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.

Settling For Nothing: Fertitta Enterprises Gets Off With Slap on The Wrist For Bankruptcy Fraud

By: Rich Bergeron

      It always amazes me to see how much history repeats itself. Nearly the same scene that's depicted in the photo above unfolded at the Fertitta-owned Red Rock Resort and Casino recently. This time around, the banquet featured the entire current crop of Xyience employees celebrating a new settlement agreement to end the company's bankruptcy battle with the trustee's counsel Jon Backman.

    The settlement is disappointing when you look at how long the proceedings dragged on and how much promise there seemed to be in taking the Fertittas to trial. My own relationship with Mr. Backman was sometimes contentious. I often asked him what could be done for the shareholders.  He always told me they would probably recover very little or next to nothing. I pressed my own motion to suspend the bankruptcy before Backman took the case on for Trustee David Herzog.

     There were times Backman seemed to be doing whatever it took to seek justice while at other times I saw the stereotypical lawyer in him. Eventually I grew to understand he was in a tough position, but he amassed a catalog of evidence that began to build momentum leading up to the trial. He won a sanctions motion that he now has to scrap his rewards for to get a lowball settlement approved. Apparently, Backman didn't want to take his chances fighting the case in court, and he eviscerated his chances to prove that case in the settlement motion.

     Reading some of those sentences came as a real shock to me. The language had the tone of someone writing with a gun to his head. I attended a hearing in Las Vegas where Backman wiped the floor with his opposition: Attorney Greg Garman. The tide seem to be turning in the case, and my own experience with Garman led me to believe he really had no idea why his clients should have to pay for stealing the company out from under the shareholders. He knew the law, but he he didn't seem to know the case that well. He certainly didn't grasp the real circumstances that made this bankruptcy a borderline criminal conspiracy.

     Paying out anything to the trustee came at a price for the Fertittas, I suppose. I wouldn't doubt the negotiations featured discussions on how the settlement motion would be written to absolve the Fertittas and their employees of all possible implications of guilt or culpability. Just like the gangsters in suits depicted in the photo above, the Fertitta brothers have to appear respectable and spotless in the public eye while running their rackets behind the scenes.

   Mr. Backman seemed ready for trial recently, and he let me know at one point that I'd probably read about it in the papers before he could tell me how it was going. He didn't quite get that one right, because I'm the one writing about what happened rather than reading about it anywhere. If I weren't around, the Fertittas might have slipped this one right under the radar. That's unfortunate, but it's the world we live in. Thanks to people who continue to look the other way and let crooks be crooks, crime really does pay for gangsters in business suits these days. Just take a few hours and sort through this blog someday. Research the Fertitta bloodline. 50 cent was over at Floyd Mayweather's gym Tuesday being a ham for the cameras, but if he really wanted to find out how to be a gangster he should have been talking to Lorenzo and Frank Fertitta III. From their machine gun-toting security details to their stubble-ridden tough-guy mugs, these guys are the picture of organized crime in Las Vegas evolved to a totally new dimension.

   It really is depressing to see a company stolen right out from the investors who built it, but even more disgusting is how the Fertittas are planning to fold Xyience into Zuffa. They are literally and figuratively driving it like they stole it.

Russell Pike (parody)

     The company's current PR staff even made it a point to disavow any connection to the company's original founder, Russell Pike, when Pike was recently convicted of Tax Evasion to the tune of owing an estimated $1.5 million to Uncle Sam. Pike will be sentenced in July. By then, the Fertittas will be making millions emulating his original model of doing business: sponsor the UFC's fighters and the UFC to sell more low-rate supplements and other assorted overpriced items. The only thing they didn't do that Pike did was seek investors. The Fertittas and their insider friends wanted all the spoils for themselves. The UFC brass wanted a supplement company tied to the organization for a long time. Now they have one.

Xyience "Round 2" will flash the new marketing model at us all on free television soon by posting the Xyience logo back in the middle of the mat once again on May 5th for the UFC on Fox 3 card. It will be the first time the company's held that position on the mat since I helped expose how the Fertittas created a false bidding war for the middle of the mat space. Xyience defaulted on a multi-million dollar payment plan for that ad space while they were steaming toward bankruptcy, and the Fertittas had to know the company couldn't meet the terms of such a deal when they put ink to paper on it.

Money coming out one Fertitta pocket and going back into another would be a common theme through the case, and I kept finding new areas where the Fertittas found ways to pay themselves without any intention of their moves ever being made public. Yet, even when I exposed much of this behavior, they managed to get away with it all and did not even have to suffer a real civil penalty. These guys have become the kings of insider dealing, influence peddling, and lawyering up to beat the band.

      Lorenzo and Frank Fertitta managed to erase billions in Station Casinos debt through the bankruptcy courts, and they bought all their over-leveraged properties back for a bottom dollar bid at the tail end of the process. They used Xyience as a trial run, an experiment of sorts. It wasn't long before the lesson learned came to be: bankruptcy can be extremely profitable if you play the game correctly. I arrived in Vegas on my last trip out during a time period where Station Casinos was still on the way out of bankruptcy. They were advertising a car a day give-away. Later on I read some reorganization paperwork that showed Station Casinos simply defaulted on the payments to the dealerships involved. The dealerships no doubt wrote off the losses as part of their insurance program, and the folks with the free cars made out like bandits. It's the kind of magic that can only happen in Las Vegas.



This is why the Fertittas themselves are very rich individuals who always make the Forbes list. This is what business-suited gangsters do. There's nothing better than selling something you got for free. As casino owners, the Fertittas must maintain a resolute appearance as upstanding young men who are law-abiding citizens. Billions of dollars could literally be at risk if they were ever caught up in any kind of criminal charges. Bankruptcy fraud seemed like a fair charge when I first levied it against them with a motion to suspend the bankruptcy. Their juice and my lack of an attorney led to a judge paying my motion no heed. The Fertittas steamrolled the company through bankruptcy with relative ease. It was like a bank robbery broadcast on national television where a million tips come in because everyone knows the robbers. Yet, nobody gets cuffed in the long run. Nobody is told to pay for their transgressions or provide any relief to those who suffered through these long years hoping something tangible would come out of the court process.

 I currently have a motion seeking $150 million in relief for sanctions against a wide array of parties implicated in the bankruptcy. There has never been an appropriate hearing on that motion, and it would require a ton of testimony to do it right. It's not a task I take lightly, and it would be a gargantuan effort to bring that hearing to fruition. Still, I am determined to do what it takes to play my part in this and provide whatever shred of justice I can.

