U-Haul founder’s gaming application moved off fast track

John Wilen

Thursday, May 7, 1998 | 10:12 a.m.

The company operating the World Trade Center resort on Desert Inn Road in Las Vegas failed to pass muster with the Nevada Gaming Control Board Wednesday in its quest for a non-restricted gaming license.

The license application, filed by Amerco Entrepreneurial Institute Inc.; Leonard S. Shoen, Amerco's president, director and shareholder; and Carol L. Shoen, Amerco's secretary and treasurer; was sent back to the board's investigative staff for further review.

Shoen founded the do-it-yourself moving company U-Haul in 1945. He has been embroiled in court battles with two sons since 1986 after his ouster as chairman of Amerco Inc., U-Haul's parent company.

The Shoens bought the non-gaming World Trade Center two years ago and now plan to invest $7 million at the property by adding gambling, 310 hotel rooms and 10,000 square feet of meeting space to the existing 65,000 square feet.

The gaming license application was sent back for review at the request of Mr. Shoen after board members said they would not approve the application because Amerco employs two ex-felons and a non-licensed manager.

"It would not be my intent to support the application today," said board Chairman Bill Bible.

Throughout Amerco's hearing, board members expressed concern with Shoen's employment of a paralegal, Michael Carter, who was arrested for auto theft and writing bad checks, and convicted of child molestation. The conviction, which resulted in a five-year jail term, occurred 22 years ago, Shoen's attorney said.

"Having served time, as (Carter) has, he's damned sure to do things right now," Shoen said.

Board members were concerned that Carter -- who does not have a law degree -- represented himself as Amerco's general counsel. While admitting it was inappropriate for Carter to represent himself as general counsel, Shoen defended Carter, saying the paralegal was more competent in many ways than lawyers the company had previously employed.

"I cannot say the two lawyers I had before are competent to do the job," Shoen said.

Carter's legal work is ultimately reviewed and approved by outside counsel, Shoen said. On questioning by board members, Shoen said Carter told him he had been convicted of rape.

Board Member Steve DuCharme took Shoen to task for employing an ex-felon without properly investigating his background.

"You're empowering somebody and putting him in charge of your legal affairs and you know he was in prison but you didn't bother to ask him what for?" asked DuCharme.

Shoen said Carter has proven to be competent and trustworthy.

Board members were also concerned with Amerco's employment of Lonnie McElroy, who was convicted of auto theft in Kansas in the late 1970s. McElroy, who serves as purchasing manager, is not significantly involved in Amerco's operations, Shoen said.

Board members disputed this assertion, noting McElroy at one point held sole power to sign checks drawn on one Amerco bank account, and that he interviewed prospective employees.

"That sounds like a lot of involvement in the operation of the company," DuCharme said.

Shoen said he was not aware of McElroy's criminal record.

"You're not surprised?" DuCharme asked, after telling Shoen about McElroy's 1978 arrest.

"No, I'm not surprised," Shoen said. "Many people have served time in prison."

Shoen expressed dismay when board members said the involvement of Carter and McElroy in Amerco's operations would prevent them from approving the application.

"What do you want me to do, terminate these people?" he asked.

Bible said the board could not direct Shoen what to do. After a recess, Shoen asked the board to refer the application back to its investigators to give him time to address concerns about Carter and McElroy.

Another Amerco employee, Royce Warren, should be properly investigated and licensed before serving as casino manager, board members ruled. Warren has an application on file.

In other actions, the board:

--Approved a two-year conditional non-restricted gaming license for the Ultra New Town Tavern, at 600 W. Jackson Ave., which is owned by Oscar Green. Tara Lorraine Green Jackson was approved as the tavern's secretary, treasurer and cage manager. The license was conditioned on the hiring of a compliance officer, the maintenance of gaming machine route operator contracts, and the promise that General Manager Elijah Green, who has not been licensed, recuse himself from involvement in gaming operations

--Approved a $205 million debt offering by Fitzgeralds Gaming Corp. Fitzgeralds will use the proceeds to repay older debt. As security, the company pledged its assets in Nevada, Mississippi and Colorado

--Approved Eve Louise Smith as general partner and 1 percent owner of the James W. Smith Family LP, which owns 5 percent of the State Line Hotel in Wendover

--Approved the conversion of Liberty Partners, a company which collects antique gaming machines, from a limited partnership to a sole proprietorship owned by Anthony A. Marnell II

--Approved an application by MGM Grand Inc. to pledge common stock to PNC Bank as collateral on its recent $500 million debt offering

--Approved a transfer of a 50-percent interest in Las Vegas Auto/Truck Plaza, at 8050 S. Industrial, from Avaness Industries Inc. to Michael Jay Manning

--Approved non-restricted race and sports book gaming licences for American Wagering Inc. and its subsidiary, Leroy's Horse and Sports Place, 3111 W. Tropicana, for off-track pari-mutual sports wagering. The board also approved the participation of Stratosphere Gaming Corp. and Riviera Operating Corp. in revenues generated by American Wagering sports betting systems;

--Gave final approval to American Wagering's acquisition of Imagineering Systems Inc., of Reno, approving the participation of Victor J. Salerno, American Wagering's president and chief executive, and of Robert D. Ciunci, the company's chief operating officer, in Imagineering operations.