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Influence charges fly in casino rescue (The Pittsburgh Tribune-Review)

By Mike Wereschagin, The Pittsburgh Tribune-ReviewMcClatchy-Tribune Regional News

Jul. 18--A flurry of calls involving state leaders, investors in Pittsburgh's casino and two state gambling regulators -- calls that resulted in a deal to shore up the casino's finances -- have prompted charges by opponents that undue influence was brought to bear.

The deal's supporters -- including Gov. Ed Rendell and House Appropriations Chairman Dwight Evans -- say their involvement was necessary to save the sputtering $780 million North Shore project.

The leaders of an investment team that soon could have a 75 percent stake in the casino donated more than $200,000 to Rendell from 2000 to 2006, state records show. Include their donations to the Democratic National Committee when Rendell was the national party chairman, and the total rises to more than $300,000.

Some lawmakers are angry that Evans, D-Philadelphia, called gambling board Chairwoman Mary DiGiacomo Colins and board member Jeffrey Coy to tell them he supported the project. Critics say it's illegal for board members to discuss matters on which they'll have to vote. Evans said his calls were no different from the letters lawmakers routinely send the board.

"I can only use the word 'incredulous' for the whole thing," said state Sen. Jim Ferlo, D-Highland Park. Ferlo urged the board to revoke Don Barden's license and start from scratch to find a slots licensee for Pittsburgh. "This thing really stinks to high heaven."

Colins and Coy didn't express any opinions in Evans' conversations with them, which he said lasted about two minutes.

"They didn't say anything except 'Thank you,' " said Evans. "It's unfortunate that other people would try to characterize this as anything other than me ... trying to make sure this thing benefits the city and the county."

That the board members took Evans' call is "clearly a violation" of the gambling law, said state Sen. Jane Orie, R-McCandless.

Orie knew only about the phone call involving Coy, who was appointed to the board by the Legislature. If Coy, a former state representative, talked to Evans about the investment team, "there's a possibility of him being forced to resign from the board," Orie said.

The calls to Colins and Coy came shortly before the first of two Monday evening conference calls involving Rendell, Evans, casino owner Barden and Chicago billionaire and investment team leader Neil Bluhm.

Negotiations between Barden and Bluhm over control of the casino had hit "some sticking points," said Rendell spokesman Chuck Ardo. Participants declined to specify what was bogging down the talks, which they had hoped to complete the previous Friday.

Evans heard about the problems from state Rep. Jake Wheatley, D-Hill District, and told Rendell he should get involved. Rendell's office set up the calls, Evans said.

Bluhm and another investor, Ira Lubert, long have been prominent figures in Philadelphia, where Rendell was mayor from 1992 to 2000. Lubert's Philadelphia-based firm, Lubert-Adler Real Estate Funds, has invested $15 billion in real estate since its founding in 1997 and controls $2.5 billion. He has donated about $141,000 to Rendell since 2000. He plans to contribute about $10 million to the casino project.

Bluhm's connection to Philadelphia dates to the 1980s, when his former real estate firm built the landmark Four Seasons Philadelphia. He has donated about $60,000 to Rendell. Bluhm donated $320,000 to the Democratic National Committee in the past 11 years, including $110,000 in 2000, when Rendell was the party chairman.

It is Bluhm's prodigious real estate success -- which includes casinos in Canada, Mississippi and the planned SugarHouse Casino in Philadelphia -- that qualifies him for the deal, and not his relationship with Rendell, said Bluhm spokesman Dan Fee. Fee was Rendell's campaign spokesman.

"The governor did not bring us into the deal," Fee said. "I think the most important thing is that Neil is a recognized developer who has built successful projects across the country."

Rendell's long-time relationship with Bluhm was "critical" to getting the deal done, Ardo said.

"His role was simply as an intermediary," Ardo said. "He attempted to smooth out whatever rough spots remained toward the end of their negotiations, and clearly he was successful."

Bluhm plans to invest $120 million in the stalled project and to use that money to attract $660 million or so in loans. Barden began construction in December with a $200 million short-term loan, on which he defaulted last month. Without Bluhm's involvement, lender Credit Suisse could foreclose on the casino property, with its steel skeleton and half-completed concrete garage.

The gambling board must approve the ownership change.

Orie and Ferlo questioned whether it was a governor's job to put together financing for a private project. Evans pointed out that the governor intervened to keep the Penguins in Pittsburgh.

What's needed to restore confidence in the gambling board's process, the senators said, is to revoke Barden's license and take applications in a public process.

"If Mr. Bluhm is Mr. Rendell's ringer, that's fine, if he is indeed found to have the best" chance at completing the project, Ferlo said. "But it should go back to the beginning of the process, which starts with the revocation of the license."

Evans said that would take too long.

"That's at least two years," Evans said. "It's silly season. It's electoral season. That's what I see going on here, and it's unfortunate this is occurring."

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To see more of The Pittsburgh Tribune-Review or to subscribe to the newspaper, go to http://www.pittsburghlive.com/x/pittsburghtrib/.

Copyright (c) 2008, The Pittsburgh Tribune-Review

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