Wednesday, May 13, 1998 | 9:58 a.m.
After six weeks of trial in federal court, U.S. Justice Department prosecutors came up empty in their quest to convict former Tropicana hotel-casino landlords Ed and Fred Doumani and their tax attorney of bankruptcy fraud.
The jury deliberated more than three days before acquitting the Doumanis and John Jagiela of charges that they withheld information from creditors and skimmed part of a $34 million judgment over the sale of the Strip resort a decade ago.
The case hearkened back to the 1970s when mob interests influenced the casino industry, but the jury decided that the 1990s allegations of wrongdoing weren't supported by sufficient evidence for a conviction.
Before defense lawyers even began their case, a fourth defendant, Nicholas Tanno, who authorities alleged had ties to organized crime, was dismissed from the case by the judge because of a lack of evidence.
The rest of the case hinged to a great extent on the stories of another Tropicana landlord, Deil Gustafson, a convicted felon and admitted liar who was trading his testimony about his association with the Doumanis for leniency in his own legal problems.
Justice Department prosecutor Lynn Panagakos tried to convince the jury that the mountain of documents presented during the trial supported Gustafson's tales and that the defendants were the ones who lied to "enrich themselves by millions."
But Dan Albregts, Ed Doumani's attorney, fumed during closing arguments that prosecutors overlooked evidence showing there was no conspiracy and no bankruptcy-court fraud.
Albregts called Gustafson a "revisionist historian who changed history to fit his own purpose ... the version the government wanted to present."
The government's approach, Albregts told the jury, "shouldn't be tolerated from representatives of our government."
Prosecutors alleged it wasn't until 1990 that the conspiracy was hatched to divert portions of a $34 million judgment from a lawsuit over the 1979 sale of the Tropicana, but defense evidence belied that theory.
Albregts said in the courtroom of Senior U.S. District Judge Justin Quackenbush of Spokane, Wash., that there were "many, many agreements" proposed by the Doumanis, Gustafson and others before the actual distribution occurred.
Jagiela, acting as his own attorney, alleged during his closing argument that Gustafson "concocted the whole story" and that government lawyers embraced his "bald-faced lies."
In the end, the jury couldn't buy the government's version or its witnesses.
Ironically, Gustafson wasn't the government's first choice as informant and star witness. That fell to Las Vegas attorney Harold Gewerter, who had represented the Doumanis in the civil case over the Tropicana's sale to Ramada Inc.
Gewerter had worked with federal investigators for months and had provided stacks of documents in expectation of immunity for his role.
But when Gustafson offered his services as an insider willing to talk, the government grabbed the offer and indicted Gewerter as a bonus.
Before the trial started, however, Quackenbush dismissed the indictment against Gewerter after ruling the government indeed had offered immunity and couldn't renege on its offer.
The government had contended that most of the $34 million from the breach-of-contract judgment won by the Doumanis was supposed to go to their bankrupt company, Hotel Conquistador. But there were out-of-court deals between the Doumanis, Gustafson, Tanno and others to carve up the proceeds among themselves without paying creditors what they were owed.
Authorities alleged that millions allegedly wound up in the hands of Midwest mobsters and their associates, although Quackenbush ruled that references to organized crime be barred from the trial.
The case was one of the remaining links at the federal courthouse to an era of mob influence within the casino industry.
Before the Doumanis sold the Tropicana, the resort was the target of a massive Justice Department investigation into alleged casino skimming by the Kansas City mob. Several Mafia bosses were convicted and sent to jail in the probe. The Doumanis, however, never were charged until the current case.
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