Casino Sued Villalobos for Gaming Debts : City Hall: Deputy mayor owed $30,000 after one weekend in 1989, and his counter checks were returned to Caesars Tahoe for insufficient funds. He denies any wrongdoing.

Over a New Year’s weekend of gambling, Los Angeles’ new deputy mayor for economic development, Alfred R. Villalobos, rolled up debts of $30,000 that took a Lake Tahoe casino 2 1/2 years and a lawsuit to collect, court records show.

In a civil lawsuit settled last summer, Caesars Tahoe said Villalobos wrote $30,000 in counter checks--blank checks provided by casinos to customers who have established a credit record--to cover gaming debts incurred over the last two days of December, 1989.

When the $30,000 in counter checks were presented to Villalobos’ Tarzana bank six months later, the bank returned them, saying there were insufficient funds in his account to cover the debts.

Villalobos, 49, vehemently denied any wrongdoing. “It’s not illegal to gamble, and it was my money,” he said. “It was settled practically immediately.”

Mayor Richard Riordan’s chief of staff, William McCarley, says he did not know of the matter before Villalobos’ appointment last month but was alerted shortly afterward. According to McCarley, Riordan has reviewed the incident with the deputy mayor, a longtime Republican activist.

“We’ve been assured by Mr. Villalobos that it’s been resolved,” McCarley said. Villalobos, he said, told the mayor “it was a misunderstanding that got out of hand. He wishes now that in retrospect he had handled it differently.”

According to Caesars’ lawsuit--filed in Los Angeles Superior Court in December, 1991--Villalobos paid $1,000 toward the $30,000 debt during the two years following the gambling weekend. The case was dismissed in July, 1992; “they’re all paid,” Villalobos said.

After a 25-year career that included public service in economic development agencies, private investment banking and business consulting, Villalobos was appointed as one of Riordan’s five deputy mayors.

Villalobos’ visibility is expected to be high as he attempts to help Riordan deliver on some of his key campaign promises--creating jobs and making the city “friendly to business.”

“I hope that I’m going to be judged on the job that I do for the mayor and the city,” Villalobos said in an interview, “and that personal matters like this really shouldn’t interfere or be considered.”

Villalobos said he is not in the habit of racking up large gambling debts.

On that New Year’s weekend--”a weekend I won’t forget for awhile”--Villalobos said he wrote the counter checks at Caesars on the understanding that the Stateline, Nev., casino would hold them for payment rather than deposit them.

Casinos frequently extend customers that courtesy to keep them coming back, experts say, and then work informally with the gamblers to obtain repayment.

When Caesars did deposit the checks in June, 1990, Villalobos’ bank--the Tarzana branch of Great Western Bank--refused to honor them, stamping many “insufficient funds.”

“Basically, they had said: ‘Take as long as you want to pay,’ ” Villalobos explained Monday. But when the casino deposited the checks without warning, he added, “then I did say: ‘I’ll pay you when I get around to it.’ It was such an embarrassment to me personally.”

A spokesman for Caesars World, the Los Angeles-based company that owns Caesars Tahoe, declined comment.

“Our policy is not to discuss litigation,” said Jack Leone, vice president of communications. “Our policy is not to discuss individual customers or even to confirm whether they are customers.” He explained that casinos extend credit to gamblers on a case-by-case basis.

Large casinos--such as Caesars Tahoe--typically extend $500 to $1,000 in credit to hotel guests, according to Gregory Gale, chief of the audit division of the Nevada Gaming Control Board in Las Vegas.

Grants of additional credit require a credit check with the gambler’s bank to determine if there is enough cash on hand to cover the debt, he said. Checks also are made with an industry clearinghouse to determine if a gambler has credit with other casinos.

In general, though, casino credit is “the easiest credit in the world,” said I. Nelson Rose, a Whittier Law School professor who is a visiting scholar at the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada in Reno.

“You can get $30,000 where it would be a real ordeal getting the same amount of money through a bank,” Rose said.

Casinos sue to collect bad debts only as a last resort, Gale said. “It’s really not good business to go out there and try to sue people for payment of their debts and markers,” he said. “They’ll work with customers just about any way they can.”

Caesars’ suit was the second in seven years accusing Villalobos of writing worthless checks.

In 1984, he was sued over a business dispute that included allegations Villalobos wrote $9,500 in checks to an Alhambra couple that were returned by three banks for insufficient funds.

The suit, filed in Los Angeles Superior Court by Vincent and Concepcion Sotelo, was settled in 1989.

The couple sought to recover $54,500 that the Sotelos claimed to have loaned Villalobos. Villalobos countered that he had provided “substantial” business services to the Sotelos in exchange for those fees.

In court papers, Villalobos acknowledged receiving a $15,000 loan from the Sotelos and giving the checks to the couple in 1981. But he denied that the checks had been deposited or had bounced.

Photocopies of the faces of the checks filed with the Sotelos’ suit show no bank stamps indicating that the checks had been deposited or that Villalobos’ accounts had insufficient funds. There are no photocopies in court files of the backs of the checks.

In an interview, Concepcion Sotelo said Villalobos paid the couple about $20,000 to settle the lawsuit. Villalobos declined to discuss the case in detail, citing a non-disclosure agreement he signed as part of the settlement. But he said he remembers the settlement being somewhat smaller.

“It was a misunderstanding between old friends,” Villalobos said.

Concepcion Sotelo said: “We were friends once. We’re not friends anymore.”

Times staff writer John Schwada contributed to this story.