Jon Ralston on what has happened, and what could still happen, when Bill Walters and George Chanos butt heads

Sunday, Dec. 3, 2006 | 7:44 a.m.

Developer Bill Walters is fuming. Attorney General George Chanos is apoplectic. This much we know.

Chanos wants the feds to probe Walters' land deals with Las Vegas and to investigate conflict allegations Walters has made against the attorney general. Walters says he has been wronged and insists he is pondering legal action, including against the media.

But what we don't know amid this elevation of testosterone and adrenaline levels is what happens next. The ifs abound as this has metamorphosed from the Royal Links case to a battle royale.

If the FBI moves forward and accepts the case, which is far from a certainty, will indictments come against any of the major players? Or if the FBI doesn't take the case, will incoming Attorney General Catherine Cortez Masto move forward or drop it? And if Walters actually follows through with his hardly veiled threat to KLAS Channel 8's George Knapp to sue the Las Vegas Review-Journal, which would seem a quixotic enterprise at best, will we see local media lawyer Don Campbell (he's mine, too, if I get in the cross hairs) and national powerhouse Joseph Alioto go at it?

This could soon become a festival of some of the city's best lawyers as Dominic Gentile has now been retained by builder Brett Torino, who believes he has been defamed by Walters in the Royal Links developer's zeal to crush Chanos. Walters has said Torino, through a third party, was first with the idea to develop the golf course as a residential subdivision. But Torino insists he was never interested in such a deal, which Walters has said (without evidence) he believes Chanos was involved in, too.

Walters and Chanos may be ready to kill each other, and yet there are similarities here. Both appear to go from zero to ballistic with alacrity. And you know what they say about speaking or acting when you are angry.

Walters' tendency is to try to kill the messenger - whether it is Chanos, whom he hired private eye David Groover to investigate, or the media or city officials he believes have a grudge against him. Chanos' shorter record in the public eye indicates that he tends to jump (investigating the city and Walters) before he thinks (he decided he might have a conflict and steps back) and then he invites second-guessing - just as he did when he went to the FBI after Walters attacked him, raising the issue of whether anyone can force the attorney general out of a case by raising smoke sans fire.

The report prepared by the law firm Chanos hired - the firm Walters has criticized because it gave a $3,000 campaign donation to the attorney general - is relentlessly damning to the city's performance in its transactions with Walters, including the aborted move to accept $7 million to allow him to lift a deed restriction that would make the land worth tens of millions of dollars and potentially require even more to mitigate odor problems. No wrongdoing by Walters is alleged and the story here always has been not about a guy trying to get the best deal but about a local government putting a developer's interest above the public's interest.

Chanos clearly did not handle all of this by the book - leaping to take the high-profile case when he was running for office, declaring an immediate conflict, handing off the probe to a law firm that contributed to him (a pittance it must be noted), soliciting Walters for a contribution at one point before he took the probe, raising the specter of bid-rigging when he handed off the file to the FBI and setting the precedent of disqualifying himself (again) when there is the mere appearance of a conflict.

But this is not about Chanos or his controversial campaign contributors, another issue Walters has raised. The issue may not even be about Walters, who is lashing out almost indiscriminately because his done deal with the city has been undone.

If crimes were committed, I am confident Cortez Masto or the FBI, in the G-Sting era, will find them. But what will not go away if and when these angry men calm down is that devastating report, where the truths are self-evident about a captive government, a wily fox and a land deal that should never have been contemplated.