Xyience Bankruptcy Hearing Yields No Decision On Sanctions For Now: Lorenzo Fertitta Suit May Be In Pipeline

By: Rich Bergeron

CLICK HERE FOR AN ARTICLE ON THE LATEST LEGAL WRANGLING IN THE LAS VEGAS REVIEW JOURNAL

An adversary case filed in Nevada bankruptcy court by the trustee's counsel for Xyience against Fertitta Enterprises, Zyen, and Zyen's General Manager William Bullard is suddenly getting very interesting. A contentious hearing Friday, October 30th in the case addressed a sanctions request for discovery violations. The hearing gave way to suggestions from Trustee's Counsel Jon Backman that Lorenzo Fertitta could be named in an entirely new future complaint as a result of what his recent, last-ditch discovery efforts uncovered.

Bankruptcy Judge Lloyd King seemed to take some limited interest in the sanctions motion and made some remarks indicating he agreed with Backman's factual take on the situation. Still, he made no final decision on the motion and asked for supplemental briefs from both sides regarding the procedural technicalities involved. Judge King also indicated that a follow up hearing featuring witness testimony would likely have to be held to determine the direction and breadth of any sanctions that could possibly apply. The judge also later set a proposed trial date for the existing case in April, 2012.

Despite what Backman described as harsh conditions for collecting evidence, he explained to Judge King that what he did find so late in the game changed the whole direction of his case. Backman argued that the lack of cooperation from his adversaries made the case far more difficult to deal with. The real tragedy, he explained, is the evidence that's just impossible to uncover. "We're never going to see those emails," Backman lamented about a situation in which he sought official Xyience email servers his adversaries somehow could not produce despite rigorous attempts to force them to. "There's nothing left to compel production of."

The complicated scenario that led to the sanctions request left both sides in the legal wrangling claiming the other was being unreasonable. A previous article previewing this hearing explains the nuances of the trustee's claims. Missing and now impossible to recover email communications are at the center of the controversy. A Fertitta right hand man of sorts, William J. Bullard, became public enemy number one for Attorney Backman at Friday's hearing.

Bullard is the General Manager of Zyen, LLC, formed as a Fertitta Enterprises subsidiary to provide a loan to Xyience. Once in the chief lien position over Xyience, the Fertitta side company quickly foreclosed on the debt. Zyen then became Manzen and assumed control of Xyience after the company declared bankruptcy in early 2008. Manzen was actually a combination of the Fertitta group (Zyen) and a company made up of four individuals named Manchester Consolidated. The combined parties coordinated to enter into a payment program in order to allow Manchester to appear to be buying the company out of bankruptcy. The monthly payments from Manchester eventually stopped coming in, giving control of Xyience back to Fertitta Enterprises once again.

To add another layer of intrigue to the complicated scheme, Machester Consolidated consisted of a total of four people with two of them being former executives of Cott beverages. Cott is the manufacturer of Xenergy. Had the bankruptcy resulted in another ownership group acquiring the company, Cott might not be guaranteed a chance to continue doing business creating the company's popular drink product that touts itself as the official energy drink of the UFC.

Friday's hearing discussed emails, some of which were only discovered after the trustee had to resort to delivering a subpoena to Gordon Biersch, a brewery and restaurant chain also owned by the Fertittas and managed by Bullard. Due to what he described as a painstaking process, Backman eventually did get a hold of some crucial emails, including one he described as "one of the hottest smoking guns I've ever seen in litigation." Fittingly called Exhibit G, the email between Bullard and Lorenzo Fertitta mentioned a $150 million offer for the purchase of Xyience from the Cott Corporation. The date of the email was aligned very closely with the first $12 million in financing the Fertittas provided to Xyience to gain control of it down the line.

The offer, if company officials capitalized on it, could have helped Xyience shareholders recover some value for their shares. Instead, it seems the Fertittas were intent on locking the shareholders out at the first opportunity they could, refusing to hold scheduled shareholder meetings and neglecting to pay the first interest payment on their loan with company funds. Hundreds of shareholders lost nearly all hope of any recovery when the Cott offer morphed into a scheme involving former Cott executives and their associates pretending to purchase the company for $15 million as a "stalking horse bidder" in the bankruptcy.

Coincidentally, I have a pending motion in these proceedings under my own adversary case which seeks $150 million in relief to be granted to shareholders burned by a campaign to silence my reporting that was trying to bring the whole Fertitta scheme to light. At the time I filed that motion I had no idea this smoking gun of an email existed, but it certainly fits a pattern I've described time and again for my readers here and at xyiencesucks.com in intricate detail.

Traditional mainstream media surrounding the sport of MMA and the world of finance is really missing the boat when it comes to the meat of this story. Yet, even a publishing entity that painted the Fertittas in a more positive light in the past picked up this vein of the tale surrounding Backman's sanctions request. Forbes Magazine didn't afford the trustee's attorney the courtesy of spelling his name correctly in the piece, and the author falsely asserted there is formal mediation involved in the case, but they did make an attempt to tell the story's most important points.

Forbes didn't send anyone to the actual hearing, though. None of the local papers had reporters there, either. It was not hard to find a seat in the courtroom. This is a story that's still unfolding in a controlled environment of sorts, so damage control for the Fertittas and the UFC so far has been fairly limited.

Backman is on track to make this case into much more of a spectacle if he indeed names Lorenzo Fertitta in any future complaint. The subpoena of Gordon Biersch's email server information led Backman to some documents he professed to never seeing before, documents that could pinpoint Lorenzo Fertitta's role in the conspiracy to bankrupt Xyience and defraud the company's shareholders and creditors.

"Whole cases can turn on single documents," Backman reminded the judge in open court on Friday. Getting a hold of the evidence that turned his case in a completely new direction added enormous excess costs for Backman to absorb on a case he took on contingency. These very documents, had Backman acquired them earlier, could have allowed the estate to make much more progress in the complicated litigation surrounding the estate at a much earlier date in the process. Instead, Backman now has to backtrack and reflect on the countless hours of wasted time spent chasing down company email servers he could never actually obtain.

The destruction, loss, and/or failure to preserve these servers and hard drives sought by Backman leaves a gaping hole in the case. The frustrating scenario caused irreparable damage that Backman had some trouble fully quantifying for the judge Friday. During much of his argument before the court, Fertitta Attorneys Gregory Garman and Joel Schwarz busily took notes, whispered to each other, and appeared to be genuinely agitated by the accusations against them and their clients. There really isn't much hard evidence of a driven, purposeful campaign to destroy the evidence in question, but the situation is about as suspicious as it could possibly be.

Attorney Garman explained away the accusations from Garman as "outrageous" and personally referred to Exhibit G sarcastically with the same "smoking gun" label Backman applied to it. Garman provided a basic timeline and list of efforts he personally undertook to assist the trustee in finding evidence. He vehemently disputes the claims that his actions constituted the hindering of Backman's discovery efforts. Instead, he explained that he did everything in his power and his clients assisted to the best of their abilities to voluntarily provide every shred of evidence they possibly could. Garman, at one point citing his high blood pressure, seemed clearly disturbed that his reputation might take a hit because of this case. Deep into one of his rants about how cooperative and misunderstood he is, he actually had to apologize when he almost uttered my name instead of Backman's.

