Key Takeaways
A former owner of Encore Boston Harbor has failed to convince the Massachusetts Supreme Judicial Court that he deserves an extra $19 million from the sale.
The Mystic River, north of Boston, with the Encore Boston Harbor in the distance. The land was a contaminated former chemical plant when it was acquired by FBT in 2009. (Image: Everett Leader Herald)owned a 49% stake in FBT Everett Realty. In 2009, his company purchased the disused chemical plant on the Mystic River where the casino now stands for $8 million.
Two years later, Massachusetts voters legalized casino gaming, and FTB hit the jackpot when Wynn Resorts showed interest in acquiring the plot. Gattineri claims the casino giant entered into a verbal agreement with FBT in 2012, promising to buy the land for $75 million if it won the bid for the region’s sole gaming license.
The only problem was one of FBT’s directors, Charles Lightbody, had a criminal record and reputed Mafia ties. Massachusetts law states that no convicted felon may profit from the operation of a casino.
Suspicious DocumentsWhile the Massachusetts Gaming Commission (MGC) was doing due diligence on Wynn Resorts, its investigators learned of Lightbody’s checkered past. They then became concerned that FBT was concealing his interest in the company.
As a result, the MGC restricted the amount Wynn could pay for the land to $35 million, which it said would be its value were it not earmarked for a casino.
FBT maintained that Lightbody had divested himself of his interest in the company in 2011 by selling his shares to Gattineri, a year before the Wynn proposal. But this was suspicious, as the relevant documents had been backdated.
Two weeks after the MGC awarded the casino license to Wynn in 2015, Gattineri, Lightbody, and another director, Dustin DeNunzio, were indicted on federal fraud charges. They were and the judge in the case determined that there was nothing in Massachusetts law that prohibited a felon from profiting from selling an asset to a casino company, only from actual gaming operations.
Ironically, the law relating to “convicted felons” had been misinterpreted not only by the MGC and the prosecution, but also by the defendants themselves.
Handshake UnenforceableGattineri argued that the MGC’s misunderstanding of the rules cost him $12 million his 49% share of the extra $40 million FTB would have received under the $75 million deal. But in its ruling Friday, the court determined that a private handshake deal was unenforceable, noting that the agreement s details with Wynn were never reported to the MGC.
[The money was] to be paid to Gattineri, the person who had purchased an additional interest in FBT from Lightbody … thereby raising concerns that such additional undisclosed compensation might end up in his hands. It is hard to imagine contractual conditions more likely to undermine the public s confidence in the licensing process,” wrote Associate Justice Scott L. Kafker.
“[…] Enforcement of such a secret agreement, contradicting the public terms of approval, constitutes a clear violation of public policy,” he added.
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