1 1 STATE OF NEW JERSEY 2 CASINO CONTROL COMMISSION 3 - - - - - - - - - - - - - - - - - - - 4 5 PUBLIC MEETING NO. 09-09-09 6 7 - - - - - - - - - - - - - - - - - - - 8 9 Wednesday, September 9, 2009 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 10:35 a.m. to 11:44 a.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 2 CASINO CONTROL COMMISSION: LINDA M. KASSEKERT, CHAIR 3 MICHAEL C. EPPS, VICE CHAIR WILLIAM T. SOMMELING, COMMISSIONER 4 SHARON ANNE HARRINGTON, COMMISSIONER 5 PRESENT FOR THE CASINO CONTROL COMMISSION: 6 DARYL W. NANCE, ADMINISTRATIVE ANALYST DANIEL J. HENEGHAN, PUBLIC INFORMATION OFFICER 7 OFFICE OF THE GENERAL COUNSEL: 8 DIANNA W. FAUNTLEROY, GENERAL COUNSEL/EXECUTIVE SECRETARY 9 MARY WOZNIAK, ASSISTANT GENERAL COUNSEL DENIS J. CORBETT, SENIOR COUNSEL 10 TERESA M. NAGENGAST, SENIOR COUNSEL SETH H. BRILLIANT, SENIOR COUNSEL 11 LON E. MAMOLEN, SENIOR COUNSEL CLAIRE FRANK, PROGRAM MANAGER 12 BERNADETTE T. FRIGEN, PROGRAM SUPERVISOR 13 DIVISION OF GAMING ENFORCEMENT: DEPUTY ATTORNEYS GENERAL 14 JOHN E. ADAMS, JR., DEPUTY ATTORNEY GENERAL JAMES J. ARMSTRONG, DEPUTY ATTORNEY GENERAL 15 BRIAN C. BISCIEGLIA, DEPUTY ATTORNEY GENERAL TIMOTHY C. FICCHI, DEPUTY ATTORNEY GENERAL 16 CHARLES F. KIMMEL, DEPUTY ATTORNEY GENERAL DOROTHY TURI, DEPUTY ATTORNEY GENERAL 17 R. LANE STEBBINS, 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. 4 DENIS J. CORBETT, SENIOR COUNSEL R. LANE STEBBINS, DEPUTY ATTORNEY GENERAL 3 STERNS & WEINROTH, PC DENNIS DALY, ESQ. 4 FOR: CAESARS ATLANTIC CITY 5 ITEM NO. 6 SANDRA DeLIA, LEGAL SUPPORT SPECIALIST JAMES J. ARMSTRONG, DEPUTY ATTORNEY 6 GENERAL LEVINE STALLER 7 JOHN M. DONNELLY, ESQ. FOR: JOHN P. CONKLIN 8 ITEM NO. 8 TRACY E. RICHARDSON, COUNSEL 9 JOHN E. ADAMS, JR, DEPUTY ATTORNEY GENERAL STERNS & WEINROTH, PC 10 DENIS DALY, ESQ. FOR: RICHARD YUHAS AND ROBERT YEE 11 ITEM NO. 9 TRACY E. RICHARD, COUNSEL 12 DOROTHY TURI, DEPUTY ATTORNEY GENERAL STERNS & WEINROTH, PC 13 DENIS DALY, ESQ. FOR: HARRAH'S ENTITIES 14 ITEM NO. 10 CLAIR FRANK, PROGRAM SUPERVISOR 15 DOROTHY TURI, DEPUTY ATTORNEY GENERAL STERNS & WEINROTH, PC 16 DENIS DALY, ESQ. FOR: HARRAH'S ENTERTAINMENT, INC. 17 AND HARRAH'S OPERATION COMPANY, INC. 18 ITEM NO. 12 SETH H. BRILIANT, SENIOR COUNSEL CHARLES F. KIMMEL, DEPUTY ATTORNEY GENERAL 19 STERNS & WEINROTH, PC DENIS DALY, ESQ. 20 FOR: HARRAH'S ENTITIES 21 ITEM NO. 17 MARY WOZNIAK, ASSISTANT GENERAL COUNSEL DOROTHY TURI, DEPUTY ATTORNEY GENERAL 22 STERNS & WEINROTH, PC PAUL M. O'GARA, ESQ. 23 FOR: HARRAH'S ENTITIES 24 25 4 1 AGENDA PUBLIC MEETING NO. 09-09-09 2 September 9, 2009, 10:35 a.m. ITEM PAGE VOTE 3 1 Ratification of the minutes of the 9 9 August 26, 2009, public meeting 4 2 Applications for employee and casino service industry licenses 5 12 initial and/or renewal of casino key 10 10 and casino employee licenses 6 6 initial and/or renewal of casino key 10 11 and casino employee licenses 7 3 Stipulations of settlement and consent agreements: 8 a) William E. Wannop, Jr. (09-0024-ER) 11 12 b) Nicholas J. Celli (07-0302-RC) 11 12 9 c) James W. Harvey (09-0076-RC) 11 12 d) Boksun Bell (08-0930-RC) 11 12 10 e) Federico Candelaria (09-0320-ER) 11 12 f) Donna E. Jackson (08-0754-ER) 11 12 11 g) Larry J. Johnson (08-0823-ER) 11 12 h) Shan Hon (09-0242-EA) 11 12 12 i) Ernest H. Alexander (08-0887-ER) 11 12 j) Francis P. Flynn (08-0431-ER) 11 12 13 k) Martin Garcia (09-0089-ER) 11 12 l) Jeffrey A. Mullen (09-0245-ER) 11 12 14 m) David P. Petsch (08-0914-ER) 11 12 n) Joseph J. Ricciardi, Jr. (09-0170-ER) 11 12 15 o) Denisha Crews-Foster (09-0258-EA) 11 12 4 Stipulation of settlement in State v. 13 14 16 Boardwalk Regency Corporation (d/b/a Caesars Atlantic City) (09-0030-VC) 17 5 Petition of Lesley S. Johnson for 15 27 early reapplication (09-0411-RA) 18 Sworn 15 6 Motion to vacate suspension order in 29 32 19 State v. John P. Conklin (08-0456-RC) 7 Consideration of final exclusion orders in: 20 a) Shoumin Chai (a/k/a Min Chai, Joyce 32 34 Dai, Chai Min, Lily Wang, Min Wang, 21 and Lily Wong (09-0227-EL) b) John M. Regis (09-0273-EL) 32 34 22 c) Jerry C. Romano (09-0274-EL) 32 34 d) Joseph Spinnato (09-0272-EL) 32 34 23 e) Erickson Urtecho (a/k/a Erikson 32 34 Urtecho, Erickson Urtecho-Miralda (08-0717-EL) 24 f) Arthur J. Zagari (09-0276-EL) 32 34 8 Request to withdraw applications for qualification: 25 a) Richard Yuhas (PRN 2010901) 34 44 b) Robert Yee (PRN 2010902) 34 44 5 1 CONTINUED AGENDA 2 PUBLIC MEETING NO. 09-09-09 September 9, 2009, 10:35 a.m. 3 ITEM PAGE VOTE 4 9 Petition of Harrah's Entertainment, Inc. 44 47 Harrah's Operating Company, Inc., Harrah's 5 Atlantic City Operating Company, LLC, Showboat Atlantic City Operating Company, LLC, 6 Bally's Park Place, Inc., and Boardwalk Regency Corp., to permit Donald Marrandino 7 to perform the duties and exercise the powers of President, Eastern Division pending plenary 8 qualification (PRN 2380905) 10 Consideration of the qualification of 47 49 9 Katrina Lane to serve as Senior Vice President and Chief Technology Officer of Harrah's 10 Entertainment, Inc, and Harrah's Operating Company, Inc. 11 11 Petition of Trump Taj Mahal Associates 50 51 (d/b/a Trump Taj Mahal Casino Resort) for 12 permission to transfer a progressive slot jackpot pursuant to NJAC 19:45-1.39(n) 13 (PRN 2300901) 12 Petition of Harrah's Entertainment, Inc., 51 56 14 Harrah's Operating Company, Inc., and casino licensees Bally's Park Place, Inc., Boardwalk 15 Regency Corporation, Showboat Atlantic City Operating Company, LLC, and Harrah's Atlantic 16 City Operating Company, LLC, for an extension of time to comply with conditions C-1 and C-2 17 in Commission Resolution No. 09-07-15-11 (PRN 1670901) 18 13 Proposed adoption of amendments for 56 57 insurance wager in pai gow poker 19 14 Proposed adoption of amendments to NJAC 58 59 19:45-1.25 (procedure for exchange of checks 20 submitted by gaming or simulcast wagering patrons; repurchase of cash equivalents) 21 15 Proposed adoption of amendments to NJAC 59 60 19:42-2.1, 2.2, 2.4, 2.8, 19:45-1.8 and new 22 rules 19:48-3.1 and 3.2 (forfeiture of winnings or things of value obtained by a 23 prohibited person) 16 Proposed adoption of amendments to NJAC 60 62 24 19:45-1.19 (acceptance of tips or gratuities from patrons) 25 6 1 CONTINUED AGENDA PUBLIC MEETING NO. 09-09-09 2 September 9, 2009, 10:35 a.m. ITEM PAGE VOTE 3 17 Petition of Harrah's Operating Company, 62 84 4 Inc., Showboat Atlantic City Operating Company, LLC, Boardwalk Regency Corp. 5 and Bally's Park Place, Inc., for approval of the issuance of new senior secured 6 notes and other relief (PRN 2400901) Michael Cohen, sworn 65 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 7 1 E X H I B I T S : 2 NO. DESCRIPTION EVD 3 4 P-1 Remand for hearings 12 license X 5 P-2 Grant 6 licenses X 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 (Exhibits retained by Commission.) 23 24 25 8 1 (Public Meeting 09-09-09 was commenced 2 at 10:35 a.m.) 3 MR. NANCE: Good morning. I'd like to 4 read an opening 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 7, 2008, filed with the 10 Secretary of State at the State House in 11 Trenton, New Jersey, a notice of this hearing. 12 On October 7, copies were mailed to 13 subscribers. 14 Members of the press will be permitted 15 to take photographs, and we ask that this be 16 done in a manner which is not disruptive or 17 distracting to the Commission. 18 The use of cell phones in the public 19 meeting room is prohibited. 20 Any member 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 Would everyone please stand for the 25 Pledge of Allegiance. 9 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 enterprise license matters. 6 The Commission approved the August 26th, 7 2009, closed-session minutes. 8 Litigation update regarding: The appeal 9 and applications of Interstate Drywall, 10 Corporation et al. 11 Petition of Highgate Steel for release 12 of money. 13 And Edward versus Adamar of New Jersey, 14 Inc., et al. 15 Item No. 1, ratification of the minutes 16 of August 26, 2009, public meeting. 17 COMMISSIONER SOMMELING: Move to 18 approve. 19 COMMISSIONER HARRINGTON: Second. 20 VICE CHAIR EPPS: Second. 21 CHAIR KASSEKERT: The motion has been 22 made and seconded. All in favor? 23 (Ayes.) 24 CHAIR KASSEKERT: Opposed? 25 (No response.) 10 ITEM NO. 2 1 CHAIR KASSEKERT: Motion carries. 2 MR. NANCE: Item No. 2, application for 3 employee and casino service industry licenses. 4 This agenda item will be entered as Exhibit 5 List 1 and 2. 6 Exhibit List 1 consists of 12 7 applications for initial and/or renewal of 8 casino key and casino employee licenses. 9 The Division has objected to licensure. 10 VICE CHAIR EPPS: I move that these 11 matters be remanded for hearing. 12 COMMISSIONER HARRINGTON: 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 six applications for initial and/or renewal of 21 casino key and casino employee licenses. 22 Staff and the Division have recommended 23 that these licenses be granted. 24 VICE CHAIR EPPS: I move that we grant 25 these applications. 11 ITEM NO. 3 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. 3, stipulation of 9 settlement and consent agreements. When I call 10 your name, please come forward, stand behind 11 this middle table so that -- spreading across 12 the room so that you may be seen: William 13 Wannop, Jr., Nicholas Celli, James Harvey, 14 Boksun Bell, Frederico Candelaria, Donna 15 Jackson, Larry Johnson, Shan Hon, Ernest 16 Alexander, Francis Flynn, Martin Garcia, 17 Jeffrey Mullen, David Petsch, Joseph Ricciardi, 18 Jr., and Denisha Crews-Foster. 19 CHAIR KASSEKERT: Has everyone whose 20 name called -- come forward at this point? 21 I'm going to ask that you each state 22 your name for the record, starting with you, 23 sir? 24 MR. FLYNN: Francis Flynn. 25 CHAIR KASSEKERT: Ma'am? Your name? 12 ITEM NO. 3 1 MS. FOSTER: Oh, Denisha Crews-Foster. 2 MR. ALEXANDER: Ernest Alexander. 3 CHAIR KASSEKERT: Okay. In a moment 4 we're going to vote on the stipulations which 5 you've agreed to with the Division of Gaming 6 Enforcement. I'm going to ask at this point if 7 any of you wish to be heard on your matter. 8 You don't have to say anything if you don't 9 want to. 10 Does anyone wish to be heard? 11 (No response.) 12 CHAIR KASSEKERT: Okay. Mr. Armstrong? 13 MR. ARMSTRONG: The Division would just 14 ask that the stipulations be approved. 15 Thank you. 16 CHAIR KASSEKERT: Thank you. 17 Any questions? 18 COMMISSIONER SOMMELING: Madame Chair, 19 move to approve the stipulations. 20 VICE CHAIR EPPS: Second. 