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Report raises questions on Foxwoods bid in Mass.

BOSTON (AP) - Foxwoods executives were grilled by Massachusetts gambling regulators on Wednesday after a background check raised questions about the Connecticut casino operator's ability to successfully manage a proposed $1 billion resort casino in Milford.

A report compiled by investigators for the Massachusetts Gaming Commission cited Foxwoods' failure to secure more than half the financing it needs for the Massachusetts project and concerns about the company's debt and declining revenues.

The so-called "suitability" hearing came less than a week before Tuesday's scheduled referendum in Milford on the casino, which would be located off Interstate 495. A finding of suitability by the five-member commission and a favorable vote by town residents are both required before the bidder, formally known as Crossroads Massachusetts, can submit a final application for the sole eastern Massachusetts resort casino license allowed under state law.

Karen Wells, director of the commission's Investigations and Enforcement Bureau, said at the outset of the hearing that she was unable to advise the panel on whether the Foxwoods bid should be cleared to continue. She said the "glaring issue" was the group's failure to secure a 55 percent equity ownership interest.

"The IEB is not in a position to make a recommendation about suitability because we don't have a complete picture of what this applicant is going to look like," said Wells.

Scott Butera, Foxwoods' president and chief executive, said Foxwoods - which would manage the casino and own a 10 percent stake - was in active negotiations with two entities that had made "very strong offers" to fill the financing gap.

"I am confident in short order we will have that done," said Butera.

Butera did not identify the potential equity partners, citing confidentiality in the negotiations. He added that Foxwoods successfully restructured its $2.3 billion debt earlier this year and is now on sound financial footing. He said the Milford proposal would be exactly what Massachusetts envisioned in a casino.

Stephen Crosby, the commission's chair, told reporters during a break in the hearing that the panel would not be able to make a full determination on suitability until Foxwoods resolves the financing issue.

"If they don't have their ducks in a row for us to find them suitable or not, the application dies," said Crosby.

The company also faced questioning about the governance structure of the Massachusetts project and whether the Mashantucket Pequot Indian tribe, which owns the Connecticut casino, would have direct influence on the proposed Milford casino.

Foxwoods Massachusetts would be governed by a three-person board consisting of Butera and two members of the tribal council, chairman Rodney Butler and Crystal Whipple. Butera offered assurances that the board would operate independently of the tribal council and that similar governing models have worked for other casinos.

Butler was questioned about the recent federal convictions of former tribal council chairman Michael Thomas and his brother Steven Thomas, the council's former treasurer, on charges they bilked money from the tribe. Butler defended the council's decision to allow Steven Thomas to continue serving as treasurer for months after his January indictment.

Commissioners posed pointed questions about whether Crossroads misrepresented its transportation plans when it told Milford residents in a mailing that a new highway interchange would be built on I-495. The plan, in fact, calls not for an interchange but construction of a feeder road connecting two existing highway interchanges to Route 16.

Steve Allen, an attorney for the group, said that the difference was one of "semantics," but that the company has made clear its intentions at public meetings.