News

Both Sides of the Table

Northeast Gaming sues Peter Picknelly for violating a contract by joining Penn National.

Comments (2)
Tuesday, March 26, 2013
Illustration By Mark Roessler

For Penn National, landing Peter A. Picknelly as a local partner in its plan to build a casino in Springfield was a significant coup.

Picknelly is the chairman and CEO of Peter Pan Bus Lines—the Springfield-based company that was founded by his grandfather and then expanded dramatically under the leadership of his father—a valuable connection, given how reliant casinos are on customers who travel by bus.

Picknelly is also the founder of OPAL Real Estate Group, which is involved in the development and management of major projects around the region. And he’s well connected in both business and political circles, a major campaign donor who has the ear of elected officials across the state.

Last December, in an interview with CBS 3 Springfield, Eric Schippers, Penn National’s vice president for public affairs, said the company was “honored” to work with Picknelly.

More recently, though, Picknelly’s involvement has created a problem for the project: last month, Northeast Gaming Group, the company behind a rival casino proposal in Palmer, sued both Picknelly and Penn National. The barbed legal battle that has since unfolded underscores the intensity of the competition for the region’s one casino license, involving not only two major casino corporations but also some of the most prominent businesspeople in the Valley, Picknelly chief among them.

*

Penn National is one of four companies competing to build a casino in Western Mass. Its plan—an $807 million resort casino in Springfield’s North End—is competing directly with another casino proposed for the city, a $800 million project that MGM wants to build in the South End.

While, ultimately, the state’s Gaming Commission will choose the recipient of the sole casino license to be granted in Western Mass., the proposals first need to gain local approval. In Springfield, that will mean having both Mayor Domenic Sarno and the City Council sign off on a host community agreement, then winning the majority of votes on a city-wide ballot, perhaps as early as June.

Like all the out-of-state casino companies competing in the region, Pennsylvania-based Penn National recognized the importance of securing prominent local businesspeople on its team; hence its alliance with Picknelly.

Picknelly, however, had been involved with the Palmer project before joining up with Penn National; the extent of that involvement is a matter of dispute. The lawsuit alleges that Picknelly, aided and abetted by Penn National, violated a contract with Northeast Gaming and breached his fiduciary responsibility to the company, harming Northeast’s prospects in the process.

The suit also alleges that Picknelly illegally offered Leon Dragone, Northeast Gaming’s president and a Longmeadow resident, a secret interest in the Springfield project if he would let Picknelly walk away from his deal with Northeast.

Picknelly and his attorney both emphatically deny those charges and accuse Northeast Gaming of trying to undermine Penn National’s casino project. Both Picknelly and Penn National have filed motions to have the case dismissed.

*

According to Northeast’s lawsuit, in late 2007, Picknelly requested a meeting with Dragone to discuss his interest in becoming involved with Northeast’s plans to develop casinos in both Palmer and New Bedford. Dragone is part owner of the Palmer land that Mohegan Sun was eyeing for a casino site.

In a meeting at the Peter Pan offices, the lawsuit says, Picknelly told Dragone he wanted to be involved in the casino project and in developing property adjacent to the site through OPAL. He also told Dragone “he did not think Springfield … was a good place to put a casino … because of the large amount of crime,” according to the suit.

Over the coming weeks, the two men continued to discuss the project; at one point, the suit alleges, Picknelly said that “he wanted to have a greater interest in the proposed Palmer casino project than his brother Paul Picknelly,” also reportedly an early investor in that plan.

Paul Picknelly is president of Monarch Enterprises, which owns the Monarch Place office building on downtown Springfield, and of Falcon Hotel Corp., which owns four hotels in the region. Paul Picknelly is now listed by MGM as a “local partner and consultant” to its casino plan for the South End. He is not being sued by Northeast Gaming.

In January of 2008, Peter Picknelly and Northeast Gaming formalized their relationship in a revenue-sharing agreement. Under the agreement, Picknelly would invest $500,000 in Northeast’s projects; in exchange, he would receive 15 percent of the net revenue from a New Bedford casino and 3 percent from a Palmer casino. (The deal was later amended to increase Picknelly’s New Bedford share to 17 percent.) The deal also included “success fees”: Picknelly would receive an additional $1 million for each casino license Northeast secured. The agreement allowed Picknelly to ask for the return of his $500,000 investment if Northeast did not secure a casino development partner or a state license within two years of the agreement’s signing.

At that point, Picknelly’s role in the Palmer deal became public. Reporting on a press release from a PR firm working for Picknelly, the Springfield Republican referred to him as “part of the development team” for the proposed Palmer and New Bedford casinos, and quoted him saying Palmer was the best site for a Western Mass. casino.

