Gambling panel chair to recuse self from Everett site review
The head of the state gambling commission is withdrawing from next week’s crucial review of the land deal for a $1.3 billion casino proposed for Everett, after disclosing that he is a longtime friend and former business partner of one of the owners of the proposed casino site.
Stephen Crosby, who has led the five-member commission since it was created in 2012, said that he has known Paul Lohnes, co-owner of the 29-acre Everett site, since the two were in the National Guard in the 1970s, and that they were business partners from 1983 to 1990 at a company that made cable television guides.
If Wynn Resorts wins the right to develop the former Monsanto chemical site into a casino, the sale of the land would potentially be worth millions of dollars to Lohnes.
Crosby, who disclosed that he knew about Lohnes’s ownership of the land for roughly a year before revealing their relationship in August, said he is confident that he could be unbiased in deciding whether to approve the land deal between Lohnes and Wynn. But Crosby said he withdrew to preserve public trust in the casino selection process, especially after gambling commission investigators raised concerns that Lohnes was working with “hidden ownership.”
The Globe reported last month that a federal grand jury and other agencies are investigating whether Charles A. Lightbody, a Revere businessman with a long criminal record, is a secret partner with Lohnes and had boasted that he could make up to $18 million from selling the land to Wynn.
“Given how demanding we’ve been with everybody else, it was appropriate for me to say: Look, this is a funky situation,” Crosby said in a Globe interview. “I could certainly be objective. I’ve complied with all the rules, but nevertheless I’m going to let the other commissioners figure out how the land gets handled.”
The commission has scheduled a Dec. 13 meeting to review a proposal by Wynn to address concerns about the land option mainly by reducing the planned sale price from an estimated $70 million to prevent any potential windfall for secret investors. The new price has not been disclosed.
If the Everett land issue is resolved, Crosby said, he plans to participate in the commission’s ongoing evaluation of the Wynn proposal, as well as its rival proposed for Suffolk Downs. The commission is scheduled to hold a hearing Dec. 16 to review the full state background check into Wynn Resorts, setting up the first significant vote on Wynn’s plan.
“As long as I’ve abided by all the ethics laws and feel this would have no impact on my objectivity, then there is no reason to recuse,” Crosby said. “My business relationship with Lohnes was over 23 years ago. I’ve seen him a handful of times since then.”
The State Ethics Commission concurred, asking Crosby to provide more details about the relationship before concluding: “You may perform your duties as Gaming Commission chairman” in matters involving Wynn and Suffolk Downs.
But the gambling commission has adopted ethics standards that are even tougher than state laws, requiring commissioners to recuse themselves from any licensing decision in which a potential conflict of interest exists, as well as abstain from participating or voting in any proceeding in which their impartiality may reasonably be questioned.
A leading casino expert said Crosby should consider withdrawing from all deliberations about which site should get a casino in Eastern Massachusetts, despite his disclosures.
‘‘It will still raise questions in the public mind . . . about his objectivity in ruling on competitors’ proposals,” said Clyde Barrow, director for the Center for Policy Analysis at the University of Massachusetts Dartmouth. “It’s a competitive bid process. These are not isolated from one another; they are in competition.”
Crosby has also disclosed personal ties to the Everett proposal’s rival. He is a friend and former Harvard football teammate of Joseph O’Donnell, one of the principal owners of Suffolk Downs.
One disappointed casino developer has already raised questions about a possible conflict for Crosby in the year before he disclosed his personal and business ties to the Everett land owner. In summer 2012, Crosby infuriated a development team working with Hard Rock to bring a casino to Western Massachusetts by suggesting to Hard Rock executive Brad Buchanan that the company apply instead for a license in Eastern Massachusetts.
Will Caruana, assistant to a developer working with Hard Rock on the Western Massachusetts proposal, said Wednesday that he recalled Crosby telling the group that it should look at sites in either Boston or Everett, though Crosby did not name a specific location.
Crosby said he never steered any developer to any site.
“Absolutely not,” he said.
However it came about, the Hard Rock team did investigate the Everett site owned by Lohnes within weeks, though it never pursued it as an option.
Under Crosby, the gambling commission has held potential developers to strict ethical standards, grilling casino executives about questionable corporate behavior, as well as the perception of impropriety.
The panel bounced one applicant, Ourway Realty, from the license competition after state investigators discovered that a key member of the development team had taken more than $1 million from the money room at Plainridge Racecourse.
Another applicant, Caesars Entertainment, was dropped from the Suffolk Downs proposal after commission investigators found it had made a licensing deal with a company linked to Russian mobsters.
Crosby said in his state ethics disclosure that he realized he had his own potential ethical problem in fall 2012, when he learned that Lohnes was an owner of the land Wynn had selected for his casino.
In 1983, Lohnes had invested in Crosby’s former company when it was struggling, according to W. Alan Vandenburgh, Crosby’s former partner. Lohnes became treasurer of the company, which went on to become the country’s second largest producer of cable television magazines.
Crosby’s business relationship with Lohnes ended in 1990, when the company, then called Crosby Vandenburgh Group, was sold, according to Crosby’s disclosure statements.
Though he considers Lohnes a friend and has socialized with him and his family five to 10 times over the past two decades, Crosby declared in his ethics form he had not seen or spoken to Lohnes since May 2012, other than a chance meeting in the commission’s lobby when Lohnes had come to see someone else.
Crosby said he learned through a mutual friend Lohnes decided not to have contact with him while the casino licensing process is underway.
Crosby also disclosed that he has long known the lead attorney for the Foxwoods project that Milford voters rejected last month, Robert Allen of Brookline.
In July, Crosby disclosed that his wife, Helen Strieder, is chairwoman of the board of Care Group, a medical group represented by Foley Hoag, which also represents a casino applicant and a slot parlor applicant.
But in his interview with the Globe, Crosby said none of these ties would be a reason to withdraw from the debate over the casino proposals.
“Knowing somebody is not in any ways a ground for a recusal,” Crosby said. “I know people involved in the two remaining projects and have known people in many of these projects as they have wound their way in the process.”
Barrow disagreed, saying Crosby’s ties could undermine faith in the fairness of the process. “If the issue is public perception, yes, he should recuse himself.”