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ATLANTIC CITY - At a press conference in February 2008, Gary Stein confidently predicted that Tropicana Casino and Resort would be sold by June. An agreement of sale was approved in June - June 2009.

As the state-appointed conservator of the troubled casino, Stein oversaw a tortuous sale that cost millions of dollars in consulting fees and dragged on for a year and a half, even though it was supposed to take only a few months.

With the casino finally sold and Stein's duties winding down, New Jersey casino regulators are discussing possible legislative changes to avoid another Tropicana-like saga if more gaming halls lose their licenses and are placed under the control of a conservator.

Perhaps most significantly, New Jersey's chief casino regulator supports the idea of limiting the fees that conservators and their professional consultants are paid. Linda M. Kassekert, chair of the Casino Control Commission, believes that fee caps would put more pressure on conservators to complete a sale as quickly as possible.

"I think that would have helped a little bit with our level of frustration, because it was tough," Kassekert said of Tropicana's sale.

Stein and his team of legal and management consultants did not have their fees capped. So far, they have racked up nearly $7.4 million in bills, with more to come. Tropicana has paid for all of the consulting costs, including the conservator's fees. The commission has final oversight of the bills, occasionally striking fees it thinks are inappropriate.

Kassekert seemed particularly irritated that Stein's lawyers would often rely on the commission's general counsel, Dianna Fauntleroy, for legal advice, yet would continue to collect big fees.

"We were working very hard, not that they weren't," Kassekert said. "But I look at what my general counsel makes as compared to some of those people. There were people who were making a good deal of money, but she was issuing all of the expert advice."

Stein is a retired New Jersey Supreme Court justice. His Hackensack law firm, Pashman Stein, is among the professionals collecting millions of dollars for their work in the Tropicana sale. Stein characterized the high cost of the consulting fees as regrettable but unavoidable.

"Nobody wanted to see the casino saddled with all the professional expenses," he said. "I have reviewed all of the invoices and made absolutely certain that the invoices were fair, reasonable and essential for the work that was done, including the work done by my office."

For his part, Stein believes he did the best job possible under extremely difficult circumstances. He said the sale was complicated by the recession, skittish buyers and the bankruptcy of the casino's former parent company. A protracted legal fight over Tropicana's ownership that made it all the way to the New Jersey Supreme Court effectively put the sale on hold for 11 months, he noted.

Tropicana was finally unloaded in a June 12 bankruptcy sale for the cut-rate price of $200 million. The buyers were a group of Tropicana's lenders headed by billionaire financier Carl C. Icahn. When attempts to find a new buyer began in earnest in early 2008, early predictions were that Tropicana would fetch $1 billion or more. Then the recession hit.

"The events of the last 18 months are unprecedented," Stein said. "Nothing like this economic downturn has occurred in this country since the Great Depression of the 1930s. No one could plan for this kind of catastrophic economic condition."

Tropicana had to be sold after the former owners were stripped of their New Jersey gaming license in December 2007 following a chaotic reign of mass layoffs, regulatory violations and customer complaints of unsanitary conditions. Stein then stepped in as the state's representative, as conservator, to oversee casino operations and search for a new buyer.

Stein also had been serving as Tropicana's trustee, a kind of corporate caretaker position while the casino goes through the licensing process. In most cases, the trustee is a mere legal formality, but Stein was thrust into control of the casino when former owner Columbia Sussex Corp. and its affiliate Tropicana Entertainment LLC had their license revoked.

The Casino Control Commission originally thought it would be a good fit to have Stein, the trustee, also assume the conservator role. But as it turned out, it was "ungainly" trying to mesh the requirements of the conservator and trustee at the same time, Kassekert said. She believes the state Legislature should address provisions of the casino conservator and trustee laws to resolve any conflicts or complications in the future.

Stein made it clear when he took charge of Tropicana that he knew little about the casino industry. "I'm not a casino mogul and never will be," he stressed in a December 2007 interview.

When Tropicana's sale continued to drag on, the commission thought it might be able to speed up the process by appointing a second conservator to run the casino while Stein concentrated on the sale, Kassekert said. But the commission never went through with the change.

Based on the Tropicana experience, Kassekert and Fauntleroy said it probably would be better to have the Legislature require that casino conservators must serve in a full-time capacity. Stein was only a part-time conservator.

"He was a hundred miles away, up in Hackensack, and that made it difficult," Kassekert said of Stein's commute to Atlantic City from his law office. "He would come down and was trying to do the best he could do under the circumstances. We sort of foisted it on him, because we really felt this was going to be a quick process."

E-mail Donald Wittkowski:

DWittkowski@pressofac.com

16 comments:

• weisenthal (261) posts 10:37 pm

  Wow, what a lunatic. Tyoical antismoking nazi, though. Mentally ill "God" complex. Think they have control, yet have none, in any case. Threaten violence, would carry through. Best locked up.

