Eric Swallow is photographed on the main floor of M8trix in San Jose, Calif., Feb. 19, 2013. (Gary Reyes, Mercury News)In an email from the PR firm on Monday, Swallow's longtime business partners, Pete and Jeanine Lunardi, said Pete would be taking over management of the towering Vegas-style cardroom. Pete Lunardi, the president of Casino M8trix, said in a statement that Swallow hasn't been involved with the casino's operations since May of last year.
The relationship between Swallow and the Lunardis fizzled after they testified against Swallow in a case brought by the state Attorney General's Office last year.
The state accused all three M8trix owners of hiding profits to skirt city taxes and avoid contributing to a gambling addiction program. The Lunardis took a settlement and agreed to pay more than $1.7 million in penalties.
But the identical case against Swallow is still pending, and Swallow says he was "disappointed" the Lunardis turned on him by testifying against him.
"I was disappointed that they would, in essence, lie to save themselves," Swallow said. "I feel bad for people that will do anything to save their hides. Lots of people will do anything under certain pressure."
The Lunardis did not respond to Swallow's comments.
Adding to the growing conflict and power struggle behind the Casino M8trix walls -- the Lunardis want to buy Swallow's half of the casino business -- but he has other plans. Swallow's decision to sell his share to a third party has sparked legal action by the Lunardis. The casino's gross revenues are estimated at $60 million each year.
Swallow is no stranger to controversy -- or bitter lawsuits.
In addition to the state accusations, Swallow was at the center of litigation with San Jose. His idea of allowing gamers to play on the top floor of the M8trix tower, reminiscent of the exclusive high-rise, high-roller rooms in Las Vegas, came under fire after police leaders said officers wouldn't be able to spring surprise inspections after riding eight floors on an elevator. Swallow sued the city and lost.
Swallow, who made his fortune in real estate investments, once owned Hollywood Park, a card club in Southern California, but also walked away from that venture in a "mutual agreement." At the time, Swallow was considered California's largest single operator of cardrooms, with both Casino M8trix and Hollywood Park under his belt.
But once he sells his shares of Casino M8trix, which he expects to do within months, Swallow says he'll be "semiretired" and will only dabble in casino consulting and real estate ventures once in a while.
Industry insiders say Swallow's share of the dazzling San Jose cardroom is estimated at $11 million a year. And while the dispute between the business partners is coming to a boil, Swallow, who lives in Los Angeles, says a divorce spurred his decision to walk away from Casino M8trix.
And he isn't going to shed a tear thinking about the towering casino he built in San Jose.
"It was just an asset, and I'm actually excited to be free of it," Swallow said. "I'm not going miss it at all. It was a lot of work and it's nice not to have to deal with all of the red tape and issues that go along with such a large operation."
Swallow's hearings related to the state charges, which began in Oakland in August, recently concluded and now an administrative law judge has 30 days to issue a decision. The decision will be presented to the state's Gambling Control Commission for approval, said spokeswoman Pamela Mares.
Contact Ramona Giwargis at 408-920-5705, or follow her at Twitter.com/ramonagiwargis.
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