Ralph Tripp, 32, of Bangor and Maurice Gunn coordinate on a signature-gathering effort on a 2016 referendum for a York County casino outside the garage at Pickering Square in Bangor in this January 2016 file photo.

A casino mogul’s controversial trail runs from Maine to Laos and back again

Maine has been good to Shawn Scott, with voters helping him in 2003 to a casino deal that pushed him toward what a judge pegged nearly two years ago as a net worth of more than $100 million. The Pine Tree State could soon be even better to him.

Published Jan. 29, 2017, at 1 a.m.     |    

A casino mogul’s controversial trail runs from Maine to Laos and back again

Posted Jan. 29, 2017, at 1 a.m.
Last modified Jan. 29, 2017, at 11:22 a.m.

AUGUSTA, Maine — Maine has been good to Shawn Scott, with voters helping him in 2003 to a casino deal that pushed him toward what a judge pegged nearly two years ago as a net worth of more than $100 million.

The Pine Tree State could soon be even better to him: The developer from the U.S. Virgin Islands is behind a ballot initiative that would hand him and his associates the license to a new casino in York County that qualified for the 2017 statewide ballot last week behind a political committee run by his sister that has already invested $4.2 million in the campaign.

It’s another example of a savvy Scott strategy: Pumping value facilities bought cheaply by persuading voters to allow slot machines, which led to windfalls in Louisiana and Bangor that made him a big-time player on the national gaming scene.

At the same time, he has attracted scrutiny from regulators — perhaps most notably in Maine — around a complex web of companies, lawsuits and other problems that contributed to him either being denied or failing to get casino licenses in five states by 2004.

Since then, he has focused on emerging markets in Asia, where Bridge Capital, an offshore company linked to Scott, had a casino seized by the Laotian government in 2015 over allegations of corruption that the company has vehemently denied.

That company helped finance an unsuccessful, long-secretive bid for a Massachusetts casino in 2016, and the Maine campaign is similarly opaque: Scott’s sister wouldn’t say whether or not her brother is funding it, but she concedes that he gave it his blessing.

Scott’s shrewd efforts in Louisiana and Maine didn’t go smoothly and illuminated some potentially sordid business practices, but they put him on the national scene.

Scott, a California native who is 50 years old, gained control of his first casino in Nevada in 1994 and sold it the next year, according to a 2003 report from the Maine Harness Racing Commission. After that, he took control of a casino in North Las Vegas.

By 1997, he was in a fight with Nevada regulators over getting a full license. The state’s Gaming Control Board flagged $3 million in loan money that went to loans for “personal friends” of Scott and John Baldwin, who now run Bridge Capital together. One member called his finances “smoke and mirrors,” and he withdrew the application.

Perhaps his most important deal came when he bought a Louisiana racetrack for $10 million and ran a campaign that persuaded voters to allow slot machines there. He sold it in 2001 for more than $130 million without cooperating with a suitability investigation for a license.

Then, he went to Maine, buying the distressed Bangor Historic Track for more than $1 million. Two of his companies then funded a $1.7 million campaign in 2003 to allow slot machines there and at Scarborough Downs. Local voters approved slots in Bangor but never at Scarborough Downs.

Just after the Maine campaign, Scott was denied a racing license in New York, according to a local newspaper, and the Maine commission’s damning report came out.

It alleged “sloppy, if not irresponsible, financial management and accounting practices” at his dozens of companies, flagging his involvement in 37 lawsuits in four states between 1992 and 2000 and documenting top employee Hoolae Paoa’s history of convictions for assault, theft and other offenses. Paoa was denied a license alongside Scott in New York.

And in 2004, Scott — again with no license in hand — sold the Bangor facility for $51 million to Penn National Gaming, which now runs Hollywood Casino.

A Scott-backed effort to legalize slots in Washington, D.C., failed to qualify for the ballot in 2004 after a judge upheld an election board’s decision, noting “a pervasive pattern of fraud, forgeries and other improprieties” in the signature-gathering process, according to The Washington Post.

Since then, Bridge Capital has turned much of its attention overseas, where a casino was seized in a messy and still-active battle with the government of Laos.

In 2006, a newspaper in the Virgin Islands reported that Bridge Capital moved from that territory in the Caribbean Sea to the Northern Mariana Islands in the Pacific Ocean after the latter U.S. territory offered to charge them no income, business, excise or earnings taxes for 25 years.

