The lead developer of the Las Vegas Mob Experience at the Tropicana resort faces new lawsuit allegations of fraud and “looting the company” of more than $1 million.
Court records, in the meantime, indicate one or more Mob Experience development companies has been considering a bankruptcy filing as the companies have been unable to resolve several lawsuits charging millions of dollars in debt has not been paid.
The Mob Experience remains open. Lead developer Jay Bloom is no longer associated in any way with the attraction, spokesman Spence Johnston said. Investors other than Bloom now own the company, Johnston said.
“It’s business as usual,” Johnston said Friday.
The latest suit over the attraction was filed Thursday in District Court in Clark County by two companies that said they advanced $4 million to the Mob Experience, with the loan backed by future cash and credit card receipts as well as the assets of the business.
The lead defendant, Bloom, is accused in the lawsuit of misstating the financial condition of the Mob Experience and impairing the value of the collateral by diverting money from the company for his personal use and allowing liens to pile up against the attraction.
Bloom recently left daily management of the Mob Experience.
Bloom said Friday he was unaware of the new lawsuit and had no immediate comment on it.
Also sued were Bloom’s wife, Carolyn Farkas, and four Bloom companies: Eagle Group Holdings LLC, Eagle Group Marketing LLC, A.D.D. Productions LLC and Order 66 Entertainment LLC.
The Mob Experience itself and its management company, Murder Inc., were not sued — an indication they still have lenders’ backing.
The plaintiffs, Vion Operations LLC and Strategic Funding Source Inc., are represented by the Las Vegas law firm Lionel Sawyer & Collins. The lawsuit indicates that with Bloom out of the picture, the Mob Experience is sharing financial information with lenders, and that information is the basis of their lawsuit.
The suit charges that beginning in February, the companies advanced money to the Mob Experience, only to later find Bloom had perpetrated a fraud by submitting false financial statements that misstated the Mob Experience’s payables, visitor volumes and company liabilities.
“Bloom submitted updated financials on or about July 8, which revealed nothing of the true financial condition of Murder Inc., did not reveal he was looting the company and were provided to conceal his ongoing fraud,” the lawsuit charges.
The suit says Bloom had told lenders the Mob Experience expected to attract 4,110 people per day when he knew the design of the exhibit couldn’t accommodate that many people. The suit says he represented tickets would be sold for $29.95, but when it opened the price was $39.95.
The Mob Experience, which opened in March, is now advertising tickets for $30.
The suit says Bloom told lenders the Mob Experience had $8 million in debt when in fact it was $15.4 million.
“The income assignments to third parties associated with this level of indebtedness was 46 percent, resulting in materially less cash being available to operate the company than represented,” the suit says.
It further charges Bloom represented the payroll would be about $26,000 per month when it’s actually believed to be more than $146,000 per month and that “Bloom never disclosed that he has not paid payroll taxes of Murder Inc.”
The suit alleges that as “part of a pattern of fraud,” Bloom in March pledged the lenders’ collateral to another creditor and that “Bloom diverted funds directly from Murder Inc. and from Eagle for payment of personal expenses, including such items as car payments, credit card bills, housing expenses (cable TV, utilities, pool cleaning, maid service), groceries and the like using categories in his records such as ‘cash for Jay’ and ‘to be accounted for later.’ ”
Diversions to entities controlled by he and his wife from Murder Inc. totaled more than $455,000, and diversions from Eagle totaled more than $203,000, the suit charges.
“By diverting funds … Bloom deliberately and purposefully rendered Murder Inc. insolvent and unable to meet its obligations as they become due without additional financing. Murder Inc. cannot operate and pay its existing debts without additional financing,” the suit charges.
Besides permitting $6.5 million in liens to be filed by contractors against the attraction, Bloom’s diversions impaired “the company’s ability to market the attraction, creating both a reduction of visitor volume and cutting short the duration of future receipts,” the suit says.
The suit alleges Bloom breached guarantees to cover obligations to the lenders, breached fiduciary duties, committed fraud and breached a covenant of good faith and fair dealing.
These allegations are in addition to charges leveled July 27 against Bloom by attorneys for investor James Beckmann — a plaintiff in one of at least seven lawsuits filed by investors and creditors against Bloom and his companies since 2010. Of the seven suits, six remain active.
In a filing claiming Bloom and some of his companies have reneged on an agreement to settle Beckmann’s suit for $735,000, his attorneys at the Las Vegas law firm Pisanelli Bice PLLC charged, “Bloom caused Eagle to purchase a $1.3 million home for him and has used corporate assets to pay for his other personal living expenses including his membership dues at Southern Highlands.”
Accusing Bloom of “fraud and deception,” Beckmann’s attorneys said his lawsuit “arose out of Bloom’s misrepresentations and failure to honor his promises and agreements with Beckmann, resulting in defendants’ absconding with over $700,000 of Beckmann’s money and cutting him out of a potential profitable investment.”
An exhibit in that lawsuit, a May 26 email to Beckmann’s attorneys from the attorney for Bloom and some of his companies, Paul Gaudet, suggested the possibility of a bankruptcy filing by one or more of Bloom’s Mob Experience development companies.
Commenting on a dispute over whether the settlement should include the word “fraud,” — an allegation denied by his clients, Gaudet wrote: “I have spoken with principals of my client who inform that the matter can be settled if the word ‘fraud’ is removed from the settlement docs, and replaced by an acknowledgement that the debt due is not dischargeable in bankruptcy.”
Bloom didn’t respond Friday to a request for comment about a possible bankruptcy filing.
Gaudet, in the meantime, has informed the court that he plans to withdraw as attorney for the Bloom companies and Bloom.
Gaudet wrote in a July court declaration that he “has received minimal cooperation from defendants in regards to production of documents which would allow (Gaudet) to adequately respond to discovery requests” and that he had not been paid $8,000 in legal fees owed by Bloom and his companies.
The Las Vegas Sun, a sister publication of VEGAS INC, is involved in a cross-promotional agreement with the Mob Experience in which it shares photo and video content in exchange for brand placement.