Seminole backer's role a surprise
By JEFF TESTERMAN
© St. Petersburg Times,
Gary Fears began his quest to win a casino management contract from the Seminole Tribe in 1996 with an expensive gift.
With a deed for land worth $1.7-million, Fears gave the tribe property it needed to build its newest gambling hall, the $34-million Coconut Creek Casino in Broward County, near Fort Lauderdale.
Later, Fears asked Seminole Chairman James Billie what else he wanted. Billie, a pilot and aviation enthusiast, mentioned Fears' $670,000 Turbo Commander aircraft.
"I know I can't afford it," Billie told Fears, according to court papers, "and if you did it illegally and gave me an airplane, that would put us both in hot water."
The Turbo Commander soon appeared at the tribe's Big Cypress airfield anyway. Billie simply took an unlimited loan of the aircraft, signaling the beginning of a close, working relationship with Fears, a 55-year-old political fundraiser, hotel developer and steakhouse owner who had dodged controversy in Illinois before coming to South Florida.
Despite Fears' generosity, he was blocked from winning the lucrative management contract at Coconut Creek by persistent questions in his background.
Because the casino would need city water and sewer, the contract with the Seminoles needed the blessing of the city of Coconut Creek. Doubts about Fears surfaced after City Manager John Kelly spoke with the National Indian Gaming Commission, the federal agency that regulates Indian gambling.
"Fears' name surfaced in conversations with the NIGC," Kelly said. After that, "I said nothing with his name on it would go to our city commission."
But, according to documents obtained by the St. Petersburg Times, Fears and at least two associates ended up quietly gaining a financial interest in the Coconut Creek casino.
In a sworn deposition given in a civil case over tribal casinos in September 2000 -- eight months after the casino opened -- Fears acknowledged being "the largest and probably majority" shareholder in a partnership that owns the gambling hall and leases it to the tribe. Fears testified that the 10-year lease is structured so that the tribe makes its payments based only on the casino's profits.
Billie confirmed the arrangement in a deposition given in the same civil case, saying Fears and his partners agreed to build the casino "and as the gaming came along we would pay them back and then we'd split moneys."
Fears' involvement was news to Coconut Creek officials.
It also surprised Jim Shore, the Seminoles' general counsel. Shore said the tribe's legal department had been left out of the loop in the Coconut Creek negotiations, with Billie handling many of the key details.
Federal agents involved in an investigation of Billie and possible corruption within the tribe took an interest in the Coconut Creek casino plans more than three years ago. Kelly said a U.S. Customs agent and an IRS agent said they were "looking into Indian gaming" and wondered if any unusual overtures had been made to his city commissioners. Kelly said he knew of none.
The investigation has intensified. FBI agents have attended tribal council meetings, delved into tribal investments in Nicaragua and secured the grand jury cooperation of Charles Kirkpatrick, the tribe's former chief pilot.
The federal investigation helped spark a grass-roots re-examination of tribal leadership. In recent weeks, the Tribal Council suspended Billie over allegations of misconduct and fired most of his top staff, including administrator Tim Cox, who used Billie's backing to put together a secret hotel deal in Nicaragua.
At the same time, the tribe has been embarrassed by disclosures of illegal deals with other Seminole casino partners.
In 1999, the National Indian Gaming Commission fined the tribe $3-million for failing to gain regulatory approval for a management contract executed by Billie and Pan American & Associates for operation of the Immokalee casino.
This year, a federal appeals court upheld the record $3.4-million fine against JPW Consultants, a company run by James Weisman that operated the tribe's Hollywood casino without approval by the National Indian Gaming Commission.
Fears says the tribe's latest casino deal, the Coconut Creek lease, is not merely an end run around his failure to get a management contract. He said the lease was put together to enable him to recoup money plowed into the casino effort.
But Fears refused to divulge the identity of his partners or to disclose what percentage of the Coconut Creek gambling receipts pay the lease.
"Some things aren't your business," Fears said.
In his deposition, taken several weeks after the Coconut Creek casino opened, Billie said he had "other business" with Fears and had received gifts from him "a bunch of times."
Fears said he gave some items to Billie, including a $100 hunting knife, presents for Billie's sons and a few meals.
