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IN BUSINESS COURTS ACCOUNTANTS SIFTING THROUGH MOB EXPERIENCE FINANCES By Steve Green senior staff writer Accountants studying the finances of the bankrupt Las Vegas Mob Experience at the Tropicana said they needed more time to figure out how millions of dollars in Experience funds were spent. The organized crime-themed Experience opened this spring, but its parent company, Murder Inc., filed for bankruptcy protection Oct. 17. The filing came after the company's finances were hurt by disappointing visitor counts and Murder Inc. was hit with at least 13 lawsuits involving unpaid bills and infighting among investors. The Experience remains open as it works its way through the Chapter 11 bankruptcy process. Outside of the bankruptcy case, an attorney for accountant Larry Bertsch, a court-appointed special master in one of the many Mob Experience lawsuits, on Nov. 2 filed Bertsch's preliminary report on the Experience's finances. The report was filed in a lawsuit pitting Mob Experience creditors against Experience developer Jay Bloom, his wife, Carolyn Farkas, and three Bloom companies. Creditors Vion Operations LLC and Strategic Funding Source Inc. claimed Bloom defrauded them by hiding financial problems at the attraction to induce them to fund $3.1 million for the Experience. They also contended Bloom had looted the Experience of more than $1 million. Bloom has denied those allegations and says it was his former partner, current Experience manager Louis Ventre, who looted the business — claims denied by Ventre. Bertsch, who was appointed by Clark County District Court Judge Gloria Sturman to help sort out the parties' financial claims against each other, raised several red flags in his first report Nov. 2. For instance, he said, some of the funding for the Experience originated with more than $10 million in promissory notes issued to investors, most paying 18 percent interest. This was part of about $13.559 million in secured and unsecured debt raised by the Experience, records show. Bertsch raised the possibility that Experience creditors could seek to recover any payments that were made to the investors as "the interests in revenue and personal property of Murder Inc. claimed by most of the note holders do not appear to have been'' documented in financing statements. Attorneys for Vion and Strategic claim the issuance of the notes amounted to the sale of unregistered securities in violation of state and federal law — charges denied by Bloom, who is pursuing counterclaims against Vion and Strategic. In looking at the finances of Murder Inc., Bertsch found that between March 2009 and September 2011, it made "unspecified payments'' of $2.497 million to individuals and $1.018 million to companies "for purposes the special master cannot presently determine.'' Similarly, more than $343,000 was categorized as "unknown expense'' due to lack of proper categorization and documentation. The total included more than $218,000 "for ATM withdrawals, house payments, meals and travel.'' Bloom left management of the Experience by July. Murder Inc.'s former parent company, Bloom's Eagle Group Holdings LLC, owns a $1.3 million "residence apparently purchased for Bloom'' and "Bloom states that the operating agreement of Eagle Group Holdings provides that he be furnished a residence,'' the special master reported. Eagle Group Holdings similarly was identified in the report as making "unspecified payments'' of $607,822 "to individuals for purposes the special master cannot presently determine'' the report said. Bloom, in the meantime, said the report confirmed what he has said all along, that "no funds, much less the millions of dollars claimed, are `missing' or `unaccounted for' as alleged by the (lawsuit) plaintiffs.'' 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All rights reserved. | 14 NOVEMBER 2011 | 13