Las Vegas Mob Experience developer hit with class-action investor lawsuit
Legal problems are growing for Jay Bloom, founder of the old Las Vegas Mob Experience tourist attraction at the Tropicana hotel-casino.
On Thursday he was hit with two potential setbacks: One in the form of a new class-action lawsuit alleging he deceived investors in the Mob Experience, and secondly in the form of a court order requiring him to pay $35,495 as partial damages in an existing lawsuit.
As has been extensively reported, Bloom raised money from investors and finance companies to develop the $25 million Mob Experience, which opened in March 2011, but ended up in bankruptcy amid a flurry of lawsuits over unpaid bills and allegations Bloom had diverted much of the investors' money to himself.
Bloom has denied those allegations and has blamed the Experience's problems on a former partner.
What used to occupy the Experience space at the Tropicana is now the Mob Attraction and is operating under new ownership. The owner of the Mob Attraction and certain Experience creditors are fighting with Bloom and investors allied with him over ownership of the mob artifacts that were procured by Bloom but remain under control of the new Mob Attraction.
One of Bloom's investors, Harold Braxton of Miami-Dade County, Fla., in the meantime filed a class-action lawsuit on Thursday against Bloom and one of his companies, Eagle Group Holdings LLC.
The suit, seeking to represent all Mob Experience investors, was filed in Clark County District Court and asserts claims of professional negligence, negligent misrepresentation, breach of fiduciary duty to investors, constructive fraud and conversion of investors' funds.
"This is a case of professional malpractice" involving Bloom engaging in professional museum exhibit consulting services, says the suit filed by Las Vegas attorney Marc Cook.
The suit seeks to recover more than $7.5 million raised by Bloom from investors along with punitive and other damages.
It says Bloom presented to investors inaccurate financial projections for the Experience and falsely told them that their investments were "fully secured by valuable collateral'' in the form of mob artifacts like guns, knives, personal photos and other memorabilia.
"The future of the exhibit was not bright and the collateral did not secure the investments. The invested money is gone. Court intervention is needed," the lawsuit says.
It alleges Bloom and/or Eagle Group converted the investors' money to themselves, were involved in "self dealing" and that after Bloom and Eagle Group gained the confidence of investors, "each defendant intended and/or acted to deceive and defraud the plaintiffs."
Bloom, however, said the Braxton lawsuit is meritless since most of the investors are allied with him.
"Counsel for Hal Braxton contacted us about bringing this action before filing it in an effort to gain our cooperation for what he described as 'solely for Braxton to reach the insurance policy of Eagle Group Holdings for his personal recovery,'" Bloom said Thursday. "He was also told that I would not cooperate with his attempt at recovery through an insurance claim based on his fraudulent assertions.''
Separately, Clark County District Judge Mark Denton signed an order Thursday requiring Bloom and co-defendants to pay $35,495 as partial damages in existing lawsuit over a Southern Highlands home that Bloom and his family had occupied beginning in March 2010 and that was foreclosed on this year.
In his suit, the foreclosing lender Daniel Simon said that after Bloom and his company Eagle Group Holdings defaulted on the mortgage in September 2011, the home was foreclosed on in June of this year. The suit says after the foreclosure, Bloom was asked to vacate the home but fraudulently remained there for several months because he had drawn up a bogus lease with a third party who was supposedly occupying the home.
"Bloom and (co-defendant Manuel Ramirez) created a fraudulent lease and caused it to be recorded to adversely effect the rights of Simon and occupy the premises unlawfully," the suit charged.
Bloom denied wrongdoing in his dealings with Simon, though Denton also signed an order Thursday finding the "lease was recorded improperly and is expunged from the records of the Clark County Recorder and that the lease will have no force and effect.''
The $35,495 in partial damages is for an "unlawful detainer" including rent Bloom and his co-defendants failed to pay of $18,000 from June 15 through Sept. 11, along with Simon's legal fees.
Bloom said Thursday that, "Simon will have no entitlement to receive anything for his claim.''
"The law provides for an offset against the Simon costs for the amount Eagle Group Holdings invested in permanent improvements in the property," Bloom said.
The home Simon foreclosed on and that Bloom lived in came up in earlier lawsuits in which Mob Experience creditors complained Bloom used Mob Experience funds to buy the home, which at one point was valued at $1.3 million.
Bloom denied any wrongdoing in buying the property.