By Liz Benston

Sun, Nov 16, 2008 (2 a.m.)

State gaming regulators are investigating the academic credentials of MGM Mirage Chief Executive Terry Lanni, who may have embellished his resume with a nonexistent MBA.

Lanni announced his resignation from the company Thursday, the same day The Wall Street Journal reported that Lanni had not received a Master of Business Administration from the University of Southern California as his corporate resume had indicated since at least 1982.

University spokesman James Grant said Lanni took MBA courses but didn’t receive a graduate degree. Lanni said he received an honorary MBA from USC in 1992, when he was named Alumnus of the Year by the business school.

Grant said there’s no record of an honorary degree.

Lanni insisted that his retirement had nothing to do with the newspaper story and that the grooming of his successor, Jim Murren, had been in motion for some time.

But several gaming insiders who spoke with the Sun said such resume discrepancies — while not unusual or especially damaging — raise red flags for regulators and can permanently tarnish a casino executive’s reputation.

Casino executives in Nevada are required to submit to extensive background checks. Since the state’s regulatory controls were initiated in the 1960s, that process has included double-checking every piece of information submitted on the 70-plus-page application form, including calls to confirm academic credentials.

It’s not clear whether Lanni told regulators on his initial application form from the late 1970s that he had received an MBA, or whether the information simply ended up on other public documents, such as news releases. By law, the information on gaming license applications is confidential, and Lanni could not be reached to discuss his license application.

Executives who have incorrect information on their license applications could have their licenses revoked, which would prevent them from holding any position, even a board of directors post, with a Nevada casino company.

The background investigation for a license aims to determine the applicant’s truthfulness about his skill as a businessman.

“The public needs to know that these people are completely aboveboard and are honest about running their businesses,” said one former regulator, who requested anonymity.

In the eyes of regulators, an embellished resume could be just as problematic as, say, a fudged tax return because it raises questions about the person’s veracity in other matters.

Perhaps for that reason, resume discrepancies are rare, the ex-regulator said.

The fact-checking process for license applications was “sloppy” at the time Lanni was first licensed to run Caesars World, another former regulator said. Double-checking references is now de rigueur, the ex-regulator said.

After executives survive their first-ever license investigation, subsequent license investigations — required every time an executive changes jobs – are cursory. Facts about the person’s background are assumed to have been well-scrubbed the first time around.

Gaming Control Board Chairman Dennis Neilander declined to comment on the review.