Friday, July 8, 2016

Corporate Raiders of Las Vegas Launching Campaign to Move Oakland Raiders to Sin City; Fertittas Making Slick Moves to Liquidate Assets for NFL Team Purchase

By: Rich Bergeron

As a passionate NFL fan who happens to also have unique insight into the number one mixed martial arts organization on the planet, I'd like this article serve as a formal warning to the National Football League...

The Fertittas owning the Oakland Raiders or having anything to do with that storied franchise, or any other NFL team with such a solid football history will forever taint your organization. To put it bluntly: the brothers Fertitta are bad news, period.

It is a wonder to me that the Fertitta brothers (now through Red Rock Resorts) can still legally hold and profit off a gaming license in the state of Nevada in light of their own HISTORY. Lorenzo and Frank Fertitta III are not now, and they never will be... real "team" players. Here are three reasons why:

1.) They are always paying themselves first in every business deal they design, and they will do whatever it takes to create vast wealth off of shady and ruthless business practices.

2.) They have a documented history of abusing the bankruptcy courts to benefit themselves off the backs of hundreds of innocent investors.

3.) The Fertitta ownership of the UFC is a prime example of why they would be the worst possible owners of an NFL team the league could even imagine. UFC fighters are often saddled with egregious contracts that are riddled with complicated performance clauses and other nuances that make it very difficult for them to maximize their earning potential.  

These slick Vegas casino baron brothers might be making stadium plans after collecting a boatload of liquid assets through their IPO of Station Casinos, but they are far from suitable owners for a major sports franchise in the NFL.

In their case, NFL ought to stand for "No Frank and Lorenzo."

The Oakland Raiders would be a great fit in Las Vegas, don't get me wrong. I'd love to see that city with an official NFL team, and it would generate local and international interest. I lived in Las Vegas for about two years (thanks in part to the Fertittas and their lawyers), and the city needs something like a big NFL stadium to stimulate the local economy and bring a different demographic to the area to enjoy something other than gambling and showgirls.

The main problem here with the proposed move is the movers. There are plenty of other fair players and sports enthusiasts based in Las Vegas who would be better ambassadors for the sport of football. NFL officials, please beware of these evil-minded brothers who wield an iron fist over the sport of mixed martial arts as it is. Even if they divest themselves from their casinos and the UFC, bringing them onboard the big NFL ownership bus means bringing their whol ugly past with them. It sends a bad message to honest people everywhere...nice guys finish last and greed is great.

The prior business moves and absolute disregard for the people they built their fortunes off the backs of is proof enough of the Fertitta brothers being unfit for NFL ownership. If there is any way to prevent any sale of an NFL team to this brotherhood, NFL officials should take that course of action and seek other investors who are unrelated to the Fertittas and their ugly shadow cast by a history of family corruption and financial scheming. The Oakland Raiders may need a figurative Hail Mary to stay alive in the league, but involving the Fertittas in their franchise as financial backers is like inviting the devil himself to be part of the ownership group. The Oakland Raiders can choose from a multitiude of "lesser evils" in Sin City to build the franchise on a new frontier.

As an NFL fan who appreciates the growth of the sport amidst so many challenges like the concussion situation and the criminal tendencies exhibited by so many players in the league, I look at Fertitta ownership of an NFL team as a stain on the sport it will never be able to erase. I consider Fertitta ownership of an NFL team to be a crime against the sport itself.

I sincerely hope the National Football League engages in a due dilligence investigation into the past business dealings of the Fertitta Brothers before they hand Lorenzo and Frank the keys to Raiders Kingdom. Their civil litigation history alone is enough to raise plenty of concerns as to their ability to fairly manage such an undertaking without resorting to their familiar MO of scheming and scamming to line their own pockets. The NFL is rife with enough scandal without the shade these two brothers bring to the collective bargaining table.

Friday, February 26, 2016

IP NO: Station Casinos, AKA Red Rock Resorts (RRR) Not Worth The Investment

By: Rich Bergeron



LOOKING OUT FOR NUMBER ONE

Frank and Lorenzo Fertitta were set to make out like bandits, raiding their cash cow corporation once again for a massive amount of funds with a single scheme. The "Red Rock Resorts" IPO was the talk of the town and Wall Street for a little while, but the brothers pulled back at the last second after feeling the shellshock of heavy market losses in late January.

Anyone who might be thinking about investing in this latest Fertitta financial scheme should also pull back.

This IPO debacle is par for the Fertitta course. If you know the real history of the Fertitta family, you know these folks are the type of people who ruthlessly screw over other people to make all their money. From the card tables to the boardroom, the Fertitta brothers have a knack for separating honest people from their savings and fortunes.

The only "offering" the public really gets in buying Red Rock Resorts stock is an offer to help the Fertitta brothers set themselves and their kids up with more voluminous, ridiculous, ludicrous wealth. And at the end of the day, the Fertittas will still run the whole Station Casinos show. And when the Fertittas run the show, history proves that they always pay themselves first.

According to BloodyElbow.com, the main beneficiaries of a Red Rock Resorts IPO would be two generations of the Fertitta family:

"...all net proceeds will go towards reorganizing the corporate structure, including an acquisition of Fertitta Entertainment LLC. It's expected that Frank and Lorenzo Fertitta will each take home $112.5 million while trusts for their six children will receive $53 million. Additional stock sales included in the IPO could net the brothers even more."

Obviously, I have my own reasons for not trusting the Fertittas. They spent an awful lot of money on lawyers trying to prove they had nothing to do with the bogus $25 million suit against me that I successfully defeated over the course of six years of representing myself in their home courts. Yet, at the same time, the injunctions secured against me prevented me from writing the truth at the beginning of that case. That allowed the Fertittas to take Xyience out from under all the honest investors in the company who thought the Fertittas would help the company and set them all up for life once the long-awaited Xyience IPO came around.

Instead of the Fertittas doing the right thing, they used fall guys to take care of themselves and stole Xyience with what the bankruptcy trustee called a "loan to own" scheme. The casino barons simply pumped a little money into their shady acquisition, sat on their stolen nest egg for a few years, and sold the whole operation off to a Texas company for way more than it was worth.

BUYER BEWARE

Wall Street regulators and speculators would also be naive to forget that Station Casinos went public before, only to find a way to allegedly underbid shareholders in reclaiming the brand as a private corporation a few years later. This is not to mention all the other small maneuvers and manipulations pulled off by these casino barons to line their own pockets and take care of their friends and family.

Dig just beneath the surface of the amusement park the Fertittas built over the bodies of their financial kills, and you will find enough skeletons to fill a cemetery. Rather than physical bodies that an "old school" mobster might leave, these new school gangsters leave broken hopes and dreams, other people paying their tabs and countless fighters on the UFC roster who are constantly and consistently underpaid and under-appreciated if they fail to "put on a show." Even banks end up feeling screwed over after agreeing to do business with these brothers and their associates.

The Fertittas and Station Casinos have a lengthy history of being involved in deals that allegedly favor them (and their friends and relatives) only to degrade and devalue their distant or direct partners at the same time. To call them duplicitous is too nice in this context, and to call them devious is also too much of a compliment. Yet, throughout the patterns of their business transactions, they seem to leave a ton of people on the other end feeling cheated, right down to the casino patrons who get comped by management just so they can lose their life savings trying to win back what's already lost. "The house always wins" is a concept that is well known and fabulously executed in the Fertitta family business acumen. Just take a gander at their litigation history:

Lawsuit over 2001 "sweetheart deal" (Station Casinos made $1.7 million on sale to former executive and family friend Blake Sartini):

"Station Casinos failed to negotiate the sale of Southwest Gaming to [Blake] Sartini at arm's length, according to the suit. The company also failed to appoint a committee of independent directors to negotiate the deal or retain a financial valuation expert to determine whether the terms of the sale were fair to the company, the suit said. The board also failed to seek independent, third-party bidders for Southwest Gaming or otherwise shop around the company for the highest possible price, it said."  

