New Jersey's attorney general urged today that Resorts International Hotel Inc., the state's only gambling casino, be denied a permanent license to operate in Atlantic City.
The strongly worded recommendation from Attorney General John J. Degnan was sent to the state's Casino Control Commission, along with a 115-page investigatory report prepared by the state Division of Gaming Enforcement.
Today's report, on which Degnan based his recommendation, cited 17 specific charges which it said support the conclusion that Resorts International does not qualify for a permanent license under the state's gambling control law.
In reaction to the report, Resorts shares began falling, and the American Stock Exchange halted trading in the stock at 1 p.m.
Most of the state agency's charges detailed extensive dealings by Resorts officers or employes with more than a dozen "unsuitable" persons, including several with criminal convictions or links to organized crime -- usually the alleged crime-financing operations of Meyer Lansky.
Resorts International has been operating its boardwalk casino since May 26 with a temporary license granted by the same commission which must now decide whether to issue the state's first permanent casino license.After Degnan's report was released, Gov. Brendan Byrne called on the commission to hold prompt hearings.
"New Jersey should not have a casino operated in Atlantic City indefinitely under unresolved questions such as those identified in the attorney general's report," Byrne said.
The Atlantic City casino has averaged $637,509 a day in gross receipts since opening last May 26. As of Oct. 31, according to reports filed with the state, the casino had taken in $101.36 million.
The original six-month temporary license for Resorts International expired Nov. 26, but it was extended for three months by the state legislature. Byrne warned yesterday that he would oppose any additional extension of that permit past its Feb. 26 expiration date.
The state Casino Control Commission has scheduled a public hearing for Resorts International on Jan. 15 in Atlantic City, according to commission spokesman Ben Borowsky.
"Obviously, the commissioners are not going to comment on the [Degnan] report," Borowsky added. "But the temporary license hearing did not deal with the integrity issue at all."
Resorts International President I.G. Davis said Degnan's report is "a very unbalanced presentation of information that has been known publicly for years and most of which we ourselves volunteered to the Division of Gaming Enforcement many months before we were granted our temporary permit."
Davis also said he is "fully confident we can adequately respond to today's statement in a manner which will nullify any suggestion that we should not be granted a permanent license."
Degnan's report, the most detailed account of Resorts International business dealings presented to date, accuses the company of failing to supply information requested by the division as required by state gambling laws.
In one instance, Degnan's report charges that more than $14.2 million in financing for the Atlantic City operation was obtained from two banks that now refuse to permit state investigators to check their files.
The report specifically cited Resorts' dealings with the Bank of Nova Scotia, which loaned a total of $12.2 million to Resorts for the Atlantic City casino, and the Bank of Commerce in New York City.
The New York bank provided $2 million of an $11 million loan which was also backed by First National Bank of South Jersey and First National State Bank of New Jersey. Both the New Jersey banks have given investigators access to their Resorts' files, the report noted.
The two banks called uncooperative have long-standing business ties with Resorts, according to the report. Resorts has waived any secrecy protection it may have under the respective banking laws but the banks have still refused to let the state look at Resorts' records, the report continued.
"To this day, we do not know the source of about $14 million to finance the New Jersey casino," said Thomas Cannon, special assistant to Degnan. "We don't know because the banks won't tell us and Resorts won't make them tell us."
The report outlined the business background of Mary Carter Paint Co., the corporate predecessor of Resorts International, and charged that the earlier firm had repeated contacts with people who have "unsuitable character and nature."
According to the report, these included seven persons or firms disciplined by the Securities and Exchange Commission in connection with deals involving Mary Carter stock. Also cited were dealings with Edward Cowett, a principal in Bernard Cornfeld's Investors Overseas Service, now defunct.
Several persons identified as operating junkets to Resorts' casino in the Bahamas -- notably Joseph Lamattina and Carlo Mastrototaro -- were named as unindicted co-conspirators in a 1972 federal indictment charging Lansky and Dino Cellini with skimming from two non-Resorts casinos.
Cellini's brother Edward was a long-time employe of Resorts, the report added, despite demands by the Bahamian government that all ties with him be severed after Edward's deportation from the Bahamas.
If the state Casino Control Commission fails to award Resorts International a permanent license, the Atlantic City casino it runs will fall under the control of a "conservator," which could operate it or sell it.