Frank and Lorenzo Fertitta Face Their Worst Nightmare as the Culinary Union Takes Center Stage in National Democratic Primary Picture

By: Rich Bergeron

This Saturday Nevada will caucus to determine how many delegates will go to which candidates running as Democrats in the 2020 race for the White House. The most significant political force to weigh in on who should get the ultimate nod on this special day for national politics will be Local 226, The Culinary Union.

This reality is much to the chagrin of a common enemy I share with this particular union, Billionaire Brothers and Sophisticated Scam Artists Lorenzo Fertitta and Frank Fertitta III. Suddenly the blackjack tables are turned in Las Vegas. It used to be the Fertittas wielding power over the union, refusing to acknowledge stringent efforts to unionize their casino chain. Station Casinos, AKA Red Rock Resorts is now losing the fight. The Culinary crew is infiltrating one Station establishment after another.

The Palms Casino, the latest acquisition for Station Casinos, is one of the last bastions of union resistance. The Fertittas already sunk hundreds of millions of dollars into upgrading this casino, and the culinary union fight actually resulted in the threat of financial kickbacks from the government getting jammed up by congressional democrats. Prior to the vote this Saturday, some democratic candidates for president may actually even join the picket line at The Palms and herald the Culinary Union effort to grab another piece of the Fertitta casino empire's pie.  

This is a nasty fight, one that countless union dues have gone toward waging relentlessly over the years since I began investigating the Fertittas for their shady involvement in the Xyience scandal. I've actually personally been interviewed at length by Culinary Union researchers on multiple occasions. Much of the information they put on their anti-Fertitta Web-sites originated with my reporting here and simply expanded on that work. At one point this fight was so fierce that the union resorted to what I saw as a sick and twisted campaign to make fighters in the UFC (also owned by the Fertittas at the time) believe that this same union would step up and stand up for their rights to fair treatment, too. The culinary union put up a Web-site pointing to a potential effort to organize fighters but never really bothered to make any legitimate foray into that realm. It was a bluff I personally blasted in an article on Rant Sports.

Now that the Fertittas are out of the fighting business altogether, I can look at this union a bit more objectively and perhaps forgive them for biting off more than they could chew years ago. After all, their people definitely picked up where I left off with exposing these spoon-fed crooks moonlighting as successful self-made men.

If you wonder just how much this feud is hurting the brothers and their casino investors, consider the moves they've made recently to pump up the stock with personal investments from family trusts and the suggested selling of senior notes to raise $750 million. They are even shopping around property they own to pay down some of the massive debt they've incurred. The fact that this company once again left the veil of private ownership and became a public entity did not stop the managing interests from tainting the brand with their financial tricks.

The Palms project alone comes in at an expense of nearly $1 billion if the cost of the purchase is included. This gamble will really have to pay off, and they will have to pinch every penny moving forward to survive an ongoing battle like this with the likes of the Culinary Union. Only the infusion of their own personal capital staved off a completely negative trend in the Red Rock Resorts stock that saw more investors losing shares than acquiring them last year. That money was not even really all that important to the Fertitta brothers themselves. It was more like a raiding of the piggy bank where they keep the future inheritance their children will enjoy someday. All of the funds came from trusts, not really out of the personal coffers they covet and hide in multiple business entities like "Fertitta Capital" and "Fertitta Enterprises."

The Culinary Union is in this for keeps, and now they are clearly at a tipping point ahead of this caucus. There is no doubt the Fertittas and their friends will be flooding Donald Trump and the rest of his party representatives with donations to stave off a Democrat takeover after the 2020 general election. If the United States decides to elect a Democrat as president, the Fertittas will likely get out of the casino business as fast as they possibly can. The union takeover will be all but inevitable.

Already the pressure is becoming unbearable as there is no stone left unturned in the fight to expose the Fertittas as frauds. At one point Station Casinos was voted by workers as one of the best places to work in Nevada, but these days Culinary folks are alleging that the chain is an unsafe working environment that OSHA should investigate. It's hard not to look back at this very moment on the tumultuous bankruptcy the chain escaped virtually unscathed. Billions of dollars in debt were erased. The amount of money spent on "going big" with The Palms may come back to haunt the company. This is especially true since there is such a focus on art involved in the $690 million overhaul. The Fertittas have not had the best luck in the art world. Frank Fertitta III once bought what was later determined to be a fake Mark Rothko painting. He paid a whopping $7.2 million for the con in the classic case of a swindler who got a taste of his own medicine. Lawsuits helped him recover the money he lost, but it was still an indicator of how the brothers often spend their income recklessly and don't use the best judgment in business decisions.

It is no surprise then that there are rumors that the Fertittas want a way out of the casino business, and they may choose the path of a complete sell-off. Only a few properties would remain under their control in that scenario, namely The Palms and Palace Station. It would also take a monumental effort to do this kind of transaction under public ownership if it doesn't represent an instant and significant benefit for all current investors.

There is also still tremendous buzz about the Fertitta brothers being interested in owning an NFL team, which would likely depend on a major sale like what I described above. Still, I would not offer any odds on that prospect unless they ingratiate themselves with a more wholesome group of partners to make the deal. As is, they are barely suitable to be given a gaming license in any state. Their connection to various cases of corruption, scandal, fraud and abuse of the bankruptcy laws is telling. They cannot run from their history, as this recent Chicago Tribune article explains. The National Football League would be wise to keep them far away from any team ownership position.

As for this weekend's caucus efforts, look for the Culinary Union to take advantage of the spotlight that will be on Las Vegas and Station Casinos on Saturday. Regardless of whether or not the Democrats have any chance to unseat Trump, the Culinary Union will continue to fight for better treatment of their workers. Their momentum is palpable, and their influencing power is potent. For once in their lives, it may actually be time for the Fertitta brothers to play nice and surrender in this war of attrition. They will only hurt themselves and their investors in the long run if they keep butting heads with this growing political force. Financial losses can be recovered, but reputational damage is typically more permanent.

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:

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.

Dispatch From The Desert: Xyience Scandal Widens, Prospect of Questions Scrambles Security

Las Vegas and all the grand glory it presents to the world never seem to be enough to impress me. The glitz and glamour, the lights and the noise, all of it is just one giant, monstrous, intricately choreographed sideshow. It's designed at the end of the day to take your hard earned money out of your pocket and hope you waste it on a chance of luck, a chance to spin the wheel and watch it all go bye bye.

There are more than a few people out here on the fringe of the desert who take advantage of that risk taking gene all of us have but so few cultivate and sharpen to a razor point.

I was called a "purported" investigative reporter by a lawyer at my last formal hearing in the case. I decided to show him recently how professional I can really be. I'm digging up more and more dirt as I move along, and it's getting better with each day.

