Feb. 17--Over the past 12 years, LeFoll & LeFoll, a Rocky Hill-based father-and-daughter legal team, has handled hundreds of debt-collection cases for Mohegan Sun and Foxwoods Resort Casino, sometimes attaching liens to real estate to compel deadbeat gamblers to pay up.
"Unless I'm not privy to something new, it's a very common practice," Raymond LeFoll said last week. "It's not just casino debt collection, it's any debt collection."
In Massachusetts, where gaming regulators are inching toward the issuance of the Bay State's first casino licenses, Attorney General Martha Coakley has called for a ban on casinos' placement of liens on homes as a debt-collection device.
Citing a Boston Globe report on the Connecticut casinos' use of the practice, Coakley, in a letter to the Massachusetts Gaming Commission, wrote that "protecting against predatory lending and overly aggressive debt collection in the gaming industry is critical, because the odds are stacked against the patron being able to earn back the value of the loan."
The Globe quoted I. Nelson Rose, an expert on gambling law and a Whittier Law School professor, who said he had not heard of "any casino company that goes after homes." The article said it was "unusual for a casino to use property liens to collect debts."
However, Phillip Van Embden, a Millville, N.J., attorney who has represented many Atlantic City casinos and some in Las Vegas, said New Jersey casinos have long extended credit and attached real estate liens in debt-collection cases.
"It's not an unusual approach," Van Embden said of using liens. "It's as routine as it gets...like the sun coming up in the morning."
In New Jersey, he said, any creditor, including a casino, that obtains a court judgment against a debtor can "register" that judgment, a process that automatically creates a property lien.
"That judgment will sit there and sit there and maybe one day the equity in the house increases, inflation kicks in, or maybe the owner wants to refinance -- but he can't because there's a judgment on it," Van Embden said. "He can't do anything until he clears up the debt."
Van Embden likened banning casinos' use of liens to "cutting off your head to cure a headache. The patient will die."
Casinos that don't have some reasonable expectation of getting paid -- and a reasonable way of compelling debtors to pay -- will stop issuing credit, he said. "And then they'll be out of business."
Rose, who was surprised to hear that Atlantic City casinos use liens, said in an interview last week that the debt-collection tools available to casinos differ from state to state. A Mohegan Tribe official who took issue with the statements of some experts quoted in the Globe report made a similar point.
"Unfortunately, the story neglected to give a full picture of the use of credit in all (gaming) jurisdictions in the United States," said Chuck Bunnell, the Mohegans' chief of staff. "In the United States, the use of liens is in fact a common practice when someone is unwilling to repay a debt -- whether to a casino, a credit card company or any other business. In fact, in Nevada, Wynn uses criminal prosecutions to recover debt."
Wynn Resorts, Mohegan Sun's competitor for the sole Greater Boston casino license the gaming commission is expected to award by the end of May, operates casinos in Las Vegas, where Nevada law treats gambling debts as criminal offenses.
Las Vegas casinos submit debt-collection cases involving "markers" or counter checks to the Clark County District Attorney's Office, according to Chief Deputy District Attorney Jake Merback, who oversees the office's bad check unit. Offenders can face imprisonment and/or fines.
"We look at them the same as any other bad check case," he said.
Rose, the law school professor, said Nevada casinos are the most aggressive in their use of the legal system to collect debts.
"They're using the DA as a collection agency," he said. "It's unseemly at the very least and a misuse of the criminal justice system."