NPRI's Transparency Project on the LVCVA: Detailed Report

By NPRI
  • Thursday, December 4, 2008

The Nevada Policy Research Institute has made the issue of government transparency a top priority in 2008, as the issue has grown in prominence nationally and as the need for more transparency here in Nevada has become clear.  

As a result of the issue's growing prominence, state-based think tanks all over the country – including NPRI – have been able to obtain national funding to pursue transparency initiatives at state and local levels.

The Las Vegas Convention & Visitors Authority is the recipient of approximately $227 million a year in hotel taxes generated in Clark County. The revenue is projected to increase to more than $305 million annually by 2012 as thousands of new hotel rooms are completed.

While the growth rate in tax collections will be tempered by the recession that is already impacting Las Vegas, the taxing mechanism is in place for the LVCVA to receive hundreds of millions of dollars in additional revenue over the next decade.

The hotel tax revenue dedicated to the LVCVA has triggered vigorous policy debate about whether a portion of future LVCVA revenue should be reallocated to other public uses. The ballot initiatives that were rejected by the Nevada Supreme Court on technical grounds are likely to be the first in a series of attempts to tap into this revenue.

Given the central role the LVCVA plays in Southern Nevada's economy, the Nevada Policy Research Institute decided to take a close look at the LVCVA's finances and operations. NPRI hired investigative reporter John Dougherty (InvestigativeMedia.com) to obtain and conduct an analysis of LVCVA internal records. Over the course of eight months, NPRI filed 16 public records requests seeking more than 60 different items. More than 10,000 pages of internal LVCVA documents have been reviewed, including line-item expenditures, internal audit reports and working papers, e-mails, travel expense reports, bonding documents and correspondence.

The investigation to date has focused exclusively on the acquisition and review of public documents. No interviews with LVCVA personnel have been conducted, beyond cursory discussions with LVCVA's attorney over the scope of the records requests. The LVCVA has provided most, but not all of the records requested. The LVCVA has not charged NPRI for the documents or for the time it has allocated to gathering, and in some cases, heavily redacting records.

LVCVA records that have been obtained reveal a pattern of extravagant spending, lax accounting, shoddy oversight and a disturbingly cozy relationship with major contractors. Internal LVCVA documents also raise serious doubt about the overall effectiveness of the $123 million-a-year advertising and marketing campaign. There is also evidence that state "Ethics in Government" laws have been violated on several occasions, and there is evidence of violations of the Advertising Agreement between R&R Partners and the LVCVA.

The LVCVA is a political subdivision of Clark County but operates as if it is a Fortune 500 corporation. LVCVA top officers travel in first-class luxury and its president, Mr. Rossi Ralenkotter, is paid $320,000 in salary and bonus incentives. State and county travel regulations require employees to minimize travel costs – a policy that is ignored by the LVCVA for its top executives. For example, LVCVA Vice President of Marketing Terry Jicinsky in April spent more than $11,500 for a weeklong trip to Dubai, including $9,000 in first-class airfare.#

Mr. Ralenkotter also enjoys frequent first-class travel, including a trip last spring to Maui. Of greater concern is Mr. Ralenkotter's willingness to accept free travel from companies that have business with the LVCVA. For example, Mr. Ralenkotter may have accepted airfare and hotel expenses from HNTB, a Kansas City design and construction company that has a contract to remodel the convention center. Accepting travel expenses from a company that has business with a public agency violates the state Ethics in Government law.

Extravagant spending and cozy relationships with contractors set the stage for more serious issues, particularly in the LVCVA's relationship with its largest subcontractor, R&R Partners. The powerful public affairs and advertising firm has received $398 million from the LVCVA over the last five fiscal years. R&R Partners' five-year contract expires June 30, 2009. The contract can be extended by five years on written approval by the LVCVA prior to March 1, 2009. R&R Partners has had the LVCVA advertising contract since 1980.

R&R Partners is the largest non-governmental beneficiary from the room tax. The LVCVA will pay R&R Partners approximately $87 million in FY2009 for its advertising campaign and other services. This is equal to the combined room tax revenue received by Clark County, Las Vegas, Boulder City, Henderson, North Las Vegas and Mesquite and significantly more than the $76 million received by the Clark County School District. A September 2007 LVCVA internal audit discovered R&R Partners breached its contract by having a subsidiary, R&R Live, bill the LVCVA outside of the terms of R&R Partners' 1999 agreement. The internal audit found widespread billing problems and concluded that R&R Live was operating without oversight. The LVCVA did not expand the audit to determine how much money R&R Live had overcharged the LVCVA since it was founded in 2000.

The failure to review R&R Live's billing practices is not surprising given the overall relationship between the LVCVA and R&R Partners. The LVCVA appears to have turned over the keys to the safe to R&R Partners. Indeed, literally, the LVCVA provided the rubber stamp of its finance director to R&R Partners to approve expenses above $500 without review by the LVCVA – another violation of the LVCVA's contract with R&R Partners.

Mr. Ralenkotter has also steered questionable work to R&R Live – work that could have been handled in-house. For example, Mr. Ralenkotter had R&R Live prepare his comments and a presentation to the LVCVA board of directors at a cost of nearly $142,000.

The LVCVA has also quietly entered into no-bid contracts for R&R Partners to provide a host of additional services paid through a monthly retainer that has nearly doubled since 2000 to $46,000. Meanwhile, William Vassiliadis, R&R Partners CEO, is steering millions of dollars of LVCVA-related business, including television advertisement production, to a company he owns called Airwave Productions. In December 2005, the LVCVA issued a $424,130 payment to R&R Partners based on a one-page invoice submitted by Airwave Productions seeking "Partial Advance Billing."

The troublesome nature of the intertwined relationship between LVCVA executives and subcontractors, particularly R&R Partners, is amplified by the extraordinary contract between R&R Partners and its largest subcontractor, Initiative Worldwide Media. This relationship appears to be in direct violation of the Advertising Agreement between the LVCVA and R&R Partners because of its secretive nature.

R&R Partners pays IWM approximately $40 million a year to purchase airtime on broadcast and cable television and radio stations. R&R Partners adds a 17.65 percent commission to IWM's cost when R&R Partners submits its invoice to the LVCVA. The troublesome part of this scenario is that IWM redacts its actual costs on invoices provided to LVCVA, making it impossible for LVCVA to know if R&R Partners is properly charging its commission.

Section 3.07 of the Advertising Agreement requires that "copies of all outside production invoices to Agency will accompany the bill to the Client. Each invoice will itemize time spent and charged during the month by agency function, media cost, production cost, taxes and all other items being charged against each project."

In addition, R&R Partners has other corporate clients that do business with IWM, posing a potential conflict of interest for R&R Partners when it represents the LVCVA's interests with IWM.

Properly charging commissions on invoices submitted to the LVCVA has been an ongoing problem for R&R Partners. LVCVA internal auditors discovered that R&R had been overcharging commissions for outdoor advertising – for years. R&R Partners was using the improper commission rate – a higher rate that had been lowered – and was basing the commission on gross rather than net. It is unknown how much money R&R Partners overcharged the LVCVA.