"We love locals" is the motto of the Station Casinos chain just coming through bankruptcy smashingly. The Fertitta family along with the Sartini family own this entity with a company called Colony Capital providing a chunk of huge capital as well.

Colony, owned by Thomas Barrack (at left), and the Ferttittas were the stalking horse bidder in the recent Station Casinos collapse, and for $772 million plus they got their own casinos back with far less debt. The original standpoint had them around $6 billion in debt. The bankrupt it and buy it back strategy worked for Xyience, and bankrupting Station Casinos in the same manner must have felt safe. They had practice.

The fact of the matter is that Xyience is a hole in the desert, and all the old junk of the Fertittas and the UFC is buried down there. I consider this company to have a red-headed step child syndrome, and the culture is to beat that child every time someone isn't looking. The bosses do it, the employees do it, and the owners do it. It happens all the time, so who cares? The shareholders were wiped clean, the creditors are begging for pennies on the dollar, and there's settlement after settlement on the official side of the bankruptcy. The lawyer fees are still likely pretty minimal compared to what they would normally face with more fierce resistance. It's all private as well, so they don't worry about the government butting in.

They TAKE AND THEY TAKE AND THEY TAKE





Now, they're giving away a car a day as part of a Station Casinos promo. I was at a Station casino not long after I arrived in Las Vegas. I was there looking to speak with the President of Xyience, as I heard he was staying there. There was no sign of him, and he wasn't listed under his real name. I did see something interesting while I was there, though. An older gentleman got in a serious argument about charges with the hotel front desk clerk. I was there no longer than 10 minutes when all that happened. I told him to mention the attorney general, and that's when the next front desk lady called me up.

I started to pick apart Xyience and find their flaws from day one, right off the airplane. First there was a cruise around their offices and warehouse facility. Then I arrived in person. Dispatches from within told me what I was doing was working wonders. The staff was meeting about me daily, sometimes having the lawyer down there to discuss it all. The "distraction" I posed was now real, as I was in their backyard suddenly. The judge's stern order in my case that I would have to appear in person for future hearings troubled me. I decided to stay in town and start doing some digging. I wanted to find out what was buried in that Xyience hole in the desert.

When an infected wound starts to get all filled with puss and blood, as disgusting as the act may be you sometimes have to just squeeze the mess out of it. You've got to get the gunk to explode out on the floor, on the wall, all over the damn place. That's what it takes. Fraud is messy, too. You have to squeeze the main players so they will force out the root of the problem. Once you get that nugget of truth and start to run with it, they will start to figure out they are in trouble. Pressing the action and seeking out answers will either result in silence, denial, or lies to cover the tracks. I got silence out of one of the main players I went after.

IS HE IN "THE CLEAR" OR NOT?


Though it seems it is legal to sell some forms of steroids and fighters don't get arrested for testing positive, the legal steroid business still seems pretty shady.

Steroids is a serious issue in fighting. MMA is seemingly sinking to the depths of the WWE with certain leagues allowing steroids to become a major contributing factor to some fighters putting on a good show in the cage. Chael Sonnen's slap on the wrist suspension for testing more than 4 times over the legal limit for testosterone is just the latest in a long line of questionable treatment for athletes who fail their drug tests.

Baseball had Barry Bonds, and he was villified, but MMA athletes don't face the same standard in the eyes of many fans. Sonnen, and others like him, are just expected to serve out their suspensions and come back. Boo birds aside, their returns are nearly certain. Why such a different view for juicers in other sports who are left with albatrosses around their necks for life?

Just don't get caught seems to be the mentality that works in MMA. Even if you do get caught, it's a formality in this day and age. The fight happening in Nevada is also reportedly an incentive to juice since the stringent testing standards in other states have been increasing while Nevada has recently been behind on initiating more involved testing. Still, the Fertittas have not yet been linked to any formal investigation regarding providing or selling steroids. The story unfolding now does link the Fertittas to looking the other way when it comes to such behavior, though.

Balco and Bonds were able to sneak under the radar with so-called "designer" steroids. It's tough to tell if that's what is at play in my own investigation. The subject of the inquiry is a Xyience employee we shall call JV, and it fits because he may not be a varsity player at this point. There's no information he's working with the knowledge of the Fertitta family or with the sanctioning of the Xyience top brass, but there is a ton of information pointing to him being involved in steroid sales.

Still, I know the Fertittas and Xyience brass know at this point that they have a person suspected of steroid sales in their employ. This individual has been reportedly banned from going to Wanderlei Silva's gym here in Vegas. While training there, JV was reportedly speaking to a strength and conditioning coach who was "fired" a couple months ago. I am seeking to speak with that individual before publishing his name, but I know who he is and where he trains now. The investigation will continue so I can figure out whether or not this is any bigger than a couple small town Vegas guys peddling roids at a low level. I'll work in the days ahead to establish what type of steroids are involved, who ese might be involved in the purchase of these steroids, and how resistant they may be to testing.

BONUS AUDIO:

http://bit.ly/gmBUwE

http://bit.ly/gZUMTZ



THE LAWYER AND THE GENERAL MANAGER

The Walrus and The Carpenter Are in Panic Mode.

It's funny how one guy can generate so much buzz. While in Las Vegas I thought it to be pretty important to go after the attorney on the case and the general manager for the Fertitta entity that ran Xyience into the ground to promote the bankruptcy. Gregory Eugene Garman seemed on the very verge of shitting his pants when I emailed the lawyer his home address in a gated community out here. He alerted his local law enforcement and his security in the community thinking I was going to show up at his doorstep. I did the same thing to General Manager of Fertitta Enterprises and Zyen, LLC "Dollar" Bill Bullard. The actual emails confirming this are as follows:


Bill Bullard
to me



show details Feb 15 (5 days ago)

Mr Bergeron,

Be advised as a result of your continued threatening and harassing phone calls to my family I have given your picture and name to security at my residence as well as local authorities. Any attempt to approach my residence or make contact with my family will be met with your arrest.

Sent from my iPhone


===========================





Greg Garman (above) to me:

show details Feb 15 (5 days ago)

Mr. Bergeron, security at my residence and the police department have already been alerted to the threat you pose. Be advised you will be arrested should you attempt to obtain access to my neighborhood.