21 CHAIR KASSEKERT: The motion has been 22 made and seconded. All in favor? 23 (Ayes.) 24 CHAIR KASSEKERT: Opposed? 25 (No response.) 13 ITEM NO. 4 1 CHAIR KASSEKERT: Motion carries. 2 Thank you for coming. Good luck. 3 MR. FLYNN: Thank you. 4 MS. FOSTER: Thank you. 5 MR. ALEXANDER: Thank you. 6 MR. NANCE: Item No. 4, stipulation of 7 settlement in State versus Boardwalk Regency 8 Corporation. 9 Mr. Corbett? 10 MR. CORBETT: Chair, Commissioners, in 11 the stipulation of settlement in this matter, 12 the casino licensee admits that it violated the 13 regulations regarding the vendor registration 14 forms and agrees to a penalty of $6,000. 15 Mr. Daly is here for the casino 16 licensee, and Mr. Stebbins for the Division. 17 CHAIR KASSEKERT: Mr. Daly? Good 18 morning. 19 MR. DALY: Good morning, Chair, 20 Commissioners. 21 We simply urge that you approve the 22 stipulation and impose a $6,000 monetary 23 penalty, to which we fully agree. 24 CHAIR KASSEKERT: Thank you. 25 Mr. Stebbins? 14 ITEM NO. 4 1 MR. STEBBINS: Thank you, Madame Chair, 2 members of the Commission. 3 I echo Mr. Daly's words. The facts are 4 before you. The admission by the licensee is 5 clear, and I believe the fines are appropriate. 6 I'd ask you to enter the order. 7 Thank you. 8 CHAIR KASSEKERT: Thank you. 9 Any questions? 10 COMMISSIONER SOMMELING: No questions, 11 Madame Chair. 12 VICE CHAIR EPPS: Madame Chair, I move 13 that we approve the stipulation of settlement 14 and impose a civil penalty of $6,000 against 15 Boardwalk Regency Corporation for violation of 16 Commission regulations regarding failure to 17 timely file vendor registration forms. 18 COMMISSIONER HARRINGTON: 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 Thank you. 15 ITEM NO. 5 1 MR. NANCE: Item No. 5, petition of 2 Lesley S. Johnson for early reapplication. 3 Miss Frigen? 4 MS. FRIGEN: Good morning, Madame Chair, 5 and Commissioners. Mr. Johnson is present. 6 For your consideration is his petition 7 seeking permission to reapply early for a 8 registration and/or a noncredential hotel 9 employment. 10 The Division has objected to this 11 petition. 12 CHAIR KASSEKERT: Thank you. 13 Mr. Johnson, is there anything you'd 14 like to say today? If so, would you please 15 rise, and we'll swear you in. 16 MR. NANCE: Would you stand, please? 17 Look at me. 18 19 LESLEY S. JOHNSON was duly sworn to 20 testify in this matter. 21 22 MR. NANCE: Please state your name for 23 the record. 24 MR. JOHNSON: My name is Lesley 25 Sahdiekhan Johnson. 16 ITEM NO. 5 1 CHAIR KASSEKERT: Thank you. 2 MR. NANCE: Thank you. You may be 3 seated. 4 CHAIR KASSEKERT: What would you like to 5 say today, Mr. Johnson? 6 MR. JOHNSON: Do I have to stand? 7 CHAIR KASSEKERT: No. You don't have to 8 stand. 9 MR. JOHNSON: I want to come before your 10 presence. I want you to know I'm a new man. I 11 respect people in authority. I have a family, 12 and I'm looking forward to getting back into 13 society and being a citizen that's works and is 14 honorable. And it's my duty and my loyalty to 15 stand up for my family for my country. And I'm 16 striving for the progress to have that 17 opportunity to do that. And so it's my 18 pleasure to stand before you needing -- wanting 19 you -- letting you know that and I want and I 20 need to have the necessary employment to obtain 21 a job to provide for my family. 22 CHAIR KASSEKERT: Are you working right 23 now, Mr. Johnson? 24 MR. JOHNSON: No. I'm not. Right now 25 I'm not working at the present time. I am in a 17 ITEM NO. 5 1 Behavioral Intervention Program here at 26 2 South Pennsylvania Avenue, and I'm working with 3 counselors there. And I am seeking employment. 4 I have a promise of employment at Trop. Not 5 Trop -- Trump Plaza. 6 CHAIR KASSEKERT: Uh-huh. 7 MR. JOHNSON: With Chef Buddy Logan. So 8 he told me when I get through with the Casino 9 Control Commission to give him a call. 10 CHAIR KASSEKERT: What sort of position 11 do you have the potential for at Trump? 12 MR. JOHNSON: Intermediate cook. 13 CHAIR KASSEKERT: A cook. Okay. 14 Let met me ask if any other 15 Commissioners have any questions before we hear 16 from the Division? 17 COMMISSIONER SOMMELING: I have no 18 questions. 19 CHAIR KASSEKERT: Commissioner Epps? 20 No. 21 Commissioner Harrington? 22 Mr. Armstrong? 23 MR. ARMSTRONG: Chair and Commissioners, 24 you have our letter of July 15th. Mr. Johnson 25 was revoked less than four years ago because a 18 ITEM NO. 5 1 disqualifying conviction, a very serious 2 disqualifying conviction, sexual assault, 3 second degree. He's been disqualified for well 4 less -- not well less, but less than the five 5 years. And it's our position he should be 6 facing at least the minimum for 7 disqualification for such a serious conviction. 8 He's just recently been released from 9 prison on March 7th, and he's currently on 10 parole. 11 It is our position that there is nothing 12 in the record here that should merit the 13 extraneous and exceptional relief that he's 14 requesting here to be permitted to return to 15 the gaming industry at this time. 16 Thank you. 17 CHAIR KASSEKERT: Mr. Johnson, is there 18 any response you'd like to make? 19 MR. JOHNSON: Yes. The period that he's 20 talking about -- it's almost up. And I'm 21 moving on with my life. Yes, I did commit a 22 crime, and I deeply regret that. I have made 23 amends with the family, and I'm making amends 24 with myself. And I respect people in 25 authority. And it's an honor to stand right 19 ITEM NO. 5 1 here -- to sit right here before you and, you 2 know, speak my case. 3 I don't -- I don't -- I don't like the 4 charges that are against me. But I have to 5 move on with my life. I regret that, and it's 6 nothing -- you know, glamorous about that. 7 Crime and living on the streets is not -- it's 8 not the way for a man to live. A man should be 9 able to work and provide for his family. And I 10 respect what he's saying. It's just that the 11 way society is now, I feel as though that I can 12 prosper, and I can make it now. Even with the 13 way the economy is, you know, I believe in a 14 second chance. And I need that. 15 And like he says, you know, I respect 16 this man, too. But I just want to be able to 17 provide for my family. 18 CHAIR KASSEKERT: Uh-hum. 19 MR. JOHNSON: And be able to live an 20 honorable life. 21 CHAIR KASSEKERT: Commissioner Epps? 22 VICE CHAIR EPPS: Mr. Johnson, I have a 23 question. I understand your statements about 24 respecting authority and seeking a living, an 25 honorable life, and taking care of your family 20 ITEM NO. 5 1 and all that is noted. And it's -- that's 2 noble. You seek us to give you permission to 3 reapply early so that you can get a job in the 4 casino industry, which is a highly regulated 5 industry where the -- the ability to work there 6 is -- is not an absolute right. It's a 7 privilege that you earn over time. 8 MR. JOHNSON: Right. 9 VICE CHAIR EPPS: But you almost seem to 10 portray it as getting into the industry is the 11 only way that you could be able to get a useful 12 life and take care of your family. If I 13 understand correctly, you have a particular 14 expertise in food -- in cooking. 15 MR. JOHNSON: Right. 16 VICE CHAIR EPPS: As a cook. And you've 17 done well in your rehabilitation to establish 18 some almost artistic qualities there. But the 19 casino industry is not the only food -- only 20 place that the food industry has opportunities. 21 Have you sought opportunities in the 22 food industry outside of the casino 23 establishments in town? What I'm saying is, 24 there are opportunities for you to enter into 25 that business. 21 ITEM NO. 5 1 MR. JOHNSON: Right. 2 VICE CHAIR EPPS: In establishments that 3 don't require you to come before us. So you 4 can get yourself on your feet and start moving 5 toward progress without even touching your 6 issues with the casino industry until your time 7 has expired. There are other food 8 establishments that don't require you to come 9 before the Casino Control Commission, but you 10 can get yourself up on your feet, start 11 working, take care of your family, and things 12 of that nature. Have you pursued those 13 avenues? 14 MR. JOHNSON: Yes, I have. And like I 15 said before, I have a promise of employment at 16 the Trump Plaza with Chef Buddy Logan. And I 17 went through all the procedures, like you said. 18 I've been other places, but when I went down 19 there to the employment office, this is what 20 stopped me. So he stated to me to come back 21 and get in touch with him, and I have went to 22 other revenues. But I need a job. I have 23 children. I need a job that has benefits so I 24 can take them to the doctor as well as provide 25 for them and spend time with them. 22 ITEM NO. 5 1 You are right. But I would like to -- 2 you know, you have a big casino that's down 3 here, and I live in Atlantic City. There are 4 other revenues, like you said, but, you know, 5 my goal is to get -- maintain a position 6 besides that. 7 VICE CHAIR EPPS: I understand your 8 goal. 9 THE WITNESS: That has a benefit. 10 VICE CHAIR EPPS: I understand your 11 goal, and that's a noble goal. And at some 12 point I think you may be able to accomplish 13 that. The problem that I have is that you seek 14 to enter a highly regulated industry where 15 integrity and things of that nature are 16 tantamount to interests there. And you have 17 this thing that is in your past that's not too 18 far away from you and you continue on parole 19 currently. 20 MR. JOHNSON: Right. 21 VICE CHAIR EPPS: At a certain point, I 22 think that based on what I've seen and the 23 representations that have been made, you will 24 be able to establish your rehabilitation and 25 you're ready. My reluctance is that I don't 23 ITEM NO. 5 1 think that we've reached that point concerning 2 the fact that you're currently still on parole. 3 That that's the difficulty that I have. And 4 the other thing is, it's not that the industry 5 is the only place that you can seek this 6 opportunity that you seek. That's -- it's not 7 as if you're seeking a situation where your 8 expertise is only in the casino establishments. 9 MR. JOHNSON: Right. 10 VICE CHAIR EPPS: That's the only place 11 you can see seek that out. So you have other 12 opportunities, and you remain on parole. That 13 makes your case particularly difficult and at 14 this posture. 15 MR. JOHNSON: Okay. When it ends -- 16 well, you all stipulation ends in 2010, I do 17 believe. 18 VICE CHAIR EPPS: And -- 19 MR. JOHNSON: That's why I was 20 reapplying early. 