was dismissed. And although 15 the Applicant argued that this was the fault of 16 the union representatives, the proof submitted 17 from March did nothing to address the problems 18 that continued from June. Simply put, I do not 19 believe this Applicant has the business ability 20 to operate a facility of this size and 21 magnitude given the decisions that were made. 22 There was little regard for regulatory 23 requirements evidenced through the total 24 disregard in the creation of an audit 25 committee, the establishment of reporting lines 82 ITEM NO. 27 1 for mandatory departments such as internal 2 audit and surveillance, and the staff and 3 security department on the casino floor. There 4 was a total disregard in the creation of the 5 management contracts without obtaining prior 6 Commission approval. It appears that the 7 Applicants either did not understand New 8 Jersey's law and regulations or did not want to 9 understand them. 10 In a word, Tropicana's regulatory 11 performance over the past year has been 12 abysmal, and there's no more glaring example of 13 that than what's transpired in attempts to 14 establish an independent audit committee. 15 The importance of the independent audit 16 committee cannot be emphasized enough. The 17 committee essentially serves as a 18 quasi-regulatory body with broad oversight in 19 some of the most sensitive regulatory areas 20 involving the casino's internal watchdog 21 mechanism. Any breakdown or compromising of 22 that function could readily lead to calamitous 23 results both for the licensee directly and in 24 terms of the public's overall confidence and 25 trust in the credibility and integrity of the 83 ITEM NO. 27 1 regulatory process and of casino operations. 2 Manifestly, the requirement of an 3 independent audit committee operating outside 4 the ambit, control, and domination of 5 management is a critical component of the 6 regulatory apparatus. 7 Nevertheless, Tropicana and TCR 8 callously disregarded the importance of the 9 independent audit committee. From the outset, 10 counsel in correspondence refer to the 11 committee not as "independent" but "internal" 12 with the implication that the committee was 13 just for the company's own internal use and not 14 designed to serve a broader regulatory purpose. 15 Given what ultimately transpired, a more 16 jaundiced view might be taken as to why 17 "independent" was excised; to provide 18 deniability for the company's intransigent 19 desire to retain management dominance on the 20 committee. 21 In that regard, this record is devoid of 22 any explanation as to how a five-member 23 committee with 80 percent of its members from 24 management could thereby constitute an 25 independent committee. But, that, in fact, was 84 ITEM NO. 27 1 the company's initial proposal to the 2 regulators that it intended to implement on day 3 one. The company steadfastly clung to that 4 template for the committee, or as a slight 5 modification thereto, for as long as it could 6 despite having no reasonable basis for that 7 structure to pass muster as independent. 8 Ms. More's testimony that all of this 9 might have been avoided had she only known that 10 management could not serve on the committee 11 sounds hollow. So is her suggestion that a 12 reading of the Commission's regulation leaves 13 one in doubt as to what exactly is required. 14 Especially, she professes to have been aware of 15 the requirement from the outset. 16 Even more extraordinary is that, despite 17 Miss More's testimony that she brings important 18 complaint matters to Mr. Yung, he professed to 19 have little or no knowledge about the audit 20 committee. 21 Just as troubling is Miss More's view as 22 to how the company could resolve the reporting 23 line with the supervisors of internal audit and 24 surveillance in the absence of an independent 25 audit committee, which she and the company 85 ITEM NO. 27 1 concede was not in place at the start. Her 2 legal status as an officer of the court is no 3 substitute for the reporting lines clearly 4 articulated in the regulation, and whatever 5 credence that may be given is certainly 6 diminished by the fact that she also serves as 7 a member of management and, thus, presumptively 8 is not entitled to receive the reports of 9 concerns that arise from the internal audit and 10 the surveillance. 11 Even more egregious was the hiring of 12 Mr. William King as the internal audit 13 supervisor. He and Mr. Buro recognized that 14 the decision had to come from the independent 15 audit committee, yet that decision was made by 16 then CFO FitzPatrick. Plainly, the 17 repercussions for noncompliance continue to 18 escalate by failing to have a functioning 19 individual audit committee once the merger 20 agreement closed. But the company was in no 21 hurry to proceed with any more alarity than it 22 did. Certainly, as the casino licensee's chief 23 legal officer, Miss Hughes bears some of the 24 blame as to the reporting lines for Mr. Edwards 25 and Mr. William King and for how the latter was 86 ITEM NO. 27 1 hired. 2 Likewise, Miss More's complicity in the 3 audit committee fiasco is unsettling and 4 somewhat puzzling. With her impressive 5 credentials, one is left to speculate how she 6 allowed by her inaction the matter to spiral 7 downward. Certainly, the vastness of the 8 responsibilities that she overseas can explain 9 much, but not all, since when addition staff 10 are needed, sometimes they simply must be hired 11 despite the cost. Then the challenge is to 12 ensure that the only delegable matters are 13 assign to the qualified staff or outside 14 counsel. Certainly, the audit committee 15 matters should have been among those that were 16 non-delegable. 17 Even after obtaining Commission approval 18 in June for the audit committee structure, 19 problems still persisted. That ruling left no 20 doubt that management could not serve on the 21 committee, yet the minutes of the initial TEL 22 audit committee meeting disclosed the presence 23 of Ms. More and Mr. FitzPatrick. Although 24 their presence at the invitation of the 25 committee to address a specific agenda topic 87 ITEM NO. 27 1 might have been understandable, their seemingly 2 unrestricted attendance certainly sent the 3 wrong signal to the regulators which had 4 determined to exclude management from the 5 committee. 6 Further, those same minutes disclose a 7 then-upcoming TCR audit committee meeting where 8 Ms. More and Mr. FitzPatrick would have served 9 with Mr. Silver as co-equal members of that 10 committee with a clear implication that he 11 would do TCR's bidding as the lone member of 12 the TEL audit committee. Although in testimony 13 the company refused that motion -- that notion. 