U.S.-Owned Casino Overrun by Crime, Security Chief Alleges

Serious crime is rampant at the Bicycle Club, a Bell Gardens card casino seized by the federal government six years ago, and the government’s own trustee has hindered attempts to halt it, according to congressional testimony by the club’s head of security.

The witness, Douglas Sparkes, told the Senate Permanent Subcommittee on Investigations on Tuesday that the trustee, Harry J. Richard, threatened to fire him for cooperating with Senate investigators.

“The condition of the club is dangerous,” Sparkes said. “The skimming, cheating, stealing and payoffs have drained the club of much needed revenues. It is without question that I have received more support from outside administrators . . . than from Richard.”

Richard denied that he threatened to fire Sparkes and said crime has decreased since his appointment as trustee three years ago.

“I have never seen any proof of what [Sparkes] is talking about,” Richard said. “Any allegation I receive in writing or orally is turned over to the Marshals Service, the city of Bell Gardens chief of police, the L.A. County Asian Gang Task Force and state officials. They have never indicated to me that these conditions are continually ongoing.”

The four-hour hearing, chaired by Sen. William V. Roth Jr. (R-Del.), focused on U.S. Marshals Service management of the troubled card club and its inability to sell the casino, which the federal government seized in 1990 after proving it was built in part with $12 million in laundered Florida drug money.

Roth described the government’s operation of the Bicycle Club as “one of the most bizarre stories in [the committee’s] long history of uncovering waste, fraud and mismanagement in government programs.”

The United States claims a 55.6% controlling interest in the larger of two partnerships that own the Bicycle Club, giving the government a controlling 36.2% share of the entire casino.

The Times previously has reported that the government received millions of dollars in profits from the Bicycle Club and that a share of the money was spent on political campaigns against competing casino operators.

Richard, a former Las Vegas casino executive, was appointed in 1993 by a Florida judge to oversee the government’s interest in the casino. Several witnesses portrayed Richard as an ineffective club manager whose efforts to sell the government’s partial ownership in the casino were clouded by his desire to remain in control of its operation.

Under sharp questioning from Roth, the head of the U.S. Marshals Service admitted that mistakes had been made in the handling of the casino and that reforms were underway to tighten management procedures of such business assets, which make up a small percentage of the government’s $2 billion in seized assets.

“We have made mistakes,” said Eduardo Gonzalez, director of the Marshals Service, “but every business makes mistakes.”

In a surprise appearance, the former manager of Asian games at the club, Hollman Cheung--now in federal prison for loan sharking, conspiracy and extortion at the Bicycle Club--spoke briefly, escorted in and out of the hearing room by several dour-faced U.S. marshals.

Cheung testified that Richard visited him in prison several times.

Asked by Roth whether Richard sought advice about whom to hire to run the games, Cheung leaned into the microphone and quietly said, “Yes.”

Richard’s former casino attorney, James Lisowski, criticized Richard’s management abilities and his handling of potential sale of the government’s interest in the casino. “I wondered to myself how was Mr. Richard, with no experience in selling casinos, no staff . . . and no ability to market the property, going to sell a $30-35 million asset,” Lisowski said.

Lisowski testified that the Marshals Service discouraged him from meeting with Senate investigators who were probing the club and that the service threatened to discredit him.

Lisowski said that, in early October, Kenneth C. Holecko, assistant director of human resources for the Marshals Service, “reminded me not to talk to the committee . . . and issued a general warning.”

Holecko, Lisowski said, followed up with a letter threatening to go to the bar association with complaints about Lisowski’s actions and to initiate a review of his billings for casino matters.

“Be a good boy, and we’ll give you a clean bill of health,” said Lisowski, describing his interpretation of the letter.

Holecko vehemently denied the allegations, saying the Marshals Service “lost trust and confidence” in Lisowski and had questions about the “scope and amounts” of his billings for legal fees. He said the service decided to withhold payment on part of Lisowski’s final bill.

In the letter, Holecko reminded Lisowski about his attorney/client relationship with the Marshals Service, but he testified that he did not intend it as a threat.

Since Richard joined the club as federal trustee in 1993, his court-approved salary has gone up dramatically while the casino’s income has dropped, according to testimony. In 1993, Richard made $116,000 in salary and bonuses, and the figure rose to nearly $322,000 last year.

Over the same period, the casino’s net income fell from $23 million to $14 million.

Richard said the income plunged because of increased competition from two nearby card clubs.

Thomas Atherton, the general manager of the Bicycle Club, said Richard showed up at the club three or four days a week, avoided tough management decisions and seemed preoccupied with prolonging his role as trustee.

“The limited time Richard spends in Los Angeles has for months been solely devoted to protecting himself and his government overseers,” said Atherton.

Richard said he oversaw significant renovations to the club, paid off large debts and upgraded the club’s security systems and surveillance operations to detect cheating and criminal activity.

Asked for his opinion of Richard’s stewardship, Gonzales of the Marshals Service said it was “satisfactory from the standpoint of maintaining the asset.”

The Marshals Service is the arm of the Justice Department responsible for taking and managing property seized in criminal prosecutions under the federal government’s Asset Forfeiture Program.

Holecko tried to reassure Roth that the Marshals Service had a letter of intent to sell the interest in the club. But Roth pointed out that the letter was nonbinding and no money has changed hands.