LeVan to “buy out” other investor after casino license is granted.
Although Mason Dixon officials have pointed to Gettysburg businessman David LeVan as the principal partner in the casino proposed for Cumberland Township, a report filed with the state Gaming Control Board indicates a different investor has by far the majority ownership.
The report states LeVan’s partner, Joseph Lashinger Jr., is the major partner in the casino plan and, as a result, a group called Concerned Citizens of Cumberland Township has raised issue with the ownership.
“The idea presented has been that LeVan’s the main guy,” said group leader Al Ferranto. “But the report talks about this Lashinger guy and why hasn’t he been around? Where’s he been?”
According to the report, Lashinger has a 98-percent ownership interest in Mason-Dixon Resorts GP, LLC while LeVan has a 2-percent interest. Mason-Dixon Resorts GP, LLC is the “general partner” and one of seven investors in Mason-Dixon Resorts LP, the company that would own and operate the proposed casino.
According to experts in corporate law, the “general partner” is important because it’s the entity that’s empowered to make decisions on behalf of the casino, while the other six investors — known as limited partners — have lesser roles.
“The idea is that limited partners will make their investment into the entity and in exchange they’ll have limited liability. They’ll only be on the hook for the amount of their contribution,” said associate professor Michael Hussey of Widener Law school. “What
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Mason Dixon is doing is fairly standard. They’ve made the general partner (Mason-Dixon Resorts GP, LLC) responsible for the day-to-day management of the limited partnership. They’re the entity that has the ability to sign contracts on behalf of the limited partnership.”
In the past, casino proponents have pointed to LeVan’s magnanimous track record in Gettysburg — he’s made large donations to Gettysburg College and the Majestic Theater, among others — as evidence that the casino would be run in conjunction with the best interests of the surrounding townships.
But because LeVan has a 2-percent ownership interest in this “general partnership,” Hussey says LeVan would be expected to have little decision-making power.
“It’s expected that Joseph (Lashinger) is the controlling individual in this capacity,” he said. “He’s always going to win. He’ll vote his 98 percent and LeVan will vote his 2 percent. He’s going to cause Mason-Dixon to take whatever action he wanted.”
But a Mason-Dixon spokesman has said a private agreement has been reached that grants LeVan the final say, even if the ownership split would suggest otherwise.
“They split all costs and Dave (LeVan) has the final decision in all matters,” said spokesman David La Torre. “To say otherwise is simply untrue.”
According to La Torre, Lashinger — a former Penn National Gaming executive — was enlisted in the project because he had extensive experience in the gaming industry.
“Joe was brought in to assist with the formation of the project. The understanding has always been that the long-term ownership of this project would be with David LeVan,” La Torre said. “Upon licensure, David LeVan, a lifelong Adams County resident, will purchase Mr. Lashinger’s interests. That will ensure Dave’s vision for job creation and investment in the local economy.”
The report also breaks down the “net” ownership interest for the seven individuals that have invested in Mason-Dixon. These figures typically show how much investors have contributed and how much they stand to gain financially, Hussey says. Among the investors, Lashinger’s total ownership interest is 76.4 percent of the casino and LeVan’s is 17.5 percent.
Apart from Lashinger and LeVan, five other individuals are identified in the report as having ownership interests in the proposed casino. They include LeVan’s wife, Jennifer, who would have a 2-percent net ownership interest and two trust funds that have been established for minors, each of which owns 1 percent. LeVan’s longtime accountant Michael Jackson and attorney Bernard Yannetti each are listed with 1 percent net ownership interests in the casino.
Hussey says if LeVan has the final say in all decisions, this discrepancy in ownership makes for an aberrant business model.
“In theory it’s possible. But what’s confusing about this is why Lashinger would put in 76 percent of the money and turn over control to LeVan,” he said. “It’s unusual that someone with such a large ownership interest and with so much capital at risk would turn over control entirely to someone else.”
According to Hussey, a signed operating agreement for the general partnership would disclose such an arrangement, but Mason-Dixon officials said any such document will not be released. La Torre also said neither Lashinger nor LeVan would be available to comment on their business relationship at this time.
“People can focus on the structure and these agreements, but it’s much to do about nothing,” La Torre said. “From day one, this project has been formulated, organized and run by Dave LeVan.”
