Bank of America has fired another salvo in the ongoing war of legal briefs involving bankrupt Fontainebleau. The latest B of A blast depicts F'bleau management as considerably less than candid with its lenders. Not only did the former allegedly stiff-arm the latter when meetings were requested, there was an episode that might be called the casino industry's version of an "October surprise."

According to page 18 of the court filing, last April 17, F'bleau sprang a double whammy on the bank. Supposedly, it had been budgeting upfront for a "Base" plan while keeping hidden an "Enhanced" plan that "included restaurants, retail, nightclubs, and pool deck gaming and bar area." Not only did F'bleau reveal that the "Base" budget was unfunded to the tune of $180 million, the "Enhanced" budget would tack on another $203 million.

What F'bleau told the bank -- but not the public -- was that it wanted to push back the opening until Feburary 2010. Its own estimates also showed that it would recoup only 60% ($35 million) of the projected LEED credits. In short, the bank is accusing F'bleau of merrily spending away even as it knew the numbers weren't going to add up.

Three days after the F'bleau surprise, the project was notified that it was in default. At that time, the megaresort was still $1.5 billion away from completion, a sum that couldn't be financed without ignoring existing loan covenants -- and one that included $300 million in change orders.

An appraisal ordered by B of A concluded that F'bleau -- which was on pace to cost $3.2 billion -- was worth only $1.76 billion. Even that figure may be optimistic, as it's predicated on F'bleau doing better-than-Strip-average numbers on the casino floor, especially at the tables, plus a 91% hotel occupancy rate.

The project also stands accused of asking to be simply forgiven over $1.3 billion in existing debt. That's more than the cost (in unadjusted dollars) of either Bellagio or Mandalay Bay and roughly equivalent to that of the new Aladdin (now Planet Hollywood). You or I could build quite a dandy casino-resort, too, if we were allowed to pay for it in Monopoly money.

Of course, if one pretended that aforesaid $1.3 billion in costs had simply ceased to exist, it would soften some gloomy ROI projections. According to the Las Vegas Sun, F'bleau's own number-crunchers found that, after two years of operation, the resort would generate $162 million-$252 million in cash flow. So we'd be looking at a 5%-8% return on investment on a $3.2 billion megaresort (the unspoken implication being that would come after two even leaner years at the start). We can have megabudget megaresorts on the Strip or high-yield Vegas casinos but we clearly can no longer have both.