25 people have been indicted in 7 states and two San Diego County card clubs have been closed due to raids on illegal gambling operations this week. The illegal gambling took place in Southern California mansions, but the two card clubs are alleged to have been used to launder $10 million from the illegal operations.
Authorities want all defendants in the casino to stand trial in Southern California. They claim illegal activities also took place in Canada and Mexico.
Palomar Card Room and Seven Mile Casino
The two clubs are the Palomar Card Room in San Diego and Seven Mile Casino in Chula Vista. Hundreds of federal and local authorities raided the gaming establishments on Wednesday, seizing $600,000 in funds from player accounts and casino funds, according to the U.S. Attorney's office. The California Bureau of Gambling Control issued emergency orders for the casinos to be closed, pending further developments.
The Bureau of Gambling Control said it was closing the clubs, because they ignored anti-money laundering laws such as failing to report transactions over $10,000. The owners of the clubs are among the 25 people who face indictments. Charges involve standard gaming-related crimes like conspiracy and illegal gambling, but also include charges such as transportation for prostitution. Given the large number of defendants in the case, it is unlikely all are charged with the same crimes (such as the trafficking charges).
Arrests in 7 States
The raids were carried out in 7 different U.S. states, including California, Arizona, Nevada, New Mexico, Iowa, Pennsylvania, and New Jersey. Most of the raids took place in California, including actions taken both in Southern and Northern California. The U.S. Attorney's Office in San Diego County is seeking to have all the defendants extradited to San Diego to stand trial.
ESPN reported that the gambling operation, which generated tens of millions in revenue, took bets in the United States, Mexico, and Canada. Authorities claim that the operation continued for at least 2 years. Most of the illegal gambling was done through illegal offshore sports betting websites, though some betting took place through other types of gaming websites. No details were given on the type of online gambling sites, though the term could mean online poker rooms, casino sites, or bingo halls.
Rancho Santa Fe Mansions
Some of the gambling took place in rented mansions in Rancho Santa Fe, an exclusive residential area in San Diego County. The U.S. Attorney's Office statement described the gaming activities, saying "Up to three times a week, some defendants held intimate high-stakes poker and blackjack games in extravagant settings that featured professional card dealers, prostitutes, chefs, and waitresses."
Four of the defendants were arraigned in San Diego County on Wednesday, and all four pleaded "Not Guilty" to charges they recruited gamblers for the operation. One of the defendants was identified as Craig Kolk, whom the San Diego Union-Tribune said works American Indian tribal casino at Barona.
Attorney Critical of the FBI
Jeremy Warren, who serves as Kolk's attorney, said his client has known about the charges for at least a year. Warren was critical of the investigation, and said, "The FBI should be protecting us from terrorists, not from someone hoping to make an inside straight."
"Fat Dave" Stroj Described as Ringleader
The ringleader has been identified by local news media as David "Fat Dave" Stroj, who is described as a San Diego resident. Mr. Stroj is said to have ran an operation which handled $2 million in action every month. At one point in 2014, it is estimated that David Stroj collected $500,000 in profits for himself in one month. Usually, gaming operations net 10% to 20% profits, so he is likely to have had one month in which the operation involved $5 million to $10 million in bets.
It is unclear whether David Stroj was arrested in the raids or not, because he does not appear to have a residence in the San Diego area under his name. The indictment says Stroj "used financiers, a business manager, sub-agents, money runners, money couriers, and debt collectors" in his operation, so it is alleged to have been a sophisticated operation.
360 Clients in 8 Locations
The indictment claims Stroj had a list of 360 high stakes clients in a variety of areas, including San Diego, Los Angeles, Las Vegas, Chicago, Florida, and South Carolina. Prosecutors say the operation had clients as far away as Toronto, Canada. It also operated in Tijuana, Mexico.
Besides using the Palomar Card Room and Seven Mile Casino to launder money, clients are thought to have made deposits in two Las Vegas casinos: the Wynn Las Vegas and Bellagio. Later, the gaming operators would cash out the chips as a way of collecting payments and laundering the money. Officials say the casinos are not accused of any wrongdoing, because they reported the financial activity to federal and state authorities properly. The operation is said to have used other means of transferring funds, including through shell companies, bank accounts, and a Las Vegas bail bond business.
Management at the Palomar Card Room did not return calls to media members, after the raids took place. A spokesman for the Seven Mile Casino said the card room looked forward to working with officials from the "Bureau of Gambling Control to resolve all issues."
