Refurbished-equipment maker described as ‘massive fraud’
Equipment Acquisition Resources Inc., which filed for bankruptcy late last year, has been described by its bankruptcy liquidator as a massive fraud that went through as much as $175 million it borrowed from lenders.
In a series of lawsuits filed in a bankruptcy court in Illinois, William Brandt Jr., of the turnaround firm Development Specialists Inc., is seeking to recover almost $2.5 million he says was wrongly sent to Las Vegas casinos to cover gambling debts.
The lawsuits were filed in October against Wynn Las Vegas, the Rio, Harrah’s and the Luxor. Among the four casinos sued, Wynn as of Tuesday was the only defendant to answer the complaint.
The lawsuits charge that Equipment Acquisition Resources of Palatine, Ill., wrongly sent checks to the casinos to cover gambling debts for company executives including Sheldon Player, his wife, Donna Malone, and Mark Anstett.
Those executives all left the company before or as Brandt took over, according to court records.
Equipment Acquisition Resources, a seller of refurbished semiconductor-making equipment, filed for bankruptcy Oct. 23, 2009, after it “engaged in a massive fraud be which it sold equipment at inflated prices and leased the equipment back from various lenders,” the administrator’s lawsuits claim.
In his lawsuit filed against Wynn Las Vegas LLC, Brandt charges that Equipment Acquisition Resources from October 2005 to October 2009 sent 21 checks to Wynn totaling $1.785 million so Player, Malone, Anstett or others could engage in gambling at one of more of the Wynn casinos.
“The debtor did not receive reasonably equivalent value in exchange for the transfers,” lawsuit claims. Brandt also alleges that some of the payments were “fraudulent transfers” because EAR received less than “reasonably equivalent value for the transfers.
In a court filing last week, Wynn disputed the claim the $1.785 million should be repaid.
Lauren Nachinson, an attorney with Quarles & Brady LLP representing Wynn, argued the money paid to Wynn was not company property rather it was compensation paid to its executives.
As Equipment Acquisition Resources executives or board members “they were entitled to receive compensation and/or other remuneration from the debtor.”
“The transfers were compensation for services rendered by Malone, Anstett and/or Player,” the filing said. “Malone, Anstett and/or Player directed that their compensation be paid directly to (Wynn), instead of them. The transfers were not assets of (EAR), but rather were assets” of the three former executives.
Brandt claimed when the checks were approved the company either “was insolvent” or had “unreasonably small capital” or was incurring debt it would be unable to pay.
The lawsuits seek return of $1.785 million from Wynn, $471,000 from the Rio, $236,500 from the Luxor and $30,000 from Harrah’s.
Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.