Tri-State Casino Paid $39 Million To Dummy Corporation

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In 1999 records show that Hartman & Tyner created "Florida Racing Services Inc." as a new business through the Florida secretary of state’s office. According to financial statements, this company was paid at least 39 million dollars over a 6 year period for an alleged loan agreement with its sister company, Tri-State Casino & Racetrack, at 9% interest.

Records also reveal that the last payment of $815 thousand was paid to the Florida Company in December 2004. In January 2005, Florida Racing Services filed its last financial statement with the state and closed down….

Was this Florida business set up for the purpose of cooking the books & avoiding taxes?

Copy of PDF records of "FRS Inc": 1999… 2000...2001..2002.....2003….2004….2005

Hartman & Tyner is a privately owned company and does not have to handover their financial statements to the public. But, as a casino & greyhound racing business, they are required to furnish the state legislative branch and racing commission copies each year so they can monitor their financial operations.

Joe Cuomo is the director of audits for the racing commission, and Earl Ray Tomblin is chair person on the “post audit subcommittee” and special investigation committees.

What becomes of these audit reports? And why no state official has questioned the accuracy of Tri-State Casino’s true financial status. Two possible explanations are that the state has not been enforcing, or is intentionally ignoring state statute 19-23-10(f) that mandates each casino turn over yearly audit reports to the legislative financial section and the racing commission.

One clue of how Tri-State funds could be diverted is in each year’s certified audit that explains how they’re moving around cash as needed… “certain prior year balances have been reclassified to conform with the current year presentation”. This would allow the owners to play a shell game with cash.

How much money are we talking? From at least 1999 through 2007, it appears the casino owners have managed to fraudulently divert at least 319 million dollars out of WV and into the pockets of Hartman & Tyner executives. Including Danny Adkins, who is company Vice President.

Here are but a few expenses they have claimed (totaled over 9 years of audit reports)…..

1. Tri-State claims that over the past nine years they have paid Hartman & Tyner $30.2 million dollars in “management fees.” There is no explanation what type of management services Hartman & Tyner provided to Tri-State, but it was very expensive.

This corroborates information we obtained, and reported; several months ago from former GM Chris Brewer who stated Danny Adkins had ordered employees’ to transfer any large amounts of excess cash to Hartman & Tyner accounts in Michigan each month.

2. An expense for administrative services totals $43 million dollars over nine years.

3. Revolving loans, notes and advances from Hartman & Tyner add up to an average of $9.9 million a year. There is a revolving line of credit for $10 million.

4. Then there is the “non-cancellable operating lease agreement” for slot machine rentals of $11 million dollars that began in 2001 and continue to this date. One inside source said that Hartman & Tyner is the company leasing the slot machines back to Tri-State.

5. Tri-State also lists $32 million dollars in stock equity from 1999 to 2007. This stock is classified as “common stock” – par value $100 a share with only 100 shares available. What is unusual is the fact that in 1999 the total equity was listed at $2.4 million and is now up to $32 million.

A sudden jump occurred in 2001 when it tripled in value from $4 million to $11. Tripled again in 2005 to $30 million. Even though the company claimed a net loss of -$500 thousand, stockholder(s) flourished.

6. One line item titled “Other” claims expenses of $5.1 million for the nine year period. No explanation was given for what this expense included.

7. $21 million dollars in “contract labor.”

8. Travel & entertainment cost $1.7 million. Just in 2007 the cost was $445 thousand.

9. Complimentary & gratuities to customers and businesses totaled $4.8 million.

NOTE: Beginning in 2004, Tri-State owners began taking the remaining difference between total assets and liabilities, and claim it as stock equity. This is the same time period that stock tripled in value and continued to grow.

Example: 2005 – Total assets minus liabilities = $30,505,309... Stock equity = $30,505,309.

Conclusion...

The only thing missing from the financial audit reports obtained for the Tri-State Gaming Center & Racetrack is an organ grinder, his cute little monkey Roger dressed up like a clown, and both are working the crowd for spare change to forward to corporate officers.

Inside sources state that at least one accountant with Gibbons & Kawash (who were replaced in 2005) complained about the continued “shell game” tactics Danny Adkins was wanting in order to allegedly cloak funds and move them to corporate bank accounts and other sources. Adkins supposedly dumped the Charleston firm and began using a local Michigan company, Vichow-Krause & Company, who also audit other Hartman & Tyner interests.

Are the WV racing commission members and state officials who oversee gambling in this state even aware of these audits? It doesn't appear they do. Even though the law implies that someone should be examining these audits…. When we requested these reports from the racing commission under the freedom of information act, the director of audits, Joe Cuomo, had to have them ordered from the casino. They were not on file as the law requires.

According to the state’s legislative auditor’s office, it is the responsibility of the “post audit committee,” and racing commission to monitor these yearly reports.

That in itself may be one of the answers why this has gone unnoticed….. To view the “chairman” of the post audit committee, click on the blue link. Post Audit Chairman

Note: Copies of audit reports available upon request. E-mail: [e-mail]

End Of Story…… ANYONE WANTING COPIES OF THE FINANCAL REPORTS E-MAIL US WITH AN ADDRESS TO MAIL...

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Contact Information:
Sam Webber & Jack Swint [e-mail]
P.O. Box 78
Shoals, WV 25562
304-549-4978