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Courtroom Struggle Between Partners Clouds the Future of the $382 million
 French Lick Casino Project; Lawsuit Documents Claim
 Incompetency, Secret Meetings

By J.K. Wall, The Indianapolis StarMcClatchy-Tribune Business News

Aug. 1, 2006 - Bloomington billionaire Bill Cook's drive to restore two historic hotels to their Jazz Age glory -- even at considerable expense -- has collided with Indianapolis developer Bob Lauth's insistence that their joint casino-resort project be done promptly and profitably.

The courtroom struggle between the state's richest man and one of its fast-rising business stars clouds the future of a project seen as the economic salvation of Orange County, one of the state's poorest areas.

Lauth faults Cook, the founder of a medical device and pharmaceutical firm, for arbitrarily adding lavish details, such as gold leaf on the molding at the French Lick Springs hotel. Cook counters that Lauth and his companies treat the project "as if they were building a Best Buy or Home Depot."

Cook and Lauth's wrangling could delay the influx of jobs and spending the casino-resort is predicted to bring. Or, at worst, the Indiana Gaming Commission could revoke the casino license it gave Cook and Lauth and find a new development team.

The bitter dispute burst into public view Monday when Orange Circuit Judge Larry Blanton unsealed the lawsuits that Cook's Orange County Holdings and Lauth Resorts & Casino filed against each other nearly two months ago.

Both sides want control of the $382 million project, which includes refurbishing the French Lick and West Baden hotels, as well as building a new casino, an event center, two golf courses, a tennis center, a swimming pool and other attractions.

Bill Cook, 75, is out of the country and could not be reached for comment. Bob Lauth, 55, declined to comment.

But their attorneys have said plenty, first in letters to each other meant to start an arbitration process and then with lawsuits.

Lauth's attorneys say that Cook is over budget by millions on its $70 million portion of the project and has admitted the project won't come in on time. It also charges that the Cook organization is "incompetent," particularly Bill Cook's son, Carl. He manages the casino-resort project for Cook, but Lauth says he is merely a front man for his father.

"Carl typically sleeps, doodles or plays games on his cell phone during the project development meetings," Lauth's lawyers wrote in court documents. Lauth also accuses Carl Cook of holding a secret meeting to vote Bob Lauth off the project's board of directors.

In response, Cook's attorneys note that Carl Cook has an MBA degree and contend that he is on the project site more than Lauth's executives and has made significant contributions to the project.

Cook's attorneys assert that Bob Lauth is "greedy" and that he sought arbitration because Lauth did not get all its financing in place on time, which Cook says reduces Lauth's ownership stake from 50 percent to 25 percent.

"Lauth's allegations of misconduct are full of inaccuracies and are characteristic of the hurried, careless, 'me-first' attitude it has demonstrated on the jobsite," Cook's attorneys wrote, accusing Bob Lauth of a "childish tirade."

Lauth responded that it successfully issued $270 million in bonds to finance the project and that both it and Cook agreed to extend the deadline for securing $25 million in additional credit.

The Indiana Gaming Commission said Monday it has started an investigation into the companies' dispute, but primarily to verify that everything is OK. Gaming officials said Monday they have seen the dispute cause "no adverse effect on the project." It is scheduled to open in November.

"We plan and expect the French Lick project to open on time," said commission chairman William Barrett.

Steve Ferguson, chairman of the Cook Group family of companies, promised the same. But, according to documents unsealed Monday, Lauth asserts the project is at risk of bankruptcy. Blanton unsealed the documents at the request of several newspapers, investors that failed to win the casino license and Indiana Attorney General Steve Carter.

The dispute between the companies started when Bob Lauth wrote letters to fire Cook's longtime architect and historic restoration firm. Cook sought restraining orders against those moves. Lauth wants a restraining order to keep Bill Cook off the project site.

Cook and his companies have been working in Orange County for 10 years and have already spent more than $150 million, Ferguson said. He said Cook's philosophy is to spend what it takes to make the resort a major attraction.

"You can't leave something half done in a quality project where you're trying to attract people from all over the Midwest and the country," he said. He added that Cook's profits from the development would go to charity.