Sent from my iPhone

On Feb 15, 2011, at 3:54 PM, "Rich Bergeron" wrote:

> OK, so you're saying now I have to find out where you live to talk to you? Can't be that hard. I found out where Bill Bullard lives.
>
> I'm not intimidated.
>
> Why is it that all you guys are afraid to answer questions? I think it's classic that ONE GUY can cause this kind of panic when I've made no threats. I'm just talking about questions. Obviously you all have something to hide.
>
> Rich


=========================

Questions put real fear in people trying to hide the truth. As much as people will hide the truth, they hate being asked about it constantly. They're always afraid one mistake will topple the whole operation. One way or another, they think they can make sure all the oysters will be eaten by cabbages and kings:

NOT SO "TRUST" WORTHY AFTER ALL (PART 2)

By: Rich Bergeron

David R. Herzog is the Liquidation Trustee for the Xyience, Inc. bankruptcy I am embroiled in out in Las Vegas, Nevada. He and I have had limited personal interaction by email and never met in person. Instead, Herzog left the meeting and conversing up to an assistant of sorts who takes care of all the details in complex cases like the Xyience saga.

Jon Backman (at left) is Herzog's counsel, and so far he's handled much of the grunt work for Herzog regarding the bankruptcy and several adversary cases filed against those who allegedly defrauded the company in past years.

I met with Backman myself this past February, and I shared a great deal of information and evidence with him. He used some of the paperwork I provided him to prosecute his cases against some of the perpetrators who swindled Xyience along the way. We worked well together while it lasted, and as we tried to hammer out a settlement, I provided a few more clues and some important insight. Over time, though, it appeared to me that Backman was stringing me along, promising to take action to help me only to fail to follow up on multiple occasions.

For instance, Backman agreed time and again that the company's initial $25 million case against me should be dismissed, starting with his first contact with me in December of 2009 (CLICK ON IMAGE BELOW TO SEE FULL SIZE):



It should have taken Backman just a few hours time to draw up a motion for dismissal, serve it, file it, and get a hearing. Instead, he apparently did nothing but ignore my case. After a while, I started to understand the reality of the situation and that this guy might not be the kind of champion lawyer he seems to want to pretend to be when he needs something.

I decided I would have to file first to get Backman and Herzog to take me seriously, as Backman insisted the maximum amount Herzog would settle for would be $5,000. Even when I agreed to that amount, though, Backman never showed me as much of a draft of any pleading. He also never provided a draft of any agreement that stipulated our terms or any written timeline for any realization of such a settlement. The communication was all only by email and by phone. Nothing with a signature. It is a prime example of flat out, pure legal delay. Backman and Herzog simply sat on this case like all the lawyers before them did.

THE BEGINNING OF THE END

Eventually, I broke off communication completely with Backman. I told him I was going to block all his email accounts, and I dropped off his radar for a while. Meanwhile I compiled the legal documents it would take to blow this case wide open. During my time formulating these crucial filings, I decided it would be a good time to give Mr. Backman one last opportunity to save face for his own sake and for the estate's benefit. I sent him an email message telling him a few hints about my plans to file new material and offering one last chance for a civil conversation if he wanted to call me. Not long after I sent the message, he called. We compromised yet again (The first settlement was supposed to pay out $5,000 to drop the estate from the counterclaim and the sanctions motion claims), and Backman made another new offer:

Thanks Rich. Have you filed your amended defamation claim? If so, would you email it to me?

Do you want to do a settlement as follows:

1. I pay you $5,000 for the Rule 9011;

2. I dismiss the claims against you;

3. You are allowed to pursue the remaining defamation claim against the company (which I would defend, and perhaps we could settle down the road).

If so, then I would recommend such a resolution to the trustee.


Jon


I accepted these terms, and I made it clear I wanted Backman to move on it as soon as he could. He sent the above email to me on November 4, 2010, and we continued being civil and trying to work things out for almost two more weeks until I began to realize more pressure needed to be applied to get Backman to do anything on my case. I knew I needed to file my latest pleadings and affidavits. So, I sent Backman and Herzog everything by email first, on November 15th, although I didn't have digital copies of the exhibits for the summary judgment motion and had to send those by snail mail.

Here's most of what went out to both Backman and Herzog that day:

Xyience Case Brief in Support of Summary Judgment By Rich Bergeron


Affidavit in Support of Summary Judgment in Bergeron vs. Xyience Bankruptcy Case


Designation of Evidence For Motion For Summary Judgment


Motion For Summary Judgment


Affidavit In Support of Motion to Amend Sanctions Motion in Bergeron vs. Xyience Bankruptcy case


Xyience Case Motion to Amend Rule 9011 Sanctions by Rich Bergeron



I expected at least some kind of backlash from Mr. Backman of course, as much of the pleading material involves descriptions of my frustration with this attorney's behavior in support of fellow attorneys I'm seeking sanctions against. Instead of getting an immediate missive from the man himself, though, I was fortunate enough to get an email meant for him from the guy he was supposed to be representing: Liquidation Trustee David R. Herzog. The intercepted communication, obviously sent to me by accident, apparently never even made it to Backman's inbox. Since it was unrelated to settlement negotiations it is both admissible in court and ripe for publication, so here it is:

Gee Jon, and here I thought you were pursuing all these claims. Oh sorry I forgot, your not nearly the atty that Rich Bergeron believes he is; oh yes he is a legend in his own mind. Here is my concern, how do we get rid of this frivilous garbage without you spending gobs of time. I'm sure he doesn't comply with local rules if they are anything like the Northern District. You always told me he was crackpot, these pleadings prove it.

David

I SHOT RIGHT BACK WITH THIS:


David,

Disrespect will get you nowhere.

You probably didn't realize you sent this to me as well.

This "crackpot" gave your counsel a lot of information and
documentation on Xyience. This information helped win your cases. Mr.
Backman still doesn't even seem to know what my case is all about,
though. Neither do you.

I'm glad you just gave me more evidence that he's defamed me as well.

Not too smucking fart for a guy who's supposed to be a REAL attorney.

Good Day,

Rich

HE RESPONDED LATER (NOTE HIS MIS-SPELLING OF HIS OWN COUNSEL'S NAME) BY WRITING:

Sir,

Making threats to us does not resolve the situation. Bachman has made tremendous efforts in pursuing the litigation against the Fertitas and the other wrongdoers. Your disparaging remarks against him in your pleadings are reprehensible. What more can we do but vigorously pursue this litigation. I apologize to you for calling you a "crackpot" but let him have the peace to do his work undistracted by your litigation.

David Herzog

AFTER A FEW MORE BACK AND FORTH EXCHANGES HERZOG GAVE UP ARGUING:

Rich,

I don't want to bicker with you further, do what you think you need to do.

David

BACKMAN'S THOUGHTS ON THE LIQUIDATION TRUSTEE'S ACCIDENTAL FOOT IN MOUTH EPISODE WERE EVEN MORE REVEALING AND INTRIGUING UNDER THE CIRCUMSTANCES:

Rich ---

Apparently, David inadvertently sent the email to you when he meant to send it to me. Like I, he is quite distressed by what you have written in your motion to amend the sanction motion, and in the summary judgment counterclaim, both of which will distract my attention from critical matters in the Zyen/Fertitta case. I restrained my tongue because I know that getting into arguments with you about the damage you are doing to the case is pointless. But David was venting his frustration, thinking he was writing to me, but inadvertently sending it to you.

