SEBELIUS: Even bankruptcy may not save you from bad casino markers

Everybody knows that what happens here, stays here. Come to Vegas, get rowdy and have a good time. We won’t tell.

But under no circumstances should you seek credit from a casino and then not pay. That we take seriously.

In fact, we have codified in state law — NRS 205.130(1)(e) to be specific — the penalty for signing a casino marker with fraudulent intent: It’s a Category D felony, and if convicted, you will be ordered to pay restitution to the poor, victimized casino.

But did you know that even filing for personal bankruptcy may not protect you from casino debt?

In a fascinating article in Nevada Gaming Lawyer magazine (yes, I read it), Lewis, Brisbois, Bisgaard &Smith LLP partner Vernon Nelson details an interesting round of recent cases that hold a casino debtor can’t use the bankruptcy laws to escape the criminal liability that comes when the state files a criminal case.

Now, it’s important to note that if you file bankruptcy before a casino claims you ripped them off, you’re most likely safe. Bernie Zadrowski, the former chief deputy district attorney who headed the bad check unit for seven years, says it’s sometimes a race to the courthouse steps: If you file in bankruptcy court before the casino files a complaint with the district attorney’s office, the DA will typically not file criminal charges against you for stiffing the casino.

But if the casino gets there first, and the DA decides to prosecute you for signing a bad marker, then you’re probably going to pay. And that’s true even if you seek to have your debt expunged in bankruptcy court.

Why? Because the criminal prosecution — and the order for criminal restitution that the law demands come with a conviction — is entirely separate from the civil proceeding in bankruptcy court. As Nelson reports, federal bankruptcy courts are loath to interfere with state criminal matters. Citing a case from the 2nd U.S. Circuit Court of Appeals (stemming from a debt owned to Caesars Palace and Circus Circus), Nelson quotes judges saying “the state of Nevada was entitled to commence or continue a criminal prosecution against a debtor even if the prosecution is based upon a debt that could be discharged in bankruptcy, and even if the prosecuting entity intends to pass recovered monies on to the complaining victim/creditor in the form of restitution.”

Now, even if you’re convicted, the chances are you’re not going to go to prison. Most defendants are sentenced to probation and ordered to repay the casino for the amount of the bad marker, Zadrowski says. And even if you don’t pay, your probation isn’t revoked as a result. In other words, there’s no debtor’s prison in Nevada. “We don’t put them in prison because they didn’t pay a casino debt,” Zadrowski says. “We put them in prison because they committed a criminal act.” (That’s true, even though they’re not really putting anybody in prison.)

On the other hand, if a former defendant has the means to pay but doesn’t, casinos can get a civil judgment based on the criminal conviction and restitution order.

There are some — and I’m sympathetic to this view — who think the government shouldn’t be acting as debt collector for large corporate casinos, which can easily afford lawyers to sue bad debtors in civil court, an admittedly more burdensome procedure. In fact, some circuit courts in the country disagree with the view of the Nevada Supreme Court and our own Ninth Circuit, which have upheld the idea that a casino marker is the exact same thing as a bad check.

But unless and until the law changes, do yourself a favor: Don’t sign a marker you can’t pay, because casinos and the DA don’t play around with that. In Nevada, we take that seriously.

Steve Sebelius is a Las Vegas Review-Journal political columnist and author of the blog SlashPolitics.com. Follow him on Twitter (@SteveSebelius) or reach him at (702) 387-5276 or ssebelius@reviewjournal.com.