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Investors Face High-Stakes Battle for Casino Profits

May 29, 1990|GLENN F. BUNTING | TIMES STAFF WRITER

When former California Assemblyman David Pierson set out seven years ago to finance construction of the world's largest card casino, he and two associates put up a total of $10,000 with hopes of someday turning a tidy profit.

Instead, they became sudden multimillionaires. Since 1985, financial records show, the Bicycle Club in Bell Gardens has produced more than $50 million in profits for the three investors and their limited partners.

The casino proceeds have helped Pierson, Beverly Hills bank executive M. Dale Lyon and business consultant Julieann Coyne Wasson acquire luxurious homes, fancy foreign cars and fat bank accounts.

While attaining overnight wealth is not unheard of in some quarters of celebrity-studded Southern California, the Bicycle Club case is striking because the three investors now stand to lose their bonanza just as quickly as they got rich.

When U.S. District Judge Norman C. Roettger Jr. ordered the seizure of the Bicycle Club in March--making it the single largest asset ever forfeited to the federal government--he also froze millions of dollars in monthly casino profits to LCP Associates, the partnership named for Lyon, Coyne and Pierson. Last week, Roettger released profits for a separate, minority group of partners led by the casino's general manager, George Hardie, but the profits of Lyon, Coyne and Pierson remain frozen.

After growing accustomed to extraordinary wealth, the LCP investors now find themselves in the uncomfortable position of struggling financially to meet exorbitant monthly bills.

To get their profits back, the three must prove in Roettger's Ft. Lauderdale courtroom that they are innocent investors who were unaware that an international drug money laundering operation funneled proceeds through the Bicycle Club. Federal prosecutors maintain that the government is entitled to LCP's 65% share of the Bicycle Club because the partnership arranged for the initial financing of $12 million in marijuana profits to build the casino.

"The government's case is that these guys invested $10,000 and are now making $300,000 a month, so they must be crooks," said Richard Marmaro, a Century City lawyer who represents Lyon.

Lyon, Coyne and Pierson each refused to be interviewed for this story. Through their attorneys and court documents, all three partners denied knowing that casino construction funds came from drug profits.

Moreover, none of the three LCP investors have been charged with any wrongdoing, nor were they suspects in the recent drug money laundering trial that netted the convictions of one LCP partner and three Miami associates.

A federal civil trial scheduled for the fall in U.S. District Court in Southern Florida is expected to determine if the investors had direct knowledge of the drug profits and whether they get to keep their shares of the Bicycle Club.

During a forfeiture hearing last month, Lyon, 60, and Coyne, 40, were singled out by Assistant U.S. Atty. Robert Bondi as the partners who were "going to have a rather rough road to hoe" in trying to persuade the court that they have "clean hands."

In addition, interviews and court documents reveal that Lyon and Pierson, 55, often had direct financial dealings with members of the narcotics money laundering network.

Marmaro said flatly in an interview that federal prosecutors do not have a case against the LCP investors.

The Bicycle Club's phenomenal success can be attributed to "a lot of hard work and risk" taken by the partners, Marmaro said. He likened Lyon to Alexander Graham Bell, Henry Ford and John D. Rockefeller--entrepreneurs who relied on an idea, not a large investment, to launch profitable ventures.

"No one believed that the Bicycle Club would be as enormously successful as it has been," Marmaro said.

The casino, valued at $150 million, yielded $23.4 million in net profits last year, and is the source of nearly half of the $21-million annual budget of the city of Bell Gardens. Nearly 2,000 people work there, operating 168 gaming tables around the clock.

As the principal organizer of LCP, Pierson has received the largest share of the net profits--$14.5 million since 1985.

It was through the legendary developer and UCLA basketball booster Sam Gilbert that Pierson and his partners acquired their fortunes. Prosecutors said Gilbert funneled millions in marijuana profits through Southern California banks and businesses as part of a scheme to launder drug funds and finance the Bicycle Club. Gilbert died at age 74 of heart failure three days before he was indicted in November, 1987.

Ironically, a large part of the LCP partners' case to the government will focus on denouncing Gilbert--the very man responsible for their stunning financial success--and denying any involvement in his dealings with drug proceeds.

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