U.S. to Sell Share of Bicycle Casino for $25 Million
The federal government’s long and embarrassing role as a major owner of the Bicycle Club Casino, one of California’s biggest card clubs, may come to an end with a $25.3-million deal announced Monday to sell the federal share to the American arm of a vast British gambling concern.
Federal trustee Frederick S. Wyle said in a brief statement that the U.S. Marshals Service had agreed to sell the government’s interest in the Bell Gardens gambling operation to the Ladbroke Racing Corporation of Pittsburgh, Pa.
Key factors in the government’s decision to sell to Ladbroke were the firm’s financial strength, its extensive gaming experience and its commitment to the deal, Wyle said.
Ladbroke and its multibillion-dollar British-based parent company, Ladbroke Group PLC, operate betting parlors, racetracks and hotels.
The sale must must win approval from local and state officials and the federal judge in Florida who has overseen the criminal case that led to the government’s seizure of a substantial stake in casino in 1990.
After a long investigation, federal agents proved that the casino was built in part with $12 million in laundered drug money. The government became the majority shareholder in one of two partnerships that together own the Bicycle Club. Altogether, the government owns 36.2% of the entire casino.
The government’s six-year involvement in a card casino that has been plagued by charges ranging from extortion to Asian organized crime activity to wholesale mismanagement sparked a four-hour hearing in March before the U.S. Senate permanent subcommittee on investigations.
Committee Chairman William V. Roth Jr. (R-Del.) called the government’s operation of the Bicycle Club “one of the most bizarre stories in [the committee’s] long history of uncovering waste, fraud, and mismanagement in government programs.”
The government made tens of millions of dollars in profit from its share of the casino. As a partner in the club, the government also contributed to political campaigns to defeat the proposal to build a rival card club in Orange County.
While the government was involved in running the casino through a previous court-appointed trustee, the U.S. attorney’s office in Los Angeles was prosecuting Hollman Cheung, the former manager of the Bicycle Club’s lucrative Asian games. He was found guilty in September 1994 and was sentenced to prison for loan-sharking, conspiracy and extortion.
Cheung told the committee that the former federal trustee, Harry J. Richard of Las Vegas, had visited him in prison and had sought Cheung’s advice on whom to hire to run the club’s Asian games.
Since Richard became trustee in 1993, the casino’s net income has fallen from $23 million to $14 million a year, while his salary has gone up dramatically, according to testimony given the committee. Richard blamed the decline in income on increased competition from other card casinos.
Eduardo Gonzalez, director of the Marshals Service, acknowledged the government’s troubled stewardship of the casino. “We have made mistakes,” he said, “but every business makes mistakes.”
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