Owner of Huntington Park Trash Firm Involved in Las Vegas Hotel Bankruptcy
When the City Council awarded a garbage contract to a fledgling firm owned by a businessman with no experience in the trash industry, the council majority reasoned that a successful entrepreneur could run any operation.
City officials have indicated in recent interviews, however, that they did not thoroughly investigate the business background of Eugene C. Fresch, owner of the new firm, H.P. Disposal.
As Fresch’s new company prepares to begin hauling garbage Oct. 1, creditors continue to submit claims in federal bankruptcy court in Las Vegas to recoup what they say they are owed by a failed hotel and casino operation owned by Fresch and a Texas investor.
Mayor Jack W. Parks and councilmen Thomas E. Jackson and William P. Cunningham, who voted last June to award the contract to H.P. Disposal, said they did not know about the financial problems of Fresch’s Las Vegas business venture. The firm, Airport Casino Inc., ran the Marina Hotel and Casino on the Las Vegas Strip until last year, when liquidation proceedings began under Chapter 7 of federal bankruptcy laws.
Not Aware of Bankruptcy
“I wasn’t aware of that (the bankruptcy), but that happens a lot of times with a corporation,” Parks said in a recent interview. “It doesn’t necessarily mean the individual himself is a bad businessman. I think the guy’s a pretty intelligent and smart businessman and will do a decent job for us.”
Parks said he probably would have voted the same, even if he had known about the casino’s business problems. But, he said, “I would probably have researched it a little bit closer. . . . " Cunningham echoed the mayor.
Jackson, who spearheaded contract negotiations for the city, said, “We studied this in great, great detail. He was a hell of a businessman.” But Jackson also acknowledged he did not know of the Las Vegas firm’s bankruptcy. “I don’t think anyone ever asked him,” he said.
Asked whether the city should have investigated Fresch’s business background more thoroughly before awarding the commercial garbage contract, Jackson said, “I don’t think it was our intention to know every detail of his (background).”
Donald L. Jeffers, the city’s chief administrative officer, said Huntington Park officials did not research Fresch’s business background. The Huntington Park Police Department found that Fresch had no criminal record, said Chief Patrick M. Connolly.
Meanwhile, H.P. Disposal, which had no headquarters or trucks when the contract was awarded, is gearing up to pick up trash from the city’s businesses next month, General Manager Jack Leonard said this week.
The company has set up a trailer as its temporary headquarters on a lot it acquired on Holmes Avenue, just outside Huntington Park’s western border. On Tuesday, Leonard showed one of the company’s white, red and green trucks to the local Kiwanis Club.
“Everything’s ahead of schedule,” Leonard said. “If need be, we could start hauling trash tomorrow.”
Leonard said all but one of the firm’s seven trucks, which together cost about $800,000, are ready to roll. The company is still hiring drivers, he said. In all, H.P. Disposal will employ about 15 workers, a spokeswoman said.
The new company will assign a worker to paint over graffiti that often mar garbage bins in the city, a plan lauded by Jackson. The councilman also said the locally based firm would be more responsive to customer complaints than the current contractor, Laidlaw Waste Systems Inc., a Canadian firm with U.S. headquarters in Hurst, Tex.
City officials said billing problems and Laidlaw’s unresponsiveness to complaints led the city to terminate the contract, effective Oct. 1. Laidlaw still holds Huntington Park’s residential garbage contract.
A Laidlaw spokesman acknowledged some billing problems, but said they were quickly corrected. He said Laidlaw has been responsive to Huntington Park.
In June, several area trash haulers opposed the contract with Fresch’s new company, and questioned whether the 66-year-old businessman received favorable treatment because his two sons run the Huntington Park Casino, which provides the city with about $500,000 in revenue annually. Eric T. Fresch is president of the company that operates the casino. Curtis Fresch manages the casino.
Councilman Jackson acknowledged that Eugene Fresch had an inside track on the new contract because he had become acquainted with city officials as a result of his sons’ positions with the Huntington Park Casino.
But Jackson denied that the decision to award the contract to Fresch was influenced by the casino’s financial importance to Huntington Park.
Fresch did not respond to numerous interview requests.
It is unclear how Fresch found about the city’s dissatisfaction with the firm. Leonard said Fresch approached him to run the new firm. The Fresches and Leonard enjoy good relations with city officials.
Jackson and Parks frequent the casino and socialize with the Fresch sons. Jackson said Leonard often socialized with city officials and won their confidence during his tenure with Laidlaw.
Leonard said he also became acquainted with Curtis Fresch and later socialized with him.
