COLUMN ONE : Japanese Tap Out in Las Vegas : Of four investors who bought bankrupt casinos, only one is a success. Gamblers have fared no better. One of the biggest has been killed; another faces fraud charges.

On the downtown stretch of Las Vegas Boulevard, near the Hitching Post Chapel and across the street from the federal courthouse, lies a barren expanse of dirt--two square city blocks of it--punctured by a gaping concrete crater.

The eyesore has a story behind it. Indeed, the site is a kind of monument frozen in time, a vestige of the city’s ephemeral brush with mega-wealth from Japan.

The fallow construction site pays homage to the rise and fall of Japanese players and investors in Las Vegas, speculators who rose to prominence atop Japan’s “bubble economy” of the late 1980s, and all but vanished when the bubble burst. Even ordinary Japanese tourists are in short supply these days.

It was at this spot that onetime billionaire Masao Nangaku started to build a foundation for his 35-story, $90-million office complex, Minami Tower, not long after he acquired the fabled Dunes Hotel on the Las Vegas Strip.

Nangaku dazzled city planners with his blueprint for urban renewal, just as he had sold himself to gaming regulators as a deep-pocketed casino operator.

But the tycoon suffered a reversal in fortune. His hyper-inflated real estate empire back in Japan started to shrivel three years ago, undermining his seemingly limitless good credit.

In the end, Nangaku failed as a casino boss. The paper billionaire was unable, or unwilling, to raise the financing needed to renovate the dowdy Dunes. The hotel went into bankruptcy and was sold last year at an estimated $95-million loss.

Construction, too, had long been stalled on the office site, known by cynics as “Minami Stealth” or “Nangaku’s Hole.” Before his ignominious exit, Nangaku gave his parcel of land and concrete to the city, wriggling out of a redevelopment contract. He had poured $35 million into the project, and lost it all. His Las Vegas years cost him $130 million.

But Nangaku is just one of a rather remarkable club of gentlemen from Japan who came here to wager away untold millions of dollars on casinos, property development and baccarat.

Their stories provide a revealing glimpse of the psychology that prevailed when speculative mania pumped up share prices and land values in Japan--and goosed U.S. markets in real estate, corporate acquisitions and fine art. The popular delusion was that land prices would continue to soar, and that the rising sun would never set.

For many investors, the craps game of the laxly regulated and relatively corrupt Tokyo stock market was simply transferred to the United States. A few sporting individuals took it here, to the mecca of all betting.

Of the four investors from Japan who bought bankrupt Las Vegas casinos, two went bust themselves while a third quickly sold out. And the two most sensational Japanese gamblers, both players of baccarat--a high-stakes card game akin to blackjack--are now conspicuously absent. One is in jail; the other was found hacked to death last year in his palatial home near Mt. Fuji.

“It’s not a pretty sight,” said Dennis Forst, a gaming analyst with Sutro & Co. in Los Angeles. “It all turned sour for the Japanese.”

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Not every investor crapped out. Sukeaki Izumi, the fourth casino buyer, is doing quite well.

Unlike his compatriots, Izumi approached Las Vegas as a business manager, not as a real estate speculator. An experienced hotelier when he bought a small, bankrupt casino in 1989 for about $10 million, he reopened it as the Ramada Hotel San Remo.

Izumi’s background was not without blemish. In Guam, where he had invested in two hotels, Nevada gaming investigators uncovered his involvement in business with a shady character who had reputed gangland ties and was indicted for fraud and solicitation of murder. But no allegations of impropriety were made against Izumi, who impressed regulators as a forthright and capable businessman.

He had other qualifications that set him apart. Izumi speaks fairly fluent English, and until the demands of a family chemical business in Osaka, Japan, forced him to return last year, he was living in Las Vegas and involved in operating his casino.

“I went to talk to him with great trepidation because of the stories I’d heard about the other Japanese casino owners,” said Michael J. Hessling, a former executive at Caesars Palace who became Izumi’s general manager.

“But Mr. Izumi is definitely a different person,” Hessling said. “He’s always had a thirst for understanding every single little detail. We’ve been glued together for the past 4 1/2 years.”

Izumi also might be described as lucky.

