The Road to Paragon – Part 2

A version of this story appears in the Vancouver Observer

Junior Players on the Inside Track

A quick and dirty proposal call with one serious proponent – a proposal set up by a rezoning worked out between the NPA council and the government of BC through the BC Pavilion Corporation.  That’s how Vancouver ended up with a casino attached to BC Place.

It’s a view confirmed by Paragon’s President Diana Bennett in an interview with the Las Vegas Review Journal shortly after Premier Campbell announced the casino project in 2010.  “There were other bidders,” Bennett said, “but we had the casino license. Others could build a hotel, but no one could offer the economic impact that we could with our plans.”

Once the NPA Council and Pavco managed to amend the land use plan and add a “major casino” use it was a done deal.

But how did a little known, privately held company that specializes in Indian Casinos in the Southern US come to be the proponent behind this deal?

Paragon was founded in 2000 by Diana Bennett and Scott Menke.  It’s not a big player in Vegas although Diana Bennett is the daughter of Mandalay Resort Group owner William Bennett.  And Menke ran the Circus-Circus resort and casino for Mandalay.

Paragon itself doesn’t operate any casinos in Vegas, unless you count a small  pub it runs in order to retain it’s Nevada gaming license.

Paragon’s focus is elsewhere according to a report by the Las Vegas Review Journal.  Bennett and Menke set up to Paragon in 2000 to “explore casino management and development opportunities outside Southern Nevada”.

In reality that meant ‘Indian Casinos’, and Paragon quickly located a band – a one-person band known as America’s “smallest” Indian band – near Palm Springs, negotiated a development and management deal and set up a small casino on the abandoned Augustine reservation.   Time magazine reported on the Paragon deal in a 2002 story on Indian Casinos:

“Maryann Martin presides over America’s smallest tribe.  Raised in Los Angeles in an African-American family, she knew little of her Indian ancestry until 1986, when at age 22 she learned that her mother had been the last surviving member of the Augustine Band of Cahuilla Mission Indians.  In 1991, the Bureau of Indian Affairs (BIA) certified Martin and her two younger brothers as members of the tribe.  Federal recognition of tribal status opened the door for Martin and her siblings to qualify for certain types of government aid.  And with it, a far more lucrative lure beckoned: the right to operate casinos on an Indian reservation.

As Indian casinos popped up like new housing developments across Southern California, martin moved a trailer onto the long-abandoned Augustine reservation in Coachella, a 500-acre desert tract then littered with garbage, discarded household appliances and junk cars, about 25 miles southeast of Palm Springs.  There she lived with her three children and African-American husband William Ray Vance.  In 1994, membership of the tiny tribe dwindled from three adults to one when Martin’s two brothers were killed during separate street shootings in Banning, Calif.  Police said both men were involved in drug deals and were members of a violent Los Angeles street gang.

“Subsequently, Martin negotiated a deal with Paragon Gaming, a Las Vegas company, to develop and manage a casino.  Paragon is headed by Diana Bennett, a gaming executive and daughter of Vegas veteran and co-founder of the Circus Circus Casino, William Bennett.  Martin’s Augustine Casino opened last July.  With 349 slot machines and 10 gaming tables, it’s the fifth and by far the most modest casino in the Palm Springs area.  But it stands to make a lot of non-Indian investors — and one Indian adult — rich”.

It’s unclear how rich.  Paragon has a record of partnering with investors to finance its proposals rather than put up its own money.  Centaur Investments of Indiana helped finance the Augustine Casino.  And they provided at least some financing for Paragon’s first foray into Canada with joint ventures with First Nations in Alberta.

More recently, Paragon has partnered with Regal Capital Advisors of Los Angeles to raise financing for an ‘Indian Casino’ near Kansas City, Missouri.  While that proposal failed with the Missouri Gaming Commission, Regal appears to be playing an exclusive role raising money for Paragon’s BC Place casino development.  A page on Regal’s site lists the company as the “exclusive advisor” for “development financing” for the Edgewater Casino.

And the site says the financing deal is a “pending transaction.”

Pavco and the BC government refuse to release details of their fast-tracked casino deal. But it seems clear that rather than doing a deal with an experienced and well-financed major player in the casino business, PavCo and the BC government are actually working with a junior player, with only ten years experience in casino development and management. Most of that is with ‘Indian Casinos’ in the US and Alberta, investing other people’s money.

How did this come to be?

The Inside Track

Paragon’s development model is uniquely American, with its focus on deals involving First Nations and structured with politically connected insiders. In its early years, Paragon operated within an American network of ‘Indian Casinos’ dominated by jailed influence peddler Jack Abramoff.

Paragon has several times turned to politically connected business partners in its local dealings. Robert Sigler — a business partner of the son of former Alabama Republican Governor Bob Riley — has been involved with Paragon’s southern and Missouri pitches.

