Binion defends his management of Horseshoe at hearing

Bill Gang

Friday, March 29, 1996 | 11:59 a.m.

The Binion family feud over who gets to run the Horseshoe hotel-casino is in the hands of District Judge Michael Douglas.

The judge had listened during a Thursday hearing to allegations of mismanagement by longtime Horseshoe president Jack Binion and testimony about the seemingly casual operation of the family-owned corporation.

Although millions of dollars flow through the Horseshoe, the issue is not just about dollars but about control. It is the ultimate sibling rivalry.

Binion took the witness stand and told how the corporation operated year after year in an informal manner.

His sister, Becky Behnen, did not appear at Thursday's hearing, although she had been at earlier court sessions.

During the hearing that was watched by a representative of the State Gaming Control Board, Douglas heard how corporate minutes weren't generated as a result of shareholder meetings but drafted to "pacify" state gaming regulators.

If Douglas rules that the corporation must hold a formal election of directors -- as Binion wants -- it likely would mean that his dissident sister would be ousted.

After all, Binion controls the majority of the stock at this point.

If the judge decides in favor of Behnen and another sister, Brenda Michael, it could be Binion who finds himself on the outside looking in at the casino he has run for more than three decades.

Behnen and Michael have alleged in a lawsuit that there has been mismanagement of the baccarat games and the sports book and Horseshoe money was used by Binion for other business ventures that did not involve the women.

They presently comprise two thirds of the board of directors and could out-vote their brother so long as they remain on the board. The next scheduled stockholders meeting to elect officers won't be until September.

Binion's attorney, Morton Galane, said the family never really went through a true election procedure since the inception of the corporation 38 years ago. Binion has been recognized as corporate president since 1964.

Galane asked Douglas to enforce a state law permitting a judge to order a stockholders meeting for formal elections if there has been none in the past 18 months.

But the sisters' attorney, Mark Bailus, argued that at a Sept. 7, 1995, stockholders meeting the issue of who was on the board of directors was raised and there was a defacto concession that the three comprised the board.

"They don't have to use the magic word -- election," Bailus said.

He asked that in the interest of justice Douglas keep Behnen on the board.

"She's the only one watching at the Horseshoe to make sure there is no more misconduct," Bailus said. "An election would give Binion unfettered control."

Galane countered that the Horseshoe has experienced "extraordinary success" during Binion's years as president.

He charged that Behnen's motive in the dispute was to put pressure on Binion to sell his stock at a "depressed value."

The fourth sibling, Lonnie "Ted" Binion, does not have a say in corporate matters despite owning 19 percent of the stock.

He has been suspended from all involvement in the Horseshoe's operation or profits by the Control Board because of years of drug abuse.

He has applied for reinstatement and a hearing on the issue has been planned.

If Ted Binion is reinstated and votes with Behnen, his stock could swing the majority of power away from Jack Binion, who owns 46 percent of the stock.

Since Ted Binion can't vote his stock, Jack Binion's ownership becomes more than 53 percent of voting stock.

It is believed, however, that if Ted Binion is reinstated by state gamers, he will vote to support his brother.

Behnen and Michael each own 5 percent of the Horseshoe, with the remaining 25 percent of the stock in their mother's estate awaiting distribution to the women.