Rivers Casino Faces $2 Million Fine

<p>Proposed penalty follows BGA inquiry into a casino contractor whose top executive has had ties to reputed organized crime figures.</p>

Three months after the Better Government Association disclosed that Rivers Casino contracted for security and cleaning services with a Chicago company whose top executive has had ties to reputed mob figures, state regulators proposed fining the Des Plaines gaming venue $2 million.
 
But in proposing the fine – one of the largest ever for an Illinois casino – the Illinois Gaming Board didn’t directly take Rivers to task for hiring United Service Cos., run by Richard Simon, a close friend and employee of late mob associate Ben Stein, and a one-time partner in another business venture with a second reputed mob figure.
 
Rather, the gaming board hammered Rivers for the way Simon’s company was hired – without competitive bids and, in some instances, even a formal contract, in violation of procurement protocols that are supposed to ensure the integrity of casino operations, according to a "complaint for disciplinary action" recently released by the gaming board, the government agency that regulates video gambling in Illinois and the state’s 10 licensed casinos.
 
The disciplinary complaint also alleges Rivers violated gaming board rules for the way it handled promotions for patrons, allegations that are unrelated to United and initially were the focus of a different gaming board probe.
 
Among the problems with Rivers’ promotions: Earlier this year the casino allowed patrons to enter a "$250,000 Sign Up and Win New Member Giveaway" after the promotional period had ended, gaming board records show. Other promotional offers were not submitted to the gaming board for approval as required, the records show. And just weeks ago, a customer was awarded a promotional prize "he did not qualify for," while two other customers weren’t given prizes "for which they qualified," the records show.
 
Gaming board records don’t specify how the $2 million fine came about, or how much was attributable to the issues involving promotions or contracting.
 
Regardless, Rivers can contest the fine. Some years ago Elgin’s Grand Victoria Casino was accused of hiring a contractor with reputed mob ties and hit with a $7.2 million fine. But Grand Victoria and the gaming board ultimately settled on a $3.2 million payment, according to records and interviews.
 
That was the biggest fine ever levied against or paid by a casino; if the $2 million fine sticks, it’d be the second-highest penalty, according to the gaming board.
 
Also proposed by the gaming board as punishment: Temporarily suspending promotions at Rivers and as well as the licenses of two top Rivers administrators.
 
Rivers released a written statement, saying: "As this is an ongoing administrative matter, we are limited in our ability to comment. Rivers has a deep commitment to compliance and we strive to continuously improve our culture of compliance. We are reviewing the IGB’s concerns carefully and will continue to fully cooperate with the Gaming Board to resolve this administrative matter."
 
United released a statement saying, "While we appreciate our past business relationship with Rivers, United was never privy to Rivers’ proprietary internal controls."
 
"United, its President and CEO, Richard Simon, as well as certain of United’s employees, voluntarily and fully cooperated with the Gaming Board’s investigation. We are grateful to the Gaming Board for its professional, thorough, and fair investigation. Contrary to certain published allegations, United, its management team, and its employees enjoy an outstanding reputation for integrity, professionalism, and high quality services."
 
Simon has said he’s a philanthropist and an upstanding businessman who simply knows a lot of people, and is in no way connected to organized crime. He has donated to the campaigns of numerous politicians, including Cook County State’s Attorney Anita Alvarez.
 
The gaming board investigation into Rivers’ relationship with United was launched in May after the BGA inquired with a casino representative about United’s janitorial and security work at Rivers, and whether Simon’s admitted business and personal ties to reputed organized crime figures were problematic.
 
Gaming board rules bar casinos from hiring anyone "of notorious or unsavory reputation" or doing anything that’d "discredit or tend to discredit the Illinois Gaming industry."
 
Saying they had not known of Simon’s background – even though it had been documented in news reports – Rivers officials fired United and notified the gaming board of United’s work for Rivers, and the gaming board started its probe, which later was combined with the investigation into promotions.
 
Gaming board officials wouldn’t say why their just-released disciplinary report makes no mention of Simon’s ties to reputed mob figures.
 
The report instead focuses on procurement violations, the allegedly improper manner in which United was hired, saying: "Rivers failed to conduct a timely vendor evaluation or obtain the required number of bids before entering into a cleaning contract with United."
 
United also worked for a time without a "formal contract," the records show.
 
Around Christmas 2013, Rivers CEO Greg Carlin "approved a blanket purchase order for over $386,000" for Simon’s company "to do back of the house cleaning in 2014."
 
Rivers hired the firm "to provide cleaning services in 2014 . . . without soliciting bids and without entering into a contract," the gaming board found.
 
In 2015, Carlin also "approved a blanket purchase order for over $412,000" for United to do more cleaning, gaming board records show.
 
Rivers hired the firm "without soliciting bids," the records show.
 
At one point there was a contract, and it was signed by another Rivers executive. But, it was "back dated" to 2011, around the time Rivers opened, records show. The same executive told investigators "he did not read" the agreement before signing it, according to the documents.
 
Casinos have rigid procurement rules to ensure the integrity of contractors, and of gaming itself.
 
Rivers spokesman Dennis Culloton has insisted that neither Carlin nor Neil Bluhm, chairman of the venture that owns Rivers, knew Simon. Simon’s company was initially hired in 2011 "at the suggestion of" a now-former Rivers official, the gaming board records indicate. The former Rivers official was familiar with United because he had formerly worked for Hyatt Hotels, which has employed United, Culloton said. That former Rivers official now works for United, according to interviews and records.
 
The former Rivers official couldn’t be reached for comment, and United officials wouldn’t answer questions about him.
 
Rivers, the newest of Illinois’ casinos, was the most lucrative in July, with $38.5 million in adjusted gross gaming receipts.

The BGA’s Brett Chase contributed to this report.