Mack hit with more ethics allegations

Thursday, Aug. 23, 2001 | 11:21 a.m.

A supplement to an ethics complaint filed against Las Vegas Councilman Michael Mack alleges that he sought loans from a prominent casino chairman and an influential golf course developer to help save his failing pawn shop business.

The amended report, filed Wednesday with the Las Vegas city clerk by local attorney Anthony Sgro, also alleges that Mack unsuccessfully attempted to borrow $1.5 million from car dealer Joseph Scala, a central figure in the complaint against the councilman. Scala ultimately loaned Mack $60,000.

The report provided fresh details about the accusation that Mack failed to fully disclose his financial relationship with Scala before casting votes in the past year that favored Scala at the expense of rival car dealer John Staluppi Jr.

Sgro represents Staluppi and two of Staluppi's associates -- Michael Bellon and Frank Maione, who filed the pending complaint against Mack with the Las Vegas Ethics Review Board.

Mack's attorney, Richard Wright, said he knew of the amended complaint but would not be able to review it until Friday at the earliest; Wright is in court today to defend another high-profile client, Mitchell Dettloff, who was involved in a wreck that killed three people.

"I can't comment in the dark, especially without speaking with my client first," Wright said of the Mack case.

A two-member panel of the ethics review board is scheduled Wednesday to consider the complaint against Mack. The decision could be delayed because of similar, and pending, complaints filed with the Nevada Ethics Commission. Sgro has since withdrawn complaints filed with the state to clear the way for the city ethics board. But the state board has not yet ruled on Sgro's request to withdraw the complaint.

Others named in the complaint, including Mack, were not immediately available for comment. But Coast Resorts Chairman Michael Gaughan flatly denied the allegation that he was approached by a Mack representative to lend money to the councilman.

In the amended ethics complaint Sgro alleged that Mack hired local businessman Todd Nigro last summer to "locate investors who would inject money into Mack's failing pawn shop business," the First Class Pawn & Jewelry store at 4635 W. Flamingo Road. It has been reported that Mack owed about $3.3 million as of December, much of which was borrowed to keep his struggling business afloat.

Gaughan, who frequently contributes money to local political campaigns, said he made a donation to Mack's successful bid earlier this year to win a four-year term representing Ward 6 on the City Council. But Gaughan -- whose company operates the Suncoast, Gold Coast, Barbary Coast and the Orleans hotel-casinos -- said he has had no other connection to the councilman since Mack was appointed to the City Council in 1999.

"I don't kowtow to Nigro, and I wouldn't do business with him," Gaughan said. "I also would never do business with a politician. I hope they bring me in to testify about this."

Local golf course developer Bill Walters said he was approached last year by Nigro to help Mack, as stated by Sgro in the amended complaint. But Walters said he immediately rejected the offer because he considered it a bad business deal.

"I vaguely remember that they were trying to put a deal together and were looking for equity investors," he said.

Walters recalled that investors were to get part-ownership in the pawn shop in exchange for helping Mack reduce his massive debt.

"From a business standpoint, it did not look like an attractive business offer," Walters said.

Walters said, however, that he has known Nigro and his father, Edward, for several years.

"I talked to the Nigros in the past about several deals, but I never did any of (the deals)," said Walters, who described most of those propositions as commercial or residential developments. "I get probably 500 business deals a year run by me."

Sgro is still investigating whether Mack participated or voted on any issue brought before the council involving Walters or Gaughan.

The complaint charged that Todd Nigro ultimately contacted Scala last summer and that Scala agreed to help Mack with his mounting debt. Scala's two conditions were that he deal with the councilman directly and that no other investors would be involved, according to the complaint. The complaint alleges Mack asked Scala for $1.5 million.

"Scala ultimately declined to buy into the pawn shop business, but did agree to give Mack money so that he could catch up on late loan payments with his bank, Nevada First Bank, which had extended approximately $1 million to finance the building and the fixtures for the pawn shops," Sgro alleges.

Scala eventually lent Mack $60,000. Scala also made $10,000 in campaign contributions to Mack through his Courtesy car dealerships and lent the councilman use of at least one Courtesy vehicle for the councilman's election bid this year.

Mack is accused of a conflict of interest because he failed to initially disclose his relationship with Scala when he led a vote in June to deny a Nissan dealership proposed by Staluppi on Rancho Road. Mack did not disclose his relationship with Scala until after the vote, then asked for the item to be reconsidered by the council so he could abstain.

Mack said he voted against the project because it violated the intent of Town Center, which groups all commercial uses into one area near Centennial Parkway and U.S. 95.

The Nissan dealership would have rivaled Scala's Courtesy Automotive, which is inside Town Center. Scala also owns several parcels of vacant land inside Town Center that have been proposed as a future auto mall, where all new car dealerships would be required by ordinance to locate.

The ethics complaint and a pending lawsuit seeking Mack's removal from office allege that the councilman voted against the Staluppi dealership because of his ties to Scala.

Sgro charged that Mack initially voiced support for Staluppi's proposal, which led to the car dealer spending tens of thousands of dollars on architectural and engineering fees and on expenses to hold escrow on the property open for an additional 90 days.

A central part of the ethics complaint against Mack is that he did not fully disclose his financial relationship with Scala in the votes that led up to Staluppi's rejection. Mack has said he did not originally disclose his relationship with Scala because he thought the $60,000 loan had been paid.

According to the amended complaint, city log-in sheets revealed that Mack met with Scala on at least two occasions shortly before the June vote against Staluppi. The report also accused Mack of discrepancies involving Scala in the councilman's financial disclosure statements filed earlier this year.

The financial disclosure form lists Peoples Real Estate Investments, LLC. as a creditor. The limited liability company is owned by Scala.

"However, documents received from Nevada First Bank reveal that Joseph Scala personally made loan payments on behalf of Councilman Mack's businesses," Sgro wrote.

Sgro also alleges that Mack violated city code by failing to list one of his creditors, Kelly Polatis, on his financial disclosure form filed Feb. 2, 2000. According to the complaint, Polatis would be available to testify that he had loaned Mack $40,000 in June 1999.

Sgro also wrote that Mack secured loans from individuals with interest rates higher than those of most financial and banking institutions. Examples included a $1 million loan at 30 percent interest and three loans totalling $300,000 that carried 18 percent interest.

"Investigation into the totality of facts and circumstances surrounding the outcome of the Rancho Nissan project have revealed that Councilman Mack was in a desperate financial situation," Sgro concluded. "His actions were motivated by his last-ditch attempt to reorganize his businesses, consolidate his debt, and get his head above water financially."

Jeffrey Libby also contributed to this report.

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