Sumner co. memo to lgfrb 12-10-10

MEMORANDUM

TO: Matt All, ChairKansas Lottery Gaming Facility Review Board

FROM: Board of County Commissioners,Sumner County, Kansas

DATE: December 10, 2010

RE: Request for additional information________________________________________________________________________

During its telephone meeting of December 7, 2010, the Kansas Lottery GamingFacility Review Board asked the local governing body to provide additional informationabout the following issues in regard to the competing applications: 1) drainage andflooding issues at the proposed sites; and 2) the status of local approvals, which includesendorsement, zoning, permits and platting.

Drainage and flooding.

The proposed Global site near Exit 19 of the Kansas Turnpike has no drainage orflooding issues. Indeed, this site is superior even to the other Exit 19 sites considered bySumner County in the first two rounds of this process.

The proposed Peninsula site nearest Exit 33 of the Kansas Turnpike is known asSite A. Local residents continue to complain of drainage and flooding issues associatedwith the site.

The proposed Peninsula site within the city limits of Mulvane (Site B) is two mileseast of Site A. Because Site B is within Mulvane’s jurisdiction, Sumner County has notformally considered drainage and flooding issues associated with this site. However, it iscommon knowledge that Site B lies directly adjacent to Cowskin Creek and is frequentlyunder water.

Endorsement.

The proposed Global site near Exit 19 is within Sumner County and has beenendorsed by the Sumner County Board of County Commissioners.

The annexation litigation, Sumner County v. City of Mulvane, case no. 101975,was concluded in Mulvane’s favor on December 7, 2010, when the Kansas Supreme

Court denied Sumner County’s petition for review. Thus, the proposed Peninsula sitenearest Exit 33 of the Kansas Turnpike (Site A) is within the jurisdiction of Mulvane andhas been endorsed by the Mulvane City Council.

Peninsula Site B is within the city limits of Mulvane and has been endorsed by theMulvane City Council.

Zoning, permits and platting.

The proposed Global site near Exit 19 has all zoning and required permits in place.

The Mulvane City Council has zoned and approved a special use permit forPeninsula Sites A and B. Platting is not yet complete for either site.

The actions of the Mulvane City Council in zoning and permitting Peninsula SitesA and B are challenged in two lawsuits recently filed by Sumner County citizens inSumner County District Court. They are Sutherland, et al. v, Sumner County, Kansas, etal., case no. 2010 CV 186 (Site A); and Sutherland v. City of Mulvane, et al., case no.2010 CV 187 (Site B). The petitions filed in both lawsuits are attached for the ReviewBoard’s reference.

Both suits challenge the legality of the zoning and special use permits for Sites Aand B. Sumner County, its officials, and the City of Mulvane and its officials are nameddefendants in the Site A suit. The City of Mulvane and its officials are named defendantsin the Site B suit. Answers to these two petitions are due later this month.

Peninsula’s experience with regulatory bodies in other states.

During its December 7, 2010, telephone meeting, there was some discussion thatthe Review Board desired further information about the applicants’ experience withregulatory bodies in other states where they do business.

In May 2010, the Iowa Racing and Gaming Commission rejected Peninsula’s bid,along with Webster County Gaming, LLC, to operate a casino in Fort Dodge, Iowa.According to published reports, factors at play in the denial were strong local oppositionto a casino, fear that the new casino would siphon revenue from existing casinos, andallegations of improper funneling of campaign contributions from Peninsula, and othersinvolved in the casino bid, to Governor Chet Culver, who supported a casino in FortDodge. A copy of the article is attached.

In fact, the allegations regarding improper campaign contributions appear to have

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surfaced during a routine background investigation of the Fort Dodge application done bythe Iowa Racing and Gaming Commission. The allegations stem from Peninsula’spayment of a $25,000.00 consulting fee to three men who then contributed the sameamount to Culver’s re-election campaign.

On October 11, 2010, a special prosecutor in Polk County, Iowa, filed criminalcharges against M. Brent Stevens, chief executive officer of Peninsula Gaming; JonathanSwain, Peninsula’s chief operating officer; Curtis Beason, a lawyer for Peninsula; andPeninsula Gaming itself, along with one other man and another gaming entity. They werecharged with making a campaign contribution in the name of another and willful failureto disclose a campaign contribution.

Peninsula’s lawyer, Beason, was also charged with one count of obstruction forallegedly providing investigators with altered documents that contained false statements.The charge also alleges Beason provided false statements to law enforcement officials.

The campaign finance charges are serious misdemeanors, carrying a maximumsentence of one year in jail and a $1,875.00 fine. The obstruction charge against Beason isan aggravated misdemeanor, carrying a maximum sentence of two years’ imprisonmentor one year in jail and a $6,250.00 fine.

