LOS ANGELES, JUNE 3 -- Former senator Paul Laxalt (R-Nev.) has settled his $250 million libel suit against a chain of California newspapers, which has agreed to a finding that there was no substantial evidence of skimming at a casino he once owned, sources close to the case said.
Laxalt could not be reached for comment. Denny Walsh, the reporter whose story sparked the suit, would not comment. Sources said an agreement to end the 3-year-old case had been drafted and tentatively approved but would not be signed until Thursday morning.
Laxalt has called a Washington news conference for noon Thursday. C.K. McClatchy, publisher of the Sacramento, Modesto and Fresno Bees, has scheduled a news conference 90 minutes later in San Francisco (10:30 a.m. PDT).
A settlement of the case, which was expected to lead to a long trial this summer or fall in Reno, would give Laxalt valuable time to raise money for a run for the 1988 Republican presidential nomination. He has said his candidacy would be "viable" if he could raise $2 million by October.
Laxalt has insisted that he did nothing wrong while he was an owner of the casino, and he could use as vindication a settlement with McClatchy that concludes he was not involved in any skimming.
According to the sources, the agreement states that thousands of hours of pretrial testimony and file drawers full of records have failed to establish any substantial evidence that an illegal skim occurred at the Ormsby House Hotel casino in the early 1970s when Laxalt was a part owner. It says the accumulated evidence also fails to show that Laxalt or his aides approved such a skim -- the stealing of gambling revenue before it is entered in the casino's books and declared for taxes -- or did anything to hinder any investigation of such activity.
The agreement appears to allow Walsh and McClatchy to stand by their story. The 120-inch-long story, published Nov. 1, 1983, began:
"Substantial sums of money were illegally skimmed from the proceeds of Carson City's Ormsby House Hotel Casino during the time it was owned by Paul Laxalt, now the powerful U.S. senator from Nevada and head of President Reagan's reelection campaign, according to federal tax agents who gathered the evidence 10 years ago."
The article alleged associations between Laxalt and various reputed organized-crime figures but did not say that Laxalt had broken any law and said its sources "did not know whether Laxalt himself knew of the scheme." In responding to Laxalt's heated denials of any involvement with a skim, the McClatchy attorneys and Walsh noted that the story did not say there was evidence of a skim, only that federal agents had said there was evidence.
The agreement would leave a decision on whether the McClatchy newspapers should pay Laxalt's court and legal costs -- said to total millions of dollars -- to a three-member panel of retired judges. The Laxalt side would pick one member of the panel, the McClatchy side would pick another, and those two members would pick the third. The judges then would determine how much money, if any, McClatchy should pay to Laxalt.