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HOME > NEWS > Investor News > House of Blues Foundation Room fires employees involved in drug, prostitution investigation
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House of Blues Foundation Room fires employees involved in drug, prostitution investigation

14 March 2014

By Richard N. Velotta

LAS VEGAS -- House of Blues Foundation Room managers have fired the employees who provided illegal narcotics and prostitutes to undercover investigators in 2013 that led to a $500,000 fine levied against MGM Resorts International.

An MGM spokesman said late Wednesday that operators of the restaurant and ultralounge on Mandalay Bay Resort & Casino’s 43rd floor “took appropriate and swift action in dealing with this situation, terminating the involved employees and ending relationships with third parties responsible for these wrongdoings.”

The Nevada State Gaming Control Board Gaming Commission said earlier in the day that MGM agreed to settle a five-count complaint by paying the fine and a $17,000 reimbursement for investigative expenses.

Control Board and Metropolitan Police Department agents said that 10 House of Blues employees and at least five nonemployees were alleged to have arranged to provide drugs or prostitutes for undercover officers and most of those contacts occurred in public areas, including on the main level of the resort.

House of Blues officials said Thursday that four employees were fired immediately and a contract with a third-party vendor the company wouldn’t name was terminated. The status of the 11 employees working with the contracted vendor wasn’t disclosed.

“While these activities took place outside our knowledge, we acknowledge our responsibility, as landlords, to monitor all nightclub and ultralounge operators at our resorts,” a statement issued by MGM said. “The intolerable activities discovered by investigators are obviously completely contrary to the type of luxury resort our company strives to run.”

The statement said House of Blues has increased its compliance and training procedures and re-emphasized its zero tolerance for inappropriate conduct.

“House of Blues is a committed, long-time partner at Mandalay Bay,” the statement said. “We are working closely with Foundation Room management to ensure their operations meet the standards we expect of them. We commit to build on the solid reputation of MGM Resorts and Mandalay Bay and will increase our oversight and tenant monitoring to address the short term, while taking appropriate steps to further enhance training to assure compliance in the long term.”

A spokesman for Malibu, Calif.-based breakwhitelight, which manages public relations for the House of Blues, said the company cooperated with authorities and changed oversight procedures when the allegations were raised.

“When we became aware of this situation, we worked closely with Mandalay Bay to determine the extent of any of the alleged activities,” spokesman Jim Yeager said. “Over the ensuing months, we modified our procedures and our management oversight to ensure we remain compliant with all governing rights and restrictions.”

Undercover officers said restaurant and lounge employees provided cocaine, Ecstasy and four women who agreed to have sex for money on four occasions over a two-month period in summer 2012.

An MGM executive signed off March 3 on the stipulation prepared by the Nevada attorney general’s office in February. The company is not expected to contest the findings of the complaint when it is considered for final approval by the Nevada Gaming Commission on March 20.

 
Richard N. Velotta
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