B4246006.8 COMMONWEALTH OF MASSACHUSETTS HAMPDEN, ss. SUPERIOR COURT DOCKET NO. HDCV2014-00138 NORTHEAST REALTY ASSOCIATES, LLC, Plaintiff, v. MOHEGAN RESORTS MASS, LLC, MOHEGAN SUN MASSACHUSETTS, LLC, AND MICHAEL VITO & ASSOCIATES, INC. Defendants. - and - MOHEGAN RESORTS MASS, LLC, and MOHEGAN SUN MASSACHUSETTS, LLC, Plaintiffs-in-Counterclaim, v. NORTHEAST REALTY ASSOCIATES, LLC, Defendant-in-Counterclaim, and NORTHEAST GAMING GROUP, INC., NORTHEAST RESORTS GROUP, INC., and, LEON H. DRAGONE, Third-Party Defendants. DEFENDANTS MOHEGAN RESORTS MASS, LLC AND MOHEGAN SUN MASSACHUSETTS, LLC’S AMENDED ANSWER, COUNTERCLAIMS AND THIRD-PARTY COMPLAINT
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B4246006.8
COMMONWEALTH OF MASSACHUSETTS
HAMPDEN, ss. SUPERIOR COURT
DOCKET NO. HDCV2014-00138
NORTHEAST REALTY ASSOCIATES, LLC,
Plaintiff,
v.
MOHEGAN RESORTS MASS, LLC,
MOHEGAN SUN MASSACHUSETTS, LLC,
AND MICHAEL VITO & ASSOCIATES, INC.
Defendants.
- and -
MOHEGAN RESORTS MASS, LLC, and
MOHEGAN SUN MASSACHUSETTS, LLC,
Plaintiffs-in-Counterclaim,
v.
NORTHEAST REALTY ASSOCIATES, LLC,
Defendant-in-Counterclaim, and
NORTHEAST GAMING GROUP, INC.,
NORTHEAST RESORTS GROUP, INC., and,
LEON H. DRAGONE,
Third-Party Defendants.
DEFENDANTS MOHEGAN RESORTS MASS, LLC AND
MOHEGAN SUN MASSACHUSETTS, LLC’S AMENDED ANSWER,
COUNTERCLAIMS AND THIRD-PARTY COMPLAINT
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COUNTERCLAIMS
Pursuant to Mass. R. Civ. P. 12, 13, and 15, Defendants Mohegan Resorts Mass, LLC
(“MRM”) and Mohegan Sun Massachusetts, LLC (“MSM” and, with MRM, “Mohegan”),
hereby amend their pleading in this matter to add the within counterclaims and third-party
claims against Plaintiff and Counterclaim Defendant Northeast Realty Associates, LLC
(“Northeast Realty”), Third-Party Defendant Northeast Gaming Group, Inc. (“Northeast
Gaming”), Third-Party Defendant Northeast Resorts Group, Inc. (“Northeast Resorts”) and
Third-Party Defendant Leon Dragone (“Dragone”).1
Introduction
In late 2008, MRM entered into two agreements with the Counterclaim and Third-Party
Defendants in connection with the potential development of a destination resort and gaming
facility in Palmer, Massachusetts (the “Palmer Project”) and the pursuit of legislation and
regulatory approval for such a project. MRM also entered into a lease with Northeast Realty for
the land in Palmer on which a potential gaming facility could be sited. Despite passage of the
Expanded Gaming Act in 2011 that legalized casinos in Massachusetts, approval of MSM as a
qualified applicant by the Massachusetts Gaming Commission (the “Commission”), negotiation
of a host community agreement with the Town of Palmer and the expenditure of tens of millions
of dollars by Mohegan in support of the Palmer Project, no gaming facility can be developed in
Palmer for the simple reason that the citizens of Palmer voted against the establishment of a
casino in the ballot referendum required by the Expanded Gaming Act. About two weeks after
the referendum, because it was clear that a majority of voters in Palmer did not want gaming and
1 Mohegan has no amendments to its Answer and Jury Demand in this matter, which is incorporated herein by reference.
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the recount requested by Mohegan would not be successful, Mohegan terminated the two
agreements that were expressly related to the Palmer Project. Following termination of the two
agreements, Mohegan continues to lease the Palmer site, as it is entitled to do, as it investigates
other potential development options for that site.
