The owners of a company that was poised to make tens of millions of dollars from a controversial casinos deal with the Government are now involved in a deal that will lead to the purchase of a Bermuda bank.

Bermudian businessmen John Tartaglia and Michael Moniz, owners of MM&I Holdings, were named last week on a notice to incorporate Permanent Capital Holdings Ltd, a local affiliate company of a private American investment firm, which announced yesterday that it was purchasing Bermuda Commercial Bank.

The pair were listed in the legal notice alongside lawyers Mark Pettingill and Grant Spurling, of Chancery Legal law firm, and Logan Sugarman and Lewis Katz, managing partners of New York-based Permanent Capital.

But Mr Sugarman said in a statement: “It is unfortunate that in using a local law firm and its recommended interim legal structure, Permanent Capital, was linked to another local business with which it otherwise has no association.

“The sole owners of Permanent Capital Ltd and the sole owners of BCB post-close are and will be Lewis Katz, Logan Sugarman and Chris Maybury.”

Mr Pettingill, a former politician who is Permanent Capital’s lead counsel in Bermuda, told The Royal Gazette the intention was to “maintain the status quo” and “grow” the bank with its existing team.

He said providing banking services to the gaming industry was “absolutely not a focus” and did not form part of BCB’s business plan. Mr Pettingill added: “There is no gaming industry on island to bank.”

A spokesman for Permanent Capital said Mr Tartaglia and Mr Moniz were directors of a local holding company that was being used to enable the merger agreement to go ahead, and neither they, Mr Pettingill nor Mr Spurling would be the ultimate owners of BCB once the transaction was completed.

Mr Tartaglia and Mr Moniz were behind an attempt to land a lucrative government contract to provide a cashless gaming system to any casinos that opened in Bermuda, as outlined in a special report in The Royal Gazette in October 2017.

MM&I entered a non-binding memorandum of understanding with the Government a year before casino gaming on the island was approved in Parliament — while Mr Pettingill sat in Cabinet as Attorney-General, along with the late Shawn Crockwell, who was the tourism development minister and responsible for gaming.

The ten-year deal, with the option for another ten years, would have allowed MM&I to reap 40 per cent of gross gaming revenue from all electronic gaming devices on the island, as well as an 8 per cent transaction fee on money exchanged for chips on dealer-operated tables.

The rewards were expected to be substantial, based on projections in a 2010 green paper on gaming.

The government-commissioned report estimated that casino gambling could generate potential revenues of between $84 million and $146 million a year, with electronic gaming accounting for about three quarters of that.

The potential cashless gaming deal was flagged up as a cause for concern by the Bermuda Casino Gaming Commission, which warned that individuals associated with MM&I’s partner firm, Florida-based Banyan Gaming, had previously surrendered their gaming licences in two major US gambling jurisdictions.

The MOU was terminated by the Government in July 2016.

Banyan representatives appeared as “expert” panellists at a Progressive Labour Party forum ten months later and told the audience that a cashless system for casinos should be mandated by law.

Present at the forum were Mr Pettingill and Mr Crockwell, who set up a private law firm after leaving Cabinet, which went on to represent MM&I.

In response to The Royal Gazette’s special report, MM&I said in a statement issued by Mr Pettingill that it would give the majority of any profits it made from a casinos deal to “churches, community clubs, vulnerable citizens’ programmes, etc”.

Mr Tartaglia said in July last year that MM&I no longer had “any interest in participating in the gaming industry in Bermuda”.

Banyan’s chief executive, Ken Jarvis, said the company had “no intention of becoming involved in the Bermuda gaming industry”.

No casinos have opened in Bermuda since the law to allow them was passed in December 2014. Regulators said one of the key stumbling blocks has been the unwillingness of local banks to be involved in the industry.

The Royal Gazette asked the island’s three largest local banks a year ago if they had decided whether to conduct financial transactions for any casinos that open here.

HSBC said it had taken a global decision to limit its involvement with the gambling sector.

Clarien said it would make a “risk-based decision” on whether to have further discussions with its stakeholders, including its overseas correspondent banks, once it had a better understanding of the island’s casino legislation and regulations.

Butterfield Bank declined to comment.

• UPDATE: this article has been amended to include a statement by Logan Sugarman regarding the ultimate ownership of Bermuda Commercial Bank.

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