NPRI's review of the 2007 LVCVA internal audit of R&R Partners discovered problems with the audit itself. The audit stated it took a sample of R&R Partners' invoices greater than $500,000 from July 2005 through mid-March 2006. However, NPRI discovered that the audit excluded invoices from mid-December through mid-January. The LVCVA on Nov. 21 provided documentation of $978,000 in billings for December 2005 in response to NPRI public records request. The documentation included Airwave Productions' $424,130 invoice for future work cited above.

Problems at the LVCVA extend beyond its relationship with R&R Partners. The LVCVA's decision to purchase commercial real estate in 2006 and 2007 at the height of the real estate market raises questions of judgment. But setting aside the crystal ball on the direction of real estate values, there is clear evidence that the LVCVA paid well above market value on at least two purchases, including a $50 million deal to buy property that had sold for $33 million 18 months earlier.

In addition to the free trips and expensive travel cited above, Mr. Ralenkotter also appears to have used LVCVA funds for a banquet that had no direct connection to the LVCVA beyond bestowing an honor on Mr. Ralenkotter. A Denver research hospital selected Mr. Ralenkotter as the 2008 "Humanitarian" of the year.

The annual award is used as an excuse to host a fundraising dinner for the hospital, which included a Las Vegas showgirl paid for by the LVCVA. Mr. Ralenkotter used thousands of dollars of LVCVA funds to prepare for the dinner and allocated $25,000 in LVCVA funds as a sponsor for the event that benefited an out-of-state organization. At the very least this appears to be a serious ethical lapse, if not a violation of the state Ethics in Government law.

There also is evidence the LVCVA board of directors held a meeting outside of normally posted public meetings when a conference call was scheduled in March to discuss the hotel tax initiatives. Mr. Ralenkotter invited six of the 14 board members as well as one alternate to participate in the March 20 conference call. The LVCVA has not provided records related to who participated in the call and what was discussed.*

Finally, there is substantial evidence that the LVCVA's much ballyhooed marketing campaign (What Happens Here, Stays Here) has had little impact on increasing tourism to Las Vegas. While the slogan has gained national fame, R&R Partners' internal monthly tracking surveys show it has had virtually no impact since 2005 – and in fact, appears to leave more people with a negative impression of Las Vegas than a positive one.

The findings above need to be placed in the overall context of the LVCVA's spending. The LVCVA spent $123 million on marketing and advertising in FY 2008, approximately 40 percent of its budget. Of this, $87.2 million was funneled through R&R Partners. LVCVA's operation of the convention center and the Cashman Center accounts for only 16 percent of the LVCVA's expenditures at $45.2 million.

Declining revenue projections have already forced the LVCVA to scale back its $890 million remodeling project for the convention center. The LVCVA has also been forced to curtail capital projects because of the impact of the $300 million in state transportation projects the LVCVA must fund at a rate of about $20 million a year.

A detailed outline of NPRI's major findings follows this introduction. Each chapter of the outline is supported by links to documentation obtained from the LVCVA. The outline and records provide a solid foundation to continue an investigation into the LVCVA's operations.

The inquiry could profitably be expanded to look at the relationships between R&R Partners and the municipalities that also receive funding from the room tax. That would allow the public to more fully understand the political structure that now controls the collection and allocation of a tax that will soon reach $500 million a year.


 

Section One:
LVCVA’s Relationship with R&R Partners
 

1.                 LVCVA Audit uncovers breach of contract
2.                 Secret contract with major media buyer
3.                 R&R rubber stamps expenses, literally
4.                 Side agreement with Billy V’s company
5.                 Ralenkotter steers $150k project to R&R Live
6.                 $46,000/month consulting retainer
7.                 Audit misses at least $1.5 million in R&R billings
8.                 Overcharging for outdoor advertising


 

Section Two:
LVCVA Operational Issues
 

1.                 $60 million in land deals as market peaks
2.                 Free trips, Dubai and Shanghai
3.                 Humanitarian spends lavishly on his award
4.                 Calling the board into secret session
5.                 Who needs studies on how we’re doing?
6.                 What is not going on here, stays here


 

Section Three:
NPRI’s Public Records Requests

A look at the record


Section Four:
About Investigative Media

John Dougherty's resume


NOTE:  By clicking any of the blue links below, you can access supporting documentation for that particular itemized topic. 


Section One
LVCVA’s relationship with R&R Partners

1. LVCVA Internal Audit Department’s September 12, 2007 report on the “R&R Advertising Agreement” finds that R&R Partners subsidiary, R&R Live, operated for more than seven years in “breach of contract”.

R&R Live submitted bills to the LVCVA outside the terms of the May 11, 1999 Advertising Agreement between LVCVA and R&R Partners. The advertising agreement was entered into between the authority and R&R Advertising or any related company or subsidiary. R&R Live is two-thirds owned by R&R Partners and one-third by Julie Gilday-Shaffer.

The LVCVA internal audit report concludes that the breach in the contract constitutes an “actual or likely violation of laws, regulations or control deficiencies that could result in significant loss to the Authority or result in bad publicity.” R&R Live violated numerous provisions of the Advertising Agreement and operated without LVCVA oversight. The audit found: 

    R&R Live services and rates were not included in the advertising agreement.

    Commissions were charged on “estimated” cost of an event, not the actual cost of the event.

    Commissions ranged from 17.65 percent to 1,505 percent in the four R&R Live events that were audited by the LVCVA.

    R&R Live charged a commission on travel of 17.65 percent. Under the R&R Partners’ advertising contract, no commission is to be charged for travel. 

    The daily rates for R&R Live personnel ranged from $286 to $1,144 and were not approved by the LVCVA. The majority of the daily rates exceeded the $70/hour rate normally charged by R&R Partners.

    R&R Partners approved R&R Live events. No evidence of LVCVA written approval of R&R Live events could be located.

    The LVCVA did not receive detailed backup of R&R Live invoices. In one instance, after reviewing the backup information, it was determined R&R Live had overcharged the LVCVA. 

    LVCVA finance director Sue Covey approved R&R Live expenses exceeding $5,000, which is beyond her authority.

Despite the history of at least six years of contract violations, LVCVA did not conduct a complete audit of R&R Live billings to determine how much LVCVA had been overcharged since R&R Live was created in 2000.  

    Beginning on July 1, 2007, LVCVA and R&R Partners agreed to process R&R Live hourly staff costs in accordance with the Advertising Agreement.

 

    LVCVA and R&R Partners agreed that R&R Live expenses for “hard costs” and productions charges would have a 17.65 percent markup – the same markup charged by R&R Partners.

 

    Backup of R&R Live invoices should be provided to LVCVA.

 

2. R&R Partners has a confidential contract with its largest subcontractor, Initiative Worldwide Media, which bills R&R approximately $40 million a year for the purchase of broadcast advertising. Initiative Worldwide Media does not disclose the cost of its media buys to R&R and the LVCVA, making it impossible to determine the amount on which R&R basis its 17.65 percent commission on bills submitted to LVCVA. 

The omission of IWM’s media buys is in direct conflict with Section 3.07 of the Advertising Agreement between R&R and LVCVA. This section states “copies of all outside production invoices to the Agency (R&R) will accompany the bill to the Client (LVCVA). Each invoice will itemize time spent and charged during the month by agency function, media cost, production cost, taxes and all other items being charged against the project.”

Initiative Worldwide Media purchases domestic network and cable television and radio advertising time for R&R Partners. IWM is R&R Partners’ largest subcontractor, purchasing between $2 million and $4 million/month in advertising time. R&R Partners charges LVCVA a 17.65 percent commission on IWM’s media buys. 