Even though Garman is an expert litigator and an excellent speaker, Backman's accusations and evidentiary support are clearly bothersome for the Gordon Silver attorney. During my own past interactions with Garman he's come across as overly concerned about how others perceive him professionally. He told me himself at one point earlier this year that he considers the Fertittas one of his least significant clients, but at this point the task of protecting them and their associates seems to be causing him some "xtreme" stress. He even asked the judge for a recess and extra time afterward to argue more points surrounding his purported cooperation with the discovery process that he felt Backman misrepresented. Traditionally, a lawyer bringing a motion introduces it, the opposition gets a chance to refute the claims, and the moving attorney gets the final word. Garman's protests led to another round of back and forth at this hearing, and it seemed to expose the attorney's nervousness.

My personal impression of Garman's tactics--though certainly swayed by my intimate knowledge of the case and his basic character--left me convinced that he is running out of confidence on this one. He let the judge, Backman, and the few in attendance at the hearing see him sweat Friday. Backman, even when he was at a loss for words, came across as perpetually relaxed in his tone, speaking with the conviction of someone who knows he is right.

Backman wore a sharp suit that seemed a little too big for him Friday, but he filled the courtroom with the authority in his voice. He called the evidence debacle "one of the most egregious discovery violations I've ever seen." He seemed to have trouble even fathoming a world where sanctions would not apply to what his opposition's been caught in the middle of. Judge King conceded that there was no question he had the power apply sanctions, but he also said he wanted to know "the source" of that power. There are multiple categories and tiers of sanctions based on certain litigation behavior. Whatever stream of relief is applicable here will be best suited to become the basis for a formal order on the matter. Judge King seems to be thinking ahead about not wanting his order appealed if he sides with Backman.

Backman described the discovery difficulties as a "shocking development" in the case and confessed, "I want this case to be over." He further explained he had no vendetta or personal issues with Garman or his clients. "A serious mistake was made here," he stated plainly at one point.

Garman, in his second crack at a response to the charges against him and his clients, reported that he'd never been engaged in "such contentious litigation." He called Garman's strategy a "fabricated emergency." He insisted Backman's allegations did not mesh with the established record in the case and that he and his clients "did comply" with the discovery process. "I took this case exceptionally seriously," he said before listing off a series of numbers quantifying how many documents were turned over to Backman and when. He argued that some of the same emails Backman recovered from the Gordon Biersch subpoena were volunteered by other defendants in the case on previous occasions.

Garman went on to contend that he's gone out of his way to try to offer Backman concessions in the wake of the discovery mess. He told the court he was willing to expand the discovery process and allow further depositions of key witnesses but Backman refused these options. Garman also spent a considerable amount of time harping on the $150 million Cott offer being insignificant since it never actually materialized.

The question Garman seemed to miss in his explanation of the multi-million dollar Cott purchase offer is why it went away so fast after a meeting between Xyience insiders and the Cott folks in Canada. The deal didn't dissolve for no reason. There's no witness testimony as of this point in this litigation that adequately gives the exact reason why the $150 million offer came off the table and why it's not suspicious that people associated with Cott ended up with an ownership interest in the company anyway. Still, Garman insisted that if there was any conspiracy involved in this case it was "a conspiracy in the light of day" and his clients were open and honest about their intentions and actions.

The record simply doesn't reflect Garman's explanation as the full truth. The shifty approach to discovery adds more suspicion to what's already a clear-cut case of deceptive practices involved in the takeover and bankruptcy of Xyience by the Fertitta group. Garman also made the mistake of calling Former Xyience Co-CEOs Adam Frank and Kirk Sanford cooperating witnesses in Backman's case. Backman clarified that while Sanford and Frank agreed to provide information and evidence without the need for subpoenas and settled their own adversary cases, they are still "co-conspirators" in the case and will be treated accordingly.

Perhaps the most pretentious portion of Garman's argument on Friday was his framing of Backman as being dishonest for not holding up his end of a bargain struck at a previous hearing to split the costs of restoring computer drives that were reportedly destroyed by a system crash at Xyience. The agreement between attorneys came to pass only because the drives were represented to Backman as the ones with the company's crucial email servers contained within them. It turned out the drives were essentially worthless once they were restored and did not contain any email records whatsoever. So, essentially Garman wants full payment on a debt for services provided that were wholly misrepresented by him and his clients.

Judge King admitted not even bothering to read previous filings I presented to the court when it came time for hearings regarding those matters. I came into Friday's hearing not expecting him to give Backman much more of a fair shake. He surprised me when he picked up on a nuance neither side considered up to that point.

Focusing on Bullard's lack of record preservation related to his emails, Judge King pointed out that Bullard was savvy enough to know that being on Xyience's board of directors would require him to fulfill certain fiduciary responsibilities including keeping accurate records. Yet, at the same time, Bullard insisted that he did not save certain material because he did not anticipate being named in litigation. Bullard pointed to the liability issues he would be embroiled in as his reason for not wanting to be on Xyience's board as a formal member. So, the evidence shows Bullard purposely avoided being held accountable for accurate record keeping at one point and yet he still claims not keeping and volunteering crucial emails was an honest and innocent mistake.

Garman did not seem to have any adequate explanation for that reality. He later wondered aloud why both sides were spending so much money on a sanctions motion and requested a trial date at "the earliest possible date." Depending on how dueling summary judgment motions end up impacting the case once they are heard in December, the two sides will face each other at trial the week of April 9th, 2012. Before then, Backman will pursue some other serious evidence issues through additional motions for relief.

It's clear that Backman's approach has Garman flustered and desperate for a rush to judgment before the case gets out of hand. His clients are in a precarious position at this point, and it's not looking like conditions will ever improve. The Fertitta attorney was clearly off his game on Friday, apparently the result of knowing that the longer this case goes on, the worse he and his clients will look in the end.

Xyience, UFC, Fertitta, Station Casinos, MMA, Internet Gambling Update

The Headline in the Las Vegas Sun Article Says it All:

CULINARY PICKS A FIGHT WITH UFC TO GET AT STATION

It is an article by J. Patrick Coolican, a writer I haven't followed that closely. I don't think I've ever seen him in any byline for a story regarding the Brothers Fertitta. Here he starts right off by sending readers to www.unfitforchildren.org, a site set up by Culinary Union insiders to illustrate how vulgar Dana White really is.

If you like Coolican's work, I highly recommend an earlier vintage of Fertitta/UFC History from the archives of our own investigative work:

ARE STRIKEFORCE'S DAYS NUMBERED?

