Ha HA

Griffin book producer files for Chapter 11, citing suit

By Liz Benston
LAS VEGAS SUN
The company that produces the Griffin book claims it's broke.

Griffin Investigations Inc., which distributes lists of suspected cheaters and card counters to casinos, has filed for Chapter 11 bankruptcy protection, citing a defamation lawsuit filed against the company by gamblers who said they were improperly detained at the Caesars Palace and Imperial Palace casinos, called cheaters and arrested.

Griffin, a security company widely used by Las Vegas casinos that sells lists of "undesirables," cited as its largest creditor the company's attorneys in the case, who are owed $106,868.15 in legal fees.

The company's second-largest creditors are the gamblers who sued Griffin. Gamblers Michael Russo and James Grosjean are owed a court judgment of $105,000, according to Griffin's bankruptcy filing.

Griffin's co-owners, Beverly and Robert Griffin, are each owed $74,000 and $50,000, respectively, in loans.

The company lists assets of $100,000 to $500,000. Its 20 largest unsecured claims total $368,482.

Griffin officials could not be reached by press time, and the company's Reno attorney could not be reached for comment.

In July, a $45,659 judgment against Griffin was entered in Clark County District Court in favor of the two gamblers. Russo was awarded $25,000 in damages and $15,000 in punitive damages and Grosjean was awarded $25,000 in damages and $10,000 in punitive damages.

Griffin distributes a list of suspected cheats and skilled gamblers, often called advantage players, called the "Griffin book" and also has an online service.

The company has many enemies among advantage players, who say they have been falsely labeled as cheaters in the Griffin book. Card counters, unlike cheaters, aren't breaking any laws but casinos don't want their play.

State gaming regulators have often said that card counting is absolutely legal but that casinos can refuse to allow card counters to play on their tables.

In the lawsuit, Russo and Grosjean claim that Griffin published fabricated information that Russo was part of a team of blackjack cheaters and that Grosjean was associated with a person who bent cards.

Filed in November 2001, the suit said Caesars Palace used information in the Griffin book to detain and arrest the gamblers after a gambling session in 2000. Caesars claims the two were bending cards. Several months after the Caesars incident, Grosjean entered Imperial Palace and was detained by casino security. The Imperial Palace claimed Nevada regulators were on the lookout for Grosjean.

The case was later divided into two separate cases. The case involving Imperial Palace resulted in an October judgment of almost $400,000 against the casino. In June, a jury awarded damages of $50,000 against Caesars Palace.

Critics say the cases marked the first judgments against Griffin, which has risked lawsuits over the years for further blurring the line between cheaters and skilled players.

"You're on such thin ice there. You're talking about people's associations and reputations," said Anthony Curtis, publisher of the Las Vegas Advisor newsletter and a skilled blackjack player who has been listed in the Griffin book. "I don't think they're malicious in any way. I think they're just doing their job. But they've hurt people with the mistakes they've made."

In spite of the company's outsized reputation in the casino industry, Griffin was basically a small, mom and pop operation, Curtis said.

"They probably couldn't make their fees keep pace with the new technology," he said.

The suit and judgment has opened the door to other critics and potential lawsuits, which might make the Griffins reconsider their business, he added.

"A precedent has been set. Maybe they will say, 'We've had enough,' " he said.

Bob Nersesian, who represented Russo and Grosjean in court, said Griffin "cried poor at trial" and showed tax returns with three years of losses.

MGM Mirage is among the many casino companies that use Griffin's services.

"The Griffin system has been very effective in tracking individuals who are known slot cheaters, advantage players and other undesirables," company spokeswoman Yvette Monet said. "This is one of many tools that we use to protect our properties and the integrity of our games."

The company, Nevada's largest casino operator, also uses an internal database it has created on cheats and card counters.

They are just doing this to avoid payment. I hope they go to jail and get raped.

It could be a delay tactic or a reduction of payment tactic, or the Griffins know there days are numbered by casinos doing a better job in house and future possibility of lawsuits against them, so they plan to ride off into the sunset with whatever they have as personal assets.

