Alex Meruelo and the Meruelo Group were supposed to be the saving grace for SLS Casino.
Like a lot of love stories though, this one is messier than either party thought it would be. Nine months ago, news first broke that the financially strapped Las Vegas casino had a buyer. Meruelo and his company already owned the Grand Sierra Casino in Reno, so vetting was supposed to be fairly simple.
Talks stalled after several months though. In November, rumors swirled the deal fell apart. In December, 60 Chinese investors filed a class action against current SLS ownership.
Now there is another matter on the casino’s plate. The Culinary Workers union sent a letter to the Nevada Gaming Control Board (NGCB) and the Nevada Gaming Commission. In the letter, the group provides several reasons it believes Meruelo is not financially suitable to own SLS Casino.
Culinary Workers claim Meruelo using offshore tax shelter
The first concern listed in the letter is that Meruelo may have issued a troubling line of credit to his brother’s ailing Miami company.
The letter summed up the situation quite succinctly:
“Last March, Commercial Bank of California, where Alex Meruelo is a founder and a member of the board of directors, extended a $13 million loan to a Miami company facing foreclosure due to an unpaid $34 million loan. The Miami company was (and still is) controlled by Richard Meruelo, who is Alex’s brother and has a history of business failures.”
More specifically, Richard was trying to build a hotel in Miami but fell into debt. The hotel group did manage to pay off the $34 million loan. Nonetheless, there are questions about how thoroughly the California bank vetted the company before issuing the new loan. There are also questions about whether or not the brothers properly disclosed their relationship.
The issues extend beyond just Richard Meruelo though. Back in 2003, Alex had a run-in with the IRS over unpaid taxes and penalties of more than $2 million. Per the letter, Mereulo claimed losses of more than $4 million. The IRS thought otherwise.
During the court proceedings, the IRS but a stay on the matter. It appears the bank account in question was part of a federal investigation of another individual besides Meruelo. It is unclear when and if the tax issue ever got resolved.
Meruelo once tried to buy the Atlanta Hawks
This is not the first time Meruelo’s financial situation jeopardized a deal. In 2011, Meruelo attempted to buy the Atlanta Hawks NBA franchise. The deal ended up disastrously falling through when questions arose about his ability to pay.
No word from anyone at NGCB on the letter or a potential investigation. One does have to wonder if the Grand Sierra might be in jeopardy as well as the SLS Casino if gaming officials deem Meruelo unsuitable.
