Mesquite Star foreclosure sale put off

By Jan Hogan
lasvegas.com Gaming Wire

      Less than two hours before the debt-plagued Mesquite Star was to go to foreclosure sale, Judge Michael Douglas granted a motion to postpone the sale.
      The motion had been brought before the District Court Tuesday by lawyers who represent some of the 276 workers at the closed hotel-casino who want their interests protected before any sale takes place.
      "There are 100-some employees whose paychecks were looted to the tune of $450,000 to $750,000 in claims," argued Matt Callister, one of the lawyers representing the workers. "They will be out in the cold unless there's a stay."
      The former employees allege their health coverage was regularly deducted from their paychecks but that the money was diverted -- no one knows where. The misuse was only discovered when medical claims came back denied, Callister said.
      The postponement of the sale was opposed by Jeffrey Albregts, representing Virgin River Casino Corp., and Brad Boodt who represented second mortgage holders Richard Kelley and the estate of the late Richard Tam.
      "Maintaining this property is costing my client $10,000 a day," Albregts told the court, "all to run a closed hotel."
      Callister said the postponement was necessary so he and co-counsel Richard Dreitzer could obtain a ruling on a Nevada statute which grants employees a lien against a defunct corporation, for wages due them.
      "The way we see it, the money taken from these people's paychecks are in essence their wages," Dreitzer said, explaining why the statue applied in this case.
      If District Court rules the statute is applicable, the workers' claims would be first in line for compensation when the property is sold. But the coverage caps out at $1,000 per employee.
      Dreitzer said getting the ruling would be a first step in seeing the workers reimbursed for their $700,000 in medical claims. He expects the remainder of the money to come from damages they are seeking.
      Some of the employees experienced a real need when it came to health coverage when they thought they were covered, the lawyers said.
      "There were a couple of strokes, a couple of pregnancies," Dreitzer said. "Since November, these people have had no coverage."
      Douglas set a bond of $40,000 to ensure any damages from Tuesday's decision. He stipulated his order was not to exceed 15 days and any judge hearing the case sooner could decide to rescind the postponement.
      "Whether someone has a claim or not, the court can adjudicate that at a later date," Albregts said. "We have no problem with the employees pursuing their claim and wherever that claim ranks out in the priority list is where it ranks out. We sympathize with them but until we come into title via the foreclosure sale of the property, we really can't do anything for them."
      The Mesquite Star, 80 miles north of Las Vegas, filed for Chapter 11 bankruptcy Dec. 1, citing assets of $22 million and liabilities of $23 million. It opened in July 1998. A reorganization plan was rejected by the court and Randy Black, a developer in the area, was appointed receiver. He resigned from running the property when it closed in March. Black was succeeded by Judy Adams, a resident of Mesquite and a former employee.