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Ellis Casino Company Files for Bankruptcy

Posted on November 29th, 2010

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After two successive years of disappointing losses brought about by economic woes, 2010 has seen some slight recovery for the casino industry. However, despite the positive news these past months, a number of dismal news can still be seen in casino headlines. Among these is the decision of Native American casino management personality R. Shawn Ellis’s to place one of his firms into Chapter 7 bankruptcy liquidation last Wednesday. After being slapped with lawsuits and a hitch in a casino resort project in Las Vegas, Ellis decided to proclaim one of his companies bankrupt. Ellis Las Vegas Inc., in its filing in U.S. Bankruptcy Court for Nevada, listed their assets as only amounting to $10,802, while its liabilities have reached $1.4 million.

Last Friday, Ellis’ company released a statement regarding the bankruptcy which included, “The business model Ellis Las Vegas was predicated upon no longer functions in the current economy and Mr. Ellis is moving on to unrelated business ventures.” According to its records, Ellis Las Vegas has, for this year, incurred losses amounting to $10.295 million. This was the worst performance for the company as it only lost $870,000 in 2009 and $9.73 million in 2008. The officers and shareholders of Ellis Las Vegas officers are R. Shawn Ellis, Ellis Development LLC, Sanjiv Dhawan (a former attorney of the firm), the Muckleshoot Indian Tribe (a tribe based in Auburn, WA) and the Shoshone-Bannock Indian Tribe (a tribe based in Fort Hall, ID).

In the bankruptcy case, the creditors include the San Pasqual Band of Mission Indians of Valley Center, CA (with a claim amounting to $120,000), SSB Gaming based in Scottsdale, AZ (with a claim totaling to $180,000) and the Kansas City, MO, office of architectural firm HOK Sport Inc. (with a claims of $350,000). The co-debtors mentioned in the case are Ellis Gaming and Entertainment Inc. and Ellis Partners Inc.

Another creditor with a case against Ellis other than this one is an Indian tribe, the Elk Valley Rancheria. This firm has a casino in California and in 2008, personally sued Ellis in Clark County District Court in Las Vegas. This case was later transferred to U.S. District Court in Las Vegas. According to the lawsuit, a management contract was signed between one of Ellis’ companies and the tribe based in Crescent City, CA, where the Elk Valley Casino is located. The suit states that in 2006, Ellis asked the tribe for a loan which may be converted into an equity interest in Ellis Partners LLC. The tribe gave Ellis Partners a loan amounting to $480,000. Should the loan be converted to an equity interest, the tribe would be an interest owner in “Ellis Las Vegas,” which was then a planned casino resort of the firm in Las Vegas.

According to the tribe, they were assured that everything about the progress was secure. Permits, licenses and zoning documents were already being processed. It was released that there were already international companies that have become investors of the project. The tribe was also informed that by 2007, four more tribes – San Manuel, Mohegan, Seminole Tribe of Florida and the Soboba Band added contributions to the project which may have reached $100 million.

However in 2008, the lawsuit claimed that Ellis Gaming was not getting revenue for the managing of a casino of the Hopland Band of Pomo Indians in Santa Rosa, CA. Its management deals with the Muckleshoot tribe and the Elk Valley casino were also terminated, leaving the company with decreased income. The tribe then terminated its casino management deal with Ellis Gaming Elk Valley Management LLC because Ellis was in “failure to comply with licensing requirements and inadequate performance — including significant operations problems and failures to perform as required under the management agreement.”

Other than this lawsuit, four more are included in the Ellis Las Vegas bankruptcy filing. A suit was filed by an individual named Craig Keith Potts, a breach of contract suit by Dhawan against the company was dismissed, and two more lawsuits filed by the Insurance Company of the West and Pacific Showcase were listed.