• weisenthal (261) posts 11:59 am

  Happy to see (not really) that violently mentally ill poster "Dr. Zaus" is currently not incarcerated. No need to try to get logic out of a mentally ill antismoking nazi who routinely posts threats of violence to their opponents, those who want the casinos to be left alone to conduct their rightful business without interference from the cigarette gestapo, the control freaks who feel they can live our lives better than we can. The Press site manager will probably remove the threatening post, but the existance of the sick minded psychotics that make up the antismoking nazi cigarette police will go on and on, until every American stands up for their freedom from neonazi control of these liberal control freaks.

• Republican4Mayor (161) posts 5:48 pm

  Stein and his team of legal and management consultants did not have their fees capped. So far, they have racked up nearly $7.4 million in bills, with more to come. Could it be that is why it went on sooooooo long? When is the last time you made $7.4 million in less than a year? Maybe they should have included his bills in the bankruptcy as well. THE ENTIRE DEAL STINKS OF CORRUPTION ONCE AGAIN!

• Apostle (1) posts 5:15 pm

   About CEOs – Anti Darwinian Metaphor – Survival of the Unfittest Posted by Carl Icahn June 16, 2008 : 8:15 PM The following is a metaphor I use. While it is slightly facetious, there is much truth to it. But keep in mind, there are many CEOs, even some I have sparred with, that are exceptions. Often, their companies are undervalued not necessarily because of them but because there are restructuring opportunities that their boards stand in the way of. CEOs that I have interacted with like Dick Parsons from Time Warner, Jim Kinnear from Texaco, David Roderick from U.S. Steel, Bob Rossiter from Lear, and Bill Fatt from Fairmont among others … do not fit the following metaphor. But unfortunately, there are too many CEOs in this country that the following does pertain to. Anti Darwinian Metaphor The way CEOs become CEOs in America is a travesty. This is one of our major problems. I use the anti - Darwinian metaphor. The survival of the unfittest. If you remember if you were in college the fraternity president was always there for you. When you had nothing to do or when you were a little depressed. Feeling down. You go to the club and the fraternity president would always be there. You wondered when he had time to study which he probably didn’t do very much of in school. He was there to sympathize with you if your girlfriend didn’t show up or didn’t call you back and you obviously sort of liked the guy because the fraternity president was usually a likeable guy. When the elections came up you would always vote for him. He had a couple qualities - the fraternity president. Politically, he was a survivor and he never made many waves. He did not promote controversy. Therefore when he went out into corporate America he was able to move up the ladder fairly quickly. Remember he survived, he didn’t make waves, and he wasn’t a threat. He kept moving up and up. Eventually he becomes the assistant to the CEO. The CEO had the same qualities. He’s a survivor. He’d never employ anyone underneath him who might be a threat. The boards like these guys… this type of CEO. The boards generally don’t own any stock (another problem with our system). The boards don’t really care to hold CEOs accountable. Remember it’s a symbiotic relationship. These guys pay the boards very well – they give the boards perks. The boards don’t care to hold them accountable because that might endanger the perks they love so much. When the CEO retires the assistant becomes the CEO. And remember what I told you. He’s a survivor. He would never have anyone underneath him as his assistant that’s brighter than he is because that might constitute a threat. So therefore, with many exceptions, we have CEOs becoming dumber and dumber and dumber. We can all see where this is going. It would almost be funny if it wasn’t such a threat to our ability to compete and to our economy in general.

• BernieSchwartz (464) posts 4:18 pm

  Next troubled Casino?? Aren't they all in trouble? Clean the beach, boardwalk and City and maybe people would want to visit. How many one legged bums can a tourists take in one day?

• weisenthal (261) posts 5:36 pm

  Atlantic City's ungracious fall is the joke of the east these days. Why not let insane antismoking nazis like "reality" take over the casinos and hand pick who is worthy of coming to their precious casinos, where everybody except the actual owners think they own the facilities? Why not? Not much more damage could be done that hasn't been done by the antismoking nazis and their criminal cohorts. The city is now doomed by the competition, the situation for these formerly exclusive casinos is hopeless. Just hand it all over to the antismoking nazis like insane "Reality" who's posts tipify the rude, surly, agressive, scary miscreants who have frightened away all the former patrons and be done with it. Best hope for employment in Atlantic City besides being a prostitute or drug seller?--get into the demolition business. It promises too get very lucrative in the near future.

• Pinesboi (10) posts 3:34 pm

  Everyone points their fingers at the AC mayor, council, school boards and goverment and says they are fools, crooks and cheats (which I don't deny) but is Stein, Kassekert and the rest of these monkeys any better? I say no they are not. So if you find yourself saying what a moron Langford is don't forget equal-opportunity. Let em know what you think of the CCC team also.

