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Elk Valley Rancheria Lawsuit Sends Las Vegas Company into Bankruptcy

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R. Shawn Ellis of Ellis Gaming and Entertainment, L.L.C. of Las Vegas filed for Chapter 7 bankruptcy liquidation Thursday, listing $12.1 million in liabilities, reported the Las Vegas Sun.

Investors and creditors with Ellis Partners LLC, which owns 85 percent of Ellis Gaming, and Sturm Gaming LLC that holds the other 15 percent, according to the filing, face millions of dollars in losses.

Another Ellis company, Ellis Las Vegas Inc., filed for Chapter 7 in November, citing $1.84 million in liabilities.

Both bankruptcies resulted from failed plans for a gaming house on the Las Vegas Strip and litigation between Ellis and the Elk Valley Rancheria, an Indian tribe in northern California. Elk Valley Rancheria sued Ellis in 2008, claiming the tribe loaned him $480,000 for development of the Ellis Las Vegas casino resort, and Ellis never paid them back. Ellis upholds the tribe converted the loan into equity in an Ellis company, so he does not owe them money.

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Set for trial in a Las Vegas federal court in March, the lawsuit could be settled beforehand, according to the Las Vegas Sun.

In Ellis Gaming's bankruptcy filing, the company maintained its main asset is a $5 million "possible breach of contract claim" against Elk Valley Rancheria. The company's only other asset is $25,440 in accounts receivable.

Ellis previously managed the tribe's Elk Valley Casino in Crescent City, Calif., close to the Oregon border.

In a 2008 All Business article, Ellis explained his approach to Indian tribes for investments in Las Vegas casinos by citing tribes' existing facilities and his enjoyment working with Indian tribes for about nine years. Ellis told All Business that he is married to a "tribal woman" and working with tribes is "what I do - is who I am."