Station Casinos employees subpoenaed in state probe

Rick Alm

Tuesday, July 25, 2000 | 10:43 a.m.

KANSAS CITY, Mo. -- The Missouri Gaming Commission on Monday subpoenaed eight Station Casinos Inc. employees to testify at an Aug. 30 hearing about bonuses the company paid more than four years ago to a St. Louis lawyer.

Two of those subpoenaed -- Troy A. Stremming, Midwest counsel, and William W. Warner, vice president for finance at the company's Las Vegas headquarters -- were among five Station executives identified last week as members of an investor group seeking to buy and split off Station Casino Kansas City and Station Casino St. Charles in the St. Louis area from the parent firm.

Station intends to use funds from the sales of the Missouri properties to buy the Fiesta and Santa Fe hotel-casinos in the northwest Las Vegas-North Las Vegas market.

The Aug. 30 commission hearing in Kansas City comes after Michael Lazaroff, Station's former St. Louis outside counsel, pleaded guilty in federal court last month to multiple felonies, including misappropriation of more than $800,000 in law firm funds. That money included the bonus from Station that was paid in installments over a two-year span that ended in June 1996.

Since the Lazaroff matter surfaced in December, questions have been raised about whether any of that money was used to improperly influence public officials in the licensing of Station's two Missouri casinos in May 1994 and January 1997.

The company has denied any wrongdoing in the Lazaroff matter.

Others summoned to Kansas City next month are Frank J. Fertitta III, Station chairman and chief executive; Glenn C. Christenson, executive vice president and chief financial officer; Scott M. Nielson, general counsel; Marnie Hinrichs, Nielson's executive secretary; Richard J. Haskins, associate general counsel and former Midwest counsel; and John Pasqualotto, vice president of regulatory compliance.

Gaming Commission officials said others are likely to testify. They could include Lazaroff, who is cooperating with authorities while awaiting sentencing, and Joseph J. Canfora, who headed Station's Kansas City operation until early 1997.

Canfora recently resigned as president of privately held Horseshoe Gaming LLC, whose principal owner, Jack Binion, faces licensing problems in Illinois.

A federal grand jury in Kansas City also has issued subpoenas to Fertitta and Christenson in connection with the Lazaroff payments. The federal prosecutors office in Kansas City had no comment about the nature of its investigation.

The proposed $475 million sale of the Missouri casinos to Station insiders is contingent on approval by the Gaming Commission and others. No such hearings have been set.

Jack Taylor, a Station spokesman in Las Vegas, said he could not discuss the development in the Lazaroff case.

"As a matter of policy, we don't comment to the media on pending legal or regulatory issues, especially when they're matters that we understood to be confidential," Taylor said.

The Missouri Gaming Commission has made no public statement about the case other than to schedule the special hearing for Aug. 30 in Kansas City. That date was chosen because it falls two days after a state law takes effect that makes it a felony to lie to the commission, the Associated Press reported.

This is only the second time commissioners have called such a hearing. The last such proceeding came in October 1996 and exposed questionable payments by Hilton Hotels Corp. to associates of a former public official in Kansas City. That controversy eventually forced Hilton to sell its Flamingo casino in Kansas City.

More subpoenas may be issued, said Kevin Mullally, the commission's deputy director. Lazaroff is cooperating with the inquiry and will testify without being subpoenaed, said Mullally, who was quoted by the Associated Press.

The hearing falls two days before Lazaroff is scheduled to be sentenced by U.S. District Judge Charles A. Shaw. Besides hiding the bonuses from his law firm, Lazaroff admitted inflating clients' bills and skirting a law that limits campaign contributions to candidates.

Specifically, he pleaded guilty to two counts of mail fraud and one count of causing false reports to be filed with the Federal Election Commission. Under federal guidelines, he could get a prison sentence of 27 to 33 months.

A court record said Lazaroff had agreed to cooperate with the Gaming Commission and federal prosecutors in Kansas City. As a result of his cooperation, Lazaroff could receive a lighter sentence -- perhaps even probation.