21 VICE CHAIR EPPS: Right. 22 MR. JOHNSON: And well, like you said, I 23 have other options, and it's totally up to you. 24 If you decline, you know, God bless you. If 25 not, God bless you still. But, like I said, 24 ITEM NO. 5 1 I'm a new man. And I thought that what better 2 place to come to regain what you've lost if you 3 believe that you are a new person and you 4 respect people in authority. So why not put my 5 petition before like -- you know, because we 6 live in America, and this is the land of the 7 free and opportunity. So, you know, that's all 8 in your hands. 9 CHAIR KASSEKERT: Your parole is up in 10 2010? 11 MR. JOHNSON: No. I have two and a half 12 years. 13 CHAIR KASSEKERT: Two and a half -- 14 okay. 15 MR. JOHNSON: For parole. And I'm in 16 the Behavioral Intervention Program right now 17 as we speak. And, like you say, you are right. 18 You know, and it's totally up to you. And I 19 will still continue traveling those revenues. 20 And so, you know, if you -- if you grant it, so 21 be it. If not, I'll just let, you know, the 22 chef though that I was denied it, and I'll keep 23 on pursuing, you know. I'll wait until the 24 opportune time. I would like to know when the 25 opportunity is available to me, if it's 25 ITEM NO. 5 1 possible to get in writing so I can reapply. 2 MS. FRIGEN: Okay. The five-year 3 restriction will end November 23rd, 2010. 4 After that date you would -- you would be 5 become eligible to go directly to a casino and 6 start looking for hotel-related employment 7 without first having to come before the 8 Commission for that type of job. That's if 9 it's denied today. 10 CHAIR KASSEKERT: Bernadette, just with 11 respect to a cook in a casino, that would be a 12 casino service employee registration; correct? 13 MS. FRIGEN: It can vary from casino to 14 casino. It can be noncredential potentially. 15 However, some of the casinos, because their 16 restaurant employees touch alcohol require all 17 alcoholic -- I mean all food and beverage 18 people to have registrations. But it might 19 vary from house to house, depending upon how 20 they structure their facilities. 21 CHAIR KASSEKERT: Uh-huh. You don't -- 22 you don't know what this position -- would this 23 position be credentialed, as far as you know? 24 That you seek. 25 MR. JOHNSON: I would not be around -- 26 ITEM NO. 5 1 is it credentialed as far as the casino 2 license? 3 CHAIR KASSEKERT: Right. 4 MR. JOHNSON: No. Not the one at Trump 5 Plaza. No. Because I wouldn't be working 6 around alcohol. I would be working inside in 7 the production kitchen. But like she said, 8 there's kitchens that have bars in them. 9 CHAIR KASSEKERT: You know, I'm almost 10 inclined -- you know, I always have a concern 11 about where we draw the line with respect to 12 the noncredential hotel employees because, 13 frankly, if you've found employment at the 14 Sheraton, we wouldn't have a role in that. 15 Here we have a role because it happens to be a 16 casino hotel. So I always grapple with those 17 particular issues. Because if somebody could 18 get -- the same job at a Sheraton and not fall 19 under our requirements, I have an issue with 20 that. 21 Commissioners? Any -- 22 I think -- I mean, I think given the -- 23 I've never seen a packet with as many letters 24 on your behalf as I have in this one, and I am 25 willing to deny your petition -- to make a 27 ITEM NO. 5 1 motion to deny your petition to reapply 2 earlier -- reapply early for a casino service 3 employee registration but grant you permission 4 to obtain employment early as a noncredential 5 hotel employee in the hopes that this position 6 would be a noncredential and this would give 7 you your opportunity. 8 Is there a second to my motion? 9 COMMISSIONER SOMMELING: Second. 10 COMMISSIONER HARRINGTON: Yes. 11 CHAIR KASSEKERT: Okay. The motion has 12 been made and seconded. All in favor? 13 (Ayes.) 14 CHAIR KASSEKERT: Opposed? 15 VICE CHAIR EPPS: No. 16 CHAIR KASSEKERT: Okay. Motion carries 17 three to one. 18 I want to really stress that I think 19 your presentation today -- you really talked 20 about how you changed your life. I wanted -- I 21 want to encourage you to continue what you are 22 doing in terms of the counseling that you are 23 receiving. I think this Commission is 24 getting -- is giving you a chance because of 25 your presentation today. And I want to ask 28 ITEM NO. 5 1 that you -- you know, you really keep to it and 2 you continue down the path that you are on 3 right now. 4 MR. JOHNSON: Thank you. 5 CHAIR KASSEKERT: You're welcome. 6 MR. JOHNSON: Thank you very much. And 7 I would like to say, like I said, it's an honor 8 to stand before you. Because before, the old 9 man, I would have fear in me and thoughts and 10 doubts. And it's truly nice when you find God 11 in your life and you really mean it and you 12 walk. And it does mean having a good 13 conversation, conduct, and character. That 14 means a lot here in a city of Atlantic City. 15 Because this city is growing, and I thank you 16 for the opportunity. I really do. And -- you 17 will -- you will -- I mean, you will be 18 blessed, but I'm just saying I will respect the 19 opportunity that you've given me. That means a 20 lot to me so I can make progress in America. 21 CHAIR KASSEKERT: Good. 22 MR. JOHNSON: I mean that. 23 CHAIR KASSEKERT: Well, continue down 24 that path. 25 MR. JOHNSON: Thank you. 29 ITEM NO. 6 1 CHAIR KASSEKERT: Okay. 2 MR. JOHNSON: Thank you. 3 CHAIR KASSEKERT: Good luck. 4 MR. JOHNSON: Thank you. 5 MR. NANCE: Item No. 6, motion to vacate 6 suspension order in State versus John P. 7 Conklin. 8 MS. FRIGEN: Commissionersn, for your -- 9 MR. NANCE: Ms. Frigen? 10 MS. FRIGEN: Oh, I'm sorry. 11 For your consideration is Mr. Conklin's 12 motion to vacate the suspension order. John 13 Donnelly is here on behalf of Mr. Conklin, and 14 Jim Armstrong for the Division of Gaming 15 Enforcement. 16 CHAIR KASSEKERT: Good morning, Mr. 17 Donnelly. 18 MR. DONNELLY: Good morning, Madame 19 Chair. Good morning, Commissioners. I'm 20 spending a lot of time here lately. 21 I'm representing John Conklin. He was 22 suspended on July 16th, 2008, solely on the 23 basis of an indictment. The indictment was 24 issued because he and two other men were 25 indicted on the allegation that a list of 30 ITEM NO. 6 1 customers had been stolen from the Trop World 2 when the three men left. 3 It's now 14 months later. The matter 4 was dismissed with privilege on May 26th, 2009. 5 Mr. Conklin entered and came out of PTI in two 6 weeks, which is an astonishingly short period 7 of time. And the fact is that Mr. Conklin did 8 not take this list -- putting aside why the 9 other complaints were dismissed. And I just 10 want to read from an affidavit that was 11 submitted by one of the other men involved. I 12 won't mention his name. 13 But Paragraph 4 of the affidavit that 14 was submitted by one of the other men was -- 15 reads "At no time during the or following my 16 employment with Tropicana did Conklin suggest, 17 imply, or direct me to take any list of 18 customers of Tropicana." 19 Paragraph 9, on or about March of 2007, 20 I electronically forwarded the customer list of 21 Tropicana. "I," the other man. Customers that 22 I had in my possession to Conklin under the 23 title "just in case." 24 Paragraph 10, "prior to this time, 25 Conklin was unaware that I took the list 31 ITEM NO. 6 1 following my employment with Tropicana." 2 The fact is the list was taken by 3 another person, and it was sent to Mr. Conklin 4 without his knowledge. The sin, if any, was he 5 took it and threw it on his floor and did not 6 report that immediately. But when it came to 7 light that this list had been taken, he 8 reported the -- was interviewed first by 9 Borgata and then the Division of Gaming 10 Enforcement and set out the facts as I've just 11 stated, was indicted, it was dismissed. And I 12 think it's appropriate at this stage to lift 13 the suspension so he can get back to work. 14 Thank you. 15 CHAIR KASSEKERT: Thank you. 16 Mr. Armstrong? 17 MR. ARMSTRONG: Chair, Commissioners, 18 you have our letter of September 1st. Mr. 19 Donnelly was copied on it. I assume he 20 received a copy of it. We have no objection to 21 it, however, we would still proceed with the 22 revocation at this time. 23 CHAIR KASSEKERT: Okay. Any questions? 24 COMMISSIONER SOMMELING: Madame Chair, I 25 move to grant Mr. Conklin's motion and vacate 32 ITEM NO. 7 1 the Commission's suspension order dated July 2 16th, 2008, thereby reinstating his casino key 3 employee license pending the outcome of the 4 revocation proceedings. 5 VICE CHAIR EPPS: Second. 6 CHAIR KASSEKERT: The motion has been 7 made and seconded. All in favor? 8 (Ayes.) 9 CHAIR KASSEKERT: Opposed? 10 (No response.) 11 CHAIR KASSEKERT: Motion carries. 12 MR. DONNELLY: Thank you very much. 13 CHAIR KASSEKERT: Thank you. 14 MR. NANCE: Item No. 7, consideration of 15 final exclusion orders in Shoumin Chai, John 16 Regis, Jerry Romano, Joseph Spinnato, Erickson 17 Urtecho, and Arthur Zagari. 18 Miss DeLia? 19 MS. DeLIA: Good morning. 20 First I'd like to ask if any of the 21 individuals are present or represented? 22 (No response.) 23 MS. DeLIA: The Commission has already 24 entered a preliminary exclusion order placing 25 these individuals on the conclusion list. All 33 ITEM NO. 7 1 but Mr. Urtecho failed to request a final 2 hearing. With respect to Mr. Urtecho, he 3 decided to waive his right to a hearing after 4 he came in for a conference. 5 The matter is now being presented to the 6 Commission for final action. 7 CHAIR KASSEKERT: Thank you. 8 Mr. Ficchi, good morning. 9 MR. FICCHI: Yes. Thank you, good 10 morning, Chair and Commissioner. 11 The Division has filed the petitions in 12 these matters setting forth the firm basis for 13 the placement of the exclusion list of all of 14 these individuals, and the Division would 15 respectfully request that the individuals be 16 placed on the permanent list at this point. 17 CHAIR KASSEKERT: Thank you. 18 MR. FICCHI: Thank you. 19 CHAIR KASSEKERT: Any questions for Mr. 20 Ficchi? 21 COMMISSIONER SOMMELING: No questions, 22 Madame Chair. 23 VICE CHAIR EPPS: Chair, I move that we 24 issue final exclusion orders for Miss Chai and 25 Messrs. Regis, Romano, Spinnato, Urtecho, and 34 ITEM NO. 8 1 Zagari. 2 COMMISSIONER SOMMELING: Second. 3 CHAIR KASSEKERT: The motion has been 4 made and seconded. All in favor? 5 (Ayes.) 6 CHAIR KASSEKERT: Opposed? 7 (No response.) 8 CHAIR KASSEKERT: Motion carries. 