8.11.07DeFeo hit with lawsuit
One casino developer sues another
By MIKE CONNELL
Times Herald
St. Clair County’s dueling casino proposals clashed Friday when one developer sued the other, claiming trademark infringement and deliberate efforts to deceive investors.
“Our dream is for a successful project in Port Huron,” said Mike Malik, who hopes to replace the Thomas Edison Inn with an Indian-owned casino and a resort hotel built with a curving, ship-like shape. “We can’t let someone like this spoil all our dreams, all of our years of work.”
He was referring to Tony DeFeo, the Clinton Township entrepreneur whose proposed $600 million development in Kimball Township may — or may not — be anchored by what would be Michigan’s largest casino.
Malik’s lawsuit, filed in St. Clair County Circuit Court by attorney Gary Fletcher, seeks injunctive relief that would stop the Kimball project.
“It’s our hope that the court here will shut him down,” Malik said.
DeFeo referred questions to his attorney, Bob Vickrey of Clinton Township, who said he had not been served with the lawsuit as of Friday evening.
“Until I see it, I cannot comment on it,” he said. “I hope you can understand that.”
One casino developer sues another
By MIKE CONNELL
Times Herald
St. Clair County’s dueling casino proposals clashed Friday when one developer sued the other, claiming trademark infringement and deliberate efforts to deceive investors.
“Our dream is for a successful project in Port Huron,” said Mike Malik, who hopes to replace the Thomas Edison Inn with an Indian-owned casino and a resort hotel built with a curving, ship-like shape. “We can’t let someone like this spoil all our dreams, all of our years of work.”
He was referring to Tony DeFeo, the Clinton Township entrepreneur whose proposed $600 million development in Kimball Township may — or may not — be anchored by what would be Michigan’s largest casino.
Malik’s lawsuit, filed in St. Clair County Circuit Court by attorney Gary Fletcher, seeks injunctive relief that would stop the Kimball project.
“It’s our hope that the court here will shut him down,” Malik said.
DeFeo referred questions to his attorney, Bob Vickrey of Clinton Township, who said he had not been served with the lawsuit as of Friday evening.
“Until I see it, I cannot comment on it,” he said. “I hope you can understand that.”
Malik has Ilitch ties
DeFeo and Malik share a common destination — establishing an Indian-owned casino in St. Clair County — but they have taken very different paths to get there.
Malik, 53, a former Algonac city councilman who grew up in Detroit and Clay Township, is closely associated with the Ilitch family, the founders of the Little Caesars pizza chain and the owners of the Detroit Tigers and Red Wings. He has been trying to develop a casino in Port Huron for more than 15 years.
His latest effort began in 2001, when city voters approved a casino in a nonbinding advisory referendum. Don Reynolds, the co-owner of the Thomas Edison Inn, led the effort to get the issue on the ballot.
A year later, Gov. John Engler and the Bay Mills Chippewa band agreed to a land swap. The tribe surrendered its long-standing claim to 110 acres at Charlotte Beach on the St. Marys River south of Sault Ste. Marie in exchange for a reservation at the 15-acre Edison Inn property. It does not authorize a casino at any other location.
The Engler-Bay Mills agreement requires congressional approval. Several bills have failed in the past five years, but the effort got a significant boost last month when Michigan’s senior senator, Carl Levin, announced his support. Levin, chairman of the Senate Armed Services Committee, is one of the most influential figures on Capitol Hill.
"We are professionals at what we do," Malik said from his office on the 10th floor of the Fox Theatre Building in Detroit. "And by the way, we’re not looking for anyone’s money."
DeFeo gets Kimball OK
DeFeo, 55, a native of New York state, has been energetically seeking investors in his projects.
Two years ago, he proposed building a casino, water park and two separate 500-room hotels in downtown Port Huron. At a presentation to the City Council in March 2006, he also spoke of taking over the management of McMorran Place.
When the Port Huron project stalled, he shifted his target to a 420-acre site beside the Horizon Outlet Mall. Last month, the Kimball Township Planning Commission signed off on plans for a $600 million development that would include a 505-room hotel, 7,800-seat arena, 8,000-seat stadium and a 400,000-square-foot convention center — a facility larger than the Novi Expo Center.
Township Supervisor Tom Portis confirmed Friday there has been no formal mention of a casino.
“The township has received nothing in writing about a casino,” he said.
Malik’s lawsuit contains a floor plan that he said was provided to a potential investor in the Kimball casino. It promises a 307,000-square-foot casino — or seven acres — with 5,310 games including 5,220 slot machines.
If built, the Kimball casino would surpass the Soaring Eagle Casino in Mount Pleasant as the state’s largest.
The label on the Kimball floor plan calls it the Blue Water Resort Casino, a name that Malik contended is meant to cause confusion with his company, Blue Water Resorts LLC.
“DeFeo’s use of the name Blue Water Casino is confusingly similar to plaintiff’s name and appears purposefully designed to confuse investors, the public and public officials,” the lawsuit said.
Lawsuit outlines troubles
Dykema Gossett, one of Michigan’s largest law firms, helped prepare the lawsuit, a hefty document that includes a detailed summary of DeFeo’s past legal problems.
