Thursday, April 9, 1998 | 12:44 p.m.
The case dates back to the 1979 sale of the Tropicana Hotel-Casino.
On trial are brothers Edward and Fred Doumani, former landlords of the Strip resort and producers of the movie "The Cotton Club." A Minnesota attorney, John Jagiela, and longtime Las Vegan Nicholas Tanno are co-defendants.
Included in an August 1995 indictment are allegations that Tanno collected more than $1 million on behalf of mob families extorting Minneapolis businessman Deil Gustafson, a key government witness in the case.
Attorney Daniel Albregts, who represents Edward Doumani, denied allegations that the four defendants and others took part in a conspiracy to defraud the U.S. government.
"There was no larceny in the hearts of these men," he told jurors in opening statements Wednesday.
Prosecutors claim the defendants illegally tried to hold on to proceeds from a $34 million court judgment that stemmed from a breach of contract lawsuit filed after the Tropicana's sale.
Also indicted was Las Vegas attorney Harold Gewerter, but charges against him were dismissed in February.
Gustafson was listed in the indictment as an uncharged conspirator. Prosecutors reached an agreement in 1995 that required him to plead guilty to one count of bankruptcy fraud.
Lynn Panagakos, a trial attorney with the Justice Department, said Gustafson agreed to testify for the government in hopes of reducing his sentence.
"He's important, because he'll give you the inside scoop, as only a criminal cohort can," she told jurors.
Panagakos told members of the jury they must decide whether Gustafson's testimony is believable. The man went to prison in the 1980s for committing bank fraud, she said.
"I'll be the first to tell you that you're going to hear bad things about this man," she said.
The bankruptcy fraud case involves the 1979 sale of the Tropicana to Ramada Inc. by Hotel Conquistador Inc. and the resulting lawsuit won by Conquistador, which accused Ramada of breaching its contract.
Those named in the indictment, along with Gustafson, had a partial stake in the $34 million judgment, which the Nevada Supreme Court ultimately affirmed.
Prosecutors claim the conspiracy began in 1987. Hotel Conquistador, then bankrupt, was awarded its judgment in 1989.
"There was no money when this conspiracy supposedly began," Albregts told the jury. "Only a lawsuit."
Among other allegations, the indictment accused Gewerter and the Doumanis of entering into a false sharing agreement to avoid reporting the Ramada judgment on tax returns.
Authorities claim the conspirators constucted the agreement in late 1990 and gave it a 1988 date, resulting in fraudulent tax savings of more than $1 million. The indictment claims the conspirators later lied under oath regarding the date of its inception.
Jagiela, who is representing himself, told jurors the sharing agreement accurately memorialized an agreement that was reached in 1988.
archive
