UPDATED: Analysts have reason to keep a close watch on MotorCity Casino (CCM Merger, Inc.) right now

Give these kinds of circumstances, you can bet analysts at Moody's as well as Standard & Poor's are keeping a close watch on MotorCity Casino's parent company, CCM Merger, Inc -- the entity Marian Ilitch formed to acquire MotorCity Casino from MGM Mirage/Mandalay Resort Group and other minor investors in 2005. In late August, Moody's reaffirmed its negative credit rating outlook for CCM Merger.

• Ilitch -- falls on Forbes' list of "400 Richest Americans" for second year in a row. Forbes' attributes the fall to troubles at MotorCity Casino which is "facing new competition from MGM Mirage" as well as an "economic downturn depressing casino valuations."
• MotorCity Casino (MCC) -- MGCB reports indicate revenues for Summer 2008 (Jun - Aug) fell 6.5% over Summer 2007.
• MotorCity Casino (MCC) -- revenues at the new and improved MotorCity Casino through August 2008 were down 1.65% over the previous 12 month period. (MGCB)
• MotorCity Casino (MCC) -- completion of what's now reported as a $300 million construction project was celebrated in September 2008 nearly a year after construction was originally anticipated to be complete.
• MotorCity Casino (MCC) -- construction, originally set to be completed by end of 2007, was ongoing through March 2008.
• MotorCity Casino (MCC) -- An expanded (25% larger) gaming floor opened in June 207 and despite an initial bump in revenues in June and July 2007; for each of the subsequent three months, revenues declined. Revenues posted in October 2007 were second lowest in that calendar year.
• MotorCity Casino (MCC) -- hotel opening delayed.
• MotorCity Casino (MCC) – August 2007 revenues were down as compared to the prior month; just two months after opening its expanded gaming floor.
• Detroit -- labor authorizes strike against three Detroit Casinos beginning Tuesday, Oct. 16. MotorCity Casino is labor's first target among Detroit casinos. On Oct. 17, MotorCity Casino locks its doors to gambling patrons.
• Detroit – realized a short-run UAW strike against GM in September.
• Detroit - UAW workers walked off the production lines at Chrysler in October.
• Detroit – second highest foreclosure rate in the Country. CNN’s Money.com reports that this past year, one of every 29 Detroit area households recorded a foreclosure filing there, almost double the rate of a year ago.
• Michigan – faced the possible shutdown of Detroit’s Casinos in the event of an anticipated Oct. 1 state government shut down.
• MGM Grand Detroit -- will celebrate a Grand Opening of its new $775 million casino hotel the Week of October 2, 2007.
• MotorCity Casino -- 400-room hotel is set to open in November completing the property’s $275 million renovation and expansion; MotorCity Casino announced the hiring of a V.P. for hotel operations in July who mysteriously has come and gone from the yet to open property; and MCC announced the hiring of a second V.P. for hotel operations in September.
• MotorCity Casino – lost its head chef in September to a restaurant in Chicago.
• MotorCity Casino – trying to gain some local marketing advantage by developing some synergy with other Ilitch-owned brands – namely the Detroit Red Wings and Detroit Tigers. MLB has a ban on mixing gambling and baseball; and an announcement for a Red Wings’ gambling tournament scheduled to coincide with MotorCity Casinos grand re-opening was pulled from the NHL’s official Red Wings’ Web site in light of recent NHL gambling scandals.
• Ilitch - falls 55 spots on Forbes 400 List; MotorCity Casino credit ratings fell, Tigers fail to make playoffs, Red Wings fail to sellout

CCM Merger, Inc. is the entity which obtained nearly $1 billion from "investors" through traditional bank loans and junk bond offerings in 2005. Ilitch used $525 million to buyout MGM Mirage, projected $275 million to renovate and expand the casino property and the balance primarily to assist in financing the acquisition of the funds in the shortrun.