The company calls itself “an international investment banking firm” with clients in the U.S., the Philippines, Thailand, Canada, Cambodia and Laos specializing in high-yield loans, or those with high return rates and high risk of default, and distressed debt, or debt in companies near or going through bankruptcy, among other things.

Baldwin, the CEO, and Scott, the vice chairman and director of business development, each have net worths exceeding $100 million, a federal judge wrote in 2014.

Bridge Capital was behind a Cambodian bank that opened in 2008 and touted its “ability to provide timely financing solutions for borrowers who have come across financial challenges, and are in need of fast, creative financing solutions” in a 2013 filing there.

In 2007, companies under Bridge Capital’s umbrella were formed in Macau — a Chinese region and gaming paradise — and Aruba — a Caribbean territory of The Netherlands — invested in Laos, an authoritarian, one-party southeast Asian nation that offered a low tax rate and a regional casino monopoly, according to court records.

The partnership broke down in 2012, when the sides went to arbitration under international laws. In 2014, they had an agreement that the casino would be sold to a buyer with no connection to Scott or Baldwin. In 2015, that agreement broke down and Laos seized and later sold the casino.

The government also re-opened a criminal investigation into Bridge Capital, alleging bribery and tax evasion linked to hundreds of thousands of dollars in cash bribes that cost the government $70 million in tax revenue. Baldwin called the allegations “utterly false” in court records and said the company was being punished for not paying bribes.

The same year, Laos went to a federal court in the Northern Mariana Islands in a bid to obtain discovery from Bridge Capital. A judge denied that request last year, but an arbitration dispute is still ongoing.

Scott’s sister fronts the Maine campaign, but she said it was blessed by her brother, who along with old Bangor allies was behind another opaque 2016 effort in Massachusetts.

The $4.2 million southern Maine campaign has been solely funded by Lisa Scott, Shawn Scott’s sister, who lives in Miami and runs the political committee backing the question. Until the effort qualified for the ballot, she made no public statements about it.

But on Friday, she responded to a set of emailed questions from the Bangor Daily News, dodging several key ones, including whether or not her brother or one of his companies gave her the campaign money and whether Baldwin or Paoa are involved.

However, Lisa Scott wrote that she “approached” her brother with “my plans for a Southern Maine entertainment complex, and he said that I was welcome to pursue the opportunity and wished me success in bringing jobs and tax revenues as well as helping to preserve the horse racing industry.” She said she’s “drawing up plans now and looking at sites.”

“I personally plan to oversee this project and am committed to assembling a world-class team resulting in a facility that all of Maine can be proud of,” she wrote.

The Maine campaign hasn’t fully taken shape yet, but a 2016 referendum in Massachusetts that lost with just 40 percent of votes may provide some clues as to what it’ll look like.

Days before that November vote to allow slots in Revere, Massachusetts, campaign finance documents previously showing that the bid was funded by a Delaware corporation were amended to show funding from Bridge Capital, according to The Boston Globe. Last week, the political committee agreed to pay $1.6 million in penalties, MassLive reported.

The previous month, that effort’s frontman, Eugene McCain, told the Globe that Shawn Scott wasn’t involved, even though he said that Scott and Paoa joined him to scout properties. But Lisa Scott told the BDN that one of Shawn Scott’s companies had a minority interest in the prospective site, though he’s “partially retired” and never contemplated a management role.

By the end, Bridge Capital contributed $1.8 million of the campaign total of nearly $3.8 million. Virtually all of the rest came from Regent Able Associate Co., a Japanese consulting company and two of that company’s employees, based respectively in Japan and Cambodia. Most of the money was funneled into the campaign through a company owned by Lisa Scott.

More clues to Shawn Scott’s involvement in Massachusetts existed before the filing change: One was the involvement of Bangor City Councilor David Nealley, who debated twice in favor of the proposal — including once on public radio — citing his city’s experience with Hollywood Casino.

Massachusetts campaign finance reports show that Nealley was paid more than $4,900 for that. He’s also an old Scott ally who made nearly $20,000 in the 2003 Maine campaign in Maine, according to records here. He was an employee of a Scott company at that time.

On Friday, Nealley said that was the extent of his work in Massachusetts and that he was enlisted on behalf of Lisa Scott for those debates. But he said he has “nothing to do with the Maine project” and as a Bangor resident, he opposes expanding gaming past existing casinos in Bangor and Oxford.

“They know I’m very proud of the Bangor project, and that Bangor project funds our regional civic center,” he said, “and as far as I’m concerned, we don’t need anything else in Maine, period.”

BDN writer Danielle McLean contributed to this report.

 

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