California’s attorney general wants to deny a gambling license to a casino in the Golden State, partly because the owners have not explained loans they received from businesses tied to a Utah polygamous sect.
Lake Elsinore Hotel and Casino also has not done enough to guard against money laundering, the California Bureau of Gambling Control said in a written filing.
There is no allegation anyone at the casino has actually laundered money.
The latest “Statement of Issues” filed by the bureau, which operates under California Attorney General Xavier Becerra, illustrates the ties the casino has to the Davis County Cooperative Society, a Utah polygamous sect also known as the Kingston Group or The Order. The filing is the first document to explain how businesses affiliated with the group lent money to buy the casino in the early 1990s.
If California’s gambling regulators accept the recommendation and deny a license to Lake Elsinore Hotel and Casino, it could force the establishment to close or its owners to sell. A four-week administrative hearing is scheduled to begin Oct. 5 in San Diego.
Four members of the Kingston family began the process of purchasing the casino in 1991 for $4 million. The filing says $3 million of that came from a company called Fidelity Funding Co. When the new casino owners applied for their first gambling license in 1993, the document says, they reported owing Fidelity Funding $6 million in all.
In 2016, the family reported owing $3.8 million to World Enterprises. It and Fidelity Funding have offices in the same South Salt Lake complex as other businesses associated with The Order.
A woman who answered the phone at the complex last week took messages for both companies. An email from a sender representing Fidelity Funding said it is a private loan company.
“Our policy,” the email stated, “prohibits us from disclosing any details that are not already public regarding our clients or investors.”
No representatives from World Enterprises nor the owners of Lake Elsinore Hotel and Casino or their attorney returned Salt Lake Tribune messages seeking comment.
The filing from the Bureau of Gambling Control says the casino’s owners have not provided information about the terms of the loans, how the money was used or whether a balance remains.
Both Fidelity Funding and World Enterprises have come up in the fraud case against Washakie Renewable Energy. Washakie executives have pleaded guilty to charges of fraud and money laundering in a biofuel scheme that prosecutors have said resulted in at least $470 million in illegal tax credits.
Prosecutors have listed Fidelity Funding and World Enterprises as two of the companies where Washakie sent its fraud proceeds. The Justice Department has moved to seize homes and commercial properties bought with that money.
No owners or executives of Fidelity Funding or World Enterprises have been charged in the Washakie case, and the biofuel company is not discussed in the casino filing.
The recent Bureau of Gambling Control documents say the casino also has reported having building leases with Fidelity Funding and another firm, D.U. Co., with ties to The Order. Those leases, the filing states, haven’t been explained either.
California requires that casinos disclose ownership and financing ties to guard against rigged games, money laundering and other forms of corruption.
Lake Elsinore Hotel and Casino — which sits along Interstate 15 between San Diego and Los Angeles and has been known as Sahara Dunes Casino — has been operating on a string of temporary gambling permits since the late 1990s, when California changed its licensing process.
A backlog with the state’s gambling regulators as well as miscommunication between those officials and Lake Elsinore about what was required for a license have created a bureaucratic back-and-forth that has stretched for more than 20 years. Earlier this month, an administrative law judge criticized the Bureau of Gambling Control for how long the matter has lasted.
The judge also said the casino should be able to resubmit its license application and that one of its co-owners, Joseph Kingston, should be allowed to transfer his shares to a second cousin, Chad Benson. Benson has worked as the casino’s chief operating officer since 2015.
The California Gambling Control Commission, which issues the licenses, rejected the administrative judge’s opinion and told the casino owners to comply with previous requests for more information.
The latest filing from the Bureau of Gambling Control goes a step further and recommends the commission deny Lake Elsinore a license altogether. Besides questions about ownership and financing, the bureau said the casino “has failed to maintain and implement an adequate and effective anti-money-laundering ... program.”
“This has created the risk,” the filing added, “that money laundering and terrorist-financing activities at the gambling establishment will go undetected or unreported.”
No criminal allegations have been leveled against Lake Elsinore Hotel and Casino nor its owners.
Neither the Davis County Cooperative Society nor any of the names it is known by is discussed in the filing. Polygamy is not mentioned either, though the gambling regulators do delve into the family of Clyde Elden Kingston.
He was one of the people who bought the casino in the early 1990s. On his 1993 application for a gambling license, he listed a woman as his wife and put down “N/A” for previous marriages.
After Kingston died in 2005, an event no one reported to the Bureau of Gambling Control until years later, he left his assets to a second woman identified as his wife, the filing says. That woman then gifted her interests to one of Kingston’s sons, Ted Kingston. He remains a co-owner of the casino. He is Chad Benson’s half brother, according to public records.