Tuesday, March 1, 2011 | 12:52 p.m.
A Las Vegas company that owns slot machine patents filed for bankruptcy Monday after accumulating millions of dollars in losses and engaging in litigation with shareholders and others.
Legal iGaming Inc. filed for Chapter 11 reorganization in U.S. Bankruptcy Court for Nevada, listing assets of $2.6 million including server-based slot machine patents it values at $2.5 million.
Liabilities were listed as totaling more than $187,000 including nearly $78,000 in legal fees owed to Las Vegas law firms Lionel, Sawyer & Collins and Sklar Williams.
The company lost about $566,000 in 2009 and another $2.6 million in 2010, the filing said.
The filing was signed by Wayne Krygier, president of the company.
In the first of two active lawsuits, Legal iGaming sued Sarah Fisher and others in Clark County District Court in July 2009, charging that Michael Saunders, while CEO of Legal iGaming, wrongly issued 1 million shares of company stock to Fisher at times he was romantically involved with her. The suit said Fisher did nothing of value to earn the shares.
"The shares were wrongfully diverted from LiG, are void as a matter of law and must be canceled," the lawsuit charged.
Fisher disputed the allegations and in a counterclaim said she had been working with Legal iGaming, Saunders and others since 2002 on various projects to benefit Legal iGaming and that Legal iGaming had agreed to compensate her in stock.
In the second suit, filed in the same court in December 2009, Legal iGaming sued Chester Wright III (a shareholder, director and officer of the company), Robert Graziano, Newcastle Group Inc. and Richard Reining.
The suit claimed the defendants were involved in a "stock fraud scheme" to "divert potential investors from investing in Legal iGaming directly" and to instead have investors buy shares held by Wright and Graziano.
In denying these allegations, attorneys for the defendants said plans by Wright and Graziano to sell their sales had been disclosed to Legal iGaming and that Legal iGaming had not objected.
Wright's attorneys also charged there had been investor dissatisfaction with management and that the suit against Fisher appeared to have been filed "to prevent Ms. Fisher from voting her shares against current management."
The bankruptcy filing lists a disputed $30,000 debt claimed by former director Wendy Yurgo to cover her lawsuit defense costs.
Yurgo was named as a defendant in a counterclaim filed by Wright. Attorneys for Wright said that at times she was either the general outside counsel for Legal iGaming, a director or an officer of Legal iGaming.
Attorneys for Yurgo have denied the allegations in Wright's counterclaim that Legal iGaming has refused to provide severance payments as promised when he left the company.
Besides those lawsuits, the company said a patent interference proceeding filed in March 2010 involving International Game Technology is pending before the U.S. Patent and Trademark Office Board of Patent Appeals and Interferences.
Records show this dispute involves Legal iGaming's "Universal Gaming Engine" patent application and IGT's patent for a "Secured Virtual Network in a Gaming Environment."
The bankruptcy filing indicates Legal iGaming is owned by scores of individual shareholders around the country, with the largest shareholders being Rolf Carlson in Albuquerque holding 23 percent of the company and Michael Saunders of Henderson -- apparently the former CEO -- with a 25-percent stake.
Messages for comment on the bankruptcy were left with the company and its attorney.