Management Looted Bell Club, Limited Partners Allege in Suit

BELL —  A bloc of limited partners in the California Bell Club has charged the gambling casino’s management company with skimming money, accepting illegal kickbacks and “looting” the club of more than $1.5 million since 1985.

The lawsuit, a civil action under the federal Racketeer-Influenced and Corrupt Organizations Act, was filed by Landmark Holding Group Inc. against California Bell Club Management Corp. The suit was filed March 31 in U. S. District Court in Los Angeles.

In a second legal action, the club managers have obtained a temporary restraining order to stop an attempted takeover of the club management by Ebrahim Victory, who heads the Landmark group. Landmark contends that a 53% majority of the limited partners voted March 2 for Landmark Holding to manage the casino.

However, the club’s partnership agreement--which is disputed by Landmark--requires an 80% majority vote, according to the California Bell Club Management Corp., which has refused to relinquish control.

Investors Bidding for Control

The legal maneuvering is taking place at the same time that an outside group of investors is bidding to buy controlling interest in the club. Investors known as the LCI Corp. have offered $70,000 a point (a point equals 1% ownership of the club), which would total $7 million for 100% ownership. Another group, FSB Inc., has made a separate offer to buy out all of the partners for $5.25 million, but that offer expired on Monday.

The suit filed by Landmark and Victory alleges that the management corporation entered into “a conspiracy . . . to systematically loot, plunder and convert for their own benefit the assets, cash, earnings and property of the club . . . and to otherwise conduct . . . the partnership’s business through a pattern of racketeering activity.”

The management corporation denies any wrongdoing. But in its lawsuit, Landmark charges that:

Management corporation officers Sam Torosian, Wing Lou and Sham Yung withdrew more than $150,000 from teller cages for their personal use without properly reporting the funds. The suit also alleges that through inadequate cash control procedures, an additional $80,000 cannot be accounted for since January, 1986.

The management corporation, Torosian, Lou, Yung and Larry Wong, another member of the management team, converted about $600,000 of partnership money by running the pai gow gambling game and a high-stakes card game for their own benefit, through a secret interest in the concession.

Torosian, Lou, Yung and Wong practiced “organized theft” of partnership funds by cashing counter checks for non-existent persons or persons who were not credit worthy.

According to Leo Branton Jr., one of Landmark’s lawyers, the usual procedure in a gambling club is to take a chance on checks that might bounce by cashing them for chips used for gambling on the premises. Landmark is charging, Branton said, that the managers gave cash, not chips, to confederates for checks that they knew were no good, and that the check writers kept the money, rather than gambling with it. Some of the check writers are also named in the suit. The checks in question total about $700,000.

- Wives, children and associates were placed on the club payroll at excessive salaries. Landmark charges that as a result, the club lost at least $100,000.

- Some defendants, not named in the suit, received kickbacks and secret commissions from club suppliers and contractors.

The Landmark suit also contains allegations that the club’s former lawyer, Leslie James Garber, performed about $100,000 worth of personal legal work for the managers and charged it to the partnership, and that he drew up a partnership agreement that he did not submit to the limited partners and to which he forged signatures through a non-existent power of attorney.

The suit also alleges that Garber backdated an escrow closing for points sold to the management corporation. The suit claims that that action gave the managers $42,000 in earnings that should have been retained by the sellers.

Garber could not be reached for comment but his law partner, Martin S. Bakst, said Garber did nothing wrong. He said the partnership agreement was drawn up in exact accordance with the limited partners’ instructions and that no power of attorney was ever given to Garber, nor was one exercised. He said Garber never billed the club for personal services to the general partners, nor did he backdate an escrow.

The lawyer for the management corporation, Howard Manning Jr., also denies all the improprieties alleged in the suit.

About the pai gow game, Manning said that the current managers had been granted the concession to run the game before they took over managing the casino and that there was a period during which they had financial interests in both the game and the casino. However, this was not a secret interest, he said, and was known to all the limited partners.

Manning said the charge concerning the bad checks will be dealt with on a check-by-check basis in court, but that the basis for the charge may be a “misunderstanding or misreading of the computer printouts.” All bad checks are “in collection,” he said.

Edward V. Washington Jr., the other Landmark lawyer, said that the point of the lawsuit is to determine “what is the intake, and where is it going? We want to establish strict, strict financial control,” he said.

Victory was involved in the day-to-day operation of the club between December, 1985, and August, 1986, as a consultant for the computerization of Bell Club records. He designed and installed the accounting software programs, according to court papers.

City Taxes Reduced

California Bell Club underwent reorganization in 1985, following convictions of former club personnel and some city officials on racketeering charges. Five times since then, the club’s management--citing a need to get the club back on its feet--has received reductions in the taxes charged by the city. The most recent agreement, on April 13, changes the city’s sliding 8% to 13% rate to a flat 10% through June 30. The first three concessions had reduced the Bell Club tax rate to as low as 8%.

The 13% tax rate is charged to all Bell businesses that gross more than $250,000 per month. Since the Bell Club last year averaged more than $500,000 a month gross, it would normally be charged the 13% rate. Because competing casinos in adjacent communities pay a lower business tax rate than the Bell club, the Bell City Council has been willing to make these tax concessions to help the club remain competitive, City Administrator Byron Woosley said. Although the City Council was aware of the lawsuits when it agreed to the recent tax relief, the council is not concerned with the details of the charges, according to George Cole, the outgoing mayor.

“The only thing that affects us is our pocketbook,” he said. “We’re concerned (about the club) because we have such a big financial stake in it.”

The club’s tax payments to the city, which Cole said are expected to be about $1.5 million a year within the next two years, will account for more than 10% of the city’s $9-million annual budget. However, because the club is still struggling to pay old debts, including back taxes owed to Bell, and because the club has lost business to newer clubs in the area, Cole said the club’s tax payments to Bell this year may be as low as $800,000.

Question of Who’s in Charge

“What we’d like to see is all one ownership group (instead of many different partners),” he said. “At different times, it’s been unclear who’s been in charge. Hopefully, the lawsuits will help settle the issue.”

Other council members agreed with Cole about the need to have the issue of the club’s control straightened out. They said the City Council is concerned with the California Bell Club not only because of the tax revenue it provides the city, but because the city is acting as trustee for the federal government for 12 points, or shares, that were confiscated from those convicted of racketeering charges.

The city has been negotiating with LCI Corp. for the sale of the government’s points. In the City Council meeting last Tuesday, newly elected Mayor Jay Price urged that the city accept LCI’s latest offer, and “take the money and run.” One of the conditions of the offer was that the purchase depends upon LCI obtaining a controlling majority of the ownership.

However, Manning, the club management lawyer, urged the council to show caution in considering any offer at this point.

“An affirmative vote on this contract may result in more litigation--muddy up the waters even more,” he said. “Things seem to be rather dynamic now.”

The council voted unanimously to reject the LCI offer.

No trial date for the Landmark suit against the management corporation has been set.

In the other case, in which both sides seek permanent injunctions to prevent the other from acting as general partner in running the club, the Landmark group has asked a state appeal court for the removal of Los Angeles Superior Court Judge Ricardo A. Torres.

Landmark is using a peremptory challenge to remove the judge, and is making no specific complaints about the judge’s conduct, Washington said. A decision on that challenge could come as early as next week.