Updated June 18, 2018 - 4:40 pm
A criminal investigation should examine the mishandling of $90,000 worth of Southwest Airlines gift cards secretly purchased by the Las Vegas Convention and Visitors Authority, local lawyers said.
“It looks like there could be potentially a theft from the public,” said Las Vegas Assemblyman Ozzie Fumo, D-Las Vegas, a defense lawyer and part-time professor at UNLV’s Boyd School of Law. “There’s a host of criminal charges that could come from this.”
Defense lawyer Todd Leventhal, a former prosecutor, said the gift card scandal looks like an example of “deplorable greed” by people in power with little oversight.
“If these guys actually conspired to purchase these cards with publicly funded money to use for personal activities,” Leventhal said, “then they have clearly crossed the line and have committed numerous criminal offenses, including conspiracy to defraud the taxpayers, theft of public funds and embezzlement.”
Authority executive Brig Lawson hid the gift card purchases, and auditors could not account for more than $50,000 of the cards, an audit report showed earlier this month. The tourism agency’s CEO, Rossi Ralenkotter, used $16,207 in cards to take personal trips with his wife.
Lawson has since resigned as the authority’s senior director of business partnerships, and Ralenkotter reimbursed the authority for the cards he used.
Last week, the convention authority board tightened controls in response to the Southwest purchases, which occurred between 2012 and 2017.
Defense lawyer Chris Rasmussen said the audit findings are concerning but might only amount to agency policy violations.
“Some things could be unethical, but it doesn’t mean that it rises to a criminal violation,” he said. “We haven’t heard the complete story from the convention authority.”
Bill Noonan, who chairs the authority board’s audit committee, said Monday that the board would cooperate in any criminal investigation.
“We we would provide any documents requested,” said Noonan, who ordered the gift card audit. “We want total transparency.”
Noonan acknowledged that the audit left some questions unanswered.
“These were auditors, not investigators,” he said.
Thomas Pitaro, a defense attorney and part-time Boyd law professor, said the findings should have been turned over immediately to law enforcement authorities.
“This agency is the voice and face of Las Vegas,” Pitaro said. “I think everyone hopes it was just sloppy and can be cured within the agency, but we have a right to know.”
Chip Siegel,a defense lawyer and former prosecutor, agreed.
“The bottom line is when taxpayer money is used in an improper or potentially untoward manner, there needs to be an investigation by law enforcement,” he said.
A Las Vegas police spokeswoman said the department has not received any information about the audit findings and does not have an active investigation.
Second airline deal
In funding requests, Lawson said the gift card purchases were for promotional events with Southwest. He did not disclose that the requests were for the cards, the audit showed. Lawson also instructed Southwest employees not to mention the cards in invoices submitted to the convention authority, the report showed.
Efforts to reach Lawson for the past two weeks have been unsuccessful, and his lawyer, Christian Gabroy, did not return calls.
Lawson told auditors he did not know that Ralenkotter used the cards for personal travel, and auditors did not uncover evidence that Ralenkotter knew Lawson had bought the cards with agency funds. Ralenkotter indicated during the audit that he thought the cards were given to the authority for promotional purposes. The agency’s travel coordinator told auditors that Ralenkotter, whose annual compensation and benefits package approaches $1 million, kept Southwest gift cards in his office desk.
Another major company, Delta Airlines, gave the authority thousands of dollars in travel certificates in return for being included in the agency’s ad campaigns and receiving shared space at trade shows. The authority also agreed to list Delta as a “preferred partner” on its website, auditors said.
But the trade was done in the open and the agency did not book any flights for business or personal use with the certificates, the audit showed.
Most of the 343 Delta certificates were given to the agency’s leisure sales and business meetings departments, which had struck deals with Delta to use the certificates to attract tourists to Las Vegas, the report showed. Written agreements between 2011 and 2017 read by auditors showed the certificates were part of the deals. The agreements called for Delta to give the authority at least $65,000 in certificates and travel upgrades.
The authority did not track all of the Delta certificates, the report found. Auditors said they were unable to determine the use of 37 certificates provided to the business meetings department in 2015 and 2016.
A Delta spokesperson could not be reached for comment.
Ralenkotter, who has been talking with board members about his retirement and a potential separation payment, has apologized for his personal use of the Southwest cards. The convention authority no longer allows the cards to be used for personal travel.
Ralenkotter and authority spokeswoman Jacqueline Peterson declined to comment on whether the agency’s handling of the gift cards might warrant a criminal investigation.
Attorney Todd Bice, who oversaw the audit, told board members last week that because of poor record keeping it would cost more than the amount of the $50,188 in missing cards for auditors to try to find out what happened to them. He recommended closing the audit, which the board approved.
Dan Landson, a Southwest Airlines spokesman, would not discuss the audit’s findings or the involvement of any company employees with Lawson.
“The gift cards were provided to the Las Vegas Convention Visitors Authority as part of various marketing programs over the last several years,” Landson said. “We do not comment on who uses gift cards or the purpose of their individual trips. We also will not comment on personnel matters involving our employees.”
Assistant Clark County District Attorney Chris Lalli, whose office prosecutes such criminal cases, declined to comment.
“At present, we have nothing to say regarding the LVCVA matter,” he said.
Noonan, the audit committee chair, ordered the airline gift card audit in February amid a Review-Journal investigation into lavish agency spending and perks for board members and staff.
The Review-Journal had requested employee gift and travel records more than a year before the board hired the auditors, but the authority did not provide any records of the airline cards. It maintains there was no process in place at the time to track use of the cards.
The authority has an annual operating budget of about $251 million, funded mostly by hotel room taxes, and uses it to promote tourism and operate the Las Vegas Convention Center.
The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson. Las Vegas Sands Corp. operates the Sands Expo and Convention Center.