Malik said the intent was to show a “pattern of deception, and it’s not a new pattern for DeFeo. We believe he is intentionally deceiving investors.”
The lawsuit indicates DeFeo has been arrested multiple times on federal drug charges, although he was convicted only once. Five years ago, he was sentenced to time served and three years of probation on a charge of conspiracy to sell marijuana. A clerk with the U.S. District Court in Albany, N.Y., confirmed the conviction Friday and said it followed a plea agreement.
DeFeo also filed for personal bankruptcy protection in June 2001. That was two months before several of his partners agreed to pay more than $1 million to settle a lawsuit brought by a company that had accused DeFeo of fraud. The partners left on the hook included Barry Switzer, the former coach of the Dallas Cowboys and the University of Oklahoma; former Democratic congressman Dave McCurdy of Oklahoma; and former Oklahoma attorney general Larry Derryberry.
DeFeo also was sued by a landlord, who accused him of owing back rent for a house in Farmington Hills. The court entered a default judgment against DeFeo for $36,375.
Investors sue in Oakland
Three months ago, TransNav Properties LLC and three individuals — Konstantine Kapordelis, Ilja Vreeken and Steven Vreeken — sued DeFeo and two of his companies in Oakland County Circuit Court.
The plaintiffs said DeFeo’s lawyer, Richard Lehr, offered to sell them 1% ownership interests in a Port Huron casino for $100,000. They said they paid $200,000 for two shares.
Their lawsuit accused DeFeo of fraud and violations of the Michigan Uniform Securities Act. The plaintiffs based their claims in part on a “confidential information memorandum” dated October 2005.
“Economically depressed, the City expressed great support for a casino in downtown Port Huron and are prepared to provide up to 38.5 acres for its development,” the memo said. “The land is comprised of several parcels all contiguous to each other.”
According to the memo, the 38.5-acre site included the old county jail, the YMCA and Bank One, which “has indicated a willingness to sell. All other parcels are owned or controlled by the City and will be available to the Company for sale.”
The memo also indicated DeFeo’s company had invested more than $2 million in an escrow account “to place a hold on the aforementioned property.”
Prospective investors also received this assurance: “The City of Port Huron and County of Saint Claire (sic) both fully support the development of a casino in downtown Port Huron, which will complement Mr. Atchison’s (sic) $200 million development south of downtown.”
The Oakland County lawsuit claims there was never any deal with Port Huron. It noted that City Attorney John Livesay sent DeFeo a cease-and-desist letter in December 2006 that warned him to quit making misleading claims.
Malik raises doubts
Malik first went public with his doubts in March 2006, when DeFeo met with the Port Huron City Council and unveiled plans for a downtown casino. Malik, who was in the audience, spoke out and said DeFeo did not appear to understand the Indian Gaming Regulatory Act or other laws that govern Indian-owned casinos.
“Until there is money on the table, everyone should be cautious,” he said at the time.
DeFeo and Malik share a common destination — establishing an Indian-owned casino in St. Clair County — but they have taken very different paths to get there.
Malik, 53, a former Algonac city councilman who grew up in Detroit and Clay Township, is closely associated with the Ilitch family, the founders of the Little Caesars pizza chain and the owners of the Detroit Tigers and Red Wings. He has been trying to develop a casino in Port Huron for more than 15 years.
His latest effort began in 2001, when city voters approved a casino in a nonbinding advisory referendum. Don Reynolds, the co-owner of the Thomas Edison Inn, led the effort to get the issue on the ballot.
A year later, Gov. John Engler and the Bay Mills Chippewa band agreed to a land swap. The tribe surrendered its long-standing claim to 110 acres at Charlotte Beach on the St. Marys River south of Sault Ste. Marie in exchange for a reservation at the 15-acre Edison Inn property. It does not authorize a casino at any other location.
The Engler-Bay Mills agreement requires congressional approval. Several bills have failed in the past five years, but the effort got a significant boost last month when Michigan’s senior senator, Carl Levin, announced his support. Levin, chairman of the Senate Armed Services Committee, is one of the most influential figures on Capitol Hill.
"We are professionals at what we do," Malik said from his office on the 10th floor of the Fox Theatre Building in Detroit. "And by the way, we’re not looking for anyone’s money."
DeFeo gets Kimball OK
DeFeo, 55, a native of New York state, has been energetically seeking investors in his projects.
Two years ago, he proposed building a casino, water park and two separate 500-room hotels in downtown Port Huron. At a presentation to the City Council in March 2006, he also spoke of taking over the management of McMorran Place.
When the Port Huron project stalled, he shifted his target to a 420-acre site beside the Horizon Outlet Mall. Last month, the Kimball Township Planning Commission signed off on plans for a $600 million development that would include a 505-room hotel, 7,800-seat arena, 8,000-seat stadium and a 400,000-square-foot convention center — a facility larger than the Novi Expo Center.
Township Supervisor Tom Portis confirmed Friday there has been no formal mention of a casino.
“The township has received nothing in writing about a casino,” he said.
