$500k fine levied in drug, prostitution investigation at House of Blues Foundation Room

A subsidiary of MGM Resorts International has agreed to pay a $500,000 fine to settle a complaint filed by the state Gaming Control Board against a tenant at the company’s Mandalay Bay property.

The board and MGM Resorts signed a stipulation Wednesday in response to a five-count March 3 complaint that employees of the House of Blues Foundation Room provided illegal narcotics and prostitutes to undercover officers four times during a two-month period.

Representatives of Mandalay Corp., the MGM subsidiary that operates Mandalay Bay, did not contest the findings of the complaint and agreed to pay the fine as well as a $17,000 reimbursement of investigative expenses.

Mandalay Corp. President and Chief Operating Officer Charles Bowling signed off on the stipulation.

The Foundation Room is a restaurant and ultra lounge operated by the House of Blues on the 43rd floor of Mandalay Bay. By regulation, casino property landlords are responsible for activities related to a tenant’s operation.

A complaint drafted by Deputy Attorney General Edward Magaw said an undercover officer on June 8, 2012, purchased 2.8 grams of cocaine from a person later determined to be a House of Blues Foundation Room host.

According to the report, the officer asked the host, who wasn’t named in the complaint, if he could use the cocaine in the club and was told that he could if he “was careful when doing so.”

The incident led to an undercover investigation by control board and Metropolitan Police Department agents.

The complaint said that on July 6 a group of agents met at the property and the host sold an officer 2.7 grams of cocaine and 1.8 grams of Ecstasy pills at a secluded location on Mandalay Bay’s main level. On that same visit, a second host and a bottle server promised agents they could provide drugs to the agents on their next visit to the Foundation Room.

On July 27 and 28, 2012, the complaint said a third host arranged to provide an officer with illegal narcotics and prostitutes. During that visit, hosts sold officers 2.5 grams of cocaine and introduced four women who agreed to have sex for money.

The complaint also said officers spoke to a Foundation Room security officer about providing marijuana and Lortab, a prescription pain medication. The under­cover officers also asked for and received from the security officer a private room for sex.

On a fourth occasion, officers arranged on Aug. 17 and 18, 2012, to purchase cocaine and “Mollies,” a pure form of Ecstasy pills from different hosts and drink servers.

In all, 10 House of Blues employees and at least five nonemployees were alleged to have arranged to provide drugs or prostitutes for undercover officers and most of those contacts occurred in public areas, including on the main level of the resort.

The control board sent industry letters to nonrestricted gaming licensees in February 2006, April 2009 and April 2012 reminding them of their responsibilities in monitoring leased nightclubs and ultra lounges and in 2011 and 2012 offered training in the policing of their venues.

Letters cited the rising volume of illegal activities occurring in clubs and how they could discredit the state and the development of the gaming industry.

The Nevada Gaming Commission is expected to consider approval of the settlement at its March 20 meeting.

Contact reporter Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow him on Twitter @RickVelotta.