Despite the fact that nothing in either of the terminated agreements required Mohegan to
also terminate its lease of the Palmer site, Counterclaim Defendant Northeast Realty sued
Mohegan alleging that simultaneous termination of all three contracts was required. Northeast
Realty also sued Mohegan for alleged pre-termination breaches of the two terminated
agreements. Nevertheless, it is Northeast Realty and its affiliates, particularly Dragone, who
breached those two agreements prior to termination by Mohegan. Accordingly, Mohegan now
brings claims against Counterclaim Defendant Northeast Realty and the Third-Party Defendants
Northeast Gaming, Northeast Resorts, and Dragone for breach of contract, breach of the
covenant of good faith and fair dealing, and unfair and/or deceptive trade practices under Mass.
Gen. Laws c. 93A, and seeks monetary damages and a declaratory judgment.
Parties
1. Counterclaim-Plaintiff Mohegan Resorts Mass, LLC (“MRM”) is a Delaware limited
liability company with its principal place of business at 5 Crow Hill Road, Uncasville, CT.
MRM was created to pursue the development of a destination resort and gaming facility in
Massachusetts in the event that proposed legislation permitting gaming facilities became law.
2. Counterclaim-Plaintiff Mohegan Sun Massachusetts, LLC (“MSM”) is a Delaware
limited liability company with its principal place of business at 1 Mohegan Sun Boulevard,
Uncasville, CT. MSM was created to develop and operate a destination resort and gaming
facility in Massachusetts.
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3. On information and belief, Counterclaim-Defendant Northeast Realty is a Massachusetts
limited liability company with its principal place of business at 270 Benton Drive, East
Longmeadow, Massachusetts, managed by Northeast Resorts Group, Inc. and Leon H. Dragone.
Paul G. Hamel (“Hamel”) is the registered agent for Northeast Realty. From 2007 to 2011, the
registered agent for Northeast Realty was Frank P. Fitzgerald, P.C., the law firm at which
Dragone’s longtime lawyer and representative Frank P. Fitzgerald (“Fitzgerald”) is the named
partner.
4. On information and belief, Third-Party Defendant Northeast Gaming is a Massachusetts
corporation with its principal place of business at 583 Shaker Road, Longmeadow,
Massachusetts, of which Dragone is President. Hamel is the registered agent for Northeast
Gaming. From 2009 to 2011, John E. Drost, another attorney at Fitzgerald’s firm, was the
registered agent for Northeast Gaming.
5. On information and belief, Third-Party Defendant Northeast Resorts is a Massachusetts
corporation with its principal place of business at 270 Benton Drive, East Longmeadow, of
which Dragone is President. Hamel is the registered agent for Northeast Resorts. From 2009 to
2011, Fitzgerald was the registered agent for Northeast Resorts.
6. On information and belief, Third-Party Defendant Dragone is a Massachusetts resident
residing at 583 Shaker Road, Longmeadow, Massachusetts, and is manager of Northeast Realty
and president of Northeast Gaming and Northeast Resorts. (Dragone, Northeast Realty,
Northeast Gaming, and Northeast Resorts are collectively referred to as the “Northeast Entities”
or the “Counterclaim Defendants.”).
Background
7. MRM and MSM are affiliates of the Mohegan Tribal Gaming Authority (“MTGA”),
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which directly or indirectly owns and/or manages gaming facilities in Uncasville, Connecticut,
Towns Plainship, Pennsylvania and Atlantic City, New Jersey. As it became apparent that
Massachusetts was considering legalizing destination gaming facilities, Mohegan representatives
began exploring the prospect of operating a gaming facility in Massachusetts.
