James M. Dwyer, the controversial former owner of White Sands Hotel, claims an ex-employee in his American company stole $5 million from the business, according to a newspaper report.

White Sands has been closed since March when Bank of Butterfield called in the receivers after Mr. Dwyer failed to keep up loan repayments.

Mr. Dwyer claims an employee, who died in 2000, stole $5 million from him since 1993 and managed to hide the theft, a report in the Press of Atlantic City newspaper last month states.

It is understood Mr. Dwyer made the same allegation in personal bankruptcy papers he filed in the US.

Mr. Dwyer, the owner of James M. Dwyer Real Estate and Investment and Development, said he had not filed any criminal complaint or released the man's name out of respect for the alleged thief's family, the report states.

Staff at White Sands in Paget, which is still closed and on the market, went months without payment and many are still understood to be owed wages.

Mr. Dwyer told the Press of Atlantic City: "I would never have found out about this (alleged $5 million theft) had this man not passed away.

"We purchased two buildings in Philadelphia. One of the banks did not come through in time.

"We went off and got very expensive financing. At the same time, we didn't realise that the underpinning funds were being eaten away."

This, according to the report, had a "domino effect" which Mr. Dwyer believes led to his personal bankruptcy.

He told the newspaper that seven projects valued at $500 million fell apart in quick succession mainly due to the alleged theft.

A court-appointment management team in September closed down the banqueting hall in the Flanders Hotel in Ocean City, New Jersey, because it was not making money.

Mr. Dwyer bought the 161 unit hotel in 1995, but a US court appointed a management team after the company hit financial problems and Mr. Dwyer filed for bankruptcy.

The developer hired a private investigator to try to locate some of the cash supposedly stolen and might have deposited in offshore accounts, said the report.

However, Mr. Dwyer remains optimistic he can bounce back and re-establish his business empire.

"We have gone through tough times. I have great faith that allows me to get up and tie my shoes. I wouldn't be able to do this without faith," he told the newspaper.

The Royal Gazette reported last week that six parties, including celebrities, are still interested in buying White Sands and keeping the 32-room property as a hotel.