SunCruz Casinos
Encyclopedia
SunCruz Casinos
was one of many cruise lines that offered offshore "cruises to nowhere", legally transporting passengers into international waters
beyond the reach of federal and state gambling laws. In the 2000s, it became known for the involvement of some high-profile lobbyists such as Jack Abramoff
, and the murder of its former owner, Konstantinos "Gus" Boulis.
coast into international waters. There, out on the sea, passengers would gamble at high stakes on poker
, blackjack
and slots
. Boulis called his fleet of 11 ships the SunCruz Casino line. By the time he entered into negotiations to sell the company in 2000, SunCruz Casinos was earning tens of millions of dollars in annual profits, and employed over 2,000 people.
Florida
state officials made several attempts to shut the business down, finally succeeding in 1999 when federal prosecutors charged Boulis with violating shipping laws over the ship's registration. U.S. shipping code forbids foreign nationals from owning American commercial vessels, and Boulis was a Greek
citizen. Boulis agreed to pay a $1 million fine, sell the business, and never work in the gaming industry again. So that Boulis would be able to get a fair price when he sold, the deal with the federal prosecutors would be kept a secret until the deal was closed. In January 2000, Boulis went looking for a buyer.
. Dimopoulos was tasked with finding a buyer for SunCruz. Jack Abramoff
, a lobbyist then employed at the same firm, heard about the situation. Abramoff told Dimopoulos that he knew buyers who would be interested. They included himself, but ethics rules prohibit the same law firm from representing a buyer and a seller, therefore Abramoff hid his interest in the purchase from his firm.
Abramoff enlisted Adam Kidan
as a partner in the deal, along with another minor partner, Ben Waldman. Both were acquaintances of Abramoff during his College Republican days. The deal started to come together. The price was approximately $145 million; Abramoff and Kidan would come up with a $23 million downpayment, and then other financiers would release loans.
Press accounts have suggested that Abramoff used his political connections to gain support for the deal in Washington. Tom DeLay
, then House minority whip, gave Boulis a flag that had flown over the Capitol building. Abramoff brought his lead financier in the deal to a fund raiser for DeLay in Abramoff's box at FedEx Field.
Ohio
Republican Representative Bob Ney
aided the purchase in the House on several occasions. In March 2000, before the deal was closed, Ney entered comments in the Congressional Record
accusing the SunCruz management of cheating passengers.
Rep. Dana Rohrabacher
(R-Calif.) was listed as a financial reference for Abramoff in the purchase. He was also quoted as saying "I don't remember it, but I would certainly have been happy to give him a good recommendation" and "He's a very honest man." by the Washington Post.
On September 22, 2000, in secret, Abramoff and Adam Kidan
convinced Boulis to accept promissory note
s for $20 million in exchange for a secret 10 percent interest in the newly reorganized SunCruz Casinos. The deal was doubly illegal: Abramoff and Kidan were violating the terms of their purchase agreement with their financiers which required that they put up $23 million of their own money, and Boulis was violating the terms of his settlement with the government, which required that he separate himself entirely from his company.
The deal was closed on September 27, using false documents that purported to attest that Abramoff and Kidan had paid the $23 million. On October 26, 2000, Ney entered comments into the Congressional Record praising the change of ownership. Ney has since accused Abramoff of duping him.
. The relationship between Kidan and Boulis grew so contentious that they had a fistfight at a business meeting in December 2000, with both parties allegedly making threats. Boulis was shot to death in Miami two months later in February 2001, in what police called "a gang style hit". A lawsuit brought by Boulis' estate alleges that Adam Kidan made three payments of $10,000 to Anthony Moscatiello immediately prior to the murder.
Kidan had hired Anthony Moscatiello as a business advisor despite Moscatiello's previous indictment as former bookkeeper for the Gambino crime family
(led by Mafia crime boss John Gotti
), paying him $145,000 through SunCruz for services that were allegedly never rendered. Anthony Ferrari also received $95,000 from SunCruz as payment for security services, in addition to further sums in casino chips.
