Wednesday, March 3, 2010 | 1:13 p.m.
The state Gaming Control Board has recommended approval of a slot-route license for a Henderson company whose owners once operated payday loan stores that were closed voluntarily after being notified by the Nevada Financial Institutions Division that they were violating state lending laws.
Coxman Gaming LLC was unanimously recommended for approval by the three-member board today, but not after a 2½-hour hearing during which board members questioned the management’s lack of oversight of Cashbox LLC, a subsidiary that grew to operate 10 payday loan stores in Southern Nevada.
The board recommended a limited slot-route and distribution license so Coxman will be able to operate slot machines in seven convenience stores and two small sports bars, in Henderson and North Las Vegas. Coxman, operated by Chet and Karla Cox, has held five restricted gaming licenses in Nevada over the last 15 years, last appearing for licensing in 2008.
But a Coxman subsidiary got most of the board’s attention today.
According to orders issued in November and December by the Financial Institutions Division, state audits conducted in 2007, 2008 and 2009 determined that violations were found in five of the company’s short-term loan outlets.
Regulators found the operation illegally made loans greater than 25 percent of the customer’s gross monthly income, made multiple loans to the same customer at the same time, made title loans without regard to the customer’s ability to repay and charged interest and late fees on loans that had been rescinded or in default.
Stores also made title loans larger than the fair-market value of the vehicles used as collateral and began repossessions on vehicles before the end of the terms of some loans. Regulators also uncovered a variety of accounting errors and omissions.
Cashbox agreed to pay $50,000 fine, surrender its state license and shut down as part of a November 2009 consent order with the state agency. Cashbox managers engaged in misconduct, the Coxes said, and were fired.
Coxman no longer operates any payday loan outlets.
Board members said they were concerned about the Coxes’ lack of oversight to the loan businesses, even though they had about a 90 percent ownership of the operation.
“This has been an ongoing, torturous nightmare getting this cleaned up,” Karla Cox told board members, adding that she first learned of the problems in February 2009.
After chastising the Coxes for their lack of oversight, the three board members said they would be watched closely in their operation of the slot route.
In its recommendation, the board ordered a limited license, meaning that the company would have to appear before the board again in 2012 to continue being licensed. The board also ordered the company to employ a certified public accountant to oversee the slot route business.
Coxman also agreed to have a compliance committee to help guide the company – an unusual strategy usually used by much larger companies.
The board’s recommendation is expected to be reviewed for final approval by the Nevada Gaming Commission on March 18.
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