1 1 STATE OF NEW JERSEY 2 CASINO CONTROL COMMISSION 3 - - - - - - - - - - - - - - - - - - - 4 5 PUBLIC MEETING NO. 08-02-20 6 7 - - - - - - - - - - - - - - - - - - - 8 9 Wednesday, February 20, 2008 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 10:53 a.m. to 12:42 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 WILLIAM T. SOMMELING, VICE CHAIR MICHAEL A. FEDORKO, COMMISSIONER 4 MICHAEL C. EPPS, COMMISSIONER RALPH G. FRULIO, COMMISSIONER 5 6 PRESENT FOR THE CASINO CONTROL COMMISSION: DARYL W. NANCE, ADMINISTRATIVE ANALYST 7 DANIEL J. HENEGHAN, PUBLIC INFORMATION OFFICER 8 OFFICE OF THE GENERAL COUNSEL: DIANNA W. FAUNTLEROY, GENERAL COUNSEL/EXECUTIVE 9 SECRETARY MARY WOZNIAK, ASSISTANT GENERAL COUNSEL 10 STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL TERESA M. NAGENGAST, SENIOR COUNSEL 11 SETH H. BRILIANT, SENIOR COUNSEL LON E. MAMOLEN, SENIOR COUNSEL 12 BERNADETTE T. FRIGEN, PROGRAM SUPERVISOR CLAIRE FRANK, PROGRAM SUPERVISOR/SENIOR EEO 13 COORDINATOR 14 DIVISION OF GAMING ENFORCEMENT: DEPUTY ATTORNEYS GENERAL 15 JACK ADAMS, DEPUTY ATTORNEY GENERAL BRIAN BISCIEGLIA, DEPUTY ATTORNEY GENERAL 16 TIMOTHY C. FICCHI, DEPUTY ATTORNEY GENERAL MARYJO FLAHERTY, DEPUTY ATTORNEY GENERAL 17 JAMES FOGARTY, DEPUTY ATTORNEY GENERAL FREDERICK J. McDONOUGH, DEPUTY ATTORNEY GENERAL 18 19 20 21 22 23 24 25 3 1 A P P E A R A N C E S : 2 ITEM NO. 3 DARYL W. NANCE, ADMINISTRATIVE ANALYST MARY JO FLAHERTY, DEPUTY ATTORNEY GENERAL 3 TIMOTHY J. LOWRY, JR., ESQ. FOR: HARRAH'S OPERATING COMPANY, ET AL. 4 ITEM NO. 4 DARYL W. NANCE, ADMINISTRATIVE ANALYST 5 MARY JO FLAHERTY, DEPUTY ATTORNEY GENERAL TIMOTHY J. LOWRY, JR., ESQ. 6 FOR: HARRAH'S OPERATING COMPANY, ET AL. 7 ITEM NO. 5 DARYL W. NANCE, ADMINISTRATIVE ANALYST MARY JO FLAHERTY, DEPUTY ATTORNEY GENERAL 8 TIMOTHY J. LOWRY, JR., ESQ. FOR: HARRAH'S OPERATING COMPANY, ET AL. 9 ITEM NO. 9 STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL 10 TIMOTHY FICCHI, DEPUTY ATTORNEY GENERAL TAMA HUGHES, ESQ. 11 FOR: ADAMAR OF NEW JERSEY, INC. 12 ITEM NO. 10 STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL TIMOTHY FICCHI, DEPUTY ATTORNEY GENERAL 13 LORETTA I. PICKUS, ESQ. FOR: TRUMP TAJ MAHAL ASSOCIATES 14 ITEM NO. 11 STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL 15 TIMOTHY FICCHI, DEPUTY ATTORNEY GENERAL JOSEPH CORBO, ESQ. 16 FOR: MARINA DISTRICT DEVELOPMENT COMPANY 17 ITEM NO. 12 TERESA M. NAGENGAST, SENIOR COUNSEL TIMOTHY FICCHI, DEPUTY ATTORNEY GENERAL 18 FOX ROTHSCHILD, LLP MARIEL GILETTO, ESQ. 19 FOR: MARINA DISTRICT DEVELOPMENT COMPANY 20 ITEM NO. 13 TERESA M. NAGENGAST, SENIOR COUNSEL FREDERICK J. McDONOUGH, DEPUTY ATTORNEY 21 GENERAL COOPER LEVENSON 22 LYNNE LEVIN KAUFMAN FOR: NEW YORK LIFE INVESTMENT MANAGEMENT 23 24 25 4 1 CONTINUED A P P E A R A N C E S : 2 ITEM NO. 14 STEVEN M. INGIS, ASSISTANT GENERAL COUNSEL 3 FREDERICK J. McDONOUGH, DEPUTY ATTORNEY GENERAL 4 FLASTER GREENBERG, PC ERIC GARRABRANDT, ESQ. 5 FOR: HIGHGATE STEEL, INC. 6 ITEM NO. 15 MARY WOZNIAK, ASSISTANT GENERAL COUNSEL JACK ADAMS, DEPUTY ATTORNEY GENERAL 7 STERNS & WEINROTH, PC PAUL M. O'GARA, ESQ. 8 FOR: HARRAH'S OPERATING COMPANY, ET AL. 9 ITEM NO. 16 MARY WOZNIAK, ASSISTANT GENERAL COUNSEL JACK ADAMS, DEPUTY ATTORNEY GENERAL 10 STERNS & WEINROTH, PC PAUL M. O'GARA, ESQ. 11 FOR: HARRAH'S OPERATING COMPANY, ET AL. 12 ITEM NO. 18 SETH H. BRILIANT, SENIOR COUNSEL TIMOTHY FICCHI, DEPUTY ATTORNEY GENERAL 13 LEO PREVITI, ESQ. FOR: IGT AND RESORTS INTERNATIONAL HOTEL 14 ITEM NO. 23 DIANNA W. FAUNTLEROY, GENERAL COUNSEL/ 15 EXECUTIVE SECRETARY MARY JO FLAHERTY, DEPUTY ATTORNEY GENERAL 16 PASHMAN STEIN SEAN MACK, ESQ. 17 FOR: ADAMAR OF NEW JERSEY, CONSERVATOR/TRUSTEE 18 19 20 21 22 23 24 25 5 1 AGENDA PUBLIC MEETING NO. 08-02-20 2 FEBRUARY 20, 2008, 10:53 a.m. ITEM PAGE VOTE 3 1 Ratification of the minutes of 11 12 January 30, 2008 4 2 Applications for employee and casino Service industry licenses: 5 14 applications for initial and/or 12 12 renewal of casino key and casino employee 6 licenses Application for a casino service industry 13 13 7 License pursuant to NJSA 5:12-92(c) for TCS American, Inc. 8 12 applications for initial and/or 13 14 renewal of casino key and casino employee 9 licenses Applications for initial and 10 renewal of casino key employee licenses and for qualification: 11 Jay B. Rosenthal, Vice President of 14 15 Hotel Operations for Marina District 12 Development Company, LLC; Joseph S. Polisano, Vice President of 14 15 13 Project Development for Trump Entertainment Resorts, Inc., and Trump Entertainment 14 Resort Holding, LP 3 Petition of Harrah's Operating Company, 16 17 15 Inc., Harrah's Atlantic City Operating Co., LLC, Showboat Atlantic City Operating Co., 16 LLC, Bally's Park Place, Inc., (d/b/a Bally's Atlantic City) and Boardwalk Regency Corp., 17 (d/b/a Caesars Atlantic City) for the issuance of a temporary casino key employee 18 license to D'Ann Glenn pursuant to NJSA 5:12-89(e) and to permit her pursuant to 19 NJAC 19:43-2.6 to assume the duties and exercise the powers of Vice President of 20 Marketing for the Atlantic City Operations without first having been found qualified 21 (PRN 0360804) 4 Petition of Harrah's Atlantic City 17 18 22 Operating Co., LLC, for the issuance of a temporary casino key employee license to 23 Michael K. Pendergast pursuant to NJSA 5:12-89(e) and to permit him pursuant to NJAC 19:43-2.6 24 to assume the duties and exercise the powers of Vice President of Hotel Operations without 25 first having been found qualified (PRN 0360805) 6 1 CONTINUED AGENDA PUBLIC MEETING NO. 08-02-20 2 FEBRUARY 20, 2008, 10:53 a.m. ITEM PAGE VOTE 3 5 Petition of Harrah's Atlantic City 19 20 4 Operating Co., LLC, for the issuance of a temporary casino key employee license to 5 Theodore Herzchel, II, pursuant to NJSA 5:12-89(e) and to permit him pursuant to 6 NJAC 19:43-2.6 to assume the duties and exercise the powers of Assistant General 7 Manager, Gaming without first having been found qualified (PRN 0360803) 8 6 Stipulations of settlement and consent Agreements: 9 a) Arleen F. Daniels (08-0-100-EA) 20 22 b) Charity A. Polczak (07-0626-EA) 20 22 10 c) Anita G. Gilmore (a/k/a Anita 20 22 Stewart, Anita Kuhn) (07-0469-EA) 11 d) Kenneth R. Smith (07-0634-EA) 20 22 e) Terrence L. Williams(07-0500-RC) 20 22 12 f) Jan Powell (07-0592-EA) 20 22 7 Application for suspension in State v. 22 23 13 Joseph M. Smith (08-0096-RC) 8 Reconsideration on Commission order 24 26 14 granting Robin Bing renewal of her casino employee license (07-0669-VC) 15 9 Stipulation of settlement in State v. 26 27 Adamar of New Jersey, Inc., (d/b/a 16 Tropicana Casino and Resorts) (07-0603-VC) 10 Stipulation of settlement in State v. 27 30 17 Trump Taj Mahal Associates (d/b/a Trump Taj Mahal Casino Resorts) (07-0688-VC) 18 11 Stipulation of settlement in State v. 30 33 Marina District Development Company 19 (d/b/a Borgata Hotel, Casino & Spa) (07-0233-VC) 12 Stipulation of settlement in State v. 34 36 20 Marina District Development Company (d/b/a Borgata Hotel, Casino & Spa) 21 Thomas Gable, and Matthew Weyler (07-0038-VC) 13 Petition of New York Life Investment 36 41 22 Management, LLC, for exemption from casino Service industry licensure (PRN 3130703) 23 14 Petition of Highgate Steel, Inc., for 41 65 release for monies held in escrow and other 24 relief (PRN 1630701) 25 7 1 CONTINUED AGENDA PUBLIC MEETING NO. 08-02-20 2 FEBRUARY 20, 2008, 10:53 a.m. ITEM PAGE VOTE 3 15 Petition of Harrah's Atlantic City 65 67 4 Operating Company, LLC, and Showboat Atlantic City Operating Company, LLC, for 5 approval to issue notes pursuant to NJAC 19:43-2.8 (PRN 0290801) 6 16 Joint petition of Harrah's Atlantic City 67 85 Operating Company, LLC, Showboat Atlantic 7 City Operating Company, LLC, Bally's Park Place, Inc., and Boardwalk Regency Corporation 8 for approval of a form of charter for independent audit committees in compliance 9 with NJAC 19:45-1.11(c)2 (PRN 0390801) 17 Petition of Marina District Development 86 88 10 Company, LLC, (d/b/a Borgata Hotel, Casino & Spa) requesting permission for Michael 11 Bond to perform the duties and exercise the Powers of Vice President of internal audit 12 of Boyd Gaming Corporation pending plenary qualification (PRN 0280801) 13 18 Petition of IGT; Resorts International 89 91 Hotel, Inc., (d/b/a Resorts Atlantic City) 14 and RIH Acquisitions NJ, LLC, (d/b/a Atlantic City Hilton) for permission to terminate 15 their "Soul Train" slot machine games and to transfer the progressive jackpots (PRN 0370801) 16 19 Proposed publication of amendments to 91 92 NJAC 19:43-14.2 (Advertising) 17 20 Proposed adoption of amendments for Dragon 92 93 Bonus Wager in baccarat and minibaccarat 18 21 Proposed publication and temporary 93 95 adoption of amendments to NJAC 19:47-3.12, 19 4.12, 7.8, and 7.11 (hand disclosure sequence in minibaccarat; disclosed ten-value card dealt 20 in error for baccarat and minibaccarat 22 Petition of Adamar of New Jersey, Inc., adj. 21 et al., for suspension of the requirement to pay a civil penalty and other matters 22 (PRN 0440803) 23 Consideration of the application of the 95 101 23 Conservator and Trustee for the former casino Licensee Adamar of New Jersey, Inc., for 24 approval of fees for the Conservator/Trustee and his Counsel 25 8 1 CONTINUED AGENDA PUBLIC MEETING NO. 08-02-20 2 FEBRUARY 20, 2008, 10:53 a.m. ITEM PAGE VOTE 3 24 Petition of Adamar of New Jersey, Inc., adj. 4 (d/b/a Tropicana Casino and Resorts) to waive imposition of fine regarding hotel room fees 5 (PRN 0440802) 6 PUBLIC PARTICIPATION REP. HAROLD JAMES 104 7 8 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 14 license X applications 5 EL-2 Grant 12 licenses X 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Exhibits retained by Commission.) 10 1 (Public Meeting 08-02-20 was commenced 2 at 10:53 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 subscribers. 13 Members of the press will be permitted 14 to take photographs, and we would ask that this 15 be done in a manner which is not disruptive or 16 distracting to the Commission. 17 The use of cellular telephones in the 18 public meeting room while the Commission is in 19 session is prohibited. 20 Any members of the public who wish to 21 address the Commission will be given the 22 opportunity to do so before the Commission 23 adjourns for the day. 24 Please stand for the Pledge of 25 Allegiance. 11 ITEM NO. 1 1 (The flag salute was recited.) 2 CHAIR KASSEKERT: Good morning. 3 MR. NANCE: Good morning. 4 The matters discussed in closed session 5 were: Employee and enterprise license matters. 6 The Commissioners approved the January 7 30th, 2008, closed session minutes. 8 Litigation update regarding Warren 9 Lackland and Lewis M. Springer, Jr., versus the 10 state of New Jersey and the Casino Control 11 Commission; 12 Gloria Ford versus the State of New 13 Jersey, Casino Control Commission et al.; 14 Tyron J. Floyd, versus the Casino 15 Control Commission and Sands Hotel Casino; 16 Husain versus Casino Control Commission, 17 et al.; 18 In the matter of the petition of SD for 19 removal from the voluntary self-exclusion list; 20 The petition of Tropicana, et al., for 21 casino license. 22 Item No. 1, ratification of the minutes 23 for January 30, 2008, public meeting. 24 VICE CHAIR SOMMELING: Move to approve. 25 VICE CHAIR FEDORKO: Second. 12 ITEM NO. 2 1 CHAIR KASSEKERT: The motion has been 2 made and seconded. All in favor? 3 (Ayes.) 4 CHAIR KASSEKERT: Opposed? 5 (No response.) 6 CHAIR KASSEKERT: Mr. Epps, I think you 7 have to abstain. 8 COMMISSIONER EPPS: Oh, I'm sorry. I 9 have to abstain. 10 CHAIR KASSEKERT: Motion carries. 11 That's okay. 12 MR. NANCE: Item No. 2, application for 13 employee and casino service industry licenses. 14 This agenda item will be entered as 15 Exhibit List 1 and 2. 16 Exhibit List 1 consists of 14 17 applications for initial and/or renewal of 18 casino key and casino employee licenses. 19 The Division has objected to licensure. 20 COMMISSIONER FRULIO: Motion to remand 21 for hearings. 22 COMMISSIONER FEDORKO: Second. 23 CHAIR KASSEKERT: The motion has been 24 made and seconded. All in favor? 25 (Ayes.) 13 ITEM NO. 2 1 CHAIR KASSEKERT: Opposed? 2 (No response.) 3 CHAIR KASSEKERT: Motion carries. 4 MR. NANCE: For consideration is the 5 application for a casino service industry 6 license pursuant to NJSA 5:12-92(c) for TCS 7 American, Inc. 8 The Division has recommended licensure 9 with the imposition of conditions. 10 COMMISSIONER FRULIO: Motion to remand 11 for hearings. 12 VICE CHAIR FEDORKO: 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: Exhibit List 2 consists of 20 12 applications and initial and/or renewal of 21 casino key and casino employee licenses. 22 Staff and the Division has recommended 23 that these licenses be granted. 24 COMMISSIONER FRULIO: Motion to grant 25 applications. 14 ITEM NO. 2 1 COMMISSIONER FEDORKO: Second. 2 CHAIR KASSEKERT: The motion has been 3 made and seconded. All in favor? 4 (Ayes.) 5 CHAIR KASSEKERT: Opposed? 6 (No response.) 7 CHAIR KASSEKERT: Motion carries. 