Wayne Newton Hobbled by Debt, Files Bankruptcy : Finance: Once the world’s best-paid entertainer, the singer now owes creditors $20 million after a series of bad investments.
Las Vegas lounge lord Wayne Newton, whose vast business holdings once included a 50% stake in the Aladdin Hotel & Casino, has filed for Chapter 11 bankruptcy protection in Reno.
Newton is seeking reorganization of an estimated $20 million in debts, attorney Gerald Gordon said on Monday. The federal bankruptcy court filing did not disclose the value of his assets, which include an Arabian horse ranch, a mansion outside Las Vegas and property at Lake Tahoe.
Newton, 50, was listed as the world’s highest-paid entertainer by the Guinness Book of World Records in 1983, and is said to still take in as much as $250,000 a week as a performer in Las Vegas. He has also worked in movies and on television.
Gordon said that Newton’s financial problems stem from a series of bad investments in the 1980s.
“This is a story involving many people,” Gordon said. “He invested in the 1980s in what in hindsight were unwise investments. They depreciated in value, and now he is unable to generate the cash flow needed to sustain them. It all basically has collapsed.”
Hints of Newton’s financial woes came in February, when a savings and loan sent him a foreclosure notice in connection with an unpaid $200,000 loan. The Internal Revenue Service subsequently issued a tax lien against Newton for $341,000 in back taxes, according to published reports.
Newton’s largest creditor is Northeastern Bank of Pennsylvania, which is owed $8.3 million, according to the Chapter 11 filing. Next in line is General Electric Credit of Colorado, owed $1.2 million. The document also lists $300,000 in debts to seven law firms.
In addition, Newton owes an estimated $13,000 to American Express, and about $14,000 to Douglas County, Nev., for property taxes on his Lake Tahoe property.
Gordon said that Newton--who first became famous as a chubby child entertainer with the 1963 hit “Danke Schoen"--has recently divested himself of most of his non-entertainment businesses.
He just completed a nationwide tour and still performs nearly half the year at the Las Vegas Hilton. Newton gained a reputation as a savvy businessman in the 1970s, when his $8.5-million annual income made him the highest-paid performer in Las Vegas history. In a widely reported business move, he and a partner purchased the Aladdin for $85 million in 1980.
That deal become the focus of a protracted lawsuit when Newton claimed that a series of reports on the NBC Nightly News in 1980 and 1981 “left the impression” that the purchase was financed with money from organized crime. Newton subsequently sold his interest in the hotel. A federal appeals court overturned a judgment against NBC in the case in 1990.
More recently, Newton became involved in gaming operations on Indian reservations. The entertainer, who is part American Indian, had an interest in gambling halls in California and Oklahoma--but both failed and left bitter feeling in the tribes that hoped to benefit.
In 1990, he took over the operation of an ailing 1,800-seat bingo hall on the Santa Ynez Reservation in Santa Barbara County. But the bingo managers had to rely on buses--which raises costs--to bring in enough players from cities such as Santa Barbara and Ventura.
“They closed and they moved on to Oklahoma. . . . The tribe didn’t generate any funds,” recalled Rosa Pace, the tribal vice president.
Tribal officials said they were owed $147,000 by Newton’s firm, representing back debts it had allegedly promised to pay but didn’t.
Newton’s firm, however, said in a statement that the tribe’s failure to allow high-stakes card games at the bingo hall was what made it “not economically feasible.”
In Grove, Okla., Wayne Newton Gaming Inc. in 1990 signed a contract to run a bingo hall for the Seneca-Cayuga tribe. But tribal officials complained last year that the firm had run up $168,000 in unpaid bills and failed to keep up payments on a construction loan taken out to build the hall.
The Oklahoma company Newton established to run the hall filed for Chapter 7 bankruptcy in federal court in May.