Back in 1998, investors accused Station Casinos principals of wasting company assets by paying a $54 million "breakup fee" to Crescent Real Estate Equities. Crescent, owned by billionaire Richard Rainwater, initially agreed to pay $1.7 billion to acquire the locals casino chain, but the deal went sour. The resulting fallout culminated with a federal lawsuit. Instead of getting roughly $18 per share in a buyout by Crescent, Station Casinos investors obviously felt shafted in having to foot the bill for another Fertitta family financial flop.

Station Casinos ended their first stint as a publicly traded company with a $5.77 billion buyout in 2007, which resulted in another slew of investor lawsuits. A few years, and around $6.5 billion in debt accumulation followed before the Fertittas put the chain through a very favorable bankruptcy process. As Donald Trump admitted to doing during his recent presidential run, the Fertittas "took advantage of the laws" in buying the bulk of the company's assets back on the other side of the bankruptcy (with the help of Deutsche Bank) for pennies on the dollar ($772 million).

The bankruptcy process victimized a long list of people (including a Texas Teachers' Pension Fund) who put money on the prospect of the Fertitta brothers building the brand into a bigger entity than their founding father Frank Junior could have ever imagined. Bondholders left in the cold by the massive bankruptcy filing sued, looking back at that 2007 leveraged buyout as the beginning of the end for the company. They filed their claims before the bankruptcy became imminent:

"The ... defendants are not acting gentlemanly,’’ the lawsuit charges. The suit alleges: "The exchange offers unfairly, disloyally and without bondholders’ consent, deny plaintiff and the entire class of similarly situated bondholders the ability to take advantage of the bond tender offers. Plaintiffs’ bond holdings will be subordinated to the newly issued bonds and, as a result, will likely be rendered worthless as the specter of Station Casinos’ insolvency approaches.’’

According to bankruptcy paperwork, the bondholders also made serious accusations that the Fertittas and their partners engaged in insider dealing with the buyout in 2007:

The buyout cost Station Casinos $4.17 billion in costs to purchase stock and incur new debt of $1.6 billion.
The filing says the buyout provided approximately $500 million in payments for insiders, nearly $300 million of which went to the Fertittas, including Chairman and Chief Executive Officer Frank Fertitta III and brother and Vice Chairman Lorenzo Fertitta. The insiders' ownership stake rose to 25 percent. 

The Xyience bankruptcy suspiciously went down under "Fertitta Enterprises" ownership just before Station Casinos officially declared bankruptcy. It appeared like the Fertittas were testing the waters by casually steering a canoe down the bankruptcy river first, waving on the giant paddleboat to follow.

At some point it seems like this family figured out that making money off their various schemes required having really great lawyers on hand to fight inevitable lawsuits, get around business and financing laws, and avoid the loss of their gaming licenses. After all, associations with criminals or criminal enterprises are supposed to disqualify certain individuals from even being involved in gaming:

Nevada Revised Statutes NRS463.0129 state: “The continued growth and success of gaming is dependent upon public confidence and trust…that gaming is free from criminal and corruptive elements.”

It's hard to believe these brothers could ever be involved in gaming when you consider their involvement in the USA Capital scandal. The former President and COO of that company earned a 12-year prison sentence for fraud perpetrated there. Some of that fraudulent activity allowed the Fertittas to benefit directly through shady loan schemes providing millions in capital to Fertitta Enterprises. Fertitta Enterprises GM Bill Bullard was a gung-ho, pit-boss-type of mover and shaker for USA Capital before Joseph Milanowski's fraud brought the company crashing down. 

According to the Las Vegas Review Journal: "The Fertitta family, founder of Station Casinos in Las Vegas, had $17 million invested in USA Capital and got it all back when one of their attorneys was on the oversight committee...The attorney then resigned from the committee." One scheme Bullard orchestrated prompted lawyers to draw up a diagram to explain it:
   
Bullard was even audacious enough to address company investors and tell them: "The longer this thing goes on (in bankruptcy court), the more the attorneys are going to get paid." 

Deutsche Bank, one of the main partners in the current Station Casinos conglomerate, is also facing recent scrutiny for alleged illegal dealings. The bank agreed last year to pay more than $2 billion in penalties to US and British authorities after admitting to rigging global interest rates. Deutsche Bank is also the subject of two ongoing criminal investigations in the United States. The bank is also facing allegations of supporting the money laundering activities of Russian clients.

On top of all this, the Fertittas willfully supported the violation of federal gaming laws by allowing "Full Tilt Poker" to advertise in association with UFC events. These in-cage and on-screen plugs obviously sent more customers to a Web-site that was not only shut down for operating illegally in the United States, but it was also later determined to be a Ponzi Scheme. The Fertittas, who also pursued online gambling through legal channels in the wake of the poker site crackdown, obviously should have known Full Tilt was always operating outside of federal gambling laws. Ray Bitar, one of the founders of Full Tilt Poker, struck a deal on various charges in 2013 that included bank fraud, money laundering and illegal gambling. Station Casinos principals and a few of their associates launched "Ultimate Poker" the same year Bitar made that last deal.  

The arrest of Bitar in 2011 also came at a time when the UFC was working on a deal to double down on their sponsorship arrangement with Full Tilt Poker. Reports in the wake of the Full Tilt bust additionally indicated that Station Casinos had their own plans to unite with Full Tilt in anticipation of favorable federal regulation regarding online gaming. Instead, Station Casinos tried and failed to do it themselves with Ultimate Poker. Even as the first and only operator in the niche for a short while, the profits made by Ultimate Poker were scarce, especially since only Nevada residents could legally use the site. 

During the Xyience debacle, the Fertittas also had peculiar connections to people disgraced by a scandal at Global Cash Access. One of the GCA flunkies, Kirk Sanford, ended up being the co-CEO of Xyience during a time when the company's collapse was inevitable. I had a meeting with Sanford and the other co-CEO Adam Frank before UFC 78: Validation in Newark, New Jersey. The two executives authorized full payment for my trip from Cape Cod, Massachusetts to meet with them and talk about the future in New York City just before the event in November of 2007. 

During that fateful sit-down, Sanford consistently maintained that the plan for Xyience was to go "scorched earth" on the investors. He also indicated this was the direction the Fertittas wanted to go with the situation. Throughout the holiday season that year, the supplement company that helped put the UFC on the map laid off multiple employees on the way to a particularly ugly bankruptcy, which was purposely orchestrated by the principals at Fertitta Enterprises

THE STATION CASINOS AND UFC UNION FIGHT

The Culinary Union in Las Vegas managed to emerge in recent years as particularly sharp thorns in the side of the Fertittas, thanks in part to their wing of researchers and writers outlining the shady history and strange bedfellows associated with Station Casinos. The union also famously contacted performers scheduled to come to Red Rock Casinos and discouraged them from doing so, among many other public protests and stunts. Now, the union is even trying to shut down the latest Station Casinos IPO attempt.

Their tactics of relentless and expensive campaigns to degrade the opposition begs the question: why would you want to work--even under favorable union conditions--for such underhanded individuals and their manipulative, wheel-greasing friends? I imagine the answer is the same one given by Willie Sutton when someone asked him why he robbed banks: "Because that's where the money is." UFC President Dana White responded to union attacks once by claiming the Station Casinos union deal would represent a $10 million per-year benefit for the culinary union itself.

