Developer Suing Genting Americas Over Alleged Fraudulent Accounting at Bahamas Resort

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Miami-based real estate developer RAV Bahamas Ltd. filed a $600 million lawsuit against Genting Americas last week alleging that the casino giant fraudulently saddled Resorts World Bimini with close to $1 billion in illegitimate debt, ruining the developer’s investment. 

RAV Bahamas and Genting Americas – a subsidiary of the Genting Group – have been partners in a company known as BB Entertainment (BBE) in the development of Resorts World Bimini, an integrated casino and hotel resort complex in the Bahamas.

RAV Calls Bimini Resort a ‘Financial Wasteland’

In the lawsuit, which was filed in the US District Court for the Southern District of Florida last Monday, RAV accuses Genting of turning the resort into a “financial wasteland” by dumping an excessive amount of debt into BBE. 

Genting owns 78 percent of BBE, while RAV owns the other 22 percent of the joint venture. RAV is accusing Genting of using that majority ownership stake – which has also given it control of the company’s board and management – to conceal how it moved hundreds of millions of dollars in liabilities from its worldwide resort network onto the books of the Bimini resort.

According to a report by The Tribune, Resorts World Bimini has incurred growing losses in recent years. After losing $69.6 million in 2019, the resort’s losses significantly increased each year, rising to as much as $151.3 million in 2022. 

BBE’s own financials showed that at the end of 2022, the company had $885.2 million in total liabilities while holding only $191.5 million in assets – most of which represented the value of Resorts World Bimini’s real estate.

“Through its stranglehold over BB Entertainment and its finances, Genting Americas has used BB Entertainment to conceal a medley of fraudulent activities,” RAV Bahamas claimed in its lawsuit. 

“Only a massive and coordinated fraud could dump nearly a billion dollars of debt on a small island resort where RAV had already developed most of the significant infrastructure. Genting Americas buried the nearly-billion dollar liabilities in consolidated statements using vague categories of expenses to conceal the fraud from RAV.”

RAV also claims that Genting has prevented it from having its own look at BBE’s financials to get a full picture of where the debt has come from.

“Genting Americas, at every turn, has deliberately kneecapped RAV’s efforts to obtain clarity into the financials, including denying RAV full access to BB Entertainment’s financial records and denying its requests for an independent audit,” the lawsuit reads.

Small Resort Generates Little Revenue, Major Expenses 

RAV Bahamas was founded by Cuban-American immigrant Gerardo Capo. RAV had already done significant work to turn Bamini Bay into a tourism destination when the company and Genting agreed to further develop the area in 2012. 

While the two were initially 50/50 partners in the venture, Genting eventually took majority ownership, with RAV Bahamas transferring 20 acres of land for Resorts World Bimini to BBE in exchange for its minority stake in the joint venture. 

Since opening, however, RAV Bahamas says that Resorts World Bimini has only generated $22.2 million in average annual revenues. In contrast, it has racked up $63.7 million in annual operating expenses, plus another $25.4 million in interest on debt, for a total of more than $89 million in costs per year on average. 

RAV says that disparity is impossible to explain without foul play.

“Only an outright fraud can explain how a small island resort that averaged $22 million in revenue per year for ten years can accumulate almost a billion dollars of debt in that same span,” RAV said in its lawsuit. “No commercially reasonable actor would incur $89 million of costs and interests per year to operate a small hotel that generates $22 million in revenue per year.”