9 Thank you. 10 MR. FICCHI: Thank you. 11 MS. DeLIA: Thank you. 12 MR. NANCE: Item No. 8, request to 13 withdraw application for qualification for 14 Richard Yuhas and Robert Yee. 15 Miss Richardson? 16 MS. RICHARDSON: Good morning, Chair and 17 Commissioners. 18 CHAIR KASSEKERT: Good morning. 19 MS. RICHARDSON: A draft resolution on 20 these matters were circulated to the parties. 21 And appearing for Petitioners is Dennis 22 Daly and for the Division is DAG Jack Adams. 23 CHAIR KASSEKERT: Thank you. 24 Mr. Daly? 25 MR. DALY: Thank you, again, 35 ITEM NO. 8 1 Commissioners. 2 I have reviewed the draft resolution. I 3 don't have any particular problem with it. I'm 4 grateful for the relief that is granted. 5 I would, however, be remiss if I didn't 6 urge the Commission on behalf of Messrs. Yuhas 7 and Yee not to impose the ordinary one-year 8 restriction that you typically do impose upon 9 the withdrawal of an application. 10 In my view, the circumstances under 11 which the regulation was drafted and the 12 problem that it was designed to address are 13 simply not applicable in a situation such as 14 this where the individual applicant is actually 15 a qualifier of an entity that is seeking a 16 higher license. I think that is quite 17 distinguishable from the individual application 18 for licensure in and which an individual is 19 seeking a personal privilege. And, thereafter, 20 if he or she thereafter changes his mind for 21 whatever reason, historically the reason was 22 because they thought they wouldn't be able to 23 get the license granted based on the record 24 that had been developed thus far. More often 25 than not, it was a failure to disclose, some 36 ITEM NO. 8 1 kind of transgression in their past. And the 2 regulation was thereafter -- therefore adopted 3 to preclude that individual from simply 4 withdrawing his application and resubmitting 5 another one and, obviously, taking up the time 6 and effort of both the Casino Control 7 Commission and the Division of Gaming 8 Enforcement. 9 That situation is quite different when 10 you're talking about a qualifier, as we are 11 here. These individuals are applying for 12 qualification only by virtue of their position 13 with the company. They get no personal right 14 or benefit if, in fact, that application is 15 granted. Thus, these individuals are in a 16 situation where if they should secure a job 17 with another entity that happens to be a 18 qualifying entity of a casino licensee, they 19 would come before you and ask that the one-year 20 restriction be waived in their circumstances. 21 And if you're consistent with what has been 22 done every case in the past, although it 23 doesn't happen very often, you would grant it, 24 and you would remove the individual from the 25 restricted list. I suggest to you, there's no 37 ITEM NO. 8 1 point in putting them on the restricted list in 2 the first place. Because, again, the situation 3 is not the situation that the regulation was 4 designed to address. Nor does it make any 5 sense either from the regulatory perspective or 6 the individual's perspective, in my opinion, to 7 impose the restriction. 8 So with that, I simply ask that you not 9 impose the one-year restriction on Messrs. Yee 10 and Yuhas. But, otherwise, I have no concerns 11 whatever with the draft resolution. 12 CHAIR KASSEKERT: Mr. Adams, could you 13 speak directly to what Mr. Daly has asked with 14 respect to the -- I don't know that we have any 15 leeway with respect to the -- and I'm looking 16 up the regulation right now so I can read it. 17 MR. ADAMS: Yeah. My initial response 18 would be that if you're inclined to do so, I 19 suppose some kind of amended regulation -- 20 CHAIR KASSEKERT: Yeah. 21 MR. ADAMS: -- or different regulation 22 or something along those lines. I believe when 23 Mr. Daly was here at the Commission, we used to 24 impose the same restriction as well. 25 Aside from some of the things he said, I 38 ITEM NO. 8 1 think there is another purpose that suits both 2 the Commission and the Division in these 3 situations, for whatever reason, if someone 4 decides that they're opting out. And I 5 appreciate the distinction he's trying to make 6 with being affiliated with a larger company as 7 a qualifier, I mean, obviously, those people 8 still benefit through going through the system 9 and getting a qualification from this 10 Commission. So if circumstances are changed, 11 and the person is leaving for whatever reason, 12 this kind of puts some finality to it from your 13 perspective and our perspective for a year. 14 And it does, I admit, I think, 15 discourage individuals from thinking, you know, 16 things have changed. There's a new opportunity 17 now. I'm going to come back in a couple weeks. 18 And takes the onus off of us, and you going 19 through that whole process again. Especially 20 in a qualifier situation, because those 21 individuals seek normally to go into their 22 positions right away either with temp 23 qualification or temp key, or whatever. 24 So if you're so inclined, I believe it 25 would have to be done by some kind of amended 39 ITEM NO. 8 1 regulation. Otherwise, I don't think you have 2 a whole lot of discretion here. 3 CHAIR KASSEKERT: Yeah. Having read the 4 regulation, there is no discretion. And I'm 5 assuming that the Division expended resources 6 on those people. 7 MR. ADAMS: Letters were drafted. We 8 spent a lot of time. We -- 9 CHAIR KASSEKERT: Uh-huh. 10 MR. ADAMS: We spent in the situation 11 because, among other things, there were other 12 matters that prompted us and you to address 13 these individuals on a more expedited basis. 14 CHAIR KASSEKERT: Thank you. 15 Let me ask if any of the other 16 Commissioners have any questions? 17 Commissioner Epps? 18 VICE CHAIR EPPS: It seems to me, I 19 think, Mr. Daly, you kind of stated -- you 20 ended up going to where I was going, anywhere. 21 If they want to come back at some later point, 22 they'll come back and ask us to waive them and 23 let them in. I think we should stay consistent 24 with what we do. And if they need a special 25 permission or something, then they can come in 40 ITEM NO. 8 1 and ask for it later. And if they don't, they 2 have no intention of coming there, they don't 3 care because a year will pass, and you never 4 come to the jurisdiction, so no harm, no foul. 5 So we put the one year on, just like we 6 do for everybody else. And if then if they 7 need relief for it, if they decide to come 8 back, they have to ask for the relief. I don't 9 see why we should take the extraordinary 10 measure of not doing it, even if you think it's 11 an extraordinary circumstance that they need it 12 waived, they can make the application. 13 MR. DALY: I know I'm tilting at 14 windmills here, but let me just state some 15 response to both those points. 16 I think there is a down side for the 17 individuals in that they may apply elsewhere. 18 And typically, as you know, all the 19 applications, the form applications that are 20 filed in every gaming jurisdiction ask whether 21 or not you've applied for a license elsewhere 22 and what the outcome of that was. If, in fact, 23 you are on the restricted list here, you are 24 required to divulge that to any other 25 jurisdiction, and that could have a negative 41 ITEM NO. 8 1 impact. They have to come back here to get 2 clearance, even if they were not seeking 3 qualification here in New Jersey, before they 4 could proceed with their position or their 5 application in some other jurisdiction. 6 And I think that's a circumstance that 7 simply isn't warranted because -- and this gets 8 now to the Division's point -- the fundamental 9 difference isn't just that one is an 10 application for licensure and one is for 11 qualification. It's the circumstances under 12 which -- and I won't argue all circumstances, 13 but I'll argue these two circumstances -- these 14 individuals were terminated involuntarily from 15 their positions. It's not as though they were 16 an applicant for a license and decided to 17 change their status and seek withdrawal. In 18 that circumstance it is perfectly appropriate 19 for you to lay upon them the one-year 20 restriction. I suggest -- again, tilting at 21 windmills, I know. But I suggest it's not 22 appropriate in a circumstance where an 23 individual is not proceeding voluntarily but 24 rather has events forced upon them and then 25 gets layered on top of the unfortunate 42 ITEM NO. 8 1 consequence of losing their jobs, also a 2 one-year restriction in the State of New Jersey 3 that they might have to explain to any 4 jurisdiction in the United States. 5 That's my -- 6 CHAIR KASSEKERT: Understanding all 7 that, but the reg says what it says. 8 MR. DALY: Well, the reg say -- if I 9 may, the reg says that the Commission has the 10 authority to do it. If the reg was going to 11 set up -- I don't have the language in front of 12 me. But I'm sure it's not mandatory. 13 CHAIR KASSEKERT: The Commission shall 14 have the authority to direct that any applicant 15 so permitted to withdraw his application shall 16 not be eligible to apply again for license or 17 registration or approval until after the 18 expiration of one year from the date of such 19 withdrawal. 20 MR. DALY: Correct. The operative words 21 there are "shall have the authority" to impose 22 such a restriction. 23 CHAIR KASSEKERT: But there's no -- you 24 know, there's no language in there that would 25 modify that and say if you're terminated, 43 ITEM NO. 8 1 that's okay. 2 MR. DALY: With all respect, it doesn't 3 have to say that. It simply, if it wasn't 4 going to say "mandatory," it will say that a 5 withdrawl request shall be conditioned upon the 6 one-year restriction. It doesn't say that. It 7 has says you have the authority to impose that 8 kind of restriction if you think that it's 9 warranted. But you don't need to. You aren't 10 compelled to by the regulation itself. 11 In any event, I'm done, anyway. 12 CHAIR KASSEKERT: Okay. 13 (Laughter.) 14 CHAIR KASSEKERT: Mr. Adams, doesn't 15 this just go to the old saying, where you sit 16 is where you stand? 17 MR. ADAMS: Absolutely. And my personal 18 experience, I have never had another gaming 19 jurisdiction or agency -- 20 CHAIR KASSEKERT: Uh-hum. 21 MR. ADAMS: -- looking into that type of 22 situation call me or inquire of us where they 23 were treating it as a negative connotation to 24 that individual's application in that other 25 jurisdiction. 44 ITEM NO. 9 1 CHAIR KASSEKERT: Thank you. 2 Is there a motion? 