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October 25, 2014

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No quick fix forthcoming for Venetian builders

County Commissioner Erin Kenny offered little hope for a quick political fix Tuesday to local trade contractors facing financial trouble because they haven't been paid for building the Venetian hotel-casino.

But companies who've filed a whopping 366 liens against the Venetian and its general contractor were urged to remain united in their legal efforts and to file complaints with state agencies and the FBI.

More than 60 representatives from subcontractors who worked on and supplied materials to build the $1.5 billion hotel-casino met Tuesday with Kenny, one of the few political leaders in the state to show much concern about the plight of local companies owed money for Venetian work.

A few weeks ago, Rep. Shelley Berkley, D-Nev., promised a similar gathering of subcontractors she'd explore federal legislation "to prevent this type of thing from ever happening again" and would contact Nevada political figures for help in resolving the problem.

John Prendeville, an organizer of Tuesday's meeting, said Berkley told him Gov. Kenny Guinn had offered to send a representative to the session, but no one from the governor's office appeared. County Commissioners Bruce Woodbury and Yvonne Atkinson Gates declined to attend, as did District Attorney Stewart Bell.

Prendeville, a former executive with Venetian general contractor Lehrer McGovern Bovis Inc., read a letter from Bell saying that because Clark County could become "embroiled" in litigation involving the Venetian, it would be inappropriate to appear.

Venetian owner Sheldon Adelson has already sued the Las Vegas Convention and Visitors Authority seeking to halt an expansion of the Las Vegas Convention Center. Some county officials have said privately they believe he may also sue the county for alleged financial damages to the Venetian, claiming county building inspectors improperly delayed opening of the resort.

Kenny said she'd talk to Bell about the trade contractors' concerns, but added, "From Clark County's perspective, our role can't be to interfere with civil cases such as this."

She echoed Berkley's vow, saying, "I'm going to see if there are any legal remedies and determine if we can actively work with the district attorney and Legislature to prevent this from happening again."

But it's what's happening now and the lack of interest displayed by many public officials that has local trade contractors fuming.

"It's absolutely outrageous that only two politicians have had the guts to meet with us," Ron Allyn, a vice president of Allyn Masonry Inc., told Kenny. "Everybody seems to be backpedaling from this issue.

"The contractors in this room employ a hell of a lot more people than (Venetian owner) Sheldon Adelson and we pay our workers a lot more money, yet nobody seems to give a damn.

"Construction is the No. 2 industry in this state, yet public officials run for cover when it comes to accepting any responsibility. That's reprehensible," Allyn said.

Prendeville said the dollar amount of liens filed against the Venetian and Bovis now tops $300 million, an amount he called "unprecedented in U.S. construction history."

A month ago, he said, contractors had filed 149 liens claiming a total of $213.8 million was owed them by either Bovis or the Venetian. In the past 30 days, more than 200 additional liens have been filed. Bovis itself has filed $145 million of liens against the Venetian, as well as a lawsuit alleging fraud.

Lawyers Richard Peel and Leon Mead, who represent more than a dozen trade contractors, said foreclosure actions against the Venetian are speeding up in District Court.

"A hearing is set for next Tuesday to consolidate all pending lawsuits against Bovis and the Venetian under District Judge Mark Gibbons," Mead told the contractors. "It's imperative if you haven't filed liens yet to do so immediately."

He said that while a trial could begin within six months, "the gravity of the case and the number and amount of liens will make this a complicated matter" that could drag out the process.

"It's important you stay united in this effort," Peel said. "They're going to try to pick you apart.

"They're looking to pay you 60 cents on the dollar. We believe you can get more money as a group than if you act alone."

Bovis has "bonded around" some of the liens, an action that forestalls immediate foreclosure by transforming the claims into a court case. The action can be expensive; state law requires a company doing that to post a bond of 1.5 times the amount claimed in the liens, and bonding companies charge anywhere from 1 percent to 30 percent of the bond's face amount.

But it removes an immediate threat facing the Venetian -- that lienholders can force a sale of the resort to satisfy their claims. Mechanics liens are superior in rank to the secured claims of mortgage holders and bank lenders.

Venetian officials have said they don't owe any money, asserting the resort's "guaranteed-maximum-price" contract with Bovis absolves them of any responsibility to pay the contractors. Bovis has said it complied with the GMP contract and any cost overruns were a result of Adelson-approved changes in the scope of the project.

Prendeville, who is suing Bovis for wrongful termination, urged the trade contractors to file complaints with the FBI.

"We're talking about a bunch of gangsters who came to this town without enough money to finish the job," he said. "I have prima facie evidence of fraud, and I've presented it to the FBI in two sessions with them."

Rick Bertuzzi and Ron Ramsey, investigators with the Nevada State Contractors Board, also urged complaints be filed with that agency, which can revoke Bovis' license if it finds improprieties.

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