Shoen’s widow, children fight over fate of hotel

Grace Leong

Thursday, Dec. 21, 2000 | 11:21 a.m.

The owner of the World Trade Center hotel, once controlled by the late U-Haul International Inc. founder Leonard Shoen, is fighting to keep the Las Vegas hotel open even as one of its creditors is trying to close the property in order to cut costs.

Carol Shoen, the second wife and sole heir to Leonard Shoen's estate, claims the closure effort and a related lawsuit is a ploy by the creditor, Katabasis Inc. -- owned by Samuel Shoen, one of Leonard Shoen's children -- to pressure hotel owner Amerco Entrepreneurial Institute Inc. into quickly selling the property at a low price.

The Shoens aren't strangers to litigation.

In 1986, two of Leonard Shoen's sons, Joe and Mark Shoen, took control of U-Haul's parent company, Amerco Inc. of Reno, and forced their father into retirement. Leonard Shoen settled a lawsuit over his ouster for more than $100 million in 1996, forcing five Amerco Inc. directors to file for bankruptcy protection.

Carol Shoen is now disputing with three of Leonard Shoen's children -- who said they loaned $8 million to his company, Amerco Entrepreneurial, from April 1997 to January 1998 -- over whose claims have priority to the proceeds of the World Trade Center's sale.

The 300-room hotel, on Desert Inn Road near the Las Vegas Convention Center, was owned since 1996 by Leonard Shoen, who died in 1999 in a one-car accident that was ruled a suicide by the Clark County coroner's office. Probate papers say Leonard Shoen's real estate is estimated to be worth $700,000, while his personal property is estimated at $8.25 million.

A lawsuit filed in June by three companies controlled by Samuel Shoen, Michael Shoen and Cecilia Shoen Hanlon said Carol Shoen allegedly told Samuel Shoen that the claims of Shoen's estate should take priority over any claims by the Shoen children's companies.

The three children won an order in July that freezes the distribution of funds from the hotel's sale.

The World Trade Center attracted two bids at a Sept. 14 auction. The Las Vegas Convention and Visitors Authority's bid of $10 million was beaten out by a $10.1 million bid from an unidentified party. But Amerco Entrepreneurial rejected the bids on Sep. 18. The LVCVA is interested in the property for expansion of its nearby convention center.

Amerco Entrepreneurial said the property was appraised as a hotel-casino at $22 million and said efforts to get buyers are ongoing.

Mark Kemp, Carol Shoen's attorney, said: "Sam Shoen's plan was to force the auction and force the sale in order to get repaid. He tried to stop the hotel's business by turning away commitments or contracts in the first half of 2000."

"If the hotel was closed and not generating income anymore, Amerco Entrepreneurial would be pressured to take a lower price, which in this case, would have been the auction price of about $10 million," he said.

Carol Shoen disagreed with Samuel Shoen over the sale price of the property, Kemp said. "Samuel Shoen wanted $14 million for the hotel, which would pay the children $12 million and $1 million for probate expenses, but Carol Shoen would end up with only $1 million."

"If there is a high enough price that's acceptable, then Carol Shoen will sell the hotel. If there isn't a high enough price, then we need to agree with the Shoen children on how to divide proceeds in order for us to accept a lower price," Kemp said. "We would accept $14 million as long as we can agree on how to divide the proceeds. But since we can't, we need to get a higher sale price."

In court papers filed Dec. 1 in Clark County District Court, Shawn King, the administrator of Leonard Shoen's estate, said the hotel has to remain open in order to maintain its value "until an acceptable sales price is obtained."

But Katabasis said the World Trade Center should be closed, citing a cash flow analysis by RSM McGladrey Inc., a Las Vegas accounting firm. The firm had predicted Amerco Entrepreneurial, which it said has $1.3 million of cash on hand, would be out of cash by Dec. 10 if it continued to operate. But if AEI ceased its business immediately, its cash wouldn't be depleted until June 10, 2001, the accountants said.

But Carol Shoen said in court papers filed Nov. 29, "all of (McGladrey's) cash flow projections ... have proved to be substantially wrong."

In exhibits filed Nov. 29, Kemp, in a letter to Jeffrey Burr, Samuel Shoen's attorney, wrote: "Larry Bertsch (a panel trustee for the U.S. Bankruptcy Court) is of the opinion that if we shut down operations at the World Trade Center prior to the scheduled auction, any buyer can expect to incur $2 million to $3 million in additional expenses to restart operations after the auction."

A hearing on King's petition to keep the hotel open is scheduled for Jan. 8.