Casino tech firm files bankruptcy, fights tribes: Update
"Every intention of staying in operation," Wolfington says
See UPDATE 3/26 for Ho-Chunk comment -- Money Centers of America, a King of Prussia firm that manages electronic payments for gambling casinos, has filed for Chapter 11 protection in federal bankruptcy court in Wilmington as it fights cash awards to two former clients, both of which are Indian tribes which operate casinos.
"We have every intention of staying in operation," Christopher M. Wolfington, director and majority owner of Money Centers, told me. He said the company has appealed a $5.6 million court order that it repay a client, the Corporate Commission of the Mille Lacs Band of Ojibwe Indians, and is fighting a sovereign-immunity claim he says the Ho-Chunk Nation has used in an attempt to prevent Money Centers' appeal from prevailing in a dispute over $4.8 million.
Money Centers, founded in 1998, was formerly traded on the Nasdaq stock market; sales peaked at nearly $20 milllion in 2005, then declined to below $10 million in 2007, and the company was de-listed, before partly recovering in the late 2000s. The firm now employs around 36 people, after "letting some non-key people go" recently, Wolfington said. The company's subsidiary, Check Holdings, counts 58 casinos as clients and has "just signed new business in the past two weeks," he said.
The bankruptcy filing lists the two tribes as Money Centers' major creditors, followed by the Duane Morris LLP law firm, which Money Centers owes $1.6 million.
Federal judge Richard H. Kyle in an opinion in his Minneapolis courtroom last month noted that Money Centers had contracted with the Mille Lacs tribe in 2009 to distribute cash to casino patrons, and that the tribe had cancelled the deal in 2012, leaving Money Centers owing the tribe $5.6 million, "which it has yet to repay." The tribe sued Money Centers, Chris Wolfington and his cousin and fellow Money Center officer Mark Wolfington for the money; in September the court granted the tribe summary judgement on a breach-of-contract claim; litigation is continuing.
The Ho-Chunk dispute also covers cash the tribe expects back from Money Center, as well as a cancellation fee Money Center has said the tribe owes the company. UPDATE 3/26: "We obtained a $4,780,000 judgment against MCA in Ho-Chunk Nation Tribal Court in September 2013," according to Christianna L. Finnern, a Minneapolis lawyer whos firm, Winthrop & Weinstine, P.A., represents the Ho-Chunk in proceedings in the Ho-Chunk Nation Tribal Court, Black River Falls, Wisconsin. "Until the bankruptcy filing, the case was on appeal to the Ho-Chunk Nation Supreme Court," she adds. (The Ho-Chunk operate six casinos in Wisconsin. An earlier version of this item wrongly said their gambling operation was in Minnesota.)
Bankruptcy reorganization will take pressure off Money Center while it fights the claims. While Christopher Wolfington owns more than half the shares, the action will spread costs across a wide swath of investors, including family members Harry J., J. Eustace and Sean J. Wolfington; developer J. Brian O'Neill, of Villanova; Leo Rishty of Weston, Fla.; Mercantile Capital LP of Wynnewood; Lake Street Gaming, Haddon Heights; Barry Bekkedam, who formerly operated a money management firm in Wayne; and more than 30 others. Case is 14-10603-CSS in the Delaware District of U.S. Bankruptcy Court