Friday, October 07, 2011

GC-Global Capital Attempting to Foreclose on The Las Vegas Mob Experience

The hits just keep on coming at the Las Vegas Mob Experience, where a lender is now trying to foreclose on its property including artifacts provided by mob family members.

The lender, GC-Global Capital Corp. of Toronto, charged in a lawsuit filed Wednesday that it’s entitled to foreclose after The Experience defaulted on debt and GC-Global was defrauded by Mob Experience developer Jay Bloom – though Bloom claims he’s the one who was victimized when he was induced under false pretenses to give up control of The Experience this summer.

GC-Global says in the lawsuit that in January it was approached by Bloom a few months before the attraction opened and that by April 4, GC-Global had obtained $3.189 million in loans that had initially been made by several individual investors to the experience.

These loans were secured by property owned by a Bloom company called the Mafia Collection LLC and GC-Global claims in the lawsuit it has a first lien position "in all personal property of Mafia Collection and all proceeds therefrom, which includes all of the artifacts and exhibits used for the Mob Experience."

The suit says the Mob Experience’s parent company, Murder Inc., defaulted on the $3.189 million in debt and asks the court to require the defendants – Murder Inc., Bloom and three Bloom companies – to show cause "why the collateral should not be delivered to the plaintiff."

It also asks for "a writ of possession directing the sheriff of Clark County, Nev., to seize the collateral from those locations where there is probable cause to believe it is located or will be found."

Murder Inc., which is now controlled by former Bloom partner Louis Ventre, has not yet responded to the suit. But it’s expected to file for Chapter 11 bankruptcy protection and reorganization soon as it faces not just the GC-Global lawsuit, but lawsuits filed by creditors including contractors that built the tourist attraction at the Tropicana resort on the Las Vegas Strip. On top of that, the Mob Experience is $500,000 behind in rent owed the Tropicana.

As was seen in the bankruptcy of Eva Longoria’s Beso restaurant on the Las Vegas Strip, the outcome of which was determined by Beso landlord Crystals, Mob Experience contractors as secured lien-holding creditors and landlord the Tropicana likely will control the fate of the attraction at that location going forward.

GC-Global is represented in Wednesday’s lawsuit by attorneys with the Las Vegas law firm Kaempfer Crowell Renshaw Gronauer & Fiorentino.

Those attorneys said in the suit that after GC-Global obtained the Mob Experience loans and was told in June that the Mob Experience couldn’t make the loan payments, it learned "defendants, through Bloom, had either negligently or intentionally made numerous misrepresentations concerning the defendants and the Mob Experience."

"Bloom stated that there were no outstanding amounts due and owing to contractors for the tenant improvements at the Tropicana," the lawsuit said. "The actual amount due and owing to such contractors was in excess of $4.5 million."

It is expected that Bloom will deny such allegations in his pending response.

"Moreover, it became known that Bloom and the other defendants were commingling funds with questionable accounting practices, which included Bloom using the defendants’ funds for his individual expenses (including $50,000 for a down payments on his house purchase)," the lawsuit charged. Bloom has already denied similar allegations by Vion and Strategic in his responses to their litigation.

"Bloom controlled virtually every aspect of the accounting process, and thus could commingle funds with his other enterprises at will, without being detected," the lawsuit charges. "It became known that Bloom made many payments to (his company) Eagle Group which were used for unrelated LLC companies that Bloom controlled."

Bloom in other lawsuits has denied allegations that he looted the company and says Ventre is the one who has looted the company since taking over this summer – charges denied by Ventre.

GC-Global in its lawsuit reiterated assertions that when it was learned the Mob Experience couldn’t pay its bills this summer, Bloom gave up 95 percent of his interest in Murder Inc. under an arrangement in which investors agreed to pump an additional $160,000 into the company to keep the doors open.

Wednesday’s lawsuit says this was because "no investors or creditors of the defendants would agree to attempt to salvage the Mob Experience unless and until Bloom relinquished any and all control over the Mob Experience."

Bloom, however, insists he put 95 percent of his stake in Murder Inc. into escrow as part of a deal in which an additional $5 million would be raised for the attraction, something that never happened.

Wednesday’s lawsuit says that after Bloom left the experience, GC-Global entered into a forbearance agreement with Murder Inc. agreeing not to file suit or foreclose on its collateral.

That agreement expired Sept. 24 and with Murder Inc. still in default, Wednesday’s foreclosure lawsuit was filed.

The suit raises the question of who actually controls some of the Mob Experience artifacts, charging: "Bloom indicated that all of the artifacts were paid for and held free and clear. That representation also turned out to be false. Bloom declined to disclose to the plaintiff, prior to the funding, that other entities or parties may hold the same security in the collateral as the plaintiff." Bloom has already denied similar arguments by Vion and Strategic in his answers in that accusation.

Wednesday’s lawsuit lifts to at least 11 the number of suits filed in the past year over the Mob Experience finances and to six the number naming Bloom personally as a defendant.

Attorneys for Bloom, his wife Carolyn Farkas and four Bloom companies, in the meantime, filed court papers Tuesday complaining that two creditors of the attraction, Vion Operations LLC and Strategic Funding Source Inc., have been using Ventre in a scheme to place Murder Inc. into bankruptcy.

Such a bankruptcy, Bloom’s attorneys complained, would strip Murder Inc. note holders of their interests in the company.

Vion and Strategic in August sued bloom over a deal in which they funded the attraction with $3.1 million as part of a $4 million receivables factoring deal. Under this contract, Vion and Strategic are entitled to 10 percent of the company’s receipts over time up to $4 million.

Bloom’s attorneys said in court papers Tuesday this lawsuit is improper as there has been no breach of the factoring agreement in which Vion and Strategic Funding have already received nearly $86,000 of the $4 million, representing all of their entitlement under their factoring agreement, according to Bloom, and therefore Bloom says there is no breach by Bloom or the other defendants as alleged by Vion and Strategic.

Bloom’s attorneys complained Murder Inc. was not named as a defendant in that lawsuit as part of the plot to put the experience into bankruptcy, because if Murder Inc. had been sued, a bankruptcy would stay the litigation against it.

"Despite failing to name the actual party to the agreements – Murder Inc. – as a defendant, plaintiffs are placing all of the blame on Bloom in is personal capacity for the alleged breach of these agreements, omitting from their claim both the actual parties to the agreement and their agent, Ventre, as co-guarantor," Tuesday’s court filing charged.

Bloom’s attorneys reiterated their charge that as part of their scheming together with Ventre, Vion and Strategic Funding submitted a "fraudulent email" to the court as an exhibit aimed at discrediting Bloom’s choice of a Canadian company to take over management of the attraction.

This allegation was denied by Vion and Strategic Funding, whose attorneys said that what looks like an altered email was actually the result of a simple cut-and-paste error, although Bloom has said the section of the e-mail deleted was from the middle of the e-mail's contents, not the top or bottom, making it unclear how a cut and paste could cause such an "inadvertent" modification as Vion and Strategic suggest.

It’s unclear if this false email charge will gain any traction as it wasn’t commented on last week by Clark County District Court Judge Gloria Sturman during a hearing in which she ordered that an accounting of the experience be performed to help her sort out the charges and countercharges in the case and decide if Ventre should be removed as manager.

Despite the lawsuits, infighting among investors and the possibility of a bankruptcy, the Mob Experience remains open at the Tropicana in a scaled-down format with the museum portion open but the interactive part closed.

Thanks to Steve Green



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