Vindicated the hard way

Lies, lies, lies.

For 13 years Baton Rouge attorney Charles “Chip” Lambert Jr. has claimed that his father’s company was cheated out of a riverboat casino license in 1994 by a conspiracy of lies, fraud and deceit.

Lambert kept pressing his family’s claim in court during all those years while the local casino business carried on as usual. The Belle of Baton Rouge, which opened under the casino license Lambert’s family had sought, has been bought and sold three times.

Earlier this year, after more than 13 years in court, a jury agreed with Lambert. After a two-week trial, a state district court jury awarded the Lambert family’s company, Capitol House Preservation, $3.8 million in damages in its lawsuit against Jazz Enterprises, Catfish Queen Partnership and Argosy Gaming.

The verdict earned a brief mention in the press, but little public attention. Still, it was a significant victory for the Lamberts, even if it takes years to collect their judgment—and assuming they get to collect it all.

During the fourth and final reign of Edwin Edwards, Louisiana riverboat gambling began in earnest, an effort to boost its flagging state income. That move would later dethrone King Eddie himself and earn him a 10-year stretch in federal prison, but that was years away. At the time, the future for gambling (called “gaming” by aficionados), and for the state, looked rosy.

In early 1993, Louisiana tossed 15 casino licenses up for grabs. No fewer than 50 companies competed for the lucrative licenses. Charles Lambert Sr., an old hand at developing casino and real estate projects, wanted to tie a riverboat casino into his newly acquired Baton Rouge landmark, the Capitol House Hotel on Lafayette Street.

Chip Lambert decided to throw in with his dad.

“I had an MBA degree and was finishing up law school, and I needed a job,” Lambert says.

The casino they wanted to open at the foot of Florida Street was going to be called the Lady Luck. As it turned out, the Lady Luck project was anything but lucky.

Lambert, fresh out of law school and admittedly naďve about the business, thought the competition for two state licenses to be issued in Baton Rouge would be honest and fair. He should have known better.

As Lambert found out, and as he explained to 225, the freshly enacted state law, known as the Louisiana Riverboat Economic Development and Gaming Control Act, gave authority for issuing the casino licenses to the Gaming Division of the Louisiana State Police. The act created a Riverboat Gaming Commission, whose members were to be appointed by the governor. The Commission was supposed to rule on any appeals regarding the Gaming Division’s licensing decisions.

However, the ink used to write the Riverboat Act wasn’t even dry before Edwards’ appointees to the Gaming Commission flipped everything around. As is often the case in Louisiana, the new law was subjected to a loose and imaginative interpretation.

Members of the Riverboat Gaming Commission decided they would take applications directly and only send those they deemed “most qualified” to the State Police for a background check and to pick up their license.

Fifteen licenses were available; the commission forwarded to the State Police exactly 15 of the 50 applications it had received, Chip Lambert says. The application from his father’s company was not among them.

To the Lamberts, the message the Gaming Commission sent the State Police was clear: These are the applicants who will get licenses.

The Commission—without legal authority, Lambert says—issued so-called Certificates of Preliminary Approval to those 15 companies and authorized them to begin construction of their casinos, even though they didn’t yet have the required licenses.

The Lamberts decided to buck the system. They submitted an application directly to the State Police for one of the two licenses available in Baton Rouge.

In July 1994, the State Police Gaming Division held a public hearing. The Lamberts’ Capitol House Preservation project went head-to-head with two other companies, Louisiana Casino Cruises and a joint venture between Jazz Enterprises and Catfish Queen Partnership. Both of the other applications won the blessing of the Riverboat Gaming Commission, and their owners received the commission’s “certificate” of preliminary approval.

At the time, Jazz Enterprises’ application claimed the company was a 50-50 partnership between Ron Johnson of Nevada and Baton Rouge businessman Mark Bradley. That was just one of the lies, Lambert says.

Jazz’s application didn’t mention that the company was actually owned by a largely unknown businessman named Steve Urie, whose Nevada-based company, Lodging & Gaming Systems Inc., provided software support to casinos. Johnson worked for Urie, and he and Bradley were merely Urie’s front men on the application, Lambert claims. According to Lambert, Urie didn’t want his casino customers in Nevada to know he was trying to open up his own casino in Louisiana.

Bradley, who is no longer affiliated with Jazz Enterprises, vehemently denies those claims. Bradley spent months wearing a wire and working undercover for the federal government in its investigation into Gov. Edwards and his cronies’ shakedown schemes involving casino licensing. He says Urie’s involvement in Jazz Enterprises was well known and well documented.

“Mr. Urie was never hidden,” Bradley says. “We couldn’t have hidden a plugged nickel under a flowerpot. Those documents were there. A third-grader could read them.”

