San Diego Card Room Battling State Gambling Enforcers

California gambling regulators have recommended denial of licenses for the owners and operators of the Palomar Card Club on El Cajon Boulevard, and the state's Gambling Control Board has voted to conduct an evidentiary hearing on the matter at a date and time to be announced.

During a February 23 meeting, the control board discussed the recommendation of its staff to, "deny the initial state gambling license application" for University Heights, LLC and its members, Naseem Salem and Adel Salem, regarding operation of the card room.                                                  

Allegations against the card room's owners and operators were contained in a report of a lengthy investigation conducted by the Bureau of Gambling Control of the state Attorney General's office.

The document has not been made public, nor were any details regarding the specific nature of the alleged violations presented during the hearing, according to board spokesman Pamela Mares.

"Staff has reviewed the Bureau report, concurs with their recommendation and recommends denial of their application," board documents say.

The board's staffers also recommended denying the license renewal application of long-time Palomar owners Donald and Susan Staats, who according to their attorney were both too ill to attend the hearing.

Finally, the officials recommended denial of the renewal of the so-called key employee license for Palomar's club manager Naseem Salem.

During the contentious hearing on the proposed denials last month, Keith Sharp, an attorney for the Palomar applicants, argued that the bureau's investigation was "poorly done" and unfair to his clients.

Naseem Salem was present at the hearing, as well as Bishop Bawai Soro of El Cajon, who heads the Chaldean Catholic diocese for the western United States, according to Sharp's testimony.

"What you see in the submitted materials, I believe, is a small card room that has been in business in the San Diego area for more than thirty years," Sharp said.

"You have in Mr. Salem a gentleman who has been in business more than 20 years.

"Originally from Iraq, he's been in the San Diego area for more than 22 years, having built several very successful businesses and having been active in many philanthropic endeavors, receiving numerous awards.

Sharp said he had furnished the commission several letters of recommendation on behalf of Salem, "including letters from the mayors of San Diego and National City," as well as those from other state and local officials.

"I'm not here to tell you that Mr. Salem and the Palomar Card Club are perfect. They are by no means perfect. They did not dot every 'i,' they did not cross every 't'.

"They have made some missteps along the way. They have made some mistakes. no time did they seek to violate the act or the regulations, or misuse or abuse their positions, or their authority."

Sharp argued that the bureau's report of its investigation was, "fraught with misstatements, false allegations, and some untruths, frankly."

He suggested that the card room's license be renewed with 20 conditions, "some of which I believe are absolutely unprecedented in the card room business."

Norman Pierce of the Bureau of Gambling Control took issue with Sharp's allegations.

"We are firmly convinced that the facts as presented in our report are fully supported by the evidence that we obtained during our background investigation," Pierce testified, adding that Sharp's submission was in "stark contrast to the evidence that we had developed during our investigation" and in "direct conflict with what we had obtained."

As a result, he said, the case called for a full administrative hearing, during which witnesses would be required to testify under oath, to ascertain the facts.

During the subsequent debate over the allegations, one board member complained that the applicants had been responsible for "a document dump that happened last week," continuing, "the accusations that were made in that document really cut to the very heart of the integrity of our bureau in many ways...It's imperative that I feel comfortable that the bureau has had adequate time to prepare a response to these very, very kind of damaging accusations."

Another member said, "I understand what attorneys have to do for their clients, I get that truly, and I understand how businesses feel about government regulation, but then we also have a duty to be sure that gambling in the state of California is free from crime and it's not a hostile environment."

Last October, the San Diego city council unanimously voted to allow the Palomar Card Club and the Lucky Lady Casino, the only two licensed gambling venues left in the city, to expand from 9 to 11 tables.

Palomar general manager Salem, who goes by the first name of Nick, argued that 70 to 80 jobs at the two clubs would be lost if the expansion request was denied, according to an August 26 report on the website of KPBS, San Diego State University's television station.

The station said 700 players a day patronize the city's two card rooms, which make "tens of millions of dollars in revenue."

Salem argued during the broadcast that the city ordinance banning card clubs in the city when the last of the current owners dies, should be repealed.

“Keeping our job is very important for all of us,” he was quoted as saying. “Obviously, it’s good for everyone. You have a good successful business going and not stopping. Not shutting down after awhile. And San Diego, every city now, in this economy, needs that.”

As we reported in August, card room interests have put big money into a lobbying effort to get rid of the law.

In early 2011, Palomar hired the prominent lobbying firm of Southwest Strategies with the object of getting the city council to change "Card Room Regulation in San Diego municipal code."

That June 30, according to Southwest's lobbying disclosure filing, the firm's A. Christopher Wahl and founder Alan Ziegaus, held a "fundraising cocktail reception," featuring "email invitations [sent] to business associates and friends" for Democratic La Jolla councilwoman Sherri Lightner.

The event raised $19,000.

Palomar also retained Arkan Somo Associates. According to the firm's lobbying disclosure, it was paid $7500 by Palomar in the second quarter of 2011 to lobby the council to "Amend Card Room Regulation in San Diego," including Muni Code section 33.3908:

"No new partners or shareholders are permitted to acquire any interest in the cardroom upon the death of, or sale by any existing partner or shareholder. A license issued to an individual shall terminate with the death of the individual."

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