Police, D.A. Align Against Card Rooms : Gambling: Two separate reports urge the San Diego City Council to reject a proposal for a $30-million casino.

In separate reports that link criminal activity and California card rooms, San Diego’s police chief and the county district attorney have urged the City Council to reject a proposed $30-million gambling casino.

Citing allegations of loan-sharking, money-laundering and other corruption surrounding the operations, Dist. Atty. Edwin L. Miller and Police Chief Bob Burgreen say they are adamantly opposed to such gaming operations.

Their position was bolstered this week by the San Diego County Police Chiefs’ & Sheriff’s Assn., which voted unanimously against the card casino and a National City ballot initiative that would allow a similar facility if approved.

“We are acutely aware of the financial difficulties currently being experienced by local governments and that the potential revenues promised by operators of card room casinos may seem attractive,” wrote El Cajon Police Chief Jack Smith, the association’s president.

“However, we believe the fiscal benefits are considerably outweighed by the negative impact these vice-ridden businesses would have on local communities,” he said.

Burgreen’s report, distributed under City Manager Jack McGrory’s signature, is the culmination of a six-week police investigation into a proposal by the California Commerce Club to build a 100-table, Las Vegas-style gaming casino in Mission Valley.

The group has been represented by former Mayor Roger Hedgecock, who stands to split $500,000 with another partner and share a 5% partnership interest if the deal goes through. Hedgecock has said he had no formal contract to lobby on behalf of the Commerce Club in San Diego.

Miller’s report will be delivered to the city this morning. He also vigorously opposes card clubs for many of the same reasons as Burgreen and has scheduled a press conference today to discuss the findings of his special operations division.

Commerce Club representatives pledged to pay the city of San Diego a $1-million franchise fee, $1 million when the club opens and about $10 million a year in new revenues. To do so, the club would need permission to buy the existing licenses of the remaining 12 card rooms that operate in San Diego.

But even a huge cash influx would not outweigh “the likelihood that this facility could become a magnet for organized crime,” the city’s report says.

Approving a card casino would be contrary to the council’s previous vote that invalidates card room licenses after a license holder dies or gives up a business, the report says.

The casinos would also hamper law enforcement investigations because the Commerce Club opposes police regulation, would exploit compulsive gambling and “provide organized crime with the incentive to initiate illegal operations in San Diego,” according to the report.

Contacted Thursday night, Hedgecock, a popular radio talk show host, said he would have no comment.

The city’s study, assembled by Assistant Police Chief Ken Fortier, found that none of the 42 “point-holders” in the California Commerce Club, nor those involved in its proposed San Diego location, have ever been involved in any “significant” criminal history, following background checks.

However, police investigators found that one shareholder had an apparent conflict of interest involving the North American Boxing Federation, that one owned a trash disposal company in Hawthorne whose award came under criticism by the county grand jury and that another owned a casino in Adelanto embroiled in a corruption investigation involving the city’s police chief.

One of the existing card club owners was charged with four gambling violations, including one count of criminal conspiracy and bookmaking. He pleaded guilty to one gambling violation, the report says.

In addition, four Commerce city officials were convicted in 1984 for their roles in a scheme to grant a poker parlor license in return for secret shares in the California Commerce Club.

In April, 1990, the federal government seized the Bicycle Club in Bell Gardens after a jury determined that $12 million of its $22 million in construction funds came from Florida drug dealers. As a result of that action, federal authorities own a 20% share in the Bicycle Club and are seeking 16% more.

San Diego police also reported that Hollmad Cheung, in charge of the Bicycle Club’s Asian games, is under criminal investigation.

“Police investigations of card rooms, throughout the years, have revealed them to be magnets for criminal activities, such as bookmaking, loan-sharking, narcotics sales and use, and trafficking in stolen property,” the report says.

A San Diego police undercover operation of card rooms conducted last year resulted in 11 arrests, including card room employees, on charges of 18 narcotics and bookmaking violations. All but one of the cases resulted in guilty pleas. One suspect is still at large.

Since nearly two-thirds of the California Commerce Club’s revenues come from Asian games, San Diego police are worried that the establishment of a new and larger card club in Mission Valley would lead to the involvement of Asian organized crime and a proliferation of “follow-home” attacks by Asian gang members.

Investigators interviewed three nationally recognized experts on compulsive gambling. They found that many are prone to commit suicide or develop other criminal behavior such as loan fraud, employee theft and embezzlement, and that their children usually end up gambling.

Proponents of the card casino say it would create 1,500 new jobs and pump millions of dollars into the local economy.

But Mayor Maureen O’Connor said Thursday that the problems associated with gambling aren’t worth an expanded work force.

“The argument is that because cities are in trouble, the casinos can provide jobs,” she said. “There are other ways to do that than potentially getting into bed with organized crime.”

O’Connor said she will move at Monday’s meeting to note and file the city’s report, and said she does not expect anyone to place the proposal on the agenda. Five votes are needed to place an item on the council docket.

“My hope is that we can nip this in the bud,” she said. “I cannot imagine anyone changing the existing Municipal Code on card rooms. We don’t want Las Vegas in San Diego. There’s nothing wrong with Las Vegas. I’ve been known to go. But we don’t need a magnet for problems and crime in this city.”

Fortier of the Police Department said card clubs take root in financially ailing cities, such as Bell Gardens and Commerce, because the cities desperately need a source of revenue.

“We have an economically diverse city,” he said. “The card club would have such a long-lasting negative effect on the city that I’d hate to see it come here. It’s not good for San Diego.”

Some in the tourism industry say the council would be shortsighted not to consider the card room and the out-of-towners it would attract.

The Mission Valley casino would be “the first new tourism generator in this town in years,” said Jack Giacomini, general manager of the Mission Valley Hilton and president of the Mission Valley Tourism Council. “We need a new reason . . . for people to come to San Diego.”

Most Mission Valley hotel managers, including executives at the Marriott and the Radisson, support the card room, Giacomini said.

A state-of-the-art, 100-table card casino with Las Vegas-style shows would draw several hundred tourists to town each week for brief stays, Giacomini said. Most would be drive-in tourists who live elsewhere in Southern California, he said.

Hoteliers would welcome those added customers because room occupancy rates are hovering at near-record lows.

The City Council’s negative reaction “is very inappropriate,” Giacomini said. “San Diego seems to play politics with everything. . . . I’m very disappointed that the politicians can’t simply look at this as a simple business proposition.”

“Whether you agree or not, gambling is a growth industry in this country,” Giacomini said. “I believe the state of California and the city of San Diego are equally adept at being able to manage a card casino . . . as Las Vegas and Nevada.”

Giacomini said the city could easily regulate the casino because “the operators will pay for a city auditor to be there. . . . Gaming is a legitimate industry today.

“There’s no legitimate argument that this will attract unsavory elements,” Giacomini said. “These kinds of comments go back to the (days of) Elliott Ness and movies of Al Capone. Street crime is far more dangerous than anything a casino might cause.”

If council members reject the card room, San Diego will hurt its growing reputation as an international tourism mecca, Giacomini said.

“The travel industry is evolving and changing,” Giacomini said. “If San Diego isn’t able to keep pace with what people want, people are going to go to other places that offer what they want.”

The city’s report makes clear that gambling is available at a number of locations, such as the Sycuan, Viejas and Barona Indian reservations, the Del Mar Race Track and the existing 12 card rooms. Tijuana offers sports betting, including dog and horse races, the report notes.

“Avid gamblers are just a short driving or flying distance to Las Vegas, without San Diego dealing with criminal and social problems associated with gambling,” the report concludes.

Times staff writer Greg Johnson contributed to this report.