Bank hits Las Vegas casino supplier with fraud lawsuit
For at least the third time, Las Vegas-based casino supplier Galaxy Gaming Inc. or its CEO have been sued over allegations they hid assets to avoid paying debts owed to creditors.
Bank of America filed suit last week in Clark County District Court in Las Vegas against Galaxy Gaming and a trust named for the Galaxy CEO’s teenage daughter, asserting fraudulent transfer claims.
The suit was filed as the bank tries to collect on what it alleges is a defaulted loan with a balance of $1.183 million as of Aug. 2.
Requests for comment on the lawsuit were placed by email and phone with Galaxy Gaming, a publicly-traded penny stock company.
Galaxy Gaming sells casino table games and associated systems and reported revenue of $1.8 million in the second quarter.
The B of A lawsuit says the loan in question was issued in 2007 to an entity called Galaxy Gaming LLC and that it was guaranteed by the “Alix Saucier Regulatory Trust.”
The trust is named after Alixandra Saucier, the daughter of Galaxy Gaming CEO Robert Saucier.
Records show Alixandra was about 13 years old when the loan was made, though it wasn’t Alixandra executing the agreement to guarantee the B of A loan. Rather, it was an attorney for the trust, records show.
The trust was established by Gloria Saucier, grandmother of Alixandra Saucier. Records show the trust initially benefited both Alixandra and her father, but that last year Robert Saucier was removed as a beneficiary.
The drafter of the trust had mistakenly added provisions benefiting Gloria’s son Robert Saucier, so he was later deleted from the trust, attorneys for Gloria Saucier said in a 2011 court filing.
The B of A lawsuit says that in the 2007 loan application, “false and misleading statements” were made about the ownership of Galaxy Gaming LLC.
The suit says the bank was told the Alix Saucier trust owned 95 percent of Galaxy Gaming LLC, but a tax return later showed Robert Saucier held 100 percent of the company’s voting stock in 2004 and that he held 50 percent of the stock, according to tax returns for 2005 and 2008.
The suit also complained that in 2007, most, if not all, of the Galaxy Gaming LLC assets were transferred to Galaxy Gaming Inc., “which resulted in the insolvency of Galaxy Gaming LLC.”
Records show Robert Saucier was the manager of Galaxy Gaming LLC and the president of Galaxy Gaming Inc. at the time of this transfer.
B of A charges in the lawsuit that Galaxy Gaming LLC defaulted on the loan by failing to make required payments on time, by transferring property backing the loan to Galaxy Gaming Inc. without the bank’s consent and by providing the allegedly false and misleading information to the bank.
B of A claims in the suit that “the transfer of Galaxy Gaming LLC’s assets to Galaxy Gaming Inc. was fraudulent against Bank of America” and demands Galaxy Gaming Inc. pay the outstanding loan balance plus interest and legal fees.
The new suit follows years of litigation since the early 2000s pitting Robert Saucier and Galaxy Gaming against creditors of the Mars hotel-casino in Spokane, Wash., which Saucier developed and named after a Grateful Dead album.
At some point, Saucier left Spokane, causing some officials to suggest he had skipped town.
In lawsuits that played out in Spokane, Seattle and Las Vegas, creditor Sherron Associates Inc. of Bellevue, Wash., charged that Saucier had failed to pay an $825,000 judgment for a defaulted loan to the Mars and had “engaged in a systematic and sophisticated scheme to protect his assets.”
The judgment by 2008 had grown into a $1.6 million claim with interest and costs.
“Saucier went to great lengths to avoid paying the judgment and created dozens of sham companies operating under the moniker ‘Galaxy Gaming,’” Sherron attorneys charged in a court filing. “The Galaxy Gaming companies were not independent companies but rather mere shells used to shield assets and defraud Saucier’s creditors.”
The creditor charged that to protect revenue from games he leased to casinos, Saucier formed at least 24 companies and that these companies were liable for the Mars debt since they and Saucier were one and the same.
“The revenue from the games is funneled through the various companies in such a way that Saucier claims it never comes into his possession and therefore is unavailable to his creditors,” the creditor alleged in a 2006 court filing. “Saucier is misusing each of the defendant Galaxy Gaming companies to avoid his financial responsibilities and to immunize his assets from the reach of legitimate creditors.”
In a 2008 lawsuit, Sherron Associates accused Saucier, Galaxy Gaming Inc. and Galaxy Gaming LLC of fraudulently transferring two Galaxy Gaming patents among themselves in order to frustrate a court order requiring Saucier to turn the patents over to the sheriff of Clark County so they could be auctioned to satisfy part of Sherron’s judgment.
Saucier and Galaxy Gaming consistently denied wrongdoing in the litigation with Sherron Associates, saying it isn’t unusual for gaming companies to establish subsidiaries in the dozens of jurisdictions they operate in for legitimate financial and regulatory reasons.
They also argued that Sherron Associates, as an assignee of the Spokane debt, lacked standing to sue them and at one point Saucier sued Sherron, alleging abuse of process.
Nevertheless, “in order to reduce the costs and uncertainties associated with litigation,” the cases were settled last year with Galaxy Gaming Inc. agreeing to pay Sherron $150,000 and Saucier agreeing to pay $350,000.