FULL TILT POKER FIASCO MAKES UFC BRASS GUILTY BY ASSOCIATION

Xyience Bankruptcy Trustee Finds Damning Evidence Against Fertittas, Pushes For Sanctions This Friday

If you want a unique perspective on fighter sponsorship Ben Fowlkes has the best recent piece on the subject:

THE TRUTH ABOUT FIGHTERS AND SPONSORS

FERTITTAS ROAD TO BUYING THEMSELVES OUT OF BANKRUPTCY PAVED WITH BAD INTENTIONS

By: Rich Bergeron

(at left, boys will be boys..Dana White stands in the middle of the two Fertitta Brothers in their younger days. The picture on the right is from a groundbreaking ceremony, and the labels printed on the photo should be reversed)


Las Vegas truly seems like the picture of luck and promise for visitors who flock to this mecca of over the top celebration hoping to hit it big or at least come home happy. As our nation is crippled piece by piece by massive fraud and failure of proper government oversight, a place like Vegas can easily get lost in the mix. It's not so appealing anymore now that most of us can see the whole "game" is rigged simply by observing our surroundings. It's all too easy to look around and get disgusted at the excess in a place like Vegas.

The housing crisis hit Vegas hard, especially when the economy soured and people stopped coming out there and taking such lavish vacations. Even the President of the United States, Barack Obama, was telling people at one point not to blow it all in Vegas.

The Fertitta family gambled hard and fast with Station Casinos on what is called "the locals market" and lost more than a bundle. Perhaps it is a bit of Karma for all the honest folks who lost their shirts in Fertitta casinos over the years. Possibly it could be chalked up to bad luck or a lack of foresight.

Or... maybe the more feasible and probable explanation is the Fertittas and their front men and lawyers did it all on purpose. They orchestrated a bankruptcy to purposely favor their position and buy the company back debt free and scare off other bidders by their sheer ability to make impossible deals possible.

It's not so far fetched, is it? Vegas is--after all--a city where the mayor is working to build a Mob museum out of an old courthouse. When a guy like Oscar Goodman, a former Mafia lawyer himself, is running "the show," it's hard to believe everything's not rigged toward the wiseguy blood in town. One of the questions that seems pointless to ask these days is, "Where's all the money really going?"

It's just becoming increasingly harder to track and regulate where and why money gets thrown around by these professional corporate crooks who have insulated themselves with vast resources and smart attorneys who know how to get around the bankruptcy courts and keep their bosses out of getting splashed with any real hot water.

Guys like William J. Bullard become untouchable after figuring out how to get through all the loopholes and sneak past regulators looking the other way. As long as the tax money and campaign contributions are flowing out, the investigators aren't looking into the Fertitta Enterprises affairs.

One of the most troubling aspects of my investigation into Fertitta Enterprises is how little there is regarding public information about what this company actually does to make all that wheel-greasing money. A look back into some INTERESTING CASE FILES of another bankruptcy process Fertitta Enterprises is involved in reveals that Fertitta Front Man William J. Bullard was implicated in some interesting claims in a massive bankruptcy of a group of companies under the USA Capital label. Bullard is connected at the hip to the Fertitta family, having common connections to Gordon Biersch, Fertitta Enterprises, Meadows Bank (Where he is ironically the "Whistleblower Contact"), and two older businesses listed on corporationwiki.com:

Inspectech Corporation of California

Tex-Wesley Clear Creek, L.L.C.

Crooks are by nature egotistical and arrogant people. The worst crooks can be the most likely to really add insult to injury with their crimes. They do this not only by way of the sheer magnitude of the crime itself, but also by the very methods and names they use to keep the whole matter secret. Consider the "USA" connection between two groups Fertitta Enterprises and Bill Bullard worked their financial fraud through over the years. Global Cash Access (GCA) Executives were heavily involved in the Xyience bankruptcy scandal. Fertitta Enterprises officials, under the guise of a subsidiary named Zyen, LLC, utilized Global Cash Access money and some of that scandal-ridden company's principal players to perpetrate the whole fraudulent Xyience bankruptcy process from top to bottom.

One of the earliest legal problems the co-founders of GCA faced were related to companies like USA Processing and EXCLUSIVE USA MARKETING CORPORATION.

GCA Founders Karim Maskatiya & Robert Cuccinotta, Former CEO Kirk Sanford, Executive Kathryn Lever, and Maskatiya's Nephew Omer Sattar are the known Global Cash Access plants put in place at Xyience to purposely bankrupt the company and funnel all the money to Fertitta connected companies like Zuffa, LLC and Zuffa Marketing. Kirk Sanford told me himself in a November, 2007 meeting in Times Square (see photo below) that Maskatiya had a considerable amount of money invested in the Fertitta lien position over Xyience.


The major connection Global Cash Access has with Fertitta Enterprises is by way of their contract to provide kiosk and transaction services to station Casinos. This is what likely put the Fertittas in touch with GCA's executives and officials in the first place.

Looking at the emerging pattern of fraud, analyzing the complicated nature of the involved transactions, and taking into account the overall landscape in Vegas that allowed this corruption to go on unchecked, it is easy to see why the Fertittas and their front men and women continue to escape culpability and accountability for orchestrating these massive fraudulent schemes. Nobody has the budget to face them in court and win, and not even the government's best investigative agencies seem willing to try to go the criminal route. The reason doesn't appear to be lack of cause as much as it seems to be about cold hard cash. The city of Las Vegas and the State of Nevada are getting their take six ways to Sunday, and so is the U.S. Government on casino, property, and income taxes paid out by the Fertitta family and their business interests.

But, the question must be asked: WHAT IS THE PRICE OF ALLOWING THIS FRAUD TO KEEP GROWING BIGGER? Do we have to let the Fertittas turn into the next Bernie Madoff before we throw the full weight of criminal charges at them? Their "bull"dog William J. Bullard should be using his financial talents to solve complicated financial crimes. Instead, he and the Fertittas have masterminded perpetrating them under the radar and behind the scenes without ever being called out by the major local press. They do direct business with the Vegas Media Magnate Greenspuns through Green Valley Ranch and Meadows Bank. They have literally covered every base but one.

A blogger with a clear conscience and a bit of talent in getting the facts out of a dedicated investigation came along and did what nobody else had the stones to accomplish and fight for.

I learned that justice is not simply a word or a concept. It is something you must believe in and strive for every day in a society that is trying to keep you from obtaining it if it means pissing off the haves in favor of the have nots. The who cares line gets tossed out there all the time like the first pitch at any big baseball game: ugly and off target.

Who cares? For one, you should if you are a true fan of mixed martial arts. Do you really want the kind of people who systematically take over and cripple companies after promising to invest in and take care of them to be ultimately in control of the best MMA league in existence? This UFC deal is "their thing" and they have some bondholders they have to pay back over the long run, but it's going to make them rich and the fighters poor after all is said and done. They put too many fighters out of business for too long when PRIDE collapsed, going down in history as just another Fertitta company destroyed with a principal purpose of picking up the best pieces and pissing away the rest.

Do you really want the kind of guys who would pay themselves with money pumped into Xyience to the tune of millions of dollars and neglect to square up with their own fighters under contract with the brand? The best warriors in the business should be making millions, and often they make pennies compared to the hours they have to put in to be in prime condition to fight. They rely on their best sponsorships at times.

