Circus clears Detroit hurdle

Circus Circus Enterprises Inc. has cleared a hurdle in its quest for a Detroit gaming license with a ruling by Michigan's secretary of state that a proposed settlement of a lawsuit didn't constitute an illegal campaign contribution.

The settlement agreement, though, still faces scrutiny from the Michigan Gaming Control Board, which is expected to rule on Circus' license application next spring.

Control Board investigators are also looking into possible links between a bizarre murder case and a principal of the Atwater Group, Circus' partner in plans to develop a $600 million hotel-casino in Detroit.

The campaign-contribution flap involved allegations that three Circus Circus executives had agreed to settle a lawsuit against former Michigan gubernatorial candidate Larry Owen in return for favorable treatment in the licensing process.

Owen, the centrist frontrunner, recently lost the Democratic primary to underdog populist Geoffrey Fieger, a blunt-speaking attorney whose clients include assisted-suicide advocate Jack Kevorkian.

Detroit newspapers called Fieger's victory a "stunning" upset, scored in part by his use of the campaign-contribution issue.

The three Circus executives -- Mike Ensign, Bill Richardson and David Belding -- had sold the Pioneer Club in 1992 to Las Vegans Steve Burnstine and Owen's stepson, Marc Curtis. Owen, a millionaire, had guaranteed the $2.5 million loan financing the transaction.

When the buyers defaulted on the loan, the Circus executives sued to collect on the debt and won a $1.2 million judgment, but agreed to settle the case for just $500,000.

After a Detroit newspaper disclosed the deal, gaming foes in Michigan criticized the settlement and the Circus executives asked Secretary of State Candice Miller for a ruling.

She recently concluded the deal technically didn't constitute a $720,000 contribution to Owen because he -- not his campaign -- gets to keep the money.

Michigan statutes covering campaign financing and gaming control indicate forgiving a debt could be considered a contribution. The state's gaming act prohibits persons who have an interest in a casino enterprise from making political contributions while their license applications are pending.

Bob Nelson, director of communications for the Michigan Gaming Control Board, said that agency will review the settlement agreement as part of its probe into the Circus license application.

The gaming board is conducting background investigations of all casino license applicants, and expects to complete them between February and April 1999, he said.

Nelson also said the board will follow developments in a murder case involving Nellie Varner, a prominent Detroit businesswoman and former University of Michigan regent who owns a stake in the Atwater-Circus partnership.

Circus holds 45 percent of the venture, while the so-called Atwater Group owns the remainder. Varner owns 10.34 percent of Atwater Entertainment and 2.155 percent of the overall Atwater-Circus deal.

Alvin Knight, a 43-year-old ex-boyfriend of Varner's daughter, was gunned down in a parking lot near his apartment July 24 -- just one day after a probate judge ordered Knight's son be removed from Varner's home and returned to his natural father.

Papers found at the victim's home describe his custody battle with Varner's daughter, who wasn't the boy's mother, and how he feared for his life because of her threats to kill him.

Police searching Varner's home found diaries they believe were written by her daughter, Janniss Scott Varner, describing killings she'd like to commit -- including Knight's -- and describing deaths she believed she'd caused through the use of voodoo and witchcraft.

"There was information about what they wanted done, how they wanted him killed," a Detroit homicide investigator told reporters for the Detroit Free Press.

But detectives searching the Varner home weren't able to find two .38-caliber Charter Arms revolvers registered to Varner. A firearms expert said Knight was killed by six .38-caliber bullets fired into his head, most likely from a Charter Arms revolver.

Such a gun figured in previous violence involving Knight. On Nov. 27, 1995, he went to Varner's home to pick up his son. According to a police report, Varner asked Knight to look at her car, which was parked in the garage and not working.

While he was in the garage, the police report said, Knight was accosted by a masked gunman, who shot him in the left shoulder. Knight lunged for the gun and wrested it away from his assailant, who ran off.

Knight took the gun -- a .38-caliber revolver -- to police, who sent it off to a storage office without performing a ballistics test on it.

The investigation into the previous attack apparently lay dormant until Knight's slaying, when details of the two incidents created a public furor in Detroit.

But last Friday, police charged 18-year-old Richard Oliver in the botched 1995 ambush and named him a prime suspect in the July 24 murder. He is being held on $750,000 bond, a prosecutor said, because "we think others were involved in the murder ... and there may be pressures brought to bear for him not to appear in court."

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