Company that Sold Land for Casino Says It Was Gamed Out of Rightful Price

Friday, January 6, 2017

The Massachusetts Gaming Commission has a big fight on its hands with the guys who sold the land for a casino in Everett to Steve Wynn.  If the commission loses, it could be out millions of dollars.

FBT Everett Realty filed a civil suit against the commission in Suffolk Superior Court, Boston, on Nov. 15, accusing it of “tortious interference” in FBT’s contract with Wynn Resorts, of Las Vegas, Nevada. [FBT is represented in the case by the Boston law firm of Todd & Weld, which boasts on its web site, "Our clients turn to us for the highest level of trial advocacy because they know that we begin to prepare every case for trial from the day it comes in the door."]
Under a binding legal option, FBT had committed in December of 2012 to selling the land to Wynn for $75 million.  But, due to subsequent “interference” by the commission, Wynn cut the agreed-upon price by $40 million, the lawsuit says, and forced FBT to accept the lower figure by threatening legal action against FBT.

The commission’s interference was motivated, the lawsuit claims, by a desire to deprive FBT of a “casino-related premium” on the land because the commission mistakenly believed a convicted felon, Charles Lightbody of Revere, who’d once been a member of FBT, was still involved in the ownership group, and the commission did not want him to make money on the transaction.   Felons are prohibited by Massachusetts law from profiting on a casino operation.
The lawsuit documents tell a version of the well-publicized tale of how Lightbody, during phone calls to a friend in prison, was caught on tape apparently crowing about the casino.  Here are some of the key paragraphs from the suit:

“On July 2, 2013, Lt. Kevin Condon of the IEB was informed by then-Major Frank Hughes of the existence of a series of recorded phone calls between Charles Lightbody and Darin Bufalino, an inmate in state prison.  In these calls, which were being monitored by state and federal law enforcement, the two men discussed the Everett casino project and gave law enforcement the impression that Mr. Lightbody retained some kind of ownership interest in FBT.  Lt. Condon has testified that the tapes were concerning to him because he ‘believed that would affect the entire gaming process if a person like Charlie Lightbody was involved in it.’  [Note: The IEB is the gaming commission’s internal law enforcement unit, the Investigations and Enforcement Bureau.]
“Shortly after Lt. Condon and Major Hughes listened to the Lightbody/Bufalino tapes, Lt. Condon determined that the IEB should interview the principals of FBT.  Those interviews took place between July 9 and July 16, 2013.  The three members of FBT, Dustin DeNunzio, Anthony Gattineri and Paul Lohnes, were interviewed, as was Mr. Lightbody, a former member of FBT.  The IEB also sought to interview Gary DeCicco, another former member of FBT, but Mr. DeCicco refused to speak to the IEB.

“During their consensual interviews with the IEB, Messrs. DeNunzio, Gattineri and Lohnes each identified Mr. Lightbody as a former owner of FBT.  The IEB (erroneously) believed, however, that the FBT principals had lied during their interviews regarding the ownership status of Mr. Lightbody in FBT.  The IEB believed either that Mr. Lightbody was still a hidden owner of FBT or, alternatively, that the FBT principals had falsified paperwork making it appear as though Mr. Lightbody had exited FBT in August 2012, rather than at some later date.
“The IEB and the Gaming Commission were angry at the FBT principals’ perceived malfeasance and the possibility that they would receive a substantial profit from the sale of the Everett Parcel if Wynn Resorts received a casino license.  This is evident from internal emails and other documents memorializing internal discussions at the IEB and Gaming Commission, the content of the IEB’s suitability report on the Wynn application, public meeting transcripts, and sworn witness testimony from a subsequent federal criminal trial.”

This thread in the suit concludes with:
“In order to impose a financial penalty on FBT and its members, one that the Gaming Commission knew it had no lawful authority to impose, the Gaming Commission devised a plan to ensure that FBT did not receive any casino-related premium for the sale of its land to Wynn Resorts.”

The enabling legislation for casino gambling, Chapter 23K of the Massachusetts General Laws, says that “ensuring public confidence in the integrity of the gaming licensing process and in the strict oversight of all gaming establishments through a rigorous regulatory scheme is the paramount policy objective” of the law. 
The power and authority granted to the gaming commission under Chapter 23K is supposed to be “construed as broadly as necessary for the implementation, administration and enforcement of the law.”

Did the commission and its investigators have a responsibility to pursue aggressively the facts concerning Lightbody’s standing in, or involvement with, FBT Everett Realty? 

Did the commission act appropriately when it took Lightbody’s former and/or supposed affiliation with FBT, fashioned it into a club, handed it to Wynn, and encouraged his company to use it as a device for saving $40 million?
Doubtful, I’ve always thought.

It’s not hard to see why DeNunzio, Gattineri and Lohnes are eager to put the commission’s action in this regard to a legal test.  (Wouldn’t you, Mr. and Mrs. Prospective Jurors, do the same?) These guys paid $8 million for the former Monsanto Chemical property in Everett in 2009 and were poised, three years later, to secure a 900 percent-plus (gross) profit by selling it to Wynn for $75 million.
As a direct result of steps by the gaming commission, they lost 53 percent, $40 million, of what they almost had and have always believed they should have collected.

I don’t think there were many who thought DeNunzio, Gattineri, Lohnes, et al. had made a good move when they acquired the property because it was severely and extensively contaminated and because its prospects for conventional redevelopment purposes were, at the time, quite dim.  They took a big chance and got extremely lucky when the state legalized casino gambling and Steve Wynn came to town, burning to vanquish the competition at Suffolk Downs/Mohegan Sun and capture the sole available casino license for Eastern Massachusetts. 
That’s the American way. 

Congratulations and good luck to each of them, I say.

Do not be surprised if the gaming commission tries to have the suit dismissed on the ground that Wynn was not named as a defendant by FBT.  If it were dismissed, FBT would almost certainly be glad to insert Wynn in the case and refile it.  Then the serious negotiations would commence. 
I was not smart enough to go to law school.  That should (but won’t) stop me from hazarding a guess, i.e., Wynn and the commission could end up contributing as much as $10 million each to make this thing go away.




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