- Associated Press - Tuesday, March 31, 2015

ATLANTIC CITY, N.J. (AP) - Billionaire investor Carl Icahn says union benefit costs and work rules were a big reason four of Atlantic City’s 12 casinos closed last year.

Icahn said on Tuesday that Local 54 of the Unite-HERE union “is one of the main contributors to the problems in Atlantic City.” His comments came a day after union president Bob McDevitt said Icahn is trying to “disembowel” Atlantic City to line his own pockets.

“McDevitt neglects to mention that one-third of Atlantic City’s casinos closed in the last year in no small part because of the work rules and exorbitant contributions to the secretive, immensely profitable union-affiliated health care plan as well as the (National Retirement Fund) pension fund that the union requires,” Icahn said. “Simply put, his union is one of the main contributors to the problems in Atlantic City, but instead of taking some responsibility or agreeing to make concessions that could save jobs, he is instead employing that age old strategy of pick a scapegoat, tell a lie and foment outrage.”

Icahn owns the Tropicana and is acquiring the Trump Taj Mahal through bankruptcy court by swapping $286 million in debt he owns from Trump Entertainment Resorts for ownership of the company. Though he doesn’t yet own the casino, he is lending it money to stay open.

The union said Icahn has been using that leverage to control Trump Entertainment behind the scenes, and it said he had a hand in the closure of the Atlantic Club casino through Tropicana, which bought the casino with Caesars Entertainment and shut it down. It also accused Icahn of thwarting the conversion of the former Showboat casino into a college campus by enforcing a legal covenant prohibiting Showboat from being used as anything but a casino.

“The reality is that Mr. Icahn has been the puppet master pulling the strings at Trump for months now, and everyone in Atlantic City knows it,” McDevitt said.

He said Icahn was “intimately involved” in the closures of the Atlantic Club and Trump Plaza and used the bankruptcy court to strip workers of their health insurance. He also said Icahn was blocking educational opportunities for hundreds of students.

Trump Entertainment CEO Robert Griffin said union health and pension costs and work rules were a major reason why the company filed for bankruptcy last September and one of several reasons why it decided to shut Trump Plaza on Sept. 16.

“We started talks with Local 54 very early in 2014 and we told them we couldn’t afford the current plans,” Griffin said. “We told them we can’t afford to have three people do the job of one, and that we need to negotiate a new contract. We received no response.”

Icahn said the pension fund to which the union belongs and a union-run health care plan are unaffordable. He said he pulled the Tropicana out of the pension plan, which “has underperformed the S&P; 500 by over 50 percent during the last five years and is currently underfunded by billions of dollars.” The Tropicana now offers its workers a 401(k)-type retirement plan.

The union is appealing a judge’s termination of health and pension coverage for Taj workers. Icahn has threatened to close the casino if the ruling is reversed.


Wayne Parry can be reached at https://twitter.com/WayneParryAC

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