Laughlin casino developers file for bankruptcy

By Steve Green

Tuesday, June 8, 2010 | 12:23 p.m.

Two companies that planned to develop casinos in Laughlin filed for Chapter 7 bankruptcy liquidation Monday in Las Vegas, just as trial was set to begin in a lawsuit alleging the projects were tainted by fraud.

The bankruptcy filings were made by Mojave Valley Resort Inc. and Mojave Valley Resort Casino Co.

Those companies are led by Palm Springs, Calif., developer Mark Temple.

A 2004 U.S. Securities and Exchange Commission lawsuit against Mojave Valley Resort Inc. and Temple alleged they made fraudulent misrepresentations to municipal bond investors who helped fund Temple's plan to develop casinos and housing projects on Indian land near Laughlin.

The suit claimed that the defendants falsely stated that $12.75 million in bonds issued in 1999 to partially fund the developments were secured by security interests in the company's lease dating to 1993 of 528 acres of Fort Mojave Indian Tribe land.

After the developers pumped $6 million of their own funds into the project, it developed financial difficulties and the developers were unable to gain traditional financing, the SEC lawsuit said.

Mojave Valley Resort then sold the bonds to finance part of the project, but later defaulted on its obligations to the bondholders by failing to make payments to the investors, who in 2004 were owed about $11 million, the lawsuit charged.

Without admitting wrongdoing, the defendants settled the case by agreeing to pay about $40,000 to the bondholders.

The bondholders, represented by Texas lender Happy State Bank, doing business as Goldstar Trust Co., in 2006 filed suit against Temple, his father, developer James Temple, and several of their companies in Clark County District Court in Las Vegas.

The bondholders initially won a $15 million judgment on breach of contract claims with a motion for partial summary judgment in that lawsuit.

Trial was set to begin this week on additional claims including allegations the defendants made fraudulent or negligent misrepresentations and were involved in fraudulent transfers and illegal distributions.

The defendants, including Desert Springs Community Corp. and MATCO Construction LLC, in court papers denied the allegations.

With Monday's bankruptcies of Mojave Valley Resort Inc. and Mojave Valley Resort Casino Co., it was unclear if the trial would proceed.

In its filing, Mojave Valley Resort Inc. listed assets of about $49,000 and liabilities of about $21.2 million, including $9.5 million owed to the bondholders.

The Mojave Valley Resort Casino filing listed no assets and liabilities of $19.157 million, including the $9.5 million owed to the bondholders.

Desert Springs Community Corp. -- the codefendant in the Las Vegas lawsuit -- is listed as a creditor in both cases, also owed $9.5 million.

The Fort Mojave Indian Tribe based in Needles, Calif., is listed as a creditor by Mojave Resort Inc. because of the lease arrangement with the Temple companies.

The tribe owns the Avi resort and casino on the Colorado River near Laughlin and the Spirit Mountain Casino in Mohave Valley, Ariz., north of Needles.