Lady Luck isn't here

By Steve Chawkins

June 14, 2009 12 AM PT

CRYSTAL BAY, NEV. — Frank Sinatra would have wept into his Jack Daniel’s.

The Cal Neva, the rustic Lake Tahoe resort Sinatra owned for three swinging years in the 1960s, was forced into foreclosure earlier this year. The stage where Frank and Dino and Sammy cut up, the cottage where a distraught Marilyn spent her final weekend, the hillside acreage above a lake bluer than Ol’ Blue Eyes: It was all up for auction -- and the number of bids was zero.

With the ring-a-ding-ding years long gone, the 220-room Cal Neva has been snared in a tangle of contemporary problems. The recession is taking a big bite out of tourism around Lake Tahoe. Indian gaming in California is keeping day trippers closer to home. And Ezri Namvar, the hotel’s most recent ex-owner, was forced into bankruptcy amid several dozen lawsuits, many from members of the tight-knit Iranian Jewish community in Los Angeles who claim he ran a $500-million real estate fraud.

The 83-year-old Cal Neva was quiet on a recent off-season Monday afternoon. The parking lot was nearly empty. At the casino, said to be the oldest in the country, gamblers drifted through in ones and twos. The Frank Sinatra Celebrity Showroom was dark -- though just the day before, a local theater group had staged “Alice in Wonderland” for a Mother’s Day crowd of 200.

General manager Bob Marcil, on the job only since April, guided a visitor through the Indian Room, a vaulted hall with a few worn easy chairs, some big-game heads and a vast expanse of vintage paneling. Through the picture windows of the white-tablecloth dining room, he gestured toward the snow-capped mountains across the lake.

“This is so God’s country!” said Marcil, 51, a Philadelphia transplant who practically vibrates with salesmanship. “Life does not get more glorious, more majestic than this!”

Marcil’s company, National Hospitality Holdings, specializes in turning around hotels in trouble. It was hired by Canyon Capital Realty Advisors, the Los Angeles firm that foreclosed on the Cal Neva.

Canyon officials said their April 8 auction flopped because of the resort’s unique location: The border between California and Nevada splits the property. “It’s the only place,” Sinatra joked, “where you walk across the lobby -- and get locked up for violating the Mann Act” (which bans interstate transportation of women for immoral purposes).

The odd division required simultaneous auctions in Reno and in Roseville, Calif. The complicated process “masked” the resort’s real value, a Canyon spokesman said.

The resort was once a watering hole for elite seekers of quickie Nevada divorces. Over the years, it was raided by Prohibition agents and shuttered by the IRS. Today, the property once known as the “Lady of the Lake” is showing her age.

Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada-Reno, lives nearby. “The Cal Neva looks tired,” he said. “It’s really had 50 years of deferred maintenance.”

Sales manager Cynthia Langhof said Namvar neglected the Cal Neva. “The last owners didn’t even clean the carpet,” she said. “I believe they acquired it just to flip it.”

Marcil, preparing for the summer, was beefing up the staff from 55 to 90. He is planning jazz brunches, big-band nights and tributes to Sinatra like the memorial pasta dinner held on May 14, the anniversary of the singer’s death in 1998.

Twice a week, visitors are ushered through the underground tunnels through which Sinatra used to hustle celebrities and mobsters from the rooftop heliport he built to their cabins around the property. For about $200 a night, guests can stay in No. 3, Marilyn Monroe’s favorite; the original white wicker furniture is still there, but her circular bed is history.

Monroe died of a drug overdose at her Los Angeles home in August 1962. Days before, she was at the Cal Neva and, by many accounts, was an emotional, pill-popping wreck, fixated on the broken affairs she allegedly had with President Kennedy, his brother Bobby and Sinatra.

From his home in Palm Desert, jazz pianist and singer Buddy Greco recalled Monroe striding into the Cal Neva’s packed lounge. “Honest to God,” he said, “it was like everyone froze. She yelled something like, ‘Why is everyone staring at me?’ She was upset.”