According to LVCVA internal auditor’s working documents obtained by NPRI through the Nevada Public Records Law, the contract between R&R Partners and Initiative is proprietary. IWM does not disclose the amount it pays to purchase advertising time on radio and television stations on its invoices submitted to R&R Partners. Nor is this information disclosed to LVCVA when R&R Partners submits its invoice. R&R Partners is paid a commission based on the value of IWM advertising buys. 

Since R&R Partners charges LVCVA a negotiated rate with IWM plus a 17.65 percent commission, R&R Partners has a disincentive to make sure it has negotiated the lowest market rate. In addition, since R&R Partners has a proprietary contract with IWM for other clients, there is also the possibility that R&R Partners could shift higher costs to the LVCVA in exchange for more favorable terms with IWM for non-LVCVA clients.

Internal LVCVA audit department documents show: 

   May 11, 2006: LVCVA finance director Sue Covey sends an e-mail to LVCVA internal auditors concerning her discussions with R&R Partners’ billing supervisor, Kristi Larsen. “I asked her about the IWM billing amounts that are whited out.”

 

 Ms. Larsen replies, stating IWM “has been doing this for years. Basically, due to their confidential disclosure, they are able to keep LVCVA from knowing what they are paying the station.”

 

In the same e-mail, Ms. Covey notes: “On the other hand, our international media buyer, CARAT, does disclose their fees.”

 

    July 7, 2006: LVCVA auditors meet with R&R Partners billing personnel and tell R&R Partners they want to know why there is a “lack of disclosure from the stations on Initiative’s bills.”

 

    July 31, 2006: Steve Jaffe, R&R Partners director of media, sends an e-mail to the LVCVA’s Ms. Covey stating that he has met with LVCVA senior audit manager Jon Reese to discuss “the non-disclosure contract with Initiative.”

 

    Aug. 22, 2006: Jim King, R&R Partners chief financial officer, states in a letter to Mr. Reese in reference to R&R Partners’ contract with Initiative Worldwide Media: “I respectfully request that this document be kept confidential. As you know our negotiated rates with Initiative are proprietary and this agreement is not exclusive to the LVCVA but applies to our overall relationship with Initiative.” (Emphasis added)

 

    Aug. 22, 2006: LVCVA auditor Reese reviews the contract between R&R Partners and Initiative Media and then shreds the document.

 

    Internal audit’s summary of the Initiative Worldwide Media/R&R Partners relationship states:

 

a.   Initiative does not disclose rates (it negotiates with broadcasters) on the individual invoices. That is why the company “white(s) out” the rates.

 

b.   R&R Partners is allowed to audit Initiative if they so choose. LVCVA auditors do not state if they asked R&R when was the last time it audited Initiative.

 

c.   In order to ensure that Initiative is charging competitive rates, R&R Partners may perform “shadow buys” where it obtains rates for the same media buys previously placed by Initiative. R&R Partners could not state how often it conducts “shadow buys” nor did it know the last time the company actually conducted a shadow buy to monitor Initiative.

 

d.   R&R Partners passes “whited out” IWM invoices through to the LVCVA, adding a 17.65 percent markup. The LVCVA has no independent means of auditing IWM invoices to determine whether R&R Partners is accurately calculating its 17.65 percent markup.

 

e.   After determining advertising strategy, R&R Partners negotiates rates with IWM and IWM in turns negotiates rates with networks.

NOTE:  Redacted IWM invoices for broadcast television and radio for November 2005 are included in file. NPRI has redacted IWM invoices from July 1, 2005-March 15, 2006.


3. R&R Partners approved expenses above $500 charged to the LVCVA with a “rubber stamp” provided by LVCVA.   

The Advertising Agreement required expenses for printing contracts, postage, travel expenses, delivery and entertainment expenses above $500 to be pre-approved by the LVCVA.  

    For an unknown period, R&R Partners was provided a rubber stamp bearing LVCVA finance director Sue Covey’s signature to approve expenses. LVCVA auditors discovered that Covey’s rubber stamp had been given to R&R Partners during the 2007 audit.

 

    R&R Partners’ use of the rubber stamp gave “the appearance that…expenses over $500 were pre-approved when they really were not,” LVCVA internal auditors stated.

 

    Despite the finding, the LVCVA did not conduct an additional audit to determine the magnitude, type and frequency of expenses that were charged using the LVCVA rubber stamp.

 

4. Airwave Productions produces television and radio commercials for R&R Partners. Airwave is 100 percent owned by William Vassiliadis, R&R Partners CEO. There is no contract between LVCVA and Airwave Productions. Airwave has submitted invoices for more than $2 million to R&R Partners for work paid for by the LVCVA.  

R&R Partners subcontracts to Airwave for certain production work. In some cases, Airwave hires third parties to do the work, and charges R&R Partners a commission on outside work.

 

    Airwave billed R&R Partners $2.44 million for production work between Dec. 13, 2004 and March 30, 2005 for “What Goes on Here Stays Here” commercials. (Records to determine how much R&R Partners charged LVCVA still needed.)

 

    Airwave subcontracts work to other vendors and then charges a commission that is passed through to R&R Partners and the LVCVA. For example, Airwave hired Laguna Productions and Transfer West for video dubbing in May 2005. The companies charged Airwave $6,325. Airwave added a $1,014 commission and invoiced R&R Partners at a total of $7,339. (R&R Partners invoice to LVCVA still needed.)

 

    Airwave billed R&R Partners for $42,502 for various projects between Sept. 29, 2004 and May 26, 2005. No detailed backup invoices could be found in records released by the LVCVA.

 

    Airwave submitted a one-page invoice for $424,130 to the LVCVA on Oct. 24, 2005 for work related to producing ads for the “Alibi” advertising campaign. The invoice notes the payment is for a “Partial Advance Billing.” The invoice does not include any itemized accounting for what work was done, or in this case, will be done – all of which appears to be in violation of Section 3.07 of the Advertising Agreement. (In addition, this invoice was approved on October 25, 2005, but was not paid until December 2005 when the LVCVA paid R&R $978,693. For an unexplained reason, the December 2005 payment was not included in the LVCVA audit of payments in excess of $500,000 to R&R for the period between July 2005 and March 2006. See Section 7 below.)

 

    Airwave also submitted a one-page invoice for about $1.2 million on Nov. 21, 2005, again as a “Partial Advance Billing” for production on the “What Happens Here, Stays Here” campaign.

5. Rather than prepare a 2005 LVCVA annual report internally, LVCVA President Rossi Ralenkotter hired R&R Live to prepare his “Vision Presentation” to the LVCVA board.  

LVCVA paid R&R Live $141,735 to prepare 1,000 brochures and produce a live presentation of Mr. Ralenkotter’s Five–Year Vision for the LVCVA.

    June 27, 2005: R&R Live submitted a one-page invoice for $98,800 in connection with Mr. Ralenkotter’s LVCVA Five-Year presentation.

 

    The charges include $23,155 for creative director, $13,440 for Producer, $29,315 for Special Media, $18,648 for general AV equipment and $7,624 for sets and scenery.

 

    June 27, 2005: R&R Live submitted another invoice for $42,935 for brochures entitled “Leave Behind 04”.