As for your comment that the remarks are slanderous, they are not because David did not publish them to anyone. They went solely to you.

David tells me that you and he exchanged further emails, but I have not seen them, so I can't comment. If you share them with me, then I will do so.


Jon

=====================================

Rich ---

I do not care whether you believe me. I did not receive David's email until you sent it to me. In fact, even when David emailed me to tell me of his error, he did not send me the email he had sent to you. As for Rule 9011, it has nothing to do with an email between an attorney and his client.

That being said, I regret that the events of today have occurred because, as you know, I have attempted to move past fighting with you, and have just accepted that you are going to do what you do --- and say what you say --- regardless of what I say. I did not like either of your motions, but I'll deal with them. There really is nothing for us to discuss about them: you have attacked my integrity, but I am a big boy and can take it. You should do the same with David's email to you and just let it go.

We'll speak soon I'm sure.



Jon

=====================================

Rich ---

I have to run to a meeting, but for the record, I never called you a crackpot. As I have told you, I believe that you are abusing the legal system with some of your pleadings, and I believe that, to some extent, because you are smart and hard-working, but severely misdirected, you can be dangerous. But I do not view you as a crackpot, and would not have used that term in describing you.

We'll speak soon.



Jon


FINALLY, BACKMAN DECIDED TO PLAY HARDBALL AND GIVE ME AN ULTIMATUM (WHICH I REFUSED TO BACK DOWN OR CAVE IN TO), OBVIOUSLY PUTTING HIS AND HERZOG'S OWN SELF-INTERESTS AHEAD OF THE ESTATE'S:

Rich ---

I don't know what you are trying to pull, but there is zero chance that the Trustee would settle your Rule 9011 claims, but let you bring a Rule 9011 motion against us the day after we paid you. We'd have to be out of our minds to do that, because then we'd be paying you $5,000 for nothing. At this point, we have not filed anything in your case, so you have no basis to file a Rule 9011 motion against either of us. In fact, if you did so, then you'd be subject to severe sanctions. And I am not going to file a settlement motion, or anything else, until you have signed an agreement saying that you will not pursue Rule 9011 motions against David or me. That was always the deal, and you know it.

Bottom line, and no further discussion: If you insist on retaining the right to pursue a Rule 9011 motion against the Debtor, the Trust Estate, David or me, then there is no settlement --- period. This is not negotiable. And if you do not accept it by 5:00 p.m. my time this evening, then our discussions are at an end, and we will cease responding to your email or speaking with you any further.



Jon

And now, because Backman and Herzog never volunteered any pleadings or demonstrated any general effort to move this case in any real direction, they use this fact as a sword against me. They claim this means they are not subject to Rule 9011 Sanctions, but they neglect to consider how liable they are for general sanctions. The problem with their backwards logic is I know the law.

The sanctions motion is not strictly a Rule 9011 motion. The motion asks the court to initiate its own ability to sanction offending parties. The pleading asks the court to provide sweeping relief for those injured by the blatant abuses of process and incessant delays wrapped up in the case. Backman and Herzog perpetrated much of the most recent delay, and at this point there is no reason not to name them to the amended motion for sanctions if I am given a chance to amend that motion.


I'LL SEE YOU IN COURT

Well, since I live thousands of miles away from the venue I won't actually see anyone in court, but I will seek a hearing and ask to appear by telephone. At that point there should be another item on the docket describing the events I've shared here. All the attorneys I've faced thus far in my budding pro-se career in law have demonstrated an extreme lack of integrity when backed into a corner. So many lawyers and people who can afford to hire them seem to live on that timeless threat, "I'll see you in court." Most of us who can't afford to engage a lawyer or don't have enough time or energy to become one end up forced to negotiate or backpedal or compromise our own integrity to deal with people who drop this threat on others with impunity.

I couldn't afford any type of legal assistance, and I wasted a lot of time trying to find it when I felt overwhelmed by this case in the early days. I did it myself, and so far that's been the best decision I've made. I don't think I'm the best lawyer on the planet or anywhere close to it. I don't think I'm a better lawyer than Jon Backman or most lawyers in practice in this country.

If I had to give my honest opinion of how good a lawyer I really am, I'd have to say I suck at it. But, then again, I don't want to be a lawyer anyway. I never did want to be one. I was forced to.

The real issue is not what kind of lawyer I am, but what kind of person I am. I'm honest, and painfully so. Some might say this high level of integrity means I could never be a proficient lawyer. Again, I don't mind, because I don't want to be an attorney anyway.

As my own legal representative, I have no attorney/client privilege. I have virtually no chance of being in front of the same judge again on another case. I won't have to face the opposing lawyer in another case, either. I don't have to make deals or play nice or rack up huge fees to fatten my paycheck. The pay is virtually non-existent and highly dependent on a favorable outcome(which has taken me longer than three years to get anywhere close to), but the work is meaningful and the victims are worth fighting for. More than anything the work I do requires a sincere and earnest sacrifice of my time for the benefit of the greater good. I have to be selfless by very nature just to keep doing it without reward or much in the way of sustainable funding. There's no guarantees, no quick fixes, and no great hope of full recovery at this rate. Yet, someone has to step up and try to do this work, anyway, and I don't see anyone else in line waiting to do it for me.

The initial shareholders of this company were swindled out of their investments. Many of them lost college funds, family trusts, and retirement savings as a result. The Fertittas promised to keep the company viable by taking their chief lien position with the help of a "private investment group." Instead, they killed the company, with help from their friends and associates. I took up the story a long time ago and tracked these transgressions from day one up to the present. I watched it all happen and warned others that it would happen before it did. I did an ominous amount of work for a microscopic amount of money. When you are in that position there is simply no time for greed or corruption to kick in if the effort is to remain true and sincere. You have to always focus on the long term, the goal to take back what was stolen from all those shareholders and their families.

I've done about as good as anyone could expect of an amateur lawyer. I've come to learn a great deal about the way the legal system works and doesn't work. I've seen how the system breaks down those who aren't willing to conform to its strict guidelines and rules. You have to be willing to get a little antiquated with your format and writing style if you want to be a halfway decent attorney, and I've spent more than a few all-nighters figuring that out the hard way. Today I'm better off because I kept trying, and I have a more compelling life story as a result of this struggle, but the journey has still been painful. The fight that rages on is still stressful and agonizing. The work never seems to get any easier.