Sinatra signaled one of his staff -- he had bodyguards known as “Pucci East” and “Pucci West” -- to usher her out.

Greco, 82, still performs at his club in Cathedral City. In an Internet auction, he hopes to bring in $75,000 for six photos taken by his ex-wife at the Cal Neva that weekend -- including, he says, the last known photos of Monroe alive.

“Everybody was there: Frank, Dean, Sammy, Juliet Prowse, Joe DiMaggio,” he said. “Frank flew in Jay Sebring to cut all our hair. It was magic.”

From time to time, spiritualists gather to summon up Sinatra and the Rat Pack. Bartender Carl Buehler has a stack of seance photographs with spectral images of . . . well, who knows? “I used to be skeptical myself,” he said.

In hotels around Tahoe, faith can only be an asset. On the north shore, where Cal Neva sits, the recession has cut business by about 20%, officials estimate. On the glitzier south shore, Horizon Casino Resort laid off 75 employees in May, shutting down “table games.”

Over the last 50 years, Nevada casino revenue has fallen only three times, according to state officials. Two of the off years came after the Sept. 11 attacks. The third was last year, when gambling revenue dropped by nearly 10% -- the steepest decline ever, with Tahoe’s north shore taking the biggest plunge at 19.4%.

Competition from Indian casinos has taken a toll even at Tahoe, where card tables and slot machines are an extra for tourists drawn by spectacular scenery and outdoor activities, said Eadington, the gambling expert. At $8 billion, gaming revenue in California matches the haul in Las Vegas.

Like some other hotel owners, Namvar planned to convert the Cal Neva to condos. But that strategy collapsed along with the national zeal for real estate. Namvar, 57, acquired the Cal Neva in 2005. It was part of a real estate empire that included the downtown Los Angeles Marriott, a Central Valley pistachio farm, land in Nevada and Arizona and a stake in Park Fifth, a stalled project in downtown L.A.

“There was a complete lack of focus,” said Pooya Dayanim, a commercial real estate broker and attorney who heads the Los Angeles-based Iranian Jewish Public Affairs Committee. “He miscalculated the market and over-leveraged himself.”

Namvar, who left Iran when he was 18, is the son of a respected businessman who delayed his own departure to secure payment for fleeing Jews who had invested with him.

“Trading on his family’s name and his own intelligence, he was able to get access to hundreds of millions of dollars of investments by very unsophisticated Jewish refugees,” said Dayanim, who is not among Namvar’s creditors or the attorneys suing him.

In the last year, many investors complained that Namvar had stopped paying interest. Negotiations to come up with a solution outside of court -- the community’s traditional way -- culminated in an angry meeting of Namvar and more than 300 investors last November.

“It’s had a horrible effect on the community. There’s no more trust -- now even family members are insisting on documents,” said A. David Youssefyeh, an attorney who represents several creditors.

Namvar is a victim of the real estate crash, said his attorney, Stephen F. Biegenzahn.

“Cal Neva was not the only project that went from looking like it had tremendous potential to being underwater in an incredibly short period of time,” he said. “His remorse is indescribable -- not because he did anything improper but because he feels it is his moral obligation to pay back investors.”

It might be cold comfort to Namvar, but he’s not the first Cal Neva owner to run into serious setbacks. In 1983, Ron Cloud, a Fresno plumbing contractor who had acquired the Cal Neva, lost his gaming license for allegedly rigging the slot machines and strong-arming debtors.

And Sinatra himself went out in predictably sensational style.

Sam “Momo” Giancana, the Chicago Mafia figure, was banned from Nevada casinos. Still, he was a frequent -- if incognito -- guest at the Cal Neva, which many say he secretly owned.

Sinatra’s undoing came after the mobster, visiting his girlfriend Phyllis McGuire of the McGuire Sisters, got into a loud fistfight with the singing trio’s manager, nearly putting the man’s eye out.

Pressured by authorities, Sinatra bowed out of the Cal Neva -- but, threatening state officials and making wisecracks, he did it his way.

“Anybody want to buy a hot casino?” he asked.

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