Moscatiello and Anthony Ferrari were charged with murder, conspiracy and solicitation to commit murder. James Fiorillo was charged with murder and conspiracy. In May 2006, Adam Kidan told authorities that Moscatiello and Ferrari confided in Kidan that another Gotti associate, John Gurino, killed Boulis. Gurino himself was killed in October 2003. Gurino wasn't part of the investigation before Kidan gave authorities Gurino's name.
action brought by Foothill Capital. Abramoff and Ben Waldman signed their stake in SunCruz over to the Boulis family estate, and Kidan later turned over his stake for $200,000. Foothill settled with Abramoff for an undisclosed sum, and continued litigation against Kidan.
On December 15, 2005, Kidan entered a guilty plea in a Miami federal court to one count each of conspiracy and wire fraud, each of which carries a possible sentence of five years in prison. U.S. District Judge Paul Huck accepted the plea and set sentencing for March 1, 2006. The specific allegations were:
On January 4, 2006, Abramoff pleaded guilty to conspiring to commit wire fraud and mail fraud, and of a separate charge of wire fraud, relating to the SunCruz purchase. On March 29, 2006, Abramoff and Kidan were each sentenced to five years and ten months in prison -— the minimum allowed per the plea bargain -— and were ordered to pay restitution of more than $21 million for their involvement in the SunCruz casino deal.
came under investigation by prosecutors for his role in aiding the purchase, and was implicated in Abramoff's plea agreement. (In a separate Indian lobbying case
, Abramoff pleaded guilty to charges including bribing a Congressman who was later identified as Ney.)
In March 2000, before a deal for Abramoff and others to purchase SunCruz was closed, Ney entered comments in the Congressional Record that were critical of the management of SunCruz: "Mr. Speaker, how SunCruz Casinos and Gus Boulis conduct themselves with regard to Florida laws is very unnerving. Florida authorities have repeatedly reprimanded SunCruz Casinos and its owner Gus Boulis for taking illegal bets, not paying their customers properly and had to take steps to prevent SunCruz from conducting operations altogether." It is alleged that this statement was intended to pressure SunCruz to sell to Abramoff on terms favorable to the latter.
It is alleged that Ney, like other Republicans in the House, was under pressure to raise money for the Republican National Congressional Committee (RNCC) in October 2000, a month prior to the November elections. In an October 23 e-mail from Abramoff to Scanlon, Abramoff asked "Would 10K for NRCC from Suncruz for Ney help?" Scanlon replied, "Yes, a lot! But would have to give them a definite answer--and they need it this week..."
The $10,000 was sent to the RNCC within days, and Ney got credit for raising it. Scanlon wrote a draft statement for Ney that praised Adam Kidan, the main partner of Abramoff in purchasing SunCruz. Ney then inserted the statement into the October 26 Congressional Record.
SunCruz Casinos
SunCruz Casinos was one of many cruise lines that offered offshore "cruises to nowhere", legally transporting passengers into international waters beyond the reach of federal and state gambling laws...
was one of many cruise lines that offered offshore "cruises to nowhere", legally transporting passengers into international waters
International waters
The terms international waters or trans-boundary waters apply where any of the following types of bodies of water transcend international boundaries: oceans, large marine ecosystems, enclosed or semi-enclosed regional seas and estuaries, rivers, lakes, groundwater systems , and wetlands.Oceans,...
beyond the reach of federal and state gambling laws. In the 2000s, it became known for the involvement of some high-profile lobbyists such as Jack Abramoff
Jack Abramoff
Jack Abramoff is an American former lobbyist and businessman. Convicted in 2006 of mail fraud and conspiracy, he was at the heart of an extensive corruption investigation that led to the conviction of White House officials J. Steven Griles and David Safavian, U.S. Representative Bob Ney, and nine...
, and the murder of its former owner, Konstantinos "Gus" Boulis.
Founding and investigation
In 1994 Boulis, already a multi-millionaire by founding the Miami Subs sandwich shop franchise, bought a number of luxury yachts. He remodeled the yachts as casinos, and began to operate his "cruises to nowhere", departing from the FloridaFlorida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
coast into international waters. There, out on the sea, passengers would gamble at high stakes on poker
Poker
Poker is a family of card games that share betting rules and usually hand rankings. Poker games differ in how the cards are dealt, how hands may be formed, whether the high or low hand wins the pot in a showdown , limits on bet sizes, and how many rounds of betting are allowed.In most modern poker...
