Businessman continuing battle with Hilton over failed construction project

VEGAS INC Coverage

Las Vegas businessman Lorenzo Doumani says he and his company will fight a lawsuit filed this week by Hilton Worldwide Inc. over a failed plan to build a luxury property on the Las Vegas Strip.

Hilton sued Doumani’s company Majestic Resorts Inc. and members of the Doumani family charging the company had distributed $169 million from a land deal to the family members but had failed to pay $1.1 million due Hilton.

The $1.1 million was an arbitration award after the Hilton/Majestic plans for a luxury Conrad hotel and a condominium tower south of the Riviera hotel-casino fell through.

In an interview Friday, Doumani denied claims by Hilton that the $169 million distribution to family members in 2007 was made to "hinder, delay and/or defraud Hilton.”

Doumani said it was Hilton — after it was sold in 2007 to the Blackstone Group — that chose not to proceed with the hotel and condominium development.

"After the sale, they no longer wanted to move forward," he said.

Arbitration was initiated by Majestic to recover some of its investment in the project, and the arbitration award against Majestic was tainted because one of the arbitrators had a conflict of interest, Doumani said.

The arbitration was conducted by a company called JAMS, a major player in the private arbitration field.

Majestic has complained that one of the arbitrators selected by Hilton, Richard Chernick, failed to disclose his past association with an attorney representing Hilton and Hilton’s general counsel – they had all previously worked together at the Los Angeles office of the law firm Gibson, Dunn & Crutcher LLP.

The Nevada Supreme Court sided against Majestic on this potential conflict of interest issue, saying Majestic was aware of the potential conflict during arbitration proceedings, but Doumani disputes that and said he isn’t giving up.

"We’ll continue to defend against that," Doumani said of the arbitration award.