Aides ‘Shocked’ Over Charges That Drug Money Funded Club

City officials in Bell Gardens expressed shock and concern Friday over charges that the Bicycle Club casino--the city’s largest source of tax revenue--was purchased with drug money laundered by the late Los Angeles contractor and UCLA basketball benefactor Samuel Gilbert.

This “gives us a notoriety we had hoped to avoid,” Bell Gardens City Atty. Peter Wallin said. “We were very careful in putting together the club, making sure everything was on the up and up.”

It is too soon, they said, to determine if a federal indictment handed down on Wednesday that named Gilbert would have any effect on the club’s operations, or the millions of dollars in tax revenue that it produces for the city.

Firm Built Club

Although Gilbert had no direct interest in the club, his construction firm--Sam Gilbert and Associates--built the $20-million, 81,000-square-foot facility in 1984, according to papers filed with the state attorney general.

Federal prosecutors in Miami charged Wednesday that Gilbert, his 46-year-old son Michael and four other men conspired to launder $14 million in drug money through a series of corporations in the United States and abroad. About $11.5 million put up by accused drug smuggler Benjamin Barry Kramer allegedly went to pay for construction and land costs of the Bell Gardens casino, prosecutors said. Federal officials plan to seek the return of that amount from the club.

Michael Gilbert, a limited partner in the club, was charged with conspiring to defraud the Internal Revenue Service.

Another son, Robert, is director of operations at the club but wasn’t named in the charges.

“I wasn’t even aware of any (federal) investigation,” City Manager Claude Booker said. “I was shocked because we do a background check ourselves, as does the FBI, and there was nothing in the background.”

Unlike the better-known gambling casinos of Nevada, clubs in California are limited to offering poker and similar card games. The Bell Gardens club offers several versions of poker, including hold ‘em and seven-card stud, panguingue (a form of pinochle and rummy) and pai-gow, a Chinese tile game.

Card clubs don’t participate in their games but merely host them in return for a fee collected from each player or each pot based on the table stakes. A percentage of the fee then goes to city government in the form of gaming taxes.

In addition to its 120 gaming tables, the Bicycle Club offers valet parking, a beauty parlor, a pastry shop and seven giant television screens continuously showing sports. It is the largest card club in southeast Los Angeles County and has provided the major source of revenue to this low-income, predominantly Latino city of 38,000.

Last year, the club’s $7 million in city taxes supplied more than half of the city’s total revenue. Since opening in 1984, the steady flow of tax money provided by the club has allowed the city’s operating budget to jump from an estimated $8.9 million that year to $10.8 million two years ago and to nearly $18 million this year.

City Manager Booker said it is too soon to judge whether the federal charges involving the club will have any financial impact on the city. He said city officials will be meeting this week to discuss the situation.

“We will be actively involved Monday morning, placing calls and doing anything we can to assist in the investigation,” Booker said. “We want the cleanest possible club.”

The Bell Gardens casino is not the first area card club to become the focus of criminal charges.

Charges at Other Clubs

In 1985, three former city councilmen in Commerce, another city official and Orange County fireworks magnate W. Patrick Moriarty pleaded guilty to bribery and racketeering charges stemming from a scheme to give officials secret shares in the California Commerce Club.

And in neighboring Bell, a former city councilman and a former city administrator were among seven other people who either pleaded guilty to or were convicted of fraud charges arising from a similar effort to secretly obtain majority ownership of the California Bell Club.

George Graham Hardie, the Bicycle Club’s general manager, said he doubts that the charges surrounding the Bell Gardens club will have any effect on its operations.

“If they (federal officials) were after the club, they would have been here by now,” Hardie said.

Hardie said the elder Gilbert was not involved in the operation of the club. He praised Gilbert’s reputation as a fine businessman.

“As far as I know, he (Gilbert) has been one of the most respected businessmen in the Los Angeles area,” Hardie said.

It was business as usual on Friday, casino manager John Sutton said.

“I don’t think people really care about what’s happened,” Sutton said. “Business is fine.”