Las Vegas Sun

March 28, 2024

$650,000 settlement with Hard Rock Hotel gets OK

HRH Tower

Leila Navidi

The valet entrance for the new HRH Tower at the Hard Rock Hotel in Las Vegas Monday, December 28, 2009.

Updated Friday, Jan. 28, 2011 | 1:52 a.m.

Hard Rock fine

KSNV coverage of $650,000 fine levied against Hard Rock, Jan. 27, 2011.

Related Document (.pdf)

Map of Hard Rock Hotel & Casino

Hard Rock Hotel & Casino

4455 Paradise Road, Las Vegas

The Hard Rock has built a reputation as one of the biggest party joints in a town full of them.

And on Thursday it paid the price — a $650,000 fine — after conceding to state gaming authorities that it has had a hard time keeping its own employees in line, let alone the partyers who swarm the hotel and its notorious pool scene.

Undercover officers observed security officers and hosts arrange the sale of marijuana, Ecstasy and cocaine to customers.

A Metro narcotics detective said that for $80 he was provided a locked private restroom by a security officer to consume marijuana. The detective said that when he was escorted back to his nightclub table, the security officer told him that the next time he wanted a “hit” of marijuana.

Agents also saw Hard Rock or contract employees providing access to private restrooms for sex.

The Nevada Gaming Commission on Thursday unanimously approved a settlement between the state Gaming Control Board and the operators of the Hard Rock Hotel for violating regulations related to illegal drug use at the property. The $650,000 fine was the third-highest ever approved by the commission.

But this hardly ends the hotel’s troubles.

Hard Rock representatives conceded to the violations before the commission, meaning those incidents could end up as exhibit A in the Florida Seminole Indian Tribe’s lawsuit against the resort.

The tribe, which owns the Hard Rock brand and Hard Rock Café International and rights to develop Hard Rock casinos east of the Mississippi, has alleged in the suit filed in U.S. District Court in New York that such activities — and more specifically alcohol and sex-fueled conduct at the hotel’s pool parties, depicted on the reality television show “Rehab: Party at the Hard Rock Hotel” — have harmed the reputation of the brand and its properties.

Hard Rock Hotel Holdings has countersued the tribe.

Fred Kleisner, president of Hard Rock Holding Co., a corporate subsidiary that operates the property, and Steve DuCharme, a former Gaming Control Board chairman who is now a member of the Hard Rock’s regulatory compliance committee, explained to commissioners Hard Rock’s efforts to prevent employees from breaking the law.

DuCharme, who formerly worked as an undercover narcotics agent for Metro, told board members that despite all the security cameras in casinos, it’s a challenge to comply with the regulations.

“No matter how secure you are, if you have rogue employees determined to violate the law, it is almost impossible to stop,” DuCharme said.

Kleisner said that when he began managing the property last March, he stressed a zero-tolerance policy on the use of illegal drugs and told managers to report matters involving alcohol consumption and drug use on the property. He said every personnel file was reviewed to find indications of drug use.

“We were aggressively thorough,” Kleisner said. “We said, ‘If you have so much as an aspirin tablet, dump it in the bin and leave.’ ”

Weeks later, the company conducted a surprise drug test on employees. Of the 600 employees, 13 failed the tests and were terminated immediately. Eight worked in nightclub venues and five in security. One was a supervisor.

But four months before Kleisner’s arrival, Control Board agents and Metro Police began working undercover, leading to the complaint.

According to the eight-count complaint filed by the Control Board on Dec. 29, the Hard Rock violated two regulations related to illegal or unsuitable activities occurring at Hard Rock clubs on seven occasions. Those activities were discovered during undercover operations.

In each case, agents saw Hard Rock or contracted employees selling controlled substances or providing access to private restrooms for sex or to use the illegal drugs. According to the complaint, activities were observed Nov. 6-7, and Nov. 20-21, 2009, and Jan. 30-31, 2010, at or near the property’s Body English nightclub; June 18-19, June 25-26, July 8-9, Aug. 13 and Aug. 27-28 at or near the property’s Vanity nightclub, and June 18-19 in a parking garage.

Gaming attorney Frank Schreck, who represented the Hard Rock, said Hard Rock executives have been vigilant in trying to stop illegal drug use on the property.

Hard Rock security officers held entertainer Bruno Mars for law enforcement authorities when the singer was suspected of using illegal drugs at the property, he said. Schreck said that has sent a shock wave that hurt the property’s ability to book some acts.

Although commissioners were unanimous in approving the settlement, they made it clear how close the Hard Rock came to facing a license revocation hearing.

“There was no compromise of the games and no (illegal drug) activity on the casino floor,” Commission Chairman Peter Bernhard said. “Had this involved the gaming side, license revocation would be on the table.”

But Bernhard also said he was disappointed that undercover officers discovered illegal activity at the Hard Rock even after Kleisner took over.

Commissioners also said they think the amount of the fine will send a message to the industry that regulators won’t tolerate illegal drug use at casinos.

The fine was painful enough to the Hard Rock that the stipulation allows the company to pay it over five payments through the end of May. The fine includes a $500,000 penalty and a $150,000 reimbursement — $75,000 each to the Control Board and Metro — to cover the cost of the investigation.

The Mirage was fined $5 million in a money-laundering complaint in 2003 and Las Vegas Sands was fined $1 million in 2004 for rigging the results of a contest.

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