8 MR. NANCE: For consideration are the 9 following applications for initial and/or 10 renewal of casino key employee licenses and for 11 qualification: For Jay B. Rosenthal, Vice 12 President of Hotel Operations for Marina 13 District Development Company, LLC; and Joseph 14 S. Polisano, Vice President of Project 15 Development for Trump Entertainment Resorts, 16 Inc., and Trump Entertainment Resorts Holding, 17 Limited Partners. 18 Staff and the -- 19 CHAIR KASSEKERT: Good morning, Mr. 20 Corbo. 21 MR. CORBO: Good morning, Chair. Good 22 morning, Commissioners. Joseph Corbo, Vice 23 President and General Counsel for Borgata. 24 With me is Jay Rosenthal, our Vice 25 President of Hospitality, who is on the agenda 15 ITEM NO. 2 1 this morning for qualification and key 2 licensure. 3 CHAIR KASSEKERT: Thank you. 4 Any questions for Mr. Corbo? 5 Thank you. 6 MR. CORBO: Thanks. 7 COMMISSIONER FRULIO: Motion to grant 8 initial and renewal of casino key licenses and 9 for qualification. 10 COMMISSIONER FEDORKO: Second. 11 CHAIR KASSEKERT: Motion is made and 12 seconded. This is a roll call vote. 13 MR. NANCE: Commissioner Frulio? 14 COMMISSIONER FRULIO: Yes. 15 MR. NANCE: Commissioner Fedorko? 16 COMMISSIONER FEDORKO: Yes. 17 MR. NANCE: Commissioner Epps? 18 COMMISSIONER EPPS: Yes. 19 MR. NANCE: Vice Chair Sommeling? 20 VICE CHAIR SOMMELING: Yes. 21 MR. NANCE: Chair Kassekert? 22 CHAIR KASSEKERT: Yes. 23 MR. NANCE: The record will reflect that 24 the motion is unanimous. 25 MR. CORBO: Thank you. 16 ITEM NO. 3 1 MR. ROSENTHAL: Thank you. 2 MR. NANCE: Item No. 3, Petition No. 3 0360804 of Harrah's Operating Company, Inc., 4 Harrah's Atlantic City Operating Company, LLC, 5 Showboat Atlantic City Operating Company, LLC, 6 Bally's Park Place, Inc., and Boardwalk Regency 7 Corp., is requesting the issuance of a 8 temporary casino key employee license to D'Ann 9 Glenn pursuant to NJSA 5:12-89(e) and to permit 10 her pursuant to NJAC 19:43-2.6 to assume the 11 duties and exercise the duties of Vice 12 President of Marketing for the Atlantic City 13 Operations without first have been found 14 qualified. 15 CHAIR KASSEKERT: Thank you. 16 Good morning, Mr. Lowry. 17 MR. LOWRY: Good morning, Chair, 18 Commissioners. 19 I rest on the papers. Nothing further 20 to add. 21 CHAIR KASSEKERT: Thank you. 22 Good morning, Ms. Flaherty. 23 MS. FLAHERTY: Good morning, Chair, 24 Commissioners. 25 We've reported affirmatively. We have 17 ITEM NO. 4 1 no objection to the granting of the relief 2 requested. 3 CHAIR KASSEKERT: Thank you. 4 Any questions? 5 COMMISSIONER SOMMELING: No questions, 6 Madame Chair. 7 COMMISSIONER FRULIO: Motion to grant 8 temporary key license and qualification. 9 COMMISSIONER FEDORKO: Second. 10 CHAIR KASSEKERT: Motion is made and 11 seconded. This is a role call vote. 12 MR. NANCE: Commissioner Frulio? 13 COMMISSIONER FRULIO: Yes. 14 MR. NANCE: Commissioner Fedorko? 15 COMMISSIONER FEDORKO: Yes. 16 MR. NANCE: Commissioner Epps? 17 COMMISSIONER EPPS: Yes. 18 MR. NANCE: Vice Chair Sommeling? 19 VICE CHAIR SOMMELING: Yes. 20 MR. NANCE: Chair Kassekert? 21 CHAIR KASSEKERT: Yes. 22 MR. NANCE: The record will reflect that 23 the motion is unanimous. 24 Item No. 4, Petition No. 0360805 of 25 Harrah's Atlantic City Operating Company, LLC, 18 ITEM NO. 4 1 is requesting the issuance of a temporary 2 casino key employee license to Michael K. 3 Pendergast pursuant to NJSA 5:12-89(e) and to 4 permit him pursuant to NJAC 19:43-2.6 to assume 5 the duties and excise the powers of Vice 6 President of Hotel Operations without first 7 having been found qualified. 8 CHAIR KASSEKERT: Mr. Lowry? 9 MR. LOWRY: Nothing further to add. 10 Thank you. 11 CHAIR KASSEKERT: Thank you. 12 MS. FLAHERTY: No objection, Chair. 13 CHAIR KASSEKERT: Thank you. 14 Any questions? 15 COMMISSIONER FRULIO: Motion to grant 16 temporary key license and qualification. 17 COMMISSIONER FEDORKO: Second. 18 CHAIR KASSEKERT: Motion is made and 19 seconded. This is a roll call vote. 20 MR. NANCE: Commissioner Frulio? 21 COMMISSIONER FRULIO: Yes. 22 MR. NANCE: Commissioner Fedorko? 23 COMMISSIONER FEDORKO: Yes. 24 MR. NANCE: Commissioner Epps? 25 COMMISSIONER EPPS: Yes. 19 ITEM NO. 5 1 MR. NANCE: Vice Chair Sommeling? 2 VICE CHAIR SOMMELING: Yes. 3 MR. NANCE: Chair Kassekert? 4 CHAIR KASSEKERT: Yes. 5 MR. NANCE: The record will reflect that 6 the motion is unanimous. 7 Item No. 5, Petition No. 0360803 of 8 Harrah's Atlantic City Operating Company, LLC, 9 is requesting the issuance of a temporary 10 casino key employee license to Theodore 11 Herzchel, II, pursuant to NJSA 5:12-89(e) and 12 to permit him pursuant to NJAC 19:43-2.6 to 13 assume the duties and exercise the powers of 14 Assistant General Manager, Gaming without first 15 having been found qualified. 16 CHAIR KASSEKERT: Again, Mr. Lowry? 17 MR. LOWRY: Nothing further to add, 18 Chair. Thank you. 19 CHAIR KASSEKERT: Thank you. 20 Miss Flaherty? 21 MS. FLAHERTY: Nothing further, Chair. 22 CHAIR KASSEKERT: Thank you. 23 Any questions? 24 COMMISSIONER SOMMELING: No questions, 25 Madame Chair. 20 ITEM NO. 6 1 COMMISSIONER FRULIO: Motion to grant 2 temporary key license and qualification. 3 COMMISSIONER FEDORKO: Second. 4 CHAIR KASSEKERT: Motion is made and 5 seconded. This is a roll call vote. 6 MR. NANCE: Commissioner Frulio? 7 COMMISSIONER FRULIO: Yes. 8 MR. NANCE: Commissioner Fedorko? 9 COMMISSIONER FEDORKO: Yes. 10 MR. NANCE: Commissioner Epps? 11 COMMISSIONER EPPS: Yes. 12 MR. NANCE: Vice Chair Sommeling? 13 VICE CHAIR SOMMELING: Yes. 14 MR. NANCE: Chair Kassekert? 15 CHAIR KASSEKERT: Yes. 16 MR. NANCE: The record will reflect that 17 the motion is unanimous. 18 MR. LOWRY: Thank you. Thank you, 19 Chair. 20 CHAIR KASSEKERT: Thank you. 21 MR. NANCE: Item No. 6, stipulations of 22 settlement and consent agreement. 23 When I call your name, please come 24 forward, standing behind the middle table, 25 spreading across the room so that you may be 21 ITEM NO. 6 1 seen: Arleen Daniels, Charity Polczak, Anita 2 Gilmore, Kenneth Smith, Terrence Williams, and 3 Jan Powell. 4 CHAIR KASSEKERT: Mr. Ingis? 5 MR. INGIS: Good morning, Madame Chair, 6 Commissioners. 7 At this time the staff has nothing to 8 add. 9 CHAIR KASSEKERT: Thank you. 10 Sir, you can come forward. Thank you. 11 I'm going to ask that you each state 12 your name for the record, starting with you, 13 sir. 14 MR. POWELL: Jan Keith Powell. 15 CHAIR KASSEKERT: Sir? 16 MR. SMITH: Kenneth Smith. 17 MS. POLCZAK: Charity Polczak. 18 CHAIR KASSEKERT: Okay. Now, in a 19 moment we are going to vote on the stipulations 20 which you have agreed to with the Division of 21 Gaming Enforcement. 22 I'm going to ask at this point if any of 23 you wish to be heard on your matter. You don't 24 have to say anything if you don't want to. 25 Does anyone wish to be heard? 22 ITEM NO. 7 1 MS. POLCZAK: No. 2 MR. POWELL: No. 3 CHAIR KASSEKERT: Okay. 4 Mr. Biscieglia? 5 MR. BISCIEGLIA: Good morning, Chair, 6 Commissioners. 7 The Division has nothing to add and ask 8 that the stipulations be adopted as submitted. 9 CHAIR KASSEKERT: Thank you. 10 Any questions? 11 COMMISSIONER FRULIO: Motion to grant 12 stipulations. 13 COMMISSIONER EPPS: 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 Thank you very much for coming. Good 21 luck. 22 MS. POLCZAK: Thank you. 23 MR. NANCE: Item No. 7, application for 24 suspension in State versus Joseph M. Smith. 25 Miss Frigen? 23 ITEM NO. 7 1 MS. FRIGEN: Good morning, Madame Chair 2 and Commissioners. 3 Before we hear from the Division, let me 4 ask whether Joseph Smith is present or 5 represented today? 6 (No response.) 7 MS. FRIGEN: He apparently is not here. 8 CHAIR KASSEKERT: Okay. 9 Mr. Biscieglia, proceed. 10 MR. BISCIEGLIA: Thank you. 11 The Division has -- or excuse me. The 12 Commission has the Division's application for 13 suspension that sets out the seriousness of 14 this matter. The Division would only add at 15 this point the matter is currently pending a 16 Grand Jury with no day set. 17 Thank you. 18 CHAIR KASSEKERT: Thank you. 19 Any questions? 20 VICE CHAIR SOMMELING: Madame Chair, 21 move to grant the Division's application to 22 suspend Mr. Smith's casino employee license. 23 COMMISSIONER FEDORKO: Second. 24 CHAIR KASSEKERT: The motion has been 25 made and seconded. All in favor? 24 ITEM NO. 8 1 (Ayes.) 2 CHAIR KASSEKERT: Opposed? 3 (No response.) 4 CHAIR KASSEKERT: Motion carries. 5 MR. NANCE: Item No. 8, reconsideration 6 on Commission order granting Robin Bing renewal 7 of her casino employee license. 8 Mr. Ingis? 9 MR. INGIS: Good morning, again, Madame 10 Chair, Commissioners. 11 Miss Bing is present in the meeting room 12 should there be any questions for her. 13 Mr. Biscieglia is here on behalf of the 14 Division 15 This is a stipulation of settlement. 16 CHAIR KASSEKERT: Thank you. 17 Mr. Biscieglia? 18 MR. BISCIEGLIA: Thank you. 19 The Division would just ask that the 20 stipulation be adopted as submitted. However, 21 there is one matter. This is being resolved 22 contemporaneously with the Petitioner's 23 deadline for a final license renewal 24 application. 25 The Division will leave it to the 25 ITEM NO. 8 1 discretion of the Commission as to whether they 2 want to treat the license application as a 3 renewal for license 71421-21 or whether it 4 should be treated as a new application. 5 CHAIR KASSEKERT: Thank you. 6 MR. BISCIEGLIA: Thank you. 7 CHAIR KASSEKERT: Any questions? 8 COMMISSIONER EPPS: Just an inquiry. 9 Mr. Ingis, she's prepared to submit a renewal 10 application today? 11 MR. INGIS: Yes. Assuming that the 12 Commission rules in our favor, she is prepared 13 to file that application today. 14 CHAIR KASSEKERT: Thank you. 15 Is there a motion? 16 COMMISSIONER EPPS: Madame Chair, I move 17 that we approve the stipulation of settlement 18 and reinstate Miss Bing's casino employee 19 license; B, vacate the order dated February 20 21st, 2007, denying her casino employee license 21 renewal application; and, C, permit Miss Bing 22 to file her application for renewal of a casino 23 employee license on February 20th, 2008, 24 subject to compliance with certain reporting 25 obligations and two wage executions. 26 ITEM NO. 9 1 COMMISSIONER SOMMELING: Second. 2 CHAIR KASSEKERT: The motion has been 3 made and seconded. All in favor? 4 (Ayes.) 5 CHAIR KASSEKERT: Opposed? 6 (No response.) 7 CHAIR KASSEKERT: Motion carries. 8 MR. NANCE: Item No. 9, stipulation of 9 settlement in State versus Adamar of New 10 Jersey, Inc. 11 Mr. Ingis? 12 MR. INGIS: Tama Hughes is here on 13 behalf of the Respondent, and Tim Ficchi is 14 here on behalf of the Division of Gaming 15 Enforcement. 16 This is a stipulation of settlement 17 which, if approved, will result in a civil 18 penalty being imposed in the amount of a 19 $10,000 for an underaged gaming violation. 20 CHAIR KASSEKERT: Thank you. 21 Miss Hughes? 22 MS. HUGHES: Good morning, ladies and 23 gentlemen. Tama Hughes on behalf of Tropicana. 24 Mr. Ficchi? 25 CHAIR KASSEKERT: Mr. Ficchi? 27 ITEM NO. 10 1 MR. FICCHI: Good morning, Chair, 2 Commissioners. 3 The Division has requested that the 4 stipulation be adopted as drafted. 5 Thank you. 6 CHAIR KASSEKERT: Thank you. 7 Any questions? 8 COMMISSIONER SOMMELING: No questions, 9 Madame Chair. 10 VICE CHAIR FEDORKO: Motion to approve 11 stipulation of settlement and impose a civil 12 penalty of $10,000 against Adamar of New 13 Jersey, Inc., for violation of Commission 14 regulations regarding underaged gambling. 15 COMMISSIONER FRULIO: Second. 16 CHAIR KASSEKERT: The motion has been 17 made and seconded. All in favor? 18 (Ayes.) 19 CHAIR KASSEKERT: Opposed? 20 (No response.) 21 CHAIR KASSEKERT: Motion carries. 22 MS. HUGHES: Thank you. 23 CHAIR KASSEKERT: Thank you. 24 MR. NANCE: Item No. 10, stipulation of 25 settlement in State versus Trump Taj Mahal 28 ITEM NO. 10 1 Associates. 2 Mr. Ingis? 3 MR. INGIS: Good morning again. 4 Loretta Pickus is here on behalf of the 5 Respondent, and Tim Ficchi is here again on 6 behalf of the Division. 7 This is another underaged gambling 8 matter, a stipulation of settlement in the 9 amount of $40,000 being imposed. 10 CHAIR KASSEKERT: Thank you. 11 MS. PICKUS: Good morning, Chair, 12 Commissioners. 13 CHAIR KASSEKERT: Good morning. 14 Mr. Ficchi? 15 MR. FICCHI: Madame Chair, again, 16 Commissioners, again, the Division -- we 17 respectfully request that the Division requests 18 that you -- respectfully request that the 19 Commission approve the stipulation of 20 settlement. 21 CHAIR KASSEKERT: Thank you. 22 Anything to add, Miss Pickus? 23 MS. PICKUS: Yes, if I may. The fine is 24 $40,000 because it's four individuals, two 25 20-year olds, a 19-year old, and an 18-year old 29 ITEM NO. 10 1 who were found at slot machines in August of 2 last year. Since that time we've initiated two 3 very strong programs that I wanted to just 4 mention just mention quickly. 