Bell Gardens Joins Squabble Over Casino

The city of Bell Gardens is in the unusual position of joining a legal battle against the city’s largest tax generator, the Bicycle Club Casino.

It is a squabble that some fear could close the card club and jeopardize the jobs of 1,350 casino employees.

The dispute centers on whether the partnership that bought the controlling interest in the casino in April received a valid operating license from the city. And, as with many things in Bell Gardens, it is mired in political feuds.

The head of an investment group that lost a bid to buy the casino interest filed a lawsuit in July, alleging that a previous City Council did not properly approve the new owners and that the casino is being operated illegally.

The majority of that council has been recalled and replaced by a bloc unfriendly to the casino management group. As a result, the city last month filed court documents that accuse the new casino owners of operating without a license.

The new casino operators have fired back by filing a $21.5-million claim against the city, alleging that the city’s tax on the casino violates state law.

“When you sue someone you have declared war on that person,” said Haig Kelegian, managing partner of the casino. “We have to do everything we can to defend ourselves.”

The tit for tat has caught casino employees in the middle. For the past month, employees have flocked to council meetings to call for an end to the squabble.

“I just want you to work cooperatively with the new owners,” casino worker Sandra Luz Cabrera told the council last week.

The lawsuit challenging the casino operators is scheduled to be heard Thursday in Superior Court in Los Angeles.

Bell Gardens has long been known for its small-town scandals and political bickering. This controversy has its share of intrigue too, but could have a huge financial impact because the Bicycle Club generates about $8 million a year, or nearly 40% of the city’s tax revenues.

The casino, the second largest in the state, was seized by federal marshals in 1990 because of money laundering at the card club under previous ownership.

Federal officials sold the casino’s controlling interest five months ago to the partnership of Haig Kelegian, Walter Lack and Robert Clark, a team that operates the Ocean’s Eleven casino in Oceanside.

Any sale or management changes at the Bicycle Club must be approved by city and state officials.

Kelegian’s partnership has a temporary operating license from the state attorney general’s office. A permanent state license is pending a background check.

Among the losing bidders was a group led by George Deitch, a real estate developer who was unseated from the Bell Gardens City Council in 1997. Deitch filed the lawsuit claiming that Kelegian’s group did not obtain the necessary city licenses. That suit also names the city as a defendant, raising questions about how the council handled the ownership transfer.

City records show that the council called a special meeting to transfer the ownership interest on May 14--three days after Bell Gardens voters approved a recall of three council members. (Their three replacements were not sworn in until May 18.)

The council declared an emergency session, allowing it to post a public notice only 24 hours in advance, not the 72 hours usually required by law.

The meeting’s minutes indicate that the three recalled council members--Joaquin Penilla, David Torres and Salvador Rios--voted to transfer the controlling interest to Kelegian’s group. The two other members--Maria Chacon and Ramiro Morales--also approved the transfer but asked that the issue be reconsidered at a later date. That request was rejected by the council majority.

The minutes show no indication that the council approved a management license for Kelegian’s group, as required by law.

Kelegian stressed that he has a letter dated May 14 from then-Police Chief Fredrick Freeman stating that the council had approved both the ownership transfer and the management license.

Freeman, however, was fired only days after the new council majority was sworn into office.

Last month, the city--under control of the new council majority--responded to Deitch’s lawsuit with a cross-complaint that supports most of his allegations.

Kelegian said he believes that the new council majority--led by Chacon and Morales--supports the lawsuit because it is closely allied with Deitch and wants him to run the casino.

Deitch, Chacon and Morales were all part of a movement in 1991 to help replace the city’s longtime white leadership with a Latino majority.

Morales, who is now mayor of Bell Gardens, rejects Kelegian’s allegations, saying that he doesn’t care who manages the casino as long as the managers have proper city approval.