Nobody in it for the wrong reasons could ever get this far, and one day Mr. Herzog and Mr. Backman might figure that out. They can underestimate me and dismiss my efforts as confused and misdirected all they want right now, but the truth will speak for itself in the long run. I didn't do this for fame and fortune. I don't have a greedy bone in my body.

I don't work for free to stroke my ego. I don't keep plugging away for hours on end with this work thinking it's a get rich quick scheme. I don't do this because it's my job. I do it because I am proud of it, I believe in it, and nobody else is in any position to do it the right way and with the right intentions in mind. My motives are pure and my conscience is clear.

I can't pretend to know what thoughts are going through the minds of Backman and Herzog at the moment or what their actual motivations and driving factors are. However, I do know that--no matter how much better than me they think they are at lawyering--their apparent character flaws will not be washed away by technicalities and nuances of process. I will expose these flaws here and everywhere else I think it's relevant to do so, and not just because I can or I think it makes me look better in comparison. I'll do it because it needs to be done, and it's simply the right thing to do.

Follow The Money: The Power & Politics Behind The UFC-Owning Fertitta Family

By: Rich Bergeron

Follow the money. It's a piece of advice many criminal and private investigators are taught as trainees. Once they graduate and get out into the field, they're reminded of the importance of that lesson nearly every day.

Money is the root of all evil to some people, but seemingly not enough when you look at the sad state of affairs in our materialistic world. Greed is a curse on society, and those overcome and driven by it will often take all they can any way they can get it. Corruption and conspiracy couldn't thrive without huge pools of unaccounted-for currency getting lost in the mix. It doesn't matter if it's your money or the next guy's, someone's always getting screwed because the worst scams are kept secret so the right people can profit while the little people always seem to lose the most. From Charles Ponzi to Bernie Madoff, the sophistication levels may have changed, but the core principles of the schemes never have and never will.

Consider the international financial picture. Forget Swiss banks. The Cayman Islands are small potatoes in the global banking power structure. The banking institutions where criminals exclusively keep and/or launder their money are only part of the problem. A worse disaster is wrapped up in the banks and businesses the "black-ops" and "spook" funds are kept for countries all over the world. Hiding money becomes a matter of national security and discretionary spending goes out the window in pursuit of global domination. HERE'S PROOF.

Each time a small scam artist pulls off a minor success, the chances of that criminal's operation growing larger increase exponentially. Scammers grow like weeds in the garden of capitalism. They sprout and grow incessantly, and there isn't enough Round-Up in the universe to exterminate them all. Too many of these small time scammers slip through the cracks. In time, these once tiny weeds become towering trees.

The size of the previous scam must always be much smaller than the latest one in the mind of an ego-driven mastermind of sweeping financial crime. Bent on the same pursuit of power and accumulation of excessive wealth, these type of criminals always crack in the long run, or they just simply piss too many people off. One way or another, justice finds them, or Karma miraculously kicks in. Yet, every now and then these type of masterminds conglomerate, and it takes longer for them to be revealed to the general public for what they really are. They make powerful friends, they contribute to the right political campaigns, they donate to charity, and they pay lots and lots of taxes to keep the government out of their affairs.

The Fertitta Family's money is not so hard to follow. Much of it is now re-invested in their own casino chain that they bought out of bankruptcy. Station Casinos is really only the tip of the iceberg, though. It's what's visible to the naked eye, but it's not the only major family asset.



Anyone remember that Casino that caught on fire a few years ago? The Monte Carlo was all over the news on January 25, 2008 as the facade began smoldering and black smoke poured into the Vegas atmosphere. Lots of YouTube Videos caught the action live.

At the time of the fire the Xyience bankruptcy had just been triggered by Fertitta Enterprises with their chief lien position over the company. I was talking with a Vegas-based investor on the phone that same day, not knowing what I know now about Victoria Partners and the Fertitta investment in MGM.

A Nevada Business Entity Search reveals seven active business entities operating in Nevada bearing the Fertitta name:

1. Fertitta Capital, LLC
2. Fertitta Capital II, LLC
3. Fertitta Colony Partners, LLC
4. Fertitta Enterprises, Inc.
5. Fertitta Gaming, LLC
6. Fertitta Partners, LLC
7. The Frank and Victoria Fertitta Foundation, LTD

There's also one revoked entity: Fertitta Management, LLC.

There's even a trademark out on the name Fertitta in Nevada.

There are additionally so many spin-offs and subsidiaries not under the Fertitta name that the full scale of Fertitta controlled and/or connected assets is virtually impossible to fully quantify. One company not often mentioned or thrown around in the mix is Victoria Partners Limited Partnership. William J. Bullard is the company's registered agent and the officers are listed as Fertitta Enterprises. This is the same family company the Fertittas used to bankrupt Xyience through Zyen, LLC. It's also the same company Frank Fertitta, Jr. served as Chairman of the Board for, even while he was "retired" from Station Casinos and making campaign contributions through Fertitta Enterprises.

MGM filed official SEC paperwork in February, 2010 that clearly lists Victoria Partners as a subsidiary of that massive gaming company. The listing reads: Victoria Partners, dba Monte Carlo Resort and Casino. So, at least on paper it looks like the Fertittas also have a controlling interest in the Monte Carlo. Ironically, just a few days after the ultimate decision by Fertitta Enterprises brass to burn Xyience investors in a figurative sense back in 2008, their other investment was burning for real.

Following the family money further, dating back as far as the late 90s, reveals a number of family trusts in different names, such as the ones listed HERE. The Centris Group paperwork also confirms Frank Junior was at the helm of Fertitta Enterprises for more than a decade with this passage: "Frank J. Fertitta, Jr. serves as chairman of the board of Fertitta Enterprises, Inc., an investment company."

For an investment company, Fertitta Enterprises is a very low profile operation. There's no company internet site, very little news about what the business actually does, and at least a few surreptitiously named and situated entities that fall under the company banner.

Of course the Fertitta ownership of Zuffa, LLC and Gordon Biersch Brewery are also significant. Zuffa, LLC has 13 separate registered Zuffa entities bearing the company label in Nevada alone. A broader national or international search would likely show many more companies owned and/or controlled by the Fertittas or their close associates. A recent re-broadcast of an old UFC card featured the Gordon Biersch Brewing Company all over the UFC mat. Looking up Gordon Biersch in a Nevada Business Entity search also produced interesting results, showing a default status for the company and William J. Bullard as the registered agent.

