COMMENTARIES ON CARD CLUBS : Tax Funds Aside, Here’s a Look at the Dark Side of Casinos : Our cities are groping for new sources of revenue. Gambling may bring more cash, but consider its criminal element and track record.

The state of California is conducting an unprecedented raid on cities’ general funds and redevelopment funds again this year. This, along with generally declining revenue, has prompted several Orange County cities to look at legalized gambling to solve their financial woes. Are they stepping into more trouble than they can handle? Let’s take an objective look at it.

Promises of as much as $1 million per month into city treasuries, support to local service clubs and large donations to cooperative council members are being dangled in front of the cities by the card clubs. The temptation is great.

But will the card clubs be a boon to the cities, or will they take control? Will the so-called “Golden Rule” prevail: i.e. “He who has the most gold often rules”?

The card clubs have long been eyeing Orange County, because of our large Asian population and the extremely large profits in pai gow and other popular Asian games.

Cities that are looking to the card clubs to save them should reflect on the cities that have been “saved” by card clubs.

One need only to look at Gardena, City of Commerce, Bell and Bell Gardens to see that gambling activity does not lead to qualifying for an “All-American City” status. Bell Gardens reportedly receives about $11 million annually (65% of its revenue) in taxes and fees from the Bicycle Club. On the other hand, according to U.S. Department of Treasury reports, organized crime groups use legal card clubs to launder millions of dollars in illicit proceeds from narcotics, loan sharking, gambling, prostitution and extortion activities.

Card clubs tout the clean family fun of an evening playing poker. The club only rents the space with a small profit and, of course, they are owned by simple businessmen who are putting money back into the community. Let’s look at these types of businessmen.

The Bell Gardens Bicycle Club has had 46% of its ownership seized by the federal government under the Federal Narcotics Asset Seizure Law. It was discovered that $12 million of the original $22 million to build the Bicycle club came from Florida drug money. Several of those “investors” were convicted on federal racketeering charges and 20% of the club’s assets were seized in that operation alone. This club, according to the Wall Street Journal, reports annual revenue of more than $90 million with profits exceeding $20 million and estimates of as much as $2.5 billion bet there each year. They were recently fined $4.6 million by the U.S. Internal Revenue Service for failure to report transactions exceeding $10,000, a requirement designed to identify money laundering activity.

The Commerce Club also had its roots in corruption. Opening in 1983, the $20-million casino saw many of its founders and operators convicted on charges of corruption in less than two years. These included J. Patrick Moriarty (a principal financial backer, vice president and finance director, and also owner of Red Devil Fireworks); Frank Sansone (allegedly connected with the Balistrieri crime family of Milwaukee, members of which were indicted for alleged Las Vegas skimming operations in two casinos they secretly owned); City of Commerce Councilmen Robert Eula and Arthur Loya, along with city Economic Director Phil Jacks Jr.ed

Card clubs point to their high degree of security and low crime rate within their clubs. By whom? In 1989, Frank Cheung, a member of the Wah Ching gang, was prosecuted for a loan sharking and extortion operation that he was running out of the Bicycle Club and other casinos. The Wall Street Journal recently reported that an investigation is underway into the activities and associates of Hollman Cheung (no relation to Frank Cheung). Hollman Cheung is a “consultant” to the Bicycle Club’s Asian games operation. His compensation from the club was reported by the Journal as “about $2 million per year.” He has recently been indicted in New York on federal fraud and racketeering charges.

What about the impact on the surrounding area? One doesn’t have to look far beyond the glitter of the Las Vegas Strip to find rampant prostitution, drugs, theft and robbery in a city that ranks among the highest in the United States in per-capita crime. There are always winners, as we all know, but once outside of the club the winner often becomes fair game for robbers, muggers, prostitutes, drug dealers and con artists who are drawn to these establishments like bloodthirsty leeches.

In the first four months of 1992, there were 16 reported cases of follow-home robberies of patrons of the Commerce and Bicycle clubs, with a total loss of $160,000. Law enforcement officials estimate that only a small percentage of these types of crimes are reported because of fear of retribution.

There are no statistics on the crimes perpetrated by losers who may be habitual gamblers and/or narcotics addicts. It often becomes a matter of desperation for these types to turn to crime locally to support their habits.

One club is proposing a “theme park” (Disneyland style) in one city in Orange County. These guys are not exactly Walt Disney-caliber. It’s a great idea from their standpoint, though: baby-sit the kids with amusement rides while they fleece dad in the poker room, loan him money at loan-sharking rates--and use the profits to “save our cities.” No thank you!

DR, B.D. CUMMINGS