The Fertittas had outstanding contract payments owed to UFC fighters sponsored by Xyience of less than a million dollars when they bankrupted the company as the chief lienholder. Why didn't they pay their own fighters who literally shed blood for the brand? All the Fertittas ever did for the brand before they destroyed it and took it over for themselves was front it with some ad space on the octagon, make their fighters accessible to sponsorships, and associate it with the rise of The Ultimate Fighter show on Spike TV. The fighters did the real work in promoting the brand. Yet only one old-regime Xyience fighter is back with the newly-branded Fertitta outfit. Matt Serra. Why? (Search this blog for Matt Serra)

The time has come for some light to be shed on this corruption and some action to be taken by the general public. If you agree with me and have your own examples of "usual suspect" fraud that's being overlooked, please Report Waste, Fraud, Abuse, or Misconduct Here.

The Fertittas are about the buy their own casinos out of bankruptcy on a budget of nearly a billion dollars built on what appears to be scheme after corrupt scheme and ruthless business practices that take advantage of the bankruptcy process and subject far too many innocent Americans and taxpayers to footing the ultimate trickle down bill. It starts with the huge investment banks. These institutions eventually pass the expenses on to the little people through overdraft and transaction fees to catch up on all the revenue they've lost hiding their transgressions and trying to avoid being prosecuted for financial crimes.

Why should we be surprised that the economic outlook is gloomy right now in America when we let financial fraudsters like this stay in control and out of jail for so long? As the Fertitta Family pumps hundreds of millions of dollars into getting a relatively debt free casino package out of a nearly 6 billion dollar and ballooning debt debacle with Station, another old associate is going down for 8-12 years in the penitentiary. Bill Bullard was a gung-ho pit boss type of mover and shaker for the company Joseph D. Milanowski drove into the ground. His scheme with one loan in the ongoing bankruptcy case of USA Capital prompted the lawyers explaining it to draw up a diagram:



So right now one lone wolf at the tip of this iceberg gets captured and caged for a while, but the rest of the wolves get to go right on running with the pack and wreaking havoc. Station Casinos is set for auction on this fast-money-first-Friday in August, and the Fertittas are poised to put in a bid as high as $772 million according to the Wall Street Journal.

Is it any coincidence that just as the Station Casinos auction closes leaving the Fertittas virtually free and clear of all the fraud that got them there, Joe Milanowski will be settling into his cell
after having a wall of bars closed on him?

August 6, 2010 could possibly be the day the Fertitta brothers make the deal of the century for themselves. This auction is paving the way for them to become even richer in the long run if they play their cards right and nobody outbids them. August 6th could potentially be the best day of the Frank Fertitta III and Lorenzo Fertitta's young business life, but it is sure to be the worst day of Milanowski's entire life, and he had to pay nearly $90 million in restitution to boot.

Instead of raising champagne glasses to toast yet another successful scheme when they steal their company back from the bottom of the cliff of debt they pushed it off, the Fertittas should be in their own bunk bed unit across from Milanowski. Bullard should be in the bunk above Milanowski. Maybe like Tyco's Dennis Kozlowski does now, they can do something constructive like teach their fellow inmates how to get their GEDs.

Here are some interesting links on Milanowski worth looking at and asking yourself why the Fertittas and William J. Bullard aren't implicated anywhere in this mess even though the civil charges implicate them as such a major player:

MILANOWSKI PLEADS GUILTY

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 20536 / April 23, 2008

SECURITIES AND EXCHANGE COMMISSION VS. JOSEPH MILANOWSKI COMPLAINT


ACCUSATIONS OF FRAUD, SECURITIES VIOLATIONS: SEC sues ex-USA Capital President

AND WHO GOT RICH WITHOUT SHARING ANY ACCOUNTABILITY WHATSOEVER???

THAT'S RIGHT F#*KIN' LAWYERS!!!

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

USA Capital investors fret over rising legal fees

INTERESTING FERTITA FAMILY AND STATION CASINO LINKS

Penn National Gaming not expected to bid on Station properties

Station Casinos Inc. sold for $1.7 billion (1998)

GAMING CHIPS: Fertitta sings Station Casinos' praises to Wall Street (1999)

RICHARD RAINWATER

New Titans of Las Vegas Reinvent Old Formula

INTERESTING LORENZO FERTITTA INTERVIEW ABOUT THE UFC'S EXPANSION

UFC OWNERS DEFENDANT IN XYIENCE LAWSUIT

Xyience, Inc. Liquidation Trustee Files Complaint Against Fertitta Enterprises And Former Company Executives

Latest Xyience Case Update

By: Rich Bergeron

The Usual Suspects, including all the characters pictured below and Fertitta Enterprises GM William Bullard, are implicated in a new civil suit. The case, filed by the Xyience Bankruptcy Liquidation Trustee David Herzog Tuesday, is finally unearthing the scandal I've been reporting on here on this site for more than two years now. The complaint is very thorough, but I've created a CONDENSED VERSION HERE.



The characters and circumstances involved are nothing new to me, but the vindication of my own complaints is new. This is the official legal representative of Xyience finally picking up the story line I've been laying down for over two and a half years now. The judge in my own case will no doubt be more willing now to admit my case is substantially sound and worthy of a second examination. Read the complaint for yourself and take the time to look back at all my reports here, and you'll see they name all the individuals I've been complaining about on this site for years. Here is the full version of the complaint:


Xyience Liquidation Trustee Complaint -

Station Casinos Collapse Backing UFC-owning Fertitta Brothers into a Corner

By: Rich Bergeron

When it rains, it pours for the Fertitta family. Last Friday the patriarch Frank Fertitta, Jr. died while undergoing treatment for heart disease in a California hospital. The death comes at the tail end of a long and painful campaign of pending bankruptcy that finally ended in the Chapter 11 proceedings that are now ongoing for Station Casinos. Services for the founding father of Station Casinos have been set for this Friday and Saturday. Yet, amidst all the major media reporting of this tragedy, only the Los Angeles Times piece on the subject has so far included the truth about the skimming investigation Frank was suspected in. Even then it was too little, too late.

The fact that Frank had been suspected of and investigated for skimming during his early career was much more important to the downfall of Station Casinos than many might think. It is this bare fact and the stigma that Frank never quite shook which kept him from being in charge of the company until his death. Instead, he was CEO of Fertitta Enterprises for a time, working on investments and land deals since he couldn't get involved in running the casinos. He left that job to his sons, with Frank III taking the reigns first in 1993. It just might be this early mantle laid upon Frank's oldest son that created the conditions which now exist today. The billionaire Fertitta brothers have shown over the years that they were never quite prepared to run the family business, unless the goal was to run it into the ground.



