Mack ordered to pay $600,000 debt

Diana Sahagun

Wednesday, Nov. 14, 2001 | 9:34 a.m.

A federal judge has ruled that Las Vegas Councilman Michael Mack must pay a national pawnshop chain for $600,000 in gold jewelry Mack purchased in 1999.

Mack on Tuesday said he purchased $1 million in gold jewelry from Texas-based EZ Corp. Inc. in the belief that a third party would melt the gold, enabling Mack to turn a profit on the investment.

But, Mack says, the refinery that was supposed to melt the jewelry never performed the work, nor did it return the jewelry. As a consequence, Mack said, he could not pay EZ Corp.

Mack, who owns the local First Class Pawn & Jewelry Superstore, said he had done business with the company that allegedly made off with the gold.

Neither Mack nor his attorney, Michael Mushkin, however, presented such arguments during the course of the lawsuit and they did not respond to summary judgments filed against Mack in July and September.

"NewsONE at 9," which airs at 9 and 10 p.m. weekdays on Las Vegas ONE, Cox cable channels 1 and 39, reported Tuesday the decision by U.S. District Judge Roger Hunt. The judge ruled Nov. 5 that Mack broke a contract with EZ Corp. Inc., which operates EZ Pawn stores. The contract required Mack to pay the company for the jewelry.

Mack, who is $3.3 million in debt, admits that he cannot make a lump payment to EZ Corp., and said law enforcement agencies are investigating the company to which he gave the gold.

According to the lawsuit, in March 1999 Mack purchased $900,203 worth of gold jewelry from EZ Corp. Mack agreed to make the first $200,000 payment by April 30, 1999, then pay $63,663 a month until March 31, 2000. According to the lawsuit, Mack had agreed that he would be charged 18 percent interest if the payments were late.

EZ Corp., a publicly held company, sued Mack in March after he defaulted. As of July, Mack still owned the company $616,893, which included $249 a day in interest charges, according to the lawsuit.

The company alleged Mack "knowingly misrepresented his ability ... to timely meet the financial demands that he agreed to in the contract."

The suit also alleges that Mack violated the contract by transferring the gold to a third party, which, Mack said, later filed for bankruptcy.

Mack reported on his 2001 financial disclosure form that EZ Corp. was one of 12 companies to which he owed more than $5,000.

In June Mack was sued by John Staluppi, who alleged his proposal for a Nissan car dealership was denied because of leverage held by one of Mack's 12 lenders, rival car dealer Joseph Scala. Staluppi has also filed two ethics complaints against the councilman; the complaints, alleging a conflict of interest, are scheduled to be heard by the Las Vegas Ethics Review Board Dec. 6.

In December 2000 Mack reported that he was $3.3 million in debt. He reported owing EZ Corp. $467,424.

In addition to owing money to his parents and several banks, Mack also owes $300,000 to May Mushkin, a well-known Las Vegas socialite; her son is representing Mack in the EZ Corp. lawsuit. Mushkin is also representing Mack in a lawsuit filed by another of Mack's lenders, Anthony Surrite, who alleges that Mack defaulted on $33,400 of a $100,000 loan.