It should be noted that one year after Ilitch purchased MotorCity Casino, both Moody's and Standard & Poor's were forced to downgrade their credit ratings for the Ilitch-controlled CMM Merger, Inc. because the entity was leveraged beyond what investors were told originally that they might expect.

first posted 10.03.07
updated 10.10.07; 10.15.07, 10.17.07, 10.25.07, 11.21.07, 11.28.07, 9.15.08

Ilitch and partner contributed to Rep. Rangel who's embroiled in corruption charges

According to OpenSecrets.org, Detroiters Mike & Marian Ilitch, and their associate/partner Michael Malik each contributed the maximum $4,600 (two contributions of $2,300 each) to U.S. Rep. Charles Rangel (D-NY) on 8.23.07. That’s a total of $13,800 to Rangel’s campaign committee. Charlie Rangel is chairman of the House Ways & Means Committee.

Citizens for Responsibility and Ethics in Washington (CREW) has labeled Rangel one of the “20 Most Corrupt Members of Congress.” Rangel has come under intense scrutiny for a series of alleged ethics lapses, including failure to disclose income on real estate property and raising money for an educational center bearing his name. Rangel is currently the focus of a self-initiated House Ethics Committee investigation.

Marian Ilitch owns Detroit’s MotorCity Casino and Michael Malik was once her partner in that venture. The pair has partnered subsequently on Indian casinos proposed in California, Michigan and New York. Mike & Marian Ilitch are the co-founders of Little Caesars Pizza and own the NHL’s Detroit Red Wings. Mike Ilitch owns MLB’s Detroit Tigers.

Ilitch drops to #301 on Forbes List; family's struggling Casino primary reason

Forbes magazine is out with its 2008 "400 Richest Americans" rankings. Detroit's Michael Ilitch dropped to #301 on this years list and Forbes estimates the combined net worth of Mike Ilitch's family at $1.6 billion which is unchanged over 2007.

The primary reason: Forbes reports that MotorCity Casino, technically owned 100% by Mrs. Marian Ilitch is "facing new competition from MGM Mirage" as well as an "economic downturn depressing casino valuations."

Ilitch Holdings, Inc. is the parent company of such privately held brands as Little Caesars Pizza, Detroit Tigers (MLB), Detroit Red Wings (NHL), MotorCity Casino, Detroit's Fox Theater. Other Ilitch owned-ventures manage many of Detroit's sports facilities and theater venues.

The Ilitch family is extremely guarded about releasing any detailed financial data for these entities.

MotorCity Casino, however, must publicly disclose its total monthly gross revenue figure to the Michigan Gaming Control Board (MGCB). Those figures are disclosed to the public regularly by the MGCB.

During the summer months (Jun - Aug), combined gross revenues at the gambling hall fell 6.5% over the same period in 2007; despite the additions of a 400-room luxury hotel (Fall 2007) and opening of an expanded gaming floor (June 2007).

MotorCity Casino is a d/b/a for Detroit Entertainment LLC which is owned entirely by another entity, CCM Merger Inc. Marian Ilitch reportedly assumed 100% control of MotorCity Casino in 2005 when she bought outstanding shares in the property from Mirage Resort Group (MRG) and various minor investors. Her buyout of MRG helped pave the way for the merger of MGM and MRG. Subsequently MGM Mirage built an entirely new $800 million casino resort in Detroit.

Since Marian Ilitch acquired control of MotorCity Casino, both Moody's and Standard & Poor's have been forced to put the casino's parent, CCM Merger, on negative watch and subsequently downgraded the entity's credit ratings. Ilitch has borrowed somewhere in the neighborhood of $1 billion from investors and creditors to acquire and remodel MotorCity Casino. Among other things, the credit ratings agencies site concerns that MotorCity Casino is leveraged beyond what investors were originally told to anticipate during the remodeling and construction phase.

Forbes: Michael Ilitch - ranked #301

Forbes: 2008 List - "400 Richest Americans"

Receiver's $2.1 million fraudulent transfer claim against Michael Malik likely among most substantial

Michael I. Goldberg, the Florida federal court appointed Receiver who filed a June 2008 $2.1 million fraudulent transfer case (Goldberg v. Malik) against Detroit “business developer” and casino syndicator Michael J. Malik, Sr., has filed a new Receiver’s report (Receiver’s Seventh Report) with the U.S. District Court's Miami Division.

In this latest report (on page 22 of 27), Receiver Goldberg indicates he’s initiated 150 fraudulent transfer claims totaling more than $20 million; claims against parties whom the Receiver alleges profited illegally from so-called “profit payments” or “client representative fees.”

