Las Vegas Sun

March 29, 2024

Board scolds Timbers chain owner

CARSON CITY -- A group that sought a license to run the gambling at the Lady Luck casino in downtown Las Vegas was turned away by the state Gaming Control Board Wednesday because one of the key shareholders filed improper income tax returns.

When it became obvious the board would deny the application of the Henry Brent Company to run the casino, Preston Howard, attorney for the group, asked the application be referred back to the staff for further investigation.

Howard said Andrew Brent Donner, who would have held 47.5 percent of the group, would withdraw from the group and then apply in about a year after he has proven he will comply with tax laws.

Donner, who has gaming licenses at seven Timbers taverns in Clark County, was questioned by board members about his prior federal personal tax returns when he listed as business expenses family vacations, a personal trainer, a swimming pool cleaner, a housekeeper, tuition and uniforms for a private school for his children and a building permit for his home.

Donner told the board that he had only one bank account and one credit card for both his business and personal expenses. And he provided all the information and expenses to an accountant, William Shine of California, who decided these were business deductions.

He said he was at fault for not checking the tax returns, has filed amended returns and that this would not happen in the future. And he has separate bank accounts and credit cards for personal and business expenses.

Board member Bobby Siller asked Donner why he thought these were business expenses. Donner replied he sent in his records and "I did not go to the expense side and ask what was deducted. This will not happen again."

All three board members -- Chairman Dennis Neilander, Scott Scherer and Siller -- said they could not vote for approval of the license. Howard, after conferring with the group, then decided to refer the application back for further investigation. Howard said Donner would drop out of the group and Robert H. O'Neil and Keith E. Grossman would go forward with their bid to run the casino.

A company called AMX has purchased the casino and the 792-room hotel. It intends to convert 300 of the rooms to a time-share operation and run the hotel, the restaurants and the bars. It plans to lease the casino to the Henry Brent Company. The present casino operator, Isle of Capri, is due to leave June 30.

Howard said an attempt will be made to extend the Isle of Capri contract for an additional 90 days while the amended application is considered.

Board members also expressed concern that the projections of the gaming revenue by the Henry Brent Company were too high.

Grossman said the casino revenue is expected at $26.4 million this year and that should increase as the new gaming operators bring in entertainment and promote the business more, including a stepped-up effort to track the players.

He said the showroom in the casino has not been operating. The new group intends to change that. But he expects only 10 percent of his business to come from local residents.

Grossman said United Coin Machine Co., a unit of Las Vegas-based Alliance Gaming Corp., would run the slot machines at the casino and receive 7.5 percent of the win. United Coin is loaning the proposed casino operators $1.7 million and will install 100 new slot machines over the next six months.

United Coin, Grossman said, will also provide $200,000 a year to improve the casino floor during the year contract.

Neilander said he did not see a lot of equity being put up by the proposed operators. But Donner said there is a $1 million bank loan available, he has committed $250,000 and he has a commitment from his father in law to put up $1.5 million.

After four-hours of testimony and questions, Neilander said he felt "extremely uncomfortable going forward" with the application. He said Donner has operated the seven taverns with slot machines in Las Vegas without problems.

But Neilander added, "The tax issue is a tough one to get over. " He said Donner has slot machines now and the tax is computed on each machine. But an unrestricted license requires more computations and the tax is applied on the gross win.

"I can't support it today," Neilander said.

Scherer said he did not think Donner had met the burden of being found suitable for a non-restricted license.

After the discrepancies were discovered in the personal tax returns by state gaming agents, Donner hired the accounting firm of McGladrey & Pullen to go through his records from 1999 to 2001.

Gary Lambrix of the CPA firm said it did a thorough review of the tax revenue of Donner and straightened out the problem.

But Scherer called Lambrix's report to the board "a whitewash." He said the report by the CPA firm to the board did not assess any culpability to Donner. He said the firm did not hold Donner accountable for these mistakes of listing personal expenses as business deductions "I was offended by the letter," he said.

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