But Lauth charges that Cook spends money needlessly. In court documents, Lauth says Cook officials award contracts without competitive bids to friends and refuse to use software or other methods that help to reduce costs.

Any delay would push back the start date for the 1,400 workers the casino-resort is expected to employ -- with an annual payroll of $32 million.

"One of the basic reasons that this is happening is to bring jobs to the county, as well as restoring the hotels," said Orange County Commissioner Jim Springer.

The casino-resort already has a tortuous history. Although residents of Orange County pushed early and hard in the early 1990s to legalize casinos in Indiana, the county didn't receive a casino license -- the last one available -- until 2004.

A company headed by New York developer Donald Trump was chosen to build the casino. But its license was later revoked after Trump fell into bankruptcy reorganization.

Rep. Jerry Denbo, D-French Lick, said he trusts Cook to get the job done.

"Bill Cook is not human; he's an angel," Denbo said. "I just really don't see any problems for the casino itself."

THE PROJECT

The $382 million development includes renovation of French Lick Springs Resort and West Baden Springs Hotel and construction of a 1,200-slot riverboat casino, a golf course, a parking garage and a convention center.

French Lick Springs Resort & Casino

It will have an 84,000-square-foot riverboat casino with a 42,000-square-foot gambling floor, as well as bigger guest rooms, gardens, new restaurants, a spa and retail shops.

-- Scheduled opening: November.

West Baden Springs Hotel

The refurbished building, famous for its six-story domed atrium, will have 240 luxury guest rooms, two restaurants, a spa and pool, and retail shops.

-- Scheduled opening: June 2007.

THE PLAYERS

Cook Group

-- What: World's largest privately held medical device manufacturer. The company also owns and operates real estate, retail and travel-service businesses.

-- Headquarters: Bloomington, Ind.

-- Founded: 1963.

-- Executive: William A. Cook, founder and chief executive.

-- Employees: About 4,000.

Lauth Property Group

-- What: Indiana's largest private developer and contractor focuses on office, industrial, retail and health-care markets.

-- Headquarters: Indianapolis.

-- Regional offices: Charlotte, N.C.; Dallas; Denver; Orlando; Phoenix.

-- Founded: 1977.

-- Executives: Robert L. Lauth Jr., chief executive; Gregory C. Gurnik, president.

-- Employees: 285.

Blue Sky Casino

Joint venture between Lauth Resorts and Casino, an affiliate of Lauth Group, and Orange County Holdings, a nonprofit organization formed by the Cook Group of family companies. The partnership was formed to develop the French Lick casino project.

TIT FOR TAT

Documents released Monday in the bitter legal dispute between Cook Group and Lauth Property Group present a war of words in the fight for control of the French Lick casino project.

On Bill Cook's motivations

-- Lauth's take: Bill Cook wants to build a legacy for himself in Orange County and is not interested in finishing the project on time or within budget.

-- Cook's take: The Cook family says the project is "about their passionate commitment to preserve Orange County's historic sites and to enhance economic development in Southern Indiana, and not their own personal profit."

On the Lauth-Cook partnership

-- Lauth's take: Cook never wanted a partner but needed Lauth to win the casino bid and secure bonds.

-- Cook's take: Lauth has put little to no money into the project but wants to get as much out of it as it can. It doesn't mind doing so by cutting corners because it will cash out quickly.

On Bob Lauth's motivations

-- Lauth's take: To complete the project on time, on budget, by the book and at a profit to all stakeholders.

-- Cook's take: When Bob Lauth was asked what motivated him to get involved in the French Lick casino, he said, "Because I am greedy."

On Bill Cook's son Carl:

-- Lauth's take: Carl Cook, the Cook family's main representative on the project, is merely a figurehead for his father. "He typically sleeps, doodles or plays games on his cell phone during project development meetings."

-- Cook's take: Carl Cook is an engineer with an MBA degree, is on the project site more than Lauth's executives and has discovered shortcomings in Lauth's work.

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To see more of The Indianapolis Star, or to subscribe to the newspaper, go to http://www.IndyStar.com.

Copyright (c) 2006, The Indianapolis Star

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