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Iowa gaming commission's Lamberti says disappointment over casino vote is fueling ‘innuendo'

Cedar Rapids Mayor Corbett says vote still ‘looks bad'

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CEDAR RAPIDS — Jeff Lamberti, chairman of the Iowa Racing & Gaming Commission, said he had no conflict of interest when he voted with the 4-1 commission majority last month to deny a proposed Cedar Rapids casino a state gaming license.

Lamberti, an Ankeny lawyer who returned to Iowa on Friday after an educational trip to Cuba organized by the Drake University Law School, took on questions about allegations over his commission vote from Cedar Rapids casino supporters that have surfaced in the past week.

The allegations center on donations made to the not-for-profit USS IOWA battleship museum, which is a Lamberti cause and fundraising venture, by two casinos that opposed the Cedar Rapids venture.

“The USS IOWA and the Racing & Gaming Commission have nothing to do with each other,” he said.

He said the four commissioners who voted against the Cedar Rapids proposal did so because two independent, fact-based studies commissioned by the commission recommended against a state license for a Cedar Rapids casino and said a Cedar Rapids casino would damage nearby casinos.

“It is unfortunate that emotion is leading to innuendo,” Lamberti said.

He said Bill Knapp of Des Moines and his company, Knapp Properties, invested in the proposed Cedar Rapids casino, and Knapp also donated to the USS IOWA at the same time late last summer and for the same purpose as Riverside Casino & Golf Resort and Prairie Meadows Race Track and Casino.

Each of the three battleship contributors donated to the purchase of artwork designed for the ship’s museum, he said.

That a Cedar Rapids casino investor was donating to the USS IOWA at the same time as the two casinos opposed to a Cedar Rapids casino “kind of shows the silliness of trying to tie donations” to the not-for-profit USS IOWA seven months before the commission’s April 17 vote on the Cedar Rapids casino, Lamberti said.

‘Reaching for straws’

Supporters of the Cedar Rapids casino, including Cedar Rapids Mayor Ron Corbett, also have wondered about an April 7 reception at the governor’s mansion, Terrace Hill, for donors to the USS IOWA.

The event put Dan Kehl, CEO of the Riverside Casino, a representative of the Prairie Meadows casino, and Lamberti at the same event with other donors to the battleship museum just 10 days before the commission vote on the Cedar Rapids project.

Lamberti said the event was scheduled a couple months earlier and was timed to allow the battleship board of directors and staff to visit the Iowa Legislature, which has given the USS IOWA a grant of $3 million. The event was not held because of any matters before the Racing & Gaming Commission.

“No, I don’t think so,” Lamberti answered when asked if the casino donations and the Terrace Hill event, which both occurred as the commission was considering the Cedar Rapids casino proposal, might look bad.

More than once, Lamberti said that the ethical standard for public officials in Iowa does not address the appearance of a conflict of interest, but only actual conflicts in which a public official financially benefits from his public duties.

“I understand people in Cedar Rapids are disappointed, and you have people kind of reaching for straws trying to create something that’s not there,” he said. “I get that. I get the disappointment.

“But this project (the USS IOWA) has been going on for four or five years. And I derive no personal benefit from any contributions that are raised from any casino interest.”

Cedar Rapids’s Corbett, who knows Lamberti from their days together as Republican leaders in the Iowa Legislature, on Friday said the casino donations and the entanglement with Lamberti’s USS IOWA cause “looks bad” no matter how Lamberti explains it.

Corbett likened it to an appointed member of the Iowa Transportation Commission who approves big highway projects and then asks road-building companies for contributions to the commission member’s favorite charities.

“Just because something is not illegal or unethical, that doesn’t make it right,” the mayor said.

Once again on Friday, Corbett called for a ban on contributions from casino interests to the causes and charities in which members of the Racing & Gaming Commission are involved.

“Otherwise, it just opens the door to questions, and it doesn’t look good,” Corbett said.

Lamberti did not sign on to Corbett’s idea, saying that the state’s current standard, which prohibits actual personal benefit, was a good one. At some point, no one would be able to serve on boards and commissions because of fear that some “tangential” community relationship might get in the way, he said.

