Cal Neva fails to catch bid at foreclosure auction; ownership falls to lender

RENO -- The lender who foreclosed on the Cal Neva Resort at Lake Tahoe has assumed ownership of the hotel-casino once owned by Frank Sinatra after no one offered to buy it at public auctions in California and Nevada.

Canyon Partners, a Los Angeles-based investment group, filed a notice of default against the Cal Neva in December after its owner, Namcal LLC, defaulted on a $26.8 million debt.

Canyon Partners set the opening bid at $15 million for the Nevada portion of the property during an auction Wednesday on the steps of the Washoe County courthouse in Reno.

A separate auction was held in Roseville, Calif., because the property straddles the state line on the north shore of Lake Tahoe at Crystal Bay, but there were no takers there either.

Canyon Partners is assessing the property and its future, but has no intention of closing the hotel-casino, said Steve Sugerman, head of Sugerman Communications Group, a public relations firm hired by Canyon Partners.

"Canyon initiated the foreclosure last year and this is the next step in that process," he said. "Canyon is going to keep the property open, which we know is important to a lot of people."

When it was owned by Sinatra from 1960 to 1963, the Cal Neva drew Hollywood stars such as Marilyn Monroe, Peter Lawford, Dean Martin and Sammy Davis Jr.

Sinatra's gambling license was stripped by the Nevada Gaming Control Board after Chicago mobster Sam Giancana showed up at the resort.

Richard Bosworth, senior director for Canyon Partners, was among 30 people who were present for the auction as strong winds blew tumble weeds across the courthouse steps just south of Reno's downtown casino district. He had no immediate comment.

Namcal bought the Cal Neva from former owner Charles Bluth in February 2005. A court-appointed receiver took over management of the property two months ago.

Canyon Partners intends to hire a new management company today to run the hotel-casino, Sugerman said. He declined to name the company.