Under the agreement, H.P. Disposal will pay the city a franchise fee of $75,000 a year or 5% of its gross billings, whichever is more. The firm paid the city a $300,000 advance on franchise fees.
Three other firms submitted proposals offering franchise fees ranging from 10% to 12% of annual gross billings and advances ranging from $500,000 to $1 million. The commercial garbage contract generates about $1.8 million a year in gross billings, an official said.
Jackson said the city never sought competitive bids on the garbage contract but began to negotiate exclusively with Fresch, someone he trusts to do a good job.
He noted that H.P. Disposal had hired Leonard as its general manager to run the new operation. He said Leonard, a Huntington Park resident, would make up for Fresch’s inexperience in the garbage business.
Leonard was a Laidlaw division manager before his resignation on June 3. H.P. Disposal incorporated on May 23, just a month before it won the Huntington Park contract.
Jackson and Parks have said the larger franchise fees eventually would have required the competing firms to raise rates or reduce service. H.P. Disposal has guaranteed it will not seek a rate increase for two years.
Councilmen Herbert A. Hennes Jr. and Jim Roberts voted against the contract.
Hennes said he objected because the firm had no experience, and other firms submitted proposals offering the city substantially more in franchise fees for the contract. Cities are not legally required to seek bids or to accept the lowest bid on a garbage contract.
When Fresch submitted his proposal, he included a resume showing that he had been principal shareholder, president and general manager of Airport Casino Inc. starting in 1975. The resume showed that his role in the operation diminished in later years.
Fresch, who lives in Palos Verdes Estates, owned a Columbus, Ohio, firm that manufactured ordnance, including bomb and bayonet parts, from the mid-1950s through the mid-1960s. The Whittaker Corp., a diversified firm, bought Fresch’s company in 1968, and Fresch became a division president for Whittaker, his resume said.
Fresch left Whittaker and entered the Las Vegas gambling business in the early 1970s. During his early years in Las Vegas, Fresch was a business partner of Allen R. Glick, who, in a trial in the mid-1980s, admitted to being a front man for organized crime.
Fresch apparently cut his ties with Glick in 1977. Fresch was never implicated in a skimming scandal that involved Glick-owned casinos--primarily the Stardust and Fremont--from 1974 to 1979. The state forced Glick out of gaming in 1979. The San Diego area businessman was never indicted in the case and Glick testified he was intimidated into fronting for the crime figures.
Fresch has never been named in a complaint to the Nevada Gaming Control Board, said board member Dennis Amerine.
Glick and Fresch were owners of Casino Operation Inc., which ran the Las Vegas Hacienda, from 1972 to 1977, according to a spokesman for the Nevada Gaming Control Board. Fresch became a director and executive vice president of Glick’s Argent Corp. in June, 1974 and resigned in November, 1975. He held a gaming license for the Stardust and Fremont casinos during most of that period.
Formed Airport Casino
In late 1974, Glick and Fresch formed Airport Casino Inc., but Fresch bought out Glick in May, 1976. In March, 1975, Fresch was licensed as president and 35% owner of Airport Casino Inc. He became sole owner after buying out Glick, but soon sold a 50% interest to Robert K. Moses Jr., a Houston businessman. Moses acquired more interest as the firm started to have financial problems, and eventually loaned the firm $5 million.
When Airport Casino filed for protection from creditors under Chapter 11 of the bankruptcy law in 1984, Moses held 87.5% interest and Fresch had 12.5%, according to court documents. Fresch was a director and was being paid $98,000 as a consultant. He earned 60% of that amount under the reorganization.
Robert A. Booker, former general manager and executive vice president of the Marina Hotel and Casino, said Fresch would travel to Las Vegas about twice a month for two or three days to give advice on promotional ideas and cost-cutting measures. Brooker also said he would talk with Fresch via telephone several times a week. Once the firm went into Chapter 11, Fresch became even more involved, Brooker said.
A 1984 court document filed by Airport Casino attorneys said Fresch “participates in the day-to-day running of the debtor’s operations.”
But the reorganization attempts proved unsuccessful. In April, 1987, a judge ordered the firm into Chapter 7 bankruptcy to liquidate its assets. The hotel and casino operation is being run by court-appointed trustees until a new operator is licensed.
Fresch said in a 1984 deposition that Marina was losing money in 1975 when he took over. It generated marginal profits in 1976 and made more money the next two years, he said. But things started going bad in 1980.
Fresch and other officials blamed the financial problems partially on high inflation in the late 1970s, which affected the company’s lease agreement with the owners of the casino building.
Moses said in a telephone interview that Fresch “was always an up-front, honorable fellow and conducted his business in a proper manner.” He said he had not seen Fresch in three years.