 

    The invoice for 323 hours of work at $70/hour included: $14,280 for computer composition and $5,302 for air direction. Las Vegas Color Graphics was paid $15,887 for 1,000 copies of the 56-page brochure. R&R Live billed LVCVA an additional $2,804 commission for the copies.

6. Advertising Agreement includes provision for additional no-bid services to be provided by R&R Partners through a monthly retainer. The monthly retainer has increased from $26,000 in 2000 to $46,000 in 2007.

According to LVCVA records, R&R Partners and LVCVA reached a side agreement on Sept. 27, 2000 under which R&R Partners would receive retainers worth approximately $26,000/month.

    Las Vegas Destination Public Relations: $10,000 

    Laughlin Public Relations: $3,500 

    Mesquite Public Relations: $2,000

 

    Research Retainer: $3,800

 

    Special Event Public Relations for Las Vegas: $4,200

 

    Special Event Public Relations Laughlin: $2,500

 

The monthly retainers are renewed each year and steadily increased. By July 3, 2007 retainers totaled $46,000/month.

    Las Vegas Public Relations: $22,000

 

    International Public Relations: $5,000

 

    Laughlin Public Relations: $3,500

 

    Mesquite Public Relations: $1,000

 

    Laughlin Public Relations: $2,500

 

    Research Retainer: $6,000

 

    Digital Marketing Services retainer: $6,000.

August 24, 2005: The LVCVA and R&R Partners’ annual agreement to extend retainers and increase certain fees is not signed by Mr. Ralenkotter. 

Unlike R&R Live, where no formal business agreement existed prior to July 2007, R&R Partners on March 12, 2003  requested to add digital retouching, assembling and proofing services as part of a new department called R&R Pre-media. LVCVA approved the new services and fixed rates.

7. Internal Audit Report of R&R Advertising Agreement failed to include R&R billings above $500,000 from Dec. 19, 2005=-Jan. 9, 2006. Records obtained from that period show lack of documentation for more than $1.5 million paid to R&R Partners.   

LVCVA auditors stated that they “tested a sample of R&R Partners invoices paid with checks issued from July 1, 2005 through March 10, 2006.” NPRI obtained copies of thousands of pages of invoices.

A complete review of these invoices revealed that the LVCVA audit department failed to include R&R Partners invoices from Dec. 12, 2005-Jan. 16, 2006 in its review. (See page 37 of “LVCVA Accounts Payable Audit” pdf in supplemental documentation.) 

NRPI filed a public records request on Aug. 8, 2008 seeking R&R Partners’ invoices and supporting documents from Dec. 13, 2005 through Jan. 15, 2006, the period in which no R&R Partners invoices were sampled. 

The LVCVA delivered records that were, in part, responsive to this request on Sept. 5, 2008. The records released were heavily redacted and did not include individual invoices documenting R&R Partners expenses for more than $1.6 million. The records also did not include LVCVA approval documentation for several of the checks, including several of unknown value.

The following summary breaks down LVCVA payments to R&R Partners that were not included in the audit sample but provided to NPRI in response to a public records request. Many of the payment records lack typical documentation, are heavily redacted and depart from the normal payment procedures that NPRI documented in the other months of the audit.  

1. LVCVA Checks 44216 and 44217

 

a. On Dec. 30, 2005 the LVCVA issued an Electronic Funds Transfer (EFT) for checks 44216 and 44217.

b. R&R Partners submitted a itemized list of invoices worth $63,957.

 

c. There is no supporting documentation for each itemized invoice. Normally, R&R submits invoices for each line item that provide detail of when the work was done, whether it was done in-house or subcontracted, and the value of the work.

 

d. There is no record of approval of the payment by LVCVA officials.

 

e.   Since the total amount is less than the audit sample size of greater than $500,000, this invoice would have not been included in the audit. However, the lack of documentation for the payment is problematic.

In late November , the LVCVA provided additional documentation and invoices in connection with the issuance of a $978,693 check dated Jan. 4, 2006. 

a.       Records indicate that the LVCVA received a $29,356 credit from R&R Partners related to the purchase of jackets for the Las Vegas Bowl. The jackets were purchased without going through a formal bidding process.

8. R&R Partners Overcharges LVCVA for Outdoor Advertising  

R&R Partners was charging an incorrect commission rate on outdoor advertising as well as basing the commission on the gross billing rather than the net billing. Auditors found $35,000 worth of overpayments on six invoices during a nine-month period.

 

    On July 1, 1999 the commission rate charged by R&R Partners for outdoor advertising dropped to 15 percent from 16.67 percent.

  

    After finding improper commission rates charged during the July 2005-March 2006 audit period, LVCVA internal auditors asked LVCVA senior management to determine whether the audit should be extended back in time to determine the total amount of overpayments.

“It is possible that these overpayments have been occurring since 1999,” LVCVA internal auditor Adam Pennell stated in an Oct. 11, 2006 memorandum to Jim Gans, LVCVA senior vice president of operations. Mr. Pennell requested a response by Oct. 18, 2006. 

    An Oct. 23, 2006 audit report states that senior management directed audit staff to review commission payments on all outdoor advertising to July 1999. “Further action will be predicated on the results of the review.”

 

    LVCVA has not produced additional records that detail what, if any, ‘further action’ was taken.


Section Two
LVCVA Operational Issues 
 

1. Purchases of more than $60 million in real estate at above-market prices at a time when the commercial real estate market was peaking.  

In 2006 and 2007 the LVCVA purchased two parcels south and east of the convention center at prices well above market value.  

In November 2007, the LVCVA paid $48 million for the Blue Harbor Apartment Complex, $14 million more than when the bulk of the property was previously sold in May 2006.

The LVCVA sold a $51 million bond to purchase the property that will increase the cost, with interest, to $95.3 million. The property was purchased to provide a staging area for construction at the convention center, which has now been delayed and scaled back.

In the second instance, the LVCVA paid $3.77 million more for a parcel in February 2006 than it did for an adjacent parcel of nearly the same size four months earlier. The February 2006 purchase generated a $4.62 million windfall to the property owner, who held the land for only 10 months.

Blue Harbor Apartment Complex (162-15-201-012, 020, 016, 024): 

    May 3, 2006: Las Vegas real estate broker Sam Ventura purchases the eight-acre Blue Harbor Apartment Complex at 3380 Swenson Street for $33 million. (162-15-201-012, 020)

 

    Aug. 7, 2007: Mr. Ventura and a limited partnership purchase an adjacent .44-acre parcel for $1.3 million. (162-15-201-016, 014)

 

    Aug. 16, 2007: Mr. Ventura obtains an appraisal stating the joint property is worth $55.15 million.

 

    Sept. 11, 2007: the LVCVA board of directors authorizes the purchase of both parcels for $50 million.

 

    Sept. 11, 2007: The LVCVA board approves issuing a $51 million, tax-exempt revenue bond to pay for the property.

 

    Nov. 1, 2007: LVCVA President Rossi Ralenkotter signs a purchase agreement for the eight-acre parcel for $45.44 million, a 38 percent increase, ($12.44 million increase) in the price of the land from May 2006. The affidavit of value attached to the deed and filed with the Clark County Assessor does not disclose the sales price. The sales price is obtained through a public records request to the LVCVA for the sales contract.

