Las Vegas-Based Group Makes Bid of $90,000 a Share for Bell Club

A meeting of the partners of the California Bell Club that the city hoped would finally settle who controls the club instead resulted in the failure of one takeover attempt and the presentation of a competing bid for ownership.

The takeover proposal by an investment group headed by lawyer Arnold Malter collapsed when he failed to get a majority vote at the Monday meeting. The action may free the city of Bell from a commitment to sell its shares in the casino to Malter, according to the city attorney.

At the meeting, a second group of investors presented the partners with a written offer of $90,000 a share, $20,000 more per share than Malter’s bid. The Las Vegas-based group said the offer would stand until Aug. 28.

The city is directly involved in the Byzantine struggle for control of the club because it is the trustee for 12.625 points (a point is a 1% ownership share) confiscated by the federal government from club investors convicted of fraud and racketeering three years ago.

City Administrator Byron Woosley and City Atty. Robert Flandrick represented Bell at the meeting and cast the trustee vote.

In June, the City Council signed an agreement to sell its shares to Malter on the condition that he gain majority control of the club.

Woosley said the city will inform the U.S. attorney’s office that Malter’s bid failed and ask advice from that office as to whether the city has fulfilled its obligations under the agreement and is free to consider other bids.

Malter has not returned phone calls seeking comment on his bid to control the casino.

However, Woosley said Malter has stated that he may continue his efforts to gain control of the club.

Woosley said there was a dispute at the meeting between Malter and the limited partners whom Malter had apparently counted on to support him.

One of these limited partners, Ebrahim Victory, a former general partner of the casino, said he and some of the other partners who had signed contracts to sell their points to Malter felt that Malter had not met the terms of those contracts, which relieved the partners of their obligations to Malter.

Among the conditions of Malter’s bid for the partners’ shares was that he be voted in as general partner and achieve majority ownership.

“Malter having failed to receive a majority,” Victory said, “now all partners consider their agreement (with him) null and void.”

Malter’s investment group “may take a shot at us in the courts,” Victory said. “I know I’m in for a fight with Malter, but we did our homework on this, and the vote was legal.”

Victory has had an active voice in the club for seven years and leads an investment group that has brought suit accusing the club’s management of financial misconduct.

An hour before the meeting with Malter, Woosley said, representatives of Las Vegas’ Southwest Gaming Inc. (SGI) presented the partners with a written offer to buy their shares for up to $90,000 a point.

Malter was offering $70,000 a point.

If a sufficient number of limited partners accept the offer, the Las Vegas group may get control of the casino without calling another partners’ meeting, according to Howard Manning Jr., attorney for the general partners. SGI President Donald Speer has said he is seeking 100% ownership of the casino.

Bell has not yet formally considered SGI’s offer, but the bid has been distributed to City Council members, Woosley said. It will be discussed at a meeting of the council Monday. Woosley said the city will wait for a decision from the U.S. attorney’s office before taking action on the offer.

Monday’s partners meeting was the culmination of months of jockeying among Bell Club investors, managers and outside groups for control of the pioneer poker club, which saw its revenues plummet after the fraud and racketeering trials three years ago. Competing clubs in nearby communities have also siphoned business from the once-flourishing club, which contributes 15% of Bell’s tax revenue.

Speer has said that if his group obtains control, it will refurbish the casino and put money into promoting the club to attract new business.

Victory said he believes that SGI will eventually get control of the club and that this will benefit the city.

“I am so relieved--I hope it’s over,” Victory said.