Disputes heat up over Mob Attraction artifacts

Jay Bloom, left, managing partner of Murder Inc., listens to Meyer Lansky II, grandson of organized crime figure Meyer Lansky, during a news conference at The Mob Experience preview center at the Tropicana on Aug. 2, 2010.

3/29/11: Las Vegas Mob Experience VIP Opening

The Las Vegas Mob Experience VIP grand opening at the Tropicana on March 29, 2011. Launch slideshow »

Guns. Knives. Brass knuckles.

Decades after they were used as tools in deadly games of profit and control, pieces of the nation’s mobster past are once again involved in a heated dispute — this time in court.

The weapons are among 1,500 artifacts housed at the Mob Attraction Las Vegas, located at the Tropicana.

Fights over ownership of the Attraction’s artifacts have been filtering through the court system for months, and now the legal battle is coming to a head with resolution possible this summer.

The collection — called the largest of its kind in the world by attorneys involved in the dispute — includes artifacts from the likes of Benjamin “Bugsy” Siegel, Anthony “The Ant” Spilotro, Charles ''Lucky'' Luciano, Meyer Lansky and Sam Giancana.

It includes such items as a Giancana slot machine and shotgun, golf clubs owned by Lansky, and mobsters’ home movies and hand-written letters.

Items obtained from the family of Spilotro, immortalized as Nicky Santoro in the Las Vegas-based movie "Casino,'' include photos, a crucifix, prayer cards, knives, a gun and .38-caliber bullets.

The legal fight over the artifacts revolves around the question of who has the right to display them for profit in fixed or traveling exhibits. It's a courtroom saga that involves a complicated bankruptcy and convoluted legal maneuvers, and it's been put on an accelerated schedule.

While in the old days this type of feud might have been resolved with a private ''sit down,'' today’s fight over the artifacts at the Mob Attraction — an operation unrelated to the competing Mob Museum in downtown Las Vegas — is playing out in open court complete with public charges of collusion and double crosses.

On one side of the dispute is Las Vegas businessman Jay Bloom, lead creator of a $25 million exhibit called the Las Vegas Mob Experience that opened in March 2011 at the Tropicana.

On the other side is investor John Vipulis, owner of the Mob Attraction Las Vegas, which operates in the old Mob Experience space.

Before opening the Experience, Bloom acquired the artifacts — the same items at issue today — through two of his companies called, appropriately enough, The Mafia Collection LLC and Murder Inc. In doing so, he worked with his then-partner, Louis Ventre.

Bloom and Ventre financed their acquisition of the artifacts and development of the Experience by borrowing some $13.6 million, including $11.9 million from investors, also called note holders, court filings say.

Click to enlarge photo

Murder Incorporated partners and co-founders Jay Bloom, right, and Louis Ventre, left, speak at a media event for the Las Vegas Mob Experience on Monday, June 8, 2010, at Tropicana Las Vegas.

It’s unknown exactly how much money was spent on the artifacts or what they are worth, though one creditor filed a lien valuing the entire collection at $3.2 million. A competing creditor filed a $2 million lien, suggesting the liens exceed the value of the collateral.

Clearly, the artifacts are worth millions of dollars. Bloom said their rental value to multiple fixed and traveling exhibitions would be $250,000 per month — if they were all rented out.

Just a few months after it opened, the Experience was facing financial trouble amid disappointing visitor counts and lawsuits over unpaid bills. Bloom left the company in July and turned it over to Ventre.

Bloom’s side of the story is that he was induced into leaving by false promises that his departure would enable the Experience to gain new financing and get back on its feet.

Ventre and certain creditors say Bloom was forced out for mismanagement and misappropriating Murder Inc. funds, including the purchase of a $1.3 million home for his personal use.

Bloom denies such wrongdoing.

Murder Inc., then under the control of Ventre, didn’t right itself financially after Bloom left, and it filed for bankruptcy on Oct. 17. It remains under control of the bankruptcy court and is now a shell with no assets.

Including rent owed to the Tropicana, invoices from contractors that built the Experience and $4.1 million in claims against its future receivables from factoring companies, it was $20.8 million in debt at the time of the bankruptcy filing.

Some of its assets, like fixtures and its built-out museum quarters at the Tropicana, were eventually sold for just $2.1 million, wiping out most of the claims of the Mob Experience investors and creditors.

The buyer of the assets, Vipulis, changed the exhibit’s name to Mob Attraction Las Vegas.

Because of disputes over their ownership, he didn’t buy the mob family artifacts out of the Murder Inc. bankruptcy.

But they remain displayed at the Attraction or in storage at the Tropicana while the ownership dispute is sorted out, an arrangement Vipulis' attorneys say was blessed by the bankruptcy court when Vipulis provided emergency financing to keep the doors open while the bankruptcy case played out.

The ownership dispute boils down to this: Vipulis, as one of the early investors in Murder Inc. well before the bankruptcy, holds the $2 million lien based on his loan to Murder Inc., which he says was guaranteed by the Mafia Collection. His attorneys say that among the investors, Vipulis was the first to record a lien against the artifacts, and that gives him the right to foreclose on and possess them since they say both Murder Inc. and Mafia Collection defaulted on the debt.

Bloom and investors newly allied with him saw their Murder Inc. claims wiped out in the bankruptcy, but they say their own liens against the artifacts trump the Vipulis lien.

They insist the artifacts were not owned by Murder Inc. but rather were leased to it by Bloom’s non-bankrupt Mafia Collection company.

Bloom says he and the investors he’s working with control notes secured by the artifacts valued on paper at $9.6 million — far more than the $2 million in notes held by Vipulis.

Bloom and investors allied with him say their superior lien position gives them the right to foreclose on the artifacts and rent them out so the note holders can be paid through rental revenue; and it proves Vipulis is wrongly in control of the artifacts.

''It’s like they’re going to steal property and then tell the original owners, 'Tell me why I should give it back to you,''' Bloom attorney Joseph Gutierrez said.

But attorneys for a receivables factoring company trying to collect damages from Bloom call the recently-revealed collaboration between Bloom and the investors ''his newest scheme to right the failed ship that was the Las Vegas Mob Experience.''

Vipulis attorney Mark Ferrario is incredulous that Bloom’s Mafia Collection company has been demanding Vipulis’ company pay rent for its use of the artifacts.

''Does anyone dispute this man took the $2 million from my client and has not paid it back?'' Ferrario said during an April 4 court hearing, pointing at Bloom.

''Defaulting debtor (the Mafia Collection) would have this court believe that if a borrower on a car loan has his car repossessed by the bank, the bank must pay him rent for the time it has possession of the car,'' Ferrario wrote in a court filing.

Ferrario said he suspected there’s been some behind-the-scenes ''collusion'' since creditors that just a few months ago were accusing Bloom of fraud are now allied with him as note holders in trying to foreclose on the artifacts. Among these creditors is the company holding the $3.2 million lien, GC-Global Capital Corp. of Toronto.

Bloom, who claims to have been double crossed by Ventre with a ''manufactured bankruptcy'' of Murder Inc., denies the collusion charge and says he and his Mafia Collection company are trying to repossess the artifacts with plans to ''leave Tropicana Las Vegas for greener pastures'' and open multiple fixed and traveling mob exhibits.

During the April 4 hearing, Clark County District Court Judge Joanna Kishner ordered that no one sell the collateral until the ownership dispute is resolved. She agreed to a fast-track schedule that could see the issue decided this summer.