Stupak receives $1.1 million in fire settlement

David Strow

Wednesday, Oct. 27, 1999 | 10:52 a.m.

Stratosphere Fire

The fire that gutted the Stratosphere site on Aug. 29, 1993, caused an estimated $3.5 million in damage.

The fire began at about 460 feet, and quickly spread through the building. Firefighters couldn't get into the tower to fight the blaze, and were only able to keep the fire from spreading to nearby buildings. Debris from the fire rained onto Las Vegas Boulevard, and the road was closed from St. Louis Avenue to Boston Street for more than a month afterwards to guard drivers from falling debris.

There was speculation afterwards that the fire was the work of an arsonist. Fire department investigators, however, were unable to find any evidence or motive for arson. The official cause of the fire was never determined, but investigators said they believed it was caused by an electrical problem.

At the time of the fire, the tower had been scheduled to open in the summer of 1994. Recovery from the fire -- and from the tower's failed initial public offering -- kept the tower from opening until 1996.

Stratosphere Tower creator Bob Stupak has accepted $1.1 million to settle a lawsuit over a 1993 fire that ravaged the tower's construction site and scuttled early plans to take the Stratosphere public.

The fire swept the half-complete tower on the night of Aug. 29, 1993, causing extensive damage. According to Stupak, the delay and damage caused by the fire caused investors to back away from Stratosphere's plans to go public, forcing him to yank a stock offering. Stupak had planed to raise as much as $58 million in a November 1993 initial public offering.

Stupak sued Perini Building Co. and Uriah Enterprises Inc. in 1996, claiming that their negligence led to the blaze. Perini was the contractor on the project, while Uriah was a subcontractor.

Stupak originally claimed damages in excess of $100 million. The settlement came four days before the case was to go to trial.

After the IPO fizzled, Stupak claimed he was "essentially left with a gun to his head," according to his lawsuit, and was forced to sell controlling interest in the project to Grand Casinos. Stupak also claimed emotional distress from this sale, saying that the Stratosphere project was the central focus in life, and that being forced to sell to Grand Casinos essentially cost him all control of the project.

Under his original IPO plans, Stupak would have retained 60 percent control of the Stratosphere.

"We felt that under the circumstances, this was the appropriate resolution to a very hotly contested case on both sides," Jim Jimmerson, Stupak's attorney, said Tuesday. "We are satisfied his rights were vindicated by the sizable payment made to him."

The fire led to a complex web of lawsuits. In a separate case filed in 1997, Transamerica Insurance Group sued Stupak, Perini and Uriah over the fire, asking for $230,000 in damages caused to a nearby McDonald's restaurant it insured. Shortly before Stupak's settlement, Perini and Uriah agreed to pay $150,000 to Transamerica.

Claims against Stupak were dismissed by Transamerica without payment.

After Grand Casinos took controlling interest in Stratosphere, it took the company public in December 1995, and opened the resort in April 1996. But heavy debt and poor earnings led to the ouster of Stupak as chairman in July 1996, and the bankruptcy of the Stratosphere in January 1997.

The resort is now owned by New York billionaire Carl Icahn, who took over the property by snapping up most of the Stratosphere's outstanding bonds.