While not mentioned specifically in the Receiver’s report by name, it sugggest the $2.1 million claim against Malik may be one of the most substantial the Receiver has filed to date – at least 10% of all the claims. Averaging the balance of the claims against the other 149 defendants suggests those claims might average $120,000 each -- or put another way, each of the other 149 cases represents just 6% -- a fraction -- of the total claim against Malik.

What was Malik's relationship with the defendants and their affiliates (Jack Utsick, Robert & Donna Yeager, Worldwide Entertainment, Inc., et. al.) named in the original $300 million fraud case brought by the SEC? ... seems Malik was more than just another of their run-of-the-mill investors. Was Malik fronting for other investors? Did he have investors of his own?

Although reportedly not an employee of Ilitch Holdings, Inc. or any of its affiliates, Malik's various affiliated entities are headquartered among the offices that make up the executives suites at Detroit-based Ilitch Holdings, Inc. Malik has partnered with Detroit's well-known Iilitch family on casinos and other ventures for nearly a decade and a half.

Ilitch holds celebration marking the end of construction at MotorCity Casino which was over budget and dealyed by almost a year

The Detroit News has reported that the Ilitch-owned MotorCity Casino celebrated the “the completion of a $300-million, three-year expansion and renovation of the site” last Friday, 9.12.08

A press release issued 11.30.05 to coincide with a formal groundbreaking for MotorCity Casino’s renovation and expansion reported the project would be completed in late 2007 and was budgeted to cost $275 million.

That seems to suggest completion of the construction project was nearly a year behind schedule; and, given that MotorCity Casino’s owner Marian Ilitch isn’t required to file full public financial disclosures, the project was at least $25 million over budget.

Consider this:

• MotorCity Casino is a d/b/a for Detroit Entertainment LLC which is owned by CCM Merger, Inc., an entity reportedly controlled solely by Mrs. Marian Ilitch, and as such she has no requirement for full public financial disclosure beyond what she chooses to include in a press release.


• Marian Ilitch reportedly borrowed hundreds of millions from investors and other creditors creating debt of more than $1 billion in orderto fund her acquisition of MotorCity Casino from MGM/Mirage Resort Group and other investors; fund the cost of construction; and fund debt service during construction.


• Since Ilitch acquired MotorCity Casino (Detroit Entertainment LLC) and established CCM Merger, Inc., that company’s credit ratings have been placed on watch lists and downgraded by both Moody’s and Standard & Poor’s. Among concerns, Ilitch has leveraged the entity beyond what investors were originally told to anticipate during construction.
  
• MotorCity Casino’s expanded gaming floor opened in June 2007 (15 months ago) and Ilitch reported a 3.5% bump over the previous year for the subsequent four months (July-October 2007); but so far that's not been sustained during those same months in 2008. Revenues reported for Summer 2008 (Jul-Aug) dropped 6.5% over Summer 2007. (MGCB)


• A 17-story, 400-room hotel with resort amenities opened at MotorCity Casino in November 2007 but revenues for eight of the last ten months (Nov. ’07 – Aug. ’08) have been down compared to those same months the previous year. (MGCB)


• Ilitch has desperately leveraged her family’s affiliated charitable foundation, sports teams and other business interests to promote and drive traffic into the expanded MotorCity Casino property; and still, revenues reported for the new and improved MotorCity Casino through August 2008 are down 1.65% over the previous 12 month period. (MGCB)
  
  Source of revenue figures: Michigan Gaming Control Board

Summer not good for Ilitch's MotorCity Casino; revenues drop 6.5%

According to revenues reported to the Michigan Gaming Control Board (MGCB), MotorCity Casino's revenues for Summer 2008 (Jun-Aug) were down 6.5% over Summer 2007; a cummulative drop of $7,360,114.51 in reported revenue for the period. In June alone, revenues fell 10%.

Given Moody's and Standard & Poor's have both previously indicated concerns that MotorCity Casino's parent company CCM Merger, Inc. was over leveraged and reflected those concerns by downgrading the entity's credit ratings during the last year; the 6.5% drop in Summer revenues would understandbly be of renewed concern to investors and creditors who are owed upwards of $1 billion -- especially if either Moody's or Standard & Poor's were to downgrade CCM Merger's credit ratings again.