Stevens, Swain and Peninsula entered not guilty pleas at an arraignment onNovember 1, 2010 in Polk County, Iowa. A trial date was initially set for January 5, 2011.On Tuesday, November 30, Stevens, Swain and Peninsula asked the Court for more timeto complete pretrial discovery and now seek to push the trial date to March or April 2011.On Wednesday, December 1, Stevens told this Review Board that he looked forward to aresolution of the criminal charges “very, very soon.”

The former chair of the Iowa Racing and Gaming Commission, Diane Hamilton,was quoted in the Des Moines Register as stating that if Peninsula is found to have actedimproperly, it could jeopardize the company’s existing Iowa gambling licenses. A copy ofthe article is attached for the Review Board’s reference.

On Wednesday, December 1, Stevens told this Review Board that even if he andothers were convicted of the charges, those convicted individuals would step aside andthe project would move forward. This assertion ignores the fact that Peninsula Gaming asa corporate body – not just its executives – has been charged with crimes. PeninsulaGaming can hardly “step aside” without collapsing this project.

Another reality is that the criminal charges compromise Peninsula’s ability tofinance the project it proposes. The mere existence of criminal charges calls into question

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whether Peninsula will be able to secure $50 million in financing. Criminal convictionswould likely eliminate Peninsula’s access to the credit market. Criminal convictions couldalso jeopardize Peninsula’s licenses in Iowa and Louisiana and eradicate the cash flowfrom those operations needed to finance this project.

Summary: risks vs. benefit.

The significant risk of Peninsula’s disqualification outweighs any benefit ofselecting Peninsula over Global. While the Review Board may not wish to usurp theperceived role of the Kansas Racing and Gaming Commission in completing backgroundchecks on the applicants, it must weigh the risks associated with approving Peninsula’sapplication. If Peninsula cannot pass the background check at this time, or if mattersunfold in the Iowa criminal case such that Peninsula is later disqualified – or facingdisqualification, chooses to withdraw – this process must start anew for a fourth time.Another year (or more) of gaming revenue will be lost. Other applicants may not return.

There is no benefit to approving Peninsula’s application which outweighs theobvious and significant risks.

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Charges filed against casino execs, others over Culver campaign contributions Posted By Tom Witosky On October 11, 2010 @ 8:20 pm In Iowa Politics Insider,News | No Comments

Two casino executives, a Davenport lawyer and a Fort Dodge businessman were charged Monday with making illegal campaign contributions to Gov. Chet Culver’s re-election campaign.

The charges were filed in Polk County District Court by Lawrence Scalise, special prosecutor in an investigation into $25,000 in campaign contributions to Culver’s campaign in 2009. The contributions were made at a time when the Iowa Racing and Gaming Commission was considering a casino license application for Fort Dodge, in Webster County.

The filing of criminal charges regarding campaign contributions in Iowa is rare, said Charles Smithson, executive director of the Iowa Ethics and Campaign Disclosure Commission. This is the first time it has happened in his nine-year tenure, he said.

The Des Moines Register first reported in April that the Iowa Division of Criminal Investigation was looking into whether Dubuque-based Peninsula Gaming Partners had aligned with supporters of the proposed Fort Dodge casino to make improper contributions to Culver. Webster County Gaming was the official applicant for the Fort Dodge license. Its management firm, Webster County Entertainment, was negotiating with Peninsula to have Peninsula operate the proposed casino.

In Iowa, it is illegal to make, or knowingly receive, a political contribution in another’s name.

No charges were filed against Culver or anyone involved with his campaign. Culver campaign officials said last summer that the campaign had donated $25,000 to charity, one of the methods allowed by law to dispose of questionable campaign contributions.The news, three weeks and a day before Culver faces re-election, is good news for his campaign, Drake University political science professor Arthur Sanders said.

Charged with making a campaign contribution in the name of another were M. Brent Stevens, chief executive officer of Peninsula Gaming; Jonathan Swain, Peninsula’s chief operating officer; Curtis Beason, a Davenport lawyer; Steven Daniel, the Fort Dodge businessman who headed Webster County Entertainment; Peninsula Gaming; and Webster County Entertainment. They also were charged with willful failure to disclose a campaign contribution.

Beason also was charged with one count of obstruction for allegedly providing investigators with altered documents that contained false statements. The charge also alleges Beason provided false statements to law enforcement officials.

The campaign finance charges are serious misdemeanors, carrying a maximum sentence of one year in jail and a $1,875 fine. The obstruction charge against Beason is an aggravated misdemeanor, carrying a maximum sentence of two years’ imprisonment or one year in jail and a $6,250 fine.