14 In sum, despite Applicants' protest to 15 the contrary that they were endeavoring to 16 develop an acceptable audit committee 17 structure, it was palpable that a delay in 18 producing a truly independent audit committee 19 was their goal. Thus, the only appropriate 20 response to the audit committee issue is to 21 deny the renewal of Tropicana's casino license 22 and to find that TCR has failed to establish 23 its suitability for plenary qualification. But 24 in so doing, I need not rely on that basis 25 alone. 88 ITEM NO. 27 1 The massive layoffs are another factor 2 that inevitably leads to a denial of the 3 application for relicensure and plenarily 4 qualification. Critically, Mr. Yung minimized 5 the extent of the planned cuts when he 6 testified before the Commission in 2006. Yet 7 shortly thereafter, he is much more forthcoming 8 on the roadshow when it was plain that a salary 9 savings of between $30 million to $40 million 10 were proclaimed to the investment community as 11 an inducement to purchase the companies 12 high-yield debt. 13 What changed? Even if one accepts Mr. 14 Yung's explanation about a miscalculation of 15 the impact of the opening of the Philadelphia 16 area slot facilities and that he should have 17 added that as a caveat to his 2006 testimony, 18 it does not address why he did not follow up 19 with the regulators before instituting the 20 massive layoffs. 21 The Atlantic City model works because it 22 involves a neutral level of cooperation and 23 trust between the regulators and the regulated 24 that unparalleled worldwide. Simply put, Mr. 25 Yung exhibited a lack of cooperation on a grand 89 ITEM NO. 27 1 scale that did nothing to earn regulatory trust 2 in his ability to operate in this marketplace. 3 Moreover, his decision-making process was 4 seriously flawed. 5 Most telling was the interaction between 6 Mr. Yung and Mr. Buro when Mr. Yung delivered 7 his handwritten note of the latest cut sheet to 8 Mr. Buro on June 5th, 2007, where Mr. Yung had 9 costed out the further staff reductions he 10 wanted to occur both in the hotel and at the 11 casino by week's end. Plainly, no reasonable 12 analysis was possible in that brief period to 13 determine whether those cost reductions were 14 feasible. As proved to be the case in the 15 player development area. 16 According to Mr. Buro, Mr. Yung directed 17 him to make the player development cuts, yet 18 Mr. Yung insisted it was Mr. Buro who 19 unilaterally made those cuts and brought in his 20 friends, a fact that Mr. Buro vehemently 21 denies. The notations on Mr. Yung's 22 handwritten note certainly seem to bear out Mr. 23 Buro's explanation of the events and are 24 cooperated by Mr. Yung's belated realization of 25 the hard lesson that Atlantic City is such a 90 ITEM NO. 27 1 player relationship business. Much so, that to 2 correct the big mistake of letting go player 3 development representatives, the company is now 4 trying to rehire them and add others as well. 5 Despite Mr. Yung's insistence that his 6 many years of experience are his guide, his 7 reliance on his experience with his other 8 casinos in much smaller markets simply did not 9 translate into the ability to understand and 10 run the property the magnitude and size of the 11 Tropicana. And certainly Mr. Yung's experience 12 and wealth could not alone justify the 13 confidence that the company hoped to engender 14 during the roadshow. 15 That proved true in the slot attendants 16 staff reductions as well, which increased slot 17 pay-out times with a consequent diminution in 18 customer service. To rectify that mistake, the 19 company had to rehire staff. Again, relying on 20 experience that was not comparable proved 21 faulty and an inadequate substitute for 22 performing the type of analysis that, had it 23 been undertaken, might have prevented the 24 reductions and negative impact on customer 25 service that the first place. 91 ITEM NO. 27 1 Likewise, Mr. Yung's failing to 2 appreciate the significance of the locksmith 3 function resulted in staff reductions that 4 would have been preventable by actually 5 examining what is required to operate in New 6 Jersey, a trait that truly has never manifested 7 itself. 8 Significantly, one of the few times that 9 the company actually conducted research into 10 whether the staff reductions were appropriate, 11 other than at the insistence of the regulators, 12 ultimately resulted in the company rejecting 13 that research. As Mr. Lyons testified, Mr. 14 Koehler's report on the security department 15 staffing had serious flaws. However, from the 16 company's perspective, Mr. Koehler's report had 17 one flaw that Mr. Lyons did not catch. It 18 recommended two few cuts, given that by early 19 August the company was looking not for 20 20 security staff reductions as Mr. Koehler 21 recommended but for 70 such reductions. With 22 that as a target, clearly the company had no 23 use for Mr. Koehler's analysis. 24 It also defies credulity that Koehler as 25 the head of security apparently had so little 92 ITEM NO. 27 1 contact with Mr. Yung of whom it has been said 2 tends to micromanage. TCR's counsel took great 3 pains in pointing out that he did not call Mr. 4 Koehler as a witness whose report was contrary 5 to the oral suggestions that Mr. Koehler had 6 given to Buro, Hughes, and others regarding the 7 need for increased security changes. 8 Rhetorically counsel asked, did Mr. Koehler 9 perjure himself? Certainly, by itself whether 10 Mr. Koehler's report varies from his 11 conversations may matter little except that it 12 gives rise to an inference that the change 13 resulted from some intervening pressure that 14 was brought to bear upon him. 15 With Mr. Yung desirous of reducing 16 security further during the week of August 17 13th, 2007, certainly Mr. Koehler's testimony 18 of his limited contact with Mr. Yung is 19 favorable to Mr. Yung, and Applicants' counsel 20 elicited that testimony. But if Mr. Koehler 21 lied about the inconsistencies between his 22 report and his conversations with Mr. Buro and 23 others, then the Commission can fairly infer 24 that Mr. Koehler also testified falsely as to 25 the limited scope of his contact with Mr. Yung. 93 ITEM NO. 27 1 Those implications are grave for Mr. 2 Yung, especially since he never resumed the 3 witness stand to corroborate his limited 4 contact with Mr. Koehler. 5 In any event, Mr. Koehler tells Mr. 6 Lyons and Mr. Buro that his report was going to 7 Mr. Yung. According to Koehler, Yung never 8 spoke to Koehler about the report other than a 9 brief telephone conversation during the course 10 of these proceedings. Incredibly, despite Mr. 11 Koehler's job as head of security for TCR 12 casino operations in five states, later in his 13 testimony he says that he had never had a 14 communication with Mr. Yung and even admits to 15 qualify his statement by the brief conversation 16 he had earlier admitted to having. 