5 CHAIR KASSEKERT: Sure. 6 MS. PICKUS: One is an internet on-line 7 training program. All employees performing 8 service on the casino floor will be required to 9 take it and pass a test for the 40-minute 10 modules. The other is a reward program, which 11 we're finding at this time has really created 12 some excitement among our employees. They have 13 so many duties, but keeping in the forefront 14 this issue, a hundred dollar reward, we're 15 actually paying out about $1,000 -- between 500 16 and $1,000 a week. So we're seeing a lot of 17 success with these programs, wanted to bring it 18 to your attention. 19 And thank you, and ask that you please 20 adopt the stipulation. 21 CHAIR KASSEKERT: Thank you. 22 Any questions? 23 COMMISSIONER SOMMELING: Madame Chair, 24 move to approve the stipulation of settlement 25 and impose a civil penalty of $40,000 against 30 ITEM NO. 11 1 Trump Taj Mahal Associates for violation of 2 Commission regulations regarding underage 3 gambling. 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. 11, stipulation of 13 settlement in State versus Marina District 14 Development Company. 15 Mr. Ingis? 16 MR. INGIS: Good morning Madame Chair, 17 Commissioners, again. 18 This is another underaged gambling 19 matter, stipulation of settlement with a civil 20 penalty in the amount of $105,000 to be 21 imposed. 22 Joseph Corbo is here on behalf of the 23 Respondent, and Tim Ficchi is here for the 24 Division. 25 MR. CORBO: Good morning, again, Chair, 31 ITEM NO. 11 1 Commissioners. 2 We obviously concur with the stipulation 3 of settlement, but we think that that's very 4 fair and comprehensive in terms of prescribing. 5 But I just wanted to add a couple of other 6 things with regard to our efforts with regard 7 to underaged matters over the years. 8 I think it should be noted that this is 9 our first, and the next item is our second -- 10 (Laughter.) 11 MR. CORBO: -- in the five years -- in 12 the five years that we've been operating. And 13 I think that you all know, and I think that 14 we've demonstrated how seriously we take these 15 matters. And we have policies and procedures, 16 training enforcement that's established a 17 culture within Borgata, not just amongst the 18 employees -- or as we call them, associates -- 19 who are responsible for enforcing this, namely 20 being security or food or beverage in the event 21 of underaged drinking, or table games or gaming 22 personnel, but really anybody who is in and 23 about the casino floor. 24 We've also established a reward program 25 where we give a monetary award to anybody who 32 ITEM NO. 11 1 identifies somebody who is underage on the 2 floor or at the bar or things of that nature. 3 And what we actually do is, in those instances 4 where we do identify that there was an underage 5 person on the floor or somewhere where they 6 shouldn't be, we have a surveillance review of 7 each and every one of those instances. And we 8 take a look and we see if there were employees 9 who interacted with those individuals or merely 10 just passed by. And if we think that they 11 should have identified those people and caught 12 them before they were actually caught, we will 13 discipline those individuals. On the other 14 hand, again, individuals who do identify 15 underage people, we give a pat on the back and 16 a few bucks in their pocket. 17 So we hope that you know that we take 18 these things seriously. This matter and the 19 matter that will follow were aberrations. 20 CHAIR KASSEKERT: These will be the only 21 two we will see from now? 22 MR. CORBO: Say that again, Chair? 23 CHAIR KASSEKERT: This will be the only 24 two we will see? 25 MR. CORBO: Unfortunately, I can't 33 ITEM NO. 11 1 promise that. But I can promise we'll do our 2 best to make sure that that's the case. 3 CHAIR KASSEKERT: Thank you. 4 Mr. Ficchi? 5 MR. FICCHI: Thank you, Chair. 6 The Division has nothing further other 7 than request the adoption of the stipulation. 8 CHAIR KASSEKERT: Thank you. 9 Any questions? 10 COMMISSIONER SOMMELING: No questions, 11 Madame Chair. 12 COMMISSIONER FRULIO: Move to approve 13 the stipulation of settlement and impose a 14 civil penalty of $105,000 against Marina 15 District Development Company, LLC, for 16 violation of Commission regulations regarding 17 underaged gambling. 18 COMMISSIONER FEDORKO: Second. 19 CHAIR KASSEKERT: The motion has been 20 made and seconded. All in favor? 21 (Ayes.) 22 CHAIR KASSEKERT: Opposed? 23 (No response.) 24 CHAIR KASSEKERT: Motion carries. 25 MR. CORBO: Thank you. 34 ITEM NO. 12 1 MR. NANCE: Item No. 12, stipulation of 2 settlement in State versus Marina District 3 Development Company, LLC, Thomas Gable, and 4 Matthew Weyler. 5 Miss -- 6 MS. NAGENGAST: Good morning, Chair, 7 Commissioners. 8 MR. NANCE: -- Nagengast? 9 CHAIR KASSEKERT: Good morning. 10 MS. NAGENGAST: Mariel Giletto is here 11 on behalf of Mr. Gable. Joe Corbo is here on 12 behalf of the Borgata, and Mr. Ficchi is here 13 on behalf of the Division. 14 For your consideration this morning is a 15 complaint which resulted in a stipulation of 16 settlement between the Division and the Borgata 17 and also a separate stipulation of settlement 18 between the Division and Mr. Gable for 19 violations of various underaged drinking 20 statutes and violations. If the Commission 21 approves the stipulation, it will result in a 22 civil penalty against the Borgata in the amount 23 of $75,000 and a civil penalty against Mr. 24 Gable in the amount of $1,000 and a letter of 25 reprimand. 35 ITEM NO. 12 1 CHAIR KASSEKERT: Thank you. 2 Let me ask first if Mr. Gable has 3 anything to say? Through his attorney? 4 MS. GILETTO: Good morning, Chair 5 Kassekert, Commissioners. 6 CHAIR KASSEKERT: Good morning. 7 MS. GILETTO: Mariel Giletto, Fox 8 Rothschild, on behalf of Mr. Gable. 9 We ask that you adopt the stipulation as 10 presented to you. And if you have any 11 questions, feel free to ask. 12 CHAIR KASSEKERT: Thank you. 13 Mr. Corbo? 14 MR. CORBO: May I just say ditto? 15 CHAIR KASSEKERT: Mr. Ficchi? 16 MR. FICCHI: I'll have to go with 17 "ditto." 18 CHAIR KASSEKERT: That's fine. 19 Let me ask if there are any questions. 20 COMMISSIONER SOMMELING: No questions, 21 Madame Chair. 22 COMMISSIONER EPPS: Madame Chair, I move 23 that we approve the stipulations of settlement 24 and assess the following penalties for 25 violation of Commission regulations regarding 36 ITEM NO. 13 1 serving alcoholic beverages to underaged 2 persons: A, impose a civil penalty of $75,000 3 against Marina District Development Company, 4 LLC, and; B, impose a civil penalty of $1,000 5 against Thomas Gable and order that a letter of 6 reprimand be issued and made part of his 7 employment employee file. 8 VICE CHAIR SOMMELING: 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. CORBO: Thank you. 17 MR. NANCE: Item No. 13, petition of New 18 York Life Investment Management, LLC, for 19 exemption from casino service industry 20 licensure. 21 Ms. Nagengast? 22 MS. NAGENGAST: Chair, Commissioners, 23 has Mr. Nance stated, this is a petition 24 seeking exemption from a casino service 25 industry licensure. 37 ITEM NO. 13 1 Miss Kaufman is here on behalf of the 2 Petitioner and Mr. McDonough on behalf of the 3 Division. 4 CHAIR KASSEKERT: Thank you. 5 Good morning, Miss Kaufman. 6 MS. KAUFMAN: Good morning. 7 I'm here today to request a field of 8 commerce exemption from nongaming casino 9 service industry licensure for New York Life 10 Insurance Management, who is a registered 11 investment advisor, and who is currently 12 providing plan administrative services and 13 related services to Resorts' 401-K plan. 14 We're requesting an exemption on the 15 basis that licensing of New York Life is not 16 necessary to either protect the public interest 17 or accomplish the policies set forth under the 18 Casino Control Act, and we believe there are 19 several factors that lead us to that 20 conclusion. 21 The first is that New York Life's 22 activities are subject to strict regulation 23 under ERISA. The second is that New York Life 24 is a registered investment advisor. And the 25 third is that the regulations that New York 38 ITEM NO. 13 1 Life is subject to, as well as the specific 2 services provided by New York Life to Resorts' 3 401-K plan, are activities that have been found 4 in the past to be exempt from licensure. 5 As for ERISA, there are numerous 6 reporting and disclosure requirements. New 7 York Life is subject to regulation by the 8 Department of Labor and the IRS. The 9 regulations include disclosure and reporting, a 10 framework of rules and prohibitions by which 11 they are to handle their fiduciary duties. 12 As for the regulations and the laws 13 under the Investment Advisors Act of 1940, 14 there are ongoing registration -- initial and 15 ongoing registration requirements that are 16 similar to those imposed by the Casino Control 17 Act and, in fact, as they relate to nongaming 18 casino service industry licensure, sometimes 19 there's actually more disclosure required to 20 the SEC. 21 There are numerous decisions on the 22 federal level that show that the SEC limits 23 registration to those institutions that have 24 demonstrated good faith, character, and 25 financial integrity. 39 ITEM NO. 13 1 In short, we believe that the 2 comprehensive regulations under both ERISA and 3 the Investment Advisors Act are very similar 4 and reflect the same values and concerns as 5 those set forth in the Casino Control Act. 6 And, lastly, and I believe perhaps 7 certainly equal as important, the Commission 8 has specifically ruled that investment advisors 9 who are governed by ERISA and who provide 401-K 10 planned administrative services to casino 11 licensees are permitted and have been granted a 12 field of commerce exemption. These include 13 Commerce Capital, Fidelity, Oppenheimer, 14 Diversified Financial. Therefore, we're asking 15 the same field of commerce exemption for New 16 York Life Investment Management. 17 CHAIR KASSEKERT: Thank you. 18 Before we hear from Mr. McDonough, let 19 just ask if any of the commissioners have any 20 questions for Miss Kaufman. 21 COMMISSIONER SOMMELING: No questions, 22 at this time, Chair. 23 CHAIR KASSEKERT: Mr. McDonough? 24 MR. McDONOUGH: Good morning. 25 I filed a report dated December 10th in 40 ITEM NO. 13 1 which I recommended this petition be granted 2 subject to that one condition, and that 3 condition be being that the relief be limited 4 to provision of 401-K services that are 5 currently providing and with a notification 6 requirement should they decide to branch out 7 into other areas. 8 CHAIR KASSEKERT: Thank you. 9 Any questions? 10 Commissioner Epps? 11 COMMISSIONER EPPS: Just for 12 clarification, I think this -- when this matter 13 started, there was -- it was seeking a 14 determination that New York Life wasn't even a 15 CSI. But I think based on our review and the 16 statute review of this matter, according to our 17 definition in the statute, it seems to me that 18 they would be a CSI. 19 Secondly, there was a suggestion by New 20 York Life that ERISA preempted the Act. And I 21 don't think that that is substantiated, either. 22 However, I am comfortable finding that 23 New York Life might get an exception from the 24 Act or from licensure because they are 25 similarly regulated by another organization or 41 ITEM NO. 14 1 with comparable regulations to the Casino 2 Control Act. 3 And based on that finding, if the body 4 is comfortable, I would move that we find New 5 York Life Investment Management, LLC, is a 6 casino service industry as defined by NJSA 7 5:12-12; B, we also find that the Casino 8 Control Act is not preempted by ERISA for 9 purposes of the requested relief here; but we, 10 C, grant the petition of New York Life 11 Investment Management, LLC, for an exception 12 from casino service industry licensure based on 13 its comparable regulation pursuant to NJSA 14 5:12-92(c) and NJAC 19:51-1.13. 15 VICE CHAIR SOMMELING: Second. 16 CHAIR KASSEKERT: The motion has been 17 made and seconded. All in favor? 18 (Ayes.) 19 CHAIR KASSEKERT: Opposed? 20 (No response.) 21 CHAIR KASSEKERT: Motion carries. 22 MR. McDONOUGH: Thank you. 23 MS. GILETTO: Thank you. 24 MR. NANCE: Item No. 14, petition of 25 Highgate Steel, Inc., for release for monies 42 ITEM NO. 14 1 held in escrow and other relief. 2 Mr. Ingis? 3 MR. INGIS: Good morning, Madame Chair, 4 Commissioners. 5 Eric Garrabrandt is here on behalf of 6 the Petitioners. Rick McDonough is here on 7 behalf of the Division of Gaming Enforcement. 8 I would note that this petition relates 9 to an attempt to recover money that was placed 10 in an escrow account by virtue of a Commission 11 decision in September of 2004. Subsequent to 12 that decision, Highgate's application for 13 casino service industry license was denied in 14 September of 2006. 15 CHAIR KASSEKERT: Good morning, Mr. 16 Garrabrandt. 17 MR. GARRABRANDT: Good morning, Madame 18 Chair, and members of the Commissioners. 19 As Mr. Ingis indicated, my name is Eric 20 Garrabrandt. I'm from the firm of Flaster 21 Greenberg in Egg Harbor Township here on behalf 22 of Highgate Steel. 