Eric Swallow at the M8trix casino in San Jose, Calif., 2013. (Gary Reyes/ Staff)
(
Gary Reyes
)Swallow last year lined up a buyer to purchase his shares of Casino M8trix, John Park, owner of Parkwest Casinos, which runs casinos in Livermore, Sacramento, Lodi, Rancho Cordova and Petaluma. Swallow says he previously offered the Lunardis a chance to buy him out, but they didn't bite. It was only after Swallow signed a purchase agreement with Park in April 2015 that the Lunardis wanted his piece of the pie.
Tracey Buck-Walsh, an attorney for the Lunardi family, said the arbitrator ruled Swallow failed to give her clients an opportunity to buy his shares last year and deliberately proposed "terms to the Lunardis that are different from (or not identical to) those offered by Park."
The dispute between the feuding business partners, who also faced charges from the Attorney General's Office for allegedly siphoning off money for themselves that should have gone to tax authorities and gambling addiction services, led to the arbitration. The arbitrator this month sided with the Lunardis, asking Swallow to start over and give his partners 30 days to make an offer.
Jeanine Lunardi declined comment on the decision Thursday morning.
But if the Lunardis are successful in their quest to buy Swallow's half, documents show they'll sell most of it to someone else -- Ryan Stone of the Monarch Group, a private La Jolla-based real estate investment firm -- who's said to be a friend of the Lunardi family.
Park, who said he was "surprised" by the arbitrator's decision, isn't walking away from his purchase offer. "We are looking at our options at this point," Park said. "As the agreement was written, I thought I'd have the opportunity to buy it. But we're still pursuing the purchase."
The Lunardis and Swallow faced similar accusations of misrepresenting revenues to avoid paying taxes by funneling money through three LLCs, but administrative law judge Mary-Margaret Anderson recommended Swallow's gaming license be revoked after he fought the charges. The Lunardis worked out a settlement with the state and got to keep their licenses, though Pete Lunardi was issued a $250,000 fine. Garden City, Inc., the former name of the casino before it rebranded as Casino M8trix and is owned by the Lunardis and Swallow, was fined $1.25 million.
The proposed judgment against Swallow, which includes revoking his license and paying $430,000, awaits approval from the Gambling Control Commission. Swallow said he plans to appeal if the commission approves it.
State officials were unable to prove Swallow and the others "siphoned money off to themselves," or failed to pay taxes but showed Swallow did provide incorrect information to the state and the Lunardis didn't properly document transactions, according to the settlement and judge's proposed decision.
Contact Ramona Giwargis at 408-920-5705. Follow her at Twitter.com/ramonagiwargis.
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