Felony in racino adviser’s record 1984 conviction may affect deal

loading...

BANGOR – A key representative of the Hawaiian entrepreneur poised to develop a racetrack casino at city-owned Bass Park is a convicted felon, according to court documents from Hawaii.

Hoolae Paoa, who has represented developer Shawn Scott at key public meetings in Bangor and Brewer over the past several months, pleaded guilty to felony theft in 1984. Court documents also show that Paoa was convicted of assault, also in Hawaii, after an incident of domestic violence in 1997 involving his estranged wife.

Last year, representatives of Capital Seven LLC, one of several companies owned by Scott, approached Bangor with plans to develop a $30 million “racino,” or racetrack casino, at city-owned Bass Park, home of Bangor Raceway and the Bangor Auditorium and Civic Center. The plan appears close to fruition, with only state licensing to be cleared.

Part of the licensing process includes a background investigation of developers conducted by staff from the Attorney General’s Office. State law governing harness racing licensing requires that applicants and their associates and creditors be of “good moral character” and that applicants be “financially responsible.”

Paoa’s associations with Scott date back at least to the late 1990s. According to Martin Gersten, Scott’s Connecticut-based legal counsel, Paoa was instrumental in transforming a Louisiana track into a successful venture for Scott.

Although Paoa has represented Scott during at least three Bangor City Council meetings, Gersten said Paoa is not an employee of Capital Seven, nor is he a member of that corporation’s board. The extent of his involvement with the Bangor project is limited to serving as a consultant.

The license hurdle

The idea behind the racino is to bolster the state’s struggling harness racing industry with revenues from slot machines. Scott and his associates say the project would create hundreds of jobs and generate an estimated $75 million in annual revenue – 25 percent of which would go to the state for agricultural, social service and education programs.

In order to pursue his plans for Bangor Raceway, which call for improvements to racing facilities there as well as the construction of such amenities as a hotel and conference center, Scott first must obtain a harness racing license from the Maine Harness Racing Commission. The commission is slated to consider Scott’s application, as well as applications from the city of Bangor and an Iowa-based competitor, next month.

A legal resident of Hawaii, Scott has offices in Nevada. He is perhaps best known for a multimillion-dollar deal in Vinton, La., where in 1999 he bought Delta Downs, a down-at-the-heels thoroughbred and quarter horse operation with a six-month live racing schedule and a year-round off-track betting facility that was on the verge of closing. Two years later, after improving the facility and winning voter approval to add slot machines, he sold Delta Downs for $130 million to industry heavyweight Boyd Gaming Corp.

More recently, he has set his sights on developing racetrack casinos in Bangor and at Vernon Downs in Vernon, N.Y. He is also one of four contenders for a proposed racino in Hobbs, N.M.

Scott plans to install up to 1,200 slot machines at Vernon Downs by the end of the year and is seeking the necessary state racing and lottery licenses. His plans call for installing up to 1,500 slots in Bangor, now that he has won approval for slots in a citywide referendum in June and a statewide referendum earlier this month.

Paoa’s history

What effect, if any, Paoa’s past violations might have on Scott’s efforts to obtain a state harness racing license in Maine remained unclear Tuesday night. Paoa said Scott has been aware of the convictions for years. Attempts to reach Scott at his home in Hawaii and on his cellular telephone were unsuccessful Tuesday.

Reached at his office in New York, Paoa noted that the theft case occurred two decades ago and that he’d paid his dues to that end long ago.

Gersten characterized the theft incident as a “commercial dispute” between Paoa and a former employer. He said that Paoa and the employer had a disagreement over pay and that Paoa had taken some items from the company as part of his compensation. Court documents listed tools and building supplies as among the items Paoa took from the company.

The incident did not result in a jail sentence, Gersten said, but Paoa was ordered to pay restitution and was placed on probation at that time.

Paoa also said that he’d fulfilled his legal obligations after the domestic violence matter. Among those obligations was anger management counseling. “I’m a better person for it,” he said.

Gersten pointed out that authorities in both New York and Louisiana knew of Paoa’s record and still licensed him.

Paoa is president and chief executive officer of Mid-State Raceway, the company that runs Vernon Downs, where Scott is in the process of opening what would be New York’s first racino.

Though Mid-State had planned to open its slots parlor earlier this month, Paoa said that the project has encountered delays in its license application process and that the opening date has been pushed back to the end of this year.

Paoa said Tuesday that his past convictions were brought to light by a New York horsemen’s group. He said that the group recently attempted to stage a hostile takeover of Mid-State Raceway but did not succeed. He said that group was behind efforts to damage his reputation in New York and in Maine.

Report under wraps

In other racino-related developments, the Maine Attorney General’s Office is expected to rule Thursday on requests made under the Maine freedom of access law for copies of its investigation into Scott and several of his companies. As of Tuesday, requests to that end had been filed by The Associated Press, the Portland Press Herald and the Bangor Daily News.

In January, the state commission issued Bangor Historic Track a conditional license for 2003, pending the results of the state-mandated background check on Scott. Initially a 49 percent owner of BHT, Scott is expected to assume full ownership of that company before the racing commission begins its licensing proceedings Dec. 15 as a licensing condition.

Henry Jackson, executive director of the Maine Harness Racing Commission, said Tuesday he was working with the attorney general’s staff to determine which documents gathered as part of the investigation should be made public. He said the state had until Nov. 26 to provide access to the information deemed public. He said the state has amassed an estimated 15,000 documents from authorities in Nevada, Louisiana and New York state, where Scott has done business.

Jackson’s executive summary of the investigation originally was not going to be made public until after it was submitted to the five-member racing commission; however, he acknowledged that could change in light of the access requests.

Jackson said the licensing proceedings likely will run several days, in large part because a relatively high number of character and other witnesses are slated to testify. He has reserved meeting space at the Augusta Civic Center for the entire week.

Jackson said that three applications for 2004 racing licenses and race dates for Bangor Raceway were filed by the Oct. 31 deadline. The applicants are Scott, the city of Bangor and Kehl Management Co., an Iowa-based casino management company that hopes to step in should Capital Seven find itself unable to fulfill its plans for Bangor.