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Tuesday, March 22, 2011

International Gambling Operations Have Roots in Alabama

The planned casino resort in Vancouver

For a state that supposedly is "anti gambling," Alabama sure has a tendency to export gaming ventures to other states--and even other countries.

A plan to start a Russian lottery was developed in Alabama, under a group called Global Trust Partners. That effort faltered and spawned a number of lawsuits, including a major one now unfolding in New York. (More on that in a moment.) But that has not stopped Alabamians from becoming engaged in international gaming activities.

The latest such effort comes in Canada. A mega gaming resort is planned for Vancouver, British Columbia, and many local citizens want no part of the operation. The opponents have solid grounds for concern, reports investigative journalist Wayne Madsen, because the facility has ties to some shadowy figures in Alabama. Such operations, Madsen writes, have connections to unlawful transactions involving big oil and defense contractors.

From a recent article titled "Grand Casino North America" at Wayne Madsen Reports (WMR):

North America--the United States and Canada--is being turned into one huge casino, where politicians receive kickbacks from criminal syndicates and illegal business deals involving American and Canadian companies. The secretive deals involve defense contractors that are intent on exporting jobs and sensitive rare earth mineral defense technology overseas and are laundering foreign pay-offs to U.S. and Canadian firms through North American gambling operations with impunity. That's the take by a former top-level Republican Party source who has witnessed the backroom deals personally.

The "casino-ization" of North America involves top politicians in Alabama, including former Republican Governor Bob Riley, a rumored 2012 presidential candidate; his son Rob's business operations; the leadership of British Columbia and the city of Vancouver; Texas oil interests; and casinos in Macau in which the family of the late Chinese leader Deng Xiaoping has a major stake.

How does it all tie together? WMR explains:

In 2000, Valparaiso, Indiana-based UGIMAG, which produced defense technology-related rare earth neodymium-iron-boron and samarium-cobalt alloy miniaturized super-magnets, was sold to Magnequench International, Inc., a Delaware-registered company that was originally part of General Motors Delphi Automotive Systems Energy and Engine Management Systems division before it was spun off. UGIMAG became Magnequench UG. Insight magazine reported that Magnequench had a contract with SL Montevideo Technology of Montevideo, Minnesota, a division of SL Industries of Mount Laurel, New Jersey, to supply it with super-magnets for a Defense Department contract to produce servo motors for the precision-guided JDAM missile.

In 1995, Magnequench, with the approval of the Clinton administration and what WMR was told was a financial boost from George Soros, was sold to a consortium that included two Chinese companies, San Huan New Materials and Hi-Tech Inc., partly owned by the Chinese government's Academy of Sciences in Beijing, and China National Nonferrous Metals Import and Export Corporation (CNIEC). In fact, both companies were owned by in-laws of Chinese Premier Deng Xiaoping, who, WMR previously reported, maintained close ties to Joe Biden who helped arrange with Deng the transfer of lost US electronic intercept stations from Iran, after the fall of the Shah, to western China.

Magnequench's owner, Archibald Cox, Jr., the son of the Watergate special prosecutor Archibald Cox, Sr., who was fired by President Richard Nixon, permitted the firm's headquarters being moved from Indiana to Singapore. Magnequench's minority stakeholder was Sextant Group, Inc. of New York, an international investment group founded by Cox, Jr. and which fronted the sale of Magnequench from GM to China. WMR has learned from informed sources that Sextant's investment money was linked to the Bush family and Soros.

What does all of this have to do with Alabama and Canada? A source tells Legal Schnauzer that Archibald Cox Jr. appears to be a key player in the Vancouver resort deal. And while Canadian news outlets state that Paragon Gaming is based in Las Vegas, it's real roots are in Tuscaloosa, Alabama, home to Robert Sigler, who operates a dozen or more companies under the Crimsonica banner. Sigler was at the heart of Global Trust Partners, which launched the Russian-lottery plan. Reports WMR:

Magnequench maintained a factory in Anderson, Indiana and another facility in Huntsville, Alabama and Alabama is where the story about Magnequench begins to involve top-level corruption by senior Republicans in the state. Magnequench's factory operations were eventually transferred to China with the approval of the Bush administration. WMR has learned that individuals closely linked to Alabama Governor Bob Riley, as well as to US Judge Mark Fuller, the judge who sent former Alabama Democratic Governor Don Siegelman to prison for corruption, were closely linked to the transfer of the magnet technology to China from where it was re-exported for use in Iran's, Pakistan's, and North Korea's uranium enrichment programs."

Speaking of Robert Sigler and Global Trust Partners, their failed Russian lottery plan left at least one investor holding the bag--and wanting his money back. Bipinchandra Shah filed a lawsuit in New York, seeking an unpaid $5.8-million court judgment for a defaulted loan. Shah, won the judgment in 2008 from the London Court of International Arbitration against a global investment partnership and a Russian bank.

From an article at The Distressed Debt Report (DBR):

Shah loaned RLI Partners of Gibraltar and affiliate Investment Lottery of Moscow a $3 million short-term bridge facility in 2005. The loan was to have been replaced by a $60 million facility from Alabama-based Global Trust Partners to jointly pursue the All Russian Electronic Lottery System project. Global Trust wasn't named as a party in the lawsuit.

RLI and Investment Lottery had obtained an exclusive license from the Russian government in 2004 to develop the lottery, according to court documents.

The Mobile Register reported in 2005 that Global Trust had intended to ultimately raise $300 million for the project, which involved the installation of 50,000 electronic terminals throughout Russia. After becoming fully operational within a few years, it was to have been the largest lottery system in the world, according to the report.

What went wrong? DBR reports:

Global Trust bailed out of the financing, however, causing RLI and Investment Lottery to default on the bridge loan. A person close to the situation said that Global Trust ultimately found the project too risky and considered the business plan presented by RLI and Investment Lottery to be inadequate. The person said that Global Trust's investors lost millions of dollars of their own on the project. They are trying to recoup their losses through the Alabama state securities commission and lawyers in Russia.

Failures to obtain financing caused RLI to disband a company it created in Gibraltar and Moscow specifically to develop a Russian lottery.

RLI and Investment Lottery's license with the Russian government has since expired, according to people familiar with the situation.

We will continue to follow the Shah lawsuit and the Vancouver-resort story. We are not opposed to legalized and regulated gaming, but gambling operations with roots in Alabama have tended to be of a dubious nature. Questionable activities at the intersection of gambling and government have torn at Alabama's social fabric and probably contributed to the massive corruption that plagues our state.

We suspect opponents of the planned resort in Vancouver are wise to be asking tough questions.

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