The owner of a prominent Chula Vista card room appeared in federal court for the first time Thursday afternoon, one day after his arrest and an FBI raid in connection with an illegal gambling and money laundering operation in San Diego.
Harvey Souza, 73, walked into a San Diego Federal Courtroom dressed in white jail scrubs and his feet shackled then listened intently as he received a $40,000 bond related to a money laundering charge.
Souza’s attorney Michael Pancer had asked for his client’s custodial release on bail after the hearing so he could put his employees back to work.
Since Souza has been in custody 300 casino employees have not been able to work, Pancer said. His presence was needed to get people back to work.
However, the judge said he would not release Souza until Dec. 11 because the appropriate paperwork would not be ready for review until then, but a check of the Federal Bureau of Prisons website indicates Souza was released Dec. 10.
Souza’s wife, Bette, two daughters and other supporters were in the courtroom watching the proceedings.
Souza was one of 25 people named in a seven-count, 18-page indictment.
Earlier this year he moved his Village Card Room from Broadway to Bay Boulevard under the new name Seven Mile Casino.
“This investigation did span a couple of years and involved millions and millions of dollars,” said Assistant U.S. Attorney Joshua Mellor outside the federal courthouse Wednesday afternoon.
“It doesn’t necessarily mean that because he is at the bottom of the indictment he is less culpable,” Mellor said of Souza.
“It wasn’t a case where they were negligent, Village Club Card Room and Palomar were willfully and criminally involved … and their programs were so criminally insufficient that allowed this activity to go on,” Mellor said.
“This bookmaking and this illegal gambling business with the high stakes poker games and black jack games generated substantial profits through the card rooms.”
According to the indictment that was unsealed Wednesday, Seven Mile Casino “knowingly and willfully” failed to implement policies, procedures and internal controls for maintaining an anti-money laundering program reasonably designed to comply with federal regulations.
Federal agents and other law enforcement agencies raided the bayfront casino early Wednesday morning, with Chula Vista police officers barring the entrance to would-be patrons.
A security guard waiting outside the casino said he showed up to work for his Wednesday morning shift and was told by agents that he needed to exit from inside.
Other casino staff and patrons patiently waited outside, wondering when they would be allowed in and what exactly was happening.
Authorities seized more than $600,000 in player and bank accounts.
Chula Vista City Manager Gary Halbert said the city of Chula Vista makes about $520,000 annually in tax revenue from the casino.
Federal prosecutors believe this is the biggest gambling prosecution in San Diego County history.
Of the 25 individuals indicted, authorities arrested 20 of them throughout the country from Philadelphia, New Jersey, Iowa, New Mexico and California.
The lead defendant in the case, David “Fat Dave” Stroj, allegedly operated an illegal bookmaking business that extended throughout North America including San Diego, Los Angeles, Las Vegas and other cities.
Stroj’s clients would write checks payable to casinos such as Palomar and Seven Mile, or the Wynn and Bellagio casinos in Las Vegas and the funds would be deposited into marker or player bank accounts, the U.S. Attorney’s Office said.
California’s Bureau of Gambling Control issued emergency closure orders on both the Palomar and the Seven Mile operations.
It’s unknown when either of the two gaming establishments will resume business.
Late Wednesday Seven Mile Casino representatives released a statement:
“Seven Mile Casino, owned and operated by Harvey Souza and his family, have worked tirelessly for the past 70 years to build upon their great-grandfather’s legacy and comply with the evolving regulations regarding card rooms across the state. As a family and as a business, they are very much invested in the community of Chula Vista and the industry. We look forward to working with the California Bureau of Gambling Control to resolve all issues.”
In July the casino opened with fanfare on Bay Boulevard.
Mayor Mary Casillas Salas and the City Council were on hand for the ribbon cutting, using the opportunity to tout the city’s bayfront as an emerging entertainment destination.
Souza, along with other members of the his family, is active in local politics having donated to various campaigns such as Salas’s 2014 mayoral campaign and Councilwoman Pamela Bensoussan’s 2012 re-election bid.
None of the members of the City Council were available for comment.
“We are still evaluating the indictment,” City Attorney Glen Googins said. “It presents a serious issue to Harvey Souza and the Seven Mile Casino.”
He added that based on what happens with the case, the city could evaluate the casino’s permit to see if they are in violation of it.
Souza’s next hearing is Jan. 29.
