The Day - Mohegan Sun drops lawsuit against 'whale' for $10M debt | News from southeastern Connecticut
Article published Sep 17, 2010
Mohegan Sun drops lawsuit against 'whale' for $10M debt
By Brian Hallenbeck Day Staff Writer
Attorney claims casino erred in granting credit
Mohegan Sun has abandoned a lawsuit against a high-rolling gambler it claims refused to pay a $10 million debt he ran up at the casino's baccarat tables in 2008.
Glenn Coe, an attorney for the Mohegan Tribal Gaming Authority, which operates the casino, filed a withdrawal document Wednesday in New London Superior Court, where the authority's case against Ausaf Umar Siddiqui of Palo Alto, Calif., was scheduled to go to trial Thursday.
The move short-circuited a case that might have offered a rare glimpse of the way casinos negotiate with so-called "whales," who can gamble millions of dollars in a single sitting.
M. John Strafaci, the New London attorney representing Siddiqui in the case, said he would have argued that the casino illegally extended credit to Siddiqui, who it should have known was a problem gambler with little or no ability to pay the huge debt he allegedly incurred.
Strafaci also said the casino failed to put in writing the terms of its arrangements with Siddiqui, as called for in the casino's gaming compact with the state and in its own operating procedures.
"As far as we know, top executives loaned him $10 million without so much as writing an IOU on a cocktail napkin," said Strafaci, who had issued subpoenas to Mitchell Etess, Mohegan Sun's chief executive officer; Anthony Patrone, the casino's senior vice president of marketing; and John Meskill, director of the Mohegan Tribal Gaming Commission.
Siddiqui, known for making flamboyant demands for creature comforts at the casinos where he gambled, wrote the authority a $10 million check before gambling at Mohegan Sun in December 2007, according to the authority's suit, which was filed in November 2008. The check bounced when the authority deposited it in a bank in June 2008, after Siddiqui had gambled and lost "at least $10 million." Siddiqui has since failed to pay up, according to the suit.
In January 2009, a federal grand jury in California returned an 11-count indictment charging Siddiqui with wire fraud, money laundering, forfeiture of wire fraud proceeds and forfeiture of money laundering proceeds.
The IRS alleged that Siddiqui raised money to pay gambling debts at casinos in Las Vegas and elsewhere through a kickback scheme he masterminded at the electronics firm where he worked. Siddiqui pleaded not guilty to the charges, which are pending.
"Given his current situation … we no longer felt there was any reason to pursue it," Etess said Thursday of the suit's withdrawal.
Etess declined to discuss the casino's position further. "It doesn't do me any good to speculate about a trial that might have happened," he said. "Mr. Strafaci is entitled to his opinion. The fact is, Mohegan Sun is far from the only casino or party that is in this situation vis-a-vis his client … who has been charged with wire fraud and money laundering, as I understand it."
Strafaci said he also would have argued that Siddiqui's debt was significantly less than $10 million and that the authority had no business depositing the check Siddiqui wrote in that amount.
Casinos and players generally reach agreement on the exact amount a gambler owes and the gambler is given time to pay it, Strafaci said. While a gambler may sign a marker giving him access to gambling chips of a certain amount at the beginning of play, he signs another marker reflecting actual losses, if any, at the end of play, Strafaci said.
Strafaci, whose representation of Siddiqui was arranged through Siddiqui's attorney in California, said he has spoken to his client on the telephone but has never met him.
"He wasn't coming to the trial," Strafaci said. "We didn't think it was necessary. We felt confident that once we presented evidence that there was no written agreement, the court would rule in our favor."
Attempts to reach Siddiqui's California attorney were unsuccessful.