23 There are -- there are two bases by 24 which we seek the release of the money in 25 escrow. And the route taken is through the 43 ITEM NO. 14 1 licensure statute, in that the reason for the 2 Commission ordering these monies placed in 3 escrow was a denial of an application for 4 licensure and a finding that their work had 5 been performed without having obtained a 6 license prior to. 7 We would request that the Commission 8 either request an exception from the licensure 9 requirements or make a finding of 10 rehabilitation statutorily for the limited 11 purpose of releasing the monies that are 12 currently in escrow. And it is for a limited 13 purpose, in that my client has ceased 14 operations. Highgate Steel no longer conducts 15 business anywhere, including within the city of 16 Atlantic City. And that is the reason why this 17 is -- as I said, limited to that particular 18 purpose. There isn't a danger that any 19 licensure for the purpose of releasing the 20 money in escrow will result in any work being 21 performed that the future since my client, as I 22 indicated, no longer does business. 23 In terms of an exception, NJSA 24 5:12-92(c) allows the Commission to exempt an 25 applicant or a licensed individual from your 44 ITEM NO. 14 1 requirement that a license be obtained on the 2 basis that the applicant will provide goods or 3 services in insubstantial or insignificant 4 amounts. 5 Not to belabor the point, but this is 6 work that was performed in 2003 and 2004. This 7 money has been held in escrow since 2004. 8 Since December of 2006 we've ceased operations. 9 So I think that the Commission could safely 10 find that we will be providing goods or 11 services in insubstantial or insignificant 12 amounts. 13 The second prong of the exception test 14 is that the licensing is not necessary to 15 protect the public interest, and there are two 16 bases for that, for the Commission to make that 17 particular finding. Number one, this money has 18 been in escrow since September 2004, despite 19 the fact that my clients performed the work in 20 2003 and 2004. It's about $77,000 -- a little 21 bit more than $77,000. We've been deprived of 22 the use of that money since then through the 23 exercise of this commission's authority. We 24 have ceased operations. We are not going to 25 perform any work in the future. So the public 45 ITEM NO. 14 1 interests, I believe, is protected by anybody 2 reviewing the procedural history of this matter 3 and seeing the authority that this Commission 4 has. The authority to punish those who it 5 finds have committed violations of the Act. 6 The authority to deprive the Applicant of those 7 sums inherently -- inherently protects the 8 public interest by that demonstration of 9 authority. 10 I had cited a State versus Whitfield, an 11 administrative law decision where an exemption 12 was found where an operator of a floor-cleaning 13 machine had stolen chips from a patron on the 14 floor of a casino was granted the exemption 15 upon the finding that the applicant in that 16 particular case was not involved with the 17 provision of services to the gaming public. So 18 application of the Whitfield holding in this 19 particular matter is also helpful in that the 20 Applicant had performed work -- they had 21 installed reinforcing steel, rebar, on the Pier 22 at Caesars in 2003 and 2004. They weren't 23 directly involved with the gaming public. They 24 weren't even building a casino. They were 25 building a shopping center for a casino related 46 ITEM NO. 14 1 industry. So based on the analysis under the 2 statute and under the Whitfield case, we 3 believe that a finding of exemption is 4 appropriate. 5 If not exemption, then perhaps a finding 6 of rehabilitation under NJSA 5:12-91(d). 91(d) 7 obviously, allows licensure-- excuse me. 8 Licensure for someone whose license has been 9 revoked, and that are eight separate 10 statutorily enumerated bases for a finding of 11 rehabilitation. I've set the fourth in them 12 forth in my moving papers. The analysis under 13 subsection D-2, D-4, D-3, and D-1. And I will 14 rely on my moving papers for those particular 15 points. I don't want to belabor each of those 16 particular points. 17 I did also site the matters of State 18 versus Wilson, Lindner -- excuse me, Lindner 19 versus Department of Public Law and Public 20 Safety. Trettner versus the Department of Law 21 and Public Safety. Hamlet, Perrotti, Dunston, 22 all for the purposes of demonstrating 23 circumstances under which either this 24 commission in the past or the Office of 25 Administrative Law or the Appellate Division of 47 ITEM NO. 14 1 the Superior Court have found rehabilitation to 2 be appropriate. 3 And I would submit that the 4 circumstances in each of those reported 5 decisions is, in many ways, worse than these 6 circumstance under which my client was denied 7 licensure, the circumstances under which the 8 money in question was placed in escrow. 9 As I stated earlier, we're not dealing 10 with the direct provision of services to the 11 gaming public or the interaction of the 12 Applicant with the gaming public. We're 13 talking about the installation of reinforcing 14 steel for concrete, installing rebar for a 15 shopping mall adjacent to a -- adjacent to a 16 casino and owned by a licensed entity. 17 Not to make light of what has occurred 18 in the past, not to -- not to indicate that in 19 any way we discount the severity of what has 20 occurred or we discount the need of any 21 applicant to obtain a license prior to 22 undertaking work. But when compared to 23 circumstances where rehabilitation has been 24 found by this and other authoritative bodies, 25 we would respectfully submit that the 48 ITEM NO. 14 1 circumstances that are presented to the 2 Commission today are less egregious. 3 Finally, Mr. Ingis had requested that I 4 provide documentation concerning a tax 5 liability that my client has. I had provided 6 by correspondence dated October 10th a printout 7 from the State of New Jersey, Division of 8 Taxation, Highgate Steel, Inc.'s, taxpayer 9 schedule of liabilities. And I bring that up 10 today in that my client has a tax bill without 11 abatement that exceeds the amount that is 12 currently in escrow. With abatement is 13 slightly less than the amount that's in escrow. 14 Now, this money is presumably in an 15 escrow account with Highgate Steel. The money 16 is somewhere -- or excuse me -- not with 17 Highgate Steel. With Stone Concrete, who my 18 client had contracted with. The money is 19 somewhere. Somebody is going to get this money 20 eventually based on this commission's decision. 21 Now, if it's Stone Concrete, or if it is the 22 owner of the project, or if it is the general 23 contractor on the project getting the money, 24 that also presents a problem because the 25 Commission has already found that my client was 49 ITEM NO. 14 1 not licensed when it performed the work in 2 question. That finding has been made. 3 Under the law, any of the entities that 4 I have listed before, Stone Concrete, with whom 5 my client had a contractual relationship, the 6 general contractor, the owner of the project, 7 all of those entities are also prohibited from 8 conducting business with somebody who is not 9 licensed. So to allow the money in question to 10 go to any of those entities would implicitly 11 encourage or reward conducting business in 12 violation of the same Act that we are here 13 making a petition under. In this particular 14 instance, the money in question is going to go 15 to the State. It is going to be used to pay 16 outstanding tax liability. It is unfortunate 17 that it has come under these circumstances, and 18 it is unfortunate that my client has to use the 19 money for those purposes. For that purpose. 20 But it certainly makes the Commission's 21 decision, I would submit, easier in that the 22 money is not going to wind up in the hands of 23 an entity who has violated the Casino Control 24 Act, either by conducting business in an 25 unlicensed capacity or conducting business with 50 ITEM NO. 14 1 an unlicensed entity. Rather, it will wind up 2 in the hands of the State. 3 And given the circumstance, given all 4 that has occurred, I believe that the grant of 5 a temporary licensure for the purpose of 6 allowing this money to be released from escrow 7 to be utilized to pay this tax liability would 8 be entirely appropriate. 9 Thank you. 10 CHAIR KASSEKERT: Let me ask before we 11 hear from Mr. McDonough if anyone has any 12 questions or would you like to -- 13 COMMISSIONER EPPS: I'll wait till -- 14 CHAIR KASSEKERT: You'll wait till? 15 Mr. McDonough? 16 MR. McDONOUGH: Thank you. Good 17 morning. 18 My response to this petition was filed 19 last year, and I trust you've had an 20 opportunity to read it. Let me just make a few 21 comments beyond those which are contained in my 22 written response. 23 I think that it would turn the purpose 24 of the Casino Control Act on its head to grant 25 the relief that's being sought here today. 51 ITEM NO. 14 1 This is not really a licensure case that's in 2 front of you, I submit. It's a case about 3 whether or not an entity that was found 4 disqualified by you and prohibited from doing 5 any business with the casinos should get paid 6 for business that it did after you prohibited 7 the company from doing any business. And so I 8 suggest to you that the analysis that has been 9 advanced on behalf of the company in terms of 10 exemption or rehabilitation misses the point. 11 The point is, should an entity be allowed to 12 reap a benefit from doing business with a 13 casino while that entity was on the prohibited 14 list, while that entity had been found 15 disqualified? And I suggest to you that the 16 answer is no. No benefit should accrue to a 17 prohibited company because it was able to slip 18 through and transact some business with a 19 casino. I think that would be an incorrect -- 20 an unjust decision and contrary to the policies 21 of the Casino Control Act. And that's the 22 point that my written response makes. 23 I attached to my response an earlier 24 letter that I had submitted in February of 2006 25 regarding this company's application for a CSI 52 ITEM NO. 14 1 license. And I hope you've had the opportunity 2 to read that 2006 letter because it sets out 3 the history of this company. And it's a 4 history that -- that demonstrated a cavalier 5 attitude toward the regulatory system, if not 6 an outright contempt for the regulatory system. 7 And when the company's principle was in front 8 of you to testify, you found that her testimony 9 was not -- was not credible. Was not 10 believable. I remember Commissioner Fedorko's 11 comment, and I quote that in my letter of 2006, 12 and that was a very accurate, dead-on right 13 comment that Commissioner Fedorko made 14 regarding the principle of this company. 15 It's been suggested in argument here 16 that if you were to somehow authorize the 17 release of the money with the condition that it 18 be applied to this company's New Jersey tax 19 debt that that might be an appropriate 20 resolution of this problem. I take the 21 position that it would not be an appropriate 22 resolution of this problem. You shouldn't 23 permit the use of that money to pay this 24 company's taxes. That would be a benefit to 25 this company. And I say to you that this 53 ITEM NO. 14 1 company should not derive any benefit from 2 doing business while it was prohibited from 3 doing business with the casinos. 4 And allowing the escrowed money to be 5 used to satisfy its New Jersey taxes would be a 6 benefit to this company. The New Jersey 7 Division of Taxation has an excellent legal 8 staff. They will find a way to collect the 9 money that they are owed by this company if 10 such a way exists. And I would note that the 11 fact that the company is asking you for 12 permission to use this money to satisfy their 13 tax debt is proof that the company feels that 14 the Division of Taxation is still pursuing that 15 debt, and is an acknowledgment on the part of 16 that company that they still owe that debt. 17 I don't think it's your job to act as a 18 collection agent for the Division of Taxation, 19 and it certainly isn't your responsibility to 20 help this company satisfy its tax debts. I 21 think that that is something that is going to 22 be between the company and the Division of 23 Taxation. 