Stockton University cast a wide net of blame Tuesday for its failed efforts to turn a former casino into a satellite campus, even as it seeks new buyers for the Atlantic City property.
It released a report on the debacle that assigned blame to many parties, including a former university president who failed to let the board know of a legal deal-breaker that had not been resolved. It also blamed the lawyer working on the deal for Stockton, who it said did not warn the university the deal was a bad one and who, in fact, had not even been admitted to practice law in New Jersey.
It blamed seller Caesars Entertainment for saying that certain deed restrictions would be waived; they weren’t, and that caused the deal to fall through.
The inquiry was commissioned by Stockton’s board of trustees and completed by an outside law firm it hired.
The attorneys said the board had become too deferential to former President Herman Saatkamp, but they also said the trustees were not given all the information they needed to assess whether the deal was worth doing.
“Saatkamp’s leadership style, and haste to obtain approval of the deal, hampered debate” and resulted in the board “not learning of critical facts,” the report said.
The Showboat closed on Aug. 31, 2014. Stockton bought in December 2014, announcing plans to convert it into an urban satellite campus that the suburban university had long wanted to establish.
The school paid $18 million for the property, which came with a set of competing deed restrictions. One, placed by Caesars Entertainment, prohibited the property from ever again being used as a casino. But there also was a 1988 legal covenant among the Showboat, the Trump Taj Mahal and Resorts casinos requiring that the Showboat never be used for anything other than a casino.
The report determined that Saatkamp knew that Trump Entertainment Resorts was refusing to waive the 1988 deed restriction but didn’t tell the board.
Saatkamp said he acted in the best interest of Stockton and placed blame on an outside lawyer advising him.
“I am deeply disappointed at the lack of emphasis on the failure of Stockton’s outside counsel, which the board and I relied upon, to fully disclose significant legal problems with the real estate agreement,” Saatkamp said in a statement. “The fact is that outside legal counsel reviewed, approved and recommended the transaction.”
The report blamed attorney Stevan Sandberg for not advising Saatkamp to walk away from the deal, and also said the attorney was not admitted to practice law in New Jersey.
Sandberg did not immediately respond to a request for comment Tuesday, nor did Caesars Entertainment.
The report came the same day that New York private equity investor Jeffrey Keating told The Associated Press he has contacted Stockton about buying the Showboat for “significantly more” than the $18 million the university paid for it. He said his initial intention is to operate it as a non-gambling property while maintaining the option to restore casino gambling there in the future.
Keating tried to buy the former Revel casino earlier this year.
Wayne Parry can be reached at http://twitter.com/WayneParryAC
View more information: https://www.foxbusiness.com/markets/stockton-casts-wide-blame-for-failure-of-showboat-deal-as-new-buyers-are-sought