Sam Nazarian, who runs swanky clubs and hotels in Southern California and Miami and recently established a footprint in Vegas with his SLS casino resort, has agreed to take no part in operations of the 1,600-room property and has stepped aside as CEO.
Nazarian sought a Nevada gaming license to run the casino. A routine investigation uncovered unsavory details about the nightclub impresario, including recent cocaine use and millions in payoffs to a felon with convictions for drug possession and money laundering, reported the Los Angeles Times. Nazarian paid about $3 million to the felon, and also made substantial payments to convicted Israeli racketeer Hai Waknine and Death Row Records founder Suge Knight.
Though Nazarian was approved for a limited one-year gaming license by the Nevada Gaming Control Board, last week he relinquished all control of his Las Vegas hotel to his principal investor, Stockbridge Capital.
“We have made a collective decision to change the operating structure for the property,” Stockbridge Executive Managing Director Terry Fancher said in a written statement. Fancher now oversees all hotel operations; Nazarian has surrendered his role as chief executive officer.
According to the Times, Nazarian is “the premier nightlife entrepreneur in Los Angeles” with 51 restaurants, 17 nightclubs and six boutique hotels across the United States. Eight more SLS hotels are set to open by 2016, including locations in New York, the Bahamas and Beijing.
Nazarian, who will keep his 10 percent stake in the SLS, originally told investigators he had not used drugs for years. When he failed a drug screening, he admitted to what he called a “one-time indiscretion” during a boys-only getaway in Cabo San Lucas.
During a grueling three-hour hearing in Carson City, Nazarian was scolded by board member Terry Johnson, who said, “We have the one issue of whether there was drug use, but then we had an additional issue of the degree to which you are speaking candidly and truthfully about it.”
Eventually, the board recommended by a 2-1 vote that Nazarian get a yearlong limited license for the SLS with six conditions, including that he not be involved in operations. Last week, the Gaming Control Board unanimously approved of the year-long limited license and the stipulations imposed by the commission.
Fancher said Nazarian “brought the leadership, vision and creativity needed to revitalize the former Sahara into the new SLS Las Vegas. Following a recent hearing by members of the Nevada Gaming Control Board, we have made a collective decision to change the operating structure for the property, which Sam and I agree is in the best interests of the SLS Las Vegas.”
The limited license won’t have an impact on operations at the SLS Las Vegas, located on the northern end of the Strip. Fancher will act as CEO, and former Station Casinos executive Scott Kreeger, named president of SLS in October, will oversee the gaming side.
