Mack is $3 million in debt

Diana Sahagun

Tuesday, Aug. 14, 2001 | 11:06 a.m.

Mack's loans totaled $3.04 million as of June 2000. A breakdown of that debt:

$1.09 million, owed to Danny Mason, owner of Big Screen Furniture Showcase

$653,831 and $313,069, owed to Nevada First Bank

$432,331, to his parents, Ron and Judy Mack

$300,000, to longtime city resident May Mushkin

$100,000, to Suzanne Kimmel

$73,017, to LDM Enterprises, LLC, owned by London Mack

$34,660, to Kelly Polatis

$27,000, to Anthony Surrite

$9,015, owed to his grandmother Helen Mack

Financial records show that Las Vegas Councilman Michael Mack is at least $3 million in debt, but he says the deficit run up by his pawn shops has no bearing on his public performance.

His private debt, he said Monday, should not be a factor in a lawsuit and in an ethics complaint that allege he voted against a car dealership in favor of a rival dealer who lent him money. Hearings are scheduled on both matters Thursday.

The debt is documented in financial records obtained by the Sun that are expected to be released publicly on Thursday, when Mack appears before a District Court judge to face allegations of abusing his office.

Mack previously had declined to release the amount of the loans, which are listed on his financial disclosure form filed with the city clerk only as exceeding $5,000.

Mack owns First Class Pawn and Jewelry at 4635 W. Flamingo Road, and earlier this year he sold Trader Bills Jewelry Outpost at the Fremont Street Experience.

As of June 2000, according to a First Class Pawn & Jewelry financial balance sheet, Mack owed nine lenders $3.04 million. He reported assets of $1.06 million.

Mack said Monday that his total debt has not decreased significantly from last year. However, the attorney who is suing Mack, Anthony Sgro, says he puts Mack's debts at closer to $4 million.

Mack is expected to release this week details of 12 loans he currently owes.

Of the 10 loans Mack reported last year as "current liabilities" of his pawn shop, the largest is a $1.09 million loan from Denny Mason, who owns Big Screen Furniture Showcase.

The other loans Mack reported for June 2000 are from: Nevada First Bank, $653,831 and $313,069; his parents, Ron and Judy Mack, $432,331; long-time city resident May Mushkin, $300,000; Suzanne Kimmel, $100,000; a Mack family corporation, LDM Enterprises, LLC., $73,017; Kelly Polatis, $34,660; Anthony Surrite, $27,000; his grandmother, Helen Mack, $9,015.

Sgro, who is suing Mack on behalf of East Coast car dealer John Staluppi Jr., plans to use Mack's debt as evidence that he used his position as a councilman to solicit investors in his private business dealings. Sgro also alleges that Mack voted to deny Staluppi's car dealership in June because he was indebted to a rival dealer.

Mack said he's not concerned about his debt casting doubt on his public duties.

"I don't know why he keeps hammering on my debts," Mack said of Sgro. "All my debt is business-related. Every business has debt."

Sgro agrees that business debt is common, but said Mack's problems run deeper.

"The problem is he's an elected official, and there is at least an appearance that he's used his office in an effort to sway persons to give him money so that he could get back on his feet," Sgro said.

One of his investors, car dealer Joseph Scala, is the source of the ethics controversy and lawsuit involving Mack.

Mack voted in June to deny a car dealership in the city's northwest that would have rivaled Scala's Courtesy dealership inside Town Center, a master-planned area. Mack later disclosed he had taken a $60,000 loan from Scala in September 2000 for his pawn shop. After the disclosure, he asked for the Staluppi car dealership to be reconsidered by the council so he could abstain. The dealership was denied a second time.

Records show that the relationship between Mack and Scala, who owns Courtesy Automotive Group, runs deeper than the councilman initially disclosed.

In September 2000, Scala bailed Mack out of at least three loan payments that were overdue to his bank, according to records from Nevada First Bank. On Sept. 8, 2000, Scala wrote a $21,000 check directly to Nevada First Bank to cover the three payments.

Mack said he arranged for Scala to make the payment directly to his bank because the loans were accrued by his pawn shops. Mack said Scala gave him a "bridge loan," a short-term loan until he received permanent financing.

