Nightclub owner Sam Nazarian gives up control of Las Vegas hotel




Sam Nazarian





Nightclub owner Sam Nazarian has relinquished control of his 1,600-room SLS Las Vegas hotel and casino, which opened in August. (Mark Boster, Los Angeles Times)

By Charles Fleming and Hugo Martin contact the reporters
This article is related to: Business,

December 16, 2014, 10:18 PM




Sam Nazarian made his name and his billion-dollar fortune creating L.A. clubs and restaurants that attracted the hippest young celebrities..

He parlayed that fame into hotels in Beverly Hills and Miami's South Beach. This year, he looked to Las Vegas as the next step in a bold global expansion, opening the 1,600-room SLS Las Vegas hotel and casino in August.

Then he ran into the Nevada Gaming Control Board.

The board's routine vetting of Nazarian, who applied for a gaming license, has now thrown his Vegas plans into disarray. Investigators unearthed recent cocaine use — along with about $3 million in payments to a felon with convictions for drug possession and money laundering. Some of the money was paid to a convicted racketeer and Death Row Records founder Suge Knight.



“It is one of the worst things you can ever go through. Your soul is bared to the world.”
- Gaming commission member Joseph W. Brown

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Nazarian characterized the payments as extortion. On Tuesday, he relinquished all control of his Las Vegas hotel to his principal investor, Stockbridge Capital.

"We have made a collective decision to change the operating structure for the property," Stockbridge Executive Managing Director Terry Fancher said in a written statement.

Fancher now oversees all hotel operations; Nazarian is out as chief executive.

Nazarian is the premier night-life entrepreneur in Los Angeles. He presides over 51 restaurants, including the Umami and Katsuya chains, 17 nightclubs and six boutique hotels across the U.S. An additional eight SLS hotels are slated to open by 2016, including locations in New York, the Bahamas and Beijing.

The boyish billionaire had gone all-in on Vegas, even relocating there about three years ago as he planned his casino. He moved into an $8.5-million, 14,000-square-foot mansion overlooking the Strip.



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"One of the main reasons I moved here … was to get out of a certain lifestyle I was around," he told the gaming board, as members grilled him about his cocaine use.

He plans to keep his 10% stake in the Vegas hotel and to continue pursuing a gaming license. The matter comes before the Nevada Gaming Commission, which oversees the board, on Thursday.

State law requires anyone with more than a 5% stake in a casino to hold a license. Nazarian declined to be interviewed by The Times.

The night-life entrepreneur has struggled for eight years to turn the former Sahara Hotel into a desert hot spot, an anchor for the redevelopment of the Strip's northern end.

Nazarian's troubles provide vivid insights into gaming board investigations of prospective casino owners in Las Vegas, a city that has struggled to clean up its image ever since its founding by mobsters. Nevada regulators dig into applicants' backgrounds as if they were nominees for high public office.

French designer Philippe Starck created "Saam," a caricature of Sam Nazarian that adorns the main porte-cochere of the SLS Las Vegas.


Los Angeles nightclub operator Sam Nazarian bought the former Sahara Hotel and Casino, closed it, then renovated and reopened it as the SLS Las Vegas.


The licenses are rarely granted, and only after months of scrutiny by gaming control agents — conducted at the applicant's expense, sometimes costing millions of dollars. In the last year, only one non-restricted license has been granted in the state.

"It is one of the worst things you can ever go through," said commission member Joseph W. Brown. "Your soul is bared to the world."

The details of Nazarian's drug use and payments to felons were picked apart in a three-hour hearing two weeks ago in Carson City, Nev., before the board's three members and the state's deputy attorney general.

Nazarian initially told investigators that he had used drugs only in the distant past. But then he failed a drug test administered by the board.

At the hearing, he admitted that he had used cocaine recently.

Flanked by attorneys, Nazarian told the board that his recent drug use was "a bad indiscretion" and "a mistake" but insisted the episode was isolated to a single instance when he was attending a golf tournament in Mexico.

The initial denial irritated board members.

"We have the one issue of whether there was drug use, but then we had an additional issue of the degree to which you are speaking candidly and truthfully about it," board member Terry Johnson said.

The investigation also turned up long-standing ties to twice-convicted felon Derrick "Smokey" Armstrong, the man he accuses of blackmail.

Armstrong, a 43-year-old former West Los Angeles exotic car customizer, denied any wrongdoing in an interview with The Times. He called himself Nazarian's business partner and "fixer."

Nazarian acknowledged that he had made payments to Armstrong, who was convicted of drug possession in 1992 and pleaded guilty to money laundering in 2010. Nazarian, now 39, said he met Armstrong in 1999 and began paying him to customize his exotic cars.

