A Caesars Entertainment subsidiary signed a licensing deal with a New York hotel firm after Caesars’ own investigation turned up material alleging a principal in the hotel company had ties to Russian mobsters and had helped sponsor a visa for a reputed professional hit man, according to a report from Massachusetts casino investigators.
Caesars, the former partner of Suffolk Downs, withdrew from the racetrack’s East Boston casino venture Friday, at the urging of its partners, after learning that state investigators would recommend to the gambling commission that Caesars be disqualified from bidding for a Massachusetts license.
Suffolk Downs is in talks with other gambling companies to replace Caesars. Hard Rock International and Rush Street Gaming are leading contenders. The casino proposal is facing Nov. 5 referendums in East Boston and Revere.
Caesars confirmed over the weekend that state investigators had raised red flags over a branding deal with Gansevoort Hotel Group, a New York boutique hotel company. Caesars severed the agreement after Massachusetts regulators flagged it as a problem.
In early 2013, Caesars announced it had entered into the branding deal with Gansevoort, essentially to use the Gansevoort name on the former Bill’s Gamblin’ Hall in Las Vegas, which Caesars is refurbishing. The 20-year agreement required Caesars to pay Gansevoort a fee based on hotel room revenue, according to the report. The fee was not based on gambling revenue.
State investigators raised issues with one of the principals of Gansevoort, Arik Kislin, who was alleged in a 2012 New York Post article to have ties to Russian mobsters.
Massachusetts investigators found that a Caesars corporate investigator had conducted a check into Kislin’s background, turning up several pieces of eyebrow-raising material.
That material included an article published in 2000 by the Center for Public Integrity that reported allegations that Kislin’s uncle was a member of a Russian organized crime group and that the uncle owned a business allegedly being used by another man, Michael Chernoy, for fraud and embezzlement from Russian banks. Other reports the company reviewed said Chernoy faced a worldwide arrest warrant from Spain for money-laundering and organized crime charges, and that a company Kislin owned once cosponsored a US visa for Anton Malevsky, a man alleged to be a Russian assassin for a Moscow crime gang, according to the report.
Further investigation by Caesars turned up additional information that suggested that Kislin had ties to criminals and criminal activity, the report stated.
“During this investigation, investigators have consulted with various law enforcement entities, including the Federal Bureau of Investigation, regarding Arik Kislin and the information detailed within this investigative report,” state investigators wrote. “In response to our request for information, we received information from the FBI that Arik Kislin is in fact known to them and has been linked to various members of Eurasian Organized Crime.”
Commission investigators also took issue with Caesars’ debt, its treatment of a high-roller who claimed the company encouraged him to gamble while intoxicated, and the work history of a Caesars executive who was chief executive of two companies that came under scrutiny by the Department of Justice for illegal Internet gaming operations while he ran them, according to the report.
A Caesars spokesman responded to the report last night.
“We strongly disagree with the staff recommendation and were prepared to address each of the concerns raised by the report,” the spokesman said. “We withdrew our application at the urging of, and in deference to, our partners in the project.”
Investigators also raised questions about the financial suitability of Richard Fields, largest shareholder in Suffolk Downs.
The review of Fields’ personal income tax returns revealed continuous reporting of significant losses, the report states.
“The absence of any positive income has resulted in the investigators being unable to determine Fields’ ability to contribute to future capital funding requests from the board of managers of Suffolk Downs.”
Investigators wrote that Joseph O’Donnell, another major owner of the track, told them that “Fields’ possible inability to satisfy future funding requests would not be a detriment to the casino project.
“O’Donnell informed us he would cover any unfunded capital calls which may occur in the future,” the report states.
Suffolk Downs’ chief operating officer, Chip Tuttle, said in a statement Wednesday that after reviewing the full report, the remaining partners were confident Suffolk Downs would pass the background check and be deemed suitable to bid for a casino license.
The commission will hold a public hearing on the contents of the report on Oct. 29.
Suffolk Downs is competing for the sole Greater Boston resort casino license with a Wynn Resorts project in Everett and a Foxwoods proposal in Milford.
The commission is expected to award the license in early 2014