Emerald Casino investors accused of lying to state regulators and selling shares to mob-connected investors have agreed to sell out for no profit in a proposed deal that would bring the state $500 million, an Emerald lawyer said Thursday.
“The attorney general expressed concern that any alleged wrongdoer would profit. We have made it explicitly clear that any alleged wrongdoer would have no profit,” C. Barry Montgomery said.
Under a proposed deal agreed to by Emerald, shareholders not accused of wrongdoing would divide $13 million in profits in addition to getting back their original investment of roughly $52 million. That group includes politically connected investors such as Sandra Degnan, wife of a former top aide to Chicago Mayor Richard M. Daley.
State law would require the license to revert to the Mississippi River area if the deal is not accepted by the Illinois Gaming Board, Montgomery said. There, he said, it would be “virtually worthless,” unless the law were changed.
Atty. General Jim Ryan reacted to the latest twist in the effort to put a casino in Rosemont by expressing unwavering opposition to the “tainted Emerald deal.” In a statement, Ryan’s office reiterated comments he made Wednesday all but promising to take legal action to block any settlement reached before a hearing has a chance to examine allegations of wrongdoing leveled against top Emerald officials.
The board and Emerald repeatedly have delayed the hearing, which is now scheduled to begin Wednesday.
Ryan, the statement said, will continue to “insist that gaming is ethically above reproach in this state. He cannot envision a settlement that would fit that standard. He believes that the tainted Emerald deal ought to proceed to the revocation hearing where allegations can be aired fully in front of the public.”
After the Gaming Board voted last year to deny the casino group’s request to open a casino in Rosemont, finding top company officials unfit, Emerald demanded the hearing in an attempt to overturn the denial.
Under board rules, the hearing officer considers evidence and recommends that the board either reverse or uphold its initial decision. The board’s final decision may be appealed in court.
Emerald has sought to short-circuit that process by selling its license for $615 million to Las Vegas-based MGM-Mirage Inc., which would assume up to $100 million in potential liabilities from Emerald. Emerald offered to hand the state $160 million, a figure that later was raised to $330 million.
The latest settlement offer amounts to a concession by Emerald chief executive officer Kevin Flynn and his father, former Waste Management executive Donald Flynn, who along with other Flynn family members control more than half of the casino company’s stock.
Kevin Flynn had insisted his family was entitled to a fair return on its investment, which Montgomery said was $10 million to $11 million.
Under the latest Emerald proposal, the Gaming Board would assume control of the license and choose a buyer and a location for a new casino. Rosemont and MGM-Mirage “would neither be in nor out,” Montgomery said.