 

    Nov. 1, 2007: Mr. Ralenkotter signs a purchase agreement for the .44-acre parcel for $2.56 million, a 97 percent increase over the sales price ($1.3 million) of the land less than three months earlier in August 2007. The affidavit of value does not disclose the sales price. The sales price is obtained through a public records request to the LVCVA for the sales contract.

 

    Nov. 1, 2007: Mr. Ralenkotter signs a $1.88 million demolition agreement with Mr. Ventura to raze the property.

 

    The total cost to acquire the property and clear the site is $49.88 million. The total cost to purchase the property, with interest on bonds payable through 2039, is $95.292 million.

 

    November 2007: Leading econometrics groups issue reports indicating that commercial real estate values began to decline in the third quarter, indicating that the LVCVA made the $50 million deal at the peak of the market.

 

The LVCVA purchased 454 Sierra Vista Drive (162-15-101-020) for $3.77 million more than an adjacent lot of equal size at 486 Sierra Vista Drive (162-15-101-021).

The $10.87 million appraisal for 454 Sierra Vista was completed only six weeks after the LVCVA agreed to purchase 486 Sierra Vista for $7.1 million. 

    April 15, 2005: San Diego real estate partnership led by Mr. Craig Ruben purchases a 1.55-acre property at 454 Sierra Vista Drive that includes a fully depreciated 76-unit apartment complex for $6.25 million. (162-15-101-020).

 

    April 22, 2005: Joel Laub & Associates obtains an appraisal on a 1.42-acre lot at 486 Sierra Vista Drive that included a 32-unit apartment complex for $7.1 million.

 

    July 12, 2005: LVCVA board agrees to acquire 486 Sierra Vista Drive for $7.1 million. The appraisal is based on the value of the underlying property.

 

    Sept. 30, 2005: Mr. Ruben obtains an appraisal stating 454 Sierra Vista Drive is worth $10.87 million. The appraisal is based on the value of the underlying property.

 

    Oct. 6, 2005: the LVCVA purchases 486 Sierra Vista Drive for $7.1 million.

 

    Dec. 13, 2005: The LVCVA board agrees to purchase 454 Sierra Vista Drive for up to $10.87 million.

 

    Feb. 28, 2006: The LVCVA purchases 454 Sierra Vista Drive for $10.87 million, a $4.62 million profit for Mr. Ruben in 10 months.

 

2. Travel expenses exceed the guidelines of other state and county agencies and on several occasions appear to violate the state “Ethics in Government” law (NRS 281A.400).

LVCVA administrative staff including President Rossi Ralenkotter, Senior Vice President for Marketing Terry Jicinsky, and staff attorney Luke Puschnig fly first-class and stay in high-end hotels, greatly increasing travel costs for the LVCVA.

The Clark County Commission created the LVCVA in 1955 under a state statute. The LVCVA has a 14-member board made up of public and private members.

Clark County code 2.45.020 (a) states “it is the policy of the board of county commissioners that travel costs be kept to an absolute minimum consistent with the effective conduct of county business.” 

In addition, Mr. Ralenkotter, and possibly other LVCVA executives, may be considered to be “public officers” under the state Government and Ethics law (NRS 281A.160). As such, Mr. Ralenkotter appears to have violated the act by accepting travel-related expenses from businesses that have contracts with the LVCVA or receive LVCVA sponsorship. 

The LVCVA provided NPRI copies of travel expense reports for its four top executives for FY08.         

The LVCVA travel and lodging expense for FY07 was $1.437 million and the budget for FY08 was $1.861 million. The entertainment expense for FY07 was $1.27 million while the budget for FY08 was $1.1 million.

Mr. Jicinsky's FY08 travel expenses included a weeklong trip to Dubai that included first-class airfare or more than $9,400.  Jicinsky also incurred significant expenses on trips to Montreal and China ($9,500 RT) and Washington, D.C., and in-town dinner expenses of more than $500. #     

    July 17, 2007: Pittsburgh, $1,923 RT. Four nights in $176/night hotel. Total: $3,166.

    Aug. 4, 2007: Beijing, China, $9,500 RT (US dollars) including Las Vegas to Montreal leg with return from Shanghai. Two nights in $1,552/night Beijing hotel. (Chinese currency.) #

    Aug. 7, 2007: Shanghai, China, $1,906 one-way flight from Beijing to Shanghai and three nights in a $1,480/night Shanghai hotel. (Both Chinese currency.) #

    Sept. 25, 2007: Washington, $2,620 RT. Two nights in $629/night hotel. Total: $4,387.  

    Dec. 3-5, 2007: Montreal, $3,079 RT. Two nights in $279/night hotel; one night in $307/night hotel. Total $4,240.

 

    March 12-13, 2008: Chicago, $2,385 RT. One night in $560/night hotel. Total: $3,148.

 

    March 17, 2008: Las Vegas, dinner at Hank’s Steakhouse with Neil Mullanophy, VP Sales, GES Expo Services: Total: $317.22

    April 8-13, 2008: Chicago, $1,674 RT. Three nights in a $287/night hotel. Total: $3,292. 

    April 15, 2008: Las Vegas, dinner at Corsa with three others to plan Travel Weekly Las Vegas Summit: Total: $541.71 

    April 17-23, 2008: Dubai, UAE, $9,447 RT (US dollars). Five nights in a $2,146/night hotel (Dubai currency). #

Mr. Ralenkotter’s travel expenses include several trips to Washington, D.C., and to Maui, Orlando and New York. In at least two instances LVCVA clients appear to have paid for substantial expenses including airfare and/or hotels. Acceptance of expenses from companies or individuals having business with the LVCVA appears to be a violation of state law.

NRS 281A.400 (4). A public officer or employee shall not accept any salary, retainer, augmentation, expense allowance or other compensation from any private source for the performance of his duties as a public officer or employee. 

    July 19-21, 2007: Pittsburgh, $1,927 RT. Two nights in $176.90/night hotel. Total: $2,396. 

    July 25-28, 2007: Williamsburg, Va., $1,801 RT. Three nights in a $253/night hotel. Total: $2,988. 

    Sept. 25-27, 2007: Washington, $1,633 RT. Three nights in a $629/night hotel. In addition, there are charges of $1,290 on September 26 and $1,525 on September 27 for “other transportation” charges. Total: $6,114. 

    Oct. 10-12, 2007: Kansas City: Airfare and hotel expenses may have been paid by LVCVA subcontractor HNTB for meetings about expansion of the convention center. Mr. Ralenkotter only paid for parking and meals on two of the three days he was in Kansas City while indicating "N/C" for airfare and hotel expenses on his expense report.

     Nov. 30-Dec. 1, 2007: New York, $2,863 RT. Hotel, meals and expenses paid by unknown client, possibly NASCAR. Attending NASCAR Awards Banquet. LVCVA sponsors NASCAR events in Las Vegas. Total: $2,863. 

    Feb. 2-7, 2008: Washington, $2,451 RT. Two nights, Feb. 5 & 6, in $456/night hotel. No hotel expenses listed for Feb. 2, 3 & 4. Possible improper expense. Total Expenses: $3,694.

     Feb. 12-13, 2008: Orlando, $1,539 RT for NAHB Welcome speech. No other expenses. Lodging paid by unknown entity. 

    Feb. 21-24, 2008: Maui, $2,830 RT. Three nights in $50/night lodging. Total: $2,830. Possible lodging subsidy. This trip was part of a Wendy’s Corporate promotion in conjunction with ESPN, the latter of which is a major LVCVA client. 

