LAS VEGAS – The man who started a hospitality empire with a Los Angeles nightclub and turned the Sahara Hotel and Casino on the Las Vegas Strip into a hipper, sleeker destination is facing questions for the second time this month from gambling regulators about his cocaine use and questionable business dealings.
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Sam Nazarian is expected to appear before the Nevada Gaming Commission on Thursday morning as he seeks a gambling license he needs because he owns 10 percent of the SLS Las Vegas hotel and casino.
The 39-year-old hospitality magnate faced the state's Gaming Control Board for hours earlier this month to answer questions about cocaine use that was more recent than he had led investigators to believe. The board also delved into his past business dealings, mainly repeated payments akin to blackmail that added up to about $3 million, including a $90,000 payment in 2011 to record producer Marion "Suge" Knight for unknown reasons.
The Gaming Control Board recommended 2-1 that the commission grant Nazarian a license, but with limits. It would only be good for a year, and the board recommended Nazarian have no oversight of gambling at the SLS Las Vegas, avoid associating with individuals of disrepute and submit to random drug tests, among other limits.
What's ultimately approved is up the commission Thursday.
Nevada has long been keen on dismissing perceptions that its gambling industry is as seedy as its mobster beginnings, and the investigations into a person's background to prevent any unseemly activity from reflecting badly on the state's biggest industry can be intense.
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"What he has run into is history," said Michael Green, a researcher for the Mob Museum in Las Vegas and associate professor of history at the University of Nevada, Las Vegas.
As Nazarian faced another likely interrogation into his past misdeeds, the company that owns 90 percent of SLS Las Vegas took a pre-emptive step and announced this week he wouldn't have any role in the hotel and casino's day-to-day operations.
"Sam Nazarian seems to be doing exactly what he needs to be doing, and maybe a little more," Green said of the entrepreneur's effort to pay for his sins by publicly stepping aside. "But he's paying for a lot of sins that preceded him, and sinners."
Gaming Control Board Chairman A.G. Burnett said he respected the move and said it represented a high-level of respect on Nazarian's part for the process.
"They've certainly got the message," Burnett said Wednesday.
At the Dec. 3 hearing, Nevada Gaming Control board member Terry Johnson questioned Nazarian's judgment in making persistent payments to an individual Nazarian said was threatening him. "Or am I to accept that this was a shortcoming of his legal counsel that this purported barnacle, purported parasite, somehow outwitted what sounds like a century's worth of legal experience in continuing to have these financial transactions occur?" Johnson said.
Much of that hearing's time was spent discussing payments Nazarian made to a former business associate, Derrick Armstrong, whom Nazarian's lawyers described as an unsavory individual who threatened to harm Nazarian and his family physically and in the public sphere by divulging embarrassing information.
Armstrong said Wednesday by phone that he planned to attend Thursday's commission hearing to clear his name. He called Nazarian's statements about him lies and said he didn't extort or threaten Nazarian.
Armstrong said the two had numerous business deals, none codified in writing, for Nazarian to back his business deals up to a reasonable amount.
"Does it make sense that a guy would pay a person ... because I was just a nuisance to him?" he asked.
A message seeking comment was left Wednesday for Randy Winograd, a lawyer for the Nazarian family.