17 Mr. Yung says he never met Mr. Koehler, 18 and he may be forgiven for forgetting if it 19 were only for that brief time that Mr. Koehler 20 testified that they had met in 2003. However, 21 according to Mr. Buro, Preston -- Mr. Preston 22 told him that Mr. Yung had met with Mr. 23 Koehler, and that they had "agreed that, in 24 fact, we needed to further reduce the staff at 25 Tropicana." 94 ITEM NO. 27 1 Seemingly, the following quote from Mr. 2 Yung corroborates that: "Yeah, we had called 3 our guy in from Lake Tahoe to come in and take 4 a look at it and see what he thought." 5 Further, at the time of his sworn 6 interview, Mr. Yung remembered the approximate 7 length of Mr. Koehler's stay in New Jersey and 8 that Mr. Koehler was to "take a look at how 9 they had everything and then reported back what 10 he thought." 11 From that clarity to Mr. Yung's part, 12 the interview then becomes murky. Although he 13 did not know to whom Mr. Koehler reported his 14 findings but suggested Mr. Reinhardt as a 15 possibility, Mr. Yung was positive that Mr. 16 Koehler had not reported to him. Mr. Yung knew 17 Koehler made recommendations, but he could not 18 recall them. When asked if he was consulted 19 about the recommendations or brought into the 20 discussion about them, Mr. Young responded, 21 "no, I don't think so." 22 Unbelievable. Mr. Yung clearly wanted 23 to reduce Tropicana's security staff to a level 24 that he believed was justified by a comparison 25 with other Atlantic City casinos. Mr. 95 ITEM NO. 27 1 Preston's narrative provided the structure to 2 do that. However, if the company gave any 3 credence to Koehler's report, the rationale for 4 Mr. Yung's predetermination would be 5 undermined. So Mr. Koehler's report was 6 buried. Unfortunately for Mr. Yung, that 7 report has come back to life only to bury him. 8 That Mr. Koehler is a liar, there is no doubt, 9 and now it is plain why -- plain to as to why; 10 to shield Mr. Yung. That Koehler remains in 11 the company's employ is also telling. 12 During cross-examination, Mr. Yung was 13 asked to discuss various matters involving 14 other jurisdictions where TCR operates casinos, 15 whether land-based, riverboats, or otherwise. 16 Despite the identity between him and TCR, he 17 repeatedly could not answer questions about his 18 operating companies' regulatory compliance in 19 those other jurisdictions. If he truly does 20 not know the answer to some fundamental 21 questions, a fair inference is that he does not 22 pay sufficient attention to regulatory matters 23 to merit his company's plenary admission in New 24 Jersey. 25 The alternative that he knows the 96 ITEM NO. 27 1 answers but chose to testify as he did carries 2 no less a grave a consequence for suitability 3 here. Moreover, the Commission has a right to 4 expect that TCR and all of its senior officials 5 in general, and Mr. Yung in particular, would 6 have taken this matter sufficiently seriously 7 and prepared accordingly. However, the lack of 8 preparation is manifest which also does not 9 bode well for a company that is attempting to 10 convince this body that it has the ability to 11 operate in this marketplace. 12 Mr. Yung's professed lack of 13 understanding regarding Aztar's management 14 contracts with TCR and Columbia Sussex also 15 strains credibility. Those types of contracts 16 are part of the business model that TCR and 17 Columbia Sussex routinely use. If Mr. Yung 18 does not understand their significance, then 19 presumably, he would also not understand the 20 significance of any of his subsequent 21 correspondence that the Applicants have 22 submitted to the regulators in support of the 23 contention that the January agreements are 24 inoperative in New Jersey. 25 Quite apart from the layoffs, TCR has 97 ITEM NO. 27 1 had turnover and key senior management 2 positions in the short 18 months or so since 3 bidding for Aztar and undergoing the New Jersey 4 regulatory process. For instance, on the eve 5 of last year's ICA proceeding, TCR hired Mr. 6 FitzPatrick as CFO who had only started in 7 Columbia Sussex in March of 2006 without any 8 appreciable prior experience in casino 9 financial matters. After Mr. FitzPatrick's 10 brief tenure, TCR hired a CFO, John Jacob, who 11 also had no demonstrable experience with casino 12 financial matters. In a bizarre twist, Mr. 13 Jacob left the company in the course of these 14 proceedings to be replaced as CFO by a 15 long-time TCR and Columbia Sussex senior 16 accounting official, Theodore Mitchel for whom 17 Columbia Sussex is seeking replacement to 18 become the chief accounting officer with 19 responsibility for that company's treasury 20 function. 21 Long-time senior casino operation 22 officer Mr. Reinhardt left in June. Mr. 23 Preston's replacement has not had previously 24 any extensive experience in overseeing casino 25 operations on a scale commensurate with that of 98 ITEM NO. 27 1 TCR post the Aztar merger. Further, compliance 2 officer Brian Doyle's experience is somewhat 3 less than stellar. 4 At Tropicana, the prior general counsel 5 was not retained post-merger but instead a less 6 experienced staff attorney was promoted to 7 general counsel. Mr. Buro, whose post 8 immediately prior to becoming Tropicana's COO, 9 was in marketing, has an extensive casino 10 resume, including a brief tenure running 11 another Atlantic City operation, but Mr. Yung 12 summarily dismissed him because of the player 13 development matter, but I conclude here as a 14 result of Mr. Buro's fealty to the regulatory 15 process. 16 Likewise, Mr. Lyons, with extensive law 17 enforcement and casino security experience was 18 hired to head Tropicana security department 19 after the merger only to be dismissed shortly 20 following the Koehler episode. 21 Mr. Lyons' objection to further 22 reductions in the security workforce cannot be 23 deemed coincidental to his departure. In this 24 respect he suffered the same fate as Mr. Buro 25 whose growing opposition to staff reductions 99 ITEM NO. 27 1 incurred the wrath of Mr. Yung and ultimately 2 led to his termination. 3 These officer changes, in some of the 4 most sensitive areas for regulatory purposes, 5 inevitably raise questions about the ability of 6 TCR, and through it Tropicana, to make the 7 necessary choices to assemble and retain a 8 competent team to operate the highly regulated 9 Atlantic City casino environment. Having one 10 or two of these types of changes in so brief a 11 time might, in other cases, might be 12 attributable to happenstance. However, their 13 collective weight in this case is but another 14 reason to conclude that the Applicants have 15 failed to carry their burden for relicensure 16 and plenary qualification. 