500 Club’s license renewed, but Clovis card room remains on shaky ground

The 500 Club Casino had its license renewed Thursday by the California Gambling Control Commission and will remain open, pending a hearing next year to determine the card room’s future.

The club remains in jeopardy of losing its gaming license because the state says its major financial backers didn’t have the necessary gaming licenses and background checks.

In a brief hearing Thursday, California Gambling Control commissioners voted to approve an interim license through Sept. 30, 2017.

The commission’s decision was viewed as good news by 500 Club officials.

“Today was the vehicle to allow us our due process,” said Dusten Perry, the card room’s general manager. “We are allowed to continue business as usual; therefore we are not closing.”

The 500 Club’s license was set to expire on Sept. 30.

The administrative law judge has a hearing schedule backlog, so the 500 Club hearing could be six months away, said Pamela Mares, the commission’s spokeswoman in Sacramento.

The state’s top gaming law enforcement officer is asking the commission to pull the 500 Club’s license. Wayne J. Quint Jr., chief of the state Department of Justice’s Bureau of Gaming Control, is also asking that 500 Club owner Louis Sarantos pay the costs of the investigation.

The state’s accusation stems from an agreement between Sarantos, listed as the 500 Club’s sole proprietor, and John Cardot, a Fresno lawyer who represented Sarantos on 500 Club business matters in front of the Clovis City Council and the state Gambling Control Commission when Sarantos was trying to win approval for the club’s expansion to a second site.

The new card room opened in June 2012 with 18 tables, tripling in size from the old Clovis Avenue and Fifth Street location. The old site remains a restaurant. There also is a restaurant in the 13,000-square-foot Shaw and Willow avenues site.

Cardot reached an agreement with Sarantos that gave him a 50 percent stake in the card room if he provided a $1.5 million loan to Sarantos to build tenant improvements when the 500 Club was expanded and relocated.

Sarantos was having difficulty getting financing for the card room expansion when Cardot made his offer. He said the loan documents were filed with state gambling officials.

The accusation says that Sarantos failed to disclose Cardot as a financial interest holder and the terms of indebtedness. Sarantos also didn’t disclose names of other financial interest holders and his level of indebtedness to them, the accusation says.

From November 2011 to July 2015, the accusation says, Sarantos “concealed and failed to disclose” to state officials the existence of his agreement with Cardot. Both are violations of the state Business and Professions Code, the accusation says.

Sarantos got a $1.2 million promissory note secured by personal property at the 500 Club, the accusation says.

The accusation says Sarantos also benefited from a second agreement with Cardot and six investors who gained interest in the 500 Club: Joseph F. Capps, Leon Bernardi, Lodi Fransesconi, Don G. Nicholson, Edward G. Mason and Jon L. Strecker. Bernardi, Mason and Strecker are listed by the state as “key employees” at the 500 Club.

“Nobody ever asked about the loan,” Perry, the club’s general manager said last week, “and all of a sudden we’ve done something wrong years later.”

Sarantos filed a lawsuit in 2013 against Cardot, claiming that Cardot was looking out for his own interests more than those of his client.

The suit says Sarantos was unduly influenced to provide Cardot “with an option to purchase 50 percent interest in the 500 Club at an option price that was grossly below the fair and reasonable value of a 50 percent interest.”

Sarantos wants to “void, rescind and/or reform” any agreements made with Cardot, which include the option to purchase.

Cardot’s former law firm, Coleman and Horowitt, was named in Sarantos’ lawsuit against Cardot.

“We dispute that the firm has any liability to the plaintiff,” said Darryl Horowitt, a partner in the firm.

He said Cardot, now a partner in Quall & Cardot, left his firm last December. Cardot said Thursday that the “statements and implications made with respect to me in the (state accusation and Sarantos lawsuit) were untrue and misleading.”

This story was originally published September 24, 2015 at 5:20 PM with the headline "500 Club’s license renewed, but Clovis card room remains on shaky ground."