I even wrote an article myself at one point wondering aloud why the union would squawk so much about the rights of UFC fighters if they weren't doing anything to actually create a fighters' union. Though some recent anti-trust suits against the UFC are working their way through the courts, these are being brought by fighters on the roster. The Culinary attacks on the UFC came out of left field in the context of what they were trying to do with organizing Station Casinos. My article basically asked the union bosses to put up or shut up in a little more nuanced terms. Much to my surprise, the union did make a play to attract interest in the fighter union concept last year, but not much has been done since then to make the dream a reality beyond a Web-site with no recent updates:

Fighters Agenda


The way the UFC brass treats some fighters and the poor pay rate prospects earn leaves too many competitors paying out of their own pockets to compete as professionals. Bills and expenses can bleed a fighter dry of any potential profits, and the lifelong negative effects of the injuries and stress of intense training and physical combat can be debilitating after retirement. The message sent by the UFC to many of their most hard-working young fighters is callous: working hard at your craft is worthless to your bosses if you can't entertain the fans when you step into the cage at an official UFC event. In the old school days of the Wild West, this mentality is the equivalent of the villain making his victim dance by shooting bullets at his feet. It was put on a show or die back then, and it's put on a show or forget about making a decent living now.

DON'T BUY IT!

The Fertittas have become exceedingly talented when it comes to putting on a "show" of their own. They pretend to be honest, upstanding citizens in the public eye while behind the scenes they keep ruining lives as a means of lining their own pockets. The Red Rock Resorts IPO is yet another example of the Fertitta family making it look like they want to help other people make money when it's really their own bottom line they are ultimately and primarily concerned about.

As long as this family is involved as managing partners of this proposed RRR stock, they are free to execute the same scams and schemes they've used in the past to unjustly enrich themselves. My guess, based on years of investigation into Fertitta dealings, is that this family will make sure in the end that they will collect the highest dividends, even if the stock itself ends up being worth less than the paper it's printed on. That's how they roll, and the evidence and history doesn't lie.

Wednesday, April 15, 2015

Rich's New Book: Representing Yourself in Court




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Rich takes readers through two of his most intriguing cases where lawyers were hired with the specific purpose of silencing his work. Rich fought back, and this book is the result of his difficult struggle as an investigative reporter constantly seeking the truth about serious subjects.
Rich used the strategies in this book to overcome a $25 million lawsuit against him and to help generate serious publicity for the case of Lucille Iacovelli.
For just $20, you can have your very own copy of Rich’s book and read all about his battles against biased judges, billionaire casino barons and a doctor bent on keeping his critics from using his name. Click the following link or the book jacket photo above to order now.

Saturday, December 27, 2014

Class Action Lawsuits Against Zuffa Set the Stage For an Interesting New Year

By: Rich Bergeron

Before you read this story, listen to Comedian Jim Gaffigan's take on legal documents for a good laugh:





Recently-filed class action cases brought by former and current UFC fighters against Zuffa, LLC are generating controversy and discussion from all corners of the MMA media. The first of these California-based cases hit the docket just as press releases went out to announce the filing. There was also a full-blown press conference celebrating the start of this intriguing course of litigation against the parent company of the Ultimate Fighting Championship, the undisputed world leader of the sport of mixed martial arts.



At first, Cung Le, Jon Fitch, and Nate Quarry (L-R above) were the three faces of the legal action. Another filing naming plaintiffs Javier Vasquez and Dennis Hallman hit the California docket Tuesday with language that is reportedly nearly identical to the other case. A third filing appeared on Christmas Eve, another lump of coal in Zuffa's stocking. This time it was Pablo Garza and Brian Vera as plaintiffs. Duplication of proceedings can be a nice way of forcing the other side to spend more money than usual defending the first salvo. If there is good reason for the cases to go on separately without quick consolidation, it will be three times the hearings the opposing lawyers need to attend, three times the paperwork, and three times the aggravation.

An initial  statement from the UFC indicated that they had not even been served the documents yet after the first round of stories emerged on the subject. Lawsuits traditionally begin with prompt service of documents, which involves someone called a process server, or in some cases a deputy sheriff or even a U.S. Marshall actually handing the lawsuit documents to the company representative. This is serious legal business, since you can't win if the opposition isn't even aware you're suing them. Some defendants try to play games to refuse or avoid service, but once they are served, the case is official. If the UFC persists in saying they have not seen the documents, the plaintiffs can also argue that service is already accomplished through publication, which is sometimes a last resort.

Examining the crux of the legal arguments in the initial filing, I can only conclude that the case makes a ton of legal sense to me. I would even say it does not go far enough. As a person who can say I've done legal battle with the attorneys for Fertitta Enterprises (a holdings and investment company owned by the same Fertitta family that owns the UFC), I'm also convinced the UFC's parent company will attack this with a relentless army of specialized attorneys. They won't be the ones who charge $500 an hour that Gaffigan mentions above. Some of them will charge  much more than that for a phone call or a short consultation. The Fertitta-owned Station Casinos chain paid some of their bankruptcy lawyers as much as $900 per hour or more to carry that case through the court process.

These firms backing these fighters will have to be ready for all out war, and in many ways it was a crafty and cunning move to publicize this effort before it even became an official legal action. It also makes sense to duplicate the proceedings on the off chance that the cases end up before two, three, or even dozens of different judges as multiple stand-alone litigation streams instead of being consolidated at some point. Legal battles often hinge on the paperwork, and well-heeled firms aren't afraid to kill a few trees to overwhelm their opponents with copious amounts of reading material. Responses to everything in all cases would also have to be filed, each of those detailed legal documents requiring different content and unique defenses. It's actually more like what Zuffa does when pursuing their own worst enemies in the courts. They are used to being the big bully who always gets what he wants. This time, they might be facing an army of Davids against one Goliath.

Unfortunately, much of the mainstream combat sports media wants to remain in the UFC's good graces and will not publish a crooked word about the company. Most of the "news" sites that support the UFC no matter what will dismiss these legal proceedings as worthless and hopeless. That's really too bad, since the UFC's objectionable and corrupt business practices are laid bare in these legal documents. If you really count yourself as a fan or supporter of this promotion you should read this whole case despite the difficulty of the language and the dozens of pages involved. To access the full case document from the opening action, click here.

Trying as hard as I can to look at this case objectively, I do have some important questions to raise.

The first question is where are the financial figures coming from in these documents? There are claims like, "On information and belief, UFC Fighters are paid approximately 10-17% of total UFC revenues generated from bouts." Yet, there is no exhibit or affidavit this statement points to for proof. This is not to say I do not believe this could be possible. I just want to see where these financial estimations are coming from.

The second major question is why are these lawyers only pursuing this action on behalf of such a narrow group of the larger spectrum of victims that their described monopsony/monopoly scheme impacts?  The reality of conditions exposed in these documents cries out for other promotions, individual promoters, managers, agents, burned sponsors, trainers and other supporting staff to be included as plaintiffs. Perhaps I should just wait and see on this front. These firms filed three detailed lawsuits in a single week, so by next month there could be dozens. Like Gremlins, these furry little legal creatures could multiply and turn into monsters.

