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D.C. Slots Bid Cost More Than $2 Million

Finance Report Filed With City

By Serge F. Kovaleski and Lori Montgomery
Washington Post Staff Writers
Saturday, September 11, 2004; Page B01

Offshore financiers have spent more than $2 million since the end of May in an unsuccessful campaign to legalize slot machines in the nation's capital, according to the latest finance report filed yesterday with District regulators.

The documents submitted to the D.C. Office of Campaign Finance show that the committee behind the gambling bid had expenditures of $1.9 million over the past 3 1/2 months and debts totaling $341,862.


D.C. Board of Elections and Ethics Chairman Wilma A. Lewis addresses board members and representatives of both sides of the slots issue in August. (Rich Lipski -- The Washington Post)

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The effort to get the gaming initiative on the Nov. 2 ballot has been funded by two St. Croix firms represented by Rob Newell, an Idaho man with a history of failed business ventures. Yesterday's filing reveals that the St. Croix firms have invested $620,000 in the gambling effort since July 11 and a total of $1.9 million since the slots committee was formed in the spring.

According to the filing, the law firm of Manatt Phelps & Phillips -- which employs former D.C. Council member John Ray, the initiative's general counsel -- has billed the slots committee a total of $587, 658 and has been paid $340,000.

In early August, the D.C. Board of Elections and Ethics ruled that the petition drive to legalize slot machines failed to collect enough valid signatures to qualify for the Nov. 2 ballot. Although the drive produced more than 56,000 signatures -- three times the number needed -- the board determined that only 21,664 came from registered D.C. voters. From that pool, 6,977 were discarded after the panel found evidence of fraud, forgery and other systematic election law violations.

Proponents of the initiative have subsequently asked the D.C. Court of Appeals to overturn the board's ruling, but the court indicated in a hearing this week that it is unlikely to do so and probably will send the matter back to the board for reconsideration. A decision by the court could come next week.

The law firm of Sidley Austin Brown & Wood LLP, which was hired by the committee to handle the appeal, has been paid $80,000, the filing says.

D.C. businessman Pedro Alfonso, chairman of the slots committee, lamented in an interview yesterday that so much money has gone into defending the manner in which signatures were collected during a five-day petition drive that ended July 6.

"A lot has been wasted on the process of getting it on the ballot and defending that process, as opposed to debating the issue of the value of gaming as an economic development tool for the District," Alfonso said.

He added, "I'm disappointed that we could not get to that stage of the battle. But it is not finished until it is finished."

The filing by the committee shows that since July, Alfonso has been paid $24,000 as a consultant. In the previous reporting period, he received $18,000 in consultant fees, records show.

The slots initiative would authorize the installation of 3,500 slot machines on a 14-acre site in Northeast Washington at New York Avenue and Bladensburg Road. The St. Croix entrepreneurs are proposing to build and operate a $510 million entertainment complex on the site, which they say would create 1,500 jobs.

The St. Croix investors also include Shawn Scott, a Las Vegas entrepreneur who has been denied or failed to obtain gambling licenses in five states where regulators found financial mismanagement, irregular accounting practices and hidden partnerships. Scott and his associates sold many of their gambling properties, in some cases as state regulators pressed for more information about their complicated web of more than 140 privately held companies and partnerships.

As for Newell, a Spokane, Wash., investment firm of which he was an officer dissolved after state regulators accused it of swindling elderly, sick people out of their life savings. Newell was not sanctioned, but the National Association of Securities Dealers censured him in 1999, concluding that he had "made unsuitable recommendations to public customers."

Dorothy Brizill, executive director of DCWatch and chief organizer of a political action committee called DC Against Slots, said of yesterday's filing: "I think it's just extraordinary. What have they bought? What have they gotten in a three-month period of time?"

"The only people financing this thing are the people in the Virgin Islands. Even the three committee members are just paid employees," Brizill said.

Brizill, who led one of the challenges to the slots petition drive, said the report shows the committee paid extra money to every petition circulator who testified during board hearings on the initiative. Since July, Brizill's DCWatch and DC Against Slots have collected a combined total of $3,222 and spent $1,625.

Vicky Wilcher, the slots committee's treasurer, was paid $17,000 in consultant fees during the latest reporting period, the filing shows. During the election board hearings on the initiative, opponents accused her of trying to intimidate circulators who had admitted committing fraud.


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