A California cardroom may find itself out of business if the state attorney general’s office can prove Casino M8trix attempted to hide millions of dollars in profits. The state’s Bureau of Gambling Control filed paperwork on May 2 accusing the San Jose cardroom of diverting significant income from its 49 poker tables to limited liability corporations (LLC) controlled by M8trix owners Eric Swallow and husband and wife team Peter and Jeanine Lunardi.
The payments to the LLCs were listed as expenses rather than distributions to owners, which reduced the amount of income M8trix reported to effectively zero in three of the four years between 2009 and 2012. This not only reduced M8trix’s tax bill but also its contributions toward city-run gambling addiction programs. The San Jose Mercury News reported that Swallow had admitted there were no invoices detailing the nature of the expenses for which the LLCs received “millions of dollars annually” from M8trix.
Bureau of Gambling Control chief Wayne Quint Jr. said M8trix’s owners had “provided misleading information” and “engaged in self-dealing to siphon off monies for themselves,” actions that Quint believes makes the owners “not suitable or qualified” to hold gambling licenses. The licenses held by M8trix and its owners are due to expire May 31, leaving open the possibility that M8trix will be ordered to close its doors when the Gambling Control Commission considers M8trix’s bid for license renewal on May 29.
While the Commission has the option of letting M8trix off with a fine, San Jose City Attorney Rick Doyle said the state’s filing “reads like revoking the license is definitely on the table.” City Councilman Sam Liccardo told KTVU that if the allegations against M8trix were proven, he was “committed to see Casino M8trix’s city permit revoked.” A M8trix spokesman said the cardroom ”believes the charges are unfounded,” a decidedly non-emphatic declaration that suggests M8trix will soon be operating under new management.