It could be all that for sure but the odds are long anyone goes to jail.

So far it's a civil matter, but who knows. As long as the Griffins compound the matter, the longer the books stay open, who knows what some enterprising attorney might uncover now that the light begins to shine in.

And maybe their bloom has fallen off the rose at the NGC. Without those bureaucratic rat bastards no longer willing to cover your ass .. who knows what might happen.

But pride does goeth before the fall.

IMO Griffin should have paid off Grosjean, worked out a deal with their attorneys on some payment plan, and moved on into the night.

Take heart in this .. no matter the outcome, no matter how well the 'tactics' work or don't work, no matter if Grosjean is able to collect in full or not, no matter if criminal charges follow or not, no matter .. you can take it to the bank that the Griffin's personal life is a living nightmare right now, consumed by putting together a battle plan, knowing it may or may not be successful, and losing a whole lot of sleep for months to come.

For that alone Grosjean deserves the thanks.

it seems to me that perhaps Griffith was undercapitalized for the degree of risk involved with the kind of business it was doing...

I wonder what is typical for a detective agency?

Anyway, if the corporate veil can be pierced the personal assets of the Griffiths could be taken by creditors.

It would be interesting to look through the books and see if the principals had taken excess compensation, distributions of cash or property, abusive reimbursement of business expenses or used some other method to take excessive amounts of capital out of the business. Who knows where this could lead to...

But it looks like the lawyers, consultants and court costs are going to take a big chunk out of the money both owed to Grosjean and that accumulated by the Griffiths.

Because of the nature of Griffins business, would not the state of Nevada had required them to be insured against lawsuits such as Grosjean and Russo's?

They better hope their Minute Book is up to date?

:)

NRS 648.135 Licensee to maintain insurance or act as self-insurer; minimum limits of liability; proof.

1. Before issuing any license or annual renewal thereof, the Board shall require satisfactory proof that the applicant or licensee:

(a) Is covered by a policy of insurance for protection against liability to third persons, with limits of liability in amounts not less than $200,000, written by an insurance company authorized to do business in this state; or

(b) Possesses and will continue to possess sufficient means to act as a self-insurer against that liability.

2. Every licensee shall maintain the policy of insurance or self-insurance required by this section. The license of every such licensee is automatically suspended 10 days after receipt by the licensee of notice from the Board that the required insurance is not in effect, unless satisfactory proof of insurance is provided to the Board within that period.

3. Proof of insurance or self-insurance must be in such a form as the Board may require.

(Added to NRS by 1973, 681; A 1985, 1339; 1987, 2137)

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PROGRAMS OF SELF-INSURANCE

NAC 648.480 Eligibility. (NRS 648.030, 648.135) To be eligible to maintain self‑insurance, a licensee shall:

1. Place on deposit with a recognized financial institution insured by the Federal Deposit Insurance Corporation, not less than $200,000 in cash, a certificate of deposit in the same amount or a similar deposit which is acceptable to the Board. The licensee must furnish to the Board evidence of the deposit. No amount of the deposit may be withdrawn unless the withdrawal is cosigned by an authorized agent of the Board.

2. Be financially responsible for all wrongful acts alleged against him and his employees.

3. Provide the Board with the name of his authorized agent in this state who will accept legal process.

(Added to NAC by Priv. Investigator�s Lic. Bd., eff. 1‑27‑89)

NAC 648.485 Statement of scope of coverage. (NRS 648.030, 648.135) A licensee who is self‑insured shall provide the Board with a statement of the scope of coverage provided, including any act for which coverage is not provided.

(Added to NAC by Priv. Investigator�s Lic. Bd., eff. 1‑27‑89)

NAC 648.490 Application for qualification; effective date of program. (NRS 648.030, 648.135)

1. A licensee wishing to qualify as a self-insured licensee must submit an application to the Board. The application must be signed by the licensee or, if the licensee is a corporation, by an officer of the corporation.