Malik’s lawsuit contains a floor plan that he said was provided to a potential investor in the Kimball casino. It promises a 307,000-square-foot casino — or seven acres — with 5,310 games including 5,220 slot machines.
If built, the Kimball casino would surpass the Soaring Eagle Casino in Mount Pleasant as the state’s largest.
The label on the Kimball floor plan calls it the Blue Water Resort Casino, a name that Malik contended is meant to cause confusion with his company, Blue Water Resorts LLC.
“DeFeo’s use of the name Blue Water Casino is confusingly similar to plaintiff’s name and appears purposefully designed to confuse investors, the public and public officials,” the lawsuit said.
Lawsuit outlines troubles
Dykema Gossett, one of Michigan’s largest law firms, helped prepare the lawsuit, a hefty document that includes a detailed summary of DeFeo’s past legal problems.
Malik said the intent was to show a “pattern of deception, and it’s not a new pattern for DeFeo. We believe he is intentionally deceiving investors.”
The lawsuit indicates DeFeo has been arrested multiple times on federal drug charges, although he was convicted only once. Five years ago, he was sentenced to time served and three years of probation on a charge of conspiracy to sell marijuana. A clerk with the U.S. District Court in Albany, N.Y., confirmed the conviction Friday and said it followed a plea agreement.
DeFeo also filed for personal bankruptcy protection in June 2001. That was two months before several of his partners agreed to pay more than $1 million to settle a lawsuit brought by a company that had accused DeFeo of fraud. The partners left on the hook included Barry Switzer, the former coach of the Dallas Cowboys and the University of Oklahoma; former Democratic congressman Dave McCurdy of Oklahoma; and former Oklahoma attorney general Larry Derryberry.
DeFeo also was sued by a landlord, who accused him of owing back rent for a house in Farmington Hills. The court entered a default judgment against DeFeo for $36,375.
Investors sue in Oakland
Three months ago, TransNav Properties LLC and three individuals — Konstantine Kapordelis, Ilja Vreeken and Steven Vreeken — sued DeFeo and two of his companies in Oakland County Circuit Court.
The plaintiffs said DeFeo’s lawyer, Richard Lehr, offered to sell them 1% ownership interests in a Port Huron casino for $100,000. They said they paid $200,000 for two shares.
Their lawsuit accused DeFeo of fraud and violations of the Michigan Uniform Securities Act. The plaintiffs based their claims in part on a “confidential information memorandum” dated October 2005.
“Economically depressed, the City expressed great support for a casino in downtown Port Huron and are prepared to provide up to 38.5 acres for its development,” the memo said. “The land is comprised of several parcels all contiguous to each other.”
According to the memo, the 38.5-acre site included the old county jail, the YMCA and Bank One, which “has indicated a willingness to sell. All other parcels are owned or controlled by the City and will be available to the Company for sale.”
The memo also indicated DeFeo’s company had invested more than $2 million in an escrow account “to place a hold on the aforementioned property.”
Prospective investors also received this assurance: “The City of Port Huron and County of Saint Claire (sic) both fully support the development of a casino in downtown Port Huron, which will complement Mr. Atchison’s (sic) $200 million development south of downtown.”
The Oakland County lawsuit claims there was never any deal with Port Huron. It noted that City Attorney John Livesay sent DeFeo a cease-and-desist letter in December 2006 that warned him to quit making misleading claims.
Malik raises doubts
Malik first went public with his doubts in March 2006, when DeFeo met with the Port Huron City Council and unveiled plans for a downtown casino. Malik, who was in the audience, spoke out and said DeFeo did not appear to understand the Indian Gaming Regulatory Act or other laws that govern Indian-owned casinos.
“Until there is money on the table, everyone should be cautious,” he said at the time.
In an interview with the Times Herald, Malik listed several reasons for doubt. He said:
"If you could do this with an executive order, we would have done it,” Malik said.
Boldrey, who now represents Malik, was Engler’s chief legal counsel for Indian affairs. He negotiated the land deal with Bay Mills in August 2002.
“Somehow, the train has to come to a halt,” he said. “We want to get the story out there so that Blue Water Resorts is not tainted.”
- DeFeo is working with the Lac Vieux Desert Band, a Chippewa tribe from the western Upper Peninsula that has never asserted a land claim that would entitle it to a reservation in St. Clair County.
- Financial projections show the Kimball casino producing a staggering $470 million in revenues in its first year. What isn’t mentioned, Malik said, is that DeFeo cannot collect the profits from an Indian casino and the public cannot buy shares in one. A manager or developer such as Malik, DeFeo or the Ilitches can take no more than a 30% cut of the tribe’s proceeds.
- Investors reportedly are being told a reservation will be established via an executive order from President Bush. Lance Boldrey, an attorney with Dykema Gossett, said a president’s ability to do this was removed by Congress before the Civil War.
"If you could do this with an executive order, we would have done it,” Malik said.
Boldrey, who now represents Malik, was Engler’s chief legal counsel for Indian affairs. He negotiated the land deal with Bay Mills in August 2002.
“Somehow, the train has to come to a halt,” he said. “We want to get the story out there so that Blue Water Resorts is not tainted.”
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