3 VICE CHAIR EPPS: Madame Chair, I move 4 that we grant the relief requested and permit 5 Richard Yuhas and Robert Yee to withdraw their 6 applications for individual qualification 7 subject to the conditions contained in NJAC 8 19:41-8.6(a). 9 CHAIR KASSEKERT: Is there a second? 10 COMMISSIONER SOMMELING: Second. 11 COMMISSIONER HARRINGTON: Second. 12 CHAIR KASSEKERT: The motion has been 13 made and seconded. All in favor? 14 (Ayes.) 15 CHAIR KASSEKERT: Opposed? 16 (No response.) 17 CHAIR KASSEKERT: Motion carries. 18 Thank you. 19 MR. NANCE: Item No. 9, petition of 20 Harrah's Entertainment, Inc., Harrah's 21 Operating Company, Inc., Harrah's Atlantic City 22 Operating Company, LLC, Showboat Atlantic City 23 Operating Company, LLC, Bally's Park Place, 24 Inc., and Boardwalk Regency Corp. to permit 25 Donald Marrandino to perform the duties and 45 ITEM NO. 9 1 exercise the powers of President, Eastern 2 Division pending plenary qualification. 3 Miss Richardson? 4 MS. RICHARDSON: Good morning again. 5 A draft resolution was also circulated 6 in this matter to the parties. The most recent 7 version being Friday, September 4th. 8 And appearing for the Petitioners is 9 Dennis Daly and for the Division is DAG Dot 10 Turi. 11 CHAIR KASSEKERT: Mr. Daly? 12 MR. DALY: I've read this resolution as 13 well, and on this one, I have no comments and 14 no objection. 15 (Laughter.) 16 MR. DALY: No problems whatsoever. I 17 would like to indicate Mr. Marrandino would 18 have loved to have been present here today to 19 meet you. He's, unfortunately, compelled by 20 other circumstances, and he was not unable to 21 be here. But he looks forward to the 22 opportunity to meeting with you individually 23 very soon. 24 CHAIR KASSEKERT: Thank you. 25 Miss Turi? 46 ITEM NO. 9 1 MS. TURI: Good morning, Madame Chair, 2 Commissioners. 3 We've also reviewed the draft 4 resolution, and subject to the conditions 5 contained therein, we have no objections. 6 CHAIR KASSEKERT: Thank you. 7 Any questions? 8 COMMISSIONER SOMMELING: No questions, 9 Madame Chair. 10 VICE CHAIR EPPS: Madame Chair, I move 11 that we adopt the draft resolution and 12 authorize Donald Marrandino on a temporary 13 basis and prior to his plenary qualification to 14 assume the duties and exercise the powers of 15 President, Eastern Division, for Harrah's 16 Operating Company, Incorporated, and Harrah's 17 Entertainment, Incorporated, and Senior Vice 18 President of the Casino Licensee, Harrah's 19 Atlantic City, Showboat, Bally's, and Boardwalk 20 Regency Corp. subject to the conditions 21 contained in NJAC 19:43-2.7 which, among other 22 things, require that he file a personal history 23 disclosure form MJ and New Jersey supplement by 24 September 24th, 2009. 25 CHAIR KASSEKERT: Is there a second? 47 ITEM NO. 10 1 COMMISSIONER HARRINGTON: Second. 2 CHAIR KASSEKERT: Motion has been made 3 and seconded. This is a roll call vote. 4 MR. NANCE: Commissioner Harrington? 5 COMMISSIONER HARRINGTON: Yes. 6 MR. NANCE: Commissioner Sommeling? 7 COMMISSIONER SOMMELING: Yes. 8 MR. NANCE: Vice Chair Epps? 9 VICE CHAIR EPPS: Yes. 10 MR. NANCE: Chair Kassekert? 11 CHAIR KASSEKERT: Yes. 12 MR. NANCE: The record will reflect that 13 the motion is unanimous. 14 Item No. 10, consideration for the 15 qualification of Katrina Lane to serve as 16 Senior Vice President and Chief Technology 17 Officer of Harrah's Entertainment, Inc., and 18 Harrah's Operating Company, Inc. 19 Miss Frank? 20 MS. FRANK: Good morning, Chair and 21 Commissioners. 22 Katrina Lane received her temporary 23 qualification from the Commission in February 24 of this year. A draft resolution on her 25 plenary qualification has been circulated to 48 ITEM NO. 10 1 the parties. 2 We again have Dennis Daly for Harrah's 3 and Miss Turi for the Division. 4 CHAIR KASSEKERT: Mr. Daly? 5 MR. DALY: And another perfect draft 6 resolution. I have no objection to this one, 7 either. 8 (Laughter.) 9 CHAIR KASSEKERT: Thanks. 10 MR. DALY: I would say that Miss Lane is 11 located out in Las Vegas and could not make the 12 trip here to be here today, but she will be in 13 this jurisdiction in the very near future, and 14 she'll appear before you in a formal fashion. 15 CHAIR KASSEKERT: Thank you. 16 Miss Turi? 17 MS. TURI: Madame Chair, Commissioners, 18 you have the letter that the Division filed 19 August 17th. Again, we've reviewed the draft 20 resolution, and we have no objection to its 21 entry. 22 CHAIR KASSEKERT: Thank you. 23 Any questions? 24 VICE CHAIR EPPS: No. 25 COMMISSIONER SOMMELING: No questions, 49 ITEM NO. 10 1 Madame Chair. 2 VICE CHAIR EPPS: I move that we adopt 3 the draft resolution and find Katrina Lane 4 qualified to serve as Senior Vice President and 5 Chief Technology Officer for Harrah's 6 Entertainment, Incorporated, and Harrah's 7 Operating Company, Incorporated. 8 CHAIR KASSEKERT: Is there a second? 9 COMMISSIONER HARRINGTON: Second. 10 CHAIR KASSEKERT: Motion is made and 11 seconded. This a roll call vote. 12 MR. NANCE: Commissioner Harrington? 13 COMMISSIONER HARRINGTON: Yes. 14 MR. NANCE: Commissioner Sommeling? 15 COMMISSIONER SOMMELING: Yes. 16 MR. NANCE: Vice Chair Epps? 17 VICE CHAIR EPPS: Yes. 18 MR. NANCE: Chair Kassekert? 19 CHAIR KASSEKERT: Yes. 20 MR. NANCE: The record will reflect that 21 the motion is unanimous. 22 CHAIR KASSEKERT: Thank you. 23 MS. FRANK: Thank you. 24 MR. DALY: Thank you. 25 VICE CHAIR EPPS: Are you coming back? 50 ITEM NO. 11 1 MR. DALY: Yeah, I am. One more. 2 (Laughter.) 3 MR. NANCE: Item No. 11, petition of 4 Trump Taj Mahal Associates for permission to 5 transfer a progressive slot jackpot pursuant to 6 NJAC 19:45-1.39(n). 7 Mr. Briliant? 8 MR. BRILIANT: Good morning, Madame 9 Chair and Commissioners. 10 This is the petition of Trump Taj Mahal. 11 I believe Miss Pickus probably would 12 prefer the matter to be heard on the papers, 13 and Mr. Kimmel is here on behalf of the 14 Division. 15 CHAIR KASSEKERT: Thank you. 16 Mr. Kimmel? 17 MR. KIMMEL: I have read the draft 18 resolution, and I have no objection to it. 19 Thank you. 20 CHAIR KASSEKERT: Thank you. 21 Any questions? 22 COMMISSIONER SOMMELING: Madame Chair -- 23 CHAIR KASSEKERT: I'll miss Sparky. 24 COMMISSIONER SOMMELING: Are you 25 reading, Commissioner Harrington? Chair? 51 ITEM NO. 12 1 CHAIR KASSEKERT: No. I said let's say 2 good-bye to Sparky. 3 (Laughter.) 4 COMMISSIONER SOMMELING: Oh. Good-bye, 5 Sparky. 6 Madame Chair, move to adopt the draft 7 resolution and grant the relief requested by 8 Trump Taj Mahal Associates to permit the 9 transfer of the "Sparky Red Hot Jackpots" 10 progressive jackpots to the "Double Diamond" 11 progressive slot machine game subject to the 12 compliance with a 30-day notice requirement in 13 NJAC 19:45-1.39(n). 14 VICE CHAIR EPPS: Second. 15 CHAIR KASSEKERT: The motion has been 16 made and seconded. All in favor? 17 (Ayes.) 18 CHAIR KASSEKERT: Opposed? 19 (No response.) 20 CHAIR KASSEKERT: Motion carries. 21 Thank you. 22 MR. BRILIANT: Thank you. 23 MR. NANCE: Item No. 12, petition of 24 Harrah's Entertainment Inc., Harrah's Operating 25 Company, Inc., and casino licensees of Bally's 52 ITEM NO. 12 1 Park Place Inc., Boardwalk Regency Corporation, 2 Showboat Atlantic City Operating Company, LLC, 3 and Harrah's Atlantic City Operating Company, 4 LLC, for an extension of time to comply with 5 conditions C-1 and C-2 in Commission Resolution 6 No. 09-07-15-11. 7 Mr. Briliant? 8 MR. BRILIANT: This is Mr. Daly's 9 petition. And Mr. Kimmel is also here on 10 behalf of the Division. 11 CHAIR KASSEKERT: Thank you. 12 Mr. Daly? 13 MR. DALY: Thank you. 14 I have no draft resolution to forward, 15 but I would ask that you grant the requested 16 extension. These two petitions -- or excuse 17 me, these two conditions that were imposed, as 18 you know, are not preconditions that have to be 19 completed prior to the move. These are 20 subsequent to the move. The move hasn't 21 occurred yet. It is expected to begin this 22 weekend, just to bring you up to speed on that. 23 And we will have satisfied all the prior 24 conditions, obviously, before that time. 25 But these two petitions which relate 53 ITEM NO. 12 1 to -- I'm sorry, these two conditions which 2 relate to circumstances involving the -- what I 3 would refer to as the failsafe provision with 4 regard to the services that they get, that 5 Harrah's gets from the three named entities, 6 IBM Global, Switchnet, and the facility at 7 Carlstadt -- and Sunguard. The arrangements, 8 the contractual arrangements, intercompany 9 contract that we're trying to work out has just 10 proved problematic from a language perspective. 11 But I have no doubt that we will be able to 12 bring that before you in time for the move. 13 Or -- I'm sorry. For -- to satisfy the 14 condition within the extended period of 30 15 days, which takes us to, I believe, September 16 28th. 17 CHAIR KASSEKERT: Mr. Kimmel? 18 MR. KIMMEL: The Division has no 19 objection to the 30-day extension. 20 CHAIR KASSEKERT: Okay. Any questions? 21 VICE CHAIR EPPS: I just have one 22 question. I understand C-1, sort of. 23 MR. DALY: Uh-huh. 24 VICE CHAIR EPPS: But C-2, the master 25 purchasing -- 54 ITEM NO. 12 1 MR. DALY: C-2 is actually hard. 2 Believe it or not, it's very difficult. What 3 they're having -- you read the condition, it 4 requires the company to go back 18 months and 5 capture all the vendors that they have entered 6 into contracts with that may have resulted in 7 some benefit to the licensee. That language, 8 in particular, is difficult to weed out from 9 the literally thousands of vendors that HOC on 10 behalf of HEI, the parent company, enter into 11 agreements with, some of them, many of them 12 have some bearing on New Jersey. Many of them 13 do not. It is not possible, just looking at 14 the computer records that they maintain with 15 regard to those vendor contracts, to ascertain 16 whether or not any of them had any benefit to 17 New Jersey in the past 18 months. So they have 18 to -- individual contracts have to be reviewed. 19 And it's a time-consuming process. I mean, 20 we'll get there. But it's just not being able 21 to do it in this time frame. 22 MR. KIMMEL: Not to engage in 23 I-told-you-so, but I remember asking that on 24 the stand and was assured that it was able to 25 be done. 55 ITEM NO. 12 1 CHAIR KASSEKERT: Let me just say -- I 2 wasn't going to say anything, but, you know, 3 and let me send a message to Harrah's 4 Entertainment. This is what happens when 5 things get put on the agenda and rushed, and 6 then we end up having to extend conditions. 