Perhaps the fatal blow to the family business and maybe even the father himself was the potential loss of Palace Station to Boyd gaming, a long-standing opponent and major competitor in the locals Vegas gaming market. Frank Junior reportedly spent every lunch hour he could at Palace Station, which was his true pride and joy and a place he might have loved even more than his own sons. This was the place that made the pauper into a prince. It all began with a little place called simply "The Casino." The name changed almost overnight after Frank Junior bought the shabby property and turned it into The Bingo Palace:



Knowing that Palace Station might be snatched away from the family by a well-placed bid in bankruptcy court must have been hard for Frank Junior to deal with. His sons must have been equally disturbed by the fact that their poor financial management of the company and over extending of company debt could ultimately lead to them losing their father's prized property to the highest bidder. Despite early rejections of Boyd's offers to purchase a group of core, less debt-laden properties during the days before bankruptcy set in, the competitor is now more intent than ever on acquiring whatever it can from its ailing enemy. If they get what they're looking for, it might even come at a lower price than they initially offered.

THE UFC IMPACT COULD BE SEVERE IN TIME

Dana White's attitude about Station Casinos falling on hard times was glib at first, and he insisted the casino troubles wouldn't translate into bad times ahead for the UFC. Yet, there is now talk of consolidating the WEC and UFC operations in what would ultimately be a cost-saving measure. The Fertittas seem to be showing signs of financial stress and things continue to get worse for the casino environment. There seems to be no bottom to the depression the company is experiencing with a reported $65.3 million loss posted by Station Casinos in the second quarter of this year.

Just a little less than a month before Station Casinos went bankrupt, Frank Fertitta III bought a $28 million home in Emerald Bay, which is a prime beachfront community in Orange County, California. The family was at one point ready to put up $244 million of their own family money to save the company from a painful bankruptcy. It seems Frank III decided to spend a considerable percentage of that bid when it seemed most apparent that the company couldn't be saved for that price. Meanwhile, now Lorenzo Fertitta is selling his Vegas house for 2.95 million bucks, meaning he may not be Dana White's close neighbor for much longer. Check out this amazing mansion on the market for a bargain:

Now that the company is in bankruptcy, the $244 million pre-packaged bankruptcy solution proposed by the Fertittas is out of the question.The company already reportedly has legal bills in excess of $16.2 million for the months leading up to the actual BK filing. The Fertittas themselves will also have to retain their own lawyers along with the rest of the company's directors. The road ahead is sure to be filled with turmoil as the finger of blame will likely be pointed squarely at the Fertitta brothers due to their ultimate oversight of the company during its fall from grace. More litigation will compound the bankruptcy as lenders and bondholders will try to exact revenge by trying to bust the big Fertitta piggy bank with the aid of high powered lawyers and law firms.

The Las Vegas Sun reports, "Station has already advanced retainers to Nave's law firms totaling $750,000 and to the Colony directors' law firm of $1 million; and has agreed to cover the costs of the attorneys for the Fertitta directors, the filing said. Additional costs for all the directors should be paid by Station as they are incurred, the company argued." Yet, even if the company does foot the legal bills for the moment, it will be Lorenzo and Frank III paying the price in the long run if litigation can prove they were reckless and irresponsible in their operation and oversight of Station Casinos. Though it's true that Lorenzo, Frank III, and Delise Sartini only own 24 percent of the company combined, Frank III and Lorenzo had the most principal management roles leading up to the bankruptcy. Lorenzo's departure for full-time UFC duty in 2008 is not likely to absolve him of culpability and may have been more of a cost-saving measure in hindsight. Of course, many experts would argue that Dana White really needed a babysitter, but it is also a strong possibility that Lorenzo knew the bankruptcy was coming and wanted nothing to do with burdening the company when he could be better used elsewhere.

The uglier the Station Casinos bankruptcy case gets, the more chances that the debacle will impact the UFC's operations in a negative manner. The so-called "experts" in the fight industry will claim that the two companies are wholly separate and unrelated. As such, they will further try to justify that the UFC is safe and secure no matter what happens to Station Casinos. At the same time these "experts" will harp on the bogus $1 billion price tag bestowed on the UFC by a Forbes magazine writer who seemingly never took into account the fact that there is a heavy debt load associated with the fight league that few talk about when a possible sale is discussed. My Enron of MMA page outlines all the details of the $350 million senior-secured credit facility that will make the UFC difficult to sell for a high profit margin. Even if the UFC's growth and success is perpetual, that loan will still have to be paid off in full before any sale would be worthwhile for all the players involved.

The vast wealth of the Fertitta family may actually be a barrier to the success of the UFC rather than a benefit considering the fact that the deepest pockets make the best targets when it comes to litigation. It doesn't take a rocket scientist to analyze the moves made by Station Casinos over the years and conclude that while the company itself suffered, the Fertitta family cashed in hand over fist. The litigation buck doesn't stop with Station Casinos, either. Though it's been a case that's been flying under the radar in recent months, the lawyers for the former PRIDE organization are still pursuing legal action against the Fertittas, Dana White, and Zuffa over allegedly false promises made that were supposed to guarantee PRIDE would continue as an active organization as part of the sale agreement. I have spoken personally with some of the lawyers on the case who are leaving no stone unturned and not giving up anytime soon.

While Frank Fertitta Jr.'s recent death may mean the brothers inherit some of their father's leftover fortune, even that influx of cash may not be enough to weather the storms to come. Of course, there are plenty of scenarios that could play out that might keep the Fertittas in great financial standing through all of this. Yet, to say that they are guaranteed to get through this with no real impact on the UFC is to neglect to consider the true facts at hand. Those facts point to the very real possibility that the Fertittas could exhaust their existing cash reserves while Station Casinos languishes in bankruptcy. If that happens, you might see the Fertittas seek another big loan package for the UFC putting that outfit in further debt. After all, the last UFC loan came only after the Fertittas overextended their credit with similar instruments they secured for Station Casinos. Those huge loans and an overzealous expansion of the company's gaming interests and land holdings have resulted in the current Station Casinos bankruptcy situation, and if something that big can fail so miserably, so can the UFC.

The bottom line here is that while the UFC brass and the associated spin machine will try to convince the fans that everything is on the up and up, behind the scenes times are very tough. The UFC continues to find success and expand its fan base in a manner that makes it appear ironclad and in no danger, but behind the smoke and mirrors there's a real possibility that things could soon start to go downhill fast. It all depends on what kind of impact the impending litigation and bankruptcy of Station Casinos has on the Fertitta family war chest. This is a family used to spending money at a rapid rate, and Frank III's $28 million home purchase during the toughest time Station Casinos has ever faced is a clear indicator of that. Those who might argue that it would be impossible for this family to lose everything over this might be the same folks who once thought Station Casinos would never go bankrupt.

As a huge fan of the UFC myself, I would never want to see the organization as a whole suffer over issues at a company that is supposed to be unrelated. At the same time, I have to wonder why the Fertittas would promise up to $244 million to keep Station Casinos out of a nasty bankruptcy. The only answer to that question is my mind is that they must have known if they couldn't make that deal things would get very ugly very fast. That's exactly what's happening. The only folks who will truly capitalize here are the bankruptcy lawyers, and there are already reports of huge legal fees accruing (as much as $995 per hour for some of these top-tier hot-shot attorneys).