The relationship soured after Armstrong borrowed money to open a car shop, Nazarian said at the hearing, and then threatened to harm or embarrass Nazarian unless he paid Armstrong another $1 million.

Nazarian, who is 6 feet 4, said he was "scared and embarrassed" and reported the threats to the Los Angeles Police Department starting in 2005.

But he kept making payments through 2013, Nazarian told the board.

One member of Nazarian's legal team dismissed Armstrong as a "parasite" common in the entertainment world.

"My city … is a city of barnacles for people who are achievers and high profile," attorney Joseph Taylor told the board. "The hangers-on, the clingers, the parasites — they are everywhere."

Nazarian told the board that Armstrong threatened repeatedly to embarrass him, disrupt pending business deals or physically harm him or members of his family.

One threat occurred the day of the grand opening of the SLS South Beach hotel, Nazarian said at the hearing: "[Armstrong] understood the mere fact that I had known him or associated with him was enough to garner bad press."

Armstrong, in an interview with The Times, said he received as much as $800,000 for work he did on behalf of Nazarian, including negotiating a deal to partner Nazarian with an energy drink producer. He denied threatening Nazarian.

"These allegations of extortion and being fearful are a bunch of lies," Armstrong said.

Dana Cole, a Los Angeles attorney who has represented Armstrong, said he helped Armstrong negotiate a settlement of a business dispute with Nazarian regarding a car business. It was not an extortion attempt, he said.

The payments included $90,000 to Knight and $83,000 to Hai Waknine, the convicted racketeer — both of whom, Nazarian told the board, were working with Armstrong.

Waknine served five years in federal prison after pleading guilty to one count of racketeering in connection with a money-laundering scheme linked to Israeli organized crime. Waknine could not be reached for comment

"So roughly $3 million in monies … were paid either to Mr. Armstrong or to others, I guess it would be fair to say, in connection with Mr. Armstrong?" board member Johnson asked Nazarian during the hearing.

"It would be fair to say," Nazarian answered.

Knight declined to comment. But a business associate, entertainment producer Mark Blankenship, called the charges of extortion "a form of profiling and racism."

The gaming board has serious concerns about prospective casino owners using drugs or consorting with felons, said Brown, a commission member since 2008 and a director of the law firm Fennemore Craig Jones Vargas. "It's big," he said. "It's major."

Veteran Las Vegas attorney Dominic Gentile said the gaming control board is rigorous in its investigations and insisted Nazarian is "not being singled out. This goes on no matter who it is."

In 1963, Frank Sinatra, then owner of Lake Tahoe's Cal Neva Casino, lost his license over his acquaintance with mobster Sam Giancana. Sinatra was approved for a new license 17 years later, only after friends Gregory Peck and Kirk Douglas spoke on his behalf.

Gentile added that many upstanding Nevada citizens — including himself — might have difficulty passing gaming commission muster.

"If you've lived any kind of life, and you've enjoyed it, there's a damn good chance you're not eligible," he said. "Let's just say that if you have a lot of money, but you've chosen to associate with people that have reputations and perhaps are notorious, it's going to be tough."

What it looks like is Suge Knight was just a silent partner probably helping to bankroll this guy with drug money, and now the guy is claiming that Suge was shaking him down.

Suge Knight is a classic example of why African Americans as a whole get a bad name. He's a disgrace and either needs gunned down in broad daylight on Crenshaw or locked up in a cage with the other animals. This guy is human garbage

This guy Derrick "Smokey" Armstrong seems like he was the main driver behind this extortion god knows how suge and that israeli dude got involved. Second time suges been brought up in a separate investigation first he was linked to that shrimp boy chow case through the black bikers and now this.

Suge seems like he likes the joint. Why didn't they ever hit this guy with a rico case? He was clearly running a criminal enterprise at death row.

They actually were running a federal investigation into death row records at one point but then i think 9/11 happened and all the resources got diverted else where.

A lot or criminal organizations benefited there, none more than the American Mafia. The last nail was being lifted to put in their coffin, then 9/11 allowed them to regroup a little bit.

Off topic, Scorsese. Are you Hollander? Call me crazy, but I really don't know.

Suge was a hardcore blood from Compton. Not sure what hood/set but he was no joke, he was extorting Vanilla Ice too.

I think it's Mob Pirus.

but he took a giant hit in the blood world, when he did his 9 years on a sny yard.

