Stratosphere vacation packages won’t be honored

Saturday, Jan. 11, 1997 | 11:59 a.m.

The financially-troubled company sent letters to package holders on Friday, saying Stratosphere Corp. could no longer afford to meet the cost of the room, food and gambling deals believed to be worth as much as $15 million.

"If Bob and Stratosphere are able to make adequate arrangements, then Stratosphere will again be able to provide its facility for your use," the letter reads. "We are sorry to have to inform you of this, but without the ability to be paid for the benefits provided, we must cease providing these benefits effective Jan. 13, 1997."

Stratosphere's management team argued that Stupak, the resort's former chairman, failed to pay enough money into a state-mandated account designed to cover the cost of the estimated 14,000 packages. Stratosphere executives charged that Stupak owes them $3.4 million for past visits by package holders.

"I anticipate Bob being sued, and if I was one of the (package owners) I'd want to sue him, too," said Jaye Snyder, a spokeswoman for Minnesota-based Grand Casinos Inc., the Stratosphere's chief stockholder. "It's a horrible thing to have somebody come to your hotel and not be able to honor what they bought."

Stupak countered that he had placed 7 million shares of Stratosphere stock into the escrow account, but mismanagement by Grand Casinos depressed the fund's value from $70 million in April to less than $7 million today. The share price has fallen from nearly $14 in April to close Friday at 72 cents, down 32 percent for the week.

"It's very strange. I can't understand how these out-of-town people react," Stupak said. "This was Grand's decision, no one else's. Now, I can understand why they're going bankrupt.

"They have no consideration for the public, the state of Nevada or the gaming industry. They completely run this place on their own."

The vacation packages were rooted in the early days of Stupak's old Vegas World hotel, which sat on the current site of the Stratosphere Tower. They ranged in price from $395 to $5,000 and were designed to draw visitors for various lengths of stay.

After Vegas World's replacement with the $550 million tower complex, package holders were given the option of cashing in their deals or transferring them to the Stratosphere.

Bill Bible, chairman of the state Gaming Control Board, said he was surprised that Stratosphere officials decided to suspend the package deals. But the state's top gaming regulator, who helped devise the escrow account, said Stupak was responsible for the problem.

At the time, Stupak was given the option of placing $15 million in cash in the escrow account of stock worth 150 percent of the package's values. But he understood he'd have to reimburse the Stratosphere Corp. for the cost of the packages, Bible said.

"The bottom line is it's Stupak's responsibility to pay for the packages," he said. "He realized it was his obligation. It's unfortunate that he's suffering financial troubles, ... but he made it very clear to us that it was his obligation to pay for the packages."

Thomas and Maria Cirafici purchased the deal after buying a $2,000 package at Vegas World.

"I think the attitude is, 'What's going to happen will happen. To hell with the people who bought these packages,"' Thomas Cirafici said.

The move followed Monday's announcement that the 9-month-old complex had devised a bankruptcy restructuring plan that could be delivered to a federal judge by the end of the month.