Debtor/Defendant applied for his first line of credit with Golden Nugget Atlantic City in September 2012. The line of credit was approved and Defendant used the credit to gamble at the Golden Nugget Atlantic City casino. Prior to August 2015, Defendant obtained advances on this line of credit to gamble at the Golden Nugget Atlantic City casino and he repaid each advance on time.
Defendant applied and was approved for his first line of credit from Golden Nugget Las Vegas in February 2015 after being approached and recruited by one of its representatives. Plaintiff was offered and accepted $10,000 in promotional chips to gamble at the casino. Between February 2015 and August 15, 2015, Defendant used this line of credit seven or eight times, each time borrowing $100,000, to gamble at the Golden Nugget Las Vegas casino. Defendant repaid each of the credit line advances on time.
On August 9, 2015, Defendant obtained an advance on his line of credit with Golden Nugget Atlantic City and was issued a marker in the amount of $100,000 to secure repayment of this advance. The marker was drawn on a joint bank account number 5720 owned by Defendant and his wife at Bank of America. Defendant used these funds to gamble at the Golden Nugget Atlantic City casino.
On August 15, 2015, Defendant obtained advances on his line of credit with Golden Nugget Las Vegas in the total amount of $250,000 and was issued three markers in the total amount of $250,000 to Golden Nugget Las Vegas to secure repayment of these advances. These markers were also drawn on bank account 5720. Defendant used these funds to gamble at the Golden Nugget Las Vegas casino.
At the time the markers were issued, insufficient funds existed in account 5720 to cover them, although sufficient funds to cover them existed in another Bank of America account, number 1608, jointly owned by Defendant and his wife. Before August 2015, Defendant would, at times, repay the amounts owed on markers with cash or gambling winnings as opposed to having the markers deposited by the casinos. In addition, Defendant was well versed in casino operations in the states of New Jersey and Nevada. Defendant knew that in New Jersey, markers in an amount over $5,000 would ordinarily not be deposited by the casino, or considered overdue, until the 45th day after the marker was issued. Defendant also knew that in Las Vegas, the markers would generally not be deposited, or considered overdue, until the 30th day after the markers were issued.
Prior to 2015, Defendant and his wife had argued for two or three years about his gambling habits. In June 2015, Debtor’s wife separated from him, although they remained living in the same home. When Defendant returned from his gambling trips in August 2015, he told his wife about his gambling losses and his desire to sell certain parcels of real estate they jointly owned to pay the gambling debts. Debtor’s wife refused to allow the properties to be sold and advised Defendant that she was filing for divorce, which she did on August 20, 2015.
On August 21, 2015, Debtor’s wife withdrew $325,000 from bank account 1608. She withdrew an additional $35,000 from account 1608 on August 26, 2015. His wife made both of these withdrawals without Defendant’s knowledge. She withdrew these funds to prevent Defendant from using the funds to pay Plaintiffs the amounts owed on the outstanding lines of credit and to prevent Defendant from further gambling.
On August 28, 2015, the wife’s divorce counsel filed a petition in the state court divorce proceeding to freeze the marital assets. The petition was granted by the state court judge overseeing the divorce proceeding on August 31, 2015.
In September 2015, a special master was appointed in the divorce proceeding to determine equitable distribution of the couple’s marital assets and other issues. After a conference with divorce counsel, the master sent a letter to counsel in the divorce proceeding dated October 16, 2015, which stated, in pertinent part:
Under the circumstances, since a vast majority of the debt is gambling debt incurred by Husband, it shall be attributable to Husband alone. Therefore, the Master recommends a framework wherein Wife will receive the vast majority of all the assets. A reasonable framework would be that Husband keeps perhaps one or two properties and perhaps a nominal sum of money and a vehicle with Wife receiving the remainder of the assets. In addition, Husband would be responsible for the gambling debt in his name alone.
See Exhibit P-11, p.1.
The master rendered his final decision in a letter dated December 10, 2015 addressed to divorce counsel. The decision awarded the vast majority of marital assets to the wife and made Defendant solely responsible for all gambling debt due to “extensive dissipation of the marital assets as a result of [Defendant’s] gambling losses which were unknown to Wife….” The state court judge made the December 10 letter an Order of Court on January 15, 2016.
Through Fall 2015, Defendant believed he would be able to pay Plaintiffs the amounts owed on the markers by selling property he owned jointly with his wife, from assets he would receive in the divorce proceeding, or from funds he could obtain from friends and relatives. His wife, however, refused to allow the sale of the jointly held property. After the master issued his recommendation, it was apparent to Defendant that he could not depend on his divorce settlement to pay the markers owed to Plaintiffs. He soon thereafter learned that friends and relatives would no longer provide him with funds to pay his gambling debts because they all decided that “enough is enough.”
In December 2015 or January 2016, Defendant realized that he would not be able to pay Plaintiffs the amounts owed on the markers from the sale of property, from marital assets, or from friends or family. Nonetheless, Defendant continued to assure Plaintiffs’ representatives that he would pay Plaintiffs the amounts outstanding when his divorce was concluded and his assets were “unfrozen.” He made these promises because he was afraid Golden Nuggets Las Vegas would file criminal charges against him if he did not make good on the markers. As a result, Plaintiffs delayed collecting on the markers, which remain unpaid to date.
On January 15, 2016, the couple’s divorce decree was entered.
On January 27, 2016, Golden Nugget Las Vegas sent Defendant a notice stating that if his outstanding balance was not reconciled in ten days, his account would be referred to the Clark County, Nevada District Attorney for criminal prosecution.
On that same date, January 27, 2016, Defendant filed his chapter 7 petition.