8. In or about 2007, in connection with its exploratory efforts in Massachusetts, Mohegan
representatives came to meet with Dragone regarding the possibility of developing land in either
Palmer, Massachusetts (the “Palmer Property”) or New Bedford, Massachusetts (the “New
Bedford Property”) on which a gaming facility could be built. With Dragone, Mohegan
representatives visited both sites on a number of occasions.
9. By 2008, the prospect of legalized gaming became a more likely possibility. It also
started to become apparent that Massachusetts would be divided into a number of regions for the
award of gaming licenses, and that an entity would only be permitted to obtain one license. At
around this time, Mohegan determined to focus on the western Massachusetts region, and in
particular, the Palmer Property.
10. In connection with its efforts to seek a license on which to operate a gaming facility on
the Palmer Property, MRM entered into two agreements with the Counterclaim Defendants: an
Exclusivity Agreement, executed by MRM, and Northeast Realty, Northeast Gaming, Northeast
Resorts, and Dragone on September 21, 2008 (the “Exclusivity Agreement”) and a Government
and Media Relations Agreement, executed by MRM, and Northeast Realty and Dragone on
October 21, 2008 (the “GMR Agreement”). At around the same time, MRM into a Ground
Lease, executed by MRM and Northeast Realty on October 21, 2008 (the “Ground Lease”), for
the lease of the Palmer Property on which Mohegan would build a gaming facility if it obtained a
license. True and correct copies of the Exclusivity Agreement, the GMR Agreement, and the
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Ground Lease (collectively, the “2008 Agreements”) are attached hereto as Exhibits A, B, and C,
respectively.
11. Dragone and the other Counterclaim Defendants were represented by counsel in
connection with the negotiation, drafting, and execution of the 2008 Agreements.
The Exclusivity Agreement
12. Because it was apparent to Mohegan that a law legalizing gaming in Massachusetts
would limit applicants to one license, and because Dragone had been promoting to Mohegan and
others both the Palmer Property and the New Bedford Property as potential sites for a gaming
facility, it was important that Dragone and the Northeast Entities be restricted in their ability to
pursue other gaming facilities in Massachusetts. Accordingly, Mohegan insisted that Dragone
enter into an agreement that both prevented him from competing against its efforts to obtain a
gaming license on the Palmer Property and required him to divest his interest in the New
Bedford Property.
13. To this end, the preamble to the Exclusivity Agreement acknowledged restrictions on
Counterclaim Defendants’ ability to develop or participate in the development of a competing
gaming facility other than on the Palmer Property:
WHEREAS, Dragone has agreed to limit his business activities so as not to
include certain activities associated with the development or operation of
prospective gaming facilities in the Commonwealth of Massachusetts, as more
particularly set forth in this Agreement.
14. Paragraph 2 of the Exclusivity Agreement contained a series of provisions effectuating
this goal and limiting Counterclaim Defendants competition against the Palmer Project.
Specifically, Counterclaims Defendants were prohibited from having any interest in land that
was being or was contemplated to be developed as a gaming facility in Massachusetts. Subject
to a limited exception in paragraph 3, Dragone was also further restricted from engaging or
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negotiating with anyone other than Mohegan regarding the development or operation of a
gaming facility in Massachusetts. Specifically, paragraph 2 expressly prohibited Counterclaim
Defendants from “solicit[ing], initiat[ing] or encourag[ing]” any proposals or offers concerning a
gaming facility in Massachusetts other than by Mohegan, and likewise, prohibited Counterclaim
Defendants from participating in any negotiations or in any way encouraging or assisting such
negotiations to the extent they concerned a gaming facility in Massachusetts other than the
Palmer Project. These restrictions applied not just to Dragone but to all of the Northeast Entities,
any family member of Dragone and any member, director, officer, manager, principal, partner or
shareholder of any of the Northeast Entities (collectively, the “Dragone Entities”), as well as any
employee, agent, or representative of any of the foregoing.
