Mack files Chapter 11

Diana Sahagun

Monday, Dec. 10, 2001 | 9:31 a.m.

Las Vegas Councilman Michael Mack has four more years to smooth out his political reputation that has been questioned over his denial of a car dealership application last summer, but Mack says his increasing personal debt has not affected his council duties.

In an attempt to ward off creditors seeing payment for overdue loans, Mack filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court late Friday. The move allows him to keep open his First Class Pawn & Jewelry shop on Flamingo Road while reorganizing his finances.

His debts will likely be outstanding by 2005, when Mack is up for re-election, and could be fodder for a political candidate looking to unseat the councilman. But Mack said he's not concerned about his next campaign, and that his financial hurdles could make him a stronger candidate.

"Not only have I been a successful and wealthy entrepreneur, but now I will be a candidate that has turned his business around. It's much like the city's (budget)," he said. "(The city) is in a budget reduction and we have to cut back, so I think overall it might help me."

Local residents and corporations file for bankruptcy every day, but Mack's $3.3 million debt became a talked-about issue this year after one of his creditors landed him in the middle of an ethics quandary.

In the last month two of Mack's lenders, Anthony Surrite and EZ Corp., took Mack to court seeking payment for overdue loans. Mack was ordered two pay both companies.

In June, Mack led the vote to deny a car dealership on Rancho Drive proposed by John Staluppi Jr. Days after the vote, Mack disclosed that he had an outstanding $60,000 loan from rival car dealer Joseph Scala, who owns Courtesy Automotive Group. Mack asked for the dealership application to be reconsidered so he could abstain, but the item was denied a second time.

Mack, who raised almost $1 million in his run for the Ward 6 seat in May, disclosed his debt after Staluppi filed a lawsuit and two ethics complaints alleging he had a conflict of interest when he voted on the dealership application.

Mack faces a Feb. 14 hearing before the Las Vegas Ethics Review Board on allegations that he denied the dealership because of leverage by Scala.

Mack filed for Chapter 11 individually, and also as the sole member of Nevada Asset Lenders, the limited liability company that owns and operates First Class Pawn & Jewelry. Attorney Gerald Gordon will ask a federal judge to combine both cases, according to court documents.

Mack's list of creditors include a $1.3 million loan from local businessman Denny Mason, $500,000 owed to Texas-based EZ Corp., and $300,000 due to local resident May Mushkin.

Ultimately, Gordon will appoint a trustee to oversee the payments to Mack's creditors, according to court documents. The first creditor's meeting will be held next month. Mack said he expects to have a plan together in the next 90-120 days.

Mack said although he has had "financial reversals" for as long as he has held office -- in addition to his recent ethics allegations -- they have not affected his abilities as a councilman.

"As far as my day-to-day business as a councilman, I'm going to move forward in making decisions that are proper for my ward," he said.

Mack could have filed for Chapter 7 bankruptcy, which would have resulted in the liquidation of all his assets, including his pawn shop, and he would have been relieved of all of his debt. Mack said that was a consideration, but he decided against those proceedings.

"For the company and for myself, I feel obligated to repay these people, and I will, as much as I possibly can," he said.

Sun reporter Grace Leong contributed to this story.