“Quite frankly, while I think the Racing & Gaming Commission is an important job and we do important work, the things I do in my community are more important to me,” Lamberti said.

He said he is involved in other community not-for-profit efforts, including On With Life, a not-for-profit organization for brain injury rehabilitation, and a service dog program for wounded veterans, which have received grants from casino interests.

“I don’t receive any personal benefit,” he said.

Lamberti said he would not be opposed to another suggestion from Corbett that the Racing & Gaming Commission members make public the associations they have so the public would see which might receive contributions from casinos.

“I have no problem with disclosure,” he said.

Saving the USS Iowa

Even so, Lamberti said he worried about “the chilling effect” that might result if active members of the community have to give up their associations with community groups to serve on boards and commissions.

Associations can be complicated, and Lamberti’s association with the USS IOWA has a couple layers.

He left the Iowa Legislature after the 2006 session, and that year ran unsuccessfully for U.S. Congress, he said.

The next year or so, he formed Riverside Partners with Becky Beach of Des Moines, who worked in the Reagan and George H.W. Bush administrations and on Republican campaigns in Iowa since then, including Lamberti’s Congressional campaign.

Riverside Partners was designed as a political consulting and fundraising business, Lamberti said.

By 2009 and 2010, Riverside Partners was hired by the USS IOWA not-for-profit organization for consulting and fundraising help. Later, Lamberti became the unpaid chairman of the USS Iowa museum board and Beach the unpaid board’s secretary.

Lamberti said the challenge to save the USS IOWA became acute in the past few years when the U.S. Navy wanted the not-for-profit to take possession of the ship and the organization was running out of money.

At that point, the Iowa Legislature provided a $3 million grant, and Lamberti said he personally guaranteed a $300,000 loan to contribute to the effort to refurbish the battleship, tow it to Los Angeles harbor and open it as a museum. Every year he pays interest on the loan, which has now amounted to $20,000 to $30,000, so the battleship museum doesn’t face the expense.

According the battleship not-for-profit’s 2012 tax return, the organization has the $300,000 outstanding obligation to Lamberti and a $500,000 one to Riverside Partners.

Lamberti said the latter is for consulting work that he and Beach did previously for the organization.

Lamberti said he and Beach agreed to reduce the amount they are owed, though he said it is unclear if the ship museum, which has been opened less than two years, ever will be able to pay them. He said he hopes to see the not-for-profit pay off the principal on the $300,000 loan, but not the interest.

Any fundraising fees related to contributions from casino interests may go to Beach working on her own, but none have or will go to him, he said.

“We’ve been very careful to make sure that if there are any of those activities (casino contributions), there is a complete wall between me and those funds,” Lamberti said. “And those (casino) funds can never be used to pay Riverside Partners.”

‘We’re not going away’

On Friday afternoon, Steve Gray, chairman of casino investor group Cedar Rapids Development Group LLC, released a joint statement to The Gazette from it and its associated not-for-profit Linn County Gaming Association, saying that the two entities would continue to pursue their effort to bring a casino to Cedar Rapids.

“Basically stated, we are not going away. We will continue to pursue this project for our community and the state,” the statement read.

“We understand some questions have been raised regarding the relationship of the chairman of the IRGC with those who were primarily opposing this project,” the statement continued. “We do not have all the facts associated with such questions and therefore cannot, and will not, comment on them at this time.

“We are confident that others will determine the facts and take the appropriate action if any is needed. For our part, we stand proud of our project, our community and our investors, and we will remain so until this project becomes a reality.”

On June 12, the Racing & Gaming Commission is scheduled to decide if it will grant a state gaming license for a casino in Jefferson, Greene County, on Highway 30 west of Ames and Boone.

Lamberti on Friday said it is possible that the commission will make a statement after the June 12 vote about accepting new applications for casinos in the immediate future.

“I’m getting enough from the members that they feel like, after Greene County, we should say something about our intentions,” he said.

Lamberti said backers of the Cedar Rapids casino backers can pursue support for their project at the Iowa Legislature.

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