15. In addition to the broad prohibition on Counterclaim Defendants pursuing any gaming
interests in Massachusetts, the Exclusivity Agreement also addressed the New Bedford Property
that Dragone had previously promoted to Mohegan as a potential gaming site. Recognizing that
Dragone’s option to the New Bedford Property and his promotion of the same as a gaming
facility would constitute breach of the Exclusivity Agreement, paragraph 3 provided a means by
which the Northeast Entities could divest themselves of their interest in New Bedford within a
certain time period. To this end, the Northeast Entities could transfer their interest in or
ownership of the New Bedford Property to a third party without regard to the property’s
proposed use as a gaming facility only if the sale or transfer occurred prior to June 30, 2009 and
resulted in a complete divestiture of the rights of Dragone or any of the Dragone Entities. After
that date, however, if Dragone sold his interests in the New Bedford Property to a third party that
was pursuing that site as a potential gaming facility, such a transfer would be a breach of the
Exclusivity Agreement by Dragone.
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16. In paragraph 6 of the Exclusivity Agreement, the Counterclaim Defendants provided
further assurances of their cooperation, including that if any Dragone Entity acquired an interest
in other land in Massachusetts potentially suitable for development as a gaming facility,
“Dragone shall give notice to Mohegan of such acquisition and may be required to cause such
entity making such acquisition to become a signatory to this Agreement.”
17. The Exclusivity Agreement also contained a provision almost identical to paragraph 2
that restrained Mohegan’s ability to pursue a gaming license or a gaming development in
Massachusetts other than on the Palmer Property. In fact, the provisions restricting Mohegan
and the Northeast Entities mirror one another: any acts Mohegan cannot do, the Northeast
Entities cannot do.
18. Despite the restrictions on Mohegan in the Exclusivity Agreement, however, Mohegan
was permitted to terminate the Exclusivity Agreement if it decided to abandon the pursuit of a
gaming license for the Palmer Property. In contrast, the Northeast Entities had no right to
terminate the Exclusivity Agreement.
The Ground Lease
19. On October 21, 2008, MRM and Northeast Realty entered into a Ground Lease, under
which Northeast Realty, as landlord, leased the Palmer Property to MRM. The leased property is
the approximately 152-acre parcel of land in Palmer defined in the Ground Lease as the
“Premises” and described in Exhibit A to the Ground Lease.
20. The Ground Lease is extremely broad in the rights granted to MRM as tenant. MRM is
entitled to “use the Premises for any lawful purpose.” The Ground Lease additionally provides
MRM with rights and privileges “as if it owned the Premises in fee simple absolute.” Moreover,
in furtherance of MRM’s rights under the Ground Lease, Northeast Realty “covenants and agrees
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to cooperate . . . to enable Tenant to realize the rights and privileges associated with such
ownership.” Art. 1. That is, under the Ground Lease that Northeast Realty signed, MRM has the
ability to use the Palmer Property for a variety of purposes and uses, limited only by its
obligation to pay rent and comply with any applicable law, and has the right to Northeast
Realty’s full cooperation and support for any commercial use of the Palmer Property intended by
MRM, including assisting with any required zoning approvals and permitting. Given MRM’s
satisfaction of its obligation to pay rent, landlord Northeast Realty was to cooperate fully,
regardless of the property’s use by MRM.
21. The Ground Lease commenced on October 21, 2008 and continues for an initial term of
50 years. Art. 1. MRM, in its discretion, can extend the Ground Lease for an additional 25-year
term and a subsequent additional 24-year term. Art. 23.
22. In exchange for these rights, MRM is obligated to make the following payments of rent to
Northeast Realty: (a) $1,750,000 on the day the Ground Lease was signed; (b) monthly rent
payments of $70,833; (c) additional rent payments of (i) $250,000 on October 1, 2008, (ii)
$750,000 on January 2, 2009, (iii) $750,000 on July 1, 2009, and (iv) $2 million on November 1,
2010. These payments were all made. MRM is also obligated to pay all taxes, assessments and
other government charges (“Impositions”), and obtain at its cost insurance on the Premises for no
less than $5 million.
