The New Hampshire Lottery Commission has agreed to three significant demands from embattled casino owner Andy Sanborn as it tries to revoke his gaming license over allegations he illegally enriched himself with a $844,000 pandemic loan.
On Monday, Sanborn, a former state senator and Republican candidate for Congress, was given an additional eight weeks to prepare his defense. The commission will take on the heavier burden of proving its case against Sanborn rather than requiring him to disprove its allegations. The commission will also step aside and allow someone from a different state agency to preside over Sanborn’s revocation hearing.
But the Lottery Commission’s underlying “grave” concerns about Sanborn’s suitability to keep his license remain the same.
Sanborn’s attorneys and the state negotiated the new terms of the Lottery Commission’s case before Merrimack County Superior Court Judge Amy Ignatius on Monday. Sanborn missed the hearing to attend a medical appointment, his lawyer Zachary Hafer told reporters following the hearing.
Court records indicate Sanborn’s lawyers and the Attorney General’s Office have discussed settling the case but details were not disclosed. John Conforti, the Lottery Commission’s chief compliance officer, said after the court hearing Monday that settlement discussions are confidential. Unless the case is settled, the next step is expected to be a December hearing where the Lottery Commission will decide whether to revoke Sanborn’s license.
Here are four takeaways from Sanborn’s case before the Lottery Commission.
In five years, this is the NH Lottery Commission’s first deep dive into Sanborn’s suitability.
Sanborn opened Concord Casino in 2018, a year before the Lottery Commission and the Attorney General’s Office began evaluating suitability reviews, done every five years for all license holders. That makes this five-year suitability review a first for Sanborn and Concord Casino.
According to Conforti’s March 13 suitability report, neither the commission nor the Attorney General’s Office did “thorough” suitability reviews until 2019 due to limited resources and the small-scale nature of gaming entities prior to that time.
The two agencies revamped the process in 2018 and amended it again in 2022 to lay out the process being used for Sanborn’s current review. The Lottery Commission conducts the primary investigation and makes a recommendation on suitability to the Attorney General’s Office, which then makes a final decision.
“As pre-2019 licensees were not subject to full reviews, the Department of Justice and Lottery Commission have committed to conducting a full suitability review at the five-year interval to determine whether these licensees should remain involved with gaming in New Hampshire,” Conforti wrote.
His report does not contemplate whether the commission or Attorney General’s Office would have challenged Sanborn’s suitability in 2018. Sanborn’s alleged misuse of $844,000 in federal pandemic assistance, which has been a focus of the commission’s and Attorney General’s Office’s investigations, did not occur until 2022.
Lottery’s concerns go beyond Sanborn’s alleged pandemic fraud
Conforti needed nearly 260 pages to lay out his argument that Sanborn be found “not suitable” to hold onto his gaming license.
Conforti’s March 13 report focuses heavily on the evidence that Sanborn allegedly misused an $844,000 pandemic assistance loan to enrich himself and Laurie Sanborn, his wife and a current state representative. But it includes a history of tax liens, alleged lewd comments, recent Lottery audits, and court action brought against Sanborn in 2005.
Conforti wrote in his report that Sanborn’s record demonstrates ‘‘an ongoing pattern of disregard for legal requirements.”
The report notes that the Sanborns and Sanborn-owned entities have been the subject of 37 tax liens. While all were resolved, Conforti wrote, “the number of liens demonstrates a pattern of noncompliance with financial responsibilities.”
Under a section of the report titled “character/reputation,” Conforti looked back 10 years, to Sanborn’s sexual comments while serving as a state senator.
Investigations by the New Hampshire Senate and the Attorney General’s Office did not find evidence that a Senate intern had been paid off to remain silent, as was alleged. But the Attorney General’s Office did determine that Sanborn had made a lewd comment to the intern. The witnesses’ statements released after the investigation raised concerns for Conforti.
“This included evidence that Mr. Sanborn had made crass comments about oral sex to an intern in 2013 and that Mr. Sanborn made ‘near-daily’ unwelcome comments about a female staffer’s appearance,” he wrote.
Conforti also noted that Sanborn was the subject of court action in 2005 when he abruptly closed Banagans, his chain of bike and ski shops in Concord, Keene, and Lebanon, without paying vendors for skis and other equipment still in his shop. Several of those companies filed a bankruptcy case against Sanborn, hoping to get some compensation for their products before he used his remaining money to pay his own debts.
Reporting at the time showed that ski companies Burton and K2 sought claims for nearly $240,000. Bike dealer Pacific Cycle filed one for $75,000. Sanborn also filed his own claims, saying he was owed $185,000 for a personal loan he’d made to his company and $170,000 in rent.