In Paragon’s Alberta and BC business that role has been filled by T. Richard Turner.

In 2001, the Alberta Government, aware of the legal history propelling the development of American “Indian casinos,” launched its own First Nations Gaming Policy allowing First Nations casinos to be established on reserve land. Paragon took immediate notice and began exploring for Albertan opportunities and partners.

Enter T. Richard Turner, a broadly connected BC businessman with his own private investment companies and a wide net of directorships.

Turner is also politically connected to BC Premier Gordon Campbell and the BC Liberal Party. Befitting his importance to the party, Turner was appointed chair of the BC Lottery Corporation in December 2001.

Fast forward to sometime in 2003. Turner is mysteriously approached by Paragon Gaming to become a partner in their Canadian operation, taking a small holding much like Robert Sigler did with Paragon Gaming Missouri.

Paragon is privately held, so Turner’s involvement was by invitation rather than public share purchase.

In other words, by December 2003 we have the Chair of the BC Lottery Corporation taking up an invitation to buy an interest in the Canadian arm of a US casino operation that, shortly after, expanded into BC and bought out the financially troubled Edgewater Casino with its BCLC license and operating agreement.

As a BC Lottery Corporation Board member Turner was obligated to “declare conflicts of interest – real or perceived.”

According to a statement released to Public Eye by the BC Lottery Corporation, Turner didn’t disclose his Paragon shareholding to the corporation until January 2005 — a year and a half after acquiring it. The Lottery Corporation did not reveal to Public Eye what triggered Turner’s late disclosure of this interest.  And they didn’t provide any evidence of this purported disclosure.

The Edgewater Casino opened in the former Expo 86 BC Pavilion in February 2005.  By the time of it’s opening the Casino was already experiencing financial difficulties due to higher than expected renovation costs along with regulatory and other issues.

As 2005 proceeded, Edgewater’s revenue was well below projections, magnifying it’s early financial difficulties. These results were of concern to BCLC, affecting its own revenue projections and bottom line – matters that are reported on regularly to the Board of Directors.  It is unlikely that the Board of Directors was not aware of the financial problems at Edgewater.

The current BCLC Conflict of Interest guidelines notes that a “situation in which you or someone you know would personally benefit from unauthorized disclosure or inappropriate use of information acquired through a BCLC Directorship” is an example of a conflict of interest.

Because of the information and knowledge he would have gained as Chair of BCLC Turner, in his capacity as a partner in Paragon’s Canadian arm, would have been immediately exposed to a conflict the moment Paragon began considering a BC opportunity.  As Paragon moved towards an interest in Edgewater, Turner moved closer to a real conflict of interest.

At some point in 2005 Paragon turned its attention towards Edgewater.  According to sources, the first informal approach was made by November 2005.  Shortly afterwards, in early December, Turner abruptly resigned his BCLC position.

Turner’s involvement behind the scenes didn’t end with the purchase of Edgewater by Paragon. As Public Eye has revealed Turner got involved in the negotiations between Paragon and PavCo as the new BC Place development took shape.

In an admission that slipped out during 2009/2010 Estimates debate in the BC Legislature, Kevin Kreuger, the Minister responsible for the BC Place, admitted to BC NDP Critic Spencer Chandra Herbert that Turner called Kreuger to lobby for the Casino’s favoured and more expensive roof design when Cabinet was reconsidering BC Place roof options in October 2009.

The BC Liberal government’s decision to go along with Turner’s high cost demand cost taxpayers approximately $100 million dollars.

But Turner’s most important contribution to Paragon was intangible. There wasn’t much the former Chair of the Lottery Corporation wouldn’t know about gaming in BC along with the workings of the BC government.  In a National Post article from last year Turner said his role with Paragon “was explaining to Paragon local perspectives and matters of community interest.”

Former BCLC chair Turner would have known that with the change in land use made by the NPA Council in 2008 Paragon, as the holder of the only gaming license in town, was a slam dunk for the BC Place development.  According to the National Post article, PavCo’s bid book sat on Turner’s desk, but he didn’t even bother opening it.   With the zoning change and Casino license in hand Paragon was more than well prepared for the Pavilion Corporation’s quick-step proposal call.

The funniest thing of all? BC may be just another off-shore hit and run business opportunity for Paragon. When asked if they may be looking at a Las Vegas opportunity someday, Bennett told the the Las Vegas Review Journal “there might be some sell-off here [Edgewater] someday, and that might give us an opportunity. We just don’t know.”

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One Response to The Road to Paragon – Part 2

  1. tf says:

    One side note to mention about the insider operations of the BC Liberal government –

    Turner resigned from BC Lottery Corporation and where is he now?

    He is chair of ICBC ~

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