Finally, what is the average fighter's costs for a year of full time training? There ought to be a reflection of this somewhere in this suit. I would love to see a poll of UFC fighters asking this question. Also, what is the average yearly income of a mid-level UFC fighter, and what percentage does he or she keep after taxes and expenses? Some of this information could come out of the discovery process if the case goes that far. A Median Income Level would be an excellent baseline for these attorneys to show that the fighters were not getting their just due out of this raw deal they had to make with the UFC in order to compete at the "elite" level of the sport.

I am certain there are still fighters out there who literally wind up in the negative after each fight with their purses and bonuses going directly to paying off expenses. Travel and lodging, passports, training staff, management, medicals, and the countless other costs associated with a typical training camp can bring a fighter from $60,000 to zero in a heartbeat. I think this is the harshest reality that will be exposed in these litigation streams. Yes, the UFC has medical insurance, but fighters bear the costs of medical testing required for every fight. To get to the level where you are attracting huge show, win and bonus purses, you need to treat mixed martial arts training like a full time job. Fighters don't just drop out of the womb as seasoned experts at every discipline. It takes dedication, heart, patience, and in many cases copious amounts of money to get you and your entourage to the promised land. Sponsors can only chip in so much after they pay the UFC just for the privilege to be associated with you. Purses can dissolve before the fighter sees a penny.  

This case tackles a plethora of actions the UFC took to lock down the MMA marketplace as the dominant, controlling force. The Federal Trade Commission investigated many of the same circumstances and found no evidence that would lead to any formal action. The fact that the FTC was even looking into the fight promotion at all was headline news, but their lack of action made the UFC look as if it was vindicated of all monopoly and monospony claims. The reality is there are just too many obstacles to a government entity bringing such an action against such well-funded and well-positioned opponents. These agencies have to deal with red tape, politics, and influence peddling on top of trying to build a rock solid case while fighting against highly skilled corporate attorneys. It doesn't help that the Abu Dhabi government is in bed with the promotion by way of their 10 percent ownership of the UFC through Flash Entertainment. Talk about an unbreakable piggy bank!

The Fertittas are notorious wheel greasers, and they promote and support powerful politicians like Harry Reid with frequent donations and endorsements that Reid repays when he can. They are also traditionally very supportive of the Republican Party. Just because all their direct Mafia ties are long gone does not mean they forgot the art of maintaining "connected" status. This is why the FTC's refusal to bring charges does not really mean there was nothing concrete behind their concerns. The Fertittas are also responsible for a large chunk of taxes paid in the state of Nevada and California, and wherever else they do business across the country. Being an average Joe taxpayer isn't going to get you out of many major jams, but things change when you pay the kind of epic tax bills the Fertittas foot every year.

At the same time, a civil law firm does not have the same constraints to worry about. They're not playing with taxpayer money. They listen to their clients, not constituents or powerful politicians. They don't have to fear a backlash. Still, the court system can also be influenced through political channels. It's an uphill battle either way. So, even when there's plenty of smoke, there's no guarantee any of it will catch fire unless conditions are absolutely perfect. This may just be that time when the blaze finally erupts, but I would be more inclined to expect a quiet settlement once the first flicker of flame becomes visible here.

Reading this suit reminded me of so many cases of fighter favoritism, payment complaints, and the UFC's many moves made to squash the competition. I am reminded first of the IFL's demise and their longtime feud with the UFC. The creators of the IFL allegedly took the UFC's proprietary information when they left the company's employ to start their new team-based fight league. The resulting lawsuit revealed that Dana White personally threatened company employees at the time with termination if they did not all immediately sign a formal non-compete agreement.

I also served as an informal consultant to one of the lawyers handling the PRIDE suit against the UFC after promises to keep the top-tier MMA promotion viable were quickly broken. The money to purchase PRIDE actually came from something called a "senior secured credit facility" that is due next year. This complex loan and credit package totaled around $400 million, and even Billionaire Mark Cuban invested in the debt. This is ironic, especially since I actually received correspondence from Cuban during the time when he was battling the UFC in court to retain the services of Randy Couture in his own fledgling fight league (HDNet Fights) that never quite got off the ground. Cuban was trying to put together a Couture vs. Emelianenko fight, but the bout fans were screaming for would never happen due to the whole ugly legal debacle. 

Cuban told me in a personal email that he was keeping an eye on my case against the Fertittas, and it came as a bit of a shock. A true financial genius, he eventually figured out how to make money off the UFC with or without Randy on his payroll. I later questioned Cuban on the Fertittas owning Xyience, which at the same time was sponsoring the UFC. Cuban wrote back and explained that there is nothing inherently wrong with them doing that from a business ethics standpoint and the arrangement was perfectly above board. Still, I thought it was strange that the Fertittas seemed to go out of their way to obscure their ownership of their own sponsor.

The recent class action lawsuit takes time to further explain Couture's issues with the UFC, including his refusal to sign over his lifetime rights. At the time Couture took a stand against his former bosses, it was a move that was unheard of. Most fighters knew if they wanted to get anywhere in the industry, they had to maintain a friendly relationship with the UFC bosses and toe the company line. Couture was one of the promotion's success stories and could claim a healthy fan base and a huge part of the UFC's history. He didn't want to short change his legacy and struggled with the UFC over their demand for lifetime rights and other concessions. The feud would grow to be a bitter one. It's actually still simmering quietly in the wake of Couture being excluded from even being able to corner his own son when Ryan Couture was a UFC fighter for a brief stint.

I interviewed Ryan Couture personally in Las Vegas a few years ago, and he told me off camera that his father encouraged him to join Strikeforce because, "The UFC likes to keep you under their thumb." The UFC's buyout of Strikeforce eventually led to Ryan having to take the best offer that came along, which happened to be the UFC's. Losses to Ross Pearson and Al Iaquinta were enough to force the organization to part ways with Ryan, and he now fights for Bellator.

So, I have intimate knowledge of how this climate of dominance developed and how fighters have been conditioned to think that you can't fight the UFC, even if you have a legitimate beef. UFC fighters are taught from their earliest involvement with the company that you're better off being blindly loyal, staying perpetually quiet about any grievances you might harbor. Typically, fighters who do speak out are those who are above reprisal (i.e. Jose Aldo or Jon Jones) or obscure enough to dismiss as disgruntled nuts (i.e. Jacob Volkmann and John Cholish). The bulk of the UFC masses want to remain employed and on the rise, hoping for brighter days and bigger paychecks. Criticizing the company leadership is a great way to earn a demotion or guarantee that you'll never get a fight bonus again.

The case also highlights Quinton "Rampage" Jackson's past run-ins with the promotion he just recently re-joined after referring to his old bosses as "the devil you know" in a Twitter post. The complaint, which Jackson is not a party to but could still actually benefit from, describes how Jackson secured individual deals with a figurine company called Round 5 and sneaker giant Reebok before the UFC moved in and blocked these moves in favor of arranging their own longtime agreements with these companies.

Jackson and Tito Ortiz both departed the UFC for Bellator amid very public disputes regarding how their careers progressed under their UFC contracts. They both once had plenty to say about how much they were mistreated, but now they are singing what sounds like the same tune and avoiding run ins with this all-powerful force in the industry. Business is business, explains Jackson. Ortiz officially turned down the opportunity to join this round of lawsuits, citing his ongoing responsibilities as a manager and agent for fighters. In other words, he doesn't want to burn down the bridge he just began to rebuild after burning down the first one.

The basic gist behind Ortiz's motivation for opting out of the court battle is actually explained on page 47-48 of the initial complaint by Le, Quarry and Fitch:

 "Professional MMA Fighters who compete at the highest level of the sport cannot 'opt out' of UFC because the UFC’s anticompetitive conduct has made it impossible to maintain a successful MMA fighting career outside of the UFC."

