Station faces regulatory scrutiny in Missouri

Steve Green and David Strow

Thursday, June 29, 2000 | 10:59 a.m.

Station Casinos Inc. of Las Vegas announced Wednesday that the Missouri Gaming Commission will hold a "public fact finding hearing" Aug. 30 in Kansas City on $500,000 in bonuses Station paid to a former outside attorney, Michael Lazaroff.

Lazaroff had been with the high-profile St. Louis law firm Thompson Coburn. He pleaded guilty June 13 to falsifying bills to clients in order to charge them for $380,000 worth of entertainment and gifts they thought they were receiving for free. He also admitted hiding from his law firm the bonus payments he received from Station.

Lazaroff pleaded guilty to two counts of mail fraud and will be sentenced in U.S. District Court in St. Louis on Sept. 1. He also pleaded guilty to causing false reports to be filed with the Federal Election Commission. Lazaroff reimbursed two employees who donated funds to Bill Bradley and Al Gore, causing them to file false reports with the FEC because the true source of the funds was not disclosed.

He faces a prison sentence of 27 to 33 months under federal guidelines.

The Post-Dispatch newspaper in St. Louis reported earlier this month that as part of the federal plea agreement, Lazaroff agreed to cooperate with the Missouri Gaming Commission and federal prosecutors in Kansas City "concerning the commission of any crimes" involving gaming in Missouri.

Station, which operates casinos in Las Vegas, Kansas City and the St. Louis area, disclosed Wednesday: "At the August hearing, the Gaming Commission is expected to take testimony relating to certain bonus payments the company made between 1994 and 1996 to Michael Lazaroff, an outside attorney who worked on certain legal matters for the company in Missouri."

Station said it has received requests for information from the U.S. attorney's office in Missouri and the Missouri Gaming Commission about Lazaroff and is cooperating fully.

Station also indicated that it was a victim of Lazaroff's over-billing scheme. It said Lazaroff pleaded guilty to "defrauding clients of the law firm, which included the company, by charging them for false expenses."

"Based on the company's own internal review, the company is unaware of any improprieties on its part," Station said Wednesday. "However, due to the uncertainty inherent in any investigation, the company cannot predict the ultimate outcome of these investigations."

Merrill Lynch gaming analyst David Anders said he hasn't heard anything to indicate Station did anything wrong in the Lazaroff case.

"We were obviously encouraged when this story broke initially ... that insiders were purchasing stock. When (company officials) are that aggressive, they believe they've done nothing wrong," he said.

Station stock was down $1 to $26.75 this morning, but it was unclear if investors were reacting to the Lazaroff announcement or to other factors.