From the outset of their dealings with Las Vegas gambling figures, City of Commerce officials expected payoffs for granting a card club license and were elated when they were offered secret shares in the poker casino, a federal prosecutor said Tuesday.
Chief Assistant U.S. Atty. Richard Drooyan made that accusation during his 42-minute opening statement outlining the government's case against Orange County businessman W. Patrick Moriarty and Las Vegas gambling figure Frank J. Sansone.
"This is a case about bribery, fraud and corruption," Drooyan told the eight-woman, four-man jury selected to hear evidence in the racketeering trial being held in the Los Angeles courtroom of U.S. District Judge William J. Rea.
"The government will show that these defendants were engaged in a scheme of artifice to defraud the citizens of Commerce of the loyal and faithful services of its City Council members," Drooyan added.
Officials Plead Guilty
Former City Councilmen Robert Eula, Arthur Loya and Ricardo Vasquez along with Phil C. Jacks, the city's former economic development director, were originally co-defendants in the case but all have pleaded guilty to bribery charges and are scheduled to be witnesses against Moriarty and Sansone.
The prosecutor said the government will prove that Moriarty, 53, of La Mirada received more than $3 million from the sale of stock in the California Commerce Club, which opened for business Aug. 1, 1983.
Drooyan stated that the prosecution also intends to show that Sansone, 47, of Las Vegas, was paid $200,000 and was given a promissory note for $800,000 when he was forced out as president of the casino because of poor management and financial problems at the club.
Jacks, the government's leadoff witness, related how the first discussions about the possibility of legalizing gambling in the City of Commerce began in 1980 when the revenue the city was getting from the sales tax "leveled off" and other sources of municipal revenue were being studied in the aftermath of the passage of Proposition 13.
The opening of a poker parlor in adjoining Bell, further stimulated interest among city officials and business leaders in the City of Commerce in setting up a card casino, according to Jacks.
Jacks testified that City of Commerce officials' first contact with Sansone came in an August, 1981, meeting at the MGM Grand Hotel in Las Vegas, where Sansone was employed as a floor manager.
The officials were in Las Vegas, Jacks testified, to attend an annual retreat the City of Commerce sponsors as a social event for its citizens and business leaders.
Meeting Set Up
Jacks said the meeting with Sansone was set up by Councilman Eula, whose cousin introduced Councilman Loya, Eula and Jacks to Sansone just before they were joined at the meeting by Morris Jaeger, a vice president of the MGM organization.
"We told them that there was the possibility that we would pass an ordinance legalizing a card club and asked if they would be interested in seeking a license to operate it. They said 'yes,' they were and asked that we keep them posted on what we were doing," Jacks testified.
He said that after that meeting, in the taxi going back to the Sahara Hotel, where the City of Commerce group was staying, Eula began talking about how "there might be something in this for us."
Jacks said he went back to Las Vegas a few weeks later to find out what kind of a deal they could get from Sansone and Jaeger in return for making sure that a group headed by them would get the license in the City of Commerce.
'$3,000 a Month Each'
According to Jacks, Jaeger offered to provide two points for each city councilman, "which would bring them about $3,000 a month each" in profits once the club got under way.
This offer was so lucrative, Jacks testified, that he was "shocked . . . that this much would be paid."
Jaeger, who has refused to answer questions from Times reporters about his part in the dealings with city officials, later was forced to drop out of the operation because Nevada gaming authorities forbade him to hold gambling interests in another state.
Before the council could pass the ordinance setting up the casino, Sansone's group encountered financial difficulties and asked Jacks if the City of Commerce officials could help in lining up money backers. Jacks said this was when Moriarty was approached to join with Sansone in the project and he, too, agreed to grant secret interests in the club to the city officials.