23. MRM also made loans to Northeast Realty in the aggregate original principal amount of
$625,000 and received promissory notes in return (the “Notes”). Upon information and belief,
these loans enabled Dragone and Northeast Realty to finance certain parts of the Palmer
Property. Under the Ground Lease, MRM is entitled to credit against its monthly rent
obligations certain obligations of Northeast Realty due under the Notes. Art. 2.
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24. The Ground Lease contemplated the development and operation of a gaming facility on
the Palmer Property. In the event that a gaming facility was opened on the Palmer Property, the
rental payments increased. Specifically, in such event, the Ground Lease provided for payments
to Northeast Realty as follows: (a) monthly rent payments of $366,917, with an annual
adjustment for inflation, plus (b) additional rent payments of (i) $2 million on the date on which
a gaming facility is opened on the Palmer Property (the “Opening Date”), (ii) $2 million on the
first anniversary of the Opening Date, and (iii) $2 million on the second anniversary of the
Opening Date. MRM further was obligated to continue to pay all Impositions and all insurance
payments.
25. In its sole and absolute discretion, with ninety (90) days advance written notice to
Northeast Realty, MRM can terminate the Ground Lease during a defined Termination Period,
which runs from July 31, 2010, through the earlier to occur of: (i) the day after MRM would be
awarded a license to operate a gaming facility on the Palmer Property and (ii) July 31, 2017.
MRM can also terminate the Ground Lease if, after gaming enabling legislation is passed in
Massachusetts, such legislation is “later suspended, repealed, rescinded, or otherwise amended to
the detriment of” MRM, subject to the same notice provision to Northeast Realty. Art. 10. By
contrast, the Ground Lease provides Northeast Realty with no termination rights other than for
non-payment of rent.
26. As of the date hereof, MRM has paid Northeast Realty over $10 million in rent and other
charges under the Ground Lease. MRM has continued to pay Northeast Realty timely all
required payments under the Ground Lease.
The Government and Media Relations Agreement
27. At the time that the parties entered into the Exclusivity Agreement and the Ground Lease,
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legislation legalizing destination gaming facilities in Massachusetts had not yet been enacted.
Nevertheless, support for such legislation was sufficiently advanced that the parties could
anticipate that, if gaming was legalized, there would be an extensive regulatory structure and
process for obtaining a license, including applications to a state-level commission and other
regulatory approvals, such as state and/or federal permits and local zoning or permitting
approvals. It was also anticipated that the number of available gaming licenses would be limited
and awarded through a competitive selection process.
28. In order to ensure that Mohegan’s efforts to pursue a gaming license in Palmer were
adequately protected, the parties entered into the GMR Agreement. Moreover, because the
proposed gaming legislation had not been enacted, Mohegan insisted that the GMR Agreement
provide that Mohegan was entitled to control the efforts with respect to such proposed
legislation.
29. The GMR Agreement covered the “lobbying, publicity and other government and media
relations activities” in connection with the Palmer Project. It also “recognize[d] that failure to
organize and coordinate such activities could materially and adversely affect the Palmer Project.”
30. The GMR Agreement delegated exclusive authority for various lobbying, publicity and
other government and media relations activities to an Executive Coordination Group (“ECG”)
consisting of the manager of MRM or his designee; an individual selected by Northeast Realty;
the Chief of Staff for External Affairs of the Mohegan Tribe or his designee; and, an individual
selected by MRM, who was designated the Palmer Project Coordinator. Arts. 1.1 and 2.1(a)(i).
In other words, three of the four members of the ECG were selected by Mohegan.
31. Under the GMR Agreement, the ECG directed all government and media relations
activities. The GMR Agreement expressly forbade unauthorized independent activity by
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members of the ECG, except as to the Project Coordinator or an individual specifically
designated by the ECG. Art. 2.1(a)(ii). At no point was Dragone or any of his representatives so
designated.
