Mob Experience developer’s artifact claims rejected

Jay Bloom, managing partner of the Las Vegas Mob Experience, stands at left, as a “mob assistant” Tommy Lynch hides from the camera during a preview of the Las Vegas Mob Experience at the Tropicana Tuesday, March 1, 2011. The $25 million Mob Experience will officially open March 29.

Citing case law from 1601, a judge has refused to allow the developer of the Las Vegas Mob Experience to seize the organized crime memorabilia at what's now the Mob Attraction at the Tropicana.

In a dispute over ownership of the artifacts related to the $20.8 million bankruptcy a year ago of the Mob Experience developed by businessman Jay Bloom, Clark County District Court Judge Joanna Kishner this week sided with two Bloom creditors and against Bloom and investors allied with him.

The fight over the artifacts -- guns, photos, letters and the like -- erupted when conflicting claims to ownership at the old Mob Experience were not resolved in the bankruptcy case. After the Mob Attraction took the place of the Mob Experience at the Tropicana through the bankruptcy process, the artifacts remained there while the dispute was sorted out.

Bloom claimed one of his companies, the Mafia Collection LLC, had acquired the artifacts from mob families and other sources and was leasing them to another company he created, Murder Inc., which is the company that ended up in bankruptcy.

After the Mob Experience bankruptcy and Bloom's departure from that company, he wanted to again control the artifacts so he could use them in a planned exhibit, perhaps a traveling mob show.

Two big creditors of Bloom, including the owner of the Mob Attraction, said they had the right to foreclose on the artifacts after Bloom defaulted on $5.3 million in loans backed by the artifacts.

Here's where the ruling from a 1601 Star Chamber court in England comes in:

To fight the threatened artifact foreclosure, Bloom said he obtained from a group of Mob Experience investors $8 million in additional debt backed by the artifacts, and that put him in a superior position to foreclose on and take possession of them.

But according to a precedent set by the 1601 ruling and rulings that would follow over the centuries, someone maneuvering with one group of creditors to harm another group of creditors is involved in a fraudulent transaction -- and the law doesn't allow Bloom to be both a creditor and a debtor in the same case.

"A property owner cannot hold a lien in its own real or personal property," Kishner wrote in her ruling. "A defaulting debtor cannot benefit from any transaction with some creditors in order to thwart the enforcement of other creditors' collateral rights.''

A request for comment was placed with Bloom, who suffered another setback last week when a court-appointed accountant in one of the many lawsuits involving him concluded that the financing of the Mob Experience had "the earmarks of a Ponzi scheme" and involved a "fraudulent transaction.'' Bloom has denied those claims.

Kishner's ruling did allow Bloom to continue pursuing some assets that did not secure the $5.3 million in debt backed by the artifacts, including office equipment and a vehicle.

But Spence Johnston, spokesman for the Mob Attraction, said the ruling ensures the 1,000-plus mob artifacts at the Tropicana will remain there.

“We are very pleased with Judge Kishner’s ruling. This is a big step in putting this ordeal behind us and we are looking forward to many successful years here at the Tropicana,'' he said.

The Mob Attraction is unrelated to the competing Mob Museum in downtown Las Vegas.

Tags: Business