Mercury News editorial: M8trix casino charges are no surprise
Guilt has yet to be proven, but the accusations revealed Thursday against Casino M8trix by California Attorney General Kamala Harris are no surprise. From the start, the San Jose card room’s baroque corporate structure alarmed authorities because they couldn’t figure out how to follow the money.
Now Harris essentially says it was a shell game to hide tens of millions in profits and avoid several million in required payments to a nonprofit agency that treats gambling addiction. More may come out at a state gambling commission hearing May 29.
M8trix owners always have banked on lobbying for city council support more than trying to comply with city regulators. It’s been paying off. The council seemed ready this spring to overrule concerns by the police and city staff and ease up on regulation.
Only Councilman Sam Liccardo, a mayoral candidate and former prosecutor, came down on the side of the cops and careful oversight. He was right, and the others were wrong.
So it’s no wonder M8trix and the city’s other casino, Bay 101, each have contributed a whopping $25,000 to the South Bay Labor Council’s independent committee to spend on the mayor’s race. Labor supports Dave Cortese. It’s likely the independent expenditures will be attacks on Liccardo, however.
It’s illegal for card rooms to donate directly to candidates for city office, but the law places no limits on independent expenditures. They’re worse than direct donations because they allow candidates to say hey, I didn’t accept anything — knowing full well they’re beneficiaries of the gambling money.
In a 33-page accusation filed May 2, the chief of the state’s Bureau of Gambling Control, Wayne Quint Jr., says M8trix owners Eric Swallow, Peter Lunardi and Jeanine Lunardi engaged “in self-dealing to siphon off monies for themselves and reduce reported net income” in violation of the Gambling Control Act.
The casino owners “are not suitable or qualified for continued licensure; therefore each of their licenses should be disciplined,” Quint wrote.
On Thursday Liccardo called for the city to launch its own investigation into whether M8trix has avoided city tax payments and to close down the club — assuming the state doesn’t do it first — if it doesn’t make restitution to Asian Americans for Community Involvement, the nonprofit it’s accused of defrauding.
AACI provides free services to treat and prevent gambling addiction, a huge problem in the local Asian community. (Its director, Michele Lew, is the editorial board’s community member.) The mayoral campaign volley bankrolled in part by M8trix and Bay 101 likely will hit mailboxes before the hearing on the state accusations. We just hope voters consider the source, if they can figure it out.
And yes, we’re more certain than ever that Liccardo is the best choice for mayor.
You can read the full article online here.