A federal judge yesterday permanently enjoined two officials of the company that previously ran the Tropicana Hotel in Las Vegas from violating federal securites laws and blocked them from exercising control of a company the Securities and Exchange Commission charged they took over through fraud.
The SEC yesterday filed a complaint in U.S. District Court here charging Deil O. Gusrafson of Minneapolis, associate of Roger F. Newstrum and a number of corporations in which they are involved with violating antifraud provisions of the securites act and other offenses.
Both men, who consented to judgements entered by the court without confirming or denying the SEC charges, are officers and directors of Hotel Conquistador Inc., which ran the hotel until it was acquired by Ramada Inns Inc. in early 1980. The hotel allegedly had been controlled by midwestern Mafia figures, according to FBI documents made public in 1979.
According to the SEC's charges, Gustafson and Newstrom sought control of a Minnesota company, El Dorado, which manufactured recreational vehicles. When the events began in 1978, Conquistador was experiencing significant cash-flow problems while attempting major renovations and construction of a new 500-room hotel at the site of its Tropicana hotel and gambling casino.
Gustafson came up with a plan to merge International, a holding company that controlled Conquistador, with El Dorado, with the notion that El Dorado could provide short-term funding for Conquistador and other of Gustafson's business interests, according to the complaint.
In the course of the carrying off the plan, according to the SEC complaint, Gustafson and his lawyer, Jay Brown, misled El Dorado's former board about whether the deal could be closed without prior approval of the Nevada gaming authorities and how much of Innternational's stock was free to be transferred.
Brown, a Las Vegas attorney, was also charged with violating antifraud provisions of federal securities law. No disposition had been made on the case against Brown.
The SEC also charged that false statements were made to gaming authorities about where the companies were in their negotiations and that moneys of a public company were diverted to purposes that appeared to produce no return for the company.
Under the terms of the order handed down by Judge Gerhard Gesell, Gustafson is barred for four years and Newstrum for two years from acting as an officer or director or being a controlling shareholder in El Dorado or any company whose securites are traded through a national securites exchange or over the counter.