He spent about $40 million to add 471 rooms to his hotel and give his casino a face lift, brushing aside warnings from his American general manager about the risks. They later learned that a colossal new casino resort and entertainment complex, the MGM Grand, was to be built across the street.

The relatively subdued south end of the Las Vegas Strip suddenly became a hot location, expected to generate a lucrative business in overflow walk-in traffic for the San Remo.

“It’s become a whole new corner,” Hessling said. “That’s basically ensured our success.”

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Until 1987, no foreigner ever had purchased a Nevada casino or acquired a license to operate one.

But along came Ginji Yasuda, a flamboyant millionaire, a playboy sportsman and a high-stakes baccarat player, with ambitions to sit on the bank’s side of the baccarat table.

Yasuda--born Sam Kyu Park in Korea but raised in Japan--was the prodigal son of a wealthy businessman. Beginning in 1971, Yasuda split his time between Japan, where he drove race cars, and Los Angeles, where he owned a mansion in Holmby Hills and kept thoroughbreds on a ranch in Bradbury.

Yasuda inherited $120 million from the sale of his father’s Tokyo real estate portfolio in 1984. He bought the dilapidated Aladdin Hotel out of bankruptcy court two years later, paying $54 million in cash.

After a 13-month investigation of his murky finances, Yasuda got his casino license. But operating the Aladdin proved more difficult than making history.

Debts piled up as Yasuda invested $40 million in remodeling and start-up costs. With only limited English skills, Yasuda had difficulty working with his managers and juggled personnel. Sources say he became mistrustful and put employees under surveillance as the casino continued to lose money.

Lenders foreclosed, regulators yanked his prized license and Yasuda filed for bankruptcy in August, 1989, listing $121 million in debts and $83 million in assets. He died of cancer three months later at age 57.

“He made the mistake of assuming that because he was a good customer, he’d be a good casino owner,” said Phil Hevener, a veteran gaming columnist for the Las Vegas Sun who now publishes a city magazine. “He hired some good people, but he failed to listen to them.”

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Nangaku, the would-be tower builder, was not a card player like Yasuda, but he followed a similar path to insolvency.

The Tokyo land baron bought the 164-acre Dunes Hotel and Country Club--also out of bankruptcy--for $158 million in 1987. Nangaku invested $12 million in basic repairs, but a major infusion of cash never came and the Dunes steadily declined. It was sold in November for $75 million to Mirage Resorts, which hopes to dynamite the place for the benefit of a Hollywood film crew before building a new theme resort.

Nangaku and Yasuda shared the distinction of completely baffling investigators from the Nevada Gaming Control Board with their Byzantine financial empires in Japan.

“These applications were very difficult, because of cultural differences and because financial transactions are documented differently,” said William A. Bible, the board’s chairman. “The Japanese police system is such that it’s difficult to get information.”

Nangaku, 73, an electronics retailer and proprietor of bowling alleys and pachinko parlors, made enough of a killing in Japan’s real estate bubble to rank among the world’s richest men in Forbes magazine’s billionaires surveys of the late 1980s.

He acquired a castle in Germany. He shrugged off more than $1 million that disappeared when he invested in a hotel deal in Bali. He bought a golf course in Hawaii and a hotel in San Diego. And he made a bid, later aborted, to build San Diego’s new courthouse complex.

But gaming investigators, who went to Japan at the applicant’s expense, found it impossible to get a solid grasp on the morass of 130 to 160 known entities that made up Nangaku’s Minami Group, Bible said.

Japan’s unique way of documenting--or rather, not documenting--business activities is compounded by a general philosophy of closing records to the public. Making matters worse, the investigators from Nevada believed that people in Nangaku’s employ were obstructing their access to information.

Because of the confusion, Nangaku initially received only a two-year restricted casino license--a limitation he would later blame for his inability to get sufficient financing to rescue the Dunes. By the time his unrestricted license was approved, it was too late.

“Financial circumstances had changed,” Bible said. “He essentially found himself tied up in a point where a lot of his land was used as collateral to secure loans, and the value of the land was shrinking significantly.”

Nangaku, it should be noted, was unsullied by the rumors of underworld connections that hounded Yasuda and several other Japanese investors in Las Vegas.

