Fifty-three year-old card room impresario and co-owner of the popular Casino M8trix in Silicon Valley, Eric Swallow, aims to clear his name after an administrative law judge questioned his “character, honesty, integrity.” Swallow, responsible for reinventing the bankrupt Garden City Casino, will probably lose his state gaming license.
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, including providing false information. Anderson made the decision after gaming regulators had difficulty proving almost a dozen more serious accusations. Regardless of the outcome of the case, Swallow plans to leave the San Jose, California casino.
Stemming from last year’s allegations by the state Attorney General’s Office, Swallow, along with business partners, Peter and Jeanine Lunardi, who are 50 percent owners in the casino, are accused of hiding casino profits in an attempt to avoid paying taxes. In 2015?the Lunardis settled their case with the state and were allowed to maintain their gaming licenses. In February the judge’s recommendations for Swallow’s punishment will go to the state’s Gambling Control Commission for approval. However, on December 18 Swallow told the San Jose Mercury News that he will appeal the decision. The proposed punishment is a better bargain than the $4.6 million to $18.8 million the state’s top regulator wanted Swallow to pay.
After other allegations by the Attorney General’s Office against Swallow and the Lunardi’s fizzled last year, the investigation into Swallow took a different turn. Per the proposed judgement Swallow is accused of failing to provide requested documentation and providing false information to the Bureau of Gambling Control. Swallow is also accused of receiving money from so-called proposition players, who are professional “prop” players hired through third-party companies to keep games going and ensure rules are followed. The professional plants are not allowed to profit from the service.
A $3.6 million payment from a limited liability corporation called “Secure Stone,” a company whose only member was Swallow’s wife, was noted in the judgment. Although going through a divorce at the time, Swallow and his wife were still legally married, so the judge found he had an interest in the LLC. While Swallow and the Lunardis set up three other LLC’s in 2008 that they received casino royalties, consulting services and software payment for, the state was unable to prove money was funneled to those LLCs in order to avoid paying taxes.
According to the judgment, Swallow’s marital status was misrepresented on a document and when applying for a license to operate Hollywood Park, a casino in Southern California, he knowingly submitted false information. Swallow referred to those as honest mistakes and not “intentional misrepresentations.” Swallow said he’s eager to clear his name and exit the gaming world. He has tapped successful casino owner John Park, who owns casinos in Petaluma, Livermore, Sacramento, Lodi, Rancho and Cordova, to purchase his 50 percent share of Casino M8trix. However according to Swallow , the sale has been delayed by his partners who want to purchase his half of Casino M8trix but have yet to agree on a price. The parties are now in arbitration, and a solution is expected next year.
In the interim, Swallow maintains his co-owner status of the M8trix, despite the state’s effort to revoke his gaming license. Just how his status in San Jose will be affected by the state gambling probe remains unanswered.