So, if that statement is indeed correct, it's highly likely that Ortiz will bite his tongue and wind up following Jackson back to the UFC in the near future. Still, where some fighters are convinced the UFC will have their backs in the long run, others are buoyed by the suit and want in. One such fighter is Sean Sherk, who retired with a 36-4-1 record that included a long stint in the UFC. Like many fighters who are no longer in the inner circle of the company as fighting superstars or honorary executives, Sherk can't help but look back and feel cheated. What he put in seems to be exponentially greater than what he was able to reap in return as far as purses, profits and residual income. Sherk is the first fighter I've heard of supporting this case who actually owned a UFC belt at one time, so if he gets formally involved it will certainly be monumental.

Though many experts might think most current UFC fighters will refuse to sign up as plaintiffs for fear of reprisals or retaliation, it might also be hard for some to explain why they signed a petition that was reportedly circulated to UFC fighters in 2012 (as described by Pablo Garza). The petition reportedly asked fighters to confirm the promotion was not a monopoly and that all its fighters were treated fairly. The signatories of this petition might be used against the plaintiffs in these class action cases as proof that the UFC is running a reputable and upstanding operation with no hint of monopoly involved.
   
The reality is, there really are "company" fighters who get all the breaks while their lesser or equal counterparts continue to get the short end of the stick. This group of pampered active and retired insiders includes Chuck Liddell, Dominic Cruz, Gilbert Melendez, Daniel Cormier, Brian Stann, Dan Hardy and Kenny Florian (among others). Other than Liddell, they all have lucrative television gigs. Liddell has commercials instead with Duralast and Bud Light. I have never personally heard any of these guys present an argument that the UFC is in any way corrupt, greedy, or worthy of any significant criticism. You often find the same level of intense blind loyalty with whoever gets picked as a coach for The Ultimate Fighter. The lone exception may be Jason "Mayhem" Miller, who was hired more for comic relief than being a yes man. Sticking to the old company line is obviously being rewarded for most of the fighters who bite their tongues when it comes to lashing out against the company's management.

Jon Jones and Ronda Rousey are stars who are really almost bigger than the promotion, but they still wind up being sponsored by who the company wants to highlight most. I suppose they are fighters who still get treated like they can do or say no wrong, but they still have to stand by the main causes the company champions. They are spokespeople by default, shilling whatever they have to in order to remain loyal to their bosses. Both Rousey and Jones were sponsored by Xyience when the Fertittas owned it. Ronda is also the "prettiest" face involved in the UFC's frequently-airing commercials for a major cell phone network. Cain Velasquez is also featured in the same commercials. Jon Jones is also the first MMA athlete to sign on with DraftKings.Com as they assemble their very first Fantasy MMA offerings in time for his upcoming bout with Daniel Cormier.

The only hint of any major animosity shown toward the promotion by any of the above-named "company" fighters in my recollection was when Brian Stann retired and cited concerns regarding PED usage in the sport, the same sentiment Longtime UFC Welterweight Champion George St. Pierre pointed to as the main reason for his departure from the sport.

Stann also recently made a telling remark during last Saturday's UFC broadcast. During one fight that didn't live up to expectations, Stann stated that as a fighter, "You have to take risks if you want to make a name for yourself in the UFC." If anyone should know, it's Stann.

If you end up washed up or not making enough money, so many fans and UFC supporters (often called nuthuggers on MMA forums) will condemn you for not trying hard enough. It's your fault, no matter what, even if you spent half your own life savings trying to make it in the sport. Yet, the UFC is not a powerhouse because it has only successful and dynamic fighters. It takes some fighters who are not so dynamic and amazing to actually show how good the best fighters really are. Having these lower-tier fighters on board is essential, but their lack of extraordinary talent also makes it easier for the UFC brass to abuse these folks. The very design of the bonus system and the fighter pay structure encourages fighters to take risks in every fight in order to achieve success in the UFC. You can't just win by split decision on a smart, boring strategy and expect to get all the spoils of fame and fortune that fighters who always win by knockout get. It's no longer a case of winning being enough. You also have to put on a show to get anywhere in this organization. 

Even though he's not a perfect poster child for fighters who did everything right and still got shafted, Cody McKenzie's recent retirement is worth noting here. He recently expressed some major issues he had with working for the UFC and trying to survive on the outer fringes of the sport and failing. Though it would be easy to argue Cody and other complainers like the Diaz brothers just don't work hard enough, you could also make the claim that they were maybe convinced at some point along the line that working harder just wouldn't matter. Some people just either don't have that natural talent or simply have no chance of getting to the elite level of the sport. The cards really are stacked against some fighters, even though some of them possess all the talent in the world.

Whatever the reason a particular contender has for lacking supreme ass-kicking ability, being a halfway decent fighter also takes a tremendous amount of work and sacrifice in this sport. The effort put in by these less than superior combatants in the UFC is just as tremendous at times as those fighters who hold championship belts. Yet, the same effort rarely earns the same return under the UFC umbrella. It's all about popularity, positioning and performance in the UFC. You can't just work hard. You also have to suck up to the brass, align yourself with the right people, and just be a good soldier in general. Even if you get booted from the UFC at some stage of your career, you still have to keep quiet about your bad experiences if you ever want to make it back into the fold.

The UFC taught Cody McKenzie a hard life lesson. They basically told him to "go fish," which is actually a career the Alaskan native would have  been better off pursuing. After all, everything on the boat is paid for. There's no on-the-job travel expenses, trainer and management fees, or dependence on extra bonus money for superior performance. You show up, you work hard, you get paid, and you go home if you don't wind up in the hospital or on the bottom of the ocean due to some kind of tragic accident.

The Ultimate Fighting Championship has a serious problem with the way they treat fighters, plain and simple. Does this lawsuit do enough to put a stop to it? I doubt it, personally. I envision this whole situation fading away quietly with each fighter getting a few million and the lawyers getting all their fees paid. All it will take is one or two bigger names coming out in support of or actually joining one of these classes of plaintiffs. There will be a point when the bad publicity and mounting sense of revolution will become too much for the UFC brass to bear, and they will pay a settlement. Nothing will actually change for the better in the long run if that happens.

For sweeping change to come out of any of this litigation, it will have to go to trial. People will have to testify, damning documents will have to be exposed in discovery, and fighters will have to tell the sordid details of their awful personal experiences with this all-powerful promoter for the record. No matter how dedicated the plaintiffs and their attorneys are, I doubt California's political climate and the possible favoritism of the Fertittas due to their casino and property interests in the state will allow this case to get to trial.

So, it makes for a good story and promotes healthy debate on the monopoly subject, but if any changes do eventually come out of this court battle, it will take years for them to take effect. The worst case scenario would be a climate where the lawsuit is actually killed before it gets off the ground, which is entirely possible if the UFC has that much behind-the-scenes influence in California.  

Nevertheless, this is a fantastic start in the quest to bring this organization to task for the way their overbearing actions negatively impact the sport of MMA as a whole. It is one thing to build something great while focusing only on your own business model and building it up from the initial concept into a worldwide force to be reckoned with. It is something else entirely to focus on destroying and/or minimizing everyone else in your niche to get to the top. Honesty is hardly ever the best policy in our capitalist way of doing business, though. Sometimes keeping secrets is actually crucial to a company's survival.