Regulators did fret about his interests in pachinko, a ubiquitous arcade game associated with illegal gambling and the demimonde of the yakuza , Japan’s mob. But Nangaku is regarded as an honest businessman--blinded perhaps by a certain amount of hubris--who took a bad fall.

“Even at the worst, if you assume Nangaku was a crook and his money was tainted, he failed to do what a successful owner must do--keep his casino new and interesting,” said Hevener, the gaming writer. “The public doesn’t care if John Gotti owns the place.”

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A horrifying example of Japan’s bad karma with the casino world came early last year when Akio Kashiwagi, a high roller known in Las Vegas and Atlantic City for his foul temper and astronomical baccarat losses, was found stabbed to death, reportedly $10 million in debt.

Shortly thereafter, gentlemanly Ken Mizuno, perhaps the most notorious high-stakes baccarat player in Las Vegas history, was arrested in Japan on fraud and tax evasion charges in connection with a golf club membership scam.

On a less dramatic level, the setbacks for the Japanese in Las Vegas may have more to do with lapses in fundamental business judgment than with playing the odds at the casinos.

Anyone bold enough to buy nostalgic old establishments such as Nangaku’s Dunes or Yasuda’s Aladdin--hotels in serious need of repair and overshadowed by the new mega-resorts rising on the Strip--was asking for trouble, analysts agree.

The final--and perhaps least conspicuous--of the Japanese casino investors, Katsuki Manabe, was no exception. A manufacturer of high-tech video arcade games in Japan, he bought the old, shuttered Holiday Inn in Las Vegas’ depressed downtown area. It reopened briefly as the Park Hotel before Manabe bailed out. He still sells his Sigma slot machines to local casinos.

“The Japanese bought casinos for the wrong reasons,” said Steve Eisenberg, a gaming analyst for Oppenheimer & Co. in New York. “They bought under the theory that real estate values would keep going up forever.”

Many fortunes were ruined in Japan as well with the crashing of the speculative house of cards built by this blind craze for real estate. The effect has been so devastating that the Japanese economic juggernaut of the 1980s has plunged into recession.

In Las Vegas, the Japanese investors--with the exception of Izumi--appeared unappreciative, too, of the complexities of managing property in the highly idiosyncratic casino industry.

“Casinos have to be run by a very competent management without losing the mystique, and those two things tend to cancel each other out,” said Henry Gluck, chief executive of Caesars World, parent company of Caesars Palace.

For now, hard times seem to be discouraging many Japanese from trying their luck in Las Vegas. That is especially true for the high rollers, who have been hunkering down at home, taking stock of their altered financial horizons.

Wealthy Japanese once dominated high-stakes baccarat, a game in which it is not uncommon to wager successive five-figure--even six-figure--bets on rapid-fire hands during marathon sessions.

The effect of Japan’s economic distress on the bottom line of casino revenues has been noticed.

At the Mirage, which traditionally accounts for about a third of the baccarat action in town, only one big player from Japan tried his luck last year, said Stephen A. Wynn, the casino’s corporate chairman.

That player happened to win big, Wynn noted with a hint of chagrin.

“Japanese play has been absent with a few exceptions,” Wynn said. “We’re just waiting to see when they’ll be in the mood to come again.”

Casino revenues from baccarat in the Las Vegas Strip area totaled $221 million for the 12-month period ending Oct. 31, down 39% from the same period a year earlier, state statistics show.

Even Japanese tourist volume, including the busloads of slot machine players, has fallen off, declining 28% in 1991.

The vacuum has been filled, to a large extent, by wealthy players from other East Asian countries such as Taiwan, Hong Kong, South Korea and Singapore, which have not been hobbled by recession like Japan.

The major casinos operate marketing offices in most Asian capitals and employ hosts whose job is to lure wealthy patrons with free air fare, complimentary suites, corporate jets and massive credit lines.

They have not forsaken Tokyo.

“The Japanese are very resourceful people,” said Caesars’ Gluck. “They’re highly intelligent and hard-working, and in the long run they are not going to be denied.”

NEXT: Ken Mizuno’s past is murky, as were his business arrangements. Charged in Japan with running a country club pyramid scheme, he is suspected of laundering illicit gains in Las Vegas.