The four men are to be arraigned at 8 a.m. Nov. 1.

Peninsula Gaming says it’s innocent of charges

Peninsula Gaming, a casino entertainment holding company with gaming operations in Iowa and

Page 1 of 4Des Moines Register Staff Blogs » Charges filed against casino execs, others over Culver ...

Louisiana, issued a statement denying the charges. The company operates the Diamond Jo casinos in Dubuque and Worth County.

“Peninsula has, during its 11-year history, always adhered to the highest standards of regulatory compliance and ethical business practices and has an impeccable record of responsibility and excellence in the gaming industry,” the statement said. “We look forward to a positive resolution of this matter.”

Daniel, a longtime Fort Dodge businessman, could not be reached for comment. He insisted to Register reporters in April that the contributions were legal.

“I’ve never been told by Peninsula or anybody to make a contribution to Governor Culver,” said Daniel, a tire shop owner who had been trying to land a Fort Dodge casino for 10 years.

Monty Fisher, Daniel’s lawyer, said Monday that he had not seen the allegations, “but I am disappointed that my client has been charged.

Beason, who could not be reached for comment, argued in an April 8 memo that a $25,000 payment from Peninsula officials to Daniel’s management company, Webster County Entertainment, was to pay for some of the group’s expenses as part of a deal to have Peninsula manage the proposed Fort Dodge facility.

The Division of Criminal Investigation began looking at campaign contributions from supporters of the Fort Dodge casino as part of its routine review of the backgrounds of applicants for casino licenses. Daniel and two other partners in Webster County Entertainment, James Kesterson and Merrill D. Leffler, contributed a total of $25,000 to Culver in late 2009.

Earlier that fall, Peninsula had paid the three men $25,000. Peninsula described the payment as a consulting fee for their work on the project.

Kesterson and Leffler were not charged but are listed as prosecution witnesses.

Potential effect unclear on existing licenses

One question raised by the filing of the charges on Monday is whether Peninsula Gaming could lose its state licenses to operate its two casinos.

The Diamond Jo Dubuque casino had gross gambling revenue of $68.4 million from 1.1 million admissions for the year ending June 30. The Diamond Jo Worth County casino had gross gambling revenue of $80.3 million from 1.2 million admissions.

State law requires that “a license shall not be granted if there is substantial evidence that the applicant is not of good repute and moral character or if the applicant has pled guilty to, or has been convicted of, a felony.”

The charges filed Monday are not felony counts. Members of the Iowa Racing and Gaming Commission said it was premature to speculate whether they might take action against Peninsula Gaming if the company and its executives are convicted of the allegations.

“ We need to see how this whole process plays out,” said Greg Seyfer, a Cedar Rapids attorney who is the commission’s chairman.

Seyfer and Commissioner Paul Hayes of Urbandale both said they viewed the allegations as isolated instances of problems in Iowa’s casino industry.

“We have been pretty tough,” Hayes said. “I think we have what we believe is a clean industry,


and we want to keep it that way.”

Fort Dodge Mayor Matt Bemrich, who has been a strong advocate of a casino license for his community, said he was shocked to hear charges had been filed.

Bemrich said he hopes the allegations don’t hurt his city’s chances of seeking a casino license in the future.

The Rev. Carlos Jayne, a United Methodist minister who has long fought Iowa’s gambling industry, said the charges prove his long-held argument that the gambling industry eventually leads to corruption.

“These guys get arrogant,” Jayne said. “They assume that they can do anything. … It wouldn’t have made any difference if it were a Republican governor or a Democratic governor because there was a license to be gotten.”

Culver: We knew we acted appropriately

In March, Culver urged the Racing and Gaming Commission to approve all four pending applications for casino licenses. Ultimately, the commission approved only one license, for Lyon County.

The Culver campaign issued this statement Monday afternoon: “We are pleased but not surprised that the findings confirm what we have been saying all along. No one in my office or my campaign did anything wrong; we complied with all campaign finance laws. ”

Culver trailed Republican former Gov. Terry Branstad by 19 percentage points in The Des Moines Register’s Iowa Poll, taken Sept. 19 to 22.

The news comes not a minute too soon for Culver, said Sanders, the Drake professor, whose study areas include the role of money and interest groups.

“The Culver people would be happy to have it brought up, and brought up now,” Sanders said. “They can argue that they were acting honorably, as was found, and that anyone trying to bring this up is simply smearing them. Culver is in a very defensible position.”

Court documents list Culver and James Larew, Culver’s chief of staff, as prosecution witnesses.