17 After all the cost cutting, one would 18 have expected Tropicana at least to be reaping 19 some financial awards -- rewards. However, the 20 Commission's own public records that it 21 complies -- that it compiles on the Atlantic 22 City casino industry, unfortunately, reflect 23 that Tropicana's 2007 monthly casino revenues, 24 through most recently as November of this year, 25 consistently have trailed those of its 100 ITEM NO. 27 1 competitors and by a significant margin 2 compared to the industry average. Although the 3 Philadelphia area slot operations and the 4 Atlantic City partial ban on smoking have 5 affected Tropicana, nothing in this record even 6 remotely establishes that Tropicana is 7 disproportionately suffering from those 8 effects, so its decline necessarily must have a 9 uniquely Tropicana cause. Consequently, the 10 company is now scrambling to find ways to drive 11 the top number such as by rehiring some of the 12 its player development representatives in the 13 hopes of recapturing their customers. Although 14 that may be a start, there's no assurance of 15 success. 16 Moreover, early in the hearing Yung 17 testified that TEL failed a covenant test under 18 the Credit Suisse credit facility to trigger an 19 event of default. Although the testimony 20 indicated that the company plans to negotiate 21 for a more favorable covenant test, which it 22 expects to achieve, I think it is appropriate 23 for the Commission to take official note of a 24 recent company press release announcing that 25 TEL was in the acceptable covenant range all 101 ITEM NO. 27 1 along. While from a financial stability 2 perspective that result may be positive, it was 3 financially irresponsible to announce 4 previously an event of default when none 5 existed. Certainly, I'm not thereby suggesting 6 that mere restatement of financial results will 7 always place an Applicant in jeopardy under 8 Section 84a. Rather, it is the totality of the 9 circumstances in this case that dictates the 10 outcome here. 11 I now turn to the cleanliness issue. 12 Mr. Giannantonio's efforts to confine 13 the cleanliness crisis to a few short weeks 14 this past spring are belied by the record. Mr. 15 Mr. Buro saw improvement by the time of his 16 departure, but that was not until August. In 17 the interim, Tropicana hosted at least one 18 convention where the attendees, through their 19 representatives, certainly have raised serious 20 questions about the suitability of the facility 21 and the responsiveness of Tropicana's staff to 22 their concerns. 23 Moreover, the complaints from patrons 24 that are in this record came only from the 25 files at the player development office and may 102 ITEM NO. 27 1 just represent the proverbial tip of the 2 iceberg when one considers that those customers 3 are only a small part of Tropicana's overall 4 client base. However, given the number of room 5 nights that Tropicana has in inventory, the 6 number of those complaints in the record does 7 not seem disproportionate to what one might 8 expect from an operation the size of 9 Tropicana's. 10 Beyond that comparison, and to note that 11 some of the complaints refer to incidents that 12 allegedly occurred nearer to the time of the 13 start of these proceedings than would have been 14 expected if the crisis was only confined to the 15 spring, those complaints carry no additional 16 weight. The individual patrons making them did 17 not testify here and, simply put, the documents 18 alone do not rise to the level that would 19 support a finding in this matter. 20 As for the notion that the crisis was 21 attributable to any one organized group within 22 Tropicana's employ, again, the record does not 23 sustain that conclusion. In particular, to the 24 extent the Tropicana invites the Commission to 25 conclude that union officials directed a 103 ITEM NO. 27 1 certain union faction to engage in a job action 2 that resulted in unclean public areas, no such 3 conclusion is possible on this record given 4 that, concedingly, another faction of the same 5 union took steps to assist Tropicana through 6 the crisis. 7 Significantly, what must not be lost of 8 is why there is a need -- what must not be lost 9 is why there is a need for a first-class 10 facility and the Legislature has made that 11 plain: To help restore Atlantic City as 12 resort, tourist, and convention destination, 13 which directly ties to the unique role that the 14 casino industry serves in the redevelopment of 15 Atlantic City. Plainly, the adverse publicity 16 Tropicana has drawn highlights the need for 17 every casino hotel to be ever vigilant in 18 maintaining a facility that meets the statutory 19 standard. 20 Undoubtedly, Tropicana did not meet the 21 standard at some point during the past year 22 while one under TCR's control. On this record 23 Mr. Giannantonio's testimony at least offers 24 the prospect that Tropicana is presenting a 25 cleaner facility, but that is hardly sufficient 104 ITEM NO. 27 1 to satisfy me for the purposes of Section 84e 2 and Section 83i. In any event, if my motion 3 carries, certainly, the Commission will have 4 the opportunity to monitor the situation more 5 closely in the near term. 6 It is also clear from the record that, 7 unfortunately, the standards for honesty, 8 integrity, and good character were not met. 9 Witnesses were evasive. Some could not even 10 ask the simplest questions as to -- answer the 11 simplest questions as to why certain actions 12 were taken. Over and over again we heard that 13 analysis were undertaken and determinations 14 could not be made until they "got their arms 15 around it," yet the determinations and 16 decisions that were made did not make sense. 17 Most unfortunately, there's evidence of 18 outright perjury in the record and evidence of 19 a more subtle kind of elusiveness. This can 20 only lead me to the conclusion that the 21 Applicant has failed to meet the requirements 22 of the Act for honesty, integrity, and good 23 character. 24 As to the complaint, the Respondents did 25 not contest liability as to Count I. They 105 ITEM NO. 27 1 offered limited opposition to the allegations 2 contained in Count II. The record clearly 3 supports a finding of liability under Count II 4 insofar as the mere existence of the legal 5 services agreement executed in February of 2007 6 undermines Mr. Silver's independence as that 7 term is defined for the audit committee 8 purposes. Accordingly, we found that the 9 Division proved the allegations set forth in 10 their audit committee complaint. 11 And I now turn to the imposition of the 12 appropriate penalty with respect to the audit 13 committee complaint. In evaluating that 14 penalty, I take note of the factors enumerated 15 in the Act at Section 130. In this case, 16 obviously, the gravity of the violation is of 17 paramount importance. 