A cloud of criminal charges that has hung for two years over Harrah’s Entertainment, in connection with illegal remodeling at its local hotels, was finally dispelled Friday morning.
Judge Eric Goodman in Las Vegas Justice Court dismissed six misdemeanor counts faced by the hotel company and two hotel employees. Goodman, who happens to be the son of the Las Vegas mayor, did so after hearing statements by Clark County District Attorney David Roger and Harrah’s attorney Richard Bryan, the former governor and U.S. senator.
Both sides jointly sought dismissal of the charges, which involved violations of building and fire codes, with a maximum fine of $1,000 per count. The two individual defendants were heads of engineering at the Rio Hotel and Harrah’s Las Vegas at the time that county inspectors issued citations in late 2007.
Roger told the court his office had two options: obtain criminal convictions or obtain compliance with safety codes. Since misdemeanor convictions would yield only paltry fines, prosecutors decided to work with Harrah’s to correct safety deficiencies.
"Misdemeanor citations are used as a tool to gain compliance," reads a statement released by the district attorney’s office after the 7:30 a.m. hearing. "Harrah’s has demonstrated cooperation in achieving compliance as required."
Reached by telephone late Friday morning, Marybel Batjer of Harrah’s Entertainment said, "We appreciate that the county has recognized our commitment to complying with all local building codes. This issue is now resolved."
To reach compliance, the county hired an architectural firm, Leo A Daly, which conducted an independent audit of 84 remodeling projects of varying scope that had taken place over the last eight years throughout the eight local Harrah’s properties, which are all on the Strip, except for the Rio.
In May, Leo A Daly turned over its findings — almost 700 pages long — to the county, which managed the audit contract, county spokeswoman Stacey Welling said.
Since May, county inspectors have been checking hotel sites identified by the firm as presenting safety issues, and Harrah’s has been fixing problems validated by the inspectors.
Harrah’s Entertainment reimbursed the county $1.1 million, the full cost of Daly’s work. In addition, Harrah’s Entertainment has also paid a $100,000 administrative fee to the county for the review process. That fee does not include the costs of permits or inspections for repairs to defective work, as prompted by the audit.
Randy Tarr, the county’s director of real property management, analyzed the Daly findings and reported on Sept. 18 that, in 64 percent of inspections, either Daly found no concerns or county inspectors later cleared up Daly’s questions.
The remaining 36 percent of inspections required some correction by Harrah’s. As of Sept. 18, the hotel company had completed more than half of the corrections.
At the Friday hearing, Roger told Goodman that Harrah’s is currently doing the final two life-safety repairs identified.
"The vast majority" of anomalies detected by auditors are matters that crop up in "many, if not all, equivalent or similar size municipalities across the nation," according to the Daly report.
"There is no apparent, or underlying, large scale conspiracy effort to neglect" the permit and inspection processes that govern construction in Clark County, according to a cover letter from the Daly audit team, which was signed by Thomas Czech, a vice president at the firm, and Ronn Lansky, who managed the audit.
According to the report’s executive summary, "approximately 22 percent of the (170 Daly) inspections revealed possible life safety issues."
But the majority of the life-safety issues Daly identified — which ranged from a single loose hand railing in hotel space occupied by a fast-food tenant, to unsealed holes in walls that were installed to stop the spread of smoke during any accidental fire — "appear to be a result of post-construction activity" such as maintenance or replacement, rather than poor initial construction.
Since the Las Vegas Review-Journal’s 2007 exposure of substantial but covert remodeling at the Rio and Harrah’s Las Vegas — which took place several years earlier, without permits or inspections — Clark County has instituted a program to regularly inspect high-rise and resort facilities, not just when it receives safety complaints about completed buildings.
Leo A Daly wrote that it detected a big disparity between facility operations at Caesars Palace and Imperial Palace, which both belong to Harrah’s Entertainment. Both were acquisitions rather than properties launched by Harrah’s.
Caesars, its flagship property, has a "distinct and well organized maintenance and operations system in place," according to the Daly report. The firm attributes that to "senior management’s involvement, which appears to affect the professionalism of the subordinate staff. …
"Conversely, Imperial Palace brings … concerns over intent, process, valuation, documentation and maintenance," the report reads. "A macro view … would suggest that Imperial Palace has not exhibited a very systematic or thorough approach toward permitting and construction."
The firm recommends that Harrah’s makes Caesars its template for running all its facilities. Daly also recommended the county review its method for assigning a dollar value to projects, "in order to arrive at a more relevant permit fee process."
Ron Lynn, who heads the county’s Development Services, responded to Daly’s recommendations in a Sept. 18 letter. Lynn supported the implementation of Caesars standards at all Harrah’s properties. But he noted that on project valuation, current state law limits fee increases for building permits.
The firm pointed out, as well, that many inspections of completed work took place just a day or two after the permit date, which suggests that work actually started before the permit was issued.
The trend "may be a byproduct of the actual or perceived length of time it takes" to get a permit in Clark County. "This perceived ‘time lag’ is working against the County and should be reviewed," according to Daly’s executive summary.
Fred Frazzetta, who filed the first complaint about illegal remodeling at Harrah’s hotels, said he was disappointed by Goodman’s dismissal of the misdemeanor charges.
"It’s a dog-and-pony show," he said of the court proceeding. He described Harrah’s remodeling problems as "willful" choices to evade safety laws, which put "hundred of thousands" of guests and workers at risk.
Frazzetta — who had worked at the Rio and Harrah’s Las Vegas, which fired him in 2007 — had complained to the county in late 2006. It initially closed his case without significant scrutiny, but reopened it after the newspaper documented the extent of the hotels’ uninspected remodeling.
Contact reporter Joan Whitely at email@example.com or 702-383-0268.