News Release: Is Moelis in Bed with Penn National?

For Immediate Release: July 13, 2011

Contact: Dale Butland, 614-783-5833

INNOVATION OHIO:
IS MOELIS IN BED WITH PENN NATIONAL?

Columbus—Innovation Ohio, a progressive think tank headquartered in Columbus, said today that it has uncovered a “potentially troubling linkage” between Penn National Gaming and Moelis & Company, the New York-based consulting firm that earned a reported $13 million to help Gov. John Kasich strike a deal with Ohio’s casino and race track owners.

Innovation Ohio’s discovery comes on the heels of a July 9 column by Brent Larkin of the Cleveland Plain Dealer who called Moelis’ $13 million fee “astonishing”, “preposterous” and “an unprecedented gift” which is “deserving of more scrutiny.”  .

Innovation Ohio said that in 2009-10, Moelis had a consulting contract with Fontainebleau Las Vegas, LLC to help that firm sell an uncompleted and bankrupt hotel and casino project. The contract, which paid Moelis at least $750,000 in consulting fees, contained “a curious provision—Section 3 (A) (ii)—specifying that if Penn National bought the Fontainebleau property, Moelis would receive an additional fee totaling 3% of the transaction value.  If anyone other than Penn National bought the property, Moelis’ would receive 1% of the transaction value.  Either payment would be in addition to Moelis’ consulting fee.”  Read the contract here.

In addition, Innovation Ohio said “it is our understanding that the Kasich administration has either stonewalled or rejected outright public records requests for information relating to the administration’s decision to retain the Moelis firm for Ohio’s own negotiations with Penn National and Rock  Ventures.”

Said Innovation Ohio Communications Director Dale Butland:

“Since Ohio taxpayers are giving Moelis $13 million, they deserve some answers.

What, exactly, is Moelis’ past and current relationship with Penn National?

Why was Penn National singled out in Moelis’ contract with Fontainebleau Las Vegas?

Why would Moelis receive a bonus of 3% of the transaction value if Penn National purchased the Fontainebleau property? Or 1% of the purchase price if Penn National didn’t buy it?  Why would Fontainebleau—or Moelis—care about Penn National’s involvement?

Since Penn National was one of the gaming firms with whom Gov. Kasich would be negotiating, did Moelis ever disclose its previous and/or current relationship with Penn National prior to being retained by the state?

If so, why didn’t the Kasich administration publicly disclose that information?  If not, why not?

There may well be satisfactory answers to all of these questions.  But since Ohio is paying  Moelis $13 million for consulting efforts characterized by the Plain Dealer’s Mr. Larkin  as “work that a bright, well-prepared fifth-grader could have performed as a homework assignment”, it is entirely reasonable to insist that answers be forthcoming.”