Summer 2007 - cummulative revenue: $126,101,544.42

Summer 2008 - cummulative revenue: $118,741,429.91

It appears the bump in revenues that Marian Ilitch's Detroit gambling hall realized after she opened its expanded gaming floor (25% larger) in June 2007 hasn't been sustained during 2008 -- not even with the November 2007 addition of a 400-room luxury hotel and other amenities to the casino resort property.

In recent months, Ilitch has leveraged her family's affiliated foundation, sports teams and other businesses in a desperate attempt to pull out all the stops and drive traffic to MotorCity Casino -- but even that hasn't helped sustain revenues.

Revenue Source: Michigan Gaming Control Board

Ilitch, Malik contribute $13,800 to Rep. Bart Stupak

According to OpenSecrets.org, on 5.05.08 Mike & Marian Ilitch and Michael J. Malik, Sr., (Mike J. Malik) contributed $13,800 to U.S. Rep. Bart Stupak (D - MI 1st).

While neither the Ilitches or Malik live or work in Michigan's 1st Congressional District it does include the Bay Mills Indian Community. The Bay Mills tribe has partnered with Mike Malik on various casino proposals and other business ventures in Michigan. Mike & Marian Ilitch have supported the projects too.

MotorCity Casino revenues down for third straight month

9.10.08

MotorCity Casino sees declines...

..Detroit's other two gambling halls, Greektown and the Illitch-owned MotorCity casinos, recorded slight declines. MotorCity was down 0.07 percent to $41.07 million from $41.09 million a year ago. Greektown, which entered Chapter 11 bankruptcy May 29, said its take declined 3.5 percent to $26.82 million from $27.8 million in August 2007...

...MotorCity Casino opened its new hotel last fall and has unveiled other elements of its new facility in stages. So far, the piecemeal launches of the enlarged gaming floor and convention space have produced modest gains at best.

Many of those new elements have been operating for the better part of a year, but ongoing work to renovate and expand MotorCity's gaming floor and add restaurants and a state-of-the-art performance theater forced patrons to dodge construction for months while the facility remained open.

This week, the casino/hotel complex began getting the word out to customers that the finishing touches are done. Executives showed off the slick new bars and restaurants and expanded gaming floor to reporters Tuesday. On Friday, MotorCity plans a VIP party to kick off the casino's new post-construction era.

The casino is introducing an onslaught of new advertising as well. Broadcast and print ads touting the end of construction have been blanketing Metro Detroit media outlets this week.

MotorCity CEO Gregg Solomon said he expects the response to be positive for both customers and MotorCity's bottom line.

"We're interested in pushing the envelope here," Solomon said. "We're making a bold statement not just about us, but about the future of the city of Detroit." (Complete Story)

Michigan Gaming Control Board: 2008 Detroit Casino Revenues Report

Ilitch partner claiming ignorance in $2.1 million fraudulent transfer lawsuit

Detroit’s Michael Malik, the self identified business developer and casino syndicator, is claiming ignorance and has denied allegations outlined in federal court charges filed in June suggesting Malik’s involvement in a $2.1 million fraudulent transfer (Goldberg v. Malik).

The case, filed by a court appointed Receiver (Akerman Senterfitt attorney Michael I. Goldberg), seeks to recover more than $2.1 million plus interest and other charges that the Receiver alleges Malik received in the form of a “Profit Payment.” Malik says he never received a “Profit Payment.”

Malik is requesting a jury trial in the matter.

See Malik’s Official Response to Goldberg v. Malik

Michael Malik's various businesses and affiliates are headquartered in the executive suite at Detroit-based Ilitch Holdings, Inc. Malik has partnered with the Ilitch family on various casino and development projects in Michigan, California and New York.

Ilitch issues statement following Mayor's guilty plea

In light of the political scandal and guilty pleadings surrounding Detroit Mayor Kwame Kilpatrick, Christopher Ilitch, CEO of Ilitch Holdings, Inc. issued the following statement:

DETROIT, Sept 04, 2008 /PRNewswire via COMTEX/ -- "This has been a difficult time for the city, region and state, and I'm hopeful that attention can return to addressing the important work at hand. History has shown we are a caring and hearty community, not easily deterred, and I believe that bodes well for our collective future. I am confident we can -- and will -- persevere and continuously improve to make this a better place for all."

