Over the past 12 years, LeFoll & LeFoll, a Rocky Hill-based father-and-daughter legal team, has handled hundreds of debt-collection cases for Mohegan Sun and Foxwoods Resort Casino, sometimes attaching liens to real estate to compel deadbeat gamblers to pay up.
"Unless I'm not privy to something new, it's a very common practice," Raymond LeFoll said last week. "It's not just casino debt collection, it's any debt collection."
In Massachusetts, where gaming regulators are inching toward the issuance of the Bay State's first casino licenses, Attorney General Martha Coakley has called for a ban on casinos' placement of liens on homes as a debt-collection device.
Citing a Boston Globe report on the Connecticut casinos' use of the practice, Coakley, in a letter to the Massachusetts Gaming Commission, wrote that "protecting against predatory lending and overly aggressive debt collection in the gaming industry is critical, because the odds are stacked against the patron being able to earn back the value of the loan."
The Globe quoted I. Nelson Rose, an expert on gambling law and a Whittier Law School professor, who said he had not heard of "any casino company that goes after homes." The article said it was "unusual for a casino to use property liens to collect debts."
However, Phillip Van Embden, a Millville, N.J., attorney who has represented many Atlantic City casinos and some in Las Vegas, said New Jersey casinos have long extended credit and attached real estate liens in debt-collection cases.
"It's not an unusual approach," Van Embden said of using liens. "It's as routine as it gets … like the sun coming up in the morning."
In New Jersey, he said, any creditor, including a casino, that obtains a court judgment against a debtor can "register" that judgment, a process that automatically creates a property lien.
"That judgment will sit there and sit there and maybe one day the equity in the house increases, inflation kicks in, or maybe the owner wants to refinance - but he can't because there's a judgment on it," Van Embden said. "He can't do anything until he clears up the debt."
Van Embden likened banning casinos' use of liens to "cutting off your head to cure a headache. The patient will die."
Casinos that don't have some reasonable expectation of getting paid - and a reasonable way of compelling debtors to pay - will stop issuing credit, he said. "And then they'll be out of business."
Rose, who was surprised to hear that Atlantic City casinos use liens, said in an interview last week that the debt-collection tools available to casinos differ from state to state. A Mohegan Tribe official who took issue with the statements of some experts quoted in the Globe report made a similar point.
"Unfortunately, the story neglected to give a full picture of the use of credit in all (gaming) jurisdictions in the United States," said Chuck Bunnell, the Mohegans' chief of staff. "In the United States, the use of liens is in fact a common practice when someone is unwilling to repay a debt - whether to a casino, a credit card company or any other business. In fact, in Nevada, Wynn uses criminal prosecutions to recover debt."
Wynn Resorts, Mohegan Sun's competitor for the sole Greater Boston casino license the gaming commission is expected to award by the end of May, operates casinos in Las Vegas, where Nevada law treats gambling debts as criminal offenses.
Las Vegas casinos submit debt-collection cases involving "markers" or counter checks to the Clark County District Attorney's Office, according to Chief Deputy District Attorney Jake Merback, who oversees the office's bad check unit. Offenders can face imprisonment and/or fines.
"We look at them the same as any other bad check case," he said.
Rose, the law school professor, said Nevada casinos are the most aggressive in their use of the legal system to collect debts.
"They're using the DA as a collection agency," he said. "It's unseemly at the very least and a misuse of the criminal justice system."
While a Connecticut gambler who fails to clear a debt at a Connecticut casino may ultimately have a lien placed on his property, he could face the threat of jail time in Nevada if he walked away from a casino debt there, Rose said.
"So having a lien on your house is a lot better than getting arrested by police in Connecticut and put on a plane to Las Vegas," he said.
Nevada casinos can also pursue a gambling debt by filing a civil suit.
A Wynn Resorts spokesman did not respond to a request for information about the company's debt-collection practices. Las Vegas-based MGM Resorts International, which operates casinos in Nevada and other states and is expected to be granted a license to open one in Springfield, Mass., declined to discuss the subject.
"We're going to need to take a pass on making a comment or providing info. We are still engaged with the licensing process," an MGM spokeswoman said.
Credit for high rollers
Bobby Soper, Mohegan Sun's president and chief executive officer, provided email responses to a series of questions about Mohegan Sun's use of liens and extension of credit. He said the use of liens is "relatively infrequent" and "always ... a tool of last resort."
"It is important to note that we have NEVER foreclosed on any of these liens," Soper wrote.
In extending credit, Mohegan Sun determines a patron's credit worthiness through the use of a personal credit report; a gaming report showing where he or she has established and paid on a casino credit line; a bank report showing cash assets and a payment method; and verification of a residence address.
Casinos typically offer credit to high-rolling patrons who play table games and who don't want to carry large amounts of cash.
Without the ability to extend credit, a casino would find it "extremely challenging" to accommodate this "significant and important group of patrons," Soper wrote. "That is the reason almost all gaming jurisdictions and casino operations offer credit."
At Twin River Casino in Lincoln, R.I., the former slots parlor that introduced table games last year, officials have discussed extending credit to patrons for the first time, a move that would require legislative approval.
In pursuing Mohegan Sun and Foxwoods gambling debtors outside Connecticut, LeFoll, the Rocky Hill lawyer, said his firm deals with "correspondent" attorneys in 12 other states. In all of those states, he said, casino debt collections and liens are handled the same way his firm handles them.
"Would the Massachusetts attorney general prefer Whitey Bulger collect the debts?" LeFoll asked. "I'd rather take my chances with the courts."