Trump sues Cordish Co. over Fla. casino project

THE BALTIMORE SUN

Donald Trump has filed a lawsuit against the Baltimore-based Cordish Co. and its partners in an Indian casino project in Florida, claiming the developers fraudulently represented themselves as Trump associates to land the lucrative deal with the Seminole Tribe of Florida.

Trump spent three years and "great expense" trying to negotiate a casino development deal with the Seminole Tribe but was told by former confidant Richard T. Fields that such a deal "would not be possible," according to the lawsuit. Then, the lawsuit alleges, Fields left Trump's organization and formed a partnership with Cordish Co. officials David S. Cordish and Joseph Weinberg, who conspired to mislead the Seminole Tribe by creating the impression that Trump was still behind their development efforts.

The Cordish team later negotiated contracts to build Hard Rock Hotel and Casino complexes on Seminole reservations in Tampa and Hollywood, Fla., that are expected to earn the developers $1.3 billion over the next decade.

Cordish, who was out of the country yesterday, issued a statement denying the claims in the suit as a "ludicrous work of fiction," and said the suit had been filed in the name of a Trump company "that is literally in bankruptcy." Trump's hotel and casino company, which includes three resorts in Atlantic City and casino operations in Indiana and California, filed for bankruptcy reorganization in November.

"The defendants will not only completely prevail in the litigation, but will also recover substantial damages against Donald Trump," said the statement, issued on behalf of Cordish and Weinberg through the Cordish Co.'s lawyer in Baltimore.

A spokesman for Fields said Trump abandoned the Seminole project voluntarily. The spokesman called the lawsuit "baseless and without merit" and said Fields is preparing a counter-claim against Trump.

The lawsuit, filed in Broward County Circuit Court in South Florida, seeks unspecified damages. But Trump's attorney said the veteran casino developer thinks he is entitled to all of the profits that Cordish and Fields stand to earn from the Seminole Tribe deal. He also said Trump hopes to renew his old relationship with the Seminoles and replace Cordish as the tribe's casino partner.

Cordish is regarded as one of the country's premier developers of urban entertainment projects but had never built an Indian casino before the Seminole project. In his lawsuit, filed late last month but which the defendants had not seen until recently, Trump suggested their lack of experience is apparent.

A preliminary Internal Revenue Service ruling last month invalidating the tax-exempt bonds issued to build the Hard Rock complexes -- a move that could force the tribe to compensate the federal government for about $233 million in lost taxes -- is evidence of the Cordish team's "incompetence and inexperience" with such deals, the lawsuit says.

"We would expect that we would be entitled to any of the profits that Fields and Cordish have arranged. That's essentially what this is all about," said Robert I. Reardon Jr., a Connecticut attorney representing Trump.

"And I would think that the tribe might reconsider its decision to go with the Cordish Co., given what's happened to the tax-exempt bonds they arranged to finance the facilities," Reardon said. "I think it shows they don't have the experience necessary for these kinds of very complicated Indian development deals."

Trump, busy this month planning his third wedding, to Slovenian model Melania Knauss, declined to comment.

Lucrative deal

Many details in the lawsuit were revealed by The Sun last March in a two-part series describing how the Cordish team crafted the Seminole Hard Rock projects to receive nearly 30 percent of the tribe's gambling profit for 10 years -- one of the most lucrative Indian development deals ever struck. By signing consulting contracts with the tribe instead of a management contract, the Cordish team was able to bypass federal Indian gaming law restricting payouts to non-Indian casino managers.

An analysis by The Sun , based on public documents and marketing studies of the two casinos, estimated that the Cordish team can expect to be paid roughly $120 million a year by the Seminole Tribe in the first year of the project, with revenues increasing annually and totaling more than $1.3 billion after 10 years. When asked to comment on the analysis early last year, Cordish responded in a letter saying: "To extrapolate in a vacuum ... what our fees will be is grandstanding or sensationalism at best."

But financial reports related to the project's bond financing show that Cordish's profits are on track to meet The Sun's estimates. Cordish's share of the profits has fluctuated since the second of the two casinos opened in May but hovered around $10 million a month last October and November -- the two most recent months for which information is available.

Cordish also defended his payments as compensation for the "enormous inherent risks" of the project. He bought $40 million worth of the bonds used to finance the facilities, an investment paying as much as 10 percent interest, and fronted as much as $20 million for initial costs, which was to be reimbursed before the casinos opened. He also financed a retail and entertainment project adjacent to the casino complexes -- unrelated to the casino deal -- that he said cost $80 million, and for which he signed a 70-year lease that the tribe can cancel after 25 years.

Today, after six full months of operation, copies of Cordish's contracts and financial documents released as part of the public bond offering suggest that much of the developer's up-front risk has already been recovered. Through the end of November, Cordish's team has been paid $81.6 million -- $28.7 million in fees paid from the proceeds of the bond sale and $52.9 million through its monthly share of the gambling profits.

Trump's lawsuit suggests that those profits would have been his if the Seminole Tribe officials in power at the time -- they have since been replaced -- understood that they were not negotiating with Trump affiliates.

"Fields, Weinberg and Cordish were able to capitalize on the goodwill and excellent reputation that Trump and his companies enjoyed with the Seminoles and were able to avoid intense scrutiny over the fact that the Cordish Company and Weinberg were sorely lacking experience in developing and managing casinos and hotels," the suit reads.

Enigmatic figure

People who met Fields through the Seminole deal describe him as an enigmatic figure who sometimes traveled with bodyguards. A former business manager of Trump's ex-wife, Marla Maples, Fields is a partner in Power Plant Entertainment LLC, the Cordish Co. affiliate handling the Seminole casino project. Before issuing a statement yesterday, he had never responded to numerous messages left by The Sun.

In an earlier interview, Cordish did not even acknowledge an affiliation with Fields. "He's hardly an employee of mine," Cordish said at the time. "But I really think whatever my arrangements might or might not be with him -- I'm not even saying I have an arrangement with him -- is a private matter."

Former Seminole Tribe Chairman James Billie told The Sun in an interview last year that he first agreed to meet with Cordish Co. officials because of Fields' association with Trump. However, The Sun never asked him whether he believed, as the lawsuit asserts, that Fields still worked for Trump at the time.

Billie could not be reached for comment yesterday.

"Sadly, now that the casino has become successful, Mr. Trump believes he can use the courts to work himself back into the deal by defaming, making false claims and insulting the tribe he walked away from," said Joe Lockhart, a former official of the Clinton administration and John Kerry campaign whom Fields has enlisted as a spokesman.

Online

For previous coverage of the Cordish casino deal, go to baltimoresun.com/cordish

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