Gaming Cop Breaks Silence on Casino M8trix Dispute

San Jose’s top casino cop has heard enough. In his first interview since Casino M8trix filed lawsuits in February against the city of San Jose, Richard Teng, the San Jose Police Department’s gaming administrator, called accusations against him “a political nightmare.”

While attempting to limit his comments to only his secondary employment, which was noted in state and federal lawsuits as “a conflict of interest” that casino owners say led Teng to harass them and stall the card club’s opening last year, the gaming administrator said that his work only came under criticism starting in 2007. That was the year Eric Swallow and Peter and Jeanine Lunardi purchased Garden City Casino.

“There’s a lot of noise out there,” Teng said. “It’s very obvious that I’ve angered somebody, and the only reason is because of my work, not personality. This whole thing has nothing to do with personality. Any and everything that I’ve done since 2002 has and always will be blessed or approved by the city attorney’s office.”

The card club owners were furious last year when Casino M8trix’s grand opening was delayed four months. “A regulator’s job is not to make friends or be out there and play golf with these people,” Teng responded.

A key issue raised in a San Jose Inside report last week is Teng’s newly reported income outside of the SJPD. City employees are required to disclose stock investments and any outside income on a Form 700, which is filed with the City Clerk’s office and the Fair Political Practices Commission (FPPC). Teng has filed a form every year since former police chief William Lansdowne hired him in 2002.

But late last month, Teng amended forms going back nine years. The new documents showed that he, in fact, has held stocks worth up to hundreds of thousands of dollars and also worked as a subcontractor for Spectrum Gaming Group, a company that had its own gaming consulting contract with the city of San Jose. Teng previously only listed outside income from his consulting business, “Richard Teng, CPA.”

How Teng and Spectrum’s work for San Jose overlapped is unclear, at least to Teng.

“Since I came on, as far as I know, Spectrum has not done any work for the city—at least not within my scope,” he said. Teng added: “Outside of my environment, I don’t know if Spectrum provided any legal support to the city attorney’s office.”

In fact, Spectrum held contracts with the city from 1998 to 2009, according to the city manager’s office. During that time, Spectrum received more than $666,000.

Teng said that on Feb. 28 he met with the city attorney’s office to discuss his Form 700s, and that on the same day he received an email telling him to amend all forms with City Clerk Toni Taber. “I did it as soon as I was told,” Teng said. “I wasn’t trying to hide anything at all.”

But the amending wasn’t done yet. According to Teng, Spectrum, which Teng started working for in the mid-‘90s, asked the city not to disclose clients he worked with on the company’s behalf. The city then complied with this request.

“Ninety-nine percent of Spectrum’s clients are government agencies,” Teng explained.

Teng has received at least $181,000 from the company since joining SJPD in 2002, according to his amended Form 700s. But that number is likely far higher considering that Teng received between $10,000 and $100,000 from Spectrum in all but two of those years and more than $100,000 in 2009.

It appears that 2009 was also a notable year in the relationship between owners of Casino M8trix—who operated as Garden City Incorporated (GCI) at the time—and Teng. Things became so volatile that Garden City sponsored a state Senate bill (SB 213) that year that would have eliminated Teng’s position while also handing employee-licensing duties to the state instead of local jurisdictions.

In a letter Rich Doyle sent on May 7, 2009, to State Sen. Rod Wright (D-Inglewood), San Jose’s city attorney noted that Garden City was sponsoring the bill less than a year after San Jose fined the card room a quarter-million dollars for violations.

Here is a portion of Doyle’s letter to Sen. Wright:

“It is our understanding that Garden City is the sponsor of the amendments to this bill. The Committee should know when it evaluates the amendments proposed by Garden City that the City has had a number of regulatory issues with Garden City’s new owners, including a recent settlement of a regulatory disciplinary proceeding begun by the City against Garden City, Inc. and its new stock owners for violations of Title 16 and the City’s Minimum Internal Control Standards Regulations governing the operation of the cardroom. These violations were in part related to Garden City’s failure to have the required experienced personnel in the day-to-day management of the business. In addition, other violations included Garden City’s inadequate security surveillance system. In July 2008, the City reached a settlement with Garden City, in which Garden City agreed to pay costs and fines in the amount of one hundred ten thousand ($110,000.00) dollars and to surrender key employee licenses held by two (2) stockowners. Garden City further agreed to ‘stayed penalties’ which would be triggered in the event of future significant regulatory violations within one year. These stayed penalties included an additional fine of one hundred forty thousand ($140,000) dollars and a one-week suspension of the gaming operation at Garden City. We note in this regard the assistance of the Department of Justice Bureau of Gambling Control which concurrently issued a notice of violation of the state’s gambling licenses after the City initiated its regulatory action against the Cardroom Permittee and the new owners.”

Doyle sent an additional letter in May 2009 to another supporter of the bill, recently termed-out State Senator Christine Kehoe (D-San Diego), who accepted numerous contributions from casinos during her time in office.

The bill was eventually vetoed by Gov. Arnold Schwarzenegger in October 2009, but it is worth noting that Sen. Wright was indicted a year after Doyle’s letter on charges of voter fraud and perjury. Many of the companies that contributed to his legal defense fund were southern California card clubs. One of these establishments, Hollywood Park Casino, has given thousands of dollars to Wright over the years.

Incidentally, reports from February of this year suggest that Swallow has taken over control of Hollywood Park Casino.

Click here to read City Attorney Rich Doyle’s letters to State Senator Rod Wright and former State Senator Christine Kehoe.

Josh Koehn is a former managing editor for San Jose Inside and Metro Silicon Valley.

4 Comments

  1. I smell Pete Constant’s name coming up in this investigation. He and Swallow sure have shared a lot of lunches and pillow talk. Are you going to break the story Josh, or will you wait 6 years for the Feds to do it?

  2. “I wasn’t trying to hide anything at all.”

    Really? Then why did you hide hundreds of thousands of dollars in income and hundreds of thousands in investments? The FPPC is very clear: report all sources of income and investments, period.

    This is CRIMINAL behavior. Didn’t Shirikowa just get arrested for the same ting?

    I hope the FPPC take this case. He’s been hiding something – and when there’s smoke there’s fire!