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The Byrne Report

Family Biz

COMING SOON to a wetland near you--courtesy of the Federated Indians of Graton Rancheria--the brothers Fertitta: Frank III and Lorenzo, owners of Station Casinos, the Las Vegas-based firm with an odds-on chance of building a casino just outside the city limits of Rohnert Park. Last week in this space, we learned that Station and the Fertittas spend a lot of snap buying influence with government officials. This week we look at the company's familial roots--and how the brothers Fertitta recently ran afoul of the Nevada Gaming Control Commission.

Back in the Roaring Twenties, two siblings from Palermo, Sicily--Rosario "Papa Rose" Maceo and Salvatore "Big Sam" Maceo--turned Galveston, Texas, into an illegal gambling and bootlegging paradise. "Ten percent of the island's population worked for the Maceos, and every merchant in town profited in some way from the rackets," claimed Texas Monthly magazine in 1993.

The Fertitta name appears to have first surfaced nationally in August 1955, when syndicate underboss Anthony Fertitta, related to the Maceo family by marriage, smashed a Life Magazine photographer in the face. After Fertitta pled guilty to assault, Life wrote, "The criminal conviction . . . helped to expose these 'legitimate businessmen' for the thugs they are."

By 1957, Texas Monthly reports, law-enforcement officials had "closed down the Maceo syndicate for good." But no matter. Gamblers everywhere were converging on Las Vegas, where their trade had been legalized. According to numerous press reports, Frank III and Lorenzo's father, Frank Fertitta Jr., left Galveston for Las Vegas in the 1960s, became a dealer and ended up building the first of what became a chain of publicly owned, family-controlled casinos.

In the early 1990s, after his name surfaced in media reports on casino troubles, Frank Fertitta Jr. retired from actively managing Station Casinos, handing over the reins to his sons, Frank III, who is now 43, and Lorenzo, who is 36.

The boys have been industrious. In addition to heading the family's Nevada-based gambling empire and developing and managing Indian casinos in California, the Fertitta brothers own and operate Ultimate Fighting Championships. Videotapes of bloody UFC battles mixing martial arts and boxing are shown on Spike TV. Ultimate Fighting Championships is licensed to stage the fights in Nevada, California and the Mohegan Sun Indian casino in Connecticut. The Fertitta brothers are also featured on the reality TV show American Casino. Although ultimate fighting was the subject of one episode of the hit Discovery Channel series, it's doubtful that the brother's battles with the Nevada Gaming Control Board will make it to the show's storyboard.

On Sept. 24, 2004, Station Casinos paid a $2.2 million fine after admitting to an 87-count complaint brought by the board. Nevada Deputy Attorney General Jennifer Carvalho told me that Station's violation of Nevada's gaming laws is a very serious matter. For her to comment on the case itself underscores its severity.

Several of Station's casinos failed to log and report hundreds of large customer cash transactions to the IRS, as is required by Nevada law. Station also evidently failed to report several such cash transactions as the cashing of multiple checks by single individuals (each single check may be under the reportable limit, but above the limit when totaled). Such financial reporting requirements comply with the federal Bank Secrecy Act, and are designed to detect money laundering by customers, as well as skimming by casino employees.

"It was a domino effect," Carvalho said. "Station self-reported a violation at one casino, and we ended up auditing all their properties. It was a system failure. Their internal auditors were not properly trained. We did not find any evidence of criminal money laundering, but they had not documented many transactions, records were lost. I hate to say it was chaos--that is a strong word--but there was no organization."

Station Casinos declined to comment for this story. In addition to paying the huge fine, Station officials promised the board that they will hire more internal auditors and clean up their financial reporting act. After more than 30 years in the business, you'd think the company might already have its act together.

These are the gambling "experts" that the Graton Indians and their leader, Greg Sarris, have partnered with to manage the tribe's proposed casino in Rohnert Park. Better watch out, local job seekers. In late January, seven female employees of the Auburn Indian Community's Thunder Valley Casino, managed by Station Casinos in Placer County, filed a lawsuit in Sacramento Superior Court "alleging sexual harassment, age and sex discrimination and wrongful termination." The lawsuit names the Auburn tribe and Station Casinos as defendants. The case may never be heard, however, because Indian nations are generally immune from civil law suits. How convenient.

Goodbye, Rohnert Park.

Hello, Galveston!

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From the February 23-March 1, 2005 issue of the North Bay Bohemian.

© Metro Publishing Inc.

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