Valuable casino license caught in knot of suits

Maura Kelly Lannan

Thursday, July 28, 2005 | 9:49 a.m.

CHICAGO -- Here's how complicated things have gotten in the legal battles over bankrupt Emerald Casino:

One day last week, attorneys argued in front of one judge whether their case should be heard by a second judge or a third judge, while a block away a fourth judge presided over yet another hearing.

And those were just two of the eight different legal avenues Emerald is pursuing in a struggle worth billions of dollars.

The dispute has spawned so many lawsuits, hearings, investigations and mountains of paperwork that even the participants seem a bit stunned.

"I think we all ought to be turned in to the Sierra Club and put in the penalty box for killing too many trees," joked Emerald attorney Robert Clifford. "The potential exists for this to be an endless stream and parade of litigation that, in my mind, should be halted."

But there's no end in sight. Clifford plans to keep fighting for the company's shareholders, and the state vows to fight back.

"Overall, we wish that it would get settled one way or another so that we can move on," said Tom Swoik, executive director of the Illinois Casino Gaming Association. "Every time there's an article about this ... that talks about mob ties or owners lying to the Gaming Board, it just makes the whole industry look bad and we'd just like to move on and get our reputation back."

Illinois law allows only 10 casino licenses. The one held by Emerald is the only one not being used. The casino went bankrupt in its original location, East Dubuque, and efforts to move to the Chicago suburb of Rosemont have been blocked by regulators who allege the casino owners lied to the Illinois Gaming Board and some shareholders are linked to organized crime.

The state wants the license back so some other casino company can start operating. The investors who control the license want to sell it and get as much of their money back as possible, said Clifford, who is to be paid _$1 million in fees and could earn an additional _$75 million if he wins the case.

Potentially, billions of dollars of income for the state and millions of dollars of profit for investors is at stake. The chairman of the Gaming Board estimated the state has lost about _$500 million in revenue since the license has been inactive.

The battle includes a hearing on the state's attempt to revoke the Emerald license, a lawsuit challenging the constitutionality of Gaming Board rules, a lawsuit to stop the revocation hearing, two appeals over the board's decision to retroactively renew Emerald's license, and a challenge to the state law letting Emerald move from East Dubuque to Rosemont.

In federal court, Emerald's bankruptcy case and a lawsuit accusing the Gaming Board of violating Emerald's civil rights are pending.

Nobody, not even participants in the legal battles, will hazard a guess on when the situation will be resolved. Knowing they are missing out on tax money, state lawmakers have occasionally discussed creating a new casino license to replace Emerald's, but the idea has never caught fire.

Barry Gross, the state's chief deputy attorney general, said the flurry of lawsuits and their similar allegations suggest Emerald and Rosemont are trying to find a judge to rule in their favor.

"Clearly, if any party feels they're being wronged they have the legal right to complain in court, but they shouldn't have the right to bring multiple actions covering the same kind of conduct and charges," Gross said.

"We can either wave the white flag and compromise the integrity of gaming or we can defend the suits," Gross said. "We will defend them all."

Gross rejects Clifford's suggestion that the battle is a waste of tax dollars and says the state has not hired additional lawyers to fight the lawsuits.