“What are the odds that people will make smart decisions about money if they don’t need to make smart decisions – if they can get rich making dumb decisions?"  

— Michael Lewis, “The Big Short: Inside the Doomsday Machine” (2010)

In 2006, during the height of the sub-prime mortgage bubble that Michael Lewis wrote about, Morgan Stanley, a stockbroker firm with no real estate experience, spent billions on bad real estate deals around the world.

In 2007, the Chinese government bailed out Morgan Stanley with $5 billion and bought a big chunk of the company. In 2008, U.S. taxpayers bailed out Morgan Stanley again with $10 billion.

In Atlantic City, Morgan Stanley spent $74 million to assemble land for a casino in the middle of a bad neighborhood, with bad streets and poor access.  There were far better locations at the Marina, by Route 40, and in midtown.

Although Morgan Stanley quickly sold most of its bad real estate investments for big losses, it doubled down on its bad bet in Atlantic City.  In 2007, it partnered with Revel Entertainment’s Kevin DeSanctis to build and operate a casino at the location nobody else wanted.

Morgan Stanley spent a fortune on plans and permits for a giant 4,000-room casino hotel at a time when the market was looking for small boutique casinos.

Just before construction began in 2008, Morgan Stanley executives finally figured out how bad their location was. So they turned to power broker law firm Cooper Levenson for another government bailout.  Cooper Levenson wines and dines and gives campaign money to politicians all over New Jersey. Cooper Levenson persuaded Atlantic City’s politicians to borrow $56 million, and evict dozens of residents to build new roads to the Revel site – while three other prime casino sites already with good roads sat empty.

Then things went from dumb to dumber.  In 2003, Boyd and MGM built the 2,000-room Borgata for a billion dollars.  But in 2008, Morgan Stanley/Revel spent $1.2 billion, and only got halfway through their construction – which was now cut back to only 1,100 rooms.  Work stopped in January of 2009 when the money ran out.

So Morgan Stanley/Revel begged for its fourth government bailout.  On April 21, 2009, the Casino Reinvestment Development Authority (CRDA) agreed to spend $20 million more for new roads around the Revel Casino site.

On April 22, 2009, its lawyers at Cooper Levenson sponsored a campaign event for then Democratic Gov. Jon Corzine at the Borgata.  The event included top union construction industry people and Howard Schoor, a pay-to-play engineer who had just pled guilty to bribing politicians.  It was all so bizarre that the Newark Star Ledger did a special story about it on April 30.

On May 14, 2009, Corzine ordered that state highway funds extend Route 30 to the Revel.

In September of 2009, the Chinese government was about to pay roughly $800 million to finish the project.  But China backed out when no American sucker offered to invest the other $400 million.

The Revel project was dead until Cooper Levenson worked out a fifth bailout by state and local government in Corzine’s last days in office.  Just before Christmas of 2009, Atlantic City’s local government agreed to a give Revel a $50 million break in county and local taxes, and request roughly $261 million in state tax breaks.  This taxpayer money would be pledged to borrow the other $400 million the Chinese had been looking for.

Local residents were outraged and signed petitions under state law to require voter approval.  But local Democrat state Sen. Jim Whelan, and Republican Assemblymen Vince Polisitina and John Amodeo rushed through special state legislation to strip local citizens of their right to force public votes on special tax deals for insiders.

Nothing happened under Republican Governor Christie until a few weeks ago. Morgan Stanley, which invested $1.2 billion, sold out to Revel for $30 million – or 2.5 cents on the dollar.  A few days later, Republican Chris Christie and Democrat state Senate President/Ironworkers Union boss Stephen Sweeney agreed to basically the same taxpayer bailout Democrat Governor Corzine set up 16 months ago.  One loan for $850 million to be secured by the property. Another for $305 million to be secured by New Jersey taxpayers.

Democrats, Republicans, our daily newspaper, and most talk show hosts are all telling us what a great deal this is. Are we at LibertyandProsperity.org alone in seeing the truth, or just in telling it?

Somers Point attorney Seth Grossman appears on 1400AM talk radio 3-4 p.m. Mondays and Tuesdays and on 92.1FM 9-10 a.m. Saturdays.  For information see www.libertyandprosperity.org, email This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call (609) 927-7333.  Breakfast discussions are held 9:30-10:30 a.m. every Saturday at the Shore Diner on Fire and Tilton roads in Egg Harbor Township.