18 With respect to Count I, relating to the 19 failure to constitute an independent audit 20 committee, the violation extended over a period 21 of 168 days, from July 3rd to June 20th of 2007 22 when the Commission first ruled on this matter. 23 Pursuant to Section 123a of the Act, the 24 Commission may deem this violation to be of a 25 continuing nature whereby the licensee may be 106 ITEM NO. 27 1 fined on a per-day basis. And, certainly, the 2 daily absence of the necessary reporting lines 3 for surveillance and internal audit is but just 4 one justification for finding that the 5 violation here was of a continuing nature. 6 Given the seriousness of the violations 7 that have now been established as to Count I of 8 the complaint, the penalty here should exceed 9 the highest amount that the Commission has ever 10 heretofore assessed as a penalty. 11 Consequently, a penalty of $720,000 for which 12 the three Respondents in Count I would be 13 jointly and severally liable is appropriate. 14 And I reached this figure by allocating $30,000 15 per week for the 24 weeks, for a total of 16 $720,000 as to Count I. 17 As for Count II, which goes to Mr. 18 Silver's lack of independence, a flat penalty 19 of $30,000 would be appropriate, bringing the 20 total civil penalty to $750,000. 21 In some respects, this has been the most 22 difficult of cases because the Commission has 23 had to apply its institutional regulatory 24 expertise derived over the life of this agency 25 to tell a long-time and otherwise apparently 107 ITEM NO. 27 1 successful businessman that he lacks the 2 business ability. Although some may question 3 whether the government should ever be involved 4 in making such a determination, the Legislature 5 has unmistakenly so charged the Commission 6 which cannot and will not shirk from that 7 responsibility. 8 In other respects the decision has 9 proven not to be difficult at all, given the 10 Applicants' demonstrated failure to appreciate 11 the workings of the Atlantic City casino 12 marketplace. The Applicants could have taken 13 the time to educate themselves in what it takes 14 to operate successfully here. Or they could 15 have hired and retained sufficient staff 16 knowledgeable in those processes. They have 17 done neither and must bear the consequence. 18 So, too, must their applications fail for a 19 lack of good character, honesty, and integrity. 20 Thus, I cannot support the Division's 21 recommendation for a one-year license subject 22 to the enumerated 26 license conditions. 23 Unfortunately, the proposed conditions, however 24 well-intentioned, cannot dissipate the taint 25 that permeates this record. In this regard I 108 ITEM NO. 27 1 emphasize that it is a privilege and not a 2 right to hold a casino license in this state. 3 Perhaps if Mr. Yung had come to that 4 realization at the outset, the record might -- 5 may have been entirely different. 6 And it should be noted the Casino 7 Control Act, articulated by the Legislature, is 8 really the only public policy which can guide 9 us under these circumstances. And to ignore 10 the standards set forth in the Act would be to 11 ignore the public policy established which 12 brought gaming to New Jersey, would ignore the 13 mission of the Act, which is to serve as a 14 unique urban tool of redevelopment for Atlantic 15 City. It would, in essence, strip the Act of 16 its very premises, rendering it a hollow and 17 empty document. If the Act is to have any 18 meaning, we cannot ignore these standards. We 19 must apply them in this instance, and in 20 applying them, determine that the Applicant has 21 failed to meet their burden. 22 Based on the entirety of the record of 23 this matter, the applications for renewal of 24 Tropicana's casino and CHAB licenses and for 25 plenary qualification of TCR should be denied, 109 ITEM NO. 27 1 and I so move. Is there a second? 2 (Applause.) 3 COMMISSIONER SOMMELING: Second. 4 COMMISSIONER EPPS: Chair, I -- I'd like 5 to second the motion, and if I could, just for 6 a second remark that holding a casino license 7 in the State of New Jersey is indeed a 8 privilege, not a right. The privilege is 9 earned by establishing at a hearing before this 10 Commission by clear and convincing evidence 11 that the Applicant is entitled to the 12 privilege. 13 If this commission is to be held in high 14 regard, it must demand that its hearing process 15 be taken seriously. The granting of renewal of 16 a casino license is never guaranteed. In the 17 hearing that is just concluded, I was left with 18 the impression in the Applicant felt that the 19 process was just an inconvenient formality. 20 Throughout the record, I constantly heard "I 21 don't know" and other incomplete responses to 22 very important questions. 23 William Yung, who is Columbia Sussex, 24 failed to convince me by a clear and convincing 25 evidence, as is his burden, that he has the 110 ITEM NO. 27 1 good character, honesty, and integrity and/or 2 business ability to hold a casino license. 3 During his testimony, Mr. Yung did not know or 4 was not forthright with us with respect to, for 5 example, the Bank Secrecy Act. He did not know 6 or was not forthright with respect to the 7 intercompany note. He did not know or was not 8 forthright with respect to the management 9 services agreement. He did not know or was not 10 forthright with respect to the details of the 11 requirements for the audit committee. 12 The lack of detailed responses in the 13 record indicates to me that the Applicant 14 either lacks the requisite knowledge to operate 15 a casino in New Jersey or that the Applicant 16 was disingenuous. In either event, a result is 17 that the renewal would have to be denied. 18 CHAIR KASSEKERT: Thank you, 19 Commissioner Epps. 20 Commissioner Fedorko? 21 VICE CHAIR FEDORKO: I share many of the 22 concerns expressed by the Chair, as well as the 23 Acting Director of the Division during her 24 closing arguments, regarding the Applicants' 25 less than stellar performance over the past 111 ITEM NO. 27 1 year. Clearly, mistakes were made and the 2 regulatory infractions occurred, some of which 3 were extremely serious in nature. The 4 Tropicana's witnesses readily conceded this 5 point. However, based on the totality of the 6 record, I am satisfied that the relicensure for 7 a limited period of one year, together with the 8 imposition of stringent license conditions, as 9 proposed by the Division, would be appropriate 10 in reaching its determination. 11 I was mindful of the overriding public 12 interest in maintaining and preserving the 13 continuity of casino operations and all that 14 entails. Accordingly, I cannot support the 15 motion. 16 A recommendation to deny licensure 17 proposes an extraordinary result which, I 18 believe, goes far beyond what is called for in 19 this case. 20 In this regard, I wholeheartedly endorse 21 the alternative remedy advocated by the 22 Division which, if implemented, would afford 23 the licensee and the Yung controlled enterprise 24 a second chance to prove their merit. 