Illinois governor accuses board of not cooperating with casino probe

Maura Kelly

Monday, April 12, 2004 | 8:46 a.m.

CHICAGO -- Gov. Rod Blagojevich's office sent a letter Friday to the chairman of the Illinois Gaming Board that accuses the board of not cooperating with an investigation the governor commissioned into the board's decision to allow the state's 10th casino to be built in Rosemont.

Blagojevich's letter said the board has refused to answer questions or provide information that Eric Holder, a former deputy U.S. attorney general, needs to conduct his investigation.

When Blagojevich appointed Holder last month, the governor said the review was needed because to "simply trust the Gaming Board, I think, is asking the taxpayers and all of us, too much."

Gaming Board chairman Elzie Higginbottom said the board is cooperating with the investigation.

The letter is latest in a series of moves by the governor and Attorney General Lisa Madigan to hammer away at the board's controversial decision to select Mississippi-based Isle of Capri Casinos Inc. to receive the casino license now held by the bankrupt Emerald Casino Inc.

The governor's letter was sent a day after Gaming Board members spent nearly three hours publicly explaining their decision -- at Madigan's behest -- to go against the recommendation of their own staff in choosing Isle of Capri. Madigan has suggested that Rosemont was a bad location for a casino because the town and its mayor might have ties to organized crime. Mayor Don Stephens denies that charge.

Board members said they knew about alleged mob ties in Rosemont but contend Isle of Capri can be shielded from organized crime if the board has enough staff to properly regulate the casino.

Gaming Board member William Dugan also questioned Madigan's motives for stalling the deal, suggesting that Madigan has higher political aspirations and doesn't want the 10th casino to open under Blagojevich's tenure. Madigan rejected the claim.

In his letter, Blagojevich said the Gaming Board wanted answers to a list of questions before agreeing to hire Holder. Initially, Blagojevich's office said it planned to hire Holder through the state Department of Revenue -- which the Gaming Board is technically under -- but Madigan said the Gaming Board staff was refusing to cooperate with Holder for reasons of privilege. For example, privilege would include letting only authorized Gaming Board employees see certain documents.

Madigan suggested Holder be hired directly by the Gaming Board to resolve the privilege issue, but the board delayed voting on the matter Thursday. Most of the board's votes were delayed so members could answer Madigan's questions about the casino decision.

"Rather than play games with an issue of this significance and magnitude, we have decided to hire Mr. Holder through the Department of Revenue instead," according to the letter, signed by Susan Lichtenstein, general council to the governor.

Higginbottom said the board wants to know who Holder would work for, who would instruct him, what his assignment and job description would be, and how many staff he would hire.

"Isn't it the reasonable thing to do?" Higginbottom said. "We didn't have that information yesterday and we didn't have time to get it so we tabled the hiring of Holder until we got the information."

In a letter sent to Lichtenstein Friday, the Gaming Board reiterated it was simply looking for clarification, not trying to be uncooperative. The letter was signed by Higginbottom.

Higginbottom said some material was not given to Holder because it was privileged information stemming from a hearing the board started when it tried to revoke Emerald's license.

Since 2001, the Gaming Board has been trying to strip the license from Emerald because the board said top company officials lied to regulators and some investors allegedly had ties to organized crime.

To end the legal battle and recoup its investors' money, Emerald agreed to sell the license. Isle of Capri bid $518 million at an auction that ended March 11 for the license.

The board chose Isle of Capri over Harrah's Entertainment Inc., which bid $520 million to build in Waukegan, and Midwest Gaming and Entertainment LLC, which bid $476 million to build in Des Plaines.

"We want to cooperate with anybody that can move this program forward. The real losers here are the taxpayers of the state of Illinois," Higginbottom said. "The Gaming Board is trying to do the responsible thing for the taxpayers of Illinois."