The beleaguered California card room industry took another serious hit last week when hundreds of federal agents cracked down on an illegal gambling ring across seven states, California, Arizona, Nevada, New Jersey, New Mexico, Pennsylvania and Iowa.
In California, agents raid the Seven Mile Casino in Chula Vista and the Palomar Card Room in San Diego, seizing more than $600,000 from player accounts and bank accounts. The owners were indicted on money laundering charges, mainly failing to report cash transactions over $10,000.
The California Bureau of Gambling Control, the regulatory board overseeing the card rooms and already operating under a cloud of suspicion and questionable ethics, issued an emergency order closing the card rooms immediately.
Much of the investigation centered on illegal sports betting operations, featuring participation by offshore websites and underground casinos, set up in rented mansions and other sites in the San Diego area.
“This indictment describes a massive operation that laundered millions of dollars in illicit proceeds,” said U.S. Attorney Laura Duffy. “We are committed to putting an end to any activity that enables criminals to hide illicit proceeds.”
“Up to three times a week, some defendants held intimate high-stakes poker and blackjack games in extravagant settings that featured professional card dealers, prostitutes, chefs and waitresses,” according to a statement from the U.S. attorney’s office.
The investigation focused on David “Fat Dave” Stroj of San Diego. The Associated Press reported that there was little public information on the defendant and it was unclear whether he was arrested during the raids.
California Attorney General Kamala D. Harris said her regulatory agency participated in the raids.
“These casinos allegedly engaged in money laundering and illegal gambling schemes that undermine the well-being of our communities,” said Harris. “I thank our California Department of Justice Bureau of Gambling Control Special Agents, as well as our local and federal law enforcement partners, for holding the alleged perpetrators accountable for their financial crimes.”
The Justice Department statement quoted Stroj as saying on an intercepted phone call, “Between you and me, the best way to launder money, you do it through these local casinos in San Diego… that’s how, if someone owes me a 100 ($100,000) and they want to wire it to me, I wire it to the Palomar and leave it in my player’s bank and they give me chips.”
Money was also wired to the Wynn and Bellagio casinos in Las Vegas, but neither casino was accused of any wrongdoing.
Even San Diego Mayor Kevin Faulconer was ensnared, reportedly receiving campaign contributions from one of the defendants
“The mayor did not meet with any of these individuals about changing card room policy,” the mayor’s office said in a statement. “They were informed that the mayor supported the police chief’s position of not changing the rules for card rooms. If there are any individuals who gave to his reelection campaign that are indicted as part of this investigation, the campaign will return their donations.”
The bifurcated California regulatory system has been under fire for several years. Ethics charges have enveloped several current and former high-level officials, but thus far, no charges have been brought.