As for business deals, Fears said Billie approached him with several, including a Hard Rock Hotel venture in Nicaragua.
"I passed on everything," Fears said.
As one of the initial investors in Argosy Gaming, Fears is no stranger to the gambling business. His family stirred controversy by making a fortune in the Alton Belle, an Illinois gambling boat, while bypassing state regulatory scrutiny.
Fears and his son Victor initially submitted, then withdrew, license applications "because of problems with a background check," said Jim Wagner, deputy administrator of investigations for the Illinois Gaming Board.
Days before the riverboat license was approved, Victor Fears sold his stake to family friend and Republican powerbroker William Cellini. Victor Fears later bought Cellini's shares and made a significant profit, a process allowing him to avoid an Illinois background check.
Cellini and Gary Fears were at the center of another controversy involving their borrowing of $28.9-million in state tax money in 1982 to build two Illinois hotels.
State officials said the politically connected businessmen defaulted on loan payments and by 1995 owed Illinois taxpayers $40-million. They settled by agreeing to pay $10-million.
In his September deposition, given as part of a suit against Fears concerning tribal casino deals, Gary Fears identified three of his partners in the Coconut Creek lease: his son, Victor, 35; George Krug Jr., 53, an executive with the K-Five construction company in Lemont, Ill.; and Alan Ginsburg, 62, president of CED Construction in Maitland.
Ginsburg did not return calls. His attorney, Paul Filzer, declined to answer questions about Coconut Creek.
Krug and Victor Fears were part of Gary Fears' Gaming Management International, a company seeking the management contract at Coconut Creek. Both men had encounters with law enforcement that met the criteria for review by investigators at the National Indian Gaming Commission.
One of Krug's firms was involved in a bid-rigging and antitrust scandal in the 1970s. Krug was granted immunity from prosecution in the case in exchange for his testimony at a trial that resulted in several convictions. Subsequently, in a 1992 application for an Illinois license for the Empress River Casino, the state gaming board determined that Krug "did not meet did the requirements for licensing," records show.
One of Krug's companies, GJR Leasing, originally bought the Coconut Creek property that Fears gave the Seminoles in 1996. Krug's company sold it to Fears' company for $1.7-million, and another company Fears controlled later deeded the property to the tribe.
Although the casino lease was intended to recoup his investments, Gary Fears said, his company took a tax write-off for the land donation after failing to win a casino management contract.
Victor Fears' legal problem occurred in January 1997, when the Gulfport businessman's Ford Explorer was stopped by police in an area known for prostitution in St. Petersburg. Officers stopped the vehicle when they saw a woman holding cash leave the Explorer.
A vehicle search turned up several pieces of crack cocaine. Victor Fears told police he had "previous crack problems" and had sought counseling. Police arrested him on a cocaine possession charge.
Two months later, the Pinellas-Pasco State Attorney's Office decided the traffic stop leading to the arrest was improper. All charges were dropped, and an attorney for Fears had the record expunged.
Still, his admission to police that he had a cocaine problem could have posed problems during a background check by the National Indian Gaming Commission.
Two other men associated with Gary Fears' company, Stephen Weil and Thomas Utterback, ended up in prison after being convicted of money laundering.
The federal investigation into Seminole gambling activities led to Weil, a financial analyst who, despite a federal perjury conviction, had signed a contract with Fears in 1994 to raise capital for Gaming Management International. Weil was fired after four months for non-performance, Gary Fears said.
In 1998, Weil was caught in a federal sting dubbed "Operation Cops and Indians." He was charged with conspiring to launder $425,000 given him by federal agents posing as drug traffickers.
Prosecutors said Weil intended to launder the purported drug proceeds through the Seminole Tribe, but claimed he was turned away because he had too little cash.
Weil, 65, was convicted after a jury trial in Miami and sentenced last year to 83 months in prison.
Utterback, a Missouri lawyer, is listed in documents as one of the first directors of Fears' company. He also was president of the holding company that owned the plane Fears lent the Tribe.
Utterback, 54, was arrested in Geneva in 1998 with four suitcases containing $3.24-million in $10 and $20 bills. The cash was reported to be the proceeds of illegal drug sales. Utterback pleaded guilty to money laundering and was sentenced to three years in prison.
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From the Times state desk
From the state wire