CASINOS Companies accused of securities laws violations

The Eastern Shawnee Tribe has looked at building a casino in Lordstown.
By JEFF ORTEGA
VINDICATOR CORRESPONDENT
COLUMBUS -- An Ohio agency is accusing two companies and others connected to an Indian tribe's attempts to build casinos in the Buckeye State of allegedly violating Ohio's securities laws.
In an order sent this month, the Ohio Division of Securities alleges that National Capital I Inc., and president Thomas John Schnippel, sold unregistered securities, made false representation in selling securities and engaged in securities fraud.
National Capital I is a corporation in the state of Delaware, but whose mailing address is listed in Botkins, Ohio. The company was created to promote and build a gambling casino to be operated by the Eastern Shawnee Tribe of Oklahoma.
In a separate order, also sent this month, the state alleges that A Piece of the Action, an Ohio company formed to raise revenue for National Capital I, and a company partner, Thomas R. Holtsberry, sold unregistered securities and made false representation in the sale of securities.
Additionally, according to the order, Robert Bollinger, another APOTA partner, allegedly sold securities and received a commission without a license and sold unregistered securities.
What is sought
The state is seeking cease-and-desist orders against those named in the orders.
The Eastern Shawnee have been exploring opening casinos in Ohio at certain sites, including Lordstown in Trumbull County, but state officials are resisting. State law currently prohibits casino gambling.
According to the order, National Capital I sold promissory notes from July 2002 to March 2005 to 48 investors totaling $1.4 million.
The notes reportedly guaranteed a 10 percent return and granted investors a percentage interest in the profit interest of the company's net gaming income resulting from operating a casino, the order said.
In selling the notes, the company told at least one investor that casino construction would begin soon, and that local political opposition to casino development was irrelevant under federal law, the order stated.
In selling the notes, the company allegedly didn't disclose that principal and interest payments would almost exclusively come from the investors' own contributions, the order said. The company also reportedly guaranteed investors their principal was safe, the order said.
According to the other order, Holtsberry formed APOTA, and brought in Bollinger as a partner who would be responsible for seeking out investors to raise revenue.
Bollinger reportedly sold 11 investment contracts totaling $275,000 to several individuals from August to November 2004, the order said.
The contracts allegedly gave investors the option of receiving one-fifteenth of the profit from liquor sales at the proposed casino, or receiving back their principal plus 10 percent interest, the order said.
Additionally, the contract gave investors the right to share in profits from the casino's first five years in operation, the order said.
According to the order, Bollinger received a $2,000 commission for each contract sold, despite Holtsberry's contention in a state filing that no commissions had been paid.
Those named in the orders could request a hearing on the allegations within 30 days of the orders' mailing date of early November, said Dennis Ginty, a spokesman for the Ohio Department of Commerce, which oversees the Division of Securities.
If no hearings are requested, the division could issue cease-and-desist orders, Ginty said.
Other measures
Further alleged violations could lead to other enforcement measures, Ginty said.
Based on legal advice, Terry Casey, a consultant to National Capital I and the Eastern Shawnees, said, "There are inaccuracies in what the [state] Securities Division has said and alleged."
Casey said if the errors aren't corrected in the near future, National Capital I will request a hearing. None of the others named in the orders could be reached for comment Monday.