Sanborn at the time said he had to close because he was ill and planned to retire. He soon returned with a new venture, Concord Draft Sports and Grill restaurant that now also houses his casino, and in 2008, ran successfully for state Senate.
Conforti also noted that the Lottery Commission’s 2021 audit of Concord Casino raised several concerns related to inaccurate or insufficient financial documentation. The observations were not uncommon among casinos like Sanborn’s, Conforti wrote, but Sanborn’s response was.
“Generally, licensees agree to make recommended changes to procedures and demonstrate that they are seeking to resolve any identified issues,” Conforti wrote. “Concord Casino, however, refused to acknowledge several of the concerns and did not commit to implementing the recommendations identified in the audit. This discussion continued past the audit as Concord Casino refused to implement basic cash controls requested by the auditors.”
The Lottery Commission agreed to grant Concord Casino a 2022 gaming license with an understanding that Sanborn would meet with the commission to resolve concerns raised in the audit, Conforti wrote.
That meeting did not take place until later in 2022 when Concord Casino sought approval for expanded gaming space, according to Conforti’s report. The commission permitted the use of the expanded facility contingent on another audit.
The second audit, conducted in 2022, raised concerns that Sanborn was misusing the pandemic loan he started receiving in January of last year.
“The apparent abuse of federal funds is part of an ongoing pattern of disregard for legal requirements,” Conforti wrote. “This is further evidenced by the habitual failure to pay taxes in a timely basis leading to 37 separate tax liens filed against him, his companies, and his family and the bankruptcy of his prior business which was allegedly designed to defraud his suppliers. Finally, Mr. Sanborn’s conduct while a state senator gives us grave concerns about his personal character and fitness to (be) associated with gaming, specifically given the severe and pervasive sexual harassment outlined in public documents.”
Sanborn’s lawyers: Lottery’s investigation was ‘sloppy, at best’
The Attorney General’s Office and the Lottery’s investigators raised similar concerns after reviewing Sanborn’s COVID-19 Economic Injury Disaster Loan application.
They said Sanborn obtained the loan under fraudulent terms by not disclosing that he operated a casino. The money cannot be used for gambling businesses. And their review of financial records led to their allegations that he used the money illegally.
In one instance, they allege Sanborn spent $48,750 on a Porsche in early 2022, when they say he had access to less than $1,000 in operating funds. In other cases, investigators allege Sanborn recorded loan expenditures for cars and more than $167,000 in rent to himself as “necessary equipment purchase(s).”
Sanborn’s lawyers said Monday the findings are inaccurate because neither the Lottery Commission nor the Attorney General’s Office conducted a thorough financial audit of Sanborn’s finances.
Hafer, one of Sanborn’s three attorneys at Monday’s court hearing, said Sanborn had at least $150,000 in his bank account when he bought the Porsche in January 2022, not less than $1,000.
“If someone wants to buy a car with their own money that they had at the time the loan came in, that’s very different than if they took and spent the (loan) money,” Hafer said. “And that’s going to come out when we have this hearing.”
Hafer said also that Sanborn relied on advice from unnamed third parties when he applied for the loan.
“That’s a classic point in the law,” Hafer said. “When somebody consults a lawyer or a consultant for advice on something, the state might not like the advice they got, but that certainly shows that they weren’t operating in bad faith.”
Hafer told the judge Monday that the state’s investigation was “sloppy, at best.”
“So the record should be clear,” Hafer said. “We are very much looking forward to meeting these allegations head-on in a fair proceeding.”
The Lottery Commission hoped to move quickly. It won’t.
The Lottery Commission first notified Sanborn it intended to revoke his gaming license indefinitely on Aug. 31, the same day Attorney General John Formella announced he supported that decision and had referred the Sanborns for criminal investigation.
The commission gave Sanborn 10 days to challenge the revocation. It agreed to give Sanborn an additional 10 days at his lawyer’s request, but another longer extension was denied. Sanborn’s gaming license expires Dec. 31.
His lawyers argued a few weeks was insufficient time to review the Lottery’s 260-page suitability report and conduct its own financial investigation of Sanborn’s use of the pandemic aid. Between Aug. 31 and mid-October, the two sides exchanged at least 20 emails or other communications and met twice.
Unable to persuade the commission to extend a hearing date, Sanborn’s attorneys sought and won a temporary restraining order in Merrimack County Superior Court.
None of the records made available to the public reveal why the commission wanted to move so quickly. Sanborn’s lawyers pointed to a court record in which commission Chairwoman Debra Douglas expressed concern about public perception.
“The optics for this agency is not good,” she said. “I don’t care where I am. People are coming up to me all the time. And it’s damaging our brand.”
Sanborn’s license revocation hearing is expected to be scheduled for early or mid-December, three weeks before his license expires.
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