lasvegassun.com
January 17, 2000
FBI seeks bank records tied to LVEN
By Gary Thompson
<gary@lasvegassun.com>
LAS VEGAS SUN
The FBI has asked at least one bank for any financial documents linked to companies and individuals who may have been involved in the rapid runup and later crash of Las Vegas Entertainment Network's stock price last fall.
Meanwhile, neither LVEN nor federal regulators will comment about results of a secret investigative hearing in Washington D.C. on Friday concerning the status of the three-month trading halt in LVEN stock.
The Securities & Exchange Commission ordered Nasdaq to suspend trading of LVEN stock as of last Oct. 18, citing questions about "the adequacy and accuracy of publicly disseminated information concerning, among other things, an agreement to receive $190 million in cash from two investors."
Publicity about that alleged investment sent LVEN stock soaring more than 250 percent before falling back almost equally abruptly in just one day of heavy trading. Collectively, investors who bought during the price runup may have lost millions.
SEC spokeswoman Dara Feldman said the federal agency had no comment about the Friday session. "We don't talk about investigations at all," she said.
Nasdaq spokeswoman Nancy Condon said investigative hearings are not public. "If in fact one did occur, we still wouldn't say anything about it," she said.
"There was a hearing in Washington this morning between LVEN and Nasdaq," LVEN spokesman Tim Noyes said Friday from the company's headquarters in Los Angeles. But he declined to discuss what happened or specify who participated.
"Everything is halted right now, and I have nothing else to report," he said.
LVEN Chairman Joseph Corazzi didn't respond to requests for comment.
A bank executive who requested anonymity confirmed that the FBI, as part of a criminal investigation, has contacted financial institutions asking for records linked to LVEN, U.S. Guarantee Corp. and some of its principals and others associated with LVEN.
The FBI recently raided the Scottsdale, Ariz., offices of U.S. Guarantee, which had purportedly agreed to help Las Vegan Fred Cruz "infuse" a total of $495 million into LVEN. Cruz hung up on a Sun reporter seeking comment Friday.
Bureau spokesman Ed Hall told the Mesa, Ariz., Tribune newspaper he couldn't reveal why a dozen agents conducted the raid because they were acting on a sealed search warrant.
Cruz and U.S. Guarantee Chief Executive Alvin Tang have several criminal convictions on charges such as fraud, conspiracy, grand theft and forgery. Corazzi and LVEN's president, Carl Sambus, were executives in businesses that have previously filed for bankruptcy.
LVEN bought the closed El Rancho property near the north end of the Strip in 1993. It sold the El Rancho to International Thoroughbred Breeders in 1996 and eventually wound up with the right to receive some additional proceeds if it could find a new buyer for the run-down property at a higher price. The deadline for that deal was last April.
Meanwhile, LVEN filings with the SEC indicate the company issued 4.75 million shares of stock to insiders including Corazzi, Sambus and Cruz in the months leading up to the October price runup.
Those price gains were fueled by a series of announcements that alleged Cruz would invest $495 million into LVEN with the aid of financial transactions engineered by U.S. Guarantee. At one point, LVEN issued several news releases saying it was offering to buy Jackpot Enterprises Inc., a Nevada gaming company, for $95 million and claiming the money for the deal had come from Cruz through U.S. Guarantee.
Both Cruz and U.S. Guarantee claimed their assets included billions of dollars of gold dust or mining claims, though they later said some of the assets had been "lost" or erased from their balance sheets.
Neither Cruz, Corazzi nor Sambus have disclosed whether they sold LVEN stock during the price increase. The FBI's search for bank financial records may provide an answer.
KJC |