About Ilitch Holdings, Inc.
Ilitch Holdings, Inc. provides professional services to the companies owned by Michael and/or Marian Ilitch. The Ilitch companies in the food, sports and etertainment industries include: Little Caesars Pizza, Blue Line Foodservice Distribution, the Detroit Red Wings, Olympia Entertainment, Olympia Development, Little Caesars Pizza Kits Fundraising Program, Champion Foods and Uptown Entertainment. Michael Ilitch owns the Detroit Tigers. Marian Ilitch owns the MotorCity Casino Hotel.

SOURCE: Ilitch Holdings, Inc.

Ilitch partner gets community service for firerarms violation

9.06.08

Malik sentenced to community service for illegally taking elk

By: Sean Dieterich, The Independent

PINETOP-LAKESIDE - Michael Malik, a Michigan man who became the center of controversy after an elk hunt on Porter Mountain last July, has been sentenced to eight hours of community service.

Malik was found guilty of firing too close to an occupied structure on Aug. 4 after a July 31 bench trial that lasted over 10 hours. The Pinetop-Lakeside Justice Court said Malik must serve the community service within 60 days. Malik must also write letters of apology to homeowners of Mountain View Ranch on Porter Mountain, where the hunt took place.
The execution of the sentence will be suspended pending the court's consideration of Malik's motion for a new trial.

Ofc. Jim Hinkel, the law enforcement program manager for the Pinetop office of Arizona Game and Fish, said the sentence handed down was "disappointing" but the department will begin their own disciplinary process. He said Malik could face a revocation of his license and a minimum civil assessment of $8,000 for the elk he killed.

"What Mr. Malik is looking at is revocation of licenses to hunt, fish or trap for up to five years," he said.

Hinkel added those revocations would not just be limited to Arizona. Since Arizona is part of a interstate wildlife violator compact, Malik could face revocations in 32 states and seven Canadian provinces, including Utah, California and New Mexico.

"If you're revoked in any one of the participating states, you're revoked in the rest of them," he said.

Hinkel said he would have liked to see the justice court hand down a tougher sentence to show other potential offenders that wildlife violations would be taken seriously. However, he said it would not affect how Game and Fish carries out their action.

"We're moving forward," Hinkel said.

* Reach the reporter at seand@wmicentral.com

Ehrlich, Foley & Serwer: Michael Malik's primary corporate attorneys

Attorney William D. Serwer has served/serves as Resident Agent for these entities believed to be affiliated with Detroit casino syndicator Michael Malik:

• Barwest, L.L.C. (Barstow, CA Casino)
• Blue Water Resorts Manager, Inc. (Port Huron, MI Casino)
• CB Property Holdings, Inc. (CB = Charlotte Beach)
• CB Property Investments, L.L.C.
• LCB Barwest, L.L.C. (Barstow, CA Casino)
• Gateway Casino Resorts, L.L.C. (Shinnecock, NY Casino)
• JR Property Holdings, L.L.C. (JR = Michael J. Malik, Jr.)
• MJM Charlotte Beach, L.L.C.
• MJM Enterprises Development Company (formerly North American Gaming Company)
• MJM Interactive Venture, L.L.C.
• MJM Security Venture, L.L.C.
• MV Land Holdings, L.L.C. (Malik & Vigliotti)

Serwer prepared and filed the original or amended articles of organizations for the following Malik affiliated entities (Malik serves as Resident Agent for these affiliates):

• Blue Water Holdings I, L.L.C.
• Blue Water Resorts, L.L.C.
• Hawaii Entertainment Associates, LLC
• Lucky 7 Development, L.L.C.
• MJM Bay Mills, Inc.
• MJM Blue Water, L.L.C.
• MJM Blue Water Investors, LLC
• MJM Border Holdings, L.L.C.
• MJM Royal Properties, L.L.C.
• Renegade Charters, L.L.C.

Serwer is a partner in the Birmingham, MI, law firm Ehrlich, Foley & Serwer. His partners are Joseph H. Ehrlich and Fred A. Foley.

