A New Jersey partnership that wanted to build an Atlantic City casino hotel hid the identities of three of its general partners, including two who were convicted felons, the Securities and Exchange Commission charged yesterday.
The SEC action describes events over several years in which the partnership negotiated with the city to buy land for $4 a square foot, which it sold six months later for $30 a square foot. While the partnership was negotiating, it entered an option agreement with Atlantic City County Executive Charles Worthington under which he would benefit from the low price, and had a former Atlantic City government lawyer on its payroll.
The SEC charged the partnership, Hotel Associates of Atlantic City, three of its general partners and a related business with violations of antifraud provisions of federal securities laws. Two partners, Angelo Cigolini and Martin Marsh, and the partnership consented to the entry of a court order barring them from future violations without admitting or denying the SEC's allegations. Partner Al Olshan and his company, Route 1, did not consent.
According to the SEC, Hotel Associates, which was formed in 1977 to construct a hotel and casino complex, agreed not to disclose Olshan's involvement in the group as a general partner and the manager of its affairs. It also decided to hide the involvement of Angelo Sarubbi, a self-employed consultant, contractor and investor who was convicted of a felony in 1976, and Nunzio Sodano, a retired aluminum laborer who was convicted of a felony in 1970, as general partners.
The partnership acquired approximately 14 acres of land in the "marina district" of Atlantic City in September 1977. Because the land was not big enough to accommodate the entire proposed complex, the group sought an adjacent eight-acre tract owned by the city.
Sometime prior to March 3, 1978, William G. Lahsman, solicitor for the city "through on or about January 14, 1978," was engaged to induce the Atlantic City commissioners to put the land up for sale at the lowest possible minimum bid price, according to the SEC.
In January or February 1978, the partnership entered into an oral agreement with Worthington, the county executive, that gave him an option to buy another four-acre tract for the same price per square foot that it would pay the city for the eight acres, the SEC said. Worthington paid $10 for this option, according to the SEC.
On March 30 that year, the city auctioned off the eight-acre tract, setting a minimum bid price of approximately $4 a square foot. Hotel Associates was the only bidder, the SEC said.