A federal appeals court affirmed a lower court ruling that dismissed a claim from the primary owners of the Country Crossing bonds, stating the bondholder isn’t owed a hearing on the legality of electronic bingo machines before the machines are actually seized.
The Lord Abbett Municipal Income Fund, which owns $5 million in Country Crossing bonds, had claimed the state’s Task Force on Illegal Gambling interfered with the fund’s ability to gain revenue from their investment due to attempted and threatened raids on the Country Crossing development in Houston County. Revenue from the bonds was to be paid in part by fees generated from entertainment and electronic bingo at the facility.
Country Crossing shut its doors in January of 2010 in response to an attempted raid by the task force commanded by John Tyson and created by former Gov. Bob Riley. The fund claimed it should be afforded a hearing on the legality of the electronic bingo machines.
The appeals court, however, ruled that the fund should not be granted a preseizure hearing.
“The government’s seizure of suspected contraband would grind to a halt if every entity that had an economic interest in the targeted property was owed a hearing before the government could lawfully seize the property,” the court’s ruling stated.
“Simply put, the due process clause does not require states to afford those who seek to profit from potentially criminal enterprises a hearing to establish the legality of the enterprise before state officers have begun a prosecution or forfeiture action,” the ruling further states.
In November of last year, the trustee of two Country Crossing bond issues totaling $29 million — U.S. Bank National Association — filed notices of default after the entities created to pay the bonds failed to provide a required accounting.
After Country Crossing closed in January of 2010, it reopened under a new name — Center Stage Alabama — and new management in the summer of 2011. It filed for Chapter 11 bankruptcy in January of this year, but remains in operation.
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