"He never came forward with the financing to this day," Stein said. "We don't have any reason to know if he is a credible bidder. He kept promising to come forward with financing, but never did. None of the other bidders have any problems with financing."

Haberle said the Palladino group has lined up bank financing to complete the deal. However, she said Palladino would no longer participate in the sale unless the conservator names a set price for the casino instead of having competitive bids.

"What bidding process doesn't have a price?" Haberle said. "It puts you at a real disadvantage. There are so many uncertainties."

Gary Stein, a retired New Jersey Supreme Court justice, has been running Tropicana since it was stripped of its license in December following mass layoffs, regulatory violations and customer complaints of bedbugs, smelly rooms and overflowing toilets.

Stein's role is to find a new owner, but his attempts to sell Tropicana have been hindered by the weak economy, the global credit crunch and what he has called "unreasonably low bids." Stein never publicly divulged the bids. He was granted permission last month by the New Jersey Casino Control Commission to throw out the existing bids and restart the process from scratch, extending the sale deadline to October.

Haber complained that Stein has kept would-be buyers in the dark about the second round of bidding, not even telling them when it would begin. She also criticized him for taking too long to sell Tropicana, noting that Stein and his Hackensack law firm of Pashman Stein have racked up nearly $1 million in sale-related fees in the process.

"They are running their own little fiefdom," Haberle charged. "The bills just keep mounting up. It just gets worse."

Gary Stein, who declined Friday to respond to Haberle's accusations, has defended his bills in the past. He has said his fees and those of his law firm are "completely in line with a transaction of this magnitude and complexity, and reflect the cost of obtaining the highest quality legal and financial advice."

Further criticizing Stein, Haberle also said Tropicana's sale would not be legal under its current structure. She maintains that Stein has not hired a New Jersey-licensed real estate broker, as required by law for a sale of this type.

"They're skirting the law by not having a licensed broker to handle that transaction. When it comes to an actual solicitation of buyers, they absolutely need a broker," said Haberle, who served as director of the New Jersey Real Estate Commission under former Gov. Brendan Byrne.

Michael Stein said the law cited by Haberle does not apply to the sale of a casino. Instead of hiring a real estate broker, the conservator has retained a team of investment banks to recruit would-be buyers for Tropicana.

Now that the first set of bids has been rejected, Gary Stein has discussed the possibility of taking Tropicana through what is known as a Section 363 sale in U.S. Bankruptcy Court. He told New Jersey gaming regulators last month that a bankruptcy auction might be the best way to pump up bids and overcome a host of legal and financial entanglements that have hampered efforts to find a buyer.

Stein's son said the "best legal minds in the area" agree that a Section 363 sale will ensure that the buyer gets full, undisputed title to Tropicana and its assets.

Haberle argued that a bankruptcy sale would have the opposite effect. She believes Tropicana's value would plummet between 30 percent to 40 percent because of the stigma and complications usually attached to bankruptcy.

E-mail Donald Wittkowski:

DWittkowski@pressofac.com