May 28, 2023

Report faults developer’s track record Baldacci signs law allowing slot machines at harness tracks

AUGUSTA – The Las Vegas developer poised to open Maine’s first racetrack casino at Bangor Raceway has had a history of legal and financial difficulties in the past decade, according to a long anticipated report released Thursday evening.

The 32-page draft report, made public by order of the Maine Supreme Judicial Court, was delivered to media outlets just two hours before Gov. John Baldacci signed a proclamation paving the way for slot machines at the state’s two harness-racing tracks.

The “suitability report,” authored by Maine Harness Racing Commission Executive Director Henry Jackson, includes a laundry list of court cases, liens and one bankruptcy involving businessman Shawn Scott, whose company, Capital Seven LLC, has applied to open a “racino” at the Bass Park harness racing track. The racing commission is scheduled to consider Scott’s license application beginning Dec. 15.

In order to obtain a license, the commission must find that an applicant is of “good moral character” and “financially responsible.”

On its surface, Jackson’s report, prepared with the help of the Maine Attorney General’s Office, purports to raise several concerns about Scott’s suitability to run the Bangor track, pointing to his involvement in 36 lawsuits in four states since 1992. During that time, his companies also have been subject to 13 liens, four tax liens and one bankruptcy, states the report, which concludes that Scott has owned, at least in part, dozens of companies that “have demonstrated sloppy, if not irresponsible, financial management and accounting practices over several years.”

The report says Scott’s chief executive officer at Capital Seven, Hoolae Paoa, has a history of arrests and convictions in Hawaii from 1978 through 1997. The offenses range from thefts to third-degree assault and criminal contempt of court.

Attorneys for Capital Seven fought against the release of the report and the hundreds of supporting documents, taking their case to Maine’s highest court earlier this week. Late Thursday afternoon, however, the court ruled that the documents could be made public under Maine’s Freedom of Access Act after several media outlets, including the Bangor Daily News, made formal requests for their early release.

Stephen Langsdorf, an Augusta attorney representing Scott, Capital Seven and Bangor Historic Track, said Thursday that he was disappointed with the document’s release, originally scheduled during the racing commission’s December hearings. The formal hearing would have provided Scott better opportunity to explain many of the charges therein, Langsdorf said.

While disappointed with the court’s ruling, Langsdorf said, he was even more dismayed by the tenor of the report, itself.

“They went through literally thousands of pages and wrote it up in the most inflammatory way they could,” said Langsdorf, contending that the report offered no grounds on which to deny Scott his license. “But at least now we’re going to move along and get past the thinking that Shawn Scott has something significant to hide.”

Those looking for the proverbial “smoking gun” in the report would be disappointed, Langsdorf said, noting that Scott has no criminal record. And despite the report’s criticisms, Scott’s attorney was confident his client would be found worthy of the Maine license, which could prove a lucrative one, with several developers waiting in the wings should Capital Seven be unable to win favor with the racing commission.

Langsdorf noted that many of the financial problems referenced in the report were caused after the contractor building Scott’s Louisiana racetrack filed for bankruptcy. The lone bankruptcy noted in the report occurred at a South Carolina company in which Scott only owned a small percentage, he said.

Errol Additon, chairman of the five-member racing commission, said Thursday that he hadn’t yet seen the report, but predicted it would be given appropriate consideration at the upcoming hearings.

“Really, we’re just going to try and digest it and make a decision,” said Additon, adding that he, like Langsdorf, was disappointed by the report’s early release, concerned the media coverage could unduly pressure commissioners. “I just hope it doesn’t taint the case.”

The commission, at least indirectly, has felt pressure from opponents of the Bangor racino plan. Chief among them has been the governor, who through media reports has urged the commission to use caution when considering the application. The administration wants to delay the process so it can institute stricter guidelines for racino operators and establish a gambling commission to oversee any new racetrack casinos.

But on Thursday, Baldacci, bound by the Maine Constitution, had no choice but to sign a proclamation clearing the way for the law to take effect. The proclamation, however, delays the law’s taking effect until 45 days after the Legislature reconvenes on Jan. 7, 2004. The constitution allows for such a delay when a bill, such as the racino bill, is found to cost more than it earns in revenue.

A fiscal note attached to the original bill suggests that the racino would cost the state upward of $27 million in such things as administrative fees and loss of lottery revenue, while only providing a fraction of that to the state’s General Fund every year.

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