25 Plenarily, I am firmly convinced that 112 ITEM NO. 27 1 this licensee and its corporate family have 2 established their suitability by the requisite 3 burden. I also have no reservations regarding 4 Mr. Yung's commitment to making the Tropicana a 5 successful entity. His business acumen has 6 been challenged during this proceeding, and 7 perhaps that is understandable given the 8 unfortunate events of the past year. But we 9 should not ignore the salient point that he has 10 achieved more than modest success in building 11 from scratch a veritable hotel empire. 12 Evidently, Yung and his small cadre of 13 senior executives in his privately held company 14 were ill-prepared upon assuming control of the 15 Tropicana to operate a casino hotel 16 establishment of this magnitude. They, 17 obviously, underestimated the intricate demands 18 of this competitive marketplace, and their 19 precarious position was compounded by the 20 influx of gaming in Pennsylvania and the 21 recently imposed smoking ban. They experienced 22 an extremely difficult orientation. But that 23 initiation period is now behind them, and they 24 are ready to make the necessary adjustments and 25 capital improvements to be competitive in this 113 ITEM NO. 27 1 arena. 2 During this hearing, the Applicants' 3 acknowledged their errors, both of commission 4 and omission, but they steadfastly and 5 convincingly represented that they were taking 6 appropriate measures to rectify any problems. 7 Significantly, these errors arose from 8 legitimate business decisions, calculated to 9 achieve necessary cost savings and maximize 10 their efficiency. 11 Although we may disagree with the 12 methods employed to achieve these goals, such 13 disagreement by itself cannot be license 14 threatening. Notably, the Applicants did not 15 take any action intended to flaunt the 16 regulatory system nor did they ever demonstrate 17 a willful disregard of the authority of the 18 Commission and the Division. There is no 19 evidence in this voluminous record to suggest 20 that they intended to impede or avoid 21 regulatory oversight. Yung may have become 22 frustrated by our insistence that we be 23 notified in advance for proposed staffing cuts, 24 but nevertheless as Fred Buro, certainly no fan 25 of Yung, testified, Yung would not 114 ITEM NO. 27 1 intentionally deceive, mislead, or defy the 2 regulators. To me, that is highly significant. 3 In short, there was no defiant conduct 4 that would result in a denial of relicensure 5 and a finding of unsuitability. Whether we 6 agree or disagree with their business methods 7 is not the issue. Rather, we must be mindful 8 that our legitimate concern is always to ensure 9 that the licensee abide by our strict 10 regulatory system and comply with our clearly 11 delineated rules and regulations. This record 12 supports a conclusion that, notwithstanding any 13 mishaps or missteps, these Applicants have 14 demonstrated their dedicated efforts toward 15 this end. 16 I am persuaded that with the present 17 management team in place this licensee and its 18 corporate family have the wherewithal to turn 19 the corner and restore the long-term stability 20 and profitability to the Tropicana Hotel 21 Casino. 22 In my opinion, the denial is clearly not 23 the answer. On the contrary, with appropriate 24 controls in place to ensure effective 25 monitoring of the operation, they should be 115 ITEM NO. 27 1 afforded the opportunity to prove their ability 2 to operate a model facility. 3 Generally, it is not our province to 4 interfere with or sit in judgment of 5 management's business decisions. A casino 6 licensee is extended broad discretion and wide 7 latitude in its efforts to achieve and enhance 8 cost efficiency and profitability. Only in the 9 rarest of cases where these decisions run afoul 10 of our regulatory requirements will we 11 intervene to cease inappropriate conduct and to 12 ensure compliance with the Casino Control Act 13 and the attending regulations. 14 Accordingly, when the Commission 15 questioned the depth of the proposed staffing 16 cuts in the security department this past 17 summer, this agency acted with full cooperation 18 of the licensed applicant was able to reach 19 equitable resolution. 20 The fundamental point is that when the 21 regulators specifically instructed the licensee 22 that cuts should have been curtailed, there was 23 no opposition. There is no legitimate reason 24 to believe that his level of cooperation and 25 commitment to regulatory compliance will not 116 ITEM NO. 27 1 continue in the future. 2 Moreover, lest anyone equivocate on this 3 point, there are numerous controls that can be 4 imposed, that already exist to ensure full and 5 timely compliance with our mandates in all 6 respects. 7 Admittedly, I, too, was particularly 8 disturbed by the failure to constitute an 9 independent audit committee over such a 10 protracted period. The licensee's inability to 11 satisfy this requirement is unacceptable and 12 inexcusable. It simply should not have been 13 this difficult. Nevertheless, I do not view 14 this infraction as rising to the level where it 15 negatively impacts upon suitability for 16 licensure. This was not a defiant act. To 17 some extent, the neglect exhibited may be 18 attributable to an understaffed legal 19 department, which is easily curable. 20 That being said, I agree with the Chair 21 that the violation is extremely serious and 22 warrants a severe penalty. In order to provide 23 an adequate deterrent, the monetary penalty 24 should be the largest ever imposed by this 25 agency in our 30-year history. 117 ITEM NO. 27 1 I was especially troubled by the 2 perjured testimony of Mr. Koehler whose 3 appearance before us can only be described as 4 reprehensible. He certainly did a disservice 5 to his employer, and I am not sure what 6 inferences we can make from his role in this 7 case, but if the license were to be renewed, it 8 should be the subject of his immediate removal 9 from Columbia Sussex. 10 Finally, I will briefly touch upon the 11 issue that surfaced regarding the cleanliness 12 of the facility. The probative value of the 13 patron complaint evidence is suspect, at best. 14 In any event, I am persuaded by Mark 15 Giannantonio's credible testimony that the 16 problems have been addressed and that the 17 licensee takes this matter very seriously. I 18 have every confidence that if given the 19 opportunity the licensee will be able to 20 operate in accordance with the standards set 21 forth in the Casino Control Act. 22 Could the Tropicana have acted with more 23 alacrity? Certainly. But is that cause for 24 denial? I don't think so. 25 And for these reasons, I respectfully 118 ITEM NO. 27 1 oppose this motion. 