Thursday, Feb. 19, 2004 | 11:36 a.m.
Nevada gaming regulators have filed a complaint against Las Vegas topless dancing club owner Pete Eliades, charging that he sold a 50 percent stake in his Olympic Garden club without obtaining required approval from the state Gaming Control Board and the Nevada Gaming Commission.
In a three-count complaint filed Feb. 11, the Control Board charged that Eliades' failed to gain regulators' OK before his December 2002 sale of the half-interest in his Las Vegas Boulevard strip club to Los Angeles businessman D. Michael Talla and two other investors for $15 million.
Eliades and the Olympic Garden hold a restricted license to operate slot machines at the property; the club currently operates 13 video poker machines. He faces a possible suspension or revocation of his gaming license and a fine of as much as $300,000.
Nevada gaming regulations require commission approval before gaming license-holders can sell or transfer ownership, rules that are strictly enforced as a way of keeping organized crime and other unsavory interests out of the state's leading industry.
"The ownership rules are the foundation of the state's gaming regulation," former Control Board Chairman Steve DuCharme said today. "It goes back to the days of hidden ownership and is based on the belief that gaming revenue should only go to those who are found to be suitable."
The complaint charges Eliades with selling the 50 percent share of Olympic Garden despite having been disciplined in 1995 for failing to advise regulators he transferred his sole proprietorship to a corporation he owned, an action he later reversed.
He tried to make a similar transfer with regulators' approval in 2000, but withdrew his application after regulators expressed concern about the request, the complaint noted.
"Based on the prior disciplinary action in 1995 and the events that occurred as a result of filing an application in 2000, Eliades knew that he should have filed an application prior to the sale of his 50 percent interest,' the complaint noted.
The control board also charged that Eliades made contradictory claims to gaming regulators and to the City of Las Vegas about the new investors' roles in the management of Olympic Garden.
Eliades' lawyer, Frank Schreck, was not available for comment, but Eliades said that he was following his lawyer's advice.
"I'm not here to break the law," Eliades said Wednesday. "My partners have no rights to the gaming, no rights to the gaming money, so where's the problem?"
Eliades and Talla are embroiled in a legal battle for control of another strip club they co-own, Sapphire on Industrial Road, that is connected to the Olympic Garden ownership matter.
Eliades' sale of the portion of Olympic Garden to Talla and his partners was incentive for Talla to sell Eliades a half-share of the former Sporting House Athletic Club.
In a lawsuit filed in June, Talla accused Eliades of fraud and of interfering with his business interests. Talla charged Eliades with failing to give his company its share of Olympic Garden's slot winnings, which he estimated at $1.2 million a year.
Eliades filed his own lawsuit one month later, claiming that he was "the victim of a criminal conspiracy to cheat him out of his income' from his ownership of Olympic Garden and his interest in Sapphire.
Eliades and his lawyers have 20 working days to respond to the Gaming Board complaint; if a settlement with the Control Board is not reached, the Nevada Gaming Commission would hold an administrative hearing to determine whether rules were broken and if a fine or other punishment should be levied.
Gaming Control Board Chairman Dennis Neilander said he signed the complaint along with Bobby Siller and Scott Scherer, the other two board members, because he believes Eliades intentionally broke important gaming regulations intended to keep unsavory interests out of the state's biggest industry.
"It appears there was a transfer of interest that took place without the prior approval of the Nevada Gaming Commission," Neilander said.
Neilander declined comment when asked whether the board is investigating the backgrounds of Talla and his partners.
In an earlier run-in with regulators, Eliades paid a $25,000 fine in 2002 after regulators filed a complaint charging that dancers at the club had been arrested for soliciting acts of prostitution and for a website linked to the club's site that displayed pornographic images.
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