Lawyers for developer Chris Milam say they scored a victory against the city of Henderson on Thursday when a judge dismissed the city’s original land fraud and conspiracy allegations against Milam from a Jan. 28 complaint.
But Henderson’s lawyers said it’s not a setback because they will file an amended complaint next week with more detailed fraud and conspiracy allegations from information gathered from Milam’s emails to consultants and developers in the past month.
The hearing Thursday before District Court Judge Susan Scann served as a preview for the main event on March 18 when the city’s legal team will ask the judge for an order that would prohibit Milam from conveying or encumbering the 480 acres of Bureau of Land Management property.
Henderson officials have accused Milam of promising to build a professional arena-stadium complex as a ruse to buy the federal land and flip it to residential developers in noncompliance of a land agreement. Milam hopes to close with the BLM on March 28. His winning land bid of $10.5 million sits in escrow.
The land deal is under federal investigation.
Frank Flansburg, a lawyer for Milam, welcomed the dismissals of the original fraud and conspiracy allegations from Henderson’s initial complaint.
“The big takeaway from today is the city had been sounding the alarm of fraud. That has been the basis of the representations about their claims,” said Flansburg, of the Las Vegas firm of Marquis Aurbach Coffing
But Dennis Kennedy, Henderson’s lawyer, refused to admit defeat.
“There’s no victory there. We will put in all the new information in an amended complaint and refile. It’ll be more specific than the original,” Kennedy said. “That’s not unusual. That’s fine with us.”
Both sides traded verbal jabs in court. Terry Coffing, another Milam lawyer, said the city had the chance to terminate the land agreement with his client but didn’t. Now an embarrassed city is suing Milam to save face, Coffing said.
“They got some egg on their face,” Coffing said. “They could have fixed it, but they didn’t.”
Coffing said Milam’s Chinese lender, CSST, changed its mind and required the developer to have an anchor tenant as a condition to be loaned the money to build an arena. Coffing said Milam could not get the NBA’s Sacramento Kings or the NHL’s Phoenix Coyotes to relocate to Henderson, so the funding fell through and the arena project was no longer viable in August.
But Kennedy said Milam never told that to the city, which found out on Nov. 28 in a letter from Milam saying the arena was not viable.
To show Milam worked with his consultants in a fraudulent manner, Kennedy said he will include new information gathered from emails through the discovery process and from depositions in the past month.
“While the City has just barely lifted the manhole to the sewer under which the Milam Defendants are lying in wait, the stench emanating is already overwhelming,” Henderson officials said in court papers filed this week.
Milam’s “termination of the Master Project Agreement was mere pretext (as alleged in the Complaint), because Milam had already signed an agreement with a residential developer to construct single-family residential homes on the Land promptly upon the BLM’s issuance of the patent to (Milam),” the court filing said. “Milam and his confederates further exchanged emails planning the termination for months before it happened.”
Kennedy said that while Milam was promising Henderson officials from last April to November that an arena project was viable and funded, the developer was secretly cutting deals with residential developers.
In August, Milam made a joint venture deal with Juliet Cos. of Las Vegas to develop single-family homes on the site, the city alleged. Discussions with Juliet began in April, the city argued.
“Juliet agreed to provide (Milam) $15 million to allow (Milam) to effectuate the sale of the Land; in exchange, Juliet would receive a first priority deed of trust over the Eastern Parcel” of the 480 acres, the city’s court papers said this week.
City lawyers also cited another example in July when Milam emailed two consultants about the plan, which was to develop 33 percent of the land as single-family homes, according to the legal papers.
“The plan was simple — enter into a joint development agreement with a residential developer whereby the developer would loan (Milam) the money necessary to close the sale of the Land, and in return, (Milam) and the developer would split the profits of the residential development,” the court papers said.
“Knowing that the City would not react kindly to Milam’s betrayal, he admonished the Defendants: ‘Anyone we talk to must keep things confidential. The City isn’t a party and they don’t need to know our internal capital structure. … The first step is therefore a very strong confidentiality agreement with any of the builders who have expressed an interest,’u2009” the court papers said.
One Milam email dated April 18, one day after Milam spoke before Henderson City Council and said the arena was financed, was sent to Anthony Marnell, president of the M Resort, about the concept of flipping the land.
In another email dated Sept. 28 to Ted Tanner of AEG Worldwide, Milam wrote that the land he was hoping to buy for $10.5 million from the BLM was worth $100 million.
Jay Young, another Milam lawyer, said Milam was following an agreement with the city that called for a sports complex, commercial use and homes.
“This is not new news. They said to Milam, ‘Listen, go out and find local people to help you develop this.’ The use was consistent with the requirements of the master plan agreement, which allowed for residential,” Young said. “The agreement allows … mixed use. He has the right to do residential building.”
But the city’s lawyer, Kennedy, said the residential use was supposed to be done only after the arena was built and was not supposed to be single-family houses.
Contact reporter Alan Snel at email@example.com or 702-387-5273.