32. The Project Coordinator was initially Paul Brody, then an employee of MTGA.
Mohegan subsequently appointed J. Gary Luderitz, another MTGA employee, as the Project
Coordinator.
33. Pursuant to the GMR Agreement, the parties also established a State Government and
State Media Operations Team (“SGMT”) and a Western Massachusetts Media and Advocacy
Team (“WMAT”). Both operated “under the supervision” of the Project Coordinator and “under
the overall direction of the ECG.” The SGMT was tasked with building support for gaming
legislation, encouraging the creation of a western Massachusetts district that would benefit the
Palmer Project, developing support for the Palmer Project, and ensuring that the legislative and
administrative processes put in place were conducive to the Palmer Project. See GMR
Agreement, Exhibit A. The WMAT was responsible for expanding local and regional support for
the Palmer Project, developing local support for gaming enabling legislation and the Palmer
Project, coordinating a successful Palmer referendum and creating an environment for successful
local permitting. See GMR Agreement, Exhibit B.
34. In addition, the GMR Agreement expressly provided that any public relations, lobbying
or other consultants retained by Northeast Realty and Dragone would “at all times be subordinate
to the direction of the ECG,” and were prohibited from serving as spokespersons for the Palmer
Project. See Exhibits A and B. The GMR Agreement specifically identifies William Cass
(Dragone’s lobbyist at the Suffolk Group), Paul Robbins (his PR consultant at Paul Robbins
Associates, Inc.), and James St. Amand as persons whose activities were subordinate to the
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direction of the ECG. Id.
35. In Article III of the GMR Agreement, the parties agreed to treat information disclosed
and shared in the course of the GMR Agreement as confidential, and agreed that all such
confidential information would not be used for purposes outside the Palmer Project. These
confidentiality provisions survive any termination of the GMR Agreement.
36. As with the Exclusivity Agreement, Mohegan was permitted to terminate the GMR
Agreement if it decided to abandon the pursuit of a gaming license for the Palmer Property. In
contrast, Northeast Realty and Dragone had no right to terminate the GMR Agreement. See Art.
IV.
From the Beginning, Dragone Works against Mohegan’s Interests
37. From the outset, Dragone worked counter to Mohegan’s interests and in violation of the
2008 Agreements. For instance, after executing the GMR Agreement but before the gaming
legislation was passed, Dragone, either directly or through Cass, continued to lobby legislators
regarding potential gaming legislation. In one particularly egregious instance, Dragone, either
directly or through his consultants, lobbied legislators regarding the fee ownership provision in
House Bill 4619, resisting efforts by Mohegan to get the bill amended to have long-term leases
be the equivalent of fee ownership. If that provision had remained in its original form, MRM
would have been required to exercise its option in the Ground Lease to purchase the Palmer
Property or otherwise get Dragone to agree to amend the Ground Lease upon the award of a
license, thereby benefiting the Northeast Entities at the expense of Mohegan.
38. While the GMR Agreement contemplated coordination of Mohegan’s efforts in building
support for the Palmer Project, Dragone failed to follow the dictates of the GMR Agreement and
instead operated independently and without authorization, doing as he wished without regard for
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and to the detriment of the Palmer Project.
39. Mohegan expected that Dragone would leverage his network of contacts in Springfield,
Massachusetts to help build support for the Palmer Project. As the closest city to Palmer,
Springfield was the most important regional economy, and it was expected to provide crucial
early support for the Palmer Project and ultimately, serve as a key source of labor for a gaming
facility in Palmer. Ignoring Mohegan’s instructions, however, Dragone neglected his
acquaintances in Springfield and failed to engage Springfield in the Palmer Project. As a result,
some early supporters from Springfield withdrew from the Palmer Project, and in fact entered
into other gaming agreements, some in Springfield.
