The SLS Hotel and Casino as seen on Sept. 28, 2014. (Wes Dickinson/Courtesy under Creative Commons

The politically powerful Culinary Union is urging Nevada gaming regulators to take a close look at the financial background of Alex Meruelo, the businessman who is in the process of acquiring the SLS Las Vegas, amid collective bargaining negotiations with his Grand Sierra Resort.

The union, in a letter to the Nevada Gaming Control Board late last month, says that although Meruelo was found suitable by Nevada gaming regulators to take over Reno’s Grand Sierra Resort a few years ago, they believe they have found issues not previously addressed by the board, highlighting three specific business and financial issues for the board to consider in its investigation of Meruelo’s suitability to purchase, own and operate the SLS Las Vegas. Meruelo’s purchase of the SLS is on hold pending the board’s approval.

The union, which represents more than 57,000 hotel workers in Las Vegas and Reno, specifically raised concerns about a $13 million loan from the Commercial Bank of California, of which Meruelo has been described as the “controlling owner,” to a Miami-based company tied to Meruelo’s brother Richard Meruelo. The letter suggests that although the company, Rebuild Miami-Edgewater LLC, plans to repay the loan if it raises $50 million through a debt offering, “it is unclear how (the bank) had assessed the many risks associated with the firm and its speculative hotel development project described in the offering document.”

The union cites the offering document in saying that the development “may not comply with current zoning laws upon completion” and the company “does not have an executed Franchise Agreement or Hotel Management Agreement in Place.” The letter also raises concerns about what it describes as Richard Meruelo’s “experience with bankruptcy and foreclosures” and “other roadblocks when conducting business,” such as when the Los Angeles Building and Safety Department banned Meruelo Maddux Properties from building anything for five years on a lot after determining that they had demolished four buildings without a permit.

“A thorough examination of these issues are needed to ensure continued public trust in the integrity and reputation of the state’s gaming industry,” said Geoconda Arguello-Kline, secretary-treasurer of the Culinary Union, in a statement. “At a time when the ‘North Strip’ is beginning to see renewed development interest and activity, the stakes couldn’t be higher for all of the people whose livelihood, financial interests, and reputation are connected to the SLS Las Vegas.”

In a statement, the Meruelo Group, Meruelo’s investment firm that owns the GSR and is purchasing the SLS, dismissed the concerns raised by the Culinary Union in the letter as “spurious,” and suggested that the letter is a byproduct of the union’s ongoing negotiations with the Grand Sierra Resort over a new collective bargaining agreement and a decertification process initiated by resort employees against the union. Meruelo will be up for approval in front of the board on March 7 and would need final approval by the Nevada Gaming Commission on March 22.

“Ultimately, we are confident that the Nevada Gaming Control licensing process will do a thorough job of addressing Mr. Meruelo’s suitability as a non-restricted licensee,” the group said in the statement.

The union letter also requests that the board look into a tax case involving Meruelo and his wife, including a published opinion by the court indicating there was a separate criminal investigation that caused a delay in the case. According to the opinion, as cited in the letter, “the IRS stated that it had just learned the Meruelos’ reported loss was generated by a tax shelter related to a grand jury investigation and that investigation could affect or be affected by the criminal case.”

The union also asks the board to monitor a lawsuit filed by 60 Chinese investors against the SLS Las Vegas’s developers to ensure that the investors’ rights are protected during the sale process.

  Culinary Union Letter to Gaming Control Board re: Alex Meruelo by Megan Messerly on Scribd

Disclosure: The Culinary Union and Grand Sierra Resort have donated to The Nevada Independent. You can see a full list of donors here.

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