Critics assail Circus executives' deal with Michigan candidate

Three Circus Circus Enterprises Inc. executives are awaiting rulings from Michigan agencies on whether the proposed settlement of a lawsuit they won may violate a ban on campaign contributions by casino operators.

If the agencies decide the proposal is illegal, the Circus executives said they will cancel the settlement. The settlement is controversial, with critics saying it benefits a candidate for governor of Michigan at a time Circus Circus is preparing to enter the potentially huge Detroit gaming market.

A quirk in Michigan's new gaming law also may act in favor of Circus Chairman Michael Ensign, Executive Vice President William Richardson and attorney David Belding, the trio that requested a ruling from Michigan's secretary of state before executing a definitive settlement of the lawsuit.

"If they've violated the law, they could amend their license application," said Nelson Westrin, executive director of the Michigan Gaming Control Board, which is also reviewing the proposed transaction.

"One of the quirks here is that they're not covered by the act until they're licensed, and they aren't licensed yet."

Circus and its partner, the Atwater Casino Group, have applied for a license to build a $600 million casino in Detroit.

At issue is a proposed settlement of a lawsuit filed by Ensign, Richardson and Belding over the sale of the Pioneer Club, a downtown Las Vegas casino they owned before joining Circus Circus in 1995.

The trio sold it in 1992 to Las Vegans Steve Burnstine and Marc Curtis. Curtis is the stepson of Larry Owen, a prominent Michigan businessman and politician who guaranteed the $2.5 million loan financing the transaction. Owen is seeking the Democratic nomination for governor of Michigan.

When the buyers defaulted, Ensign, Richardson and Beldon sued in Clark County District Court to collect on the debt. Judge Stephen Huffaker issued an oral decision last November awarding the plaintiffs $1.2 million.

Their lawyers began negotiating a settlement with Owen, the only defendant with sufficient financial resources to pay the debt, Belding said.

"The two local defendants are judgment-proof because they have no assets," he told the Sun.

"We agreed to settle with Owen for $500,000 rather than run the risk of having the decision overturned on appeal or having to go through the Michigan courts to collect," Belding said.

Once the settlement number was reached, the trio asked the Michigan secretary of state's office to rule that the agreement didn't violate a ban against casino operators contributing to political candidates.

But word of the proposed settlement prompted gaming foes in Michigan to complain that the plan to forgive almost $720,000 constituted an illegal campaign contribution.

"The unusual and suspicious nature of the Circus Circus executives' actions in regard to collecting on Larry Owen's $1.2 million debt demands a full and thorough investigation," said gaming foe Bill McMaster.

"Not only is the upcoming Democratic gubernatorial election thrown into doubt by this apparent sweetheart deal, but there is a huge cloud over the rush to bring casino gambling to downtown Detroit."

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.

The Circus executives believe "the proposed settlement ... is not a contribution as that term is defined by the act," according to their Michigan attorney, Robert Stocker.

"However, we and our clients are sensitive to the need to take every reasonable action to confirm this opinion," he wrote in the letter asking for a ruling.

"It's been suggested that we're trying to confer a benefit on Larry Owen," Belding said. "But if we wanted to do that, we wouldn't have pursued the lawsuit in the first place."

Circus is one of several Nevada casino companies offering perfectly legal financial support to political allies in states outside Michigan. It is spending millions to help defeat an Indian gaming initiative in California and has contributed at least $300,000 to the campaign of Kenny Guinn, Republican candidate for governor of Nevada.

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