Fred Foley formed MJM Manistee, Inc. another Malik affiliate.

Joseph Ehrlich represented Marian Ilitch before the Michigan Gaming Control Board during her acquisition of MGM/Mirage Resort Group’s shares of MotorCity Casino in 2005.

Mike Malik denied permit to develop Harsens Island Marina

8.31.08

Island permit denied

By BOB GROSS

The state Department of Environmental Quality has denied a marina permit for a 348-unit clustered housing development on the former Boys Club property on Harsens Island.

According to a letter from David Dortman, environmental quality analyst for the DEQ’s Land and Water Management Division, the proposed project “will have significant adverse impacts on the natural resources associated with the St. Clair River.

The developers, Grande Pointe Development and Lucky 7 Development LLC, had applied for the permit on May 1.

The proposed planned unit development has met with opposition from island residents. On Feb. 27, the Clay Township Planning Commission rejected a special land use request that would have allowed construction of the project.Grande Pointe and Lucky 7, which are owned and managed by former Clay Township resident Michael Malik, filed an appeal of the planning commission’s decision in St. Clair County Circuit Court. That appeal is still moving through the legal process. (Complete Story)

Charitable foundation affiliated with the family of Mike Ilitch uses $50,000 to purchase baseball tickets

According to its 2006 IRS Form 990, Ilitch Charities for Children (aka Ilitch Charities) spent $50,000 purchasing "baseball tickets" to distribute to "disadvantaged families."

Mike Ilitch, patriarch of Detroit's Ilitch family, owns the Detroit Tigers Major League Baseball (MLB) team. The family-owned Olympia Entertainment holds the mangament and licensing contracts for Comerica Park, the home field of the Detroit Tigers. Ilitch Holdings, Inc. is the parent company of these and other Ilitch family-owned enterprises.

Christopher Ilitch, CEO of Ilitch Holdings and a member of MotorCity Casino's management committee, is chairman of Ilitch Charities and his wife Kelle is a director. Christopher Ilitch's former executive assistant, David Agius, is president and treasurer of Ilitch Charities.

Ilitch charitable foundations used to promote struggling gambling hall

Detroit's powerful Ilitch family is using its various affiliated charitable foundations to promote and possibly even generate revenue for the struggling Detroit casino owned by the family's matriarch.

According to a press release marketing the two-day festivities, on August 24 & 25, Ilitch Charities along with the Detroit Tigers Foundation and the Detroit Red Wings Foundation, hosted a Detroit area golf tournament which was preceded by a "Summer Soiree" preview party at Detroit's MotorCity Casino.

The gambling hall is reportedly owned entirely by Mrs. Marian Ilitch. Family patriarch Patriarch Mike Ilitch owns the Detroit Tigers and along with Marian is co-owner of the Detroit Red Wings.

Christopher Ilitch, CEO of Ilitch Holdings and a member of MotorCity Casino's management committee, is the chairman of Ilitch Chairities and his wife Kelle is a director. David Agius, Christopher Ilitch's one-time executive assistant, is the President of Ilitch Charities. Patriarch Mike Ilitch owns the Detroit Tigers and along with Marian is co-owner of the Detroit Red Wings.
The Ilitch events were marketed as opportunities to play golf and mingle at MotorCity Casino with Hollywood celebrities as well as managers, players and coaches affiliated with the Ilitch owned Detroit Red Wings and Detroit Tigers.

The Ilitch family has been using its charitable foundations and other assets to promote and drive revenues to MotorCity Casino. Twice before the Detroit Red Wings Foundation and player from the NHL franchise have been used to promote poker tournaments at MotorCity Casino.

Major League Baseball (MLB) has strict prohibitions against gambling and casinos which apply to its players, managers, coaches and owners. The press release suggest those currently affiliated with the Tigers baseball team were partcipants at the MotorCity Casino party.

Even after spending more than $300,000 renovating and expanding MotorCity Casino, revenues at the Ilitch-owned gambling hall have been on the decline. Crain's Detroit reports that revenues at the Ilitch casino are down 1.5% over the previous 12 months and in July alone revenues took a 7.26% dive. In the last several years, Moody's and Standard & Poor's have downgraded the credit ratings for MotorCity Casino (aka CCM Merger, Inc.)