Branstad, who has regularly mentioned the investigation, continued Monday to suggest impropriety.

“Iowans can draw their own conclusions about the circumstances surrounding this pay-for-play scandal and whether or not this passes the smell test,” Branstad campaign spokesman Tim Albrecht said.

— Staff writers William Petroski and Thomas Beaumont contributed to this article.

Article printed from Des Moines Register Staff Blogs: http://blogs.desmoinesregister.com/dmr

URL to article: http://blogs.desmoinesregister.com/dmr/index.php/2010/10/11/charges-filed-against-casino-execs-others-over-culver-campaign-contributions/


Copyright © 2009 Des Moines Register Staff Blogs. All rights reserved.


Peninsula Gaming officials request 60-day trial delay

By TOM WITOSKY • [email protected] • November 30, 2010

Two Peninsula Gaming executives accused of making an illegal $25,000 contribution to Gov. Chet Culver's re-election campaign have asked for a delay of their trial. The defense lawyer for M. Brent Stevens, Peninsula Gaming chief executive, and Jonathan Swain, the company's chief operating officer, has requested a 60-day trial delay, court documents filed Monday show. The defense needs more time to complete depositions and evaluate evidence, attorney Guy Cook said. Culver, who lost in his re-election bid earlier this month, is scheduled to give a deposition to defense lawyers on Dec. 17, Cook's motion stated. James Larew, Culver's chief of staff and legal counsel, is scheduled to be deposed on the same day, court records showed. All of the defendants contend that the contribution, which was solicited by Culver in November 2009 and paid in two $12,500 installments by Steve Daniel, Merrill Leffler and James Kesterson, was legal. Culver's role in soliciting the contribution will be used by the defense in an attempt to show that their clients did nothing illegal, Cook said. Stevens and Swain are scheduled to go on trial Jan. 5, along with Daniel, a Fort Dodge businessman, and Davenport lawyer Curt Beason. The four men, along with Peninsula Gaming and Webster County Entertainment, have been charged with making the $25,000 contribution illegally to Culver's campaign in late 2009. The contribution was made at a time when the Iowa Racing and Gaming Commission was considering a casino license application for Fort Dodge, in Webster County. It was first reported in April that the Iowa Division of Criminal Investigation was looking into whether Peninsula Gaming of Dubuque had aligned with supporters of the proposed Fort Dodge casino to make improper contributions to Culver. In Iowa, it is illegal to make, or knowingly receive, a political

contribution in another's name. No charges were filed against Culver or anyone involved with his campaign. Culver campaign officials said last summer that they had contributed $25,000 to charity, one of the methods allowed by law to dispose of questionable campaign contributions. All four men and both companies were charged with making a campaign contribution in the name of another, as well as willful failure to disclose a campaign contribution. The charges are serious misdemeanors and carry a maximum sentence of a year in prison and a $1,250 fine. Beason also was charged with obstructing prosecution. He allegedly caused "physical evidence, that is, documents that would be admissible in trial, to be altered, and then provided said altered documents containing false statements" to investigators, records showed. That charge is an aggravated misdemeanor, carrying a maximum sentence of two years in jail and a $6,250 fine. In his motion, Cook said a delay, which isn't opposed by prosecutor Lawrence Scalise, is needed because defense lawyers received the state's evidence last week.

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Casino contribution defense cites '95 court ruling

By TOM WITOSKY • [email protected] • December 1, 2010

A 1995 Iowa Supreme Court decision could haunt prosecutors attempting to convict four men accused of making an illegal contribution to Gov. Chet Culver's re-election campaign. Defense lawyers cited the case involving Leonard Azneer, former president of Des Moines University, in procedural arguments Tuesday designed to raise questions about whether a special prosecutor has provided sufficient evidence to justify a trial. "There may be five volumes of evidence, but overall the evidence is skinny in this case," Guy Cook, attorney for two executives of Peninsula Gaming, told District Associate Judge William Price. "There is a lot of paper, but the charges are unclear and inconsistent." But Richard McConville, one of the prosecutors handling the case, said there is sufficient evidence presented to take the case to trial and obtain convictions. "The evidence shows there was intent to make an illegal political contribution and not to disclose who actually was making the contribution," McConville said. Cook represents M. Brent Stevens, Peninsula Gaming's chief executive, and Jonathan Swain, the company's chief operating officer. They are scheduled to go on trial Jan. 5, along with Fort Dodge businessman Steve Daniel and Davenport lawyer Curt Beason. The four men, along with two companies, Peninsula Gaming and Webster County Entertainment, have been charged with illegally funneling a $25,000 contribution to Culver's campaign in late 2009. All four men and both companies have pleaded not guilty to charges they aided and abetted the making of a campaign contribution in the name of another, as well as willful failure to disclose a campaign contribution. But Cook and Monty Fisher, Daniel's attorney, raised a legal question that brought up the Azneer case in contending that the charges are not specific enough to warrant a trial.

