Wednesday, Jan. 20, 1999 | 10:42 a.m.
One owner of the Aztec Inn is suing the Strip casino's other owners, accusing them of engaging in self-dealing loan transactions and causing the casino to lose more than $1.7 million since its 1991 opening.
Gerald D. Brinkman, a resident of Chatham, Ga., who owns a 25 percent interest in the Aztec, sued co-owners Paul Kellogg, Gary Vause and Aztec Inn Casino L.P. in Nevada District Court.
Brinkman alleges Kellogg, Vause and another co-owner, Donald Drombowski, made a number of high-interest loans to the Aztec Inn and later had the casino repay those loans over Brinkman's objections. Drombowski is not named as a defendant in the suit.
"Kellogg, Vause and Drombowski have loaned money to Aztec Inn Casino at above market interest rates (18 percent converting to 25 percent after one year), despite the objection of Brinkman," states the suit. "Kellogg, Vause and/or Drombowski have caused Aztec Inn Casino to repay loans owing to Kellogg, Vause and Drombowski and then borrow money from (those owners) at higher interest rates, over the objection of Brinkman."
Brinkman alleges the loans violate the Aztec's limited partnership agreement, which calls for unanimous consent of all loan transactions.
But Brinkman has done the same thing, said Michael Mushkin, an attorney representing the Aztec.
"Mr. Brinkman has also made loans and received the same rate of interest on loans as these partners have," said Mushkin.
Brinkman's attorney did not return a call for comment.
The Aztec Inn has lost $1.7 million since 1991, alleges Brinkman, and its losses have accelerated in recent years. According to the suit, the casino lost $217,000 in 1996, $418,000 in 1997 and $474,000 through the first ten months of 1998.
Aztec General Manager Bill Maxwell said the company's problems cannot be laid at the feet of just three of its owners.
"Everybody is in the same boat," said Maxwell. "And it's difficult to row that boat when one of the passengers is hitting you with one of the oars."
Maxwell concedes that the casino faces high debt costs, but said it is fine, operationally. He accused Brinkman of failing to chip in to support the Aztec Inn.
"The three partners are supporting the company," said Maxwell. "The fourth partner is not."
Brinkman wants a judge to place the casino in receivership so he can recoup his investment.
"The business of the Aztec Inn Casino can only be carried on at a loss," states Brinkman's suit. "Kellogg, Vause and/or Drombowski have been guilty of such conduct as tends to affect prejudicially the carrying on of the business. ... Accordingly, a receiver should be appointed to conserve, preserve, protect and administer Aztec Inn Casino's assets and business..."
Mushkin doubts the casino will be forced into receivership.
"I believe the suit is without merit," said Mushkin. "At this stage I don't believe their request (for a receiver) meets the legal standard."
The Aztec Inn, at 2200 and 2210 Las Vegas Blvd. South, includes a 50-unit motel and five apartment buildings.