Failed Rosemont casino suit ends with $272 million verdict
A federal judge ruled that six former officers of the failed Emerald Casino bid in Rosemont owe creditors $272 million for losing the company's gaming license.
The six men each owe $45.3 million for failing to comply with the Illinois Gaming Board's rules and regulations, which resulted in the state agency yanking the company's gaming license in 2005 in an unprecedented move, wrote U.S. District Judge Rebecca Pallmeyer in an opinion released Tuesday.
Pallmeyer's opinion found former Emerald officers Walter P. Hanley, John P. McMahon, Joseph McQuaid and Kevin D. Larson liable for the loss of the gaming license, which inevitably led to the bankruptcy of the company. The judge also ruled against the estates of father and son Donald F. Flynn and Kevin F. Flynn, who died in 2011 and 2013 respectively.
Frances Gecker, Emerald's bankruptcy trustee, sued the six men as well as a seventh former officer — who Pallmeyer determined was not responsible for the loss of the gaming license — to recoup losses by nearly 100 different creditors, said Gecker's attorney Catherine Steege of Jenner & Block. Steege said the estate of former Chicago Bears Hall of Famer Walter Payton was one of the creditors owed money by Emerald.
“I'm very pleased with the ruling and everybody worked very hard to get there and we'll see where it goes from here,” Gecker said.
Gecker had initially sought more than $500 million from the defendants, which was the value of one of the bids for the state's 10th gaming license. But Pallmeyer based the financial verdict on the purchase price of the gaming license that eventually went to the operators of Rivers Casino, which is located just down the road from Rosemont in Des Plaines.
The Emerald Casino saga had auspicious beginnings and always lingered under a pall of controversy that finally came to a head in 2001 when state regulators began looking into allegations of mob ties with potential investors.
The state finally revoked the corporation's gaming license after determining that the board had lied to regulators and withheld information from the state that casino operators are required to disclose.
The casino was under construction at the time of the investigation, but was soon halted and eventually demolished. Much of Rosemont's expansive entertainment district now rests on the former casino site.
Attorneys for the defendants refused comment regarding Pallmeyer's verdict.
Steege said the parties are due back in court later this month. She said Pallmeyer's opinion didn't address at least three other claims in the suit and her opinion needs to be officially entered as a judgment before moving forward.