California tribe probing finances of Las Vegas gaming executive
A California Indian tribe is still trying to collect money from bankrupt Las Vegas gaming executive R. Shawn Ellis – and is looking into his finances.
Beginning in November, three Ellis companies and Ellis personally filed for Chapter 7 bankruptcy liquidation in Las Vegas after plans for a casino-resort in Las Vegas fell through.
The bankrupt companies are Ellis Partners LLC, Ellis Las Vegas LLC and Ellis Gaming & Entertainment LLC (dba Ellis Gaming).
Ellis is known in the Indian gaming community for, in the 2000s, landing a handful of tribal casino management contracts around the country. One was for the Elk Valley Rancheria’s casino in Crescent City, Calif., near the Oregon border on the Pacific coast.
Ellis had borrowed money from the Elk Valley Rancheria for development of his proposed Las Vegas resort. Tribes participating as investors in the resort included the Muckleshoot Indian Tribe in Auburn, Wash.; and the Shoshone-Bannock Indian Tribe in Fort Hall, Idaho, court records show.
Prior to the bankruptcies, Elk Valley Rancheria sued Ellis, saying it had loaned him $480,000 for development of the "Ellis Las Vegas" casino resort on the Las Vegas Strip but that Ellis failed to pay back the money.
Ellis maintains he doesn't need to pay back the money because the tribe converted the loan into equity in an Ellis company.
Attorneys for Ellis argued that nothing was owed since the tribe "irrevocably elected to convert the notes to equity interests'' and that the tribe was then obligated to apply for National Indian Gaming Commission (NIGC) approval for the deal but failed to do so.
But U.S. District Judge Kent Dawson in Las Vegas in September granted the tribe's motion for partial summary judgment, ruling: "The court finds untenable defendant's position that plaintiff acted in bad faith, or was obligated to apply for NIGC approval under the terms of the promissory notes."
That lawsuit is now stalled because of the bankruptcies of Ellis and his companies.
But attorneys for the tribe are still trying to recover money from Ellis and his companies in the bankruptcy process. Their claim now totals $1.04 million with interest and attorney’s fees.
In court papers filed last week, tribal attorneys say they want to look into potential transfers of money and assets – and signaled that if sufficient assets are located, the tribe may try to seize them through the bankruptcy process.
The clerk of the U.S. Bankruptcy Court for Nevada last week ordered Ellis, his wife Katherine and several Ellis-related companies to appear for financial examinations next month at the offices of the tribe’s Las Vegas law firm, Gordon & Rees LLP.
Attorneys for Ellis, his wife and companies haven’t yet indicated if they’ll contest the examination orders.
Besides Ellis and his wife, an examination order was issued to Simon Keith, identified in court documents as chief operating officer of Ellis Gaming & Entertainment.
Examinations also were ordered for companies EHI LLC, Ellis Development LLC, Ellis Holdings Inc., Ellis Holdings LLC, Ellis Holdings International LLC, Ellis Services LLC, Ellis Energy Inc., Ellis Entertainment Services LLC, Luxe Partners LLC, Ellis Partners Inc. and Ellis Bond Holdings LLC.
"A preliminary review of the bankruptcy filings and financial documentation produced to date by R. Shawn Ellis and the Ellis entities appears to demonstrate that they have participated in numerous related-party and consultant transactions not at arms’ length with each other to the detriment of other creditors," attorneys for the tribe asserted in filings in the Ellis bankruptcy cases this month.
"The identification of any assets that are potentially property of the estate and the evaluation and, if appropriate, prosecution of potential claims relating to such assets are important to ensuring that all available sources of significant value are identified and pursued," the filing said. "Elk Valley’s ability to investigate the circumstances of numerous transfers of assets among debtor and his affiliated companies, to the debtor, to and from debtor’s business associates, and to and from debtor’s family members is critical to determining whether Elk Valley has any potential claims, causes of action or remedies with respect to the transactions."