7 Not that I necessarily have a problem with 8 that. But, you know, you push staff and push 9 staff, you push staff, and then you can't 10 comply with the the conditions. And I have a 11 real problem with that. And I have a problem 12 with the way that this continues down the line. 13 And I'm frustrated with it, frankly. 14 MR. DALY: Understood. 15 CHAIR KASSEKERT: Any other questions? 16 COMMISSIONER SOMMELING: No other 17 questions, Madame Chair. 18 CHAIR KASSEKERT: Is there a motion? 19 VICE CHAIR EPPS: Madame Chair, I move 20 that we adopt the draft resolution and extend 21 the deadline in Commission Resolution No. 22 09-07-15-11 to comply with conditions C-1 and 23 C-2 nunc pro tunc for a period of 30 days. 24 COMMISSIONER SOMMELING: Second. 25 CHAIR KASSEKERT: The motion has been 56 ITEM NO. 13 1 made and seconded. All in favor? 2 (Ayes.) 3 CHAIR KASSEKERT: Opposed? 4 (No response.) 5 CHAIR KASSEKERT: Motion carries. 6 Thank you. 7 MR. DALY: Thank you. 8 MR. NANCE: Item No. 13, proposed 9 adoption of amendments for insurance wager and 10 pai gow poker. 11 Mr. Briliant? 12 MR. BRILIANT: Okay. Commissioners, as 13 you know, I'm pinch-hitting for Mr. Moncrief. 14 CHAIR KASSEKERT: Actually, here comes 15 Mr. Mamolen. 16 MR. MAMOLEN: This is mine. 17 MR. BRILIANT: Oh. 18 (Laughter.) 19 MR. MAMOLEN: You want to do it? 20 MR. BRILIANT: Be my guest. Be my 21 guest. 22 MR. MAMOLEN: Okay. 23 MR. NANCE: Correction. Mr. Mamolen? 24 VICE CHAIR EPPS: Stay right there, 25 Seth. 57 ITEM NO. 13 1 MR. MAMOLEN: Okay. This is before you 2 for final adoption at this point. 3 The amendment's to implement what is 4 essentially a side wager in pai gow poker. The 5 players wagering, in essence, to -- on the 6 seven cards dealt to him or her that they do 7 not form a pair. So Ace high would be -- of 8 the seven cards would be the high -- would be 9 the lowest pay off on that kind of a side wager 10 with nine high being the highest pay out. 11 We were waiting on the Division's 12 confirmatory mathematical analysis to confirm 13 the analysis from Shuffle Master. We received 14 that in the last week or so. And, again, it's 15 before you for final adoption. 16 CHAIR KASSEKERT: Thank you. 17 Any questions? 18 COMMISSIONER SOMMELING: No questions, 19 Madame Chair. 20 Move to adopt as published. 21 CHAIR KASSEKERT: Is there a second? 22 COMMISSIONER HARRINGTON: Second. 23 VICE CHAIR EPPS: Second. 24 CHAIR KASSEKERT: The motion has been 25 made and seconded. All in favor? 58 ITEM NO. 14 1 (Ayes.) 2 CHAIR KASSEKERT: Opposed? 3 (No response.) 4 CHAIR KASSEKERT: Motion carries. 5 MR. MAMOLEN: Thank you. 6 MR. NANCE: Item No -- 7 CHAIR KASSEKERT: Mr. Briliant? 8 MR. NANCE: Item No. 14, proposed 9 adoption of amendments to NJAC 19:45-1.25. 10 MR. BRILIANT: Okay. Now we're set. 11 This proposal, Commission, would confirm 12 Commission regulations with recent the 13 statutory amendments requiring that checks 14 issued to a patron by a casino licensee cannot 15 be accepted by another casino licensee for 16 gaming purposes if the check was issued as 17 compensation for employment or for goods and 18 services rendered. 19 The comment period on this regulation 20 closed on September the 4th, and no public 21 comment has been received. Or was received. 22 Put it that way. 23 CHAIR KASSEKERT: Thank you. 24 Any questions? 25 COMMISSIONER SOMMELING: No questions, 59 ITEM NO. 15 1 Madame Chair. 2 COMMISSIONER HARRINGTON: I'll move that 3 we adopt as published. 4 CHAIR KASSEKERT: Is there a second? 5 COMMISSIONER SOMMELING: Second. 6 CHAIR KASSEKERT: The motion has been 7 made and seconded. All in favor? 8 (Ayes.) 9 CHAIR KASSEKERT: Opposed? 10 (No response.) 11 CHAIR KASSEKERT: Motion carries. 12 MR. NANCE: Item No. 15, proposed 13 adoption of amendments concerning forfeiture of 14 winnings or things of value obtained by a 15 prohibited person. 16 Mr. Briliant? 17 MR. BRILIANT: Okay. This procedure -- 18 excuse me. This proposal would create a 19 uniform procedure for resolving complaints that 20 are filed by the Division of Gaming Enforcement 21 for the forfeiture of winnings obtained by 22 persons who are prohibited from gaming because 23 of age, exclusion, conviction, self-exclusion 24 or otherwise. 25 Again, the public comment period closed 60 ITEM NO. 16 1 September the 4th. No public comment has been 2 received. 3 I see Mr. Stebbins at the Division 4 table. 5 CHAIR KASSEKERT: Do you have some 6 public comment? 7 MR. STEBBINS: No. Only available to 8 answer any questions should there be any. 9 MR. BRILIANT: Okay. 10 CHAIR KASSEKERT: Thank you. Thank you. 11 Any questions for Mr. Stebbins? 12 COMMISSIONER SOMMELING: No questions, 13 Madame Chair 14 COMMISSIONER HARRINGTON: I move that we 15 adopt it as published. 16 VICE CHAIR EPPS: Second. 17 CHAIR KASSEKERT: The motion has been 18 made and seconded. All in favor? 19 (Ayes.) 20 CHAIR KASSEKERT: Opposed? 21 (No response.) 22 CHAIR KASSEKERT: Motion carries. 23 Thank you. 24 MR. NANCE: Item No. 16, proposed 25 adoption of amendments to NJAC 19:45-1.19. 61 ITEM NO. 16 1 Mr. Briliant? 2 MR. BRILIANT: Okay. 3 CHAIR KASSEKERT: Mr. Briliant, I'm 4 sorry. 5 MR. BRILIANT: That's okay. 6 This proposal would codify recent 7 statutory amendments that permit a percentage 8 of the poker tournament prize pool to be 9 withheld as a dealer tip. 10 Once again, the comment period closed 11 September the 4th. No public comment has been 12 received at this time. 13 CHAIR KASSEKERT: Thank you. 14 Any questions? 15 COMMISSIONER SOMMELING: No. 16 VICE CHAIR EPPS: Move to adopt as 17 published. 18 COMMISSIONER SOMMELING: Move to adopt 19 as published. 20 (Laughter.) 21 VICE CHAIR EPPS: Jinx. 22 CHAIR KASSEKERT: Is there a second? 23 COMMISSIONER SOMMELING: Second. 24 CHAIR KASSEKERT: The motion has been 25 made and seconded. All in favor? 62 ITEM NO. 17 1 (Ayes.) 2 CHAIR KASSEKERT: Opposed? 3 (No response.) 4 CHAIR KASSEKERT: Motion carries. 5 MR. BRILIANT: All right. 6 Thank you very much. 7 MR. NANCE: Item No. 17, petition of 8 Harrah's Operating Company, Inc., Showboat 9 Atlantic City Operating Company, LLC, Boardwalk 10 Regency Corp., and Bally's Park Place, Inc., 11 for approval of the issuance of new senior 12 secured notes and other relief. 13 Miss Wozniak? 14 MS. WOZNIAK: Good morning, Chair and 15 Commissioners. 16 I would note that a revised draft 17 resolution dated September 8th at 1 p.m. has 18 been distributed to the Commission and parties. 19 And I would further note that there is a 20 sealing request as to the Division report. 21 Mr. O'Gara is here on behalf of Harrah's 22 and Miss Turi on behalf of the Division. 23 CHAIR KASSEKERT: Mr. O'Gara. 24 MR. O'GARA: Good morning. 25 A real Harrah's person, Michael Cohen, 63 ITEM NO. 17 1 who is the Assistant Counsel of Harrah's, who 2 is here, came out last night. 3 With respect to the draft resolution, 4 it's perfect. All the ones are perfect. I 5 don't always get it on the record, but they are 6 always perfect. No problem at all. 7 And, you know, procedural, Mr. Cohen is 8 going to testify with respect to the specifics 9 of the petition. 10 CHAIR KASSEKERT: Thank you. 11 Let me ask if Miss Turi would like to 12 make some comments first before we take 13 testimony. 14 MS. TURI: I've also received the draft 15 resoloution, and I'll reserve judgment as to 16 the Division's recommendation until after we 17 hear the testimony. 18 We note that this particular petition 19 was filed a weak ago, Friday, the 28th of 20 August. We attempted to go through the 21 information that was provided to us and, 22 unfortunately, based on all the information 23 that was available for us to file a report last 24 Friday, which left us a little concerned about 25 some of the issues that are being raised and 64 ITEM NO. 17 1 some of the things that are being done. And so 2 we requested that there be some testimony 3 presented to you to explain this transaction, 4 and particularly this transaction going forward 5 with some of the other transactions that have 6 been accomplished and have been approved by 7 this Commission during the past three or so 8 months. 9 CHAIR KASSEKERT: Thank you. 10 Mr. O'Gara, you may call your witness. 11 MR. O'GARA: Yeah. Michael Cohen. 12 Other transactions. We've done other 13 transactions? 14 CHAIR KASSEKERT: Lots of them. And 15 have been very cooperative in moving as quickly 16 at possible, I would note again for the record. 17 MR. O'GARA: And I will note Michael got 18 on the plan last night very late, and he'll -- 19 CHAIR KASSEKERT: I understand. He may 20 be a little jet lagged. 21 We'd like to swear you in. I assume 22 you're not licensed in New Jersey? 23 MR. COHEN: No, I'm not. 24 CHAIR KASSEKERT: Mr. Nance? 25 65 Cohen - direct 1 MICHAEL COHEN was duly sworn to testify 2 in this matter. 3 4 MR. NANCE: Please state your name for 5 the record, 6 MR. COHEN: Michael Cohen. 7 MR. NANCE: Thank you. 8 CHAIR KASSEKERT: You may proceed, Mr. 9 O'Gara. 10 11 DIRECT EXAMINATION BY MR. O'GARA: 12 Q. Michael, by whom are you employed? 13 A. Harrah's Operating Company. 14 Q. And in what capacity? 15 A. I'm the Vice President Associate General 16 Counsel and Corporate Secretary. 17 Q. And prior to joining Harrah's, did you 18 practice law somewhere else? 19 A. I did. I practiced law at a private law 20 firm, Latham & Watkins in California. 21 Q. And have you as Associate General 22 Counsel with Harrah's had involvement with various 23 matters relating to the financing that -- financings 24 of Harrah's that have been approved by this Commission 25 over the last several months? 66 Cohen - direct 1 A. I have. I'm the legal counsel for our 2 finance transactions. 3 Q. And, as such, you interact with Mr. 4 Halkyard and with the various other securities lawyers 5 and the underwriters and those type of folks? 6 A. Yes, I do. 7 Q. And you're familiar with the approval 8 that we're seeking today and the petition that was 9 filed with the Commission -- 10 A. Yes, I am. 11 Q. -- last Friday, apparently. 12 Can you describe for us, Mr. Cohen, what 13 is it that Harrah's is seeking to do in this 14 particular transaction of which the approval is 15 sought? 16 A. The purpose of this offering is -- in 17 our strategy is flexibility in these uncertain 18 economic times. And I'll give four examples of what 19 we're trying to accomplish by the first lien debt 20 offering. The first is to extend the maturity of our 21 debt issueances. The money raised from this offering 22 will be used to repay loans that are due in 2015 under 23 our term loan -- our credit facility and 2014 under 24 our revolver under our credit facility. 