In the 33-page report on Casino M8trix prepared by the state attorney general’s office, one mantra is repeated again and again about casino entrepreneur Eric Swallow.
“Swallow is not a person of good character, honesty or integrity, and his prior activities pose a threat to the effective regulation and control of controlled gambling,” it reads.
The report exhaustively detailed how Swallow and his partners, Peter and Jeanine Lunardi, allegedly set up a variety of shell organizations designed to minimize the casino’s profit.
These entities operated without invoices, the AG said, and they under-reported their income. The investigators found a disturbing level of self-dealing with M8trix’s owners.
To bolster their case, the AG’s office cited lie after lie. In September 2010, for example, Swallow called Deputy City Manager Deanna Santana and boasted of how much the casino had spent on hardware.
Then, according to the report, he called an underling and made sure that the number on an attachment was changed from $58,000 to $358,000. What’s a few hundred thousand among friends?
Comparisons
For anyone who knows the history of San Jose’s card clubs, the report was staggering. In the 1980s, Garden City’s controlling family, the Dalises, got into trouble for skimming $50,000 here, $25,000 there. In the new Garden City, renamed M8trix, the numbers were millions.
For city officials who have taken the brunt of Swallow’s assaults on their competence and vision, there had to have been some quiet nods at reading the report.
While Swallow had denounced San Jose’s “small-town mindset,” you cannot read the report without concluding that he needed more supervision by police, not less.
It was no surprise last week when the issue flared in the mayor’s race. Councilman Sam Liccardo, a voice for vigorous police scrutiny of the card clubs, called on the South Bay Labor Council’s political action group to return $50,000 from the card clubs, money he said was intended to help his rival, Supervisor Dave Cortese.
That won’t happen. But Liccardo upped the ante by introducing two card club opponents, ex-Mayor Tom McEnery and ex-Councilman David Pandori.
“These businesses are very different than any other businesses,” Pandori said. “The city can outlaw them. One vote of the council can change the bottom line of a card club by millions of dollars.”
City’s dilemma
The problem for San Jose is that it now takes in more than $16 million in taxes from the card clubs. In effect, it has agreed to a legalized bribe.
You can argue that the city needs the card clubs to stay in operation. It’s hard to argue that it needs Eric Swallow.
Through a spokesman, Swallow has said he is confident he will prevail — though it’s unclear when an administrative law judge will make a recommendation on his license.
You cannot think that the AG’s people believe he should only get a slap on the wrist. “Swallow is not a person of good character, honesty or integrity,” they said.