2. An application must include:

(a) An audited financial report of the licensee�s business covering the 3 years immediately preceding the date of the application; and

(b) A copy of the licensee�s proposed program of self-insurance.

3. A program of self-insurance becomes effective when it is approved by the Board or the Executive Director.

(Added to NAC by Priv. Investigator�s Lic. Bd., eff. 1‑27‑89; A 4‑22‑93)

NAC 648.495 Insolvency of licensee. (NRS 648.030, 648.135)

1. If a self-insured licensee becomes insolvent, the financial institution in which the deposit required by NAC 648.480 is made shall immediately give written notice to the Board regarding the licensee�s insolvency.

2. Upon receipt of the notice, the Board may apply to a court of competent jurisdiction to have the deposit held for not more than 2 years to pay any claims made against the licensee.

3. If a self-insured licensee becomes insolvent, he may, if allowed by the Board, present evidence to the Board that his program of self-insurance should be allowed to continue. Such evidence must be presented not later than 10 days after the Board receives notice that the licensee is insolvent.

4. For the purposes of this section, a licensee is insolvent if:

(a) The amount of his deposit is reduced below $200,000; or

(b) The financial institution in which the deposit is made has reasonable cause to believe that the deposit will be so reduced.

(Added to NAC by Priv. Investigator�s Lic. Bd., eff. 1‑27‑89)

the law you cite only specifies liability insurance to third parties...

now what that means who knows? would Grosjean & Russo qualify as third parties? I am not so sure about that, as i take it a third party usually means an uninvolved party.

anyway, if there was insurance, the case would probably have been settled by the insurance company, or the case could have been appealed, which requires the appealing party to post in trust the amount of the award...Griffiths did not have the money to appeal it seems, thus the bankruptcy...i would expect an insurance company could easily come up with the funds to put in trust for an appeal, and meanwhile negotiate a settlement with Grosjean et al.

anyway, i am not sure of the priority of creditors in liquidation, but i believe the amounts owed the principals would come last, after the unsecured creditors.

"the law you cite only specifies liability insurance to third parties...

now what that means who knows? would Grosjean & Russo qualify as third parties? I am not so sure about that, as i take it a third party usually means an uninvolved party."

Tort liability for third parties would include anyone who suffered either bodily injury, property damage or personal injury damage due to the acts of the insured. Grosjean and Russo would definitely be third parties under the law.

Most packaged commercial policies for businesses, provide coverage for the insured's named premises, general liability including property damage, bodily injury, completed operations coverage and personal injury which includes slander, false arrest, detention or imprisonment, malicious prosecution, oral or written publication of material that violates a person's right of privacy, and advertising liability. Many professionals also purchase an optional coverage called errors and ommissions coverage from a specialized carrier for any error or ommission they may mistakenly make.

The personal injury coverage of a policy is what pertains in the Grosjean/Russo case however there's a gotcha contained within the list of exclusions which would let the insurance company off the hook, especially since court documents clearly establish that Griffin intentionally falsified information. And because the information was known by Griffin to be false, if they did have E&O coverage it wouldn't apply either because it was not an error.

The standard exclusion for slander, false arrest etc will speak of intentional acts committed by the named insured, typically it may say something along the lines "Arising out of oral or written publication of material, if done by or at the direction of the insured with knowledge of its falsity." This exclusion would void all coverage for that section of the policy, including legal representation.

I would guess that if Griffin had personal injury coverage in their commercial policy, they submitted the claim to their insurance carrier and was denied coverage based upon the list of exclusions. I'm quite certain that during Bob Nersesian's quest to leave no stone left unturned he thoroughly investigated the insurance coverages available.

In any event, there may be more developments to this case in the future as the legal maneuvering by both parties begin during the bankruptcy proceedings. I doubt we'll hear anything more at all from Bob N until the case is completely finished.

Just thinking out loud....If Griffin is granted chapter 11 bankruptcy protection, how fast do you think it would turn into a chapter 7 and completely put them out of business, if a second slander suit is brought against them?