As long as Station Casinos continues to lose revenue due to the poor economy and a prolonged bankruptcy, the Fertitta Brothers will have less money to invest in the UFC. If a complete catastrophe drains the Fertitta family coffers, they may very well try to leverage Zuffa's assets somehow. If at that point they are shafted by potential creditors and/or lenders, the real troubled waters for the company will start churning. A sale of the company might never take place as some have reported, but the lack of cash reserves could result in the UFC becoming a much more streamlined organization. Whether or not that streamlining negatively impacts the business remains to be seen, but those who tell you there will be no impact whatsoever are wishful thinkers. It all depends on how bad things get in the days to come.

SAINTS OR SINNERS? WILL THE FERTITTA REPUTATION RECOVER?

"A reputation once broken may possibly be repaired, but the world will always keep their eyes on the spot where the crack was." Joseph Hall

The Fertitta family still has a rock-solid reputation in Las Vegas. Numerous reports of Frank Fertitta, Jr.'s death in the Vegas media have made no mention of the family patriarch's troubles or tribulations. The most familiar refrain in these Vegas reports reflects the fact that Station Casinos has been repeatedly represented as one of the best companies to work for in Las Vegas. These articles also laud Frank Junior for virtually inventing the locals casino market. As far as Station Casinos bankruptcy news, I've yet to find an article that even suggests that anyone in the Fertitta family was reckless or irresponsible in the business practices that led to the bankruptcy.

Only a nasty and contentious bankruptcy process, which seems inevitable, will tarnish the Fertitta image in Sin City and beyond. Local reporters will have no choice but to explain what's happening when things get truly ugly. The cracks in the facade of the once untouchable family reputation will only then become fully visible.

As the truth emerges as to just how irresponsible the Fertittas have been leading up to this bankruptcy, it will become increasingly harder for the Fertitta Brothers to do business elsewhere. The way Fertitta Enterprises handled the Xyience bankruptcy is a perfect example of how powerful people can get away with impropriety with little consequence, but that was really small potatoes compared to the current situation with Station Casinos. I truly believe the Xyience debacle was a practice run for the bigger and bolder Station Bankruptcy. Though the Xyience situation was a much less sordid and scandalous affair than the Station Casinos bankruptcy process promises to be, there are some common threads. Unlike Xyience, though, the Fertittas have much more to lose when it comes to the casino business. I wouldn't be surprised if the Fertitta brothers completely sell off the business and confine themselves to either just a few properties or the consulting business alone.

Whatever happens, it will expose the true nature of just how ruthless billionaire business tycoons can be and what lengths they will go to in order to keep the money coming in. Those who think the Fertittas are saints and can do no wrong will ultimately have to accept that the sinner label is more appropriate. Just think about how much these guys are worth, what kind of money they're spending, and then look at what their fighters in the UFC get paid. No matter how successful the UFC becomes, it seems the league's top fighters will never get the kind of paydays that the best boxers get. This reality seems lost on most fans, and any fighter who speaks up about it knows there's a strong possibility of being blacklisted at best or thrown out of the league at worst.

For those few folks out there who know the real truth about how the Fertittas operate and the "family" history that put them where they are today, their comeuppance can't arrive too soon. Karma is a bitch.

STATION CASINOS OFFICIALLY FILES BANKRUPTCY

By: Rich Bergeron

Station Casinos has filed for bankruptcy after negotiations with creditors failed to produce a workable solution. While the bankruptcy filing only affects a portion of the vast business and its many arms, it could be a very long fight. The company, laden with an estimated $5.7 billion in debt, is playing off the move as nothing to get alarmed about in recent press reports:

LAS VEGAS REVIEW-JOURNAL: CHAPTER 11 PROTECTION: Station Casinos regroups, continues normal operations at resorts

Hurt by Debt, Casino Firm Station Files for Chapter 11


Station Casinos ends negotiations with bondholders, files for Ch. 11 protection


ASSOCIATED PRESS STORY ON BANKRUPTCY


CASINO CONSULTING AND MANAGEMENT COMPANY NOT PART OF BANKRUPTCY

FERTITTA-OWNED STATION CASINOS IS SUFFERING FROM DOWN ECONOMY

Life can be brutal in the desert.

Station Casinos, which is partially owned by the 90% Zuffa, LLC Owning Fertitta Brothers (Lorenzo and Frank III), is suffering tough economic times as an entity. Before I explain further, it's important to understand what Station Casinos really is, in their own words:

"Station Casinos, Inc. is the leading provider of gaming and entertainment to the residents of Las Vegas, Nevada. Station's properties are regional entertainment destinations and include various amenities, including numerous restaurants, entertainment venues, movie theaters, bowling and convention/banquet space, as well as traditional casino gaming offerings such as video poker, slot machines, table games, bingo and race and sports wagering. Station owns and operates Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Texas Station Gambling Hall & Hotel, Sunset Station Hotel & Casino, Santa Fe Station Hotel & Casino, Red Rock Casino Resort Spa, Fiesta Rancho Casino Hotel, Fiesta Henderson Casino Hotel, Wild Wild West Gambling Hall & Hotel, Wildfire Casino Rancho, Wildfire Casino Boulder, formerly known as Magic Star Casino, Gold Rush Casino and Lake Mead Casino. Station also owns a 50% interest in Green Valley Ranch Station Casino, Aliante Station Casino & Hotel, Barley's Casino & Brewing Company, The Greens and Renata's Casino in Henderson, Nevada and a 6.7% interest in the joint venture that owns the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages Thunder Valley Casino near Sacramento, California on behalf of the United Auburn Indian Community."

The business model may be just as broken as the national economy, dependent on the airs of excess and the willingness of every average Vegas visitor to let a little ride on luck. Looks like those jet setters are cutting back on their City of Sin junkets of late, looking for the cheap deals in the strip proper rather than straying to the posh, overbuilt, more modern and lavish quarters and suburban style of the newest Station Casinos developments. Maybe that's why they have to reconfigure their whole financing picture:

Station Casinos, Inc. Announces Private Exchange Offers of Its Debt Securities for New Secured Term Loans



Station Casinos downgraded after seeking debt exchange



Station Casino owners consider cash infusion



Obviously, the government isn't ever going to step in and bail out the casino industry. This a business niche that has been notorious for supporting and being directed and fueled by organized crime interests. Hence the following scene from the movie Casino:






Maybe there's some screaming matches like that going on behind the scenes in Vegas still today. Personally, I don't believe the kind of Fertitta family ties to organized crime ever just go away. I'm convinced that the phrase "clean money" has been used far too liberally to describe the successful income generating strategies of the brothers Fertitta.

