Regulators stumped on Ritz-Carlton licensing

Thursday, April 4, 2002 | 11:09 a.m.

CARSON CITY -- A corporation, owned by its 7,000 Indian shareholders mostly in Alaska, hit a snag Wednesday in seeking initial state permission to run a casino at a Ritz-Carlton hotel under construction at Lake Las Vegas in Henderson.

The state Gaming Control Board sent the application of Cook Inlet Region Inc. back to staff for more study on how a waiver can be granted without having to license every stockholder.

Cook Inlet, with a book value of $960 million in assets, has joined with Texas investors Sid and Lee Bass and Transcontinental Properties to develop the 350-room hotel at an estimated cost of $200 million.

Cook Inlet asked the Control Board to be licensed as a holding company and intends to run the casino through a limited liability company.

Control Board member Scott Scherer said he was worried that a small number of the shareholders might have unsavory backgrounds and would not qualify for a license. And he wanted to stop any profits from Nevada casinos going to members of the corporation who might be found unsuitable.

But Cook Inlet officials told the board existing laws provide every shareholder must get an equal division of the dividends or profits. Carl Marrs, president and chief executive officer of Cook Inlet, said there were some members of the corporation in jail but they do not control the direction of the company.

There are 627,800 shares of stock but nobody owns more than 500 shares because of federal restrictions. And the stock can't be sold to outsiders. "They don't control the corporation," Marrs said. "We've got a closed corporation created by Congress."

Marrs said all the shareholders had to be treated equally.

Control Board Chairman Dennis Neilander called Cook Inlet a "strange corporate animal." Congress in 1971 approved an Alaska Native Claim Settlement, which split the Indian members into 12 corporations. They received close to $1 billion plus land.

The Cook Inlet corporation received $72 million with about half of it to be distributed to the 7,000 people. The individuals were also given 100 shares in the corporation and the directors took $34 million and built it into a near $1 billion company with interests in telecommunications, tourism and real estate.

Shareholders cannot sell their stock but it can be passed on by death, divorce or by gift.

Cook Inlet owns half of the Hyatt Regency at Lake Las Vegas but is not involved in the casino operation. The Ritz-Carlton would be the first gaming operation for the closed corporation. The day-to-day operation would be handled by Las Vegas veteran casino executives Dan Reichartz and Dan Scott.

If Cook Inlet is found suitable to be a holding company, the officers of the corporation and those involved in the limited liability company would have to undergo background investigations and licensing.

The company wants to eliminate the requirement that all shareholders must be licensed. There were suggestions that if an individual acquired 1, 5 or 10 percent, then he or she could have to be investigated by the board.

Scherer suggested that those who have more than 200 shares submit their names for licensing. That would amount to more than 100 people. But board member Bobby Siller said he didn't see the need for that.

Siller said the way the corporation is structured and the existing restrictions, there is "not threat from any organized group," referring to undesirables. He said this was a unique company.

The issue never came to a vote.

Mark Kroloff, chief operating officer, said completion date of the Ritz-Carlton is early next year. The complex, about 17 miles from the Las Vegas Strip, would have golf courses and shops in the Lake Las Vegas MonteLago development.

archive