BELL — The way city officials see it, putting up $7.1 million to get the California Bell Club back on a winning streak is no gamble, despite a string of legal troubles that threaten to shut it down.
In fact, they say, it's probably the best game in town.
"We feel that we're picking up the casino at its lowest level (in market value) in years," Mayor George Mirabal said of the city's latest move to purchase the 8-year-old card club--although it is now the focus of a criminal investigation. "We'll hold it for about five years and then sell it for a profit."
By late summer, if all goes as planned, Bell will be the first city in the country to own a gambling club. Since September, officials have been considering the purchase as a way to save the failing card club so it will again provide a steady flow of tax revenues.
Last week, the city moved a step closer to acquiring the casino when City Atty. J. Robert Flandrick and representatives of the casino's general partnership, the California Bell Club Management Corp., met in a conference with Superior Court Judge Pro Tem Herbert M. Klein to work out details of the proposed takeover.
Documents Filed in Court
In a recent vote, 74% of the poker club's 50 limited partners said they favored Bell's bid to buy out their interest through eminent domain proceedings, according to court documents filed last week.
The club's general partnership, which consists of four directors, had earlier agreed to the takeover, said Howard Manning, attorney for the general partnership that also acts as the club's management group.
'It's a fair price. Everything is going along smoothly," Manning said about his client's willingness to proceed with the takeover plan, which the management group originally opposed.
A conference is scheduled July 11 in which the judge will decide how much money each investor and creditor should receive. After that, the city is expected to begin selling revenue bonds to finance the takeover, Flandrick said.
The court action came less than a week after Los Angeles County sheriff's deputies, with the help of city, state and federal law enforcement agencies, raided the club, along with the homes of two general partnership directors and a Las Vegas-based gambling firm.
Acting on an anonymous tip about possible skimming of proceeds, deputies seized financial and business records at all four locations, according to Los Angeles County Deputy Dist. Atty. David Conn. The prosecutor declined to elaborate on the contents of the records, saying that all evidence gathered in the 4-month investigation has been sealed by court order.
No charges have been filed, said Conn. "It's the first step in a criminal process," he said.
Last week was not the first time the card club has been at the center of criminal allegations. In 1985, former city administrator John Pitts and former City Councilman Pete Werrlein Jr. pleaded guilty to conspiring to form a secret partnership with poker club investors.
More recently, a bloc of limited partners filed a lawsuit that accused the management group of skimming profits. The parties in that case have agreed to drop the litigation if the city's proposed buyout goes through.
In recent years, the club has suffered economically as well. Its highly publicized opening in 1980 drew poker players from around the state. By 1983, the club was generating about $2 million annually in city tax revenue. But as other casinos began to spring up in nearby Southeast cities, the California Bell Club began to lose customers to the competition.
In 1984, the city, which had come to rely on the hefty revenue, collected $450,651--less than half of what it collected the year before. The club owes Bell about $700,000 in back taxes, city officials estimate.
"That's why we want to take it over," said City Councilman George Cole, who is part of a two-man committee overseeing the takeover details. Cole said that he was encouraged by the recent law enforcement raids. "It strengthens our position that the management has to be cleaned out of the place. That's been our effort all along," he said.
Mirabal said the current criminal investigation has not hampered the city's efforts to take control of the club. "It doesn't affect us," he said.
Early this year, in an effort to find someone to operate the casino for the city, Bell's Redevelopment Agency was negotiating with Ronald Sarakbi, who operates the nearby California Commerce Club. The agency was also talking with Las Vegas-based Southwest Gaming Inc., where records were seized by law enforcement officials in the raid last week.
A spokesman for Southwest Gaming, which law enforcement officials identified as a consulting agent to the Bell club's management group, declined to comment last week.
Because of the criminal investigation, Mirabal said, city officials have decided to no longer consider Southwest as a potential card club operator. He said the city will reopen the search.