Police Bosses, Some Indians Startled : Bingo Prober Quits, Applies to Run Games

A San Diego Police Department criminal intelligence officer who helped uncover corruption at the Barona Indian Reservation’s bingo games has quit her job and asked the Indians to hire her to run their troubled, high-stakes bingo operation.

Law enforcement officials in San Diego said they were surprised that the undercover officer would change hats and want to manage the very bingo games she had helped investigate, but they said their investigations would not be compromised.

San Diego Assistant Police Chief Bob Burgreen said Thursday that he learned on Wednesday that Kathy Thaxton, a veteran of 12 years with the department, was interested in managing the bingo games. He said he confronted her and gave her an ultimatum to either drop the idea of managing the bingo games or resign from the department.

“At that point, she went to the personnel office and resigned,” Burgreen said.

Several hours later, Thaxton appeared before the Barona Indian tribal council, asking that it hire her to run the bingo games and promising that she could return to the Indians a profit of $100,000 a month.

A spokesman for the tribal council said the matter will be discussed at a general council meeting Saturday morning.

Bingo has not been played at Barona--the first Indian reservation in California to offer unregulated, free-wheeling bingo games--since April 27, when the management company, American Management and Amusement, said it wanted to reorganize, and renovate the bingo hall.

The tribal council responded by suing American Management in federal district court in San Diego, alleging that the company kept two sets of financial books, failed to prepare monthly operating statements, undercapitalized the bingo games and failed to pay its fair share of operating expenses. Tribal critics have complained that the bingo games have failed to generate the profits they expected.

American Management counter-sued the tribe, claiming the Indians were acting without cause in voiding the bingo management contract.

Both suits have been frozen in court because American Management has entered Chapter 11 bankruptcy proceedings, according to Harry Hertzberg of Los Angeles, the company’s lawyer and one of its principal stockholders.

Thaxton was part of a multiagency criminal task force led by the San Diego County Sheriff’s Department that investigated alleged fraud in the bingo games. In her undercover capacity, Thaxton played bingo and developed contacts in the bingo hall to help develop information about the operation of the games, California Deputy Atty. Gen. Gary Shons said.

But Thaxton disputed law enforcement reports that she worked in an undercover capacity during the investigation. She said in a telephone interview that she had played bingo at the reservation for three years and in 1985 began noticing “some very flagrant things” in the bingo operations.

“I never hid the fact that I was a police officer,” she said. “I’ve known these people for three years . . . and their first security guard was a retired Secret Service agent who knew I was an officer. I never was an undercover player. I went out there on my own as a player and saw some very flagrant things. I brought these things to my department’s attention and initially they weren’t very enthused about an investigation. . . . I wasn’t sent out there to uncover it.”

Her specific role, Shons said, was to uncover enough information about possible fraud in the bingo operation to justify the issuance of a warrant to search records at the bingo hall. A subsequent raid and county grand jury investigation led to the indictment of former general manager Stewart Siegel, a one-time Las Vegas casino consultant, on six felony counts of grand theft. Authorities alleged that he fixed bingo games in which $139,000 in prize money was awarded to shills--players Siegel selected in advance to win the games by rigging the outcomes, and who kicked back most of their winnings to him.

Thaxton said that she did not become an investigator in the case until December, when the search warrants were issued. But even when she became actively involved in the investigation, Thaxton said, the operators knew she was an officer when she appeared at the bingo games.

Siegel pleaded guilty April 2 to four counts of stealing about $96,000 in prize money. He is scheduled to be sentenced Aug. 15.

John Jentz, Thaxton’s sister’s fiance and a San Diego businessman, said he had agreed to help her raise financial backing for the operation should she be awarded the contract.

“She told me that the Indians were not happy with the management and approached her, asking if she could help them out,” Jentz said. “She thought about it and said, ‘Gee, it might not be a bad idea.’ ”

Jentz, who owns the Country Bumpkin Dance Machine and Mony Mony’s dance clubs as well as Balboa Realty, said he would not only help line up investors on behalf of his future sister-in-law but would consider loaning her money himself for the bingo business. “It’s a lucrative business,” he said.

Burgreen said Thaxton’s decision to switch from bingo investigator to bingo manager “will not, we don’t believe, compromise anything (in ongoing investigations into bingo games). But we’re certainly not happy about it. We feel her doing this was a conflict of interest and that she utilized her position, because of the criminal investigation into Barona, to her own advantage. We’re not happy about that.”

Furthermore, Burgreen said, “We don’t want our people involved in gambling operations. It’s not in the best interest of the Police Department or for the community for police officers to be involved in gambling operations. It (bingo) lends itself toward problems, as noted by the investigations that were done out there.”

Thaxton said that it is “unfortunate” that Burgreen feels that way about her decision to quit the department in favor of running a bingo operation.

“I didn’t go into the investigation with the idea of obtaining a contract,” Thaxton said. “It’s unfortunate that Chief Burgreen feels that I used my friendship with the Indians to this end. It’s unfortunate that it’s being presented in that vein. The truth is that I didn’t decide to compete on this contract until June 4.”

According to Thaxton, some tribal council members invited her “to come out here and run this thing.” After talking to council members, Thaxton said, she put a plan together on her own time, worked out a financing plan and submitted a contract.

She would not reveal any specifics about her contract proposal but called erroneous reports that she is prepared to offer the council $200,000 in cash and finance an additional $2 million.

Shons, who presented evidence against Siegel to the grand jury, said Thaxton’s decision would not affect any further prosecutions “because our investigation is historical, looking backward at things that already occurred.

“But it might look strange to the public, and her decision has left us all scratching our heads. It came as a surprise to us.”

Thaxton said she decided to compete for the bingo contract only because “it is a good business opportunity.” If she does not get the contract or if the business venture does not work out, Thaxton said, police officials told her she could get her job back if she returns within 12 months. Thaxton said she has received about 30 commendations from the department during her career.

Catherine Holsbo, a leading Indian opponent of the bingo games, said she was shocked by Thaxton’s request to run the operation.

“She was a key person working on the investigation of bingo and who we’ve been working with, and now she wants to run it herself?” Holsbo said. “Where does that leave us? We’re scared because we’re not sure if we can work with law enforcement any more. We don’t know who we can trust.”

Tribal Chairman Edward (Joe) Welch could not be reached for comment, but tribal attorney Art Bunce said Thaxton was one of about a dozen persons or companies seeking a contract to resume bingo at Barona.

One of the bingo bidders is Barton L. Schuman, a Los Angeles developer and owner of Meridian General Inc., a real estate investment consultant company, according to Hertzberg, American Management’s attorney.

Hertzberg said he and the other principals of American Management are trying to work a deal where Schuman would buy out their interests in American Management and then seek to renew the company’s contract with the Barona Indians.

“The principals (of American Management) are interested in getting out and selling their stock to Mr. Schuman,” said Hertzberg, who said the current owners of the company “have lost millions. Maybe he figures he can do better.”

Hertzberg said he was incredulous that Thaxton was in competition with Schuman to run the bingo games. “She was investigating our operation, and now she’s trying to take it away from us? . . . The Police Department must be embarrassed by this. The very person who was trying to kick us out is now trying to take it over,” he said. “That’s interference with advantageous contractual relationship. That’s wrong.”

Shons said he saw no conflict in Thaxton’s action and doubted that defense attorneys would try to argue that Thaxton worked to uncover wrongdoing at Barona in order to take over its management.

“I just don’t see that happening,” he said.

Times staff writer H.G. Reza contributed to this story.