Las Vegas Sun

August 30, 2014

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State wants Ormsby House sold

CARSON CITY -- Former Las Vegas developer Barry Silverton has been given an ultimatum to either sell the Ormsby House hotel-casino in Carson City or face a takeover by the state.

Tired of repeated regulation violations, the State Gaming Control Board voted Tuesday to allow Silverton to remain in operation only until February to close a proposed sale.

Patriot American Hospitalities Corp. of Dallas, which has hotel properties around the nation, has been negotiating with Silverton to buy the property. It would lease it to the Las Vegas-based American Wagering Inc. to run the hotel and casino.

Silverton's license expires this month. Board Chairman Bill Bible said he would not vote for an extension if there was not a pending sale. He said his legal staff has looked into the possibility of a state supervisor taking over the 200-room hotel, built by former Sen. Paul Laxalt in 1972, if the deal falls through.

Bible cited an 18-page letter listing accounting violations at the Ormsby House, some of which were never corrected.

Silverton took withholding taxes for employees and used the money to pay some vendors. Vendors have to sue Silverton to get him to pay his bills. He said at the end of October there were $139,000 in delinquent payments that were 120 days overdue to other firms.

Silverton, who is involved in the Pacific Malibu development in Southern Nevada, told the board that progress has been made in clearing up the bookkeeping violations and that he is current in most of his bills. To improve the cash flow, Silverton said he put $125,000 into the casino. The money, he said, came from a partial settlement of a suit in Las Vegas involving Pacific Malibu.

Bible complained that while the problems were occurring, Silverton has spent only 40 days at the hotel this year. And the chairman revealed that someone stole $10,000 out of the casino cage.

Silverton challenged the 40-day figure but admitted he has been spending most of his time in California the last three to four months. His lawyer, Michael Alonso of Reno, said Silverton has a good idea who took the money and that employee has been fired.

Alonso said he hoped the sales agreement could be signed by next week, but he cautioned that contracts sometimes take longer. He said the proposed purchasers were involved in larger deals in other places. Patriot American recently purchased the Bay Meadows horse racing track near San Francisco for $168 million.

American Wagering is headed by Vic Salerno, who has 48 percent of the stock and runs 39 sports and race books in Nevada. He also owns the Howard Johnson property off the Las Vegas Strip. Since his company already has a license, it probably would require only a short investigation by the state before Salerno could step in.

Board member Brian Harris said he has written more accounting violations to the Ormsby House than any other casino in the state. "You have dug a deep hole," Harris said.

Board member Steve DuCharme said there were concerns 15 months ago when the board licensed Silverton about whether he had the ability to run a hotel-casino.

"This (the license) is not a learner's permit," DuCharme said, arguing that Silverton has not shown he's qualified to run the business.

The recommendation by the Control Board must be approved by the Nevada Gaming Commission, which meets Dec. 19 in Carson City.

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