"No one (besides Scala) that I have taken money from has come before the city," Mack said.

At the time Scala gave him the $21,000 installment, Mack said he was in deep financial trouble.

Mack also had two banks loans, one for $400,000 from May 1998, and another for $675,000 from June 1999, according to bank statements.

Although as of June 2000, the balances had dropped to $313,069, and $653,831, respectively, Mack has had a difficult time in the last two years making the monthly payments, records show. Most of Mack's payments were a month late, and since he took the loans out Mack had accrued nearly $9,500 in late fees, bank records show.

His monthly payments for both loans -- including regular payments and interest payments -- totaled well over $22,000 a month, bank records show.

Although Mack accepted Scala's loan almost a year before he voted to deny the Staluppi dealership, records show Mack had an ongoing relationship with Scala this year.

The Sept. 8 check to the bank for $21,000 was part of the $60,000 Mack disclosed he had taken from Scala. Mack said he would detail later this week how the remainder of the $60,000 loan was disbursed.

On Monday, Mack acknowledged for the first time that his financial relationship with Scala went beyond the $60,000 loan.

Mack said Scala may have donated trucks for use during his election campaign, which began this year and ended in April when Mack was elected overwhelmingly to his council seat. Mack did not report an in-kind contribution of trucks on his financial disclosure form. Election law requires that cash contributions and in-kind contributions must be reported on the form and filed with the city and state.

Mack said he would confer with his campaign manager and if Scala donated the trucks, he would submit an amended disclosure form.

Scala is one of 12 investors whom Mack has listed on his financial disclosure form filed with the Las Vegas city clerk in February.

Mack said he plans to reveal the total amounts this week, after getting permission from the lenders.

Seven of those lenders he reported last year were listed on Mack's financial disclosure form filed with the city this February, while two loans were either paid off or not included. Five new lenders were added.

The 2001 financial disclosure form lists loans from Mason, Helen Mack, Mushkin, Kimmel, Surrite, LDM Enterprises and Nevada First Bank. In addition, Mack reported a $60,000 loan from Peoples Real Estate Investment, LLC. -- owned by Scala - and undetermined amounts from the Mack Family Trust, EZ Corp. -- which operates EZ Pawn stores -- and First Security Leasing, owned by Wells Fargo and Levebure Security, an Iowa banking company.

According to a First Class Pawn & Jewelry statement for the first six months of last year, the business lost $508,000, with expenses of $778,000 and a net income of $270,000.

Mack's finances have become the focus of an ethics probe of the councilman. Mack, who also will face the Las Vegas Ethics Commission Thursday, found himself the target of litigation after he revealed in June that he had taken the $60,000 loan from Scala.

Mack led the vote to deny the car dealership proposed by Staluppi on Rancho Drive in the northwest, saying the application went against the intent of Town Center, which groups all new car dealerships into one area. Some of that land proposed for the auto mall at Centennial Parkway and U.S. 95 is owned by Scala and several others.

According to the lawsuit and two ethics complaints, Staluppi argues that Mack changed his vote -- after initially saying he approved of the dealership -- because of the money he had taken from Scala. The lawsuit also accuses Mack and Scala of conspiring to prevent any new car dealerships from being located outside of Scala's property.

And with more than 10 lenders, Sgro said all of Mack's votes should be questioned.

Mack said he is in debt because he neglected his business during his council run, not because business was slow. Mack said he would never use his position as a councilman to solicit money from private investors.

In addition to his debt at his First Class Pawn, in June 2000 Mack was facing financial hardship at his Trader Bill's Jewelry Outpost, which was located at the Fremont Street Experience.

Before that pawn shop was sold this year, Mack reported making $110,166 in gross profits in the first six months of 2000, according to financial statements. But because of expenses including advertising, salaries, payroll, and rent, Mack reported expenses of $205,850, putting him in the red by more than $95,000.

"This is a guy who was in desperate financial means," Sgro said. "It may provide the reason as to why he could be influenced monetarily."

Sun Librarian Rebecca Bagayas contributed to this report.

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