    March 31, 2008: Los Angeles, $278 RT airfare plus additional charges of $529 and $332 for “other transportation” charges.

    April 6-7, 2008: Chicago, $2,204 RT airfare. One night in $289/night hotel plus “other transportation charges” of $114 and $78. Total: $2,832. 

 

        April 10-11, 2008: Denver, $379 RT airfare. Hotel charges of $709; “Other transportation” charge of  $486.

   April 18-21, Carson City, $442.50 RT airfare. No lodging expenses.

    May 19-20, 2008: Washington, $2,286 RT. One night in $456/night hotel. Total: $2,286. 

    June 23-24, 2008: Washington, $2,334 RT. One night in $399/night hotel. Total: $2,880.

3. Improper use of LVCVA funds for personal benefit in possible violation of the Ethics in Government law, NRS 281A.400 (7).   

“A public officer or employee, other than a member of the Legislature, shall not use governmental time, property, equipment or other facility to benefit his personal or financial interest.” 

The Denver-based National Jewish Medical and Research Center holds an annual Las Vegas dinner to honor a prominent Nevadan with the purpose of raising money for medical research. The 2008 goal was to raise $400,000. Most, if not all the money raised at the dinner, was to be used out-of-state at the Denver medical research center.

The May 2008 dinner honored Rossi Ralenkotter and his wife as “humanitarians” of the year. The LVCVA had no official business with National Jewish Medical in 2007 and 2008. The research center offers few services to Nevadans. 

Mr. Ralenkotter appears to have taken steps to hide the true purpose of the dinner in LVCVA expense reports. For example, Mr. Ralenkotter states on an expense form, which he approved, that the reason he took an April 2008 LVCVA-paid trip to the National Jewish Medical and Research Center in Denver was for a “medical meeting sales call/public relations.” 

In fact, the reason for the visit was a tour of the National Jewish facility and meeting with doctors who were “honoring” Mr. Ralenkotter.

Mr. & Mrs. Ralenkotter were the guests of honor at the May 10, 2008 dinner at the Four Seasons. The event raised approximately $211,000. The largest single donation was a $25,000 gift from the LVCVA.  

R&R Live, a subsidiary of R&R Partners, played a significant role in planning the dinner and was paid an unknown amount.  

LVCVA staff devoted considerable time in preparing for the event, including Mr. Ralenkotter’s secretary and other LVCVA employees. LVCVA expenses include:

 

    Aug. 1, 2007: Mr. Ralenkotter expenses a $515 dinner at Flemings Steakhouse for himself, his wife and Dr. and Mrs. Schwartz to “finalize the chairmanship of the National Jewish Hospital Corporate fundraiser”.

 

•    August 27, 2007: The National Jewish Medical and Research Center sends a letter to civic and business leaders announcing that Mr. Ralenkotter would be presented with the 2008 Humanitarian Award. “I hope I can count on your support for this year’s dinner, which honors Rossi and benefits National Jewish,” concluded the letter signed by Julie Gulak, special events manager for National Jewish-Western Region. (emphasis added)

 

•    Oct. 11, 2007: Mr. Ralenkotter expenses a $1,251 dinner expense at Roy’s Restaurant. Attendees include Julie Gilday-Shafer, president of R&R Live, to “discuss committee structure and program for the National Jewish Hospital fundraiser for Las Vegas.” Mrs. Ralenkotter attended the dinner as well as Dr. and Mrs. Schwartz, Mr. & Mrs. Gil Cohen of Cannery Resorts, Karen Marano of National Jewish Hospital, and Mary Ann Scott of the LVCVA.

     Jan. 8, 2008: The LVCVA confirms in an e-mail to Ms. Gulak that it will contribute $25,000 to be a “Whale” sponsor for the dinner honoring the Ralenkotters. 

    Jan. 9, 2008: National Jewish-Western Region submits an invoice for $25,000 to the LVCVA for “Whale Sponsorship”. The payment is due by May 1, 2008.  

    April 10-11, 2008: The LVCVA pays for Mr. Ralenkotter’s trip to Denver to tour the hospital facilities. Ralenkotter states on his expense form, which he approves, that the purpose of the expense was a “medical meeting sales call/public relations.” Ralenkotter flies first-class and pays for $709 in hotel charges. Total expenses charged to LVCVA for Mr. Ralenkotter’s trip to Denver: $1,505. 

    April 28, 2008: Mr. Ralenkotter expenses a $259 dinner at JRs Place to “finalize the plans for the National Jewish Hospital dinner and presentation.” Mrs. Ralenkotter and Dr. & Mrs. Schwartz attended the dinner. 

    May 7, 2008: When asked by LVCVA three days before the event if the “money that is raised for this event stays in Nevada or Colorado?” Ms. Gulak replies in an e-mail: “That is a tricky answer. The money raised goes towards National Jewish. We do take care of Nevada residents and we do have subsidized care for Nevada residents. We don’t have it all stay in Nevada as this will not give the biggest bang for the buck. We do a lot of research and that is where a lot of the money goes.” 

    May 8, 2008: LVCVA issues $25,000 check that is signed by Mr. Ralenkotter.

    May 9, 2008: Mr. Ralenkotter charges $49 for a Tuxedo rental “for National Jewish dinner” to his LVCVA expense account. 

    The LVCVA paid for numerous other expenses including the reprinting of invitations, the donation of gifts for a silent auction, meals for planning meetings held at the LVCVA (March 5, 2008, $255; April 15, 2008, $376; and April 30, 2008, $237), show girls for the event ($375), and event planning expenses (unknown) that were handled by R&R Live. 

    LVCVA records indicate that LVCVA paid for printing expenses of a dinner brochure honoring Mr. Ralenkotter. Cost unknown. 

4. March 17, 2008 and March 20, 2008 conference calls with multiple members of the LVCVA Board of Directors outside of regularly scheduled board meetings. The conference call was initiated by R&R Partners to discuss an initiative seeking to change the State Constitution to reallocate the “room tax.”  

Seven of the 14 members of the LVCVA Board of Directors were invited to participate in a March 20, 2008 conference call to discuss a possible legal challenge to the intiative. It is not known whether all seven board members participated in the call nor is it known what was discussed during the call.*

Nevada Revised Statutes Chapter 241 provides an exception to the open meeting law for a public body to receive information from the body’s attorney regarding a matter over which the body has supervision, control, jurisdiction or advisory power (ARS 241.015, 2(b)).

The conference call in question was initiated by the LVCVA’s public relations and marketing firm. Although attorneys were invited to the call, it is not known whether the purpose of the meeting was strictly to receive legal information, or whether it was to discuss the authority’s general strategy in regards to the initiative, or both. 

    March 11, 2008: LVCVA staff attorney Luke Puschnig tells the LVCVA board of directors that on Feb. 29, 2008, two constitutional initiatives had been filed with the Nevada Secretary of State. Both initiatives seek to reallocate room taxes. Mr. Puschnig said LVCVA staff is taking “necessary steps to challenge the initiatives. LVCVA retained the law firm of Brownstein, Hyatt, Farber and Schreck to assist with the challenges.”

 

    March 12, 2008: R&R Partners sends an e-mail to LVCVA executive staff to schedule a conference call for March 17 to discuss the room tax. The e-mail is sent to several LVCVA staffers as well as R&R Partners executives Billy Vassiliadis and Pete Ernaut.

