A California tribe has filed a second complaint against Las Vegas casino figure R. Shawn Ellis as it tries to recover $1 million from a soured business deal.
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.
Ellis and his companies over the years managed Indian casinos including one owned by the Elk Valley Rancheria in Crescent, Calif.
Because of his relationship with that tribe, starting in 2006 Ellis obtained $480,000 in loans from the Rancheria for development of his Ellis Las Vegas Resort.
The tribe says $1 million is now owed by Ellis, including interest and fees. Ellis insists he doesn’t need to pay the money back as the tribe converted the loan into equity in one of his companies.
The tribe — which says it removed Ellis as manager of its casino for inadequate performance in May 2008 — initially sued him in federal court in Las Vegas in 2009.
That case was closed because of Ellis’s bankruptcy. The tribe has now filed a $1 million claim against Ellis’s bankruptcy estate.
In a lawsuit filed Thursday in the bankruptcy case, the tribe accused Ellis of fraud, saying he had “falsely promised Elk Valley that no matter what happened with the loans, Elk Valley would be made whole” and that he used the tribe’s funds to pay for his personal expenses and to pay off his prior debts.
“Ellis has a pattern and practice of obtaining funds for one entity, co-mingling the funds obtained with other entities, making inter-company loans, transferring assets from one entity to another, paying himself an exorbitant salary and then creating new entities without regard to his debts and obligations,” the complaint says.
Numerous alleged misrepresentations are mentioned in the lawsuit, including claims that Ellis had gained $200 million in funding for the Las Vegas resort from a source in Dubai and that several tribes had agreed to invest in the Las Vegas resort when, in fact, they had not.
These include the Soboba Band, the San Manuel Band, the Seminole Tribe of Florida, the Mohegan Tribe and the Viejas Band of Kumeyaay.
The Shoshone-Bannock and the Muckleshoot tribes did each invest $5 million in the project, as Ellis “used Elk Valley and Elk Valley’s Chairman, Dale Miller, to induce other Indian tribes to invest money into Ellis’s various companies,” the suit charges.
The Gila River Indian Community is mentioned in the suit as having considered making a $50 million investment — something that did not happen.
Attorneys for Ellis, who has declined comment on the Elk Valley allegations against him, have not yet responded to the lawsuit.
The suit seeks to block Ellis from discharging — or canceling — the money allegedly owed to the tribe through the bankruptcy proceeding.
It also seeks an order denying Ellis’s discharge from bankruptcy, along with the recovery of funds allegedly spent and assets allegedly transferred by Ellis. These recoveries would go toward satisfying the tribe’s claim.
“Ellis made material misrepresentations to Elk Valley and omitted other material facts in order to induce Elk Valley to make the loans,” the complaint says. “Ellis made material misrepresentations to Elk Valley in order to convince Elk Valley to forego collecting on the notes when due. The debt owed by Ellis to Elk Valley is non-dischargeable," the complaint says.
Ellis’s codefendants in the suit are Simon Keith, Luxe Partners LLC, Ellis Entertainment Services LLC, Ellis Development LLC, Ellis Development Partners LLC, Ellis Las Vegas Management LLC, Ellis Holdings International LLC, EHI LLC, Ellis Bond Holdings LLC, EBH LLC and SLS Fund Advisors.
Keith is described in the suit as COO at times of an Ellis company, Ellis Gaming & Entertainment.
It’s unclear how last week’s complaint may affect the rights of Ellis’s other creditors in his personal Chapter 7 bankruptcy case. In his filings, he has reported assets of $401,000 against liabilities of more than $12 million.