The lawsuit outlines ways Picknelly used his clout to promote the Palmer project: hosting a gathering for local legislators to discuss the plan; talking it up at political fundraisers held at his Springfield home. “During one of those fundraisers, … Picknelly told Massachusetts Governor Deval Patrick that Palmer was the best location for a Western Massachusetts casino,” the suit said. Several of Picknelly’s employees at OPAL and Peter Pan also became involved in discussions about development near the casino and a potential bus stop at the site, according to the suit.

But at some point, the relationship changed. On Dec. 7, 2011, the lawsuit contends, Picknelly met with Dragone to tell him that he “intended to enter into a competing joint venture for a proposed casino in Springfield,” showing Dragone a site plan identical to the one now being promoted by Penn National. Picknelly asked Dragone to release him from his obligations to Northeast and join him in the Springfield project, the suit alleges; in addition, it says, he told Dragone that if he did release him, “he would give Mr. Dragone an interest in his Springfield casino joint venture, which would not be publicly disclosed.

“Peter A. Picknelly told Mr. Dragone that through this proposed stratagem, Mr. Dragone would have interests in two casino proposals, thus increasing his chances for financial success,” the lawsuit states. “Mr. Picknelly’s offer of a silent or hidden interest sought to engage Mr. Dragone in conduct prohibited by the recently enacted Massachusetts gaming legislation.”

Dragone, according to the suit, refused the alleged offer, and also refused to release Picknelly from his obligations to Northeast. In a letter dated Aug. 7, 2012, an attorney for Picknelly formally informed Dragone that Picknelly was involved in the Springfield project and was disassociating himself with the Palmer project, and again asked for the return of his $500,000 investment. About two weeks later, Penn National confirmed to the media that it was in talks with Picknelly about working together on the North End development.

Northeast Gaming’s lawsuit contends that, through multiple conversations with Dragone, Picknelly had “sought out and received proprietary Northeast Gaming information regarding overall strategy, legislative efforts, issues regarding possible ancillary land use, issues regarding public and private transportation, and issues regarding prospective competitors” and then used that information “to his own unlawful and unfair advantage,” to benefit the Penn National project in Springfield.

In addition, the lawsuit contends that Penn National unlawfully and “actively participated with … Picknelly in his betrayal and abandonment” of his agreement with Northeast Gaming, to the latter’s detriment.

The Advocate made multiple attempts over several weeks to interview Dragone’s attorney, Stephen Spellman of Springfield’s Egan, Flanagan and Cohen, including submitting questions in writing. At deadline, Spellman had not responded to our questions.

*

In an interview with the Advocate, Peter Picknelly referred questions about the lawsuit, which he described as “completely frivolous,” to his attorney. The lawsuit’s contention that he’d offered Dragone a secret, and illegal, piece of the Penn National Project, Picknelly called “so bizarre I can’t even respond to that.”

Penn National’s response echoed Picknelly’s. In a short statement sent to the Advocate, Schippers, the company vice president, called the case “frivolous and without legal basis.” The company’s motion to dismiss the case called the lawsuit “a bad faith attempt to harass Penn National” and said it offered no evidence that the company interfered with Picknelly’s relationship with Northeast.

In a separate motion to dismiss, Picknelly’s attorney, Michael Callan of the Springfield firm Doherty, Wallace, Pillsbury and Murphy, argued that Picknelly was never a partner in the Palmer project; he would have had no control over the project’s operation or management and would not share in any losses. He was simply an investor, as made clear in the revenue-sharing agreement he signed in 2008.

That agreement, the motion says, included a provision that he could ask for his money back after two years if the project did not secure a casino-developer partner or a state license. Picknelly, the motion adds, followed all the legally required steps to remove himself from the Palmer deal and ask for the return of his $500,000 investment, which he has yet to receive.

While the lawsuit contends that Picknelly had begun talks with Penn National while still involved with Northeast Gaming, Callan said his client had no agreement with Penn until after he’d formally asked to be released from his agreement with Northeast. Callan also disputed the contention that Picknelly has misused proprietary information he received from Dragone. The revenue-sharing agreement, he said, contained no confidentiality requirement. In an interview with the Advocate, Callan described Northeast Gaming’s lawsuit as “looking for splashy headlines” and full of inaccurate assertions.

But in the lawyerly war of words, the other side has not spared the ammunition, either. In responding to the motion to dismiss, Spellman, Northeast Gaming’s attorney, stood by his assertion that Picknelly had begun quiet discussions with Penn National while still committed to his client. “Penn National Gaming snuck into town, meeting clandestinely with Mr. Picknelly to discuss his participation in a competing venture,” Spellman wrote.

As Northeast moves ahead with its legal challenge, seeking a jury trial and damages to be determined by the court, Picknelly’s attorney Callan has threatened a countersuit.•

Comments (2)
Post a Comment

Maureen, why is this appearing now? This story is 3 months old. Want to really make news? How about exploring the connection between Leon Dragone and MGM through Frank Fitzgerald.

