David Bergstein transferred property deeds to his mother in order to keep Mandalay Bay from collecting on a more than $1 million gambling debt, according to a lawsuit filed Thursday by the Las Vegas casino.
The lawsuit, filed in Los Angeles Superior Court, says Bergstein put up an estimated $7 million worth of Los Angeles-area land as collateral on $950,000 in gambling chips in early 2008.
But before the casino came to collect, he transferred them to his mother, Sarah Bergstein, effectively preventing Mandalay Bay from acquiring them through banking channels, the lawsuit states.
Sarah Bergstein, acting as a trustee, was aware of the reason behind the property transfers, according to the lawsuit, which accuses him of fraud.
In an interview with TheWrap, Bergstein called the lawsuit "nonsense."
"I had a dispute with them over $200,000. They recorded default judgement, and are trying to collect on it. I’m getting it reversed in Las Vegas. Until they get it reversed, they continue their collection efforts."
Bergstein said the default judgement was because his lawyer did not respond to the suit.
At some point Bergstein made a $150,000 payment to the casino, but Mandalay Bay sought a summary judgment on the principal amount of $800,000, plus $204,756.16 in interest and additional fees that brought his debt up over $1.03 million, according to the filing.
In June of 2008, Bergstein transferred four parcels of land in Hidden Hills — worth nearly $6 million — to his mother, with the sole intent of keeping it from Mandalay Bay, the lawsuit states. He then did the same thing with two other Hidden Hills parcels in September — these worth more than $2 million — shuttling it first through one of his companies, Drbac, and then on to Sarah Bergstein.
The lawsuit asks that the court void the property transfers; that Bergstein and his mother be restrained from trying to sell them; that Mandalay Bay’s standing judgment against him be considered a lien on the land; and that Sarah Bergstein be forced to account for any profits earned on it in the interim.
A message left by TheWrap with Bergstein’s lawyer, Michael Barnes, was not immediately returned Thursday night.
The troubled financier is the target of a lawsuit by 27 creditors who banded together and managed to get a court-appointed trustee to take control of his assets.
He’s also involved in a furious bidding process to buy Miramax from Disney — even while in the midst of all this trouble. But the consortium of investors he’s advising could soon be out of luck: TheWrap learned Thursday night that the Weinstein Co. has secured exclusive negotiating rights with Disney.
Pamela Chelin contributed reporting to this story.
© 2008 Los Angeles Times photo by Gary Friedman. Reprinted with permission.