24 Now, my letter to you of 2007 cited a 25 prior case, which I think is instructive, 54 ITEM NO. 14 1 although the facts were a little different. In 2 that case that I cited in my letter, and that 3 was the case that happened in 1990 regarding a 4 company called Cornell. And Cornell was a 5 construction company that was found by the 6 Commission to be disqualified, and at the time 7 that finding was made, Cornell was right in the 8 middle of a construction project building a 9 garage for one of our casinos here in Atlantic 10 City. And that finding of disqualification as 11 Cornell placed the casino in a very difficult 12 position because Cornell was providing a crane, 13 a unique crane not easily replaceable in fact, 14 we went round and round with the casino and 15 with the general contractor on that garage 16 project to see if we couldn't find a 17 replacement crane to step into the shoes of the 18 Cornell crane. And we couldn't find one. And 19 the casino was in trouble because they were 20 right in the middle of the garage project. And 21 the Commission, quite properly, didn't want to 22 harm the casino. And so the compromise that 23 was reached was the Commission approved the 24 continued use of the Cornell crane subject to 25 the condition that Cornell not be paid for the 55 ITEM NO. 14 1 use of that crane subsequent to the finding of 2 disqualification by this Commission. We agreed 3 with that. You agreed with that. All the 4 parties agreed to that, and that's what 5 happened. The crane was allowed to be used to 6 complete that project, and no money was paid to 7 Cornell for the use of that crane after the 8 finding of disqualification. 9 There have been other cases that have 10 come up in the past. I didn't cite them in my 11 letter, but one that comes to mind is a case 12 that occurred, I would say about ten years ago, 13 involving Don King Productions when Don King 14 Productions was suspended by you as a result of 15 a federal indictment in New York City. And a 16 deal was proposed to the Commission by a casino 17 in Atlantic City -- I believe it was one of the 18 Trump casinos. Mr. Fusco represented them at 19 the time. And the deal that was proposed was a 20 deal that would have allowed casino money to go 21 not to Don King but to Mike Tyson in 22 satisfaction of a debt that Don King owed to 23 Mike Tyson. And we opposed the granting of 24 that -- the granting of permission to proceed 25 with that deal on somewhat the same legal 56 ITEM NO. 14 1 argument that I'm advancing to you here today 2 as it pertains to the permission for the money 3 to be used for the Division of Taxation. And 4 you ruled against King and the casino in that 5 case and in favor of the position that I 6 espoused, and I would suggest to you that 7 similar considerations should be at work here. 8 Thank you very much for your attention. 9 If you have any questions, I'll be happy to try 10 to answer them. 11 CHAIR KASSEKERT: Let me ask if there 12 are any questions, first. I'm sure you'll want 13 to respond. 14 VICE CHAIR SOMMELING: I have no 15 questions. 16 CHAIR KASSEKERT: Commissioner Epps? 17 COMMISSIONER EPPS: I have a few 18 questions. 19 First, when you began your remarks, it 20 almost seemed that you suggest that we give you 21 something that I would call a limited license 22 almost. You want us to grant you a license for 23 the unique purpose of getting paid so that you 24 can then disburse that money, but then after 25 that, you would go away and not do any work. I 57 ITEM NO. 14 1 don't know that that limited license exists. 2 MR. GARRABRANDT: If I may. Yeah. I 3 reviewed the statutory and the administrative 4 body of law very thoroughly before briefing 5 this issue, and I simply could find no 6 statutory or administrative authority for 7 either the placement or the release of escrowed 8 funds. Without that there wasn't really a 9 legal argument to be made, an application of 10 facts to statutory law to be made. So even if 11 it is not the grant of a license, perhaps -- 12 and, yeah. I agree that there wasn't a 13 statutory mechanism by which a temporary 14 license could be granted, either. 15 COMMISSIONER EPPS: Because in that 16 situation, if, for example -- if we went down 17 that road that you went and we granted a 18 license, there's no real -- there's nothing 19 really to prevent Highgate Steel from 20 reorganizing with a license and then going to 21 do work and then coming back and, say, well, 22 you gave us a license. 23 MR. GARRABRANDT: Correct. 24 COMMISSIONER EPPS: That sends us down a 25 path that I don't know that we want to go down. 58 ITEM NO. 14 1 MR. GARRABRANDT: Okay. 2 COMMISSIONER EPPS: With respect to 3 exemption, I don't think -- I don't find, at 4 least for myself, those arguments compelling to 5 me, given the nature of and the totality of the 6 circumstances involving this specific subject 7 and this matter. The nature and events that 8 occurred in this particular matter put it in 9 such a posture that I can't get to exemption or 10 rehabilitation, given the record that is before 11 us and what has transpired in front of us as a 12 body. 13 But I will tell you that I'm having a 14 bit of difficulty resolving this matter, and 15 I'll turn to you, Mr. McDonough, for some 16 guide-- or at least your thoughts. Because I'm 17 in a quandary. If we allow the request as 18 suggested by Highgate and allow that money to 19 be applied to a tax obligation, although 20 Petitioner argues that the money doesn't go to 21 Highgate, it does, in fact, go to Highgate 22 because it absolves them of a financial 23 obligation that they have going forward. And 24 it's the same as giving them the money to make 25 a payment that they owe, so it does go to them. 59 ITEM NO. 14 1 However, I have some problem with the -- 2 and I know you brought it up Cornell. I have 3 some problem with the contractor who engaged 4 them getting a windfall. You basically get 5 subcontracting work done that you don't have to 6 pay for. That gives me some pause, too. And I 7 don't know what your thoughts were on that. 8 MR. McDONOUGH: Well, it's the same 9 situation that we faced in Cornell. There was 10 a quote/unquote windfall in the Cornell matter 11 that accrued to the project owner, I believe. 12 And I didn't think that it was the most optimum 13 of results, but I thought it was the fairest 14 result at the time, and I think the fairest 15 resolution here is what I have suggested to you 16 here today, that the project owner be returned 17 the funds in question. 18 MR. GARRABRANDT: Mr. Epps, if I may. I 19 don't know the facts of Cornell, obviously, as 20 well as Mr. McDonough knows them. But we are 21 also dealing with an entity, either the general 22 contractor or the property owner, who violated 23 its own section of the statutory framework, of 24 the regulatory framework. So they're not an 25 innocent party. They are not somebody who's 60 ITEM NO. 14 1 going to get a windfall, as you suggest, and 2 well, good for them. We're talking about 3 somebody who's going to get a windfall who did 4 business with a body, with an entity, that this 5 commission has already found was not licensed 6 at the time they entered the contract. And 7 there is a complete statutory and regulatory 8 framework for either the general contractor or 9 the property owner to follow when entering into 10 subcontracts that, obviously, somehow wasn't 11 followed. So it is not an innocent. It is not 12 an innocent party who is going to benefit if 13 you follow the suggestion of Mr. McDonough. 14 And this isn't an easy decision. I 15 understand that. And the only thing that makes 16 this easy is the involvement of the State of 17 New Jersey. And, yes -- satisfying my client's 18 tax liability will accrue a benefit to my 19 client. But we're talking about a small 20 company who has been -- ceased operations since 21 December of 2006. So Mr. McDonough suggests 22 that the State would have no trouble satisfying 23 the tax liability without the obligation of 24 this escrow, and that very well may not be the 25 case. I don't know what my client's situation 61 ITEM NO. 14 1 is with regard to the assets it has, with 2 regard to what other ability it as a 3 corporation might have to satisfy this tax 4 liability. I simply don't know any of those 5 facts. However, I would suggest that it is not 6 uncommon for small businesses that stop doing 7 business to have no assets. I'm not 8 representing that that is the case here, but 9 what I am saying is that perhaps, perhaps the 10 satisfaction of the State's liability will not 11 be as easy as Counsel suggestions. 12 MR. McDONOUGH: I would just like to 13 respond to the point that was made about 14 violations that may or may not have been 15 committed by other entities in connection with 16 this case. 17 As I pointed out in my 2006 letter to 18 you, the Division did a complete investigation 19 of Highgate and all of the companies with which 20 it did business while on the prohibited list. 21 We interviewed a number of people. I conducted 22 over 24 sworn interviews in connection with 23 that investigation. And we took what action we 24 deemed appropriate with regard to every other 25 entity that is within your jurisdiction. Now, 62 ITEM NO. 14 1 please don't ask me what we did with respect to 2 each entity, because I'm not prepared to 3 discuss that now. I'd have to go back to my 4 office and look at the files and tell you what 5 we did. But we did look at it, and if there 6 were any complaints that were appropriate, we 7 did bring them. And if we deemed it not to be 8 appropriate, then that was our resolution as 9 well, but we did look at that issue. 10 CHAIR KASSEKERT: Commissioner Fedorko? 11 COMMISSIONER FEDORKO: Mr. Garrabrandt, 12 you said this is not an easy decision, and, 13 frankly, I think it is an easy decision. There 14 was a prohibitory order from the company doing 15 business. The company did business. What's 16 the problem? 17 MR. GARRABRANDT: The problem is -- 18 COMMISSIONER FEDORKO: Why is that so 19 hard to understand? 20 MR. GARRABRANDT: I understand that 21 part. 22 COMMISSIONER FEDORKO: Okay. 23 MR. GARRABRANDT: The problem is what 24 happens to the money? Does it sit in escrow 25 forever? Or does it go to a company who either 63 ITEM NO. 14 1 did business with a prohibited vendor or was a 2 prohibited vendor? That's the hard part. 3 COMMISSIONER FEDORKO: All right. 4 Nothing else. 5 CHAIR KASSEKERT: You want to recess? 6 COMMISSIONER FEDORKO: No. 7 CHAIR KASSEKERT: Anybody need a recess? 8 COMMISSIONER EPPS: I do. 9 CHAIR KASSEKERT: All right. 10 Commissioner Epps needs a recess. Anything 11 else to say before a recess? 12 MR. McDONOUGH: No. 13 MR. GARRABRANDT: No. Thank you very 14 much. 15 CHAIR KASSEKERT: Okay. 16 (A recess was taken from 11:40 a.m. to 17 12:03 p.m.) 18 CHAIR KASSEKERT: Go back on the record. 19 Commissioner Epps? 20 COMMISSIONER EPPS: Nothing. 21 CHAIR KASSEKERT: Commissioner Fedorko, 22 are you prepared to make a motion. 23 COMMISSIONER FEDORKO: Madame Chair, I'm 24 going to make a motion to deny the petition and 25 order that money that has been held in escrow 64 ITEM NO. 14 1 pursuant to the Commission's decision on 2 September 14th, 2004, be returned to the 3 project owner, Boardwalk Regency Corp. 4 COMMISSIONER FRULIO: Second. 5 CHAIR KASSEKERT: Motion is made and 6 seconded. 7 Any discussion? 8 VICE CHAIR SOMMELING: No discussion 9 Madame Chair. 10 CHAIR KASSEKERT: Commissioner Epps? 11 COMMISSIONER EPPS: At the vote. 12 CHAIR KASSEKERT: Okay. The motion has 13 been made and seconded. All in favor? 14 (Ayes.) 15 CHAIR KASSEKERT: Opposed? 16 COMMISSIONER EPPS: Madame Chair, I'm 17 going to abstain, and I'm going to abstain not 18 because I disagree with the ultimate decision, 19 but my difficulty with respect to the 20 distribution of the money, and I can't satisfy 21 myself that any option works for me. So, in 22 light of that, I'm just going to abstain from 23 the vote. 24 CHAIR KASSEKERT: Thank you. 25 The motion carries four votes aye with 65 ITEM NO. 15 1 one abstention. 2 Thank you. 3 MR. McDONOUGH: Thank you. 4 MR. GARRABRANDT: Thank you. 5 MR. NANCE: Item No. 15, petition of 6 Harrah's Atlantic City Operating Company, LLC, 7 and Showboat Atlantic City Operating Company, 8 LLC, for approval to issue notes pursuant to 9 NJAC 19:43-2.8. 10 Miss Wozniak? 11 MS. WOZNIAK: Good afternoon. Mr. 12 O'Gara is here for the Petitioners and Mr. 13 Adams for the Division. 14 CHAIR KASSEKERT: Mr. O'Gara? 15 MR. O'GARA: Good afternoon. 16 Madame Chair, this petition is one 17 which, I believe, at the time of the closing we 18 had indicated to you was a part of the CMBS 19 financing which would be a post-condition 20 closing. As part of the financing the -- 21 there's an agreement between the OPCOs and the 22 PROPCOs whereby the PROPCOs have been advanced 23 additional sums to the OPCOs, and in return 24 will have notes issued to them in the amount 25 of -- specified in the petition, I believe it's 66 ITEM NO. 15 1 a gross amount in the total of $40 million, and 2 there will be collateral assignment of the 3 liens to the lender. In this case that lender 4 remains JP Morgan. That loan has not gone out, 5 and they will remain in effect. The actual 6 issuance of note and collaterals require your 7 approval, and I would ask that you give the 8 same. 9 CHAIR KASSEKERT: Thank you. 10 Mr. Adams? 11 MR. ADAMS: Good afternoon, Chair and 12 Commissioners. 13 You have our letter report of February 14 8th, and unless you have any questions, we 15 don't oppose the relief sought. 16 CHAIR KASSEKERT: Thank you. 17 Any questions? 18 COMMISSIONER SOMMELING: No questions, 19 Madame Chair. 20 COMMISSIONER FRULIO: Motion to adopt 21 the draft resolution and approve the issuance 22 of notes by Showboat Atlantic City Operating 23 Company, LLC, and Harrah's Atlantic City 24 Operating Company, LLC, as described in the 25 record pursuant to NJAC 19:43-2.8 subject to 67 ITEM NO. 16 1 the conditions set forth in the resolution. 