We have been wondering aloud for months now why Leon Dragone and Northeast Realty Associates, the folks bringing you the Palmer Casino plan never sued Paul Picknelly like they did his brother Peter.

In his story last week, TV-22 Ryan Walsh, sports reporter turned investigative journalist asked the same question. The response from Paul Picknelly’s team? Paul turned his interest in Palmer over to his son-in-law. After the laughter throughout the Valley quieted down at such an obvious and quite frankly convenient excuse, it made us go back to our connect the dots puzzle books.

Was there another connection that would preclude Leon Dragone from suing Paul Picknelly and MGM? Wasn’t Peter sued because his knowing Palmer’s secrets gave him an unfair advantage with Penn? Well, didn’t Paul by his involvement also have the same info? So, why no suit? We don’t think convenient hand off to a close family member would stop the tenacious Leon Dragone et. al from pursuing the same legal action. So, again...why no suit?

That leads CasinoWhispers to then ask the questions - Does Leon Dragone have a silent financial interest in MGM and the South End Plan? The same kind of silent financial interest he turned down in the Penn deal? What’s the connection?

We went back to old articles dating from almost a decade ago and what we got was more questions than answers. The biggest question of all... Why is Leon Dragone’s longtime lawyer, decades long friend and close advisor Frank Fitzgerald now representing MGM in Springfield? Is Frank Fitzgerald the missing link?

Frank Fitzgerald began representing Leon Dragone as early as 1993. Not only was he Leon’s lawyer, but was often representing Leon as his spokesperson, and emissary before various municipal bodies. Frank was even the Registering Agent for Northeast Resorts Group of which Leon Dragone was the President. You can’t enter a GOOGLE search of their names together without finding pages of entries listing a connection between them and the Palmer casino.

Frank Fitzgerald, is the founder and long time Chairman of the Board of the Bank of Western MA, coincidentally the very lending institution that provided Dragone with the financing he needed to secure the land the proposed Palmer casino would be build on. Small world! These guys were tight. Like two peas in a pod tight.

By anyone’s guess, more than either Picknelly brother, no single individual would have a greater knowledge of the details and inner workings of Dragone’s casino interests and plans than Frank Fitzgerald. Frank would have a complete understanding of the property, corporate organizational structure, and secret competitive nuances of the Palmer strategies. So we can’t help wondering why in a million years, Leon would allow his lawyer to work with his greatest potential adversary in the casino fight, MGM?

Anyone? Bueller?

A lawyer isn’t able to represent represent a client if it would be adverse to the interests of another client unless both the new client and the current client agree. This is an unyielding part of the strict ethical code governing the conduct of persons engaged in the practice of law.

There is no doubt that MGM and the Palmer Casino are competitors. In going back and looking at all the newspaper coverage, it’s pretty clear that Frank knows most if not every element of the Palmer project.

We can’t imagine how anyone could reasonably think that Frank’s representation of MGM wouldn’t hurt Palmer.

Given the scope of the relationship publicly reported between Fitzgerald and Dragone, it is hardly likely that Frank could be actively involved in the MGM project without Leon’s consent and disclosure to MGM.

Under the circumstances only two possibilities could exist. Either Frank Fitzgerald has internally decided that he can ethically represent both clients or he has Mr. Dragone's consent.

Given that Frank Fitzgerald has been publicly associated with the MGM project in Springfield, it is highly unlikely that he has did this without Leon Dragone's consent. If that consent has been given, the question is what did Mr. Dragone get in return for it?

Does Leon Dragone have a silent interest in the MGM South End plan?

With the incredibly poor showing by Mohegan Sun last week in Palmer, could Dragone be playing the odds that if his Palmer project fails, MGM might still provide some kind of a windfall?


Posted by CasinoWhispers on 3.27.13 at 5:48

Come back Casino Whispers, come back!

Posted by MassGal on 4.2.13 at 14:52
Comment:

Name:

Password:

New User/Guest?

Find it Here:
keyword:
search type:
search in:

« Previous   |   Next »
Print Email RSS feed

From Our Readers
Baker: More of the Same; Props to Rohmann; Props to Rohmann
Between the Lines: A Gun Owner’s Resentment
Why make it expensive and difficult for law-abiding residents to possess firearms?
Sorry, Nixon
If the impeachment of our 37th president showed that the system works, what does Obama’s continued political survival say about it?
The Zipcar Is Here
Car sharing takes hold in the Valley.
Under the Microscope
Did ex-WSU president Evan Dobelle use university resources to support an identity as well as a lifestyle?
From Our Readers
Casino Opposition “Selfish”; Cut Foreign Aid, Not Our Military
Between the Lines: Deval’s Capital Management
He can rehab his office, but what about his legacy?
From Snowden to the Pentagon Papers
Can student interest in civics be rekindled?