Bankrupt S.C. firm linked to financier of D.C. slots bid

A South Carolina company owned by a financier of the District’s gambling initiative held a controlling interest in gambling establishments in that state that failed to pay various taxes and violated state gaming laws before eventually going bankrupt five years ago.

John K. Baldwin, a St. Croix, U.S. Virgin Islands, businessman who has invested heavily in the effort to bring video lottery terminals to the District, was a partner in a company called Carolina Equities LLC in the late 1990s, according to bankruptcy court records.

Mr. Baldwin was a partner in Carolina Equities with Shawn A. Scott, the Las Vegas gambling financier who first proposed bringing slot-machine-style gambling to the District. Mr. Scott since has dropped out of the process over concerns about his background.

Las Vegas-based Carolina Equities held controlling interest in at least five gambling halls in South Carolina in the mid-1990s, according to public records.

The firm still owes more than $1.2 million to the owner of Hot Rod’s in Columbia, S.C. — one of the gambling halls it controlled, according to Alton Bivens, an attorney for Hot Rod’s owner Frederick McCary.

Mr. Bivens said Mr. McCary sold to Carolina Equities his corporate stock in a company called T&G; Enterprises Inc., which operated a video-pokergallery and strip club in Columbia in the late 1990s. Carolina Equities paid $250,000 upfront and promised to pay the rest gradually, the attorney said.

Mr. McCary continued to own and operate the strip club, while Carolina Equities controlled 10 video-poker machines worth $5,000 each and a “sneak-a-peak” blackjack machine worth $15,000, Mr. Bivens said.

In 1999, Carolina Equities defaulted on its payments to Mr. McCary and removed the video- poker machines, said Mr. Bivens, citing bankruptcy records.

“The machines were taken out, and so there was no collateral to take,” he said. “We did get a judgment against them, but almost immediately they declared bankruptcy, which prevented us from being able to collect.”

Mr. Bivens said Mr. McCary couldn’t afford to sue Mr. Scott and Mr. Baldwin personally.

“It left my client trying to chase a corporate shell of a business,” Mr. Bivens said. “To execute the judgment against them, you’d have to pierce the corporate veil, and that costs money.”

LLC, which stands for limited liability company, refers to a business whose owners are protected from personal liability for business debts and claims.

Mr. Baldwin and Mr. Scott together have owned and operated numerous limited liability companies, several of which have dissolved.

Mr. Baldwin could not be reached yesterday for comment at his office in the Virgin Islands.

Former D.C. Council member John Ray, who has been lobbying for the gambling initiative, did not return a phone call yesterday. Mr. Ray had asked Mr. Scott to remove himself from the process over concerns about his business dealings.

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