What happened at the end of the license hearing came as no surprise to Lambert. After listening to five days of testimony, the State Police gave the last two riverboat casino licenses to the two applicants the commission had already approved, the Jazz Enterprises-Catfish Queen joint venture and Louisiana Casino Cruises, although the hearing’s findings made it clear that all three companies were qualified to operate a casino.

According to a State Police report, Capitol House had lost its bid simply because there weren’t enough licenses to go around. In a zero-sum game, someone has to lose. The system, although slightly skewed, had worked.

Or had it?

Shortly after the licensing hearing, Steve Urie “bought” a 75% controlling interest in Jazz Enterprises from Johnson and Bradley for $1.

Urie turned around and sold the company and its new casino license to Argosy Gaming for nearly $30 million. Much later, Argosy sold Jazz Enterprises and its license to yet another company, this time for $150 million.

Lambert saw the sale to Argosy as proof that Urie had been hiding in the shadows until it was time to step out and cash in.

Bradley contends that Urie had all along been Jazz’s financial backer and had pumped at least $2 million of his own money into the casino company. Urie had an option—a well-known option, according to Bradley—to take a controlling interest in the company at any time.

Chip Lambert felt his father had been cheated. In addition to the shenanigans with the system itself—specifically, the Gaming Commission setting itself up as the final decision maker on who got a license—Lambert felt his father’s company lost out on earning a riverboat casino license as a direct result of fraud committed by Jazz Enterprises and Catfish Queen.

The two companies’ joint application was riddled with misrepresentations and outright lies, Lambert says. The application should have gone into the trash, which would have left only two viable candidates for the two remaining licenses. But that didn’t happen.

In 1995, Lambert did what every lawyer does when he feels his client—in this case, his own father—has been cheated. He sued. What he didn’t figure was that he would still be fighting that same lawsuit well into the next millennium.

“I didn’t know I would be captaining this legal ship for 13 more years,” he says.

During those 13 years Lambert has devoted more than 6,500 hours to working on the case. The case has reached the Louisiana Supreme Court five times, and the First Circuit Court of Appeals has issued four written decisions on various aspects of the case.

Finally, last February, Lambert got his day in court. Actually, 11 days, but after more than a dozen years, who’s counting days?

After listening to two weeks of testimony and wading through mountains of financial records—surely enough to send even the most conscientious juror into snoozeville—the jury returned a verdict that agreed with most of what Lambert had insisted for years. Jazz Enterprises and Catfish Queen had misrepresented material facts in their application.

In other words, they lied.

The jury awarded the Lamberts $3.8 million in damages, plus an unspecified amount of interest.

Not only did the jury find that Jazz Enterprises and Catfish Queen lied on their license application, they also found that if the two companies’ lies had been exposed before the state issued the license in question, their application “would have been denied based on the submission of materially false, untrue, and/or misleading representations,” according to the jury’s written verdict.

The jurors said that the Lamberts’ Capitol House project would have been issued the license instead.

Naturally, Mark Bradley disagrees with the jury’s decision. “We were cleaner than clean,” he insists. “We were the most investigated company of all the 15 riverboat licensees. This court case that they won was an abysmal failure of our court system. It was ludicrous.”

Although Bradley, Johnson and Urie are no longer associated with the casino, the company that now owns it, Penn National Gaming Inc., may come after them to collect the judgment, Bradley says, which, with interest, could be upwards of $10 million.

Bradley says he has his own theory about the lawsuit, although it’s one the jury obviously didn’t buy. “It was sour grapes by the Lamberts,” he contends. “They were promised a casino, and they were beat, and they couldn’t stand the beating. The Lamberts are evil, deceitful people.”

Chip Lambert says he is prepared to keep fighting for what he believes is fair.

No matter how many times Jazz Enterprises gets bought and sold, the license will forever be tainted, Lambert says, because the original applicants broke the law to get it.

“I’d like the law to be applied as written,” he says.

Through a succession of owners, Lambert contends, Jazz Enterprises has “occupied the market improperly and illegally since the license was issued.”

New companies, Lambert says, should be allowed to compete fairly for the license. “I think because the license was obtained by fraud, the license should be revoked.”

Is he interested in another shot at developing a riverboat casino?

“I think my days in the gaming industry ended back in ’94,” he says.

Lambert says both sides in the long-running legal battle will likely appeal the recent verdict. He wants an appeals court to reverse state District Judge William Morvant’s ruling that the jury could not consider in their damages calculations the money Capitol House would have earned had it been issued the license back in 1994. Lambert’s fraud examiner estimated the company’s lost cash flow at somewhere between $375 million and $620 million.

The other side has already filed a motion for a new trial.

“I’m well aware they aren’t rolling over, and we are committed to pursuing this,” Lambert says. “My father and I will see this through to the very end.”

Even if that takes until well into the next decade.