Park Place appealing $8 million judgment won by high-roller

By Liz Benston

Thursday, Dec. 5, 2002 | 11:18 a.m.

In the casino business, they say, the house always wins -- a truism that has prompted numerous gamblers to try their skill at counting cards or by outright stealing.

A federal jury verdict last month, however, marked a surprising turnaround for a casino giant used to pouncing on potential cheats.

Last month, a U.S District Court jury in Las Vegas sided with high-rolling gambler Steven Mattes in a fraud suit against Park Place Entertainment Corp., awarding Mattes close to $8 million in damages on all seven charges leveled against the company, including $1.5 million in punitive damages.

The suit -- a far cry from casinos' typical disputes with gamblers over jackpots -- has attracted notice from casino insiders and prompted an investigation by state casino regulators into claims that the company lied to Mattes and cheated him out of millions of dollars.

Park Place has repeatedly denied the charges and is expected to file today in federal court a motion for a new trial and a second motion that would ask the judge in the case to determine whether there were lawful grounds for one or more of the verdicts returned. The company says it anticipates filing an appeal with the 9th Circuit Court of Appeals in San Francisco after it exhausts other avenues. U.S. District Judge James Mahan signed the $8,026,000 judgment last week.

"What really is under attack by Mr. Mattes is the integrity of the entire regulatory system we have worked so hard to establish here in the state of Nevada," Park Place spokesman Robert Stewart said. "Mr. Mattes' tale is predicated on a massive conspiracy theory -- that more than a dozen Park Place employees somehow evaded every check and balance ever put in place by state regulators and then managed to miraculously keep their silence over the last three years."

"Mr. Mattes produced no evidence to support that theory. The truth is, we carefully followed procedures ... established by state regulators -- and we have the records to prove it."

The state Gaming Control Board completed a regularly scheduled months-long audit of Park Place's Paris and Bally's resorts on the Las Vegas Strip in 2001 and turned up no irregularities with regard to either Mattes' play or company's bookkeeping, said Scott Mahoney, vice president and general counsel of Park Place's western region.

State Gaming Control Board Chairman Dennis Neilander said this week that the board has been aware of the charges against Park Place since the original complaint was filed and is investigating the charges. Neilander declined to elaborate or comment on specific allegations.

The publicity surrounding the verdict not only gives Park Place a black eye but shakes the very foundation of trust essential to maintaining relationships with high-rollers.

Mattes, a Los Angeles-area businessman, has more than 20 years of experience as a gambler at casinos worldwide and often came to Las Vegas to play high stakes blackjack, sources say.

"This is bad for business," said one casino source who declined to be named. "If I were a high-roller and I could gamble anywhere I wanted, I'd think twice about coming to Las Vegas."

The case also sheds light on an esoteric world rarely seen by the average casino patron. The gaming industry, praised for its squeaky-clean financials and extensive background investigations on key employees, has emerged from its Mob-run legacy as one of the most highly regulated industries in the world. Those controls extend to disputes that are often settled with help from the Gaming Control Board before escalating to a courtroom trial.

In this case, both sides accuse the other of not seeking the board's assistance in settling the dispute.

In December 1999, Mattes filed suit in Los Angeles County Superior Court against Park Place and its Bally's Las Vegas and Paris Las Vegas casinos. The federal charges leveled against the company prompted a move to federal court in Southern California. The case was later transferred to federal district court in Las Vegas, where the trial took place last month. Kevin Mirch, a Reno-based attorney and one-time casino owner known for prosecuting Prudential Insurance for fraud, began to represent Mattes after the case was transferred to Nevada.

The suit centers on activity that took place over four days of gambling by Mattes during the opening weekend of Paris Las Vegas, Park Place's French-theme casino resort that opened on the Las Vegas Strip in September 1999. Mattes was invited by a Paris casino host -- a person who arranges trips and authorizes complimentaries for high-rollers -- to gamble under a $2 million line of credit.

The original complaint alleges that Park Place breached a contract with Mattes by refusing to extend him more credit after he spent through the $2 million in addition to earlier gambling winnings. Mattes, according to the complaint, asked the casino to stop payment on a check for gambling winnings earned during an earlier trip to Bally's Las Vegas. The casino stopped payment on the check but refused to allow Mattes to gamble further at Paris, instead ushering him to the Las Vegas Hilton, another Park Place property.

The Paris casino host, Tom Bonnane, initially told Mattes that the reason he was asked to leave Paris was because Mattes had written some bad checks in the past, the complaint says.

"Upon further inquiry, (the host) informed Mr. Mattes that the real reason for revoking the... line of credit and expelling Mr. Mattes to the Las Vegas Hilton, which is owned by Park Place, was that they were concerned with the bottom... line for the grand opening and wanted to show a profit and that Mr. Mattes' numbers made the grand opening look great," the complaint continues.