Consider the case of a guy named Ken Pavia who used to be a big player in the MMA industry and is now a bit more removed from the sport. Pavia shared some UFC contracts with Bellator and wound up on the business end of a Zuffa lawsuit against him. The debacle eventually led to Pavia leaving the country to work for an overseas fight promotion. Pavia told me during this period that Dana White personally threatened him over the situation, telling him that the company would do everything in its power to get revenge. He even claimed White told him he would not be happy until Pavia's fiance left him and he committed suicide. A countersuit filed on behalf of Bellator and Pavia helped initiate a settlement in the case that is not allowed to be discussed by either party. So, now the outcome of a case about company secrets is itself a company secret.

The point is, the UFC is constantly building up their power base, and they have tremendous pull when it comes to making or breaking a fighter under their employ. They can also make life difficult for anyone who may rely on their support to do business in the industry.

Often the courtroom can be the last place to look for any semblance of real justice, but the tide has to turn somewhere. Maybe it will turn here, but my outlook on the situation is colored by skepticism and personal experience with the type of lawyers the Fertittas hire and how they operate. I'm more inclined to think more publication and less legalese would be a better way to inspire change. A blockbuster documentary exposing fighter complaints, maybe with a few blurred faces and distorted voices, might go a lot further in blowing the lid off this corruption.

Unfortunately, there's also a chance that this behemoth is just too big already and nothing will be able to keep it in line. As these class action cases outline, the UFC has been at this monopoly building thing for a long time, and they're very adept at avoiding culpability for their worst transgressions. Still, all it will take is one honest judge in California who is willing to hear the case out and let it continue to a final conclusion. And it would certainly help to have a few more high caliber fighters coming out of the woodwork to join the cause and levy their own personalized complaints and grievances.

I have been harping on the possibility of a legal action like this against the UFC for a long time, ever since Dana White started saying he wanted the UFC to be as popular and powerful as the NFL someday. I predicted years ago that a class action lawsuit could be the only way to stop the rampant abuse many fighters under UFC contract face in trying to earn a respectable and comfortable living. Even the highest paid UFC athletes no doubt make a huge chunk of their income from sponsors and endorsements. The most famous fighters also get movie roles on top of all that, so there's not much to complain about. Yet, what does it say about the sport and the owners of the biggest promotion in the sport when even their top athletes aren't making a luxurious living off the actual wages they're paid? Why should they need to depend on all this outside income when the profits of the promotion make it possible for them to be compensated much better without all that hoopla?

The answer to those questions may be more simple than you think. It all amounts to one short word, just five letters long: GREED. And the UFC brass is so downright greedy that I can't imagine them spending more on a settlement than they would be willing to shell out on the army of legal bulldogs it will take for them to crush their opposition here. When you are as corrupt and conniving as the Fertittas and Dana White, lawyers can be the most important piece of the puzzle. Some of the sleaziest attorneys are just as likely to advise you on how to break the law through sophisticated maneuvering as they are to help you make sure to follow it to the letter. The kind of lawyers employed by these folks are the ones all the lawyer jokes are really made for. Many of them already sold their souls to the highest bidder, and they have no scruples or morals remaining to stop them from taking these valid fighter complaints and turning them into a puff of smoke.

I, for one, will be rooting for the fighters to score a key victory here that finally exposes the UFC for taking advantage of the very people who made the organization what it is today. The publication of the suit itself goes a long way in doing just that, but results are what will really matter in this case. This legal team has the personnel and the persistence to make things interesting, but what they really need is to secure a final judgment or at the very least get to trial.

Stay tuned as we follow this case to see if any of this legal wrangling will pan out for the plaintiffs in the long run. I know one of the folks behind this case is interested in starting a fighters union at some point, so even if the case settles it might lead to some financing for that future endeavor. This development might not represent a perfect plan to revolutionize the way the UFC does business, but it's a damn good start as far as attempting to root out some of the corruption and mistreatment some of the promotion's fighters endure. I will keep a sharp eye on these cases as they play out and pass on new documents and developments as I acquire them.

Tuesday, September 2, 2014

Fertittas Walk Away From Xyience & Xenergy With Big Red Buyout

By: Rich Bergeron

Inside sources at Xyience, Incorporated broke the news to me last week that the company would soon be sold off to Big Red, based in Austin, Texas. Employees will apparently not be receiving severance packages, and early indications are that the beverage company buying out the brand will not seek to enter into the supplement business. This means only the Xenergy line of energy drinks will remain under the Xyience label. I held off on publishing the news immediately due to a promise of more intelligence if I let it go a few days. Then, the Las Vegas Review Journal forced my hand today with THIS REPORT.

The sudden washing of their hands of the former supplement giant known for sponsoring Chuck Liddell in happier days is par for the Fertitta course. It comes as no surprise that Lorenzo and Frank would bail on the company in this fashion. It certainly is ironic, though. It was actually disgraced Xyience Founder Russell Pike who originally came up with the idea to hype up the Xenergy line in the hopes of selling it to a major bottling outfit. Pike wanted Pepsi or Coke to come in with a multi-million dollar offer to take over Xenergy and transform it into a wholly unique company. The Fertittas obviously fell short of that lofty goal (maybe it had something to do with something Dana White once said), possibly banking on their Galveston, Texas roots and other family connections in Texas to ink the new deal that allows them to walk away from this boondoggle.

Other whispers from the final days of the Fertitta-run Xyience indicate that marketing studies showed Xenergy is being sold to more mainstream non-UFC-fans than ever. This reality also means the end of UFC sponsorship deals with Xyience and Xenergy.

One thing the company managed to do well over the last few years is in the realm of building distribution agreements for their sugar-free energy drink. Since the heady "Monica" days at Xyience, Xenergy's always been easier for the company to market than the supplement lines. Insiders who are aware of the Fertitta walkout point to profitability, or lack thereof, as an issue for the whole conglomerate. Lorenzo Fertitta in particular, one of the principles at Fertitta Enterprises (which holds the official, albeit obscured, ownership position over Xyience), is reportedly growing tired of losing $5 million a year.

This is the end of another monumental scam for the Fertittas, who just barely escaped serious liability in a lawsuit brought against them by the U.S. Trustee in bankruptcy court. The scheme that drove Xyience just far enough into the ground for the billionaire casino barons to take the whole thing over is now officially in the rear view mirror of their Rolls Royce. The roadmap's been painfully obvious to people like me from the very beginning, but somehow the local boys made good managed to avoid culpability and accountability for the mess they ultimately left behind by their selfish actions throughout the whole process. Let's not forget the hundreds of innocent shareholders who saw their investments turn to dust thanks to the way the Fertittas swept in and turned the whole operation into another sad example of vulture capitalism.

Though I took some small consolation from Fertitta Attorney Greg Garman telling a judge at my final hearing that my reporting has caused his clients multiple headaches with the gaming authorities in Nevada, it is even more comforting to know the Fertittas never could get Xyience buzzing again under their leadership. Maybe they will finally come to realize they would have been better off doing everything above board. I know, fat chance on the "Come to Jesus" moment ever happening for these scum-of-the-Earth con artists.

The bottom line is there won't be any former Xyience investors waiting for the final closing of this deal to cash in on what they put their life savings behind so many years ago. The Fertittas will be another couple of fat cats getting fatter when they deposit the final checks that bail them out from this disaster they constructed and created out of sheer, callous greed. Perhaps it will all go to pay for another yacht, another private jet, or another summer getaway they can jet off to when everyday life gets too real. Whatever the final sale price is, it is a crying shame that none of it will go to the honest folks who actually put the brand on the map with their hard-earned money from decades of the kind of hard work the Fertittas themselves will never be able to relate to. Whoever said liars and cheaters never win probably never met Lorenzo and Frank Fertitta III.