Further cross-referencing the other companies Bullard is a registered agent for gives you the following businesses:

1. Campione, LLC (Lorenzo Fertitta is a managing member)
2. Export Limited Partnership (Fertitta Enterprises listed as General Partner)
3. Gordon Biersch Brewing Company
4. KB Enterprises (Victoria K. Fertitta is President and Director)
5. Victoria Partners Limited Partnership
6. Zyen, LLC (parent company of Xyience, Inc. and subsidiary of Fertitta Enterprises)

So many companies linked to the Fertittas are mired in scandal, fraud, and/or lawsuits. Station Casinos alone is dealing with a labor union debacle in the midst of their bankruptcy and just settled a huge wage dispute with employees who filed suit against the company. Station Casinos executives basically put the whole casino chain around 6 billion dollars in debt to cause the bankruptcy, blaming the tough economy the whole way through. Now they just happen to be hiring again just a few months after they bought most of the company back in the bankruptcy courts for a song. Why didn't the Fertittas take any flack for tanking and then banking back into their own chain of casinos? Why do these billionaires keep getting bailed out of big trouble?

Even the Gordon Biersch takeover by the Fertittas became hostile when they ran into an executive with some ability to fight back against their fraudulent actions.

William J. Bullard was reported to be one of the central figures in attempts to defraud a former executive of McDonald's named Thomas B. Allin who had invested in the brewing company:

"On Dec. 13, 1997, Allin alleges, he was informed by Bullard that the company's board of directors had determined that the fair-market value of the company was about $12.3 million and that the value of Allin's stock was now $40 a share, or worth $2.2 million less than he paid for it 18 months earlier."

Bullard was also implicated in shady dealings at USA Capital, another company mired in a long bankruptcy process. One of our previous articles here outlines Bullard's alleged involvement in some of the massive fraud perpetrated at the company that at the time of the bankruptcy held over $950 million in "assets." Bullard had the opportunity to speak to an unruly crowd of USA Capital principals according to a piece in the Las Vegas Review Journal, which quoted him:

"The longer this thing goes on (in bankruptcy court), the more the attorneys are going to get paid," Bullard said.

As if all of the above isn't enough to question and investigate further how and why the Fertittas make their money, there's deeper questions that need to be asked. Where do they keep all that money, how do they spend it, and who have they made friends with that keeps them from getting caught in their past swindles?

Meadows Bank is a great place to start. The records for Fertitta Enterprises and the Fertitta family's political donations over the past decade are also worth a look. The Board of Directors at Meadows Bank includes Lorenzo Fertitta, Andre Agassi, Key Reid (Son of Harry Reid), and Las Vegas Media Magnate Brian Greenspun. Timothy Poster is also on the same board and happens to be the same guy who sold The Golden Nugget to another Fertitta (Tillman Fertitta)in 2005. The bank was too late on the scene to be damaged by the housing crisis and just in time to benefit from a new season of bailouts and big spending in Washington. The current Community Bank Legislation funnels billions to institutions including Meadows Bank via the SBA 504 Loan Pool also known as First Mortgage Loan Program or FMLP.

Here are a few interesting articles and links on the Meadows Bank players and their games:

Meadows Bank and the TARP Tax A question of Ethics for Senator Harry Reid

Book excerpts describing Harry Reid's days as Gaming Commissioner.

KEY REID GETS SWEETHEART JOB AFTER REPORT REVEALS RELATIVES OF POLITICIANS WORKING FOR LOBBYING FIRMS

THE REID CONNECTION

With political D-day today: November 2, 2010, it's also no surprise that so many UFC personalities are stumping for Harry Reid to stay in power. It's no surprise the above article also quotes Ross Miller, the guy who oversees all those business entity registrations for the Fertittas and their associates and friends:

"The UFC is one of the most powerful brands in the world for reaching 18- to 30-year-olds," Nevada Secretary of State Ross Miller said. "Anytime a candidate gets their endorsement, it sends a powerful message to that demographic."


Follow the money, see who greases what wheels and how, and you begin to realize how corrupt these financial masterminds really are. Though they've left a trail of broken lives and burned investors in the wakes of all their financial scheming, the Fertittas still look slick and smart somehow. They get away with fraud after fraud, one bankruptcy after another only they benefit from, and they just keep patting the politicians who help them on the back and putting money in their campaign coffers.

No matter what your political allegiance may be or where your sympathies lie as far as the big ticket issues go, far too many elected officials abuse their power and influence to serve themselves, their associates, their friends, and/or the people who helped pay for them to get elected. Nobody's keeping an eye out for the average everyday person anymore struggling to pay rent and put food on the table for his family. Politicians are far too busy feeding billionaires more benefits they don't need for kickbacks and consideration or campaign contribution payback.

It really is time for Americans to get more educated and follow the money in their own states and locales to see where it leads. I doubt the Tea Party or any new party of any kind is really the answer. It doesn't really matter who leads us if not enough of us are intelligent and active enough in society to hold our leaders accountable for their actions. Rather than rock the vote, it's time to truly rock the system and radically alter the status quo as far as what we accept from our leaders and our society's systems as a people. Get educated on what the real facts are and don't listen to the repetitive 24-hour news cycle. Dig deeper. Explore and expose what you can in your own neck of the woods. Be conscious of the real everyday problems that surround you, not just the ones CNN or Fox News tells you about.

Fertitta Enterprises, the Fertitta Brothers, PRIDE, Zuffa, and Xyience: Inside the pattern of fraud

Xyience, Incorporated completed a sale of the company recently (see April Fools Day Sale article) through bankruptcy court, leaving creditors and investors looking elsewhere to lay the blame for the damages done to them. Fertitta Enterprises may be the first in line to face the throng of disappointed and devastated folks left in the lurch by the bankruptcy. Shareholders were promised the Fertitta funding would save the company from this fate, but instead it seems that very funding is what drove Xyience into the ground. In addition to the Xyience case, present and past litigation against Fertitta interests reveals some very troubling patterns of alleged fraudulent business activity.

The situation only gets more complicated with each day, and though adversary cases are still pending in bankruptcy court, a recent ORDER filed in the main case leaves the company in new hands “free and clear of liens.” In other words, Xyience itself may never have to pay out a dime in damages or past due bills despite all the victims the company left in the wake of its Chapter 11 filing.

Having to compile court documents of my own to illustrate a direct pattern of fraudulent behavior on behalf of the Fertittas, I recently dug up some interesting findings. First of all, I checked the financial history of Station Casinos. A great effort to take the company private came to a crescendo last year, but there is still a great deal of public information available about the major chain of casinos.

To prevent rehashing too much of the boring details here, I’ve taken the liberty of listing the following sites where more information about the financials of Station Casinos can be found:

SEC SCHEDULE 13D FOR STATION

CLASS ACTION REPORTER ACCOUNTS OF STATION'S MERGER-RELATED LAWSUITS

SEC INFO REGARDING THE MERGER SUITS AND A CLASS ACTION CASE BEING PURSUED BY STATION EMPLOYEES

SEC INFO ON FRANK FERTITTA III

SEC FORM 10-K FOR STATION

Though the company is off the trading block, I found the following passage in my research explaining why there are still some reporting duties required:

“The Surviving Corporation will, however, continue to file periodic reports with the Securities and Exchange Commission, because the voting common stock of the Surviving Corporation will be registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, and such reports may be required by indentures governing the outstanding indebtedness of the Surviving Corporation or applicable law.”

