PORTLAND – The Pennsylvania company that has a development deal with the owners of Scarborough Downs for a racino in southern Maine has sued the developer of a Bangor racino in federal court accusing him of libel.

Penn National Gaming Inc. filed a lawsuit Friday in U.S. District Court charging Shawn Scott, owner of Capital Seven LLC; Kathleen Newman, who works for Scott; and Maine Opportunities, a political action committee created and funded by Scott through Capital Seven, with libel for funding a political advertisement that makes false accusations about Penn National.

The lawsuit seeks preliminary and temporary injunctions in addition to compensatory and punitive damages for Capital Seven’s “malicious and bad faith efforts to tarnish the reputation and good standing of Penn National … and thereby corrupt the election process.”

It also calls for a retraction of equal size and prominence in southern Maine newspapers.

A hearing on the complaint is scheduled Monday afternoon in U.S. District Court in Portland before Judge George Singal.

Penn National also is one of three companies ready to step in and develop a Bangor racino if Scott and his company are unable to meet the obligations of their development deal.

The lawsuit was filed on the fourth day of licensing hearings before the Maine Harness Racing Commission at the Augusta Civic Center. The commission will determine if Scott gets a license to operate the track at Bass Park and bring a $30 million racino with slot machines to Bangor.

Newman, a former member of the Maine Lottery Commission, is treasurer of Maine Opportunities, according to the suit.

The complaint alleges that in an effort to defeat the Dec. 30 referendums in Westbrook and Saco, Scott, Newman, Maine Opportunities and Capital Seven falsely accused Penn National of having been caught engaging in money laundering. According to the lawsuit, Maine Opportunities ran ads in Westbrook and Saco newspapers that were libelous.

“Enough is enough,” said Jordan Savitch, general counsel of Penn National Gaming, in a press release Friday. “This latest assault in Shawn Scott’s insidious campaign of deception and lies aimed at disrupting the democratic process in Westbrook and Saco simply cannot go unanswered.”

Augusta lawyer Stephen , a member of Scott’s legal team, said during a break in Friday’s commission hearings that he had learned of the lawsuit during the lunch break. He declined to comment on it until he had read it.

The lawsuit claims that the defendants appear to have confused Penn National’s casinos with Casino Magic Biloxi, a Mississippi casino that is not owned or affiliated with the Pennsylvania firm. The Biloxi casino is owned by Pinnacle Entertainment Inc., according to the press release.

In August 2000, Penn National purchased two of Pinnacle’s Mississippi properties, Casino Magic-Bay St. Louis and Boomtown Biloxi. Neither of the two properties was related to the charge referred to in the ads, which was filed before Penn National entered the gaming market in Mississippi.

“The vote on December 30 is just the first step in what will be an exhaustive approval process,” said Eric Schippers, Penn National’s vice president of public affairs. “We hope the voters will see through Shawn Scott’s efforts to confuse and mislead them and, instead, allow our economic development project to be fully considered. If the project receives a ‘yes’ vote, then we will sit down with their city officials to work out an appropriate package that will result in the creation of more than 500 new jobs and significant property tax relief.”

Last month, a Capital Seven affiliate filed a lawsuit in state court accusing Scarborough Downs of breach of contract. The affiliate – VAS LLC – charges in the suit that Davric Maine Corp. and Sharon Terry, owners and operators of Scarborough Downs, agreed in November to operate a racino in southern Maine to be financed and constructed by VAS.

The lawsuit alleges that Scarborough Downs reneged on the deal and entered a partnership with Penn National.

Bangor Daily News reporter Dawn Gagnon contributed to this report.