40. Springfield, led in part by its mayor, had initially been anti-gaming, but when Springfield
itself began to explore gaming possibilities, Dragone’s failure to secure the city’s support was
especially problematic. Moreover, when MGM moved into Springfield, Mohegan lost an
important source of urban regional support and gained a competitor for what would become the
Region B license. Notably, at around this time, Fitzgerald, Dragone’s longtime lawyer and
representative, who represented the Northeast Entities on the 2008 Agreements and the Palmer
Project, also left the Palmer Project in favor of the MGM project in Springfield, which, on
information and belief, could only occur with a waiver from the Northeast Entities.
41. In direct contravention of the restrictions placed on him in the GMR Agreement, Dragone
also sought to act as the face of the Palmer Project in the Town of Palmer, despite that he did not
have an equally large or influential network in Palmer as he did in Springfield. On information
and belief, Dragone independently engaged with members of the Town Council, including Paul
Burns, without the approval of the ECG or the Project Coordinator. What contacts Dragone
developed, however, were ultimately a hindrance to the Mohegan effort to secure a gaming
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license on the Palmer Property.
42. Dragone evidenced similar disregard for the Exclusivity Agreement in the period before
gaming legalization was passed. For instance, under the Exclusivity Agreement, the Northeast
Entities were obligated to divest themselves of their options to purchase the New Bedford
Property. On information and belief, after June 30, 2009, the Northeast Entities retained
ownership of those options. Moreover, on information and belief, even after selling the options,
the Northeast Entities retained an indirect interest in those properties.
43. By retaining an interest in the New Bedford Property, Dragone and the other Northeast
Entities violated the Exclusivity Agreement. Moreover, on information and belief, since June
30, 2009, Dragone or his representatives, either directly or indirectly, have promoted the New
Bedford Property in discussions with gaming companies other than Mohegan.
44. Mohegan instructed Dragone to stop promoting the New Bedford Property as a site for a
potential gaming facility, including by sending a written notice of default under the Exclusivity
Agreement for Dragone’s failure to divest himself of the New Bedford options and his choice to
continue shopping the New Bedford Property to other gaming companies. Nevertheless,
Dragone tried to use his retention of the New Bedford options as a bargaining chip in
negotiations with Mohegan concerning performance under the Ground Lease and the Exclusivity
Agreement.
45. On information and belief, Dragone or other Dragone Entities had either direct or indirect
interests in other sites being considered for gaming facilities prior to Mohegan’s termination of
the Exclusivity Agreement.
46. On information and belief, Dragone or other Dragone Entities had an indirect interest in
the MGM Springfield project prior to November 20, 2013. This explains in part Fitzgerald’s
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association with MGM Springfield.
47. On information and belief, Dragone or other Dragone Entities retain either a direct or
indirect interest in a possible casino development in New Bedford. The Commission may in the
future award a Region C license for southeastern Massachusetts. Hamel, the registered agent for
all the Northeast Entities, and Dragone’s attorney and advisor on a variety of matters, is an
officer and director of South Coast Casino Corp. (“South Coast”). On information and belief,
South Coast is a group of five land owners who seek to site a casino in New Bedford’s Hicks-
Logan neighborhood. In October 2013, Hamel stated he had “had contact” with potential
gaming operators, and as recently as March 2014, Hamel confirmed, “We’re still trying to get a
casino in New Bedford.”
Mohegan Works to Pass a Voter Referendum
48. On November 11, 2011, “An Act Establishing Expanded Gaming in the Commonwealth”
(the “Act”) became law in Massachusetts, amending Chapter 23K of the Massachusetts General
Laws. The Act established three regions in Massachusetts, within each of which up to one
gaming license can be awarded. In addition, one slots license can be awarded separately.
49. By November 2011, Mohegan had been in Palmer for about three years seeking to
generate support for gaming. Since 2009, Mohegan had maintained headquarters on Main Street,
a space that allowed it to grow its presence in Palmer in the years before passage of the gaming
legislation, meeting members of the community and building awareness of its proposed gaming
facility. During this period, Mohegan engaged in community meetings, and met with residents,
local business owners and town administrators. During this period, its government strategists,
O’Neill & Associates, tracked the progress of proposed legislation, as well as the associated
regulatory and administrative structures that would implement the legislation, so that Mohegan
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could react appropriately once such legislation was passed.
