2 card clubs raided, 25 indicted
Busts from Chula Vista to New Jersey, involving sports betting and poker in Rancho Santa Fe
Federal authorities announced Wednesday that 25 people have been indicted in a massive international gambling ring that netted $10 million in profits from sports betting and high-stakes card games played at swanky rented Rancho Santa Fe mansions.
The two-year-long probe also ensnared the Palomar Card Club on El Cajon Boulevard in San Diego and the Seven Mile Casino on Bay Boulevard in Chula Vista.
Both were used as venues to launder some of the millions in gambling proceeds, according to federal prosecutors with the U.S. Attorney’s Office in San Diego.
At the center of the ring was David “Fat Dave” Stroj, a longtime bookmaker and gambler who FBI agents said in an affidavit for a warrant to search his condominium in downtown San Diego was associated with the Philadelphia mafia.
Information gleaned from wiretaps showed his bookmaking and gambling business was far-flung with more than 360 clients and operations in San Diego, Los Angeles, Chicago, Las Vegas, South Carolina and Florida, as well as Toronto, Canada and Tijuana, according to the warrant.
Stroj lived in a condominium at 503 K Street near 5th Avenue, and also had another home in Chula Vista that was searched more than a year ago, court records say.
Assistant U.S. Attorney Joshua Mellor said that Stroj’s gambling business was lucrative, taking in about $2 million in bets a month. In a single month last year, Stroj netted more than $500,000 in profits, Mellor said.
Both the Palomar and Seven Mile Casino, which were already facing administrative licensing allegations from state gambling regulators, were ordered shut down by California Bureau of Gambling Control Chief Wayne Quint Jr. on Wednesday. It was unknown when they would reopen.
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The card rooms were just two conduits that were used to launder money. The ring also used a bail bond business in Las Vegas, shell companies and bank accounts, according to prosecutors.
Gamblers would pay debts owed to Stroj by writing a check, payable to one of the card rooms, Mellor explained. The check would then be deposited in the “marker” accounts held for players at the card rooms, for co-defendants indicted in the scheme. The money would then be withdrawn from those accounts in either cash or chips, he said.
On wiretaps, Stroj said that the card rooms were a preferred way to launder the money. In a recorded conversation, Stroj said he told one gambler that “Palomar is the best way I can wash the money,” court records say. “I don’t have to report it. I just deposit it at the Palomar, and there’s no problem for me.”
Prosecutors said in a statement that the Wynn and Bellagio casinos in Las vegas were also used in this manner. Neither were named in the indictment, unsealed Wednesday.
Four defendants appeared in court Wednesday. Mellor described them as “sub-agents” who recruited gamblers into the ring and managed them, collecting money and paying out winnings. One defendant, Craig Kolk, works at the tribal casino at Barona. Another, Ricardo Castellanos Velasquez, was described by his lawyer as a managing director of the Xolos professional soccer team in Tijuana.
Jeremy Warren, the lawyer for Kolk, said his client has known about the investigation for more than a year. He said the resources expended on it amounted to overreach by federal authorities.
“The FBI should be protecting us from terrorists, not from someone hoping to make an inside straight,” Warren said.
FBI agents descended on the Seven Mile Casino on Bay Boulevard in Chula Vista and the Palomar Card Club on El Cajon Boulevard in San Diego around 6 a.m. Wednesday, said agency spokesman Darrell Foxworth.
In all 21 people were arrested around the country, including in new Jersey, Pennsylvania, Iowa, New Mexico and San Diego. Officials seized more than $600,000 from player bank accounts here.
Not all of the individuals were indicted on all charges. Twenty people were indicted on the sports book operation, and two on the prostitution charge.
Among those indicted was Harvey Souza, the owner of the Seven Mile casino. He was charged with not having an anti-money laundering program in place at the card room. One of the proprietors of the Palomar Card Club, Naseem “Nick” Salem, was indicted on the same charge for that card room, as well as a money laundering conspiracy charge.
Both card rooms as corporate entities were also indicted.
Agents were still on site at the Seven Mile club five hours after the raid started. Chula Vista police had blocked off the entrance to the card club and were turning away a steady stream of patrons.
In a statement, a spokeswoman for the casino said that Souza and his family would work with regulators to resolve all the issues. The statement did not address the indictment.
Both card rooms — at the time Seven Mile was known as the Village Club and located on Broadway — were raided in October 2014 by the FBI, but the purpose of those raids was not disclosed.
Village Club moved to a new location and expanded the number of tables allowed under Chula Vista’s card room ordinance earlier this year. Chula Vista Mayor Mary Salas was on hand for the opening.
Both card rooms are in trouble with the state gambling regulator, the California Gambling Control Commission, and the Bureau of Gambling Control.
In October, regulators filed an accusation against the Palomar Club and longtime owners Donald and Susan Staats, contending they had turned over operation of the club to an unlicensed operator, their daughter.
In September, regulators accused Souza of not disclosing a $3 million loan to construct the new casino, and conducting other improper financial transactions.
Both accusations are still pending with the state, which says it wants to revoke the operating licenses for both.
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