2 CHAIR KASSEKERT: Thank you, 3 Commissioner Fedorko. 4 A motion has been made and seconded on 5 my motion to deny plenary qualification and 6 Tropicana's casino and CHAB licenses and for 7 plenary qualification of TCR. 8 Mr. Nance, this is a roll call vote. 9 MR. NANCE: Commissioner Sommeling? 10 COMMISSIONER SOMMELING: Yes. 11 MR. NANCE: Commissioner Epps? 12 COMMISSIONER EPPS: Yes. 13 MR. NANCE: Commissioner Frulio? 14 COMMISSIONER FRULIO: Yes. 15 MR. NANCE: Vice Chair Fedorko? 16 VICE CHAIR FEDORKO: No. 17 MR. NANCE: Chair Kassekert? 18 CHAIR KASSEKERT: Yes. 19 MR. NANCE: The record will reflect by a 20 vote of four to one, Vice Chair Fedorko voting 21 in the negative, the motion carries. 22 CHAIR KASSEKERT: Thank you. 23 Is there a motion with respect to the 24 audit committee? 25 VICE CHAIR FEDORKO: Madame Chair, I 119 ITEM NO. 27 1 move to find the named Respondents liable for 2 violating the audit committee complaint and 3 impose a civil penalty in the amount of 4 $720,000 for Count I and $30,000 for Count II, 5 for a total of $750,000. 6 CHAIR KASSEKERT: Is there a second? 7 COMMISSIONER SOMMELING: Second. 8 COMMISSIONER EPPS: Second. 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 We will now recess to come back with a 17 motion with respect to the trustee and 18 conservator issues. 19 Thank you. 20 (A recess was taken from 4:52 p.m. to 21 6:56 p.m.) 22 CHAIR KASSEKERT: Thank you. 23 We'll go back on the record with this 24 disposition. 25 The remaining relief requested in PRN 120 ITEM NO. 27 1 2910708 as to the composition and charter of 2 the proposed audit committee for Ramada New 3 Jersey has been rendered moot. 4 More importantly, the ICA trust has now 5 become operative and arrangements are being 6 made to ensure an orderly transition to the 7 trustee. Among the first order of business is 8 to obtain the resignation of Mr. Yung as the 9 sole member of the Tropicana's board of 10 directors. Until he does so or is removed by 11 the Trustee as the owner of the Tropicana's 12 equity securities, Mr. Yung shall be barred 13 from invoking or exercising any privileges or 14 right attendant thereto. 15 Further, by having invoked the 16 provisions of the Administrative Procedures Act 17 to prevent the lapse of Tropicana and CHAB 18 licenses and now having denied those renewal 19 applications, it is necessary to summarily 20 institute a conservatorship in order for the 21 casino to remain in continuous operation 22 pursuant to the casino operation certificate 23 and to ensure that all prerogatives attendant 24 to the former CHAB license remain in place. 25 Plainly, time has not allowed for the 121 ITEM NO. 27 1 appointment of a conservatorship at this 2 juncture. In the previous interim, the trustee 3 in cooperation with the Chair or my designee 4 who is delegated to have all authority 5 necessary to affect an orderly transaction and 6 shall be empowered to act in this matter. 7 For the reasons that have been stated on 8 the record, as well as and will be fully -- 9 more fully discussed in a written decision to 10 be issued by the Commission today, I move that: 11 One, pursuant to Section 95.14 of the Casino 12 Control Act, the Interim Casino Authorization 13 trust agreement governing the rights, titles, 14 and interest of Tropicana Casino and Resorts, 15 Inc., and the Tropicana Casino and Hotel 16 located in Atlantic City shall be made 17 operative immediately, and that the trustees 18 should be vested with and authorized to 19 exercise all powers, authority, and duties 20 necessary to carry out the responsibility of 21 the trustee under the terms of the Casino 22 Control Act and the trust agreement; two, due 23 to the denial of Tropicana Casino and Hotel 24 licensure for renewal of its casino license 25 that the Commission exercise its authority 122 ITEM NO. 27 1 under Article 9a of the Casino Control Act to 2 appoint and constitute a conservator to take 3 over and into his or her possession and control 4 all the property and business of the licensee 5 relating to the casino and the approved hotel, 6 which decision has been implemented as 7 expeditiously as possible in coordination with 8 the ICA trustee; and, three, adopt the terms of 9 the order as to trustee and conservatorship. 10 And I so move. 11 Is there a second? 12 COMMISSIONER FRULIO: Second. 13 COMMISSIONER SOMMELING: Second. 14 CHAIR KASSEKERT: The motion has been 15 made and seconded. All in favor? 16 (Ayes.) 17 CHAIR KASSEKERT: Opposed? 18 (No response.) 19 CHAIR KASSEKERT: Motion carries. 20 Before we entertain the public portion 21 of the meeting and ultimately a motion to 22 adjourn, I would like to read into the record 23 portions of a letter which has been delivered 24 to Tropicana to the employees down there at -- 25 to reassure them about the continued operation. 123 ITEM NO. 27 1 On Wednesday, December 12th, 2007, the 2 Casino Control Commission decided not to renew 3 the Tropicana casino license. I want to assure 4 every employee that Tropicana remains open for 5 business, and there's no plans to make any 6 changes in the staff. The Commission is 7 committed to seeing the Tropicana remain as a 8 thriving, vibrant property of which New Jersey 9 can be proud. 10 The Casino Control Commission's decision 11 does not directly affect most of you. Continue 12 to report to work, do your jobs, and continue 13 to report to your current supervisors. There's 14 a trustee who has taken control of the property 15 from Tropicana Entertainment and Columbia 16 Sussex, and the casino's hotel management team 17 will report to him. Soon the Commission will 18 also appoint a conservator to run the property. 19 Both the trustee and the conservator will make 20 sure that the Tropicana continues to operate 21 until a suitable buyer can be found. The 22 period between now and when the property is 23 sold will be confusing -- a confusing one in 24 many ways, but I want to make sure that the 25 confusion does not distract you from your job. 124 ITEM NO. 27 1 We will try to keep all of you informed at each 2 step of the way in order to keep any confusion 3 to a minimum. Each one of you will play a 4 vital role in the operation. Tropicana and I 5 count on you to do your you utmost to provide 6 all the Tropicana's customers with exceptional 7 experience. 8 And that's from myself as Chair, the 9 Commission. 10 That being the case, we can -- 11 MR. DiGIACOMO: Chair, I believe Mr. 12 O'Gara has an application. 13 CHAIR KASSEKERT: Surely. 14 MR. O'GARA: Yeah. Two things, with 15 your indulgence. First -- and the first is 16 administrative and procedural. It is that, 17 number one, I can assure you that Mr. Yung and 18 I spoke immediately after your decision. Mr. 19 Yung, other than communicating to Mr. 20 Giannantonio his thanks, will have no further 21 communication with anyone at the Tropicana. 