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Thursday, November 20, 2014

From Tuscaloosa to Las Vegas to Russia, Rob Riley's connections to gambling industry run far and wide


Rob Riley
Rob Riley, the son of former "anti-gambling" Alabama Governor Bob Riley, has ties to national (Las Vegas) and international (Russia) gambling that go back a decade or more. The state's largest newspapers largely have ignored Rob Riley's hypocrisy on the issue. But that changed with a recent investigative piece by Josh Moon at the Montgomery Advertiser.

Rob Riley even initiated a business deal with VictoryLand owner Milton McGregor, whose business was targeted for raids by Bob Riley in the final two years of his governorship (2008-10).

Does the Rileys' two-facedness on gambling know any boundaries? Based on Moon's reporting, the answer seems to be no.

The Decatur Daily exposed Rob Riley's ties to gambling in 2005, but the issue seemingly has been off limits for the state's metropolitan dailies. Josh Moon's article changes that, and it exposes the Riley family's duplicity for a widespread audience.

Rob Riley's interest in gambling seems to flow from his friendship with Robert Sigler, which started when both were students at the University of Alabama. Sigler went on to head Tuscaloosa-based parent company Crimsonica and Paragon Gaming, a Las Vegas company that started in 2000 to help Indian tribes develop casino gambling on reservations.

Public records show that Rob Riley was an attorney, board member, and registered agent for Crimsonica until at least May 2005. All of this from the son of a governor who once called electronic-bingo machines a "cancer" in Alabama.

Exactly what path did Rob Riley take into the world of gambling? Josh Moon spells it out, starting with Milton McGregor's claim that Bob Riley once sought a job for his son with VictoryLand:

In a way, McGregor says he was already doing business with Rob Riley. One afternoon in 2004, Rob Riley and his University of Alabama college roommate had shown up at McGregor's office unannounced to meet with the casino boss about possible investment opportunities.

Rob Riley's roommate, a former Wall Street worker named Robert Sigler, was the founder of a number of investment and finance companies, most notably Crimsonica and Global Trust Partners. McGregor said Sigler and Rob Riley pitched a number of investment opportunities. Rob Riley acknowledged going to McGregor's office, but said he went only because Sigler asked for an introduction and he was helping a friend.

Rob Riley was listed as the attorney and a board member for Crimsonica.

The most potentially lucrative business deal entered into by the group was a plan to set up a nationwide lottery in Russia — a plan that would ultimately go awry for many reasons, including the fact the Russian mafia didn't care for the idea.

The word "trust" in Global Trust Partners apparently was not meant to be taken literally. As for Rob Riley, he adopted his usual habit of resorting to fuzzy logic in an effort to explain away his proximity to gambling:

Rob Riley said he had no interest in (the Russian lottery) deal and warned Sigler that it wouldn't work. Ultimately, when the deal did fall apart, the investors — including McGregor, Sigler and Montgomery doctor David Thrasher — lost a substantial sum of money. There has been speculation through the years that Rob Riley also lost money, but he insists he had no involvement in the lottery deal, although he admits to losing money on some of Sigler's other ventures.

Let's see if we understand this. Rob Riley knew the Russian lottery plan wouldn't work, and he had no financial involvement with it, but he helped line up other investors anyway? Does that make sense to you?

Robert Sigler
Here is a more important question: If Rob Riley knew the plan wouldn't work, but still sought money for it from others, did he engage in a form of investment fraud?

The Russian-lottery deal remains a murky subject, but we've written about it several times. A post titled "International gambling operations have roots in Alabama" addressed a lawsuit by an investor named Bipinchandra Shah, who sought 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. Here is how we described the Shah case, based on an article from 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 with the deal? A complete answer to that question is hard to determine, but here is how we described it, again with assistance from DBR:

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.

For now, let's return to a Rob Riley quote from my interview with him in early 2013:

LS: You claimed in the newspaper the other day you don't know anything about gambling funds going to the RSLC and wound up in Alabama. Are you serious? They took gambling money from 2003, dating to the Mississippi Choctaws?

RR: No, no, I did not know that.

LS: Why do you not support gambling in Alabama? Is it on a moral basis?

RR: Yes.

Does Rob Riley sound like someone who really is morally opposed to gambling? Our answer to that is no. When Rob Riley gets involved with gambling operations, does he know what he's doing? The answer to that seems to be no, as well.


(To be continued)

1 comment:

Anonymous said...

Thanks for your coverage on this, LS. The public needs to know more about Robert Sigler. Just how close was he to the Riley admin, and how did he benefit?