, blackjack
Blackjack
Blackjack, also known as Twenty-one or Vingt-et-un , is the most widely played casino banking game in the world...
and slots
Slots
Slots may refer to:* Jørgen Slots, a leading Danish periodontist currently on faculty at USC Dental School* Slot machine* Leading edge slots aerodynamic devices on an aircraft leading edgeFor further meanings see slot...
. Boulis called his fleet of 11 ships the SunCruz Casino line. By the time he entered into negotiations to sell the company in 2000, SunCruz Casinos was earning tens of millions of dollars in annual profits, and employed over 2,000 people.
Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
state officials made several attempts to shut the business down, finally succeeding in 1999 when federal prosecutors charged Boulis with violating shipping laws over the ship's registration. U.S. shipping code forbids foreign nationals from owning American commercial vessels, and Boulis was a Greek
Greece
Greece , officially the Hellenic Republic , and historically Hellas or the Republic of Greece in English, is a country in southeastern Europe....
citizen. Boulis agreed to pay a $1 million fine, sell the business, and never work in the gaming industry again. So that Boulis would be able to get a fair price when he sold, the deal with the federal prosecutors would be kept a secret until the deal was closed. In January 2000, Boulis went looking for a buyer.
Purchase of SunCruz Casinos and political ties
Boulis' lawyer Art Dimopoulos worked at Preston Gates Ellis & Rouvelas Meeds, a large firm in Seattle, WashingtonSeattle, Washington
Seattle is the county seat of King County, Washington. With 608,660 residents as of the 2010 Census, Seattle is the largest city in the Northwestern United States. The Seattle metropolitan area of about 3.4 million inhabitants is the 15th largest metropolitan area in the country...
. Dimopoulos was tasked with finding a buyer for SunCruz. Jack Abramoff
Jack Abramoff
Jack Abramoff is an American former lobbyist and businessman. Convicted in 2006 of mail fraud and conspiracy, he was at the heart of an extensive corruption investigation that led to the conviction of White House officials J. Steven Griles and David Safavian, U.S. Representative Bob Ney, and nine...
, a lobbyist then employed at the same firm, heard about the situation. Abramoff told Dimopoulos that he knew buyers who would be interested. They included himself, but ethics rules prohibit the same law firm from representing a buyer and a seller, therefore Abramoff hid his interest in the purchase from his firm.
Abramoff enlisted Adam Kidan
Adam Kidan
Adam Kidan is an American businessman, the former owner of SunCruz Casinos and former president of Atlantic & Pacific Mattress Co. He was one of lobbyist Jack Abramoff's business partners, and became a national figure when his involvement in one of Abramoff's illegal lobbying ventures came to...
as a partner in the deal, along with another minor partner, Ben Waldman. Both were acquaintances of Abramoff during his College Republican days. The deal started to come together. The price was approximately $145 million; Abramoff and Kidan would come up with a $23 million downpayment, and then other financiers would release loans.
Press accounts have suggested that Abramoff used his political connections to gain support for the deal in Washington. Tom DeLay
Tom DeLay
Thomas Dale "Tom" DeLay is a former member of the United States House of Representatives, representing Texas's 22nd congressional district from 1984 until 2006. He was Republican Party House Majority Leader from 2003 to 2005, when he resigned because of criminal money laundering charges in...
, then House minority whip, gave Boulis a flag that had flown over the Capitol building. Abramoff brought his lead financier in the deal to a fund raiser for DeLay in Abramoff's box at FedEx Field.
Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
Republican Representative Bob Ney
Bob Ney
Robert William Ney is an American politician from the U.S. state of Ohio. A Republican, Ney represented Ohio's 18th congressional district in the U.S. House of Representatives from 1995 until November 3, 2006, when he resigned...
aided the purchase in the House on several occasions. In March 2000, before the deal was closed, Ney entered comments in the Congressional Record
Congressional Record
The Congressional Record is the official record of the proceedings and debates of the United States Congress. It is published by the United States Government Printing Office, and is issued daily when the United States Congress is in session. Indexes are issued approximately every two weeks...
accusing the SunCruz management of cheating passengers.
Rep. Dana Rohrabacher
Dana Rohrabacher
Dana Tyron Rohrabacher is the U.S. Representative for , and previously the 45th and 42nd, serving since 1989. He is a member of the Republican Party...
(R-Calif.) was listed as a financial reference for Abramoff in the purchase. He was also quoted as saying "I don't remember it, but I would certainly have been happy to give him a good recommendation" and "He's a very honest man." by the Washington Post.
