Real estate: Regulators turn down Judah Hertz's application, citing alleged dealings with reputed mob figures. He denies wrongdoing.

From The Los Angeles Times Staff and Wire Reports

Judah Hertz, owner of the California Mart and several other major downtown Los Angeles properties, lost a bid Wednesday for a Nevada gaming license as a result of alleged ties to reputed mobsters involved in drug dealing and prostitution.

Hertz "obviously is unsuitable for licensure with the state of Nevada and has no business here," said state Gaming Commission Chairman Brian Sandoval as the commission voted 4 to 0 against Hertz's application.

Hertz denies any wrongdoing. In an interview with The Times, he said he has sold the Comstock hotel-casino in Reno and withdrew offers to buy two other Reno properties, the Flamingo Hilton and a 50% stake in Sands Regent. Hertz Investment Group and an affiliate, Sapphire Gaming, began acquiring the three Reno casinos in 1999, starting with a $5-million deal for the Comstock.

The New York native had asked to withdraw an outdated application for a gaming license, but regulators rejected the request and voted unanimously to deny him. Nevada officials said Hertz failed to show up to a hearing of the state's Gaming Control Board and a meeting of the gaming commission.

"I knew what the ruling was," said Hertz, who owns about 3 million square feet of office space in central Los Angeles. "There was no point in going."

The Nevada gaming control board said Hertz had dealings with reputed organized crime figures including Jacob Orgad, an Israeli immigrant and accused international drug smuggler. The board said Orgad allegedly distributed cocaine for the Gambino and Escobar crime families, supplied cocaine and recruited women for notorious Hollywood madam Heidi Fleiss and has been linked to the illegal distribution of methylene dioxymethamphetamine, or MDMA, also called Ecstasy.

Control Board documents also state Hertz got some of the money for his Reno ventures from an uncle of Hai Waknine and Assaf Waknine, alleged enforcers for Orgad and members of the Bachsihan crime organization involved in ecstasy dealing.

Hertz said his only connection with Orgad was during the purchase of a downtown building on Hill Street. He said he paid Orgad a brokerage commission as part of the purchase and has had no further dealings with him.

The real estate investor has also been a mentor and a business associate of Hai Waknine, according to John Forbess, an attorney for Hertz. Waknine might have had a troubled past, but "he's been completely straight and has been a respectable businessperson," Forbess said. "It's not like Judah has been hanging around with unsavory characters."

Hertz, who had sought licensing approval for himself and several families, got the only denial from Nevada gaming regulators. The other applications were referred to staff. Though they could come up again, it's unlikely given the concern about Hertz.

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