• beachone (26) posts 2:27 pm

  We spent a few days at the Trop this past week and then at another casino hotel and both places were very clean. In fact I saw cleaning at both locations that go beyond the norm. Our rooms at the Trop were well kept and the housekeeper did a fine job with the daily cleaning they provided. Now the problem that we had was actually the service we received at several eateries within the Trop. These places were not Trop operations but independent operations, poor very poor service. The young servers paid more attention to their cell phones and other things than to the customer. When the customer has to request something from the server time after time then there is a problem. The biggest complaint everyone heard at all of the casinos was the tightening of the machines. We witnessed very little hand pay jackpots and just trying to cashout a ticket with any wining was nearly impossible. Until the casinos loosen up the machines people are not going to return. b

• Reality (1) posts 2:08 pm

  Atlantic City needs to ban these drug addicted smokers once and for all. This will improve the win percentage. The quality of the casino customer will improve once you rid the casino floor of these cigarette junkies. These druggies are the bottom dwellers of society, banned from nearly every business in this state but the casino floor. These junkies are not wanted anywhere in this state. They are a menace to society. Who wants to be next to one of these lowlifes at a table game or a slot machine? These people are ignorant, and stink. Their breath, clothes, and hair wreak of tobacco. The casino will have happier, healthier customers and workers once these druggies are banned. These drug addicts will still come to gamble, they are animals, and animals adapt to their surroundings. It's time for these drug addicts to go where they belong, to smoke with their other fellow druggies. You junkies think you are being treated like second-class citizens? Wrong, you addicts have NO class, so being treated like second-class is a step up for you losers! This little piggy went to market, this little piggy stayed home. Do us a favor piggies- stay home!

• casinopeg (14) posts 12:46 pm

  Crusader you are wrong about the trumped up charges of dirty rooms and staff cuts. I have been going to the trop for over ten years and no a lot of people you got there jobs cut. The bathrooms were dirty and the casino floor was also dirty. You were lucky if you had towels in your room. Since they have been running it with out that owner it is cleaner and the service is better.

• PennsylvaniaSucks (93) posts 12:35 pm

  yeah yeah yeah... you were all predicting that Tropicana would be shut down and you were proven wrong. Don't like A.C.? Stay out. Problem solved. Bunch of crybabies in this forum.

• layoffvictim08 (17) posts 11:46 am

  Stein has it backwards: Corruption and casino mismanagement all created on behalf of corporate greed led to the economic downturn! And unfortunately, this continuous wheeling and dealing and dancing to avoid future bankruptcies will only create more harm than good. The casino industry in A.C. will never be the same. There will always be layoffs and a lack of benefits from here on out, a revolving door for employees. There's going to be so many casinos being built here and there and everywhere that everybody's backyard will have casino one day!

• crusader (3) posts 11:09 am

  Governor Corzine will not do it but you can bet your bottom dollar that if Chris Christie is elected Governor in November he will appoint a special commission to investigate Denial of a license by the casino control commission at Linda Kassekert and a Unions urging and the sellout and rape of the assets of Tropicana after the takeover by the State appointed clowns.

• crusader (3) posts 11:01 am

  Back in December of 2007 when Kassekert and her cronies in the union teamed up to deny Tropicana a license to operate based on some trumped charges of dirty rooms and staff cuts the courts and politicians supported the decision.Now years later when all the lawyers and conservators milked Tropicana for millions and caused the bankruptcy and loss of a billion dollars to the investors in Trop. Kassekert now wants the state to change the law so conservators and Lawyers will get less when she and her cronies take another license under false pretenses and appoint conservators who will milk the job the same as Stein and his crew did. But worry not, no casino company in their right mind will ever again build in Atlantic City with the corruption there and the present casino control commission.

• Nikynewark (75) posts 8:19 am

  icantstandit has it right. How do you turn down a higher offer in favor of a lower one? The original offense (bad housekeeping) didn't justify the fiasco that followed. No wonder AC is circling the drain waiting for the death blow when Foxwoods Philly opens. I don't see multiple casino or slot parlor ownership in CT or NY. But in AC the casinos are controlled by a limited number of owners and CCC allowed it. With limited competition AC is failing. One casino/one owner just like when AC was the hot place to be.

• icantstandit (21) posts 10:51 pm

  Well gee---Do you suppose there was outright theft going on? It cost 7.4 mil for Stein to botch the job. He could have sold the Trop for 500 million more that they got, but the price was "too low", and all because he wasn't ready to leave his profitable position. He should be fired and then arrested. But it's just now that Kessekert thinks changes should be made? Fire her and the whole incompetent CCC too. With friends like this bunch, NJ doesn't need enemies!

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