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Bert Caldwell: Shady games catch up to Saucier

Sun., Aug. 15, 2010

Robert B. Saucier may be chief executive officer of Galaxy Gaming Inc., but he cannot escape the gravitational pull of Mars.

He’s back, or at least a 13-year-old lawsuit is.

Many in Spokane will recall Saucier in 1997 created Washington’s first non-tribal casino, the Mars Hotel, after pushing for changes in state law that allowed house-banked gambling.

But the Mars quickly proved to be a red planet, bleeding money, skipping taxes, filing bankruptcy and, in July 1999, evaporating in a spectacular fire quickly attributed to arson.

But Saucier had already hot-footed to Las Vegas, allegedly having pocketed an $825,000 loan secured by the Mars.

He founded Galaxy Gaming Corp. in late 1997.

While at the Mars, Saucier developed a type of blackjack side bet that increased the casino’s take. Other casino owners wanted to adopt the game, so he began licensing what is now called “Lucky Ladies.”

Galaxy added more games to its portfolio over the years, Saucier restructuring the business at least twice in the meantime. The company went public last year.

Last week, the public Galaxy reported its first profitable quarter. But the results might be a push as far as Saucier is concerned.

On Aug. 5, three Washington Court of Appeals judges in Spokane revived a lender’s efforts to get its money back from Saucier. The judges said Bellevue-based Sherron Associates Loan Fund V (Mars Hotel) LLC was entitled to pursue a 1998 judgment against Saucier obtained by a former LLC, or limited liability company. Saucier and his lawyers had argued the claim against him perished when the first LLC ceased to exist. Sherron attorney Kevin Bay maintained that the judgment was an asset that could not just disappear like a palmed ace.

The case could be the last of its kind. The Washington Legislature this year modified the process of dissolving LLCs.

But Saucier still has a problem. Unless the Appeals Court finding is overturned, he’s on the hook for, not $825,000, but more than $1.7 million, with interest accruing at the rate of 12 percent annually. And Bay is seeking, in King County, to have Galaxy recognized as, essentially, Saucier’s alter ego. An entity controlled by Saucier owned 75 percent of Galaxy stock as of April 30.

Also, in Nevada, Bay is trying to get the judgment enforced against Galaxy’s intellectual property, claiming those assets are really Saucier’s. Bay says Saucier has constantly shifted ownership of his assets to frustrate creditors.

Saucier did not respond to a request for a comment on the Appeals Court ruling. But in the quarterly filing made with the U.S. Securities and Exchange Commission after the court decision, Galaxy and Saucier said they intend to continue a vigorous defense. Meanwhile, the company and Saucier have sued Sherron for “various abuses of process in the litigation and their malicious attempts to improperly enforce a judgment.”

Galaxy is paying Saucier’s legal fees, which in 2009 ran to $37,661, and almost $13,000 through the first six months of 2010. It also rents office space from another LLC of which Saucier is the manager. His annual salary, meanwhile, is a paltry $30,000.

How the various legal actions will play out is unknown, like the fate of the galaxy. But for those who remember Saucier’s Spokane ventures, the lawsuits are but another chapter in the Martian chronicles.

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