 

    Five members of the LVCVA board members receive the e-mail and are given instructions on how to participate in the conference call, including: Henderson Mayor Jim Gibson, Mesquite Mayor Susan Holecheck, North Las Vegas Mayor Michael Montadon, Boulder City Councilman Mike Pacini and Boyd Gambling’s Keith Smith.

 

    LVCVA attorney Luke Puschnig’s name does not appear on the e-mail string of invitees. R&R Partners attorney Morgan Baumgartner is on the list of invitees.

 

    March 18, 2008: Mr. Ralenkotter sends out an e-mail notice for a second conference call to be held on March 20 to discuss the “room tax.” Mr. Ralenkotter, according to the e-mail, will be the chairman of the meeting that also includes Mr. Vassiliadis and Mr. Ernaut.

 

    The invitees include six of the 14 LVCVA board members: Las Vegas Mayor Oscar Goodman, Henderson Mayor Jim Gibson; Mesquite Mayor Susan Holecheck; Clark County Commissioner Rory Reid; Mayor of the City of North Las Vegas Michael Montadon and Boyd Gaming’s Keith Smith. In addition, LVCVA board member Mike Pacini, Boulder City councilman, is included on the CC list and provided with the time and conference code for the call, bringing the number of board members invited or notified of the conference call to seven.*

 

    R&R attorney Mr. Baumgartner and LVCVA attorney Mr. Puschnig are included among invitees.

 

    April 8, 2008: The LVCVA staff does not disclose to the board of directors at the next regularly scheduled meeting that a March 20 conference call was scheduled with half of the LVCVA board of directors.*

    The LVCVA has not produced records related to notes or recordings taken during the March 20 conference call. Nor has it produced records related to how many of the board members noticed and copied on the conference call participated in the discussion. 

5. LVCVA rejects a proposal for an outside firm to conduct a study measuring the effectiveness of its marketing campaigns.  

LVCVA or R&R Partners rejected a 2008 proposal by GLS Research to conduct quarterly, semi-annual and annual surveys to determine the effectiveness of marketing efforts. The rejection comes when other marketing reports are indicating a decline in effectiveness of advertising campaigns.

 

    On April 25, 2008, GLS Research submitted a proposal to conduct a series of “conversion studies” of Las Vegas leisure visitors to “ascertain whether or not any of the LVCVA’s marketing and/or advertising initiatives had an impact on their decision to visit and/or engage in certain activities. Estimates of the proportion of visitors who were impacted could then be used to develop estimates of the value of these initiatives.”

 

    The word “Declined” is handwritten across the top of the proposal with no indication of who made the decision.

 

    A month earlier, Penn, Schoen & Berland issued a report on leisure travelers nationwide for the LVCVA. The sampling occurred between Feb. 22-25. An executive summary of the key findings of the report was redacted.

 

      However, as has occurred repeatedly with the LVCVA, the authority is not consistent in redacting records. The authority has released redacted and unredacted copies of the same report on several occasions. In this case, the LVCVA released the complete PSB report, which paints a bleak outlook for Las Vegas tourism. 

a.   Intent to visit Las Vegas is down 15 percent from April 2006, to “the lowest point we have ever recorded.”

 

b.   The mid-market income gamblers are being hardest hit by the economic downturn.

 

c.   PSB states “the LVCVA must explicitly message and communicate the unique and inherent VALUE of a Las Vegas vacation.” And, the LCVA “needs to commit to an aggressive, multifaceted PAID media campaign to support this messaging.” (First 23 pages included. NPRI has balance of 175-page report.)

 

d.   PSB is awarded contracts by R&R, which is reimbursed by the LVCVA. PSB appears to be a “cheerleader” for R&R Partners advertising campaigns as demonstrated in its fawning praise of R&R in its reports.

On, May 5, 2008 the LVCVA circulated among staff an “internal” report showing “rough” Return on Investment based on estimated visitor contribution/total LVCVA marketing expenditures. The entire report provided to NPRI is redacted. 

6. Advertising impact surveys suggested as early as June 2005 that R&R Partners’ “adult oriented” advertising campaign was ineffective but LVCVA continued with the campaign. Airwave Productions, a company owned by Billy Vassiliadis, produces the “What Happens Here, Stays Here” commercials.  

Advertising impact reports prepared by R&R Partners’ affiliate R&R Research, reveal that the highly acclaimed “What Happens Here, Stays Here” advertising campaign has been relatively ineffective since at least December 2005.

The campaign has frequently generated a higher percentage of people saying the advertisements left them with a negative impression of Las Vegas rather than a positive impression. The monthly survey of 360 respondents is conducted in six markets: Los Angeles, Phoenix, Chicago, Seattle, Philadelphia and New York City. 

The January 2006 “Destination Advertising Awareness” survey states that 71 percent of the people said the ads with the WHHSH tagline had “no effect on their impression of Las Vegas.” Only 13 percent said the ad gave them a more favorable impression of Las Vegas and 16 percent said the ad gave them a less favorable impression of Las Vegas. 

The survey’s results on the effectiveness of the WHHSH advertising continued relatively unchanged, according to R&R Research’s monthly in-house report. For example:

 

    June 2006: “17 percent more favorable, 70 percent no effect, 13 percent unfavorable.”

 

    January 2007: “14 percent more favorable, 70 percent no effect, 16 percent less favorable.”

 

    June 2007: “15 percent more favorable, 69 percent no effect, 16 percent less favorable.”

 

    January 2008: “14 percent more favorable, 71 percent no effect, 14 percent less favorable.”

 

    June 2008: “11 percent more favorable, 72 percent no effect, 17 percent less favorable.”

 

    The June 2008 report concluded: “These results suggest the new advertising executions appear to be having mixed results, especially in the largest markets.”

Semi-Annual tracking reports prepared by GLS Research began showing less support for the “adult freedom” message that is the cornerstone of the WHHSH campaign in the spring of 2005. 

    The June 2005 GLS report states “after steadily advancing over the past two years, agreement with two statements about adult freedom declined significantly.” Fewer respondents agreed with the premise that “I can do what I want when I want” and “I can be whomever I want.”

    The October 2005 GLS report found a slight rebound of those who agree with the “adult freedom” statement, “but it is still lower than a year ago – suggesting an area for continued focus in future advertising.”

 

    March 2006 GLS report found the “adult freedom” theme showing “significant increases from a year ago – suggesting that this advertising strategy is working.”

 

    October 2006 GLS report found a significant decline in agreement with the “adult freedom” messages, noting “especially the decline in ‘resonance’ of the (WHHSH) tag line.”

 

    April 2007 GLS reports “interest in visiting Las Vegas has declined over the past year – as has interest in visiting Orlando and Mexico – suggesting generally lower interest in vacation travel.” The “adult freedom” messages were mixed with two themes rating below Spring 2006 levels and two above Fall 2006 levels.

 

    October 2007 GLS reports no “significant changes over the past year on adult freedom measures.”

 

    April 2008 GLS reports “the country’s economic downturn appears to be having an impact on vacation and pleasure travel.” The report found respondents were less likely to agree with adult freedom messages and more inclined to think Vegas is “just like anywhere else.” Las Vegas tourists, for the first time since testing began, were found “more likely to describe Las Vegas as ‘expensive’ and less likely to describe it as ‘classy.’”

