High roller strikes deal with Harrah’s over debt

High roller Terrance Watanabe struck a deal on Thursday to dismiss his criminal case and end a bitter court fight with Harrah's Entertainment over a $14.7 million gambling debt.

The agreement was announced at a status check in the criminal case, which was set to go to trial on Monday in the courtroom of District Judge Donald Mosley.

Chief Deputy District Attorney Bernie Zadrowski told Mosley his office was dismissing theft charges against Watanabe, a 53-year-old Nebraska philanthropist, as a result of a "global settlement" in the civil litigation between Watanabe and Harrah's over the unpaid gambling markers.

"In the interest of justice, it's appropriate to dismiss the case," Zadrowski said afterward.

Both Watanabe's lead Los Angeles attorney, Pierce O'Donnell, and Harrah's disclosed the general terms of the settlement after the court hearing.

Watanabe agreed to drop his civil lawsuit against Harrah's, and Harrah's agreed to delay going ahead with its countersuit while both sides go to binding arbitration to resolve Harrah's $14.7 million claim against Watanabe, the two sides said.

District Attorney David Roger said late Thursday his office accepted what he called a "reduced" administrative fee of $500,000 from Watanabe to dismiss the criminal case.

Had Watanabe gone through the normal restitution program run by Zadrowski and the district attorney's bad check unit, he would have been required by state law to pay an administrative fee of $1.4 million, which is 10 percent of the gambling markers Harrah's claimed he owed, Roger said.

"I reviewed the settlement agreement that both parties requested, and I felt it was a fair resolution to the case," Roger said. "This was a unique case, and I felt the matter was best left to an independent arbitrator."

In a statement, Harrah's said both sides "have agreed to a framework for resolving all outstanding issues between them."

The company said it "has no objection" to the district attorney's decision to dismiss the criminal charges, and it "looks forward to resolving its claims against Mr. Watanabe in arbitration."

The arbitrator's decision will remain confidential, both sides said.

O'Donnell said in a statement that Watanabe was "pleased that the criminal indictment has been dismissed and that Harrah's and (Watanabe) will resolve Harrah's claims against him in a civil alternative dispute resolution proceeding."

O'Donnell released a statement from Watanabe, who was not in court on Thursday, that read: "I never intended to defraud Harrah's and I am grateful that the District Attorney Office exercised its discretion to dismiss the criminal charges."

Mosley on Thursday ordered authorities to return the $1.5 million bail Watanabe had posted last year.

The settlement brings an end to the largest criminal case ever filed by Zadrowski's unit, which under state law has authority to prosecute gambling debts as bad checks.

Watanabe had hired a battery of expensive lawyers and the well-known Los Angeles-based crisis management firm of Sitrick and Co. to help him wage the high-profile fight with the bad check unit and Harrah's Entertainment over the past 16 months.

At Harrah's request, Watanabe was charged with theft in February 2009 for failing to pay the $14.7 million in markers at Caesars Palace and the Rio during an epic gambling binge in the final months of 2007.

His lawyers stated in court papers that he lost $189 million at the Harrah's casinos in 2007, which gaming experts said made him one of the biggest "whales" of all time on the Strip.

Watanabe alleged in a lawsuit that Harrah's Entertainment, the world's largest gaming company, unlawfully encouraged him to gamble away tens of millions of dollars by keeping him in a constant state of intoxication.

He contended that employees at Caesars Palace and the Rio supplied him with a steady flow of alcohol and prescription painkillers as his enormous gambling losses piled up.

Harrah's denied wrongdoing and counter-sued Watanabe in District Court.

But the Nevada Gaming Control Board, which is not bound by the agreement between Watanabe and Harrah's, later opened an investigation into Watanabe's allegations.

It is illegal under Nevada law for a casino to allow "visibly intoxicated" patrons to gamble.

Control Board Chairman Dennis Neilander said Thursday that regulators are moving forward with their investigation.

"We are not finished," he said. "Our investigation is ongoing."

Neilander declined to give a timetable on when the state's probe would be completed, but he said the dismissal of the criminal charges against Watanabe removes an obstacle to their case.

Neilander has previously said the control board would not take any action against Harrah's, if needed, until the criminal case was resolved.

In court papers, Watanabe's lawyers challenged the constitutionality of the bad check unit and argued that it was impossible for prosecutors to establish Watanabe had committed a crime.

They argued that Watanabe had plenty of money in his bank accounts at the time the markers were executed, and Harrah's had permission to access that money.

Contact reporter Jeff German at jgerman@ reviewjournal.com or 702-380-8135 or read more courts coverage at lvlegalnews.com.