Efforts by Las Vegas Mob Experience developer Jay Bloom to remove the current Experience manager were delayed during a court hearing Friday.
A judge not only refused to remove the current manager, Bloom’s former partner Louis Ventre, for now, but required all of the parties to contribute their share of the cost of an accounting for the project. That requirement would cost Bloom $12,500, and that's money Bloom doesn't have, Bloom's attorney told Clark County District Court Judge Gloria Sturman.
"Mr. Bloom does not have the viability to make this payment at this time," his attorney Joseph Gutierrez told the judge after Bloom, who was sitting in the courtroom audience, approached his attorney and whispered something into his ear.
Sturman refused to relent and ordered that Bloom share the cost of the accounting 50/50 with the creditors suing him.
In the lawsuit at issue, Bloom demanded an accounting only of the Experience’s finances since July under the tenure of current manager Ventre, given that he is alleging that monies are unaccounted for under Ventre.
Instead, creditors requested an accounting from inception, and Bloom offered no objection. The judge ordered that the Experience’s finances be put under the microscope of an accountant and fraud examiner since its inception to the present day.
The mafia-themed Experience at the Tropicana resort opened this spring but has struggled with disappointing visitation counts and infighting among investors — and has been hit with at least 10 lawsuits over unpaid bills.
Creditors say Bloom gave up 95 percent of his stake in the Experience’s parent company this summer — after it defaulted on its debt — as part of a deal in which an additional $160,000 was invested by others to keep the doors open.
Bloom says he put his equity in "escrow" so more money could be raised and that he was induced to leave under false pretenses.
Key lenders to the company insisted in court Friday that Bloom had indeed given up his ownership stake, and Sturman said their assertions had not been disproven.
Creditors Vion Operations LLC and Strategic Funding Source Inc. sued Bloom this summer, saying he defrauded them by hiding financial problems at the attraction to induce the lenders to fund the Experience to the tune of $3.1 million in a receivables factoring deal.
Bloom hit back with a counterclaim alleging Vion and Strategic along with Ventre had been looting the company since Bloom’s departure and that the Tropicana had failed to adequately market the attraction.
Bloom didn’t succeed with his effort to remove Ventre on Friday after the Experience’s parent company, Murder Inc., introduced an affidavit from Tropicana CEO Alex Yemenidjian supporting Ventre and criticizing Bloom.
The affidavit said the Experience owes the Tropicana more than $500,000 for unpaid rent and other obligations due under the lease and that because of its failure to pay contractors, they had filed more than $6.6 million in liens against the Tropicana.
Nevertheless, Yemenidjian said in his affidavit, the Tropicana has chosen not to exercise its rights under the lease to evict the Experience, "in part as a result of Tropicana’s good working relationship with Louis Ventre."
"Mr. Bloom also has not been forthcoming and honest in his dealing with Tropicana, and has made numerous misrepresentations to Tropicana over the course of its dealings with him," Yemenidjian said in the affidavit.
"Due to the material breaches of the lease that occurred when Mr. Bloom was the managing partner of the tenant, Mr. Bloom’s misrepresentations and unreliability and Mr. Bloom’s recent initiation of litigation against Tropicana, Tropicana is not prepared to make concessions under the lease in the event that Mr. Bloom or another party selected by or associated with Mr. Bloom is appointed managing partner or receiver of tenant," his affidavit said.
Bloom and a group of investors at the hearing opposed to Ventre’s continued management had proposed that a Canadian company called Select Contracts be put in charge of the Experience.
Bloom's attorneys indicated this affidavit was collected under false pretenses provided by Ventre to Yeminidjian, including an email fabricated by Ventre, and further indicated that the hotel president was receptive to the third party operator brought in by the creditors and supported by Bloom, saying Select Contracts is an appropriate choice.
But attorneys for Murder Inc. and creditors supportive of Ventre said nothing is known of this company and that Bloom lacked standing to make this demand anyway. They also pointed to Yemenidjian's affidavit apparently threatening to evict the Experience if anyone associated with Bloom is put in charge.
Sturman agreed she didn’t have enough information about Select Contracts to put it in charge and allowed the accountant appointed by the court to consider Bloom's and the secured creditors' request to remove Ventre and appoint Select Contracts.
But the judge expressed frustration that no one on the Ventre side had proposed a way to reopen the major part of the Experience, the interactive part that was shut down amid financial problems that the Ventre side blames on Bloom’s earlier alleged mismanagement and diversion of funds, and Bloom blames on Ventre's mismanagement over the last three months.
The attorney for Murder Inc. and Ventre, Joseph Kistler of the Las Vegas law firm Hutchison and Steffen LLC, said "Ventre has a plan and the financial backing to turn around the company financially."
He was quick to add, however, that this may require a Chapter 11 bankruptcy reorganization.
Also Friday, it was revealed there was quite a bit more to the story about why the interactive portion — the major portion — of the Experience was closed earlier this month.
At the time, the move was billed as part of a plan to improve the experience with better technology.
A different — or at least an expanded — story was told Friday.
Kistler, in a court brief, charged that after Bloom left the company in financial ruin, Ventre was unable to come up with $450,000 for past due invoices from Video Equipment Rentals (VER) of Las Vegas.
"The result was that VER removed its equipment from the Mob Experience. The Mob Experience is highly dependent upon technology, and the removal of VER’s equipment was devastating," his brief said.
"Had Bloom made timely payments to VER, VER would not have removed its equipment. Unfortunately, the result was that Ventre was forced to close down the Experience portion of the show," his filing said.
The bottom line after Friday’s hearing is that Sturman ordered that any missing artifacts belonging to the Experience be returned.
"If this has been reduced to a museum, it needs everything it can get," she said.
Also, accountant Larry Bertsch and his team will work as a special master for the court, studying the Experience’s finances before and after Bloom left. This is something they do regularly for the court.
Bertsch is likely to issue a report within the next few weeks that may help Sturman decide whether to keep Ventre on as manager or to instead appoint Select Contracts as manager, removing Ventre.
Whatever information Bertsch and his fraud examiner find, it likely will bolster one side or the other as they continue to litigate over the future of the Experience.