25 These first lien loans are -- excuse me, 67 Cohen - direct 1 notes, will be maturing in 2017 so it pushes the 2 maturity out two to three years. It also enhances the 3 liquidity for Harrah's Operating Company. Ninety 4 percent of the net proceeds of this offering are used 5 to repay the amounts on the credit facility, 6 permanently reduce them. But ten percent is used to 7 temporarily reduce revolver capacity, which is about 8 $70 million. So by this transaction, we improve our 9 liquidity by $70 million. We can reborrow that money 10 if we need to in the future. 11 The third purpose of this offering is 12 covenant cushion. We have a senior secured leverage 13 covenant that we must comply with in order to be in 14 compliance with our credit facility. This is an 15 amendment negotiated in June of this year. The 16 lenders agreed that we could issue up to $2.2 billion 17 with at-face value notes that would be exempt from 18 this senior secured leverage ratio if we use 90 19 percent of the proceeds to repay their loans. So 20 this -- by repaying loans under the credit facility, 21 by issuing these notes, we actually -- these notes 22 don't count for the senior secured leverage ratio, 23 which gives us much more cushion so that we don't come 24 close to breaching that covenant. 25 And the fourth reason is we're taking 68 Cohen - direct 1 advantage of the markets. There was you a long period 2 of time, approximately 18 months, there were almost no 3 abilities to refinance any debt in the markets because 4 of the economic crisis and because of the -- the over 5 exuberance by the banks in lending money into the 6 gaming industry. That window opened up in June and is 7 currently still open. We are fearful that it will end 8 any day now. So we're taking advantage of it, and 9 we'd like to refinance our debt when we can. 10 Q. Michael, with respect to the -- is there 11 any appetite for unsecured debt out there for the 12 gaming industry? 13 A. Unfortunately not. 14 Q. In their report, the Division makes 15 allusions to a concern that they had with respect to 16 the effect that this particular offering might have on 17 the blended long-term interest rate that Harrah's pays 18 on its overall debt. Can you address that? 19 A. Yes. The issuance of this note and 20 repayment of loans under our credit facility will 21 increase our annual interest expense about $45 million 22 a year. We think that's a very good tradeoff for 23 extending our maturities for two to three years and 24 the covenant cushion. Again, our theme of these 25 offerings is to -- we don't know what the economy is 69 Cohen - direct 1 going to do, and we want to be as prepared as possible 2 for what happens with the economy. So we think that's 3 a very good trade. We think that the $45 million is a 4 modest amount for the company of our size and annual 5 interest expense in exchange for that two-to-three 6 year extension of the maturity and the covenant 7 cushion. 8 And I'd like to point out when combining 9 all our financing activities in the last nine 10 months -- and as the Chair alluded to, we have done a 11 lot. In those nine months we've done an exchange 12 offer in December of 2008. We did an exchange offer 13 in April of 2009. We did a first lien bond offering 14 in June of 2009. We recently at your last meeting had 15 approval for contemplated second lien note issuances. 16 We've done open market purchases where we've used cash 17 and bought our bonds back at below par. And now if 18 you add in this September first lien net offering, 19 we've reduced our total debt load by about $3.3 20 billion. And if you add all of those financings 21 together, we have reduced our annual cash interest 22 expense by approximately $150 million. 23 So this is all part of a grand plan of 24 giving the company economic -- or excuse me -- 25 enhanced flexibility during this -- these uncertain 70 Cohen - cross 1 economic times. 2 Q. Michael, so it's fair to say, as you 3 look at the market, there may be occasions again on 4 which if there's an opportunity to achieve the goals 5 you've described that Harrah's could be back and you 6 could be seeking further approval? 7 A. Yes. I would be surprised if we weren't 8 back seeking further approval as we have a large debt 9 structure, and we're always looking to refinance and 10 push out maturities and to take advantage of these 11 economic turmoil in the market when we can. 12 MR. O'GARA: I don't have any other 13 questions. 14 CHAIR KASSEKERT: Miss Turi? 15 MS. TURI: Yes. 16 17 CROSS-EXAMINATION BY MS. TURI: 18 Q. You've alluded to the fact that you 19 might be looking towards something else in the future. 20 Do you plan on any other transactions similar to these 21 within this year, the next several months? 22 A. We don't have any contemplated 23 transactions. We have used the capacity under the 24 June amendment to issue first lien bonds, to exchange 25 them for credit facilities. So we can't do that 71 Cohen - cross 1 transaction again. But there are other transactions 2 that we've -- we're always contemplating. And if one 3 of them seemed fruitful, we would be coming back to 4 the Commission and ask -- and the Division and asking 5 for permission to do so. 6 Q. In terms of this approval that you're 7 seeking now, how great is the difference in the 8 percentage of the interest rate for the bonds that you 9 are -- that you're now seeking to issue and what the 10 interest rate is on those that you're seeking to 11 replace? 12 A. The debt that we're placing -- I don't 13 have the exact numbers in front of me because it 14 floats on Libor, but -- 15 Q. Uh-huh. 16 A. -- I think it's about four, four and a 17 half percent currently. The debt we are issuing is at 18 11 and a quarter percent. The markets have changed 19 dramatically since we got that Libor plus 300 credit 20 facility that was negotiated in December of '06 and 21 put in place finally in January of '08. The economy 22 has changed dramatically. We are -- we are very happy 23 to be getting 11 and a quarter percent unsecured debt 24 currently. We think that's a very good rate. And if 25 you compare that to other leveraged gaming companies, 72 Cohen - cross 1 we're doing better than most. 2 Q. And you feel -- what is the urgency now 3 for doing this when there is such a great increase in 4 the percentage interest rate? 5 A. We feel the interest rates are only 6 going to go up, not down. And we are -- as I alluded 7 to earlier, we are cognizant of the fact that there 8 was about a 18-month window. It was almost impossible 9 to issue any debts in the markets. And we feel it's 10 appropriate to take advantage of the markets when they 11 are now open. They could close any day, and we could 12 have another window where we are unable to refinance. 13 Q. Have you issued anything or have you 14 done anything in terms of issuing the notes that you 15 had an approval for two weeks ago? 16 A. We have not. 17 Q. Second lien notes? 18 A. We have not taken advantage of that yet. 19 Q. Do you intend to do so in the near 20 future? 21 A. We don't have any pending transactions. 22 Those are expected to be one off negotiated 23 transactions. Our focus currently was the first lien 24 bond offer and try to take advantage of the market 25 opening right after Labor Day. But we will be looking 73 Cohen - cross 1 to negotiate those transactions in the near future. 2 Q. Well, the issuance of these bonds for 3 which you're seeking approval now in any way do they 4 inhibit or detract from your ability to issue the 5 second lien notes? 6 A. No. We don't expect it to detract. If 7 anything, we think it will enhance. We think people 8 will be happy that we took advantage of the first lien 9 capacity under the amendment to the credit facility 10 and allowed us to refinance some of that debt and push 11 out the maturities. 12 Q. Have you reached out to any individual 13 institutional investors in terms of buying any of the 14 notes that you plan on issuing if you have approval 15 today? 16 A. Yes. We have. And we have underwriters 17 that are -- that have -- we have seven underwriters 18 that are working on the transaction. 19 Q. And when do you expect to complete this 20 transaction? 21 A. Friday. 22 Q. This coming Friday? 23 A. This coming Friday. 24 Q. Does this in any way have any nexus or 25 relationship to the other issuances that you've done? 74 Cohen - cross 1 In other words, does this have a nexus with the second 2 lien notes that were issued in August? 3 A. There's no direct nexus. It is part of 4 our strategy to continue to enhance our liquidity and 5 be as -- and have as much flexibility as possible in 6 these uncertain economic times. 7 Q. And so it's your testimony that you 8 don't believe that the increase in the interest rate 9 or the debt service that you're going to have in the 10 short term will in any way detract from a financial 11 flexibility or stability of the casinos? 12 A. No. We think it will actually enhance 13 it. 14 MS. TURI: I have no further questions. 15 CHAIR KASSEKERT: Thank you. 16 Let me ask if any of the Commissioners 17 have any questions? 18 Commissioner Epps? 19 VICE CHAIR EPPS: I have a question. 20 You say you went from a four percent 21 interest rate to an eleven and a half by virtue 22 of this transaction? 23 THE WITNESS: Uh-huh. 24 VICE CHAIR EPPS: But what was the -- 25 what is the tradeoff, if you could again, for 75 Cohen 1 that increase in interest rate? Because at 2 first blush, that increase in interest rate 3 looks significant. But there's a benefit to 4 taking that tradeoff. What is that benefit? 5 THE WITNESS: The benefit is we push the 6 maturity out for two to three years, the 7 revolver for two years, and the term loan for 8 three years. It also increases our liquidity 9 by $70 million because we're only using 90 10 percent of the proceeds of this to permanently 11 pay down credit facility. So we've opened up 12 $70 million of liquidity that more than covers 13 the annual interest expense increase. 14 VICE CHAIR EPPS: The second thing is, 15 just so I'm clear on your testimony, even 16 though this increases your annual interest 17 payment by some $50 million, you still 18 reduced -- or in the aggregate from all the 19 transactions you've done your interest payments 20 by 150 million? 21 THE WITNESS: That's correct. If you 22 add all the transactions we've done in the last 23 nine months, we've decreased our annual 24 interest expense by $150 million. 