Denaples v. Pennsylvania Gaming Control Board

178 A.3d 262
CourtCommonwealth Court of Pennsylvania
DecidedJanuary 19, 2018
Docket719 C.D. 2017
StatusPublished
Cited by5 cases

This text of 178 A.3d 262 (Denaples v. Pennsylvania Gaming Control Board) is published on Counsel Stack Legal Research, covering Commonwealth Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Denaples v. Pennsylvania Gaming Control Board, 178 A.3d 262 (Pa. Ct. App. 2018).

Opinion

OPINION BY

JUDGE SIMPSON

Louis Anthony DeNaples (DeNaples) petitions for review of an order of the Pennsylvania Gaming Control Board (Board) denying DeNaples’ January 2017 petition seeking a clarification regarding restrictions on his personal ability to transact business with Mount Airy # 1, LLC (Mount Airy), a casino with a Category 2 slot machine license. DeNaples, who developed, previously owned and served as president of Mount Airy, contends the restrictions imposed on him do not apply to business entities in which he has stock or some other ownership interest or affiliation (DeNaples-Affiliated Corporations), especially after his Principal license expired. DeNaples contends the Board’s written limits and restrictions imposed on him as a named individual should not apply to corporations in which he owns stock absent any language or conduct by the Board indicating such intent or purpose. Further, DeNaples asserts the Board’s conduct and actions do not indicate an intent to impose limits and restrictions on entities not named or referred to in the Board’s orders imposing the restrictions. Upon review, we affirm.

I. Background

A. Generally

DeNaples is a northeast Pennsylvania businessman and a shareholder in many privately held corporations. DeNaples developed Mount Airy, a casino resort located in Mount Pocono, Pennsylvania. On December 20, 2006, the Board initially approved Mount Airy for a Category 2 slot machine license under the Pennsylvania Race Horse Development and Gaming Act (Gaming Act), 4 Pa. C.S. §§ 1101-1904. The same day, the Board approved DeNa-ples for a Principal license, as the president and sole owner of Mount Airy.

Prior to these approvals, DeNaples underwent a comprehensive investigation by the Board’s Bureau of Investigations and Enforcement (BIE) and Office of Enforcement Counsel (OEC). The BIE established by Section 1517(a) of the Gaming Act, 4 Pa. C.S. § 1517(a), investigates applications for licenses, permits, registrations and violations of the Gaming Act. The OEC acts as the prosecutor in all noncriminal enforcement actions before the Board. During the background investigation, De-Naples provided confidential sworn testimony before the Board.

Following the license approvals, the Board filed an adjudication in support of its decision to approve the licenses. Following an appeal by another applicant, the Supreme Court affirmed the approval of Mount Airy’s license. See Pocono Manor Investors, LP v. Pa. Gaming Control Bd., 592 Pa. 625, 927 A.2d 209 (2007). Therefore, in February 2007, the Board issued a Principal license to DeNaples. In July 2007, the Board issued a Category 2 slot machine license to Mount Airy. In October 2007, Mount Airy opened its doors and commenced gaming operations.

Meanwhile, in May 2007, following the Board’s approval of Mount Airy’s license, Dauphin County District Attorney Edward Marsico, Jr. (District Attorney) empaneled a grand jury to investigate the truthfulness of DeNaples’.sworn testimony before the Board. On January 30, 2008, District Attorney filed a criminal complaint against DeNaples alleging four counts of perjury. On February 5, 2008, the Board suspended DeNaples’ Principal license.

Fourteen months later, in April 2009, the Court of Common Pleas of Dauphin County entered a judgment of nolle prosse as to perjury charges against DeNaples following an agreement between the District Attorney and DeNaples, wherein De-Naples transferred. 100% ownership of Mount Airy tp other entities. In June 2009, after the charges were nolle pressed, the Board lifted the suspension of DeNaples’ Principal license.

B. 2009 Petition Seeking Approval of Ownership Change

In July 2009, Mount Airy filed a petition seeking Board approval of an ownership change from DeNaples to Mount Airy Holdco, LLC (Holdco). On September 23, 2009 the Board ■ issued its “2009 Order” approving the purchase of a 100% ownership interest in Holdco by the Grantor Trust II of Lisa A. DeNaples (Lisa A. DeNaples Trust), The 2009 Order included the following conditions:

12. That the Grantor II Trust [sic] of Lisa A, DeNaples shall not invest in any entities in which Louis A. DeNaples has any ownership interest or any entity in which he has control.
13. That Louis A. DeNaples may not receive, directly or indirectly, any remuneration, cash or property distributions, from [Lisa A. DeNaples Trust], [Mount Airy] or [Holdco].

R.R. at 17a. DeNaples labeled the written restrictions or conditions in Paragraph 13 of the 2009 Order as the “Anti-Distribution Provision.” See Pet’r’s Br. at

14.Essentially, DeNaples interpreted these restrictions as prohibiting him from, receiving any cash or property distributions in his executive capacity as a Principal licensee.

C. 2011 Consolidated Petitions to Modify

In May 2011, Mount Airy filed three consolidated petitions to modify the 2009 Order, one of which sought to disseminate ownership in Mount Airy and Holdco from solely the Lisa DeNaples Trust to seven trusts equally benefitting DeNaples children and grandchildren., The Board approved the dissemination of ownership in Mount Airy Holdco, LLC, as follows: 14.2857% shares owned by Grantor

Trust II — Louis A. DeNaples, Jr.; • 14.2857% shares owned- by Grantor
Trust II — Donna Dileo; 14.2857% shares owned by Grantor
Trust II — Lisa DeNaples; 14.2867% shares owned by Grantor
Trust II — Anne DeNaples; •14.2867% shares owned by Grantor
Trust II — Dominica DeNaples; 14.2857% shares owned by the Trust f/b/o Children of Margaret Mary Glod-zik; and
14.2857% shares 'owned by the Trust f/b/o Children of Nicholas DeNaples.

See Bd. Op., 5/23/17, Finding of Fact (F.F.) No. 17 n.4.

On June 13, 2012, the Board issued its “2012 Order” granting and denying some of, the relief requested in Mount Airy’s modification petitions. During the period of September 23, 2009 to June 13, 2012, De-Naples continued to function as a Principal licensee by loaning Mount Airy approximately $35,000,000 and guaranteeing debt in the amount of approximately $100,000,000. Thereafter, the Board allowed DeNaples’ Principal license to expire.

The Board’s 2012 Order included the following restrictions, on Mount Airy’s transaction of business with DeNaples, which are consistent with the restrictions in the 2009 Order: ■

4. The Children’s Trusts may not invest in, or make a loan to, any entities in which Louis A. DeNaples has any ownership interest or any entity'in which he has control.
5.

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Bluebook (online)
178 A.3d 262, Counsel Stack Legal Research, https://law.counselstack.com/opinion/denaples-v-pennsylvania-gaming-control-board-pacommwct-2018.