La Torre continued, “There are some who wish to make this out to be something more than it is. Their intent is to distract from one basic fact: Mason-Dixon will create 900 jobs and pour millions of dollars into the local economy.”
But the Concerned Citizens group has also raised issue with the Memorandum of Understanding signed by Lashinger and the chairman of Cumberland Township. The memorandum guarantees at least $1 million to the township and the supervisors pledged support for the Gaming Control Board hearings, which will be held to consider public testimony on the casino.
“If LeVan’s calling all the shots why didn’t he sign the MOU? That’s the indication of who really is the owner,” said Ferranto. “I think it’s a good strategy because Lashinger is an outsider and LeVan is the person everyone knows. He’s done a lot of good things for this community, so he’s the front man.”
Hussey agrees it’s atypical that Lashinger signed the memorandum, especially if he plans to sell all of his interests in the casino.
“I think you would want LeVan to sign it,” Hussey says. “Maybe it’s not in the legal structure and Lashinger is just deferential. On the face, it’s very confusing.”
La Torre said it was a matter of legality.
“I can’t speculate on those matters and I’m not privy to those conversations,” he said.
Apart from his executive position with Penn National Gaming, Lashinger is also a former state representative from Montgomery County and the lead partner in Harrah’s Chester Casino & Racetrack, located south of Philadelphia. The Delaware County harness-racing track was one of the first operations in the state to open a slots facility.
In 2005, LeVan and other investors attempted to launch a slots casino called the Crossroads Gaming Resort and Spa, but were turned down by the Gaming Control Board, which cited significant public opposition as the reason for the rejection.
The Crossroads proposal was funded by a nine-member group of investors, of which LeVan was president. In the proposal, LeVan had a 12.75-percent net ownership interest while a private investment firm, Silver Point Capital, L.P., had a 75-percent net ownership interest.
MASON DIXON RESORT
Gettysburg businessman David LeVan and former Penn National Gaming executive Joseph Lashinger have proposed converting the Eisenhower Inn and Conference Center along Emmitsburg Road, located about 0.8 miles south of the Gettysburg National Military Park, into a gaming resort with 600 slot machines and 50 table games.
The state’s Gaming Control Board will hold its first hearing on Aug. 31 to consider public testimony on whether to award the pair the last remaining Category 3 gaming license. The location of the hearing has not yet been determined.
Their proposal is expected to face competition from three other applicants including the Holiday Inn Harrisburg West in Cumberland County, the Nemacolin Woodlands Resort in Fayette County and the Fernwood Hotel and Resort in the Poconos.
2005 PROPOSAL
In 2005, Gettysburg businessman David LeVan and other investors attempted to launch a slots casino called the Crossroads Gaming Resort and Spa, but were turned down by the Gaming Control Board, which cited significant public opposition as a major reason for the rejection.
The Crossroads proposal was funded by a nine-member group of investors known as Chance Enterprises, of which LeVan was president.
Born in Gettysburg, LeVan earned a bachelor’s degree from Gettysburg College and went on to earn a degree in advanced management from Harvard Business School. He spent 10 years with Coopers and Lybrand and 20 years at Conrail Inc., where he served as president, then CEO, then COB until his retirement in 1998. He resides in Gettysburg. He and his wife, Jennifer, are managing partners in Battlefield Harley-Davidson.
The investors in the Crossroads proposal were mostly state business leaders and included, among others, Dan Vorum, founder of president of City Motors, in Washington, Pa., and J. Edward Clouse, of Carlisle, who started Clouse Trucking, a family-owned milk-hauling company.
As of August 2005, LeVan had a 12.75 percent ownership interest as a limited partner in the Crossroads proposal. A private investment firm based in Greenwich, Conn. called Silver Point Capital, L.P. had a 75-percent ownership interest.
Silver Point Capital, which was founded by former Goldman, Sachs & Co. partners, became involved in the proposal after Morgan Stanley withdrew its support as the largest financial backer for Crossroads.
At the time, a Morgan Stanley spokesperson said only it wasn’t the right deal for the investment bank. LeVan was also criticized by No Casino Gettysburg for being a “minor” investor in the Crossroads casino.
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