2 CHAIR KASSEKERT: Is there a second? 3 VICE CHAIR SOMMELING: Second. 4 CHAIR KASSEKERT: The motion has been 5 made and seconded. All in favor? 6 (Ayes.) 7 CHAIR KASSEKERT: Opposed? 8 (No response.) 9 CHAIR KASSEKERT: Motion carries. 10 MR. NANCE: Item No. 16, joint petition 11 of Harrah's Atlantic City Operating Company, 12 LLC, Showboat Atlantic City Operating Company, 13 LLC, Bally's Park Place, Inc., and Boardwalk 14 Regency Corporation for approval of a form of 15 charter for independent audit committee in 16 compliance with NJAC 19:45-1.11(c)2. 17 Miss Wozniak? 18 MS. WOZNIAK: Chair, Commissioners. 19 Again, Mr. O'Gara for the Petitioners and Mr. 20 Adams for the Division. 21 CHAIR KASSEKERT: Thank you. 22 Mr. O'Gara? 23 MR. O'GARA: Yes, ma'am. The petition 24 that is before you deals with the audit 25 committee of the four New Jersey casino 68 ITEM NO. 16 1 licensees. And, hopefully -- I don't want to 2 bore you, but it's somewhat instructive to know 3 of how Harrah's got here. 4 At the outset of this transaction, we 5 were very mindful that these companies were 6 going private and being purchased by two 7 private equity funds and their co-investors. 8 And sometime, probably in February of 2007, we 9 submitted to Ms. Wozniak our -- you know, our 10 acknowledgment that we realized that that meant 11 of end of what was known as the Harrah's board 12 of directors and an outline of what we thought 13 the structure of Harrah's was going to look 14 like at the end of the day. With the exception 15 of a few PROPCOs and, you know, three or four 16 holding companies that nobody anticipated, we 17 wound up where we thought we would be at the 18 end of the day, which was where the company 19 would -- when it was publicly traded had a 20 board of directors which consisted of Harrah's 21 insiders and largely outsiders in the sense of 22 outsiders as defined by the New York Stock 23 Exchange rules, which is that they had no 24 affiliation at all with Harrah's Entertainment 25 or its subsidiaries. And we knew that that 69 ITEM NO. 16 1 would not be the case. We knew the prevailing 2 case at the end of the day was that all of the 3 shareholders in this company who had any 4 control, voting shares, would be principles in 5 both Apollo and TPG and that that group of 6 people, each of whom you found qualified, would 7 populate the board of directors of what was 8 then AGT in stock symbols, now AGI, and that 9 below it in this significant number of entities 10 which Harrah's controls, there would be 11 operating companies. And the convention would 12 be the one that Harrah's had always used, which 13 was that the boards of directors of those 14 entities would consist of Mr. Loveman and Mr. 15 Atwood. And in New Jersey what that means is 16 that when we pass down through and get to the 17 actual licensees, we have the Showboat and 18 Harrah's operating LLCs, which have these 19 boards only because we designate them. There's 20 no legal requirement they have the boards. And 21 BBP and Caesars, which have Mr. Atwood and Mr. 22 Loveman. 23 We're also acutely aware that we had to 24 have a audit committee, and we were also 25 acutely aware that we had various other 70 ITEM NO. 16 1 requirements in various places, and I'm sure 2 you're all aware that we have compliance 3 committee requirements in Nevada. And there's 4 other things. And the idea was to create a 5 template which would satisfy all of them. And 6 in doing so, we took a look at the regulation. 7 And the time and place when we're doing this 8 is, you know, early to mid-2007. And the 9 regulation and its history is in our 10 memorandum. We know how we got here. And the 11 regulation talks about an independent audit 12 committee of the casino licensee's board of 13 directors or the alternative, which is the 14 independent members of what I'll call the big 15 board. 16 And it does not use the phraseology, 17 which one often sees in requirements involving 18 boards and securities, that it's an independent 19 committee consisting of members of the board of 20 directors. It's an independent audit committee 21 of the board of directors. And in -- it's 22 solely within the province of these entities 23 legally to comprise committees either of the 24 board or of members appointed by the board who 25 are also not members of the board of directors. 71 ITEM NO. 16 1 But the idea was to satisfy the requirements 2 here that they be independent and that they'll 3 fidelity be toward maintaining the control they 4 had over internal audit and surveillance. That 5 it not be delegated to the management of the 6 company and that they be outsiders and 7 independent. And we constituted that committee 8 and submitted to you a charter. 9 And I believe if you look at the 10 charter, in all aspects it satisfies the 11 requirements of what you want. They have that 12 responsibility. That is, their sole 13 responsibility, and they are in no way beholden 14 to any part of the management of the company. 15 They are duly constituted committee. 16 And we're then confronted with the 17 language in the Tropicana decision which talks 18 about, you know, being members of the board of 19 directors. And I would suggest to you that 20 here that perhaps you would consider whether 21 you want to, A, reconsider it or, B, relax it 22 here, for several reasons. 23 Number one, the boards of directors of 24 these licensees are not the policy making 25 bodies that determine what happens in Harrah's 72 ITEM NO. 16 1 in Atlantic City. It's Mr. Loveman and Mr. 2 Atwood. They are there because they're a 3 corporate necessity. They populate throughout 4 Harrah's the same way. The policy making 5 people at Harrah's are the people that sit on 6 the ATI board. Mr. Loveman is there. He was 7 there with representatives of both of the 8 sponsors. And these are the formalities that 9 are required for the legal organization. 10 And if you were to look at the history 11 of what goes on with these entities up until 12 now, you'll see virtually any action that 13 they're required to take was taken by unanimous 14 consent. One thinks of who these people are 15 and how they could get the unanimous conset. 16 The policy is set by ATI. Then if there's a 17 legal requirement of filing or some type of 18 document executed, as we saw with the financing 19 documents where they have to sign every level 20 down. It's a convention and a convenience that 21 it be these people. 22 But, importantly, if we were to take 23 this committee in place, this committee which 24 now has its fidelity entirely to that charter 25 and place them on this board, it would not be 73 ITEM NO. 16 1 as if they were placed on the board of a public 2 company. And I think when you look at 3 independent directors of a public company, and 4 you look at them being on the board, there's a 5 good deal of thought that goes that they have 6 obligations to the shareholders who are out 7 there. Which constitute in public companies 8 the public, which means they have obligations 9 besides those that go directly to management. 10 So they have independence. And they have, you 11 know, their shareholder obligations and their 12 fiduciary duties are to a wide universe. 13 In this instance, if we were to place 14 these people on these boards, in fact, their 15 fiduciary duty would be only to the 16 shareholders and those shareholders are the two 17 Hamlet entities. And that would be their 18 primary obligation. Now, they have their 19 obligation under the charter. They will 20 fulfill them. There's no question. But they 21 would be less independent in the sense that 22 they have a legal fiduciary obligation created 23 by statute over to the private equity 24 shareholders. 25 If they are a committee of the board 74 ITEM NO. 16 1 which has the same authority, created by the 2 board, with a charter authorized by the board, 3 they have no obligation. None. There's no 4 legal obligation to the shareholders. They're 5 not members of that board. They solely have 6 the obligation created by their charter. 7 And I would suggest to you that this, 8 perhaps, reaches closer to the goal of what you 9 want. And that what we have is a circumstance 10 in which the constitution of the audit 11 committees and their charters is a difficult 12 issue because each one has to be applied on a 13 template against the organization that you're 14 putting it to. A big public company, if you 15 have a board with outside directors, that very 16 well may work. It may work would have X number 17 at one place or another. But if you look at 18 your over-arcing goal, which is that they be 19 independent and they that they exercise that 20 power for the goal of the regulation and the 21 statute, I think what we have submitted to you 22 probably comes as close to achieving that as is 23 possible. Because we've removed from it the 24 idea of any fiduciary responsibility which 25 passes on to the closed holders, quote-unquote 75 ITEM NO. 16 1 management or the owners. 2 And I think it's permissible under your 3 regulations because, as I say, the regulation 4 was written, saying committee of the board. 5 Not saying committee consisting of a members of 6 the board of directors. I mean, these are 7 distinctions which have real meaning when one 8 writes these regulations and, in fact, have 9 real meaning when one sets up a board and how 10 you do it. 11 It's not unusual for boards to have 12 committees, some of which are not members of 13 the board. There have been instances here 14 where gaming companies have sold themselves, 15 placed themselves up for auction and had 16 auction conducted by members -- by committees 17 of the board which did not constitute members. 18 When IGT sold Caesars, when it sold itself at 19 an auction, it was a committee, kept one member 20 of the board and five outside people on it 21 appointed by the board. They selected the 22 winning bid. It was never ratified. 23 So I suggest to you, we haven't done 24 violence to the regulating. And what we've 25 achieved is the goal you want, and it leaves 76 ITEM NO. 16 1 the autonomy for the company to run in the 2 fashion that it set itself up to run for 3 business purposes. And to the degree that you 4 try to have the regulations harmonize with the 5 organization that's chosen by the people who 6 run the businesses, you're able to achieve that 7 harmony as well. 8 And I would ask that you grant the 9 relief sought in the petition, approve the 10 charter, and approve the two members we've 11 selected, each of whom are qualified, have been 12 qualified by this Commission to serve as a 13 one-time outside director of Harrah's 14 Entertainment. 15 Thank you. 16 CHAIR KASSEKERT: Do we have -- does 17 anybody have any questions for Mr. O'Gara 18 before we hear from Mr. Adams? 19 COMMISSIONER SOMMELING: No questions at 20 this time, Madame Chair. 21 COMMISSIONER FEDORKO: Hear from Mr. 22 Adams. 23 CHAIR KASSEKERT: Okay. Mr. Adams? 24 MR. ADAMS: Chair, and Commissioners, 25 you have our letter in response to the 77 ITEM NO. 16 1 petition. We pointed out in that letter 2 certain language in the regulation of which we 3 believe is favorable susceptible to 4 interpretation by you, and we are very 5 comfortable with whatever that interpretation 6 is by you today. 7 We also noted in there the possibility 8 that perhaps what also should be considered is 9 the number of persons involved here so that we 10 don't get into situations where there's some 11 kind of deadlock on the board, and that's also 12 referenced in the letter. 13 Other than that, I'd be happy to answer 14 any questions you might have. 15 CHAIR KASSEKERT: Mr. O'Gara, could you 16 just comment on the number? 17 MR. O'GARA: Yeah. 18 CHAIR KASSEKERT: Three versus two? 19 MR. O'GARA: Yeah. I think that we're 20 venturing off here into areas where we're 21 talking about the theoretical and, you know, 22 it's a question of is anything possible? 23 Certainly one can take a look at the evolution 24 in your decisions and, in fact, there are 25 discussions with you of single-member 78 ITEM NO. 16 1 committees and whether or not that would 2 function. And when one says, okay, look. We 3 want more than one because we want to have, you 4 know, kind of a consensus and idea, there's a 5 review, you get to two. Now, any time you take 6 an even number, you claim you're going to have 7 a tie. I don't think there's any history in 8 any of committees if you look at them, if you 9 have a public company, one inside, two outside 10 where there's ever been a tie. I mean, what 11 we're talking about here are guidance and 12 policy making functions with the exception of 13 the decision to discharge or to hire. They 14 involve consensus type ideas, overseeing and 15 that type of thing. And I don't think there's 16 any reason to suggest that there has to be 17 three. 