Court Gives Flynt OK to Buy Card Club in Gardena

Hustler magazine publisher Larry Flynt received permission Monday in federal bankruptcy court to pay $8 million for a Gardena card club that he says will be run as a decent, proper business, with no scantily clad hostesses--or games of strip poker.

The sale started with a letter to Flynt from a concerned casino employee asking the famed pornographer if he would take over the bankrupt Eldorado Club, which has been closed since last year. When Flynt received the letter, his reply was ‘yes.’ ”

“I’ve been a gambler all my life. I enjoy it a great deal,” Flynt said in a telephone interview. “The card club casinos in Southern California have been poorly managed. They haven’t had a presence in the Los Angeles area. We intend to advertise a lot.”

Flynt, who uses a wheelchair after being shot in the back, was not in court Monday. But a bevy of dark-suited attorneys were, representing Flynt, the seller, the bankruptcy trustee, the city of Gardena and another potential buyer.

And so was Maggie Mundet, the faithful card club employee who sent the magazine mogul a one-page letter saying that the 29,000-square-foot club sits on 6.7 acres and was for sale. It opened in 1968, when George Anthony paid $2.8 million to tear down the Embassy Club, an old gambling establishment, and built the Eldorado Club on Vermont Avenue.

“I just felt he was the person who could run this place,” Mundet said. “Mr. Flynt is a fabulous person. He is intelligent and witty. He is going to make a terrific owner.”

One sticky question, however, has yet to be answered. Can Flynt get a gaming license from the state attorney general’s office? Flynt and his lawyers said there should be no problem.

The publisher, who has spent his fair share of time in court defending his 1st Amendment rights to publish pornographic photos, has never been convicted of a felony, which is a barrier to getting a gaming license. But he has spent time in jail.

In 1977, Flynt was convicted on an obscenity charge, but the conviction was eventually reversed. Years later, he was charged with contempt for cursing a judge. He started serving a sentence in 1984, but a higher court dismissed the case and set him free.

Gardena must also approve transfer of the license after Flynt makes a formal application that involves a background check by local police.

The state Department of Justice, which monitors the card club industry, also conducts background checks.

Starting on Jan. 1, new legislation will be enacted giving the state new authority to enforce strict, wide-ranging controls over California’s multibillion-dollar card club industry.

Flynt has until Feb. 17, 1998, to buy the property, the club, the liquor license and the gaming license for $7.1 million from the Anthony Co., which is represented by a bankruptcy trustee, Eldorado Properties and Eldorado Enterprises.

The publisher also must pay $900,000 to Gardena for bonds floated to build a yet-to-be constructed parking structure next to the casino.

If Flynt has not received his gaming license by Feb. 17, 1999, another party can apply for the license and operate the club for him.

One other bidder for the card club, W/F Investment Corp. of Century City, offered $6.8 million, but would have leased the property with a right to buy. The sellers preferred to get their money immediately.

William Fleischman, head of W/F Investment, asked U.S. Bankruptcy Court Judge Samuel L. Bufford that his bid be reconsidered if Flynt cannot complete the deal. A status conference was set for Feb. 25.

Gardena city officials are relieved to see the court approve the sale. The city is owed nearly $1.1 million in taxes from the club. The Anthony Co. will be responsible for the taxes once any transaction is completed. The taxes will help pay off the city’s $4.1-million general fund budget deficit.

The Eldorado Club is one of two gambling establishments that contribute heavily to the city’s budget.

The city’s only operating club, the Normandie Casino, with 70 tables in use, is expected to generate $4.73 million this year in taxes, or 16% of Gardena’s general fund budget. In recent years, the Eldorado Club’s annual gaming taxes amounted to about $700,000.

Gardena was the first California city to legalize draw poker and helped turn gambling into a million-dollar business.