Check-kiting rumors were spread to other company executives, effectively blackballing Mattes from Park Place properties, the complaint says.

The charges grew more insidious, Mirch said, after new information surfaced during the discovery period of the trial.

Over the course of several interviews with Park Place staff and after poring over internal company documents, Mirch obtained what he calls a damning array of details showing that Park Place tampered with the documents to show losses by Mattes instead of gains. Park Place lured the high-roller and his family on an expenses-paid trip to Las Vegas to try and win back the money Mattes had won from an earlier trip to Bally's, Mirch said.

"This is outright fraud," he said.

Park Place accuses Mirch of using complex financial documents to confuse and misinform the jury.

"If he sees a piece of evidence he doesn't like, his response is that (Park Place) made it up," Stewart said. "The jury was looking at dense, complicated documents. On the other side, they had a simple story from Mr. Mattes. The story simply wasn't true."

Paris stopped payment on the check to pay down previous casino markers owed by Mattes, Park Place's Mahoney said. Mattes was not allowed to gamble further because the casino was concerned about his ability to repay further debts.

Mattes' credit history is not as spotless as Mirch led the court to believe, Stewart added.

While Mattes' consumer credit report may be superlative, a separate report obtained from Central Credit Corp., the leading credit agency casinos rely upon to rate gamblers, shows that Mattes had stopped payment on other checks, he said.

Mattes has been granted credit lines because he has millions of dollars in the bank to back up his play and because he repays his debts, Mirch said.

"This was the kind of guy every casino wants. He doesn't swear. He doesn't drink. He's a family man."

Park Place kept sloppy, and at worst, false records on how much Mattes had lost to the casino, he said.

Mirch said he showed the jury Paris casino markers that appear to contain signatures for Mattes that are forged. The markers also are incomplete, he said, lacking key employee signatures.

Another marker, the last generated for Mattes during his trip, isn't signed by anyone -- a blatant violation of casino policy, Mirch added.

The casino also taped over surveillance videotapes of Mattes' play -- another violation of casino rules that require casinos to keep tapes involving customer disputes, he said.

Mattes testified that he did not recall signing all the markers, according to Mirch and Park Place attorneys.

Park Place says the markers are legitimate and were completed properly. Moreover, Mattes signed off on the final terms of what he owed, attorneys say.

"We thought the issues were resolved," Mahoney said. "The only dispute we were aware of was that he (argued for) more credit... which we refused."

Mattes only failed to sign one marker, Park Place says. The marker, for $50,000, probably wasn't signed because Mattes -- who typically bet up to $30,000 per hand -- had likely lost the money quickly and left the table before signing the marker, said Park Place witness Dave Ellis, director of cage operations at Bally's and Paris.

Mirch says he also showed the jury "rim cards" generated while Mattes was playing blackjack. Rim cards track each time a high-roller takes or pays money back to the dealer during the gambling session. The cards, which resemble an accountant's ledger, allow gamblers to play through wins and losses without stopping to sign markers issued by the casino.

While the rim cards showed Mattes had lost money, other internal documents produced by Park Place showed that he was up by several million dollars, Mirch said.

Park Place denies the charge, saying the internal documents show duplicate figures aimed at explaining to casino regulators how money is subtracted from or added to earlier totals.

Whether or not Park Place is at fault, observers say the trial presented an argument for tighter controls on rim card play.

Rim cards let high-rollers with credit margins borrow or pay back money to the casino while gambling and allow casinos to track on the fly the tens of thousands of dollars that can change hands in a matter of minutes. High-rollers often prefer "playing on the rim" to avoid interrupting a fast-paced game to sign markers. Casino employees must carefully record and sign off on each transaction to ensure that the casino has documentation of what gamblers owe or have won.

Casino markers -- which show the amount left over on the gambler's credit line -- are typically generated after a gambling session is over and are signed by the customer in addition to the dealer, a supervisor and a casino cage clerk.

Rim cards -- more than any aspect of casino recordkeeping -- are subject to human error, experts say.

"Rim credit is a dangerous thing. There's a human element here," said one casino manager who declined to be identified. "This may be the catalyst to eliminate rim credit."

Another concern by casino insiders is that the case could weaken casinos' authority to refuse gamblers credit or ask customers to leave.

Casinos may advance and withdraw credit for any reason and may also eject anyone from the floor -- a tactic that has been used to bar card counters or people who are disturbing other customers.

Casinos may be more careful about how they set up credit arrangements beforehand, said another casino source who declined to be named.

Park Place recently suspended Bonnane, the casino host named in the suit, for allegedly accepting a personal loan from Mattes for about $250,000 prior to the lawsuit.

At trial, Bonnane admitted to accepting the loan, presenting a major conflict of interest for a casino that has hired a host to attract business, Mirch said.

Bonnane has been suspended pending further investigation into the loan, Stewart said.