Both lawyers asked the judge to require prosecutors to provide more specific facts about their clients' alleged wrongdoing. Cook said the charges failed to cite the particular individual who made the illegal contribution and which defendants aided and abetted in the contribution. Citing the Azneer case, Cook also argued that prosecutors failed to provide any evidence that the defendants willfully failed to disclose the contribution to the Iowa Ethics Campaign Disclosure Board. In 1995, the Iowa Supreme Court ruled that Azneer could not be prosecuted for making illegal campaign contributions unless prosecutors could prove that Azneer knew that it was against the law. Azneer had admitted to receiving reimbursement from the university for $80,000 in political contributions he made to state and federal candidates from 1983 through 1992, but claimed he didn't know those contributions were illegal. The state charges against Azneer were dropped after the decision. Cook said the same evidence is required against the defendants in the Culver case because the statute requires proof that the action taken was willful. "That decision is clear," Cook said. "You must prove a defendant in case like this was aware of the statute and intended to violate it."

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But McConville expressed confidence that the charges against the four men were appropriate. He said the money was illegally funneled into Culver’s campaign when Peninsula Gaming paid $25,000 to Webster County Entertainment. That money was then directed to Culver’s campaign by Daniel, a co-owner of Webster County Entertainment, and two of his partners. “The evidence shows that money was paid to a campaign that didn’t actually come from the people who actually were making the contribution and that any reporting of those contributions didn’t disclose the actual contributor,” McConville said. The contributions were made at a time when the Iowa Racing and Gaming Commission was considering a casino license application for Fort Dodge, in Webster County. All four defendants attended Tuesday’s hearing.

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Iowa gov possible witness in casino campaign case | 07 Dec 2010 | 01:33 PM ET

DES MOINES, Iowa - Iowa Gov. Chet Culver may be called to testify in a criminal case against four people and two casino groups accused of illegally donating money to his re-election campaign, according to court documents filed this week.

Culver was among 11 people listed as possible defense witnesses in the case against Peninsula Gaming LLC, its chief executive officer Martin Brent Stevens, its chief operating officer Jonathan Swain, Webster County Entertainment and its chief supporter Steve Daniel and Curtis Beason, a Davenport attorney. The men and their companies are charged with violating campaign disclosure laws. Beason also faces one count of obstruction.

They are accused of making illegal contributions to Culver's campaign by donating money in the name of another person. It is illegal in Iowa to give or receive political donations in someone else's name.

"Neither the Governor nor the Culver-Judge Campaign were ever the subject of this matter," Culver's office said in a statement released Tuesday. "However, every effort will be made to fully cooperate with the process until this situation is resolved.

Guy Cook, the attorney for Peninsula Gaming, its executives and Beason, filed the witness list on Monday in Polk County District Court. A telephone message left for Cook was not immediately returned.

Other names on the list include former Iowa Attorney General Bonnie Campbell, Dubuque Mayor Roy Buol, other Peninsula Gaming officials and Dennis Gomes, president and CEO of Gomes Gaming Inc., of Atlantic City, N.J.

The case is set for trial Jan. 5, but both sides have asked for more time to prepare.

Cook also filed a motion Monday seeking an extension for filing pre-trial motions to no sooner than Feb. 14 and seeking a trial date in March or April.

At issue is a $25,000 campaign contribution to Culver's campaign.

Those charged with breaking contribution disclosure rules had submitted an application for a casino in Fort Dodge, one of four proposals submitted to the Iowa Racing and Gaming Commission. Culver supported all four applications, saying they would create jobs, but the panel rejected the Fort Dodge application as well as casinos proposed in the city of Ottumwa and Tama County.

The panel approved one in Lyon County.

After questions about the donation were raised, Culver donated the money to charity.

The charges were filed in Polk County by special prosecutor Lawrence Scalise, who was appointed by Iowa Attorney General Tom Miller to investigate the claims.

In filing the charges, Scalise issued a short written statement that said there was no evidence of any wrongdoing by anyone other than those named, apparently clearing Culver of any wrongdoing.

Culver solicited campaign contributions from some of the people involved in the casino projects but said he did nothing wrong in the fundraising and later released a statement that said the charges made it clear that neither he nor is staff violated any laws.

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Sumner co. memo to lgfrb 12-10-10