Former Station Casinos outside counsel pleads guilty to fraud

Wednesday, June 14, 2000 | 10:36 a.m.

SUN STAFF AND WIRE REPORTS

ST. LOUIS -- Attorney Michael Lazaroff often thanked his clients with extravagant gifts, including tickets to Backstreet Boys concerts and trips to Las Vegas.

What his clients didn't know was that they were paying for every "gift" they received.

The high-powered attorney at the firm of Thompson Coburn admitted Tuesday to using falsified bills to charge clients for $380,651 worth of entertainment and gifts they believed were free.

Lazaroff told a federal judge that between January 1992 and December 1999, he inflated clients' bills for long-distance telephone charges, fax charges, witness preparation, courier charges or legal services.

U.S. District Judge Charles A. Shaw accepted Lazaroff's guilty plea to two counts of mail fraud and said he will sentence Lazaroff on Sept. 1. Under federal guidelines, Lazaroff could get a prison sentence of 27 to 33 months.

Lazaroff, 50, has left Thompson Coburn and will surrender the law license he has held for 25 years.

As a result of his cooperation, prosecutors could recommend a lower sentence -- possibly probation.

Lazaroff also pleaded guilty to one count of causing false reports to the Federal Election Commission.

Lazaroff admitted he reimbursed fellow Thompson Coburn employees who wrote two $1,000 checks to Bill Bradley and six $1,000 checks to Vice President Al Gore. That caused the two campaigns to file false reports to the FEC because the money's true source -- Lazaroff -- wasn't disclosed.

Additionally, Lazaroff admitted he hid $500,000 in bonuses he received from 1994 to 1996 from Station Casinos Inc. of Las Vegas, developer of casinos in the Las Vegas, Kansas City and St. Louis areas. The money should have gone to Thompson Coburn, where as a partner, Lazaroff's share would have been less than $10,000.

Court records show that Lazaroff will pay Thompson Coburn restitution of $678,417 for its share of the bonus money from Station Casinos and for the fraudulent billings.

Through a spokesman, Lazaroff said he accepts responsibility for his crimes and regrets the pain he caused family, friends and business colleagues.

"As I read the formal summary of my recent past, though I could debate and defend several aspects thereof, I realized that I have strayed more than a little from the values I had hoped would define my personal life and professional career," Lazaroff said.

The FBI began looking last year into allegations that Lazaroff took money from clients without informing his partners at Thompson Coburn, one of the St. Louis area's largest law firms.

The firm's chairman, John Musgrave, has said an independent audit found that Lazaroff improperly billed about 50 clients. It found that Lazaroff alone caused the billing irregularities and that no other lawyer was involved.

The Post-Dispatch newspaper, citing a court record, reported Lazaroff has agreed to cooperate with the Missouri Gaming Commission and federal prosecutors in Kansas City "concerning the commission of any crimes" involving gaming in Missouri.

Investigations involving Lazaroff began last year when the Gaming Commission made a routine inquiry into Station's plan to buy the Flamingo Hilton riverboat casino in Kansas City.

Assistant U.S. Attorney Steven Holtshouser said federal prosecutors and the Gaming Commission continue to examine Lazaroff's financial dealings with his full cooperation, the Kansas City Star reported.

Questions about the Station bonus payments to Lazaroff contributed to the demise of the Station deal to buy the Flamingo riverboat. It was eventually sold to Isle of Capri Casinos Inc.

The Missouri Gaming Commission has made no public allegations or statements concerning the bonus money paid by Station to Lazaroff.

A Gaming Commission spokesman today declined comment, and a Station spokesman told the Las Vegas Sun today that Station has not been informed that it's a subject of any Missouri Gaming Commission probe tied to Lazaroff.