The California Gambling Commission has stripped Casino M8trix co-owner Eric Swallow of his ownership license and imposed a hefty penalty of $13.7 million, according to The Mercury News.
The disciplinary action taken against the card room impresario means that he can no longer be a part of the ownership of the popular Casino M8trix in California‘s Silicon Valley because he would have to have a state license to do so. On Sunday, the Silicon Valley Business Journal first reported the May 26 decision, which will take effect June 27.
The Commission’s action stems from allegations by the state Attorney General’s Office in 2014 that Swallow, along with business partners, Peter and Jeanine Lunardi, who are 50 percent owners of the casino, used limited liability companies (LLCs) to hide profits from the casino in an attempt to avoid paying taxes. In 2015, the Lunardi’s settled their case with the state and were allowed to maintain their gaming licenses. While the charges were never proved, state regulators did find that Swallow failed to provide requested documentation and provided inaccurate information to the Bureau of Gambling Control.
In speaking with The Mercury News by phone on Sunday, Swallow’s attorney Allen Ruby said that the $13.7 million penalty was unwarranted and that the decision will be challenged in court. “He was not charged with any wrongdoing in connection with these money transfers,” Ruby said. “It’s not clear what they are fining him for. There is no connection between the specific alleged violations that they found … and the fine.”
San Jose City Attorney Richard Doyle called the LLCs, “shell companies,” and told the news agency, “It’s almost a skimming operation, a way of funneling money out of the card room.”
In mid-December state gambling officials were issued a recommendation by Judge Mary-Margaret Anderson that Swallow’s license be stripped and that he be fined $430,000 for alleged violations. Anderson made the decision after gaming regulators had difficulty proving almost a dozen more serious accusations.
Doyle told the news agency that Swallow’s case has been watched carefully by the city, and that, “Come June 27, he better have a buyer or he can no longer operate,” and, “His partner can, but that’s going to have to be worked out among them.” Doyle went on to say that if Swallow does manage to sell his 50 percent share in Casino M8trix, the city, and the state will have to investigate the new owner separately.
Swallow has tried for months to sell his half ownership in the casino but has yet to have any success.