50. After passage of the Act, Mohegan moved to become a gaming license applicant,
including by securing a financing commitment from Brigade Capital Management for the Palmer
Project and by forming MSM, which would serve as the applicant to the Commission. The
Commission also established an application schedule, under which the first phase of a two-part
application (RFA-1) was due January 15, 2013 and the second phase (RFA-2) on December 31,
2013.
51. Under Section 15(13) of the Act, to contend for a license, an applicant for a gaming
license must sign a host community agreement and obtain a certified and binding favorable vote
on a ballot question in the host community. If the result of the vote is negative, then the
applicant cannot submit another application to the Gaming Commission again until at least 180
days after the negative vote, and only after signing a new host agreement with the community.
Accordingly, Mohegan work diligently on both fronts, working to reach and sign a host
community agreement with the Palmer Town Manager and preparing a campaign for a ballot
question on a gaming facility in Palmer.
52. On information and belief, Dragone, through his counsel, had direct contact with the
Commission during the pendency of and regarding Mohegan’s RFA-1 application, which
contacts were proscribed by the GMR Agreement and neither authorized by nor disclosed to
Mohegan.
53. The host community agreement was negotiated throughout 2012 and 2013. During that
period, Mohegan met with the Town Manager and members of the Town Council, and held
public meetings where it responded to resident and constituent concerns. Mohegan had
meetings and negotiations during this period, both with respect to negotiating a host community
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agreement and with regard to building public support for a gaming facility on the Palmer
Property. On August 29, 2013, Palmer and Mohegan signed the host community agreement (the
“Host Community Agreement”). Under the Host Community Agreement, Mohegan agreed to
make $15.2 million in annual mitigation payments to the Town of Palmer, as well as a $2.94
million upfront payment if Mohegan received a license for the Palmer Property. These payments
would be distributed to and appropriated by the town in its sole discretion. Having secured the
Host Community Agreement, Mohegan thereafter submitted its request for an election to the
Palmer Town Council. Its request was approved unanimously and the vote was set for
November 5, 2013.
54. While negotiation of the Host Community Agreement was ongoing, in the summer of
2013, Mohegan launched its campaign on a prospective ballot question to approve gaming in
Palmer. Mohegan hired Michael Vito of Michael Vito & Associates to direct its field operations
in preparation for the ballot question. Vito runs a successful government relations firm in
western Massachusetts and has significant experience in government, communications,
community relations and elections, including in connection with then-Senator John Kerry’s 2004
presidential campaign, where Vito ran the campaign’s successful effort in western New
Hampshire.
55. Vito engaged key area stakeholders, including local business and civic leaders, securing,
among others, the endorsement of the Palmer Chamber of Commerce and the Palmer Police
Department. Vito also formed a Mohegan campaign committee to anchor the local effort.
Comprised of respected, longstanding Palmer residents and leaders, the committee was chaired
by Elaine Boone, a former chair of the Town Council, and joined by David Whitney, a former
Palmer Public Schools teacher and current tax preparer, as treasurer.
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B4246006.8
56. Vito ran a vigorous ground campaign in support of the Palmer referendum. Where, at the
outset, Vito engaged in relationship building with local and area leaders, by the summer of 2013
when it appeared that a Host Community Agreement would be formalized, he began to focus on
voter outreach. Between his campaign staff and a number of grassroots volunteers--many of
whom were identified and organized by Mohegan--Vito organized phone banks, canvassing
efforts, events at the local community and senior centers, and other meetings and meet-and-
greets designed to engage with voters, with extensive social media support from Mohegan and its
public relations and advertising teams. In the two months leading up to the election, at the point
at which voter receptivity to messaging would be at its peak, the Mohegan campaign also
engaged in a substantial television, radio and print advertising buy for the Town of Palmer and
the surrounding areas. All told, Mohegan spent roughly $12 million on its public relations