First, let’s examine exactly what entities merged to create the newly consolidated Station Casinos under the banner of Fertitta Colony Partners (FCP): FCP is a company formed by Frank J. Fertitta III, chairman and chief executive officer of Station; Lorenzo J. Fertitta, vice chairman and president of Station; and Colony Capital Acquisitions, LLC, an affiliate of Colony Capital, LLC..

The new business entity left behind a situation not all that different from the Xyience bankruptcy. Multiple lawsuits resulted, and the recent public reporting of the financial condition of Station Casinos reveals the who, what, and why:

WHO SUED:

Roessler v. Station Casinos, Inc., et al., Case No. A532637;

Filhaber v. Station Casinos Inc., et al., Case No. A532499;

Traynor v. Station Casinos, Inc., et al, Case No. A532407;

Goldmann v. Station Casinos, Inc., et al., Case No. A532395;

Griffiths v. Station Casinos, Inc., et al., Case No. A533806; and

West Palm Beach Firefighters' Pension Fund v. Station Casinos, Inc., et al., Case No. 07-A536211.


WHY THEY SUED:

On June 1, 2007, the plaintiffs filed an amended consolidated class action complaint (the "Amended Complaint") in the District Court against Station, Station's directors, Frank J. Fertitta III, Lorenzo J. Fertitta, Blake L. Sartini and Delise F. Sartini, Colony Capital, LLC ("Colony"), Colony Capital Acquisitions, LLC ("Colony Acquisitions") and FCP. The Amended Complaint alleges that Station's directors breached their fiduciary duties to Station and its stockholders. The Amended Complaint also alleges that Frank J. Fertitta III, Lorenzo J. Fertitta, Blake L. Sartini, Delise F. Sartini, FCP, Colony and Colony Acquisitions knowingly aided and abetted the Company's directors in breaching their fiduciary duties to the Company's public stockholders. The Amended Complaint sought an injunction preliminarily and permanently enjoining the defendants from proceeding with, consummating or closing the Merger transaction, and demanded that the plaintiffs be awarded their costs and disbursements incurred in connection with this action, including reasonable attorneys' fees and reimbursement of expenses.

WHAT HAPPENED:

In November 2007, in order to resolve the litigation and avoid further cost and delay, the Company and the individual defendants, without admitting any wrongdoing, entered into a global stipulation of settlement with plaintiffs ("Proposed Settlement"). Pursuant to the Proposed Settlement, the Company made supplemental disclosures in its Definitive Proxy Statement filed with the SEC on July 9, 2007, to address certain claims raised in the Consolidated Action. As part of the Proposed Settlement, plaintiffs' counsel applied to the Court for an award of attorneys' fees in the amount of $1.9 million, inclusive of costs and expenses. The Company agreed to pay the fees and expenses on behalf of all plaintiffs as awarded by the court in an amount up to $1.9 million.

On December 11, 2007, the District Court preliminarily approved the Proposed Settlement. Thereafter, notice of the Proposed Settlement was disseminated to more than 31,000 former shareholders of Station and published in the Wall Street Journal (national edition), the Los Angeles Times and the Las Vegas Review Journal.

None of the former shareholders objected to the terms of the Proposed Settlement. Consequently, at a hearing on February 11, 2008, Judge Mark R. Denton of the District Court approved the Proposed Settlement of the Consolidated Action.

Station dodged that bullet only to face another uprising from its own former employees:

On February 4, 2008, Josh Luckevich, Cathy Scott and Julie St. Cyr filed a class action complaint in the United States District Court for the District of Nevada, Case No. CV-00141, against Station Casinos. The plaintiffs are all former employees of the Company. The complaint alleges that the Company (i) failed to pay its employees for all hours worked, (ii) failed to pay overtime, (iii) failed to timely pay wages and (iv) unlawfully converted certain earned wages. The complaint seeks, among other relief, class certification of the lawsuit, compensatory damages in excess of $5,000,000, punitive damages and an award of attorneys' fees and expenses to plaintiffs' counsel.

The latest class action complaint is peculiar to say the least when matched up with some choice quotes from Lorenzo Fertitta that I discovered on the spring of 2007 CLASS NOTES PAGE FOR NYU’S STERN BUSINESS SCHOOL:

“Of all the success we’ve had with Station Casinos, I am most proud to have been selected by Fortune magazine as one of the top 100 companies for whom to work,” said Fertitta. “We were ranked at number 18 and are up there with industry giants Nordstrom and Google. One of the best pieces of advice I’ve received is to surround yourself with good people and treat them right. Being ranked as one of the top 100 companies to work for was validation for me that we’re doing just that.”

Hypocritical though it may seem now when looking back at that statement in light of the employee suit, an even bigger whopper came later in his remarks. The follow up Lorenzo offered was just plain ironic:

“Asked to offer insider’s tips on gambling to his fellow alumni, Fertitta stepped outside his professional persona and exclaimed, ‘Yes, stop doing it! I took finance with Professor Aswath Damodaran and know that there are better ways to get a return, dollar for dollar.’”

Seems hard to believe a man who owes his fortune to gambling and casinos—built off the backs of previous generations of similar (and sometimes much more devious/illegal) business interests—would advise anyone not to gamble.

It appears there may be trouble ahead for Station Casinos because so many people seem to be taking Lorenzo Fertitta’s advice. Recent Station financial reports reveal that there may be trouble ahead for the heavily leveraged corporation. (see www.secinfo.com/dVut2.t26p.htm)The reports point the finger of blame at the state of the national economy, the credit and mortgage crises, and the conditions of the merger. Here’s a snippet:

“Our high leverage and debt service obligations could adversely affect our ability to raise additional capital to fund our operations, increase our vulnerability to general adverse economic and industry conditions, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations. As a result of the Merger, we are highly leveraged. Our ability to make scheduled payments on, or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to general economic, financial, competitive and other factors that are beyond our control. While we believe that we currently have adequate cash flows to service our indebtedness, if our economic performance were to deteriorate significantly, we may be unable to maintain a level of cash flows from operating activities sufficient to enable us to pay the principal, premium, if any, and interest on our indebtedness.”


The Fertittas are facing other threats due to their interests in Zuffa. Brothers Lorenzo and Frank Fertitta III own 90% of Zuffa, LLC which includes the UFC, WEC, and what’s left of PRIDE. Illustrating a common theme of complaints lodged against the famed casino magnates, a lawsuit filed by former PRIDE owners cites “fraudulent and negligent misrepresentation and breach of the covenant of good faith and fair dealing” regarding the deal that ultimately resulted in the death of the premiere MMA league. The suit came on the heels of Zuffa’s own suit against the PRIDE principals, and the fight ahead promises to get pretty ugly.