Things are about to get interesting in Xyience's adversary proceeding against me in bankruptcy, as there is little time left for the opposition to make up facts to absolve themselves of responsibility for filing and pressing the frivolous claim that this whole saga began with. Xyience's frivolous case against me was meant as a method to silence me so the folks wanting to steal the company from the shareholders could get away with it. Now they almost have been able to ride off into the sunset unscathed, but I still have time to go the extra mile and fight for those interests who have been drowned out thus far in all this.

THE REAL “DEAL” ON XYIENCE

By: Rich Bergeron

Recently A New York City Magazine that shall remain nameless published an article about the Xyience saga I’ve been reporting on since late 2006. The reporter interviewed me for over an hour as part of her research, but her editor cut out every single quote of mine she put into her story.

Whoever decided to make the cuts was also kind enough to leave a nasty quote in the story from one of the opposing attorneys in my case.

Of course I’m used to not being backed up by most media outlets on this huge scandal. Yet, I’m also confident that eventually the media will have no choice but to start following this case. I know that with the right effort and due diligence I’ll be able to carry my case forward to a shocking resolution. David will beat Goliath in this one, and the truth really will shine through.

Judge Mike Nakagawa held a show cause hearing in bankruptcy court on September 10th related to the recording of my May 14th hearings. He probably didn’t expect the whole thing to turn into an indictment of his own actions in the case, but that’s exactly what happened.

Judge Nakagawa continued the scheduling conference in my case on five different occasions prior to the show cause hearing, and he also promised to deliver decisions on at least three different dates without following through, and I decided enough was enough. Xyience is creeping closer and closer to ultimate approval of their reorganization plan. As it is that plan only benefits the players who orchestrated the fraudulent bankruptcy. I took control of the September 10th hearing to really send the message that I’m not playing games anymore. I wanted the judge to know that he was taking things much too lightly and not paying attention to the absolute need for a full and fair investigation of the whole process.

I asked the judge to recuse himself from the case in a prior motion, and he tried to pigeonhole the request into the category of a recusal based on a previous association.

“Have you ever met me, Mr. Bergeron,” he asked.

I told him no but explained that was not the reason I asked him to recuse himself. I laid into him at that moment, outlining all the various issues with his poor management of the entire case. I called him out for all his broken promises and his allegiance to the bankruptcy attorneys. It was the most amazing feeling of my life to be so captured by the emotion of it all and to be fighting for what I believed in with all my heart. Toward the end of the hearing, I could hear the judge’s voice quiver as if my assault on his character and integrity had really rattled him. He seemed pretty eager to get to the next case on the docket.

I have since requested that the case be transferred to U.S. District Court in Boston, Massachusetts. That will be the best venue for this type of case since there’s a First Amendment issue involved and since continuing the case in Nevada leaves my opponents with all the advantage. Bringing the matter to my home state allows me to at least appear in person, and the change in venue will also ensure that the Fertitta influence factor is eliminated. These billionaires have a lot of power in the Vegas area, and it’s just plain stupid to think they haven’t tried to manipulate the proceedings somehow.

The taxpayers of our great nation are going to have to foot the bill for about $700 billion of bad banking and mortgage and securities schemes in the coming months. Who knows if it’s the bottom of the barrel or if we might actually be in for more rocky roads ahead. The Xyience debacle should teach us that greedy billionaires can buy whatever they want, even judicial influence. This is a living example of how our nation is corrupted from within.

Sometimes the little things in life are the most telling. This may seem like a little, insignificant issue to many MMA fans, but you have to think of the ripple effects. How many people have suffered as a result of the 380 or so shareholders who lost a boatload of money on this bad deal? From another perspective, the Fertittas’ role in this fraud is even more disturbing. How many people do these guys do business deals with each year? How much money do these folks control through either their personal business decisions or choices they make on major boards they’re part of? If they’re committing fraud even at the lowest level and actually bankrupting a company to make a quick buck, there’s something fishy going on behind the scenes, and you don’t have to call Colombo to figure it out. This cancer will spread to their UFC operation in due time, and the league will choke on its own ego.

And another thing… where is the SEC on all this stuff? If they can’t wrap up a simple fraudulent caper like this—even when I gave them all the evidence as it was happening—how do we expect our federal government to really clean up the bigger and badder shit going down?

Markets don’t collapse because the big boys just stop pulling their weight all of a sudden. It’s because all the little screw ups combine to make one grand one. Every level of business can contribute to a crash, and no financial giant or mom and pop store is immune. Yet, there is something intrinsically wrong with the idea that billionaires like the Fertittas are pulling scams like the Xyience bankruptcy and getting off without so much as a slap on the wrist. Where is the accountability? Where are the watchdogs and advocates for a closer look at this thing? Where is the big investigation that should ensue? What is wrong with this picture?

The problem is, the fraud always starts small like the crazy dude in some major European bank who lost billions of the company’s money on bad futures trades. Nobody ever stepped in at the right time to stop him, and he never stepped in to stop himself. The Fertitta family financial boom started off with one casino. Now they own an empire of casinos, real estate, and other luxurious property. The old time roots of organized crime run deep in the family Fertitta, and when you have that much wealth, influence, and organizational power you can pretty much do what you want these days. The mantle of “clean money” fits the Fertittas well in the circles of public knowledge, but most people who follow the UFC aren’t actually up on the family’s brutal history. So you have to ask yourself: do Family ties ever become severed just because one or two of the family members starts making more money and gaining more territory? HELL NO! The fraud gets more sophisticated, and the operation moves underground and gets entrenched. Everything has to be more subtle. Instead of the physical removal of actual cash from the casino count room, now the “corrections” to the books are being done through computer programs and failsafe loopholes in the equipment that leave most people down on their luck at the end of the night.

The partnership between Global Cash Access officials and Fertitta Enterprises is very troubling. The individuals who left Global Cash Access to head up Xyience’s bankruptcy dive were all connected to an alleged failure to report and pay out commissions for the venues where their cash machines were installed. The machines allowed casino patrons to make paperless transactions for gaming cards and other casino offerings. Fertitta Enterprises operates multiple casinos in which Global Cash Access machinery is placed. Why would the Fertitta Brothers do business with a bunch of the very same fraudsters who just potentially screwed their company out of millions? Did Kirk Sanford take over as Xyience CEO to repay his debt to Fertitta Enterprises? Was he so good at his GCA bailout that the Fertittas knew he would be a natural at bankrupting Xyience?

I feel my case is on the verge of a major breakthrough, because the time has come. This kind of thing just can’t go unnoticed anymore if we are to survive as a healthy nation. This and every penny ante scam like it should be sniffed out and stopped before it ever gets this bad. And we can’t handcuff the press for trying to warn people about what dangers lie ahead and what’s really going on behind the scenes. We can’t keep fighting for freedom in foreign lands and ignoring the lack of it in some places here. If we keep acting like freedom is something that’s passed down from the richer to the poorer, we’ll never make real progress.