Troubled Florida Company Buys Stalled Dunes Casino
ATLANTIC CITY, N.J. (AP) _ The financially troubled Dunes Casino Hotel project here has been sold to a Florida company with its own troubled history of lawsuits, cash shortages and federal investigations, federal documents show.
The Royale Group Ltd., a company in the hotel and real estate business, recently bought out nearly all the stock in the Dunes, according to documents filed with the Securities and Exchange Commission and the U.S. Bankruptcy Court and reviewed by The Press of Atlantic City.
The Dunes project at the southern end of the Boardwalk stalled in 1979 when the owners ran out of money. Its bare steel girders have stood rusting ever since.
Developer Jack Bona arrived in 1983 to rescue the casino but was forced to file for bankruptcy protection in August 1985.
Since then, Bona has tried several other plans to raise money to pay off his debts, including a sale of shares and private deals with investors. All have failed.
Royale’s chief executive officer since 1981 has been Leonard Pelullo, a leader in the effort to restore a strip of art deco-style hotels on Miami Beach.
Pelullo and Bona have tried to keep the deal for the Dunes quiet. A Royale Group Ltd. vice president refers all questions about the sale to company attorneys, who say they cannot provide details.
So far, no one in Royale has said anything about how the company plans to raise the approximately $250 million needed to complete the casino hotel.
Royale has been trying to break into the Atlantic City casino industry for a decade. Then called Cavanaugh Communities Corp., the company first bought marina land in 1978 but was unable to put together financing for a casino.
Documents obtained by The Press from the SEC and U.S. Bankruptcy Court say that Boardwalk to Bay Inc., a Royale subsidiary, has purchased 99 percent of the Dunes stock from Bona and has an option to buy the other 1 percent.
Pelullo and his companies have been involved in nearly three dozen separate lawsuits and actions by government agencies, according to company documents filed with the SEC. Many were filed by banks over the alleged failure to repay millions of dollars worth of loans, the newspaper reported.
Pelullo’s business dealings spawned a U.S. grand jury investigation in 1986, the newspaper said. According to Royale’s SEC filings, the investigation centers on the circumstances surrounding a $13 million mortgage granted to Royale by a California savings and loan.