Las Vegas Sun

November 21, 2018

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Unpaid markers upheld as bad checks

The Nevada gambling industry won a major victory when a federal judge in Las Vegas upheld the state's controversial practice of using bad-check laws to prosecute gamblers with unpaid casino markers.

Attorneys for gamblers facing criminal prosecution for failing to pay markers -- casino credit agreements -- say they are promissory notes, not checks.

U.S. District Judge Philip Pro disagreed.

"This court finds the disputed casino markers to be negotiable 'checks' (under Nevada law)," Pro wrote in an April 12 ruling dismissing a gambler's suit against Clark County District Attorney Stewart Bell and Caesars Palace.

Bell and several of Nevada's biggest casinos argued Nevada law specifically equates dishonored markers with bad checks.

They are defendants in 10 class action lawsuits filed by gamblers nationwide who claim Bell and the casinos violated the federal Fair Debt Collection Practices Act by using Nevada's criminal enforcement provisions to collect private casino debts.

Matthew Fleeger, a Dallas gambler who had accumulated unpaid markers in April 1998 that totaled about $184,000, sued Caesars Palace and prosecutors from Clark and Douglas counties in November.

His complaint contends that markers aren't negotiable checks or drafts, but they are instead IOUs or promissory notes representing a debt owed or a line of credit granted. He alleged Bell had illegally filed criminal complaints to prosecute civil debts, unlawfully issued and circulated arrest warrants in Nevada and other states and violated his rights to due process.

Fleeger is represented by Los Angeles attorney Richard Fine and Las Vegas attorney Robert Langford.

Though Fine has filed similar lawsuits in California on behalf of other gamblers seeking class-action status, Pro ruled only on Fleeger's suit against Caesars Palace because the proposed class has not been certified.

Pro ruled it is a violation of Nevada's bad check legislation to write checks without sufficient funds to cover them.

He ruled that any nonpayment of casino markers "would fall within the prosecutorial purview of the Nevada District Attorneys" and that this was "completely proper under a facial reading of Nevada's bad check statute."

His ruling upheld Nevada Senate Bill 335, which gives legal status to any gaming credit instrument dated after June 1, 1983.

The bill was passed by the Legislature to bolster Nevada's falling gaming credit collection rate in the early 1980s, which affected the state's tax revenues and casino profits.

Pro explained his definition of casino markers as "negotiable checks" because they "specifically state that the payor empowers Caesars Palace to fill in the amount, name, account number and address of any financial institution in which the payor holds funds."

"The markers also do not delineate any explicit dates for repayment, thereby subjecting the payor to a repayment obligation at the will of the payee," he ruled.

But Fleeger's attorneys on Tuesday disputed Pro's ruling.

"Either the marker is an outstanding debt to Caesars Palace or it's a check. You can't have it both ways," Fine said. "If a marker is a debt, it can't be a check. Because a check is a payment like cash, you're not creating debt. If a marker is a check, then there's no need for a credit line."

But Bell said, "we have a federal judge that says we're right."

"The casinos are doing business in an appropriate fashion. As long as there's a rule in the book on bad checks, we will continue to enforce it."

"The person who defrauded the casino doesn't want to live up to his responsibility and is trying to find a way around that. Fortunately for the lawful people in this state, the court ruled against that," Bell said.

Pro, in his ruling, also dismissed Fleeger's claims that Caesars Palace violated false imprisonment and false arrest laws when it caused him to be arrested and jailed in Texas for nonpayment of casino markers, saying this was "within the legal bounds of Nevada's bad check statute."

Fleeger's attorneys plan to appeal Pro's ruling by May 12 to the 9th Circuit Court of Appeals in San Francisco.

"It'll take a year or two for the 9th Circuit to decide whether to overturn Judge Pro's ruling or not. If we lose, we will file a petition with the Supreme Court," Fine said.

Fine said Pro's ruling won't deter the gamblers from continuing to ask for class certification to litigate against the District Attorney's office for its use of criminal law to collect bad debts.

"We have nine other pending cases against the Hilton, Caesars Palace, MGM Grand, Tropicana, Sahara and Harrah's and Bell," Fine said, adding the court hasn't ruled on those other cases yet.

"If we succeed in overturning Judge Pro's ruling in the 9th Circuit (court of appeals) or if he rules differently on any one of the other cases, then the class certification (request) will go on," he said. "We're hoping that Judge Pro may decide to rethink his opinion once he looks at the other cases, which have briefs that are more detailed and complete."

"The war isn't over. They may have won a battle, but it doesn't mean they'll win the war," Langford said.

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