18 I would also suggest if you took this to 19 its ultimate conclusion and were to say -- 20 which I don't think you have to -- that people 21 had to be on boards, we'd start to have boards 22 which do nothing except act by unanimous 23 consent with five, six, seven people on them. 24 Boards that never met, but you have to chase 25 down seven signatures every time you do a note 79 ITEM NO. 16 1 off it. 2 So I don't think there's been a problem, 3 and I don't think the problem needs to be 4 addressed. I mean, I don't think it's the same 5 policy considerations that took you from the 6 idea that we're comfortable with multiple eyes 7 rather than the single individual, that you 8 have to consider the theoretical possibility of 9 ties and eliminate all even numbers from the 10 equation. 11 CHAIR KASSEKERT: I guess the good idea 12 about multiple eyes is that if a concern arises 13 through the audit committee, then to have more 14 than one individual there to bring those 15 concerns properly up and have them dealt with. 16 It's better, you know -- 17 MR. O'GARA: I also think -- if the 18 regulation, you know -- if I believe that -- 19 part of this regulation is for the benefit of 20 the people who have to have policy meetings. 21 If you have two individuals, you know, you 22 increase by a hundred percent the chances of a 23 faster response. There's a problem. One 24 person is traveling, one isn't. These are 25 business people or people who have other, you 80 ITEM NO. 16 1 know, obligations. You've certainly assured 2 it. I mean, I don't know there's that much 3 gain, say, from increasing it from two to 20. 4 CHAIR KASSEKERT: Commissioner Epps? 5 COMMISSIONER EPPS: I don't know if I 6 have questions as much as remarks. But, Mr. 7 O'Gara, I think I agree with you, with what you 8 said is that our -- the reg is subject to a 9 couple of different reads. And it's probably 10 that way because it wasn't necessarily 11 anticipated that we would be in this posture 12 with this industry because we have embarked -- 13 we've turned down a new road that we've never 14 really travel down before with these private 15 companies and their setups, and they create a 16 structure different than that which was dealt 17 with and anticipated in -- in the inception of 18 the Act in our involving these gaming 19 companies. 20 It seems to me, though, the neatest way 21 for us to handle this would be to go to the 22 section and clean it up and forever make it 23 such that there's no ambiguity to the extent 24 that we can. Doing that would not give your 25 company any relief right now. But for, as you 81 ITEM NO. 16 1 indicated, a relaxation of it in this instance. 2 And I think, as difficult as that is, that's 3 where I kind of find my best comfort in this. 4 MR. O'GARA: Well, if I might, 5 Commissioner, I think that you are -- when you 6 say "relaxation," what you can do -- or you're 7 interpreting it. I mean, I believe that and, 8 you know, everyone is free to disagree with me. 9 I believe that this -- if this read and said an 10 independent audit committee of the casino 11 licensee's board of directors had to be 12 constituted by members of the board. And if 13 you look at the stock exchange regulations, 14 there's circumstances where board membership is 15 required and others where it isn't. I think it 16 gives you both ways, either interpretations. 17 So I think the interpretation is available. 18 And perhaps -- God knows. America's a 19 proponent of rule making. Here stand I; right? 20 Won't be my first rodeo with rule making. We 21 all know that. 22 (Laughter). 23 MR. O'GARA: But, quite frankly, that 24 doesn't solve the problem. Because, let's be 25 honest. There's -- to suggest that we could do 82 ITEM NO. 16 1 rule making and that this company -- your 2 ultimate goal will be satisfied after they 3 undid themselves once and redid themselves 4 again, would make no sense. 5 What I suggest to you is you may want to 6 get there through rule making but, in fact, 7 you're free at this point to have this 8 interpretation. Whether you do it through 9 relaxation of the standard which you 10 enunciated, which was one of the two 11 alternatives under this regulation, or you do 12 it by reinterpreting, I suggest to you that you 13 can do it either way. But that if you choose 14 to follow the position that I advocate before 15 you, you come -- you've accomplished your goal. 16 And, quite frankly, I think you've done it in a 17 manner which is more in harmony with what you 18 seek in your regulation than if you were to put 19 these people on private boards. 20 CHAIR KASSEKERT: I guess my struggle is 21 I come at it the opposite end of Commissioner 22 Epps. I read the regulation. I see what I 23 think is the plain reading of it. Yet I do 24 believe that Commissioner Epps is correct that 25 ultimately we need clarification. To me it 83 ITEM NO. 16 1 seems plain on its face, but, obviously, as 2 history dictates and as your arguments 3 illustrate today, there may be some confusion 4 about the interpretation, and perhaps it is not 5 clear. So I sort of come at it from the 6 opposite way that you do. 7 MR. O'GARA: I think, Chair, maybe the 8 reason I come to reading it differently than 9 you do is that we'll never know as this was 10 written whether someone was looking at other 11 definitions. But we do know that as far back 12 as Resorts in 1984, this -- this Commission was 13 using American Stock Exchange definitions for 14 "independent director," and so we know there's 15 some suggestion that looking at the Exchange 16 defined terms for "independence" and "board 17 member" is something that's been part of the 18 culture here, at least going back to that. 19 And, as I said, if you were to read some of 20 those regulations, you were to read this idea 21 of committee of the board -- member of the 22 board as opposed to board committee, one can 23 see how you arrive at the interpretation you 24 do, and you arrive at it by plain reading and 25 other ways. But I suggest to you, whichever 84 ITEM NO. 16 1 you adopt, that you have the ability right here 2 and now to accomplish your goal by allowing us 3 to go forward with this standard because, quite 4 frankly, you may get more than you get if you 5 were to rigidly try to adhere to an 6 interpretation. 7 I am not, you know -- I have -- whether 8 you want to relax your interpretation or you 9 want to reinterpret, you know, obviously, I 10 seek a goal here. But I think either way, you 11 come closer to achieving what it is you want 12 from these -- this outside committee which has 13 responsibility for surveillance and internal 14 audit committee. That that's -- you know, I 15 think you get to the goal. So I don't have a 16 preference. But I'll take either one. Thank 17 you. 18 (Laughter.) 19 CHAIR KASSEKERT: Commissioner Fedorko? 20 Do you have anything? Insight on this. 21 COMMISSIONER FEDORKO: I guess the 22 problem I have with this, I just can't 23 understand how a member of the audit committee 24 who's on the board is independent. With a 25 private equity firm. I mean, in '78 I don't 85 ITEM NO. 16 1 think they were contemplating private equity 2 firms owning casinos. And that's really the 3 issue for me with this. 4 CHAIR KASSEKERT: Commissioner Frulio? 5 No. 6 Commissioner Sommeling? 7 VICE CHAIR SOMMELING: No comment. 8 CHAIR KASSEKERT: Does anyone need a 9 recess? 10 COMMISSIONER FEDORKO: No. 11 CHAIR KASSEKERT: Is there a motion? 12 COMMISSIONER FEDORKO: Madame Chair, I'm 13 going to make a motion to deny the requested 14 ruling but; A, to waive the requirements of 15 NJAC 19-45-1.11(c)2, upon good cause shown 16 pursuant to NJAC 19:40-1.3(d) insofar as it 17 would require that the Petitioners' audit 18 committee be comprised of members of the board 19 of directors; and, B, to approve the proposed 20 audit committee charter. 21 CHAIR KASSEKERT: Is there a second? 22 VICE CHAIR SOMMELING: Second. 23 COMMISSIONER EPPS: Second. 24 CHAIR KASSEKERT: The motion has been 25 made and seconded. All in favor? 86 ITEM NO. 17 1 (Ayes.) 2 CHAIR KASSEKERT: Opposed? 3 (No response.) 4 CHAIR KASSEKERT: Motion carries. 5 I am going to say, though, that I truly 6 believe -- in voting for this, I'm not going to 7 try to forestall and say I'm reversing my 8 earlier opinion, although it does appears that 9 I am reversing my earlier opinion. I do think 10 that we need closer examination with respect to 11 this, especially as we move forward and see 12 more and more entres with respect to private 13 equities, which is really a new animal for us 14 to be dealing with as we move forward. 15 So I will ask counsel here at the 16 Commission to start considering that as we move 17 forward, and we will certainly ask for the 18 input of the Division of Gaming Enforcement and 19 the industry as well. 20 Thank you. 21 MR. O'GARA: Thank you very much. 22 CHAIR KASSEKERT: Motion carries. 23 MR. NANCE: Item No. 17, petition of 24 Marina District Development Company, LLC, 25 requesting permission for Michael Bond to 87 ITEM NO. 17 1 perform the duties and exercise the powers of 2 Vice President of Internal Audit of Boyd Gaming 3 Corporation pending plenary qualification. 4 Miss Frank? 5 MS. FRANK: Good morning, Chair and 6 Commissioners. 7 A draft resolution of Mr. Bond's 8 temporary qualification has been circulated to 9 the parties. 10 With respect to Joe Corbo, General 11 Counsel of Borgata, we're doing this on the 12 papers. He had no objection to the resolution. 13 And Mr. Fogarty is here for the Division. 14 CHAIR KASSEKERT: I gave him a pass 15 because I was hard enough on him today. 16 Mr. Fogarty? 17 MR. FOGARTY: Good afternoon. 18 Bond. The name is Bond. Michael Bond. 19 (Laughter.) 20 CHAIR KASSEKERT: You've been waiting to 21 do that. 22 MR. FOGARTY: I've been waiting to say 23 that. 24 (Laughter.) 25 MR. FOGARTY: We filed a letter dated 88 ITEM NO. 17 1 February 1 not objecting to Michael Bond being 2 temporarily qualified to act as Boyd's -- what 3 is he? A Vice President of Internal Audit -- 4 of Internal Audit. And I've seen Miss Frank's 5 resolution, and I have no objection to it. 6 CHAIR KASSEKERT: Very good. 7 Any questions? 8 COMMISSIONER SOMMELING: No questions, 9 Madame Chair. 10 COMMISSIONER EPPS: Madame Chair, I move 11 to adopt the draft resolution and authorize 12 Michael Bond on a temporary basis prior to his 13 plenary qualification to assume the duties and 14 exercise the powers of Vice President of 15 Internal Audit for Boyd Gaming Corporation 16 subject to the conditions contained in NJAC 17 19:43-2.7 which, among other things, require 18 that he file a personal history disclosure form 19 MJ and NJ supplement by March 6th, 2008. 20 VICE CHAIR SOMMELING: Second. 21 CHAIR KASSEKERT: Motion has been made 22 and seconded. This is a roll call vote. 23 MR. NANCE: Commissioner Frulio? 24 COMMISSIONER FRULIO: Yes. 25 MR. NANCE: Commissioner Fedorko? 89 ITEM NO. 18 1 COMMISSIONER FEDORKO: Yes. 2 MR. NANCE: Commissioner Epps? 3 COMMISSIONER EPPS: Yes. 4 MR. NANCE: Vice Chair Sommeling? 5 VICE CHAIR SOMMELING: Yes. 6 MR. NANCE: Chair Kassekert? 7 CHAIR KASSEKERT: Yes. 8 MR. NANCE: The record will reflect that 9 the motion is unanimous. 10 MR. FOGARTY: Thank you. 11 MS. FRANK: Thank you. 12 MR. NANCE: Item No. 18, petition of 13 IGT, Resorts International Hotel, Inc., and RIH 14 Acquisitions, New Jersey, LLC, for permission 15 to terminate their "Soul Train" slot machines 16 games and to transfer the progressive jackpots. 17 Mr. Briliant? 18 MR. BRILIANT: Good afternoon, Madame 19 Chair. 20 Mr. Previti is here on behalf of the 21 Petitioner, IGT. Mr. Ficchi is here on behalf 22 of the Division. 23 I have circulated a proposed draft 24 resolution of the parties, and they have 25 indicated that it's acceptable to them if it is 90 ITEM NO. 18 1 acceptable to the Commission. 2 CHAIR KASSEKERT: Thank you. 3 Mr. Previti? 4 MR. PREVITI: Good afternoon, Chair, 5 Commissioners. 6 Leo Previti appearing for IGT. We've 7 read the draft resolution and ask that the 8 Commission adopt it. 9 CHAIR KASSEKERT: Thank you. 10 Mr. Ficchi? 11 MR. FICCHI: Yes. Good morning, Chair, 12 Commissioners, again. 13 We've reviewed the draft resolution, and 14 we have no objection to its adoption by the 15 Commission. 16 Thank you. 17 CHAIR KASSEKERT: Thank you. 18 Commissioners Epps, you had a question? 19 COMMISSIONER EPPS: You guys don't like 20 Soul Train? 21 MR. PREVITI: Actually, it was the most 22 popular games before us. But they all have 23 lifecycles, but it's get -- 24 CHAIR KASSEKERT: We're getting older. 25 (Laughter.) 91 ITEM NO. 19 1 COMMISSIONER FRULIO: Sorry, Mike. 2 CHAIR KASSEKERT: Any other questions? 3 COMMISSIONER SOMMELING: No questions, 4 Madame Chair. 5 COMMISSIONER FRULIO: Move to adopt the 6 draft resolution and approve Petitioners' 7 request to transfer progressive slot jackpots 8 subject to the conditions in the resolution. 9 COMMISSIONER FEDORKO: Second. 10 CHAIR KASSEKERT: The motion has been 11 made and seconded. All in favor? 12 (Ayes.) 13 CHAIR KASSEKERT: Opposed? 14 (No response.) 15 CHAIR KASSEKERT: Motion carries. 