We'll have more details as they come to light on this blockbuster transaction.  


Saturday, June 28, 2014

Convenient Accident or Cold-Blooded Murder?

"You wanna pull off a brilliant murder, you gotta act like it's an accident. If you do it right, you ain't even gotta be there when it goes down." Jamie Foxx as Dean Jones in Horrible Bosses (2011)

EDITOR'S NOTE: It may be helpful for readers to review a few of our prior reports herehere, and here in order to better understand the history leading up to the events described in this article. 

By: Rich Bergeron

      More than 20 years ago, on the afternoon of November 4th, 1993, Carl Wesley Thomas died after his 1992 Suburban crashed on a gravel-lined stretch of Plush road in Frenchglen, Oregon. According to the official police report (for the full document click on these links to pages 1, 2, and 3), the investigation of the scene indicated the vehicle swerved to the left first, with the two left-side tires leaving the road briefly. 

     Upon swerving back onto the road, Thomas apparently paid dearly for not wearing his seat belt. He was ejected from the vehicle as it rolled over, crushing him underneath it. The report goes on to state that the vehicle rolled again and wound up in a ditch at the side of the road. Thomas was discovered face-down on the road, some 36 feet from where the Suburban ultimately came to rest. 

     The Harney County Sherriff's Office dispatched Officer F.H. Hickey, Jr. to the scene. His report of the accident explained, "The victim received multiple fractures of the right leg, a flailed chest, and head injuries and was pronounced dead at the scene at 6:15 PM." 

     Whatever Hickey observed that did not end up in the report may forever remain a mystery, because the officer died of a heart attack in 1995. 

      The Sheriff at the time was Dave Glerup, who still holds the position today. I spoke to Glerup last October, just a few weeks shy of the 20th anniversary of the fateful crash. He explained that the scene of the rollover was a rural, remote road which experienced "lots of accidents of this type." He added that the conditions were "kind of treacherous," especially for anyone who was driving while intoxicated. 

     Officer Hickey's report also indicated that a half-ounce of cocaine was found on Thomas along with an empty baggie and a short straw, discovered in his pocket only after the body went to a local funeral home. The records Sheriff Glerup sent me included a Blood Alcohol Report on Thomas from the State Medical Examiner, which came back negative for alcohol. To the sheriff's knowledge, there was never any testing done to determine whether Thomas had any other drugs in his system at the time of the crash.  

    Despite inferences of foul play suggested to him over the years, Sheriff Glerup remains convinced that the cause of death should be classified as accidental. "It's hard to believe this could be anything but an accident," he explained. "I can't picture a homicide where the vehicle actually rolls over him like that." 

   Throughout the decades since the incident, rampant speculation still points to the case as a possible homicide. Adding to the suspicious circumstances involved in the crash is the fact that, just prior to his death, Thomas agreed to provide testimony at a very important meeting with Missouri Gaming officials regarding their inquiry into whether or not they should grant a gaming license to Station Casinos. Just before his death Thomas also reportedly met with Station Casinos officials to discuss his summons to Missouri, and that meeting most likely included Frank Fertitta, Jr. offering counsel to his longtime friend and associate. The crash happened on his trip back to Oregon from the Vegas sitdown, and it guaranteed Thomas would never testify in Missouri. The Fertittas were able to get their Station Casinos license after all with the dead man telling no tales. 

     There was only one condition put on the final approval: Frank Junior could not be part of the Missouri operations of the company. Frank's eldest son Frank Fertitta III, AKA "Frankie Three Sticks," ended up having to hold the reins there in Missouri until the state implicated the company in multiple scandalous incidents detailed further here. Missouri revoked their license and forced Station Casinos to sell their Missouri properties and go back to Vegas where Frank III also eventually had to take over due to his father's questionable past.  

    It's a long story, but it's safe to say Station Casinos would benefit tremendously from the death of Carl Thomas. Though that doesn't make it a sure thing that the crash was somehow orchestrated or caused by an unknown suspect connected to the Fertittas, the family collected a unique type of figurative "insurance" after the "accident."  

     To put things in perspective, Thomas earned a permanent ban from all Nevada casinos in 1990 after being implicated in the massive skimming operation popularized in the 1995 movie Casino, starring Robert DeNiro and Joe Pesci. Frank Junior himself was on the fringe of that scandal, and the prevailing Las Vegas legend has Frank taking over Thomas' co-ownership of what later became the first Station Casino property for a lump sum of one single dollar. The forfeiture of his ownership interest reportedly came just before Thomas went to prison for what was supposed to be a 15-year stretch. Thomas served only two of those years according to a report of his death published in the Orlando Sentinel, thanks only to his willingness to cooperate with authorities.

     Frank Junior had connections to multiple casinos in Las Vegas during the heydey of Mafia skimming there. Between his departure from Texas in 1960 and his purchase of "The Casino" with Carl Thomas in 1976, Fertitta went from bellboy to dealer to pit boss to Baccarat manager to general manager at properties including: The Stardust, The Tropicana, The Sahara, Circus Circus, and ultimately The Fremont. "The Casino" later became "The Bingo Palace" which would morph further into Palace Station in 1983, launching what would become a vast "locals casino" empire rivaled only by the Boyd Corporation founded by Sam Boyd. To this day, Station Casinos and Boyd compete as the leaders of this market catering to local Las Vegas residents and casino workers.  

     The jury is still out on how Frank Junior avoided prosecution in the skimming investigations, especially since FBI wiretaps caught him on tape talking about "excess cash" and other veiled references to the skimming repeatedly. A security agent named Harry McBride, who worked under Thomas at the time, also told authorities that there was a "Frank" involved in perpetrating the skimming operation at the Fremont Hotel and Casino. McBride also cooperated with investigators who ultimately turned Thomas as well. McBride testified in a U.S. District Court Case against five members of the skimming ring in 1985. 

      There are no official records I know of regarding any testimony or cooperation on the case offered by Fertitta himself, but I did find one court document in which a name of a witness was redacted, and the person described sounded like Fertitta. My personal theory is that Frank was a secret witness in exchange for immunity from prosecution. Rather than testify in open court, he could have provided background information that helped further the investigation. After all, that might explain why David Helfrey, the chief prosecutor in the 1985 trial cited above, later went to work for Station Casinos in Missouri. If Frank Junior being a snitch sounds too far fetched, consider the fact that Frank "Lefty" Rosenthal (played by Robert DeNiro in Casino) died before the fact that he was a government informant leaked out. 

      Another possibility is that Carl Thomas himself could have requested Fertitta be left alone in exchange for his cooperation. Thomas switched sides during the same 1985 trial in which McBride testified. He obviously had some very incriminating and useful evidence for federal prosecutors about all the players, but he certainly could have left Fertitta out of any information he volunteered. The only other alternative explanation for Fertitta avoiding jail time is that he was an extremely lucky man. 

     For more on the investigations into Mob-influenced Vegas skimming at the time, check out this Dennis Griffin blog, which is the first of three chapters on the whole operation. Like most organized crime schemes, the whole enterprise turned out to be very sophisticated. The movie based on the true events is a bit loose with the facts, and it's really only half the story. 

    Harry McBride would later resurface during a 4-year probe of Frank Junior by the Nevada State Gaming Control Board in the lat 80s. If McBride agreed to testify before the Control Board, it could prove that Fertitta lied about his role in the Argent skimming operation when he applied for his gaming license. Thanks in part to McBride's outright animosity toward a commission member, the vast political connections cultivated by Frank Junior, and also possibly the lack of any criminal penalty for not taking the stand, McBride declined to cooperate with the board. He reportedly also did not think any good would come of him testifying. 