Not a priority as long as Eric Holder is AG.....Suge Knight is as Holder would say ''one of his people''

Wow..

didn't see thread about Suge running over those 2 guys so just updating this thread

details of latest incident with video is here

http://www.washingtonpost.com/blogs/styl...ip-is-not-news/

NOW Suge is claiming to be legally blind.

http://radio.com/2015/03/11/suge-knight-blind-left-eye/


All
Suge Knight Claims to Be Blind in One Eye
March 11, 2015 6:25 PM


By Philip Cosores
Suge Knight‘s legal problems took a perplexing turn today regarding a direction that Knight, like Zoolander, can’t turn: left.
Let us explain: Suge Knight’s lawyer is now claiming that Knight is legally blind in his left eye, and in an interview with the NY Daily News (via Complex), said it “wasn’t an option for Knight to veer left down the side street” instead of plowing straight into the path of Cle “Bone” Sloan and [Terry] Carter.
“How can he go left if he can’t see?” Fletcher asked. “This was a literal presentation of being blindsided. He was attacked on his blind side. To me it seems obvious. He’s being punched in the face, he can’t see.”

What this line of thinking doesn’t really explain is why Knight was driving a car to begin with if he is blind in one eye. Doing such in any situation would seem to endanger everyone’s lives on the road. Surely, this will come up in court.

That video of him running those guys down is brutal. Don't see him getting out of this one.

Also the guy he killed was a well respected compton OG and he's apparently been getting taunted and threatened by fellow inmates.

@Scorcese,

yeah,I haven't watched the clip but in watching feature on the story..I recognized the other guy who was run over as a sometime actor. He was the gangster in Training Day who

SPOILER

switched sides on Alonzo in the standoff scene between Hawke and Washington

When I saw the footage of Suge knocked out cold on the ground a few years ago...I realized his days as alpha dog bully were over.

I heard excerpts of an Ice T audiobook and he mentions that neither he nor Suge are official gang members..they are affiliated. Outsiders, like us don't know the difference but in jail there would definitely be a clear distinction.

Your talking about Cle bone sloan was one of the guys that got run over but not the one that died. He's a hollywood consultant/actor now and also a member of the athens park bloods.

Heres a clip from training day he's in when alonzo showing jake a heavy gang neighbourhood.
[video:youtube]https://www.youtube.com/watch?v=TiNjypUQWpg[/video]

That particular scene is what this movie authentic , something that Hollywood is to afraid to try, and that's the Black P. Stone Jungle set. Those are the ones started by a fellow from Chicago T Rodgers. Jungles & Bity (City) are the only 2 sets and their reputation is cemented there.

Suge's claims of self-defense are ridiculous. He could've easily turned the other way. Sloan and Carter probably were packed but judging from the clip it really didn't seem like they were going to attempt a hit on Suge. Running the guy over was completely unnecessary. But when you're dealing with a self-obsessed dirtbag whose power has waned, you can expect things like this to happen.

I read an article in GQ years ago about T. Rodgers and his story.Gonna look for it and post.

It's a bogus defense but from what I've read....Suge is claiming that others were lined up and strapped,down one escape route..and yadda yadda yadda

if you watch the video everyone else was standing back from the initial fight including carter and he reversed out into the road too.

It wouldnt surprise me if suge walks.He has been involved in so much shit its like he has a guardian angel looking out for him.Suge wasnt an actual gang member he was affiliated with a bloods set BUT he went into buisness with Harry O a bigtime blood gang member drug kingpin and ripped him off a million dollers to start death row and then not only never paid him back but also stole his lawyer from him.So suge has some pretty powerful friends for him to be able to fuck over a guy like that and get away with it

I forgot to thank you for the name of the actor...

I KNEW that guy was the real deal and not an actor when I saw him in Training Day.I got same feeling watching him as when I first noticed Danny Trejo in a film.....Con Air..I said..nah....this dude is no actor....he looks like he's shot people before.

Cle Bone Sloan refuses to testify against Suge Knight in court

http://abc7.com/entertainment/cle-bone-sloan-says-he-wont-snitch-on-suge-knight/656104/


When asked why he wouldn't testify, he told the prosecutor



"You got it twisted homie, around here you've got to put in your own work"

article about him in this issue, read it on a flight...well written piece....will find it eventuallly online and post it

GQ september 1992 "LA's Original Gangster"

I wonder why suge knight got rid of his lawyer david kenner.

Kenner was also his lawyer during death rows heyday.

only folks who deal in stereotyping would paint any group of folks with one brush

don't feed trolls....just put them on your ignore list

hey gets you check those vids I sent you?

Cheech,

yeah, thanks

great vids........dude talks a bit too slowly though, so when I play the vids back i speed them up