16 MR. PREVITI: Thank you. 17 MR. NANCE: Item No. 19, proposed 18 publication of amendment to NJAC 19:43-14.2. 19 Mr. Briliant? 20 MR. BRILIANT: Madame Chair and 21 Commissioners, the proposal before you would 22 codify in the Commission's advertising 23 regulations certain judicial determinations 24 that have been made regarding commercial 25 advertising, so we are simply bringing the 92 ITEM NO. 20 1 Commission's regulations up to date to conform. 2 CHAIR KASSEKERT: Thank you. 3 Any questions? 4 VICE CHAIR SOMMELING: Move to approve 5 for publication, Madame Chair. 6 COMMISSIONER EPPS: Second. 7 COMMISSIONER 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 MR. BRILIANT: Thank you. 15 MR. NANCE: Item No. 20, proposed 16 adoption of amendments for Dragon Bonus wager 17 in baccarat and minibaccarat. 18 Mr. Mamolen? 19 MR. MAMOLEN: Good afternoon, Madame 20 Chair, and Commissioners. 21 This matter is before you for adoption 22 relative to a side wager known as the Dragon 23 Bonus wager on both baccarat and minibaccarat. 24 And it's referred to as the optional bonus 25 wager, and it is that wager that's placed on 93 ITEM NO. 21 1 the initial cards dealt to both either player 2 or banker hands, and their winning payouts for 3 natural payouts point count exceeds one hand or 4 the other by four or more points. 5 There were no comments received to the 6 publication. And, again, it's before you for 7 final adoption. 8 CHAIR KASSEKERT: Thank you. 9 Any questions? 10 VICE CHAIR SOMMELING: Move to adopt as 11 published, Madame Chair. 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. 21, proposed 20 publication and temporary adoption of 21 amendments to NJAC 19:47-3.12, 4.12, 7.8, and 22 7.11. 23 Mr. Mamolen? 24 MR. MAMOLEN: This is a matter before 25 you for publication and temporary adoption. 94 ITEM NO. 21 1 It's really two issues combined in one, two 2 matters addressed in one proposal. 3 The first would allow the banker's hand 4 in minibaccarat to be disclosed and announced 5 before the player's hand. This conforms 6 basically -- one of the options of the way they 7 do it in regular baccarat. 8 The second one is addressing a little 9 bit of an irregularity we had with an 10 inadvertently disclosed card that is a 11 ten-value card. Ten-value cards in baccarat, 12 minibaccarat are ten, jack, queen and king. 13 And the way of disposing of that irregularity, 14 as proposed, would be allowing the 15 additional -- either one or ten additional 16 cards being dealt from the shoe, and then the 17 game will proceed as usual. 18 It's before you for publication and 19 temporary adoption. 20 CHAIR KASSEKERT: Thank you. 21 Any questions? 22 COMMISSIONER SOMMELING: No questions, 23 Madame Chair. 24 COMMISSIONER FRULIO: Move to approve 25 for publication and temporary adoption. 95 ITEM NO. 22-23 1 COMMISSIONER FEDORKO: Second. 2 CHAIR KASSEKERT: The motion has been 3 made and seconded. All in favor? 4 (Ayes.) 5 CHAIR KASSEKERT: Opposed? 6 (No response.) 7 CHAIR KASSEKERT: Motion carries. 8 MR. NANCE: Item No. 22, petition of 9 Adamar of New Jersey, Inc., et al., for 10 suspension of the requirement to pay a civil 11 penalty and other matters. 12 MS. FAUNTLEROY: That matter is being 13 adjourned at the request of the Petitioners. 14 Thank you. 15 MR. NANCE: Item No. 23, consideration 16 of the application of the Conservator and 17 Trustee for the former casino licensee Adamar 18 of New Jersey, Inc., for approval of fees for 19 the Conservator/Trustee, and his counsel. 20 Miss Fauntleroy? 21 MS. FAUNTLEROY: Good afternoon. 22 You have before you the application, the 23 first application of the application of the 24 Conservator, Justice Stein, for allowance of 25 fees of his direct fees as well as allowance 96 ITEM NO. 23 1 for fees and expenses of his personal counsel, 2 Pashman Stein. 3 For the Petitioner is Sean Mack and for 4 the Division of Gaming Enforcement is Mary Jo 5 Flaherty. 6 The invoices, as well as the report of 7 the Conservator, was provided to Paul O'Gara on 8 behalf of Tropicana and to the Division as 9 well. 10 CHAIR KASSEKERT: Thank you very much. 11 Mr. Mack, good afternoon. 12 MR. MACK: Good morning, Chair, 13 Commissioners. 14 You have our papers before you. If you 15 have any questions, I'm happy to answer them. 16 Otherwise, I'll rely on what we've submitted to 17 you. 18 CHAIR KASSEKERT: Thank you. 19 Commissioner Epps, would you like to 20 wait to -- 21 COMMISSIONER EPPS: I'll wait. 22 CHAIR KASSEKERT: All right. 23 Miss Flaherty? 24 MS. FLAHERTY: Yes. Commissioners, 25 we've reviewed the invoices and computed the 97 ITEM NO. 23 1 hours at the rates stated. Based upon the fact 2 that the payments to the Conservator are within 3 the authority of the Commission under the 4 Casino Control Act, noting that matter, we have 5 no objection with respect to the items 6 submitted. 7 Thank you. 8 CHAIR KASSEKERT: Thank you. 9 Questions? Commissioner Epps? 10 COMMISSIONER EPPS: I don't know if I 11 have so much of a question as a caution or a -- 12 not even a caution -- but a thought. 13 I understand that when this matter was 14 originally engaged, there was a great deal of 15 work to do and a huge learning curve, and I 16 understand that. I guess my only request is, 17 going forward, considering the nature of what 18 we're dealing with, if we could seek in the 19 future to limit the number of high level, 20 high-fee people on the same item going forward. 21 That would, I think, serve these whole purpose 22 better. 23 MR. MACK: I hear your comment. I will 24 bring that back to Justice Stein, and we will 25 do our best to make sure everything is staffed 98 ITEM NO. 23 1 efficiently and appropriately so there's no 2 overlapping where it's not necessary. 3 COMMISSIONER EPPS: Thank you. 4 CHAIR KASSEKERT: Thank you. 5 Any other questions? Okay. 6 Today we have before us the 7 Conservator's application for allowance of his 8 direct fees and for allowance of fees and 9 disbursements for services performed on his 10 behalf by his personal counsel, Pashman Stein, 11 PC, for the period of December 20th, 2007, 12 through December 31st, 2007, and for the period 13 of January 1st, 2008, through January 31st 14 2008. 15 In accordance with our December 19th, 16 2007, order, we received the Conservator's 17 first report of the administration of his 18 conservatorship, and that report provided us 19 with an overview of the Conservator and his 20 personal counsel's efforts to fulfill its 21 statutory directive, which is to ensure the 22 continuity and stability of operations at the 23 Tropicana pending its disposition, and to 24 endeavor to secure its disposition. 25 I note that the Conservator and his 99 ITEM NO. 23 1 counsel submitted appropriate supporting 2 records for their application. As I've been in 3 contact with the Conservator, for the most part 4 on a daily basis, I'm well aware of his efforts 5 in these endeavors. Through January 31st, 6 2008, the Conservator has expended over 143 7 hours on behalf of the administration of his 8 conservatorship while his counsel, Pashman 9 Stein, has expended over 254 hours. And this 10 is indeed a lot of time. In light of the 11 regular, hourly rate of the Conservator and his 12 personal counsel, also approved by the 13 Commission, the fee allowance for the 14 Conservator and his counsel could quickly 15 escalate. The Commission does have the 16 statutory authority to approve all fee 17 applications and reduce them if the Commission 18 deems them excessive. If the circumstances 19 warrant, as Commissioner Epps noted, I will not 20 be reluctant to exercise that authority. 21 However, I do not believe a reduction in either 22 the Conservator or his counsel fees is 23 warranted at this time. 24 The revocation of Adamar's casino 25 license and its expiration and the denial of 100 ITEM NO. 23 1 plenary qualification for Adamar's holding and 2 parent companies created a unique set of 3 circumstances and raised a number of novel 4 issues which needed to be immediately addressed 5 by the Conservator and his counsel. 6 I do not however, wish to see the fees 7 and expenses attendant to the Conservatorship 8 become unduly burdensome and expect that the 9 Conservator, his counsel, and approved 10 consultants will be judicious in this regard. 11 I'm, therefore, heartened to receive reports 12 that the Conservator is preparing to release 13 the initial offering memorandum for the sale of 14 Tropicana and that he intends to vigorously 15 pursue a June closing. 16 With these cautionary remarks, I move to 17 approve the application of the Conservator for 18 the allowance of his direct fees in the amount 19 of $92,247 for the period December 20th through 20 January 31st, 2007, and to his personal 21 counsel, Pashman Stein, PC, in the amount of 22 $120,817.50 for fees and 1 -- yeah -- $1729.17 23 for expenses for the same period, for a total 24 allowance pursuant to the Conservator's 25 application for the amount of $215,691.67. 101 ITEM NO. 24 1 Is there a second? 2 VICE CHAIR SOMMELING: Second. 3 COMMISSIONER FEDORKO: Second. 4 COMMISSIONER SOMMELING: Madame Chair, 5 is there a clarification on the January date? 6 Should that be 2008? 7 CHAIR KASSEKERT: Yes. 2008. Did I say 8 "2007"? 9 VICE CHAIR SOMMELING: Yes. 10 CHAIR KASSEKERT: I did. Thank you for 11 correcting me, Commissioner Sommeling. 12 A motion has been made and seconded. 13 All in favor? 14 (Ayes.) 15 CHAIR KASSEKERT: Opposed? 16 (No response.) 17 CHAIR KASSEKERT: Motion carries. 18 Thank you. 19 MR. MACK: Thank you. 20 MR. NANCE: Item No. 24, petition of 21 Adamar of New Jersey, Inc., to waive the 22 imposition of fines regarding hotel room fees. 23 Mr. Ingis? 24 MR. INGIS: It's my understanding, 25 Madame Chair and Commissioners, that that item, 102 ITEM NO. 24 1 too, has adjourned at the request of the 2 Petitioner. 3 CHAIR KASSEKERT: Thank you. 4 MR. NANCE: In accordance with 5 Resolution No. 07-12-12-26, the next closed 6 session of the Commission shall be held on 7 Wednesday, March 5th, 2008, at 9:15 a.m. in the 8 Commission offices. 9 It is now time for the public 10 participation portion of the meeting. 11 CHAIR KASSEKERT: Before I ask if 12 there's anybody from the public that wishes to 13 be heard, I'd be remiss in not introducing our 14 guests from Pennsylvania who are with us today. 15 We have Representative Harold James, who 16 is the Chairman of the Pennsylvania House of 17 Representatives Gaming Oversight Committee. 18 You ar very welcome, sir. Representative 19 Ronald Waters, who is the Vice Chairman. 20 Representative Curtis Sonney. I hope I'm 21 saying that correctly. Did I say that 22 correctly? 23 REP. SONNEY: Sonney. 24 CHAIR KASSEKERT: Sonney. Very good. 25 Representative Mike O'Brien and Mary 103 1 Isaacson, who is his Chief of Staff. 2 And from the Pennsylvania House of 3 Representatives Gaming Oversight Committee 4 staff, we have Terrence Alladin, who is the 5 Executive Director. Christina -- Christa 6 Vinson, Legislative Assistant. LaTasha 7 Williams, Research Analyst, and Mandi Love, 8 who's consultant to the Committee. 9 And from our colleagues on the 10 Pennsylvania Gaming Control Board, we have Paul 11 Resch, Secretary to the Gaming Board, Cyrus 12 Pitre, an old friend of ours from New Jersey, 13 who is Chief Enforcement Counsel. Doug 14 Harbach, the Director of Communications, and 15 Dan Stambaugh, Legislative Liaison. 16 So you are all welcome. And thank you 17 for coming. And I know we're going to be 18 talking after this, if we don't interrupt your 19 lunch schedule, which I think we've gone well 20 over. 21 Let me ask if there's anyone from the 22 public who wishes to be heard? 23 Seeing no one, I'll declare this portion 24 of the meeting closed and -- 25 Oh, would you like to be heard? 104 PUBLIC PARTICIPATION - REP. JAMES 1 REP. JAMES: Yeah. 2 CHAIR KASSEKERT: Terrific. Thank you. 3 Come up and approach and take a seat. 4 And state your name for the record, although we 5 know who you are. 6 REP. JAMES: Thank you. 7 My name is Representative Harold James, 8 Majority Chairman of the Gaming Oversight 9 Committee of the Pennsylvania House of 10 Representatives. 11 I'd just like to thank you for allowing 12 us the opportunity to be here to hear you in 13 session and with our committee. I'd like to 14 thank all your staff for the help in getting us 15 here, and Mandi Love from our staff that helped 16 us, and I appreciate it. And we're look 17 forward to gaining some expertise. 18 CHAIR KASSEKERT: Thank you. Thank you 19 very much for coming. 20 Anyone else from the public who wishes 21 to be heard? 22 (No response.) 23 CHAIR KASSEKERT: Seeing no one, I'll 24 declare this portion of the meeting closed and 25 entertain a motion to adjourn. 105 1 VICE CHAIR SOMMELING: Motion to 2 adjourn. 3 COMMISSIONER FEDORKO: Second. 4 COMMISSIONER FRULIO: 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 (Public Meeting 08-02-20 was adjourned 12 at 12:42 p.m.) 13 14 15 16 17 18 19 20 21 22 23 24 25 106 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: February 22, 2008 23 My Commission Expires on July 10, 2009 24 ID No 2062871 25