22 And so you're aware of that. He was aware of 23 your decision, and he will abide by it. I 24 mean, that -- 25 Second, the -- I believe, and I may be 125 ITEM NO. 27 1 mistaken, I believe by operation of law the 2 trustee gained control of all the stock the 3 moment you voted, and I believe a 4 conservatorship would require a conservator 5 receive the stock from the trustee. I would 6 hope that we could have some proceedings at 7 some point to avoid that confusion, because 8 having two guys lawyered up over some stock 9 that I already gave to a trustee by operational 10 law, I'd like to avoid. 11 But we believe, and it's our 12 understanding, and my client will abide by the 13 fact, that Mr. Stein now sits in his seat as 14 the sole shareholder of Adamar of New Jersey, 15 not with respect to Tropicana Entertainment, or 16 the remaining assets. But there's no question 17 that we understand that and respect that. 18 Finally, I would apply to you, as I've 19 indicated to your counsel, to stay your order 20 and the effect of your order at least for a 21 period of time sufficient to allow me to serve 22 everybody and go to the Appellate Division. I 23 have an appeal as a matter of right from a 24 final agency action to the Appellate Division. 25 And I would ask you to stay that because the 126 ITEM NO. 27 1 Court has told us that I must make that request 2 of a stay for you before they'll consider 3 anything from me. 4 We have contacted the Appellate 5 Division. We told them we were awaiting an 6 order. When the order was not forthcoming, by 7 order of the Appellate Division, we 8 communicated your remarks to them. They took 9 as an opinion. And we will communicate the 10 order now. But we'd ask you to stay the effect 11 of your order at least for a reasonable period 12 of time so that people can file and see if 13 whether or not the Appellate Division wishes 14 to, you know, grant the further stay or deny a 15 stay of the effective of that order. Because 16 the order itself, I believe, beyond what we are 17 talking about here, which is a -- who controls 18 Adamar of New Jersey, has consequence under the 19 credit agreement in terms of other security 20 that secures the credit agreement. I believe 21 your vote is an event of default under the 22 credit agreement, and as such, absent a stay 23 for us to go get a stay from them, they are 24 free to begin to take somewhat precipitous 25 action. 127 ITEM NO. 27 1 There's also, I have been informed, 2 absent a stay, action that has to be taken by 3 Louisiana Gaming Board, which does not have the 4 same provisions as you do and would result in 5 the closure of that facility. 6 So that's why I want the stay, so I can 7 go to the Applicant tomorrow. We were in touch 8 with them. I think you voted at ten after -- 9 ten of 5:00, roughly. We told them there was a 10 vote. They asked us to get the order, and now 11 I have a law clerk there, but I don't know if 12 I've lost the judge. 13 So to that degree, I'd ask you to grant 14 that stay. And -- if you're so inclined, but 15 in any event, to act upon that request. 16 CHAIR KASSEKERT: Miss Flaherty? 17 MS. FLAHERTY: Yes, Chair. 18 In coordination with the Commission 19 staff, we have taken actions with regard to the 20 safety and protection of the facility. We 21 defer to your judgment, the Commission's 22 judgement, with regard to the stay. 23 Thank you. 24 CHAIR KASSEKERT: Thank you. 25 Let me ask if Commissioners need a 128 ITEM NO. 27 1 recess or -- 2 COMMISSIONER EPPS: Yeah. Briefly. 3 CHAIR KASSEKERT: Brief recess? 4 MR. O'GARA: Thank you. 5 (A recess was taken from 7:04 p.m. to 6 7:18 p.m.) 7 (Ms. Maher not present.) 8 CHAIR KASSEKERT: Thank you. 9 We'll go back on the record. Mr. 10 O'Gara, having reviewed the order that I just 11 signed with respect to the conservatorship and 12 trust -- trustee, I would point you to the 13 provision found on Page 3, the second paragraph 14 which deals with applications for relief from 15 the provisions hereto on behalf of the casino 16 licensee shall be made to the Commission as 17 delegated to the Chair or her designee. And in 18 this instance, you can make an application for 19 relief as early as tomorrow. So, therefore, I 20 would move that I will make a motion that we 21 deny your request for a stay. 22 Is there a second? 23 COMMISSIONER SOMMELING: Second. 24 COMMISSIONER EPPS: Second. 25 CHAIR KASSEKERT: The motion has been 129 ITEM NO. 27 1 made and seconded. All in favor? 2 (Ayes.) 3 CHAIR KASSEKERT: Opposed? 4 (No response.) 5 CHAIR KASSEKERT: Motion carries. 6 MR. O'GARA: Yes. Just one thing if I 7 just -- for the record -- 8 CHAIR KASSEKERT: Sure. 9 MR. O'GARA: Just so -- we will -- and 10 this is on its way to the Appellate Division, 11 so we are asking them to act tonight. So you 12 have notice and by Miss Fauntleroy. I don't 13 think they'll hear me until the morning. I 14 assume they're rationale people, and they'll 15 hear me in the morning. But I'm ever hopeful 16 that they'll hear me like at 1:00 in the 17 morning. 18 (Laughter.) 19 MR. O'GARA: But we are. And the papers 20 are being served. We'll serve the Attorney 21 General. I believe for the State we have 22 provisions. We can make service on you in 23 Trenton. Because they have these kind of 24 emergent things. As soon as I have the papers, 25 I'll get them to Miss Fauntleroy. But it's 130 ITEM NO. 27 1 simply an application to stay your order, 2 pending their review of our application for a 3 stay, pending our notice of an appeal which 4 will be filed -- it's just that procedurally is 5 what we're doing. 6 CHAIR KASSEKERT: Thank you. 7 MR. O'GARA: Okay? So I actually gave 8 notice to you, rather than -- but you'll give 9 notice to Ms. Fauntleroy. 10 CHAIR KASSEKERT: Mr. Nance? Public 11 portion. 12 MR. NANCE: In accordance with 13 Resolution No. 07-12-12-26, the next closed 14 session of the Commission shall be held on 15 Wednesday, January the 2nd, 2007, at 9:15 a.m. 16 in the Commission offices. 17 It is now time for the public 18 participation portion of the meeting. 19 CHAIR KASSEKERT: Is there anything 20 anyone from the public that wishes to be heard? 21 (No response.) 22 CHAIR KASSEKERT: Seeing no one, I'll 23 declare this portion of the meeting closed and 24 entertain a motion to adjourn. 25 COMMISSIONER SOMMELING: Motion to 131 1 adjourn. 2 VICE CHAIR FEDORKO: Second. 3 COMMISSIONER FRULIO: Second. 4 CHAIR KASSEKERT: The motion made and 5 seconded. All in favor? 6 (Ayes.) 7 CHAIR KASSEKERT: Opposed? 8 (No response.) 9 CHAIR KASSEKERT: The motion carries. 10 Thank you. 11 (Public Meeting 07-12-12 was adjourned 12 at 7:21 p.m.) 13 14 15 16 17 18 19 20 21 22 23 24 25 132 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: December 17, 2007 23 My Commission Expires on July 10, 2009 24 ID No 2062871 25