Judge Releases Bicycle Club Profits : Courts: An attorney says the federal order means, in effect, that the general manager and his partners are innocent of involvement in a money-laundering scheme.
A federal judge last week signed an order allowing Bicycle Club General Manager George Hardie and the partners in his corporation to receive their share of the millions of dollars in profits that have been withheld from them since early April when federal authorities seized the club.
The federal Drug Enforcement Administration and Internal Revenue Service seized the club April 3 after federal prosecutors in Florida proved that $12 million in profits from a marijuana smuggling operation was used to finance construction of the club. The club grosses about $100 million a year.
On Wednesday, U.S. District Judge Norman C. Roettger Jr. ordered that the profits should be distributed immediately to Park Place Associates, the corporation in which Hardie owns a controlling interest.
James Clark, attorney representing Park Place Associates, said the order effectively declares Hardie and his partners innocent of any involvement in the money-laundering scheme.
“The government would not unfreeze the profits if they didn’t believe (Park Place Associates) is innocent,” Clark said.
A spokeswoman for the office of the U.S. attorney for the Southern District of Florida refused to comment on the order.
Last November, partners in Park Place Associates were assured in a letter from Assistant U.S. Atty. Robert Bondi that the federal government did not believe they were involved in the scheme and that their shares of the club were not at risk. Park Place Associates owns 35% of the club.
The order does not affect the profit distribution to Park Place Associates’ joint partner, LCP Associates, which owns 65% of the Bicycle Club. According to the original seizure order, the government will retain control of the profits belonging to LCP Associates, and no partners in LCP Associates are to receive their normal monthly allotments until it can be determined that they had no knowledge of the money-laundering operation. A hearing has been scheduled for September, and LCP partners have been gearing up for a legal battle to retain their share of the profits.
LCP Associates has been under intense scrutiny by federal authorities because it was responsible for arranging the financing for casino construction. Michael Gilbert, one of the partners in LCP Associates, was convicted in Miami of racketeering charges stemming from the drug operation.
His father, the late Los Angeles developer Samuel Gilbert, provided the financing to LCP Associates through a corporation he created called CGL, whose partners also were partners in LCP Associates. Samuel Gilbert was indicted on charges relating to his involvement in the money-laundering ring, but he died before the indictment was handed down.
“The government has taken the position that (CGL) knew or should have known where the money came from,” Clark said.
According to the agreement reached between Park Place Associates and federal authorities, in return for monthly distribution of the corporation’s profits, Park Place investors agreed not to sell their interests in the club until the conclusion of the hearing, Clark said.
He said the judge’s order did not release the April profits of the club, which have been placed in a special U.S. marshal service account. Those profits are expected to be released within two months, and Park Place Associates is expected to be removed entirely from the legal fight between LCP Associates and the federal government, he said.
The city of Bell Gardens has been trustee of the club since it was seized. City Manager Claude Booker said the city will retain trusteeship until federal authorities determine whether the partners of LCP Associates should be allowed to keep their shares. Until then, nothing will change, he said.
News of the money-laundering operation and its connection to the Bicycle Club has hurt Hardie and the club, Hardie said. Profits have been down slightly, many political contributions made by the Bicycle Club have been returned and several models who were interviewed for the club’s annual Diamond Jim Brady poker tournament refused to work after a series of Times articles.
“It hasn’t been positive obviously,” Hardie said. “We hope to be through with all of this soon.”