January 22, 1997
Reserve developer to have gaming license bid denied
By Gary Thompson
<gary@lasvegassun.com>
LAS VEGAS SUN
State regulators are expected to deny gaming licenses Thursday for Steven Rebeil, the controversial developer of Henderson's Reserve hotel-casino.
Citing "overwhelming" evidence of a credit scam at Rebeil's Gem Homes development company, the State Gaming Control Board has already urged that he be deemed unfit to hold a gaming license.
The Nevada Gaming Commission meets Thursday to consider the Control Board's recommendation.
Rebeil had sought to withdraw his application for licensure as an officer, director and shareholder of Ameristar Casinos Inc., the publicly traded company that merged with Gem Gaming Co., original developer of the Reserve.
The Control Board voted unanimously to deny that request, as well as his bid to proceed with his application to be approved a 40 percent owner of Pacific Gaming Sahara Inc., operator of Charleston Express. The Nellis Boulevard locale includes 15 slot machines.
In the latter case, the Control Board denied Rebeil's bid for a restricted license because he "lacks good character, honesty or integrity and ... adequate business probity."
It also rejected his bid to withdraw the Ameristar application, instead voting to deny his license outright. Rebeil didn't appear at the Control Board hearing, but wrote to board Chairman Bill Bible that he would be out of town and "figured my lawyer, Frank A. Schreck, could represent me on my behalf."
At the hearing, Schreck heatedly denied he was Rebeil's attorney, saying he'd notified the developer several months earlier that he wouldn't represent him.
Rebeil, the subject of more than a score of lawsuits alleging improprieties in various business dealings, didn't respond to a SUN request for comment.
But at the Control Board hearing, Schreck -- one of the state's most respected gaming attorneys -- said he had represented Rebeil in the licensing procedure until it became clear "he was absolutely lying to me and lying to everybody else."
The alleged lies involved a reputed scheme in which Rebeil's Gem Homes purportedly overbilled homebuyers at a 220-residence subdivision for an average of $2,500 per house, according to Dominic Magliarditi.
Magliarditi, a lawyer and senior vice president of Ameristar Casinos who testified at the Control Board hearing, said the allegations were raised by a Rebeil partner who'd uncovered the purported scheme after talking with subcontractors.
Magliarditi testified that he believed Rebeil's denials of any wrongdoing "up until the latter part of 1996 ... and then Frank hit me with the bomb."
Schreck's "bomb" was his discovery that gaming investigators had learned through what he called "some very intelligent investigative work" that the subcontractors were allegedly asked to submit two bills.
Credits from the false, inflated bills were used to build Rebeil's Spanish Trail home, Magliarditi said.
"There were substantial amounts" of such credits uncovered in the Control Board investigation, Bible said.
"(It) looks like at least in one tabulation we have in excess of $800,000 that were accumulated, then applied against his personal residence," the board chairman said.
"I tended to want to believe (Rebeil) with respect to his representations because he adamantly denied having a credit relationship," Schreck said.
"On one project there was $170,000 worth of credits that were given because of the way the books balanced. And all of a sudden Mr. Rebeil came up with two checks from another company ... and these two checks were looked upon with some skepticism by the agents as if they may have been manufactured and applied to this.
"So at the suggestion, it was a good suggestion, of the investigators, I went to the concrete subcontractor."
At that point, Schreck said, "I went from believing Steve" to "about 80 percent" not believing him.
Schreck said he called Magliarditi, who assembled documents "all of which indicated there were no kickbacks or no inflations."
"I looked at these documents and I said only one of two things can happen: Either the guys I talked with at the concrete (company) are lying, which I believed they were not, or there were earlier proposals," Schreck said.
When the gaming attorney found the earlier proposals, he said, that "moved me from 75 percent to 100 percent disbelieving Mr. Rebeil."
"The earlier proposals were lower by a round number?" Bible said.
"Yes," Schreck said. "The first proposal for one of the projects was clearly a negotiated one to get the right price, which you do normally. Then the next proposal was boosted $500. And then that was in the proposal that was submitted with the package as it was rewritten.
"At that point, obviously I'm not going to represent the individual anymore. But he adamantly denied it."
Magliarditi also testified that he and Rebeil made "modifications" to an income tax form prepared by the accounting firm Arthur Andersen & Co.
"The form that had Arthur Andersen's employee's signature on it?" asked board member Brian Harris.
"That's correct," answered Magliarditi.
"Did you strike through the line and then put in a new number and initial it, or did you 'white out' and recopy it?" asked board member Steve DuCharme.
"I think they were whited out and then the numbers were inserted," Magliarditi said.
"You did that just based on Mr. Rebeil (who) would say, 'I don't like that number, change it,' and you changed it?" asked Harris.
"That's correct."
"And always downward?"
"They were downward, that's correct," Magliarditi said.
DuCharme said with all the mistakes Rebeil and Magliarditi claimed were made in haste, "the odds of probability are that at least one of the mistakes you made is going to be made in favor of the IRS, but that didn't happen here?"
"That's correct," Magliarditi said.
Magliarditi resigned from a local law firm in early 1994 to go to work for Rebeil. The firm had represented Rebeil and had several bills outstanding, which Magliarditi said he "adjusted" for his soon-to-be employer.
"In effect, you're leaving the firm and you're adjusting your billings for your future employer?" Bible asked.
"That's correct," the lawyer said, adding that he had trimmed the bills because of his anger over the firm's alleged failure to pay him a bonus.
"That implies you shaved the fees because you didn't get the bonus," Bible observed.
"I think that could have been an element in some of those adjustments, because they were aggressive adjustments," Magliarditi said. He added, "I didn't receive any benefit from the adjustments."
"Your future employer did," Harris noted.
As with Rebeil, the board voted unanimously to deny Magliarditi's bid to withdraw his application for licensure as an Ameristar officer and to deny the application itself.
Magliarditi also acknowledged a "large volume" of lawsuits against Gem Homes, but said most of it involved nonpayment claims filed by subcontractors. And he agreed that consumer-advocate agencies such as the Better Business Bureau and various trade groups had received scores of complaints.
Meanwhile, Ameristar is working to satisfy its contractual obligations to Rebeil and Magliarditi and still proceed with development of the Reserve, said Brian Katz, Ameristar vice president.
Ameristar acquired Gem Gaming and the Reserve last October and is redesigning the unfinished hotel-casino.
Ameristar operates the Cactus Pete's and Horseshu hotel-casinos in Jackpot, and has opened casinos in Iowa and Mississippi. The Reserve is its first Southern Nevada project.
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