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Bell Reforms Aimed at Poker Club Corruption : Dadanians' Trial Details How Two City Officials Used Their Office, Hid Ownership, Aided Business Partners

January 03, 1985|MELINDA BURNS | Times Staff Writer

BELL — John Pitts walked into a Los Angeles jewelry store in March, 1981, and picked up $25,000 in packets of 10 hundred-dollar bills from the owner's desk. Pitts, city administrator at the time, agreed not to make any large purchases that could be traced and put the money in his briefcase. Later he stashed it in a floor safe in his master bedroom at home.

Nearly every month for the next 28 months, according to Pitts' testimony in federal District Court in Los Angeles, he picked up $5,000 at George and Jean Dadanian's jewelry store. George Dadanian told him to take the neatly stacked bills from the top of his desk so that he could say he never bribed Pitts, Pitts told the jury.

The Dadanians last month were convicted for their role in the scheme that saw two city officials cash in on the establishment of the California Bell Club, one of the state's largest casinos.

The officials, Pitts and then-Councilman Pete Werrlein Jr., have pleaded guilty to forming a secret partnership with prospective poker club owners in 1977, drafting city ordinances to pave the way for the gambling business, and ensuring that their business partners would obtain the club license. In return, Pitts and Werrlein received a 51% interest in the club.

It is a scenario that Bell city officials hope will never be repeated.

The six-week trial of the Dadanian brothers has driven home the lesson that " 'power corrupts, and absolute power corrupts absolutely,' " City Administrator Byron Woosley said in an interview. He was appointed acting city administrator at the height of the scandal.

"It's going to be a tough battle to restore public confidence in City Hall," Woosley said. "We realize that we've got kind of an uphill road, but we'll do it."

To help "avoid a hint of public corruption," he said, the city has taken the following steps to provide "some checks and balances" over the city's supervision of the club, which continues to operate.

- A three-man committee composed of Woosley, Bell-Cudahy Police Chief Frank Fording and Finance Director Steve Klotzsche reviews the club's operations and makes recommendations to the council about investors in the club.

"Now there's no one person on the city staff that can make all those decisions with respect to that card club," Woosley said. Before federal indictments were filed a year ago in the poker case, Pitts directed investigations of prospective investors.

- Fees are collected for background investigations of prospective club employees and shareholders, as stipulated in the card club ordinance. Before the federal indictments, no fees were charged, Woosley said.

- The City Council has directed staff members not to begin investigating prospective investors until their names have been cleared by the state Gaming Commission. A state law effective last July requires all prospective investors in gaming clubs to register and be investigated by the commission.

- Police Chief Fording will be asked to review as many as nine investors (out of 59) in the California Bell Club who have not yet registered with the state and are in violation of the Gaming Registration Act, said James Watson, state Gaming Registration Program manager.

- The city will contract an independent firm to monitor the casino floor and ensure that seat rental fees are collected properly. Previously, the monitoring was done by a distant relative of a club owner, said Woosley. Cities collect revenue by sharing in the fees paid by gamblers to play.

Pitts testified he conceived the idea of establishing a poker club in the city as a way to generate revenue for the city.

The revenue--as much as $2 million a year in Bell--makes poker clubs attractive despite their potential for corruption, said city officials.

The scandal in Bell is not unique. In the City of Commerce, the former mayor, two former councilmen and the former director of economic development in 1984 pleaded guilty to federal charges of accepting hidden shares in the California Commerce Club in return for helping two businessmen set up the casino.

In Gardena one year ago, the City Council toughened its poker ordinance, passed in the 1930s. It requires that the city manager, city attorney and police chief together approve investors and oversee operations.

The ordinance includes "very detailed, very thorough" requirements for background investigations of prospective shareholders, said the Gaming Commission's Watson.

The City of Bell, new to the card club business, was "not that sophisticated," he said. "They had not perhaps realized how people can forge documents, lie about financial backing . . . and they got taken to the cleaners."

Watson conceded, however, that not even the state's investigation of prospective shareholders is fail-safe. If a person is "willing to perjure himself and front money for someone, he can get away with it," Watson said.

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