State gambling investigators looked at the business connections of former MTR Gaming Group CEO Edson "Ted" Arneault before determining he should no longer have a slots license for an Erie casino, according to a former West Virginia sheriff who said he was called to testify against Arneault.
Arneault is fighting to retain his license for Presque Isle Downs Casino in a hearing before the Pennsylvania Gaming Control Board in Harrisburg. According to a letter to Arneault, investigators advised the board not to renew his license because of unspecified concerns about Arneault's character, based on a background investigation.
The hearing, which began Thursday and is expected to last five days, was closed to the public at Arneault's request.
Ted Dragisich, a former Hancock County, W.Va., sheriff and former employee at MTR's Mountaineer Casino Racetrack & Resort near Weirton, said investigators asked him about his and Arneault's connections to New Kensington native Charles Sack, who in 2001 was a $12,500-a-month consultant for MTR.
Sack, who could not be reached for comment, recently was hired as director of strategic development at The Meadows Racetrack & Casino. He has a six-month contract to help the casino introduce table games and will apply for a slots license within a week, said David LaTorre, a spokesman for The Meadows.
Dragisich said the board subpoenaed him to testify at its hearing, but he does not plan to respond. He said he has not talked to Arneault in two years.
"They want me to testify against Ted Arneault," Dragisich said. "I told them to kiss my (expletive). ... They want me to say bad things about Ted Arneault."
Neither Arneault nor his Philadelphia attorney Charles Hardy could be reached for comment.
Barry Creany, the board's deputy chief enforcement counsel, wrote to Arneault in January, saying an investigation by the Bureau of Investigations and Enforcement "revealed inaccuracies or inconsistencies between the statements you made to investigators and the board which call into question your character, honesty and integrity."
The investigation identified "several areas of concerns," Creany wrote, adding that the bureau believes Arneault has not proven he is a "person of good character, honesty and integrity" sufficient to remain licensed.
Arneault left MTR in 2008 but needs the Pennsylvania license to retain the 5.67-percent stake he owns in the company, The Associated Press reported.
Arneault revealed his connection to Sack during a 2008 deposition as part of a civil lawsuit in Erie. He said Sack worked for MTR until a licensing issue arose in Nevada.
Sack, who worked at a Las Vegas casino, testified in a deposition as part of the lawsuit that he came under scrutiny from the Nevada Gaming Control Board because he met with John "Duffy" Conley, a former South Side resident who was convicted in 1995 for running a $15-million-a-year video poker business. Conley, released from prison in 2004, was arrested again in 2006 and convicted of running an illegal sports-betting operation. He was released from prison in July.
Sack testified he was approached about doing business with Conley but immediately declined. Even so, he said, Nevada regulators became interested.
"That's when they started looking at me, saying, you know, 'We think you're kind of an unsuitable guy,' " Sack testified.
Cyrus Pitre, the Pennsylvania Gaming Control Board's chief enforcement counsel, through a spokesman declined to comment on the investigation of Arneault or acknowledge whether Dragisich was called to testify.
Based on testimony, the state hearing officer will make a recommendation to board members, who will decide whether to renew Arneault's license, said board spokesman Richard McGarvey.