25 VICE CHAIR EPPS: And your debt load is 76 Cohen 1 reduced by? 2 THE WITNESS: By $3.3 billion. 3 CHAIR KASSEKERT: Any other questions? 4 COMMISSIONER SOMMELING: No questions, 5 Madame Chair. 6 CHAIR KASSEKERT: Commissioner? 7 Okay. You may step down. 8 THE WITNESS: Thank you. 9 CHAIR KASSEKERT: I'm assuming you have 10 nothing on redirect or recross as I'm -- 11 MR. O'GARA: No. Good assumption. 12 CHAIR KASSEKERT: Miss Turi, any closing 13 statements? 14 MS. TURI: The Division thanks Mr. Cohen 15 for coming here and answering our questions and 16 addressing our concerns regarding the 17 short-term as well as the long-term goals of 18 Harrah's when it comes to these transactions. 19 As you're aware, we've had several of them 20 during the past several months. We've looked 21 towards trying to come to some understanding of 22 what it is that Harrah's is attempting to do 23 and where Harrah's is proceeding in terms of 24 these various transactions and their liquidity 25 and their flexibility. 77 ITEM NO. 17 1 On the basis of the testimony as well as 2 the information that we've gotten previously, 3 and the information that we've provided in 4 reports to the Commission, we would, therefore, 5 not object to the entry of the draft resolution 6 as it's been presented to us in its final draft 7 form. 8 CHAIR KASSEKERT: Miss Turi, before I 9 hear from Mr. O'Gara, let me just ask a 10 question. You know, we are very cognizant of 11 the fact that our resources here by the 12 regulatory agencies have been extremely 13 stretched through numerous things, the 14 inability to hire, the attrition rate, 15 furloughs. 16 MS. TURI: Furloughs. 17 CHAIR KASSEKERT: Can you just on the 18 record tell me the strain that these 19 last-minute submissions cause in terms of the 20 staff's resources? 21 MS. TURI: What -- again, all of the 22 things that you've been indicating, the 23 furloughs, the vacation times, the lack of -- 24 or the people who have left, the diminishing 25 numbers of individuals that we have at the 78 ITEM NO. 17 1 Division who are able to handle these types of 2 matters, makes it extremely difficult for us to 3 do it in a very short period of time. 4 We also have -- one of the things that 5 makes a little bit of a difference is the time 6 difference between the East Coat and the West 7 Coat and the fact that -- 8 CHAIR KASSEKERT: Uh-huh. 9 MS. TURI: -- what we attempt to get to 10 the West Coast to get the questions, to get the 11 information that we need. We try to get the 12 information as quickly as possible, but when 13 we're giving a given a period of six days, six 14 working days to file a response, it makes it 15 difficult for us to understand exactly what's 16 happening in every single transaction. 17 In this particular instance, we were a 18 bit distressed because we were unable to 19 discern exactly what it was in terms of the 20 going forward, and what was to be accomplished 21 by a stand-alone when it's an eight percent 22 increase. And at first blush it looks as if 23 it's going to be detrimental potentially to the 24 casino and potentially to flexibility. 25 Based on the testimony, we've learned 79 ITEM NO. 17 1 that that's not the case. That it's going to 2 be together with everything. 3 We would hope that we wouldn't have to 4 go through this particular route in the future 5 in terms of having to ask someone to come and 6 testify, that we could work maybe another week 7 or two weeks, which would give us the ability 8 to have the communication that we need to get 9 the information that we need and so we can 10 present a final report to the Commissioners and 11 not have to go through a proceeding such as 12 this. 13 CHAIR KASSEKERT: Thank you. I 14 appreciate that. 15 Mr. O'Gara? 16 MR. O'GARA: Yeah. Thank you, Chair. 17 We're very cognizant of the time. One 18 of the problems is that I think -- I don't 19 believe that you or anyone else believes that 20 it's kind of dictated by some master plan to do 21 things in six days. It's market dictated. I 22 think what Michael said is very true, and I 23 think you even know it if you pick up the 24 "Journal" in the morning. I mean, these 25 windows open and close. And we're deeply 80 ITEM NO. 17 1 appreciative, not only of Dot but Mr. Glaum and 2 Mary Wozniak, and Bob Latimer, and George 3 Scott -- or Sue Scott and George Clark. And 4 what we've attempted to do is with those time 5 frames, even though we work on, you know, 6 different times, those questions pass through 7 Michael and I. And I think you could look at 8 the e-mails, and see they're answered at 1:00 9 and 2:00 in the morning. I mean, there's some 10 effort here to do that. We're very 11 appreciative. And I think that the purpose of 12 Michael's testimony, what we've tried to do all 13 along the transactions, Michael's explained to 14 you, is try to get as much time, as much 15 information, and as openly as we can against 16 these kind of market windows that they work 17 against. 18 The ultimate goal is not to be 19 blocked -- Commissioner Epps asked about the 20 tradeoff, and it's seven percent. But I think 21 from the testimony or -- you know, it's not 22 2006, and there's no more four-percent money. 23 The 11 compares favorably with what you're 24 looking at people are borrowing now in this 25 industry. And the idea is to -- to keep the 81 ITEM NO. 17 1 flexibility and move those maturities out so 2 the company is not faced with some of the 3 issues that some of their colleagues in this 4 industry are, which are facing huge amounts of 5 this maturing and having no way to deal with 6 it. And the frequency often -- and, believe 7 me, Chair, we have -- Mr. Cohen and I have some 8 trepidation when we file these things, too, 9 about the fact that, you know, I was standing 10 here on last Wednesday and Michael was 11 e-mailing me Wednesday afternoon, and we all 12 knew what that meant. So we're not unmindful. 13 But to some degree it's kind of a tradeoff 14 there, too, that we're trying to bring it out 15 and be as forthcoming as we can and to not to 16 run into that wall. 17 Because this company has a large capital 18 structure. And, hopefully, it was edifying to 19 you to learn, you know, to some -- you're down 20 3.3 billion, and you're down a hundred and a 21 half, even on the expense side, even with this. 22 And we'll continue to try to be as timely as we 23 can. But we're not unappreciative of all 24 that's done. And, you know, Mr. Cohen, I'm 25 sure, would come back again. I think if we hit 82 ITEM NO. 17 1 the 700 million threshold, we could probably 2 get him on a plane, and we appreciate it. And 3 ask you to adopt the draft resolution. 4 CHAIR KASSEKERT: Thank you. 5 I appreciate your comments. And I only 6 ask them because I just want to make the 7 parties aware of the strain that these agencies 8 are under that we have worked very hard to 9 accommodate these requests, understanding that 10 market conditions can change very quickly. 11 MR. O'GARA: Yeah. 12 CHAIR KASSEKERT: But just wanting you 13 to understand that -- you know, that the first 14 of all, you're not the only company out there 15 that we're dealing with issues. And, secondly, 16 we are under a distinct strain with some of the 17 things that have been going on here from a 18 fiscal standpoint. 19 MR. O'GARA: We get it. 20 CHAIR KASSEKERT: Yeah. 21 MR. O'GARA: I mean, I've e-mailed 22 members of your staff when they're away. 23 They've e-mailed me when I'm in other places. 24 CHAIR KASSEKERT: Uh-hum. I understand. 25 MR. O'GARA: We try to make this work. 83 ITEM NO. 17 1 There's not anything particularly contentious 2 about borrowing money, but it's just very paper 3 intensive. And we understand it's technical. 4 And I appreciate that some of the questions -- 5 they're very fair questions. Because if you 6 look at something, if you don't know what the 7 other 11 are, it doesn't make sense. But we 8 appreciate it. 9 CHAIR KASSEKERT: Thank you. Let me ask 10 if any Commissioners is have any other 11 questions? 12 VICE CHAIR EPPS: Our last meeting is a 13 day ahead. 14 (Laughter.) 15 VICE CHAIR EPPS: So you got a short 16 window for the next meeting. 17 MR. O'GARA: I told Michael it was a 18 Tuesday. We hope to take a pass, but I'm not 19 making any promises, Commissioner. 20 CHAIR KASSEKERT: Let met just ask. Do 21 we need to make a motion on the sealing 22 request? 23 MS. WOZNIAK: You can. It's 24 incorporated in the draft resolution, so it's a 25 common document in the draft resolution, so -- 84 ITEM NO. 17 1 CHAIR KASSEKERT: So it's not necessary 2 to do a separate -- 3 MS. WOZNIAK: It's not be necessary. 4 CHAIR KASSEKERT: Okay. Thank you. 5 Is there a motion? 6 VICE CHAIR EPPS: Madame Chair, I move 7 that we adopt the draft resolution and grant 8 the relief requested and approve the issuance 9 of the new first lien senior and secured notes 10 due 2017 subject to the condition -- conditions 11 and to the extent set forth in the resolution. 12 COMMISSIONER SOMMELING: Second. 13 CHAIR KASSEKERT: Motion has been made 14 and seconded. This is a roll call vote. 15 MR. NANCE: Commissioner Harrington? 16 COMMISSIONER HARRINGTON: Yes. 17 MR. NANCE: Commissioner Sommeling? 18 COMMISSIONER SOMMELING: Yes. 19 MR. NANCE: Vice Chair Epps? 20 VICE CHAIR EPPS: Yes. 21 MR. NANCE: Chair Kassekert? 22 CHAIR KASSEKERT: Yes. 23 MR. NANCE: The record will reflect that 24 the motion is unanimous. 25 CHAIR KASSEKERT: Thank you. 85 1 MR. O'GARA: Thank you. 2 MR. MICHAEL: Thank you. 3 MR. NANCE: In accordance with 4 Resolution No. 08-12-10-22, The next closed 5 session of the Commission shall be held on 6 Tuesday, September 22nd, 2009, at 9:15 a.m. in 7 the Commission offices. 8 It is now time for the public 9 participation portion of the meeting. 10 CHAIR KASSEKERT: Is there anyone from 11 the public who wishes to be heard? 12 (No response.) 13 CHAIR KASSEKERT: Seeing no one, I'll 14 declare this portion of the meeting closed and 15 entertain a motion to adjourn. 16 COMMISSIONER SOMMELING: Motion to 17 adjourn. 18 COMMISSIONER HARRINGTON: Second. 19 VICE CHAIR EPPS: Second. 20 CHAIR KASSEKERT: The motion has been 21 made and seconded. All in favor? 22 (Ayes.) 23 CHAIR KASSEKERT: Opposed? 24 (No response.) 25 CHAIR KASSEKERT: Motion carries. 86 1 Thank you. 2 (Pubic hearing 09-09-09 was adjourned at 3 11:44 p.m.) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 87 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: September 13, 2009 23 My Notary Commission Expires July 22, 2014 24 ID No 2062871 25