On September 22, 2000, in secret, Abramoff and Adam Kidan
Adam Kidan
Adam Kidan is an American businessman, the former owner of SunCruz Casinos and former president of Atlantic & Pacific Mattress Co. He was one of lobbyist Jack Abramoff's business partners, and became a national figure when his involvement in one of Abramoff's illegal lobbying ventures came to...
convinced Boulis to accept promissory note
Promissory note
A promissory note is a negotiable instrument, wherein one party makes an unconditional promise in writing to pay a determinate sum of money to the other , either at a fixed or determinable future time or on demand of the payee, under specific terms.Referred to as a note payable in accounting, or...
s for $20 million in exchange for a secret 10 percent interest in the newly reorganized SunCruz Casinos. The deal was doubly illegal: Abramoff and Kidan were violating the terms of their purchase agreement with their financiers which required that they put up $23 million of their own money, and Boulis was violating the terms of his settlement with the government, which required that he separate himself entirely from his company.
The deal was closed on September 27, using false documents that purported to attest that Abramoff and Kidan had paid the $23 million. On October 26, 2000, Ney entered comments into the Congressional Record praising the change of ownership. Ney has since accused Abramoff of duping him.
Payment dispute and murder
The business relationship soured soon after the fraudulent purchase. Boulis allegedly clashed with Kidan over the falsified wire transfer. Abramoff was mostly a silent partner, but both he and Kidan used SunCruz funds to pay for numerous personal expenses. Boulis also alleged that Kidan had links to organized crimeOrganized crime
Organized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run by criminals for the purpose of engaging in illegal activity, most commonly for monetary profit. Some criminal organizations, such as terrorist organizations, are...
. The relationship between Kidan and Boulis grew so contentious that they had a fistfight at a business meeting in December 2000, with both parties allegedly making threats. Boulis was shot to death in Miami two months later in February 2001, in what police called "a gang style hit". A lawsuit brought by Boulis' estate alleges that Adam Kidan made three payments of $10,000 to Anthony Moscatiello immediately prior to the murder.
Kidan had hired Anthony Moscatiello as a business advisor despite Moscatiello's previous indictment as former bookkeeper for the Gambino crime family
Gambino crime family
The Gambino crime family is one of the "Five Families" that dominates organized crime activities in New York City, United States, within the nationwide criminal phenomenon known as the Mafia . The group is named after Carlo Gambino, boss of the family at the time of the McClellan hearings in 1963...
(led by Mafia crime boss John Gotti
John Gotti
John Joseph Gotti, Jr was an American mobster who became the Boss of the Gambino crime family in New York City. Gotti grew up in poverty. He and his brothers turned to a life of crime at an early age...
), paying him $145,000 through SunCruz for services that were allegedly never rendered. Anthony Ferrari also received $95,000 from SunCruz as payment for security services, in addition to further sums in casino chips.
Moscatiello and Anthony Ferrari were charged with murder, conspiracy and solicitation to commit murder. James Fiorillo was charged with murder and conspiracy. In May 2006, Adam Kidan told authorities that Moscatiello and Ferrari confided in Kidan that another Gotti associate, John Gurino, killed Boulis. Gurino himself was killed in October 2003. Gurino wasn't part of the investigation before Kidan gave authorities Gurino's name.
Bankruptcy, investigations and indictments
SunCruz declared bankruptcy in June 2001, and was subsequently auctioned off to new management in a bankruptcyBankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
action brought by Foothill Capital. Abramoff and Ben Waldman signed their stake in SunCruz over to the Boulis family estate, and Kidan later turned over his stake for $200,000. Foothill settled with Abramoff for an undisclosed sum, and continued litigation against Kidan.
