Vegas Casino Facing Bankruptcy and Citizenship Troubles

The former Sahara Casino on the Vegas strip – renamed as the SLS Las Vegas after a 2011 buyout – is “on the verge of bankruptcy” according to a lawsuit brought by 60 Chinese nationals who invested almost $400million in the project in return for US Citizenship under a government program.

Todd Prince, writing for the Las Vegas Review Journal this weekend, reported that ‘plaintiffs are seeking $255 million in damages plus attorney fees and other costs’ after news emerged that the casino hasn’t made a profit since opening and none of the Chinese investors have yet received their permanent green card.

The lawsuit was recently filed at the Los Angeles Superior Court and describes in detail how the investors loaned some $400 million for both Phase1 and Phase 2 conversions of the former Sahara in 2013 and 2014, ‘to help owners Stockbridge Capital Group and sbe Entertainment’ turn it into the SLS Las Vegas on the north Strip.

According to the court documents, ‘The plaintiffs’ investment in the Phase II LLC will be completely wiped out and many of the plaintiffs will not be able to get their permanent green cards,’ part of the  EB-5 Pilot Program.

The program allows ‘foreign citizens to potentially receive U.S. citizenship if they invest $500,000 in “at-risk’’ large-scale projects that create jobs’, but the investors claim that changes to the funding after Stockbridge Capital Group agreed to sell the casino to Meruelo Group earlier this year, puts their citizenship possibilities at risk.

Each investor stuck $45,000 into the project, but talk of bankruptcy was ‘downplayed’ by Stockbridge, who stated:

“The company does not expect the litigation will deter the sale and it does not in any way anticipate a bankruptcy filing,” and called the lawsuit “without merit”.

However, according to reports, the owners have been ‘pumping millions of dollars a year into the SLS to keep it afloat’ and the news of the sale and restructuring of the loans has led to the investors’ actions, Jeffrey Bell, the attorney representing Phase II Chinese investors, stating:

“We either consent to the sale to Meruelo or the company will file bankruptcy — that is what we are being told verbatim.” He added: “The plaintiffs’ investment in the Phase II LLC will be completely wiped out and many of the plaintiffs will not be able to get their permanent green cards.’’

According to Cardplayer.com, ‘The iconic Sahara fell victim to the financial crisis of 2008 and closed in 2011. It had been open since 1952. Despite the reboot, SLS struggled out of the gate, losing more than $80 million in the first half of 2015.’