$3M A.C. gave to N.Y. firm done improperly, casino official saysSaturday, August 08, 2015By John V. Santore

The $3 million Atlantic City gave to a New York company in 2013 to run a community development lending program should have been approved by a specially appointed committee of city and casino officials.

It wasnt, says a casino official familiar with the deal and a member of the three-member committee.

Now, the city is suing W. Wesley Drummon, president of ZeMurray Street Capital LLC, in federal court, alleging its money was used for improper purposes and that no loans were ever provided to the community.

The money was transferred in 2013 from the Mirage Agreement Fund. Created by a 1996 agreement between Atlantic City and the former Mirage Resorts, the fund is governed by guidelines requiring a committee to review and approve its use, according to documents obtained by The Press of Atlantic City.

But in the case of ZeMurray, that process never took place, said Joe Corbo, Borgatas current vice president and general counsel.

Corbo said Borgata is one of three committee members with a vote to authorize the disbursement of dollars from the Mirage fund, which was created to spur development in the city.

He said his company first heard of ZeMurray from then-mayor Lorenzo Langfords staff in May 2013.Borgata requested information about ZeMurray and the loan program from both the city and ZeMurray, but was not provided with sufficient information to answer Borgatas many questions, Corbo said. We were never subsequently advised that there would be a vote taken by the committee, and as such, Borgata never participated in a vote to authorize the use of the Mirage redevelopment funds.

In fact, since we became aware of the current situation, Borgata has not been advised if a vote was ever taken by the other two members to authorize the use of those funds, Corbo said.

The Press requested all city documents connected to the ZeMurray deal, receiving 85 pages in response. None of the documents reference the approval committee or any actions taken by it.

The committee is defined by the Mirage agreement as consisting of one member appointed by the Mayor, one member appointed by the President of the City Council and one member appointed by the Redeveloper. The redeveloper was originally Mirage, though that company became MGM Resorts International in 2000.

The responsibility of the committee will be to make a final determination as to how and on what projects the funds will be expended, the agreement states. The Party appointing any member of this committee may remove or replace such member at any time.

Langford has not responded to multiple requests for comment on the ZeMurray matter and did not respond to a request for comment concerning the approval committee.

In 2013, current 4th Ward Councilman William Marsh was City Council president. Marsh did not respond to a phone call, an email or an in-person appeal for comment this week about the committee.

On Thursday, a spokesman for Corbo declined to comment beyond Corbos statement.

The Mirage Agreement Fund was originally designed to promote the development of the North Huron Redevelopment Area, the land north of Huron Avenue. City records show the fund contained $4.58 million in May 2013. It held $1.32 million as of this June.

However, city rules permit the fund to be spent on projects besides those related to the North Huron area, so long as they meet a series of pre-established guidelines.

Acceptable uses include housing construction and rehabilitation and low-interest loans for small-business development.

Borgata was developed jointly by MGM Resorts and Boyd Gaming Corp., which is why a Borgata official could be appointed to represent MGM on the committee.

Meanwhile, the citys suit to reclaim its lost funds, already before a judge in Camden, expanded into a second state last month.

The Tennessee Department of Financial Institutions has challenged a subpoena filed by Atlantic City in federal court in Tennessee. The city has requested financial information concerning TN BIDCO, a Tennessee-based loan company allegedly purchased in 2013 by ZeMurray using the citys funds.

Gary and Michael Lax, the brothers of current Don Guardian aide and former Langford staffer Eddie Lax, are associated with TN BIDCO. Eddie Lax has not been named in any court documents and has declined to speak about the case.

Last month, the city attempted to expand the scope of its New Jersey suit to include Gary and Michael Lax as defendants, though that motion was challenged by Felix Gonzalez, the attorney for Drummon and ZeMurray, and is still pending.

A.C. Council panel discussed ZeMurray plan. The memorandum of understanding Atlantic City signed in 2013 with ZeMurray Street Capital LLC was discussed in City Councils revenue and finance committee one week before it was approved by council, according to minutes from the meeting obtained by The Press.

The deadline for the discovery process, during which evidence relevant to the case is obtained, has been set for Oct. 30.