     The final decision on the matter came down to a 2-1 vote to take no action against Frank Junior. Just a few years later, in 1993 (the same year Carl Thomas died), Frank Junior passed the empire to his sons Frank III and Lorenzo. Despite Frank Junior giving up official control of Station Casinos, he spent a great deal of time at the very same property he named "The Casino" when he bought it with Carl Thomas in 1976. Though he was no longer officially in charge, workers at Palace Station would often run into Frank Junior making his rounds or eating lunch there right up until his tragic death on the operating table during a heart procedure in late August of 2009.

      Carl Thomas died a tragic, yet convenient death for a Las Vegas family that later saw their power and influence grow exponentially. Even a pre-planned bankruptcy of the whole Station Casinos chain didn't stop the Fertittas from reigning supreme in the locals market and taking a once little known fight league from barbaric side-show to mainstream attraction. Through it all, Lorenzo and Frank III heeded the example of their dearly departed father. Like Frank Junior--who was a prolific political donor in his day--they always grease the wheels whenever and wherever possible. Both Democrats and Republicans benefit from that family tradition, and if paying off the politicos isn't enough to keep their corrupt actions from being shut down, they also continue to keep up their father's habit of buying a ton of advertising in the local papers to keep mainstream reporters from writing too much about their worst transgressions.       

     Beyond Las Vegas, the Fertittas also have contracts with various Indian-run casinos to manage casino complexes across the country. The Fertittas also do consulting work for casinos and stand at the forefront of the online gaming movement. This quiet expansion is nothing new, which is likely why the Harney County Sheriff's Office received requests for the records of the Carl Thomas crash from the Missouri Gaming Commission and the Indiana State Police Gaming Enforcement Section in 1994. Oddly enough, Nevada gaming officials have never requested accident report copies according to Sheriff Glerup.  

    My own investigation of the records leaves more questions than answers. The first question, and perhaps the most important one is: what caused Thomas to swerve when the crash initiated? Even the most comprehensive forensic examination with all the technology we have even today might run into a dead end trying to answer that one. The fact that the crash happened on a gravel road might mean that any tracks of another vehicle that was possibly involved might not be detected by investigators. Another unanswered question is why was there no testing for drugs when Thomas had cocaine in his pocket at the time of his death? Also, how often are passengers ejected from a vehicle that then rolls over them? Though Sheriff Glerup concludes the ejection and rollover makes it most likely the cause of death was accidental, I really don't understand that reasoning. 

     If the straw and the cocaine were both in his pocket at the time of the crash, it seems obvious to me that Thomas wasn't doing the cocaine at the moment of the initial swerve. So, that can't be the cause. If there was any amount of cocaine in his system, it also seems highly unlikely he fell asleep at the wheel. The only valid explanation in my humble opinion is that he was trying not to hit an animal crossing the road (accident), or another person and/or vehicle was responsible (murder or vehicular manslaughter). Since the area was so remote, there would be no witnesses, and law enforcement would take considerable time to arrive on the scene. 

     Rather than pin this down as an accident, I consider this a cold case that should be classified as unsolved with the official cause of death deemed undetermined. Unfortunately for all who wish to know the full truth, this is one case that will never be re-opened. There's absolutely no possible way of finding out exactly what happened, which makes Jamie Foxx's line at the top of this story so relevant to the situation. If it was murder, it was executed flawlessly. If it was actually an accident, there's still not enough evidence to conclude what really caused the rollover. It's a perfect storm of suspicious, but easily explained away facts that could support either side of the debate. Regardless of how he died, though, without Carl Thomas helping Frank Junior get his start, the Fertitta empire might not exist today. In the same breath, it must be said the death of Thomas also helped guarantee the continuation of that empire that might have been stopped in its tracks if Thomas told the truth in front of those Missouri gaming officials. 

      Those who dismiss the conspiracy theories would point to Thomas not implicating Fertitta when it counted back in 1985. Why would he bother to throw Frank Junior under the bus in front of a gaming commission that didn't have the power to throw him in jail for a long time if he didn't cooperate? Doubters would also point out that Fertitta wouldn't have a formal meeting with Thomas if he knew he was going to have him killed on the trip home. The very fact that at least two gaming authorities wanted to see the crash report proves that even the slightest possible inference of a criminal deed sheds a bad light on any gaming license candidate. Why would Frank Junior risk the suspicion that would surely fall on him? I can only surmise that if it was murder, Frank Junior might not be the one who ordered it. If he was running the Fremont skim for the Kansas City mob as the evidence shows, he could have also expanded to Missouri to appease the next generation of the same Kansas City outfit after the original skim bosses went down. 

      A murder for hire operation of this scope and magnitude, leaving no trace of evidence of a homicide, seems more like the work of a trained and experienced killer used to working in the shadows of the underworld. The hit could have been ordered by someone else deep within the organization who stood to benefit from Station Casinos getting a Missouri license, if indeed it was a sophisticated hit. Then again, who had more to gain than Frank and his family? Therefore, you can't forget the words of another "Lefty" from another movie based on a true story. I'm talking about Al Pacino's character in Donnie Brasco. "When they send for you," Lefty said, "You go in alive, you come out dead, and it's your best friend that does it."

     Regardless of the true circumstances surrounding the Carl Thomas crash, it is a mystery that will follow the Fertitta family for eternity. The ghost of Carl Thomas will haunt the family legacy as long as the facts as we know them are passed down from one generation to the next. The cloud of suspicion will never go away even if speculation of any current mob connections to the Fertittas is unfounded. The fact is, the physical Mafia ties may be long gone, but the organized crime mentality still exists thanks to what Frank Junior passed down to his sons. Everything they do may technically be "legal," but there's a good chunk of activity that could be labeled very close to crossing the line into criminal behavior. Even if you can't call it criminal, you can certainly call it corrupt and underhanded. Go back through their history, and you will find one deftly avoided major scandal after another. From Argent to USA Capital to the orchestrated Station Casinos and Xyience bankruptcies to the dirty dealings of Zuffa over the years, it's all a matter of complicating and obfuscating things just enough to avoid serious lawsuits and/or criminal prosecution. It may not be the textbook definition of "crime," but it's definitely organized. 

Monday, October 7, 2013

Smoking Gun Evidence that Bergeron Case Was Unfounded in Law or Fact




The above email chain dates back to the beginning of the $25 million Xyience lawsuit filed against me in Las Vegas District Court back in 2007 by Attorney Jamie Cogburn. These exchanges came from an email recently sent to me by the brother of Xyience Founder Russell Pike, who is currently incarcerated due to a conviction for tax evasion. I will be publishing a large cache of other insider emails in the near future.

At the time these emails originated, Pike was working feverishly to get more investors to come in to keep Xyience viable. My reports were making those efforts nearly impossible. The lawsuit described investors willing to enter into financing with Xyience, but only if my articles were removed from the Internet. As soon as the case resulted in a preliminary injunction against me, Russell Pike sent a representative out to deliver copies of the injunction order to local investors. This rep wrote the following statement in an affidavit I filed in my counterclaim:


The Fertittas always denied through their attorneys that they had anything to do with the suit against me, but it's obvious from this testimony that they forced Xyience's hand. Dana White didn't end up investing anything, but before Fertitta Enterprises went through with their loan package they did get White's approval.

This email chain will be the main exhibit in a new case against Attorney Cogburn in Nevada. There will be much more to come on this front in the days and weeks ahead. Stay Tuned.