Lots of regulatory action the past couple of years in Southern California. I also recall the Lucky Lady not being so lucky with raids and closures.
FBI Swoops in on Two San Diego Card Rooms, Indicts 25 in Huge Illegal Gambling Ring
First Published: December 10, 2015
San Diego Card Clubs Raided by FBI
Harvey Souza (center), owner of the Seven Mile Club, in happier times. The club was allegedly used as a conduit for money-laundering by a Mob-affiliated gambling ring.
The FBI raided two San Diego card rooms on Wednesday, moving in for what the Bureau alleges is the casinos’ role in a massive illegal gambling operation.
Palomar Card Club on El Cajon Boulevard in San Diego and the Seven Mile Casino on Bay Boulevard in Chula Vista are accused of being the conduit through which the operation’s dirty money was laundered.
At the head of the ring was bookmaker and alleged Philadelphia Mob associate David “Fat Dave” Stroj, who, according to court documents, made $500,000 a month from illegal gambling activities that included sports betting and the organization of high stakes poker games. The operation handled around $2 million per month, the documents said.
Stroj is alleged to have had more than 360 clients on his books, with operations spanning from California to Florida, and from Canada down to Mexico.
In all, 25 people were arrested along with Stroj in the raid, including the owner of the Seven Mile Casino, Harvey Souza, and one of the owners of Palomar Card Club, Naseem “Nick” Salem.
Because casinos have traditionally been targets for criminals looking to launder money, they have, since the passage of the Money Laundering Control Act of 1986, been required to file a Casino Transaction Report to the Financial Crimes Enforcement Network (FinCEN) for any currency transaction over $10,000.
However, the indictment alleges that Palomar, specifically, was not merely guilty of negligence, but of deliberately turning a blind eye to transactions and therefore of actively conspiring with the gambling ring.
So while the Seven Mile is simply charged with not having sufficient anti-money-laundering measures in place, the Palomar is charged with conspiracy to money launder.
“They were not duped. It was criminal in nature,” said Assistant US Attorney Joshua Mellor of the Palomar Card Club’s involvement.
Condemned by Wiretaps
According to court documents, FBI wiretaps recorded Stroj explaining how he was able to launder money through the card clubs.
“Palomar is the best way I can wash the money,” he is reported to have said. “I don’t have to report it. I just deposit it at the Palomar, and there’s no problem for me.”
Prosecutors also said that Stroj had laundered money through the Bellagio and Wynn in Las Vegas, although neither casino is named in the indictment.
Both of the San Diego casinos have been in trouble with regulators before. Earlier this year, the California Gambling Control Commission accused the owners of the Palomar Club, Donald and Susan Staats, of transferring its ownership to an unlicensed operator, their daughter.
Souza was castigated by regulators in September for failing to disclose a $3 million loan that he had used to build the Seven Mile.
Both properties have been closed down and will remain so until they are able to demonstrate they are able to operate in accordance with their licensing requirements.