Eric Swallow is increasingly frustrated as he tries to get rid of the San Jose casino he first opened five years ago: Casino M8trix, but keeps finding it the subject of indictments, money problems and regulatory fights—a history of casinos in the area he had hoped to escape.
Swallow and his partners first acquired the gaming license a decade ago, and then opened the seven-story card club five years later. It has been profitable, an estimated $60 million in gross revenue.
But Swallow has also been targeted by a state investigation of alleged corruption, while also being in an expensive divorce and a dispute with co-owners. The erstwhile partners, Peter and Jeanine Lunardi have testified against him in a case in which the State Attorney General has accused all three of hiding profits and avoiding other payments.
At this point Swallow wants to eat his losses and walk away. But the state isn’t making it easy for him. When he found a willing buyer for his share, it was vetoed by the California Gambling Control Commission, which found a purchaser it likes better: the Lunardis, along with two other investors, Patrick and Jamie Tierney.
Instead of allowing John Park, Swallow’s preferred buyer, who has five card clubs, and wanted to pay a larger amount for his share, the commission insisted that the sale should go to a lower bid.
This sparked a protest from Park, who accused the commission of favoritism. Through his attorney Park sent a letter to the commission accusing Deputy Attorney General William Torngren of “irregular, improper and, at times, likely illegal attempts to influence the sale.”
This May 24 letter, which San Jose Inside obtained, added that the deputy attorney general “has used the power of the state to conduct a concerted campaign to predetermine winners and losers among private parties in a card room transaction.” Park asks that the sale be postponed until his allegations can be investigated.
However, the Attorney General’s office is denying the claim and the commission ordered that the sale proceed.
Park’s attorney Scott Garnere claims Torngren adopted different prosecutorial standards for Swallow than he did for the Lunardis, and also tried to drive down the purchase price. He also accuses the state of withholding back pay from a former M8trix worker, named Bryan Roberts, to force him to testify for the state—and that he encouraged that worker to hack Swallow’s emails and servers.
In the letter Garner writes, “In addition to effectively purchasing Mr. Roberts’ testimony, Torngren was, at a minimum, complicit in Mr. Roberts’ warrantless and illegal search of Mr. Swallow’s servers.”