 

      A June 2008 Survey by Penn, Schoen and Berland Associates states that there has been a decline in women saying they intended to visit Las Vegas in the next three to four months. The survey reveals a potentially serious long-term problem for Las Vegas because of its “adult freedom” image. 

    “We know from our past work, there is concern among women 40-65 years of age and those likely to be traveling by themselves (or with only 1 other person), about the ‘Spirit of Vegas’. This is certainly something to keep in mind,” the report states.

* NOTE:  NPRI originally included erroneous attendance/invitee figures for the conference call.  The LVCVA has since made public the accurate figures, and NPRI has modified its report to reflect the accurate information.

# NOTE:  NPRI originally erroneously cited these travel expense figures due to incorrect conversions between Dubai and United States currency.  NPRI has modified its report to reflect the accurate information.


Section Three:
Background 

NPRI submitted the following public records requests to the LVCVA:

 

1.      April 12, 2008: Seeking LVCVA board records, background documentation, offering statements for bonds, independent audit reports, financial statements, investment policy, bid policy and public records policy.

 

2.      May 8, 2008: Advertising Agreement with R&R, Advertising Agreement Audit report and communications between LVCVA executives and R&R employees.

 

3.      May 9, 2008: Appraisals for seven properties recently purchased by the LVCVA.

4.      May 9, 2008: The financing plan for the Master Plan Enhancement Program. Communications between the LVCVA and financial advisors.

5.      May 22, 2008: Copies of all invoices paid with LVCVA checks to R&R and supporting documentation between July 1, 2005 and March 10, 2006 when an internal audit was conducted on the Advertising agreement. Also requested all audit work papers and communications between R&R and LVCVA concerning the audit.

 

6.      May 30, 2008: The financing plan for the Master Plan Enhancement Program that includes the impact of the sale of up to $300 million in transportation bonds. This was a follow-up request to the May 9 records request to which the LVCVA had not yet responded.

 

7.      July 3, 2008: Travel and entertainment expenses reports for LVCVA executives, copies of “white-out” invoices submitted by R&R on behalf of Initiative Worldwide media, records related to the LVCVA rubber stamp provided to R&R and ownership records related to R&R Live.

 

8.      July 30, 2008: Cell phone records for LVCVA executives.

 

9.      July 30, 2008: Request to identify recent and pending litigation and identify which records the LVCVA was withholding because of pending litigation.

 

10.   Aug. 8, 2008: R&R invoices and supporting documentation submitted between Dec. 13, 1995 and Jan. 15, 2006.

 

11.   Aug. 8, 2008: Marketing, economic impact reports, LVCVA strategy meetings minutes and communications with gaming industry analysts.

 

12.   Aug. 13, 2008: Correspondence between the LVCVA and National Jewish Hospital between July 1, 2007 and August 10, 2008. All LVCVA records related to the National Jewish Hospital fundraiser.

 

13.   Aug. 13, 2008: All written records related to the March 17 and March 20 conference calls that included members of the LVCVA board of directors.

 

14.   Aug.25, 2008: Financial records that show total annual payments to R&R Partners for the last five fiscal years.

 

15.   Aug. 25, 2008: All reports prepared by the LVCVA internet marketing and research department, all reports prepared by outside contractors to monitor effectiveness of LVCVA advertising campaigns.

 

16.   Sept. 19, 2008: Invoices received by the LVCVA in connection with the National Jewish Medical & Research Humanitarian Dinner. All records of communications between LVCVA staff and LVCVA board members concerning LVCVA sponsorship of the dinner.

Section Four:
Resume of John Dougherty
 

PO Box 644
Tempe, AZ 85280
Jedtimes@gmail.com
602-710-9433
www.InvestigativeMedia.com   

Summary: 

I have broken complex financial stories ranging from the Keating Five scandal highlighted by the Senate Ethics Committee investigation of five U.S. Senators involved with financier Charles Keating Jr. in the 1980s, to uncovering the financial corruption of former Arizona Governor J. Fife Symington III five years before his indictment and resignation in 1997, to exposing the secret fundamentalist Mormon polygamist society in Northern Arizona that led to the 2007 felony conviction of polygamist prophet Warren S. Jeffs.

I have won more than two-dozen state (Ohio, California and Arizona), regional and national awards including being named Arizona Journalist of the Year three times and Arizona Investigative Reporter of the Year twice.

Gilbert Gaul, a Pulitzer Prize-winning writer at the Philadelphia Inquirer and one of four judges in the 1995 Journalist of the Year competition, said my stories on Governor J. Fife Symington III "were real eye-openers that raise significant questions about the operations of Arizona government, cronyism and the candor of candidates running for office." Pulitzer winner Eileen Welsome called my stories on Symington "some of the best journalism I have ever read." She called Dougherty "an inspiration to anyone in our business and a champion for taxpayers."

My freelance work appears in the New York Times, The Washington Post, WashingtonIndependent.com and High Country News, a nonprofit paper that covers environmental and political issues in the West. I covered the high-profile trial of Mr. Jeffs for the New York Times in 2007 and the 2001 World Series for The Washington Post. 


Education:

B.S. Journalism, Arizona State University, Tempe, AZ, 1978

B.S. Economics, Arizona State University, Tempe, AZ, 1981

Work Experience:
 

Jed Investigations

Private Investigations

Arizona Department of Public Safety License #1564190

Owner

February 14, 2007 to present.

Duties: Conduct background investigations, contact and interview witnesses, conduct surveillance, interview inmates, obtain sworn statements and prepare investigative reports for clients.

 

InvestigativeMedia.com

President

September 1, 2006 to present

Duties: Publish stories under freelance contracts with the New York Times, San Francisco Chronicle, WashingtonIndependent.com, Phoenix New Times and High Country News. Conduct special investigations for nonprofit organizations, including the Nevada Policy Research Institute.

Phoenix New Times
Phoenix, Arizona
Staff writer 1993-2004
Staff columnist 2004-2006
Tenure: March 1, 1993 – September 1, 2006

The Southwest Sage (defunct)
Flagstaff, Arizona
Founder, Owner, Editor and Publisher of a free weekly newspaper distributed in Northern Arizona
Tenure: August 1, 1992 – February 28, 1993

East Valley Tribune
Mesa, Arizona
General assignment and political reporter
August 1, 1991 – July 31, 1992

Half Moon Bay Review
Half Moon Bay, CA
Managing Editor and staff writer
August 1, 1990—July 31, 1991

 

Dayton Daily News

Dayton, Ohio

Business reporter/Environmental reporter

January 15, 1989 – August 1990

East Valley Tribune
Mesa, Arizona
Business reporter
April 1, 1988 – January 15, 1989

The Phoenix Gazette
Phoenix, Arizona
Business reporter
June 1984-April 1988

The Washington Post
Washington, DC
Intermittently from September 1978 – March 1984.
News Aide, freelance contributor to sports and financial


References:
 

John Mecklin

Editor

Miller-McCune Center for Research, Media and Public PolicySanta Barbara, CA
john.mecklin@sbcglobal.net 

Jeremy Voas

Former editor Phoenix New Times

Investigator

Federal Public Defender

Phoenix, Arizona

jeremyvoas@yahoo.com

 

Joan Nassivera

Assistant National Editor

The New York Times

jonass@nytimes.com