The litigation all revolves around agreements reached between PRIDE and Zuffa in mid-April to late May of 2007. The PRIDE complaint explains:

“As a result of the world-class reputation that Sakakibara created with the PRIDE brand, numerous entities were very interested is purchasing PRIDE. Included among these interested purchasers were the Fertittas. Although Plaintiffs had numerous "suitors" for PRIDE, Plaintiffs ultimately selected Defendants as the buyer for PRIDE. Although the financial amounts offered by other suitors would have exceeded that offered by the Defendants, Plaintiffs sold PRIDE to the Defendants. The biggest reason for such decision was the Defendants' insistence and promise to keep the PRIDE brand as a global top-level brand.”

Those involved in the Xyience situation as investors ratifying the Fertitta infusion of capital in November of 2007 also trusted the billionaire businessmen to maintain and build on the Xyience brand. Instead, they bankrupted Xyience and broke all their promises. Though they have a long list of excuses for why they ultimately dismantled PRIDE, Zuffa originally came out publicly with Dana White claiming they would create a “Superbowl” type event every year by coordinating both leagues and keeping both running strong. Also like Xyience, the litigation regarding PRIDE alleges that the plan all along was to destroy the business to enrich the players who made the deal happen.

Remember that the $350 million senior secured credit facility Zuffa received in the summer of 2007 paid for the PRIDE purchase while also providing huge dividends to the Fertitta brothers and Dana White. Yet, despite Dana White being the front man for Zuffa and spouting promises about what would happen to PRIDE, according to the Sakakibara suit it was primarily the Fertitta brothers who made the most significant vows to make the marriage happen during October, 2006 negotiations:

“During the negotiations, Lorenzo J. Fertitta told Sakakibara that for the sound growth of the entire mixed martial arts industry over the course of the next 20 to 30 years, it was essential for both PRIDE and UFC to have the same owner who would manage and maintain these two brands from a position akin to a commissioner so that appropriate order and rules could be created to protect fighters and maintain and expand the market. Based on these comments made by the Fertittas, Sakakibara was pleased that the Fertittas' seemed to share a sincere concern and understanding for the industry and the PRIDE
brand. This sincerity proved untrue based on subsequent events.”



The lawsuit claims Dana White’s culpability in the deal only came later when he allegedly revealed the true motives of Zuffa for acquiring PRIDE:

“Dana White, the president of Zuffa, was present during the initial negotiations, and later stated that the goal of the entering into the transaction with Plaintiffs was acquiring PRIDE fighters and PRIDE's video footage of prior PRIDE fights.”

Having denied several other interested parties the opportunity to purchase the league, the asset purchase agreement signed on April 17, 2007 stipulated a requirement that PRIDE be maintained as a top-tier MMA brand. The lawsuit alleges that the sale only went through (at a much lower price than other entities offered) because the former PRIDE owners were confident Zuffa would fulfill all their promises. The suit goes on to explain that there has not been a single PRIDE show since the sale and all former PRIDE employees were fired. The Japan offices closed as a result.

In addition to problems with the sale stipulations, the suit also outlines issues with the consulting agreement signed by the parties:

“While Defendants made the immediate payment portion of the Consulting Fee due to Plaintiffs, as well as three (3) Monthly Consulting Fee payments, the last monthly payment paid by Defendants to Plaintiffs was the August, 2007 payment. Defendants have not made the required Monthly Consulting Fee payments since that time. Plaintiffs have demanded payment of the Consulting Fee through letters or emails to Defendants dated October 3, 2007, October 10, 2007 and October 17, 2007, and in a Notice of Default dated November 20, 2007. Defendants have refused to pay the Consulting Fee, either on a monthly basis or in a lump sum as required by the Consulting Agreement.”

Zuffa apparently refused those payments due to the lack of background checks done on the plaintiffs in the Sakakibara suit. The lawsuit claims those checks are actually not required as part of the consulting agreement. Though mentioned in the sale agreement, the checks were designed for those former PRIDE employees retained by Zuffa after the sale, and the Sakakibara suit plaintiffs were allegedly never meant to be actually employed by Zuffa at any time. There is a gray area regarding Sakakibara’s own requirement to pass background checks, but the plaintiff claims that under Nevada Gaming Commission rules he actually obtained a license based on sufficient checks of his background that revealed he has never committed a crime.

Despite the lack of any connection between Zuffa’s operations and the Nevada Gaming Commission beyond the Fertittas being operating owners of Station Casinos, apparently there is some argument as to whether or not the former PRIDE officials should have been subject to the background checks required by Nevada Gaming Commission regulations.

Ironically, the complaint was actually filed on April 2, 2008 and dated April 1, the same day that the Xyience “auction” resulted in a purchase agreement being signed by Manchester Consolidated Corporation. The complaint seeks at least $10 million in damages.

A hearing will be held on April 28th regarding Dream Stage Entertainment’s motion to dismiss the lawsuit brought against the former PRIDE owners by Pride FC Worldwide Holdings, LLC (the entity created by Zuffa upon purchasing PRIDE).



To make matters worse for Zuffa and the Fertittas, the Randy Couture debacle rages on in three separate proceedings, including one that is now destined to be decided in the Texas courts due to HDNet’s involvement. Dallas Mavericks Owner and HDNET Pioneer Mark Cuban (see above picture) entered into the fray against Zuffa with the intention of helping free Couture from his contract in order to help make the Couture vs. Fedor fight happen under the banner of his MMA league. An order filed on April 9th granted a remand of the dispute to the 193rd Judicial District Court of Dallas County, Texas.

Despite instigating so much suffering and victimizing so many innocent people, the brothers Fertitta are still firmly in control of an empire worth billions. They even allegedly shortchanged the same people who helped them sustain that empire by toiling at their casinos day after day. Past victims tried various attempts to hold these men accountable for their financial transgressions, but so far even civil litigation has fallen short of taking them to task. While poised to get away with their latest round of fraud in a court system that may be more friendly to them than any other litigant in Nevada, the Fertittas truly live in the lap of luxury.

Take a look for yourself at the mansions they occupy (according to PRIDE suit address listings for the brothers):

LORENZO'S HOUSE

Frank's Old House (Dana White Lives There Now)

FRANK'S New Neighborhood

As another famous crooked millionaire might say: “Only in America.”

Stay tuned for further reports focused on Xyience’s ongoing bankruptcy situation and the aftermath of the recent sale of Xyience’s assets to Manchester Consolidated Corporation.