On December 15, 2005, Kidan entered a guilty plea in a Miami federal court to one count each of conspiracy and wire fraud, each of which carries a possible sentence of five years in prison. U.S. District Judge Paul Huck accepted the plea and set sentencing for March 1, 2006. The specific allegations were:
- On September 27, 2000, Foothill Capital Corporation, along with Citadel Equity Fund, Ltd., funded approximately $60 million in loans toward the $147.5 million sale to a group of investors of SunCruz Casinos by Konstantinos (Gus) Boulis. The buyers were headed by defendants Adam R. Kidan and Jack A. Abramoff. According to the Indictment, as an express condition for providing the loan, the lenders required proof that Kidan and Abramoff had made a cash equity contribution toward the purchase price in an amount of at least $23 million. As proof that this condition had been met, the buyers, led by defendant Kidan, executed a closing statement, signed by Kidan, attesting that $23 million in funds had been transferred by the buyers to Gus Boulis towards the purchase price of SunCruz. Also, as part of the closing documents, Kidan and Abramoff signed “cash equity contribution” statements asserting that the buyers had contributed no less than $23 million in cash toward the purchase of SunCruz. In support of the above false statements, Kidan and Abramoff caused to be sent to the lenders a counterfeit copy of a wire funds transfer notification, reflecting that $23 million had been transferred from the account of Leak, Inc. at Chevy Chase Savings Bank, in Chevy ChaseChevy ChaseCornelius Crane "Chevy" Chase is an American comedian, writer, and television and film actor, born into a prominent entertainment industry family. Chase worked a plethora of odd jobs before moving into comedy acting with National Lampoon...
, MarylandMarylandMaryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
, to the account of Gus Boulis at Ocean Bank, in Miami, Florida.
- To further support the loan application, both Kidan and Abramoff provided personal financial statements. The lenders relied on both financial statements, and the counterfeit copy of the wire funds transfer, deciding to approve and fund the loan. Some of the proceeds of the loan were then wire-transferred to the account of Gus Boulis at Ocean Bank, in Miami, Florida. The copy of the wire funds transfer notification reflecting the transfer of $23 million from the buyers to the seller was fraudulent, as no such transfer of funds ever occurred, and the buyers had never made any cash contributions toward the purchase of SunCruz. Similarly, the personal financial statements provided by Kidan and Abramoff to Foothill contained false information concerning their respective assets and liabilities.
On January 4, 2006, Abramoff pleaded guilty to conspiring to commit wire fraud and mail fraud, and of a separate charge of wire fraud, relating to the SunCruz purchase. On March 29, 2006, Abramoff and Kidan were each sentenced to five years and ten months in prison -— the minimum allowed per the plea bargain -— and were ordered to pay restitution of more than $21 million for their involvement in the SunCruz casino deal.
Connections to Congressman Bob Ney
According to the Washington Post, Bob NeyBob Ney
Robert William Ney is an American politician from the U.S. state of Ohio. A Republican, Ney represented Ohio's 18th congressional district in the U.S. House of Representatives from 1995 until November 3, 2006, when he resigned...
came under investigation by prosecutors for his role in aiding the purchase, and was implicated in Abramoff's plea agreement. (In a separate Indian lobbying case
Jack Abramoff Indian lobbying scandal
The Jack Abramoff Indian lobbying scandal is a United States political scandal relating to the work performed by political lobbyists Jack Abramoff, Ralph E. Reed, Jr., Grover Norquist and Michael Scanlon on Indian casino gambling interests for an estimated $85 million in fees. Abramoff and Scanlon...
, Abramoff pleaded guilty to charges including bribing a Congressman who was later identified as Ney.)
In March 2000, before a deal for Abramoff and others to purchase SunCruz was closed, Ney entered comments in the Congressional Record that were critical of the management of SunCruz: "Mr. Speaker, how SunCruz Casinos and Gus Boulis conduct themselves with regard to Florida laws is very unnerving. Florida authorities have repeatedly reprimanded SunCruz Casinos and its owner Gus Boulis for taking illegal bets, not paying their customers properly and had to take steps to prevent SunCruz from conducting operations altogether." It is alleged that this statement was intended to pressure SunCruz to sell to Abramoff on terms favorable to the latter.
It is alleged that Ney, like other Republicans in the House, was under pressure to raise money for the Republican National Congressional Committee (RNCC) in October 2000, a month prior to the November elections. In an October 23 e-mail from Abramoff to Scanlon, Abramoff asked "Would 10K for NRCC from Suncruz for Ney help?" Scanlon replied, "Yes, a lot! But would have to give them a definite answer--and they need it this week..."
The $10,000 was sent to the RNCC within days, and Ney got credit for raising it. Scanlon wrote a draft statement for Ney that praised Adam Kidan, the main partner of Abramoff in purchasing SunCruz. Ney then inserted the statement into the October 26 Congressional Record.