Bell’s Hiring of Felon Threatens Reopening of Card Club, State Says

The city of Bell may have jeopardized plans to reopen a troubled poker parlor by hiring as its monitor of the operation a former mayor who was convicted of felony charges stemming from his hidden interest in the club years ago, state officials said.

The city last month hired Peter Werrlein Jr., who managed the once-thriving California Bell Club until he pleaded guilty in 1984 to mail fraud and owning an illegal gambling business. He served 10 1/2 months in federal prison.

City officials defended their decision to hire Werrlein, saying he will discourage illegal practices--such as money laundering, skimming and bad-check cashing--that might shrink their share of earnings from the poker club.

“Sure, it sounds crazy,” said Councilman George Cole. “But is it any crazier than hiring a convicted burglar to teach people how to secure their houses against break-ins? He knows how to spot loan-sharking, he knows how to spot skimming, he knows how to spot rip-offs. . . . “We want to put in place the toughest monitoring system in California,” Cole said.

An official with the California Department of Justice, which regulates card clubs, said the state has not received a licensing request from the now-closed enterprise, but expressed concern about Werrlein’s agreement with the city.

“It raises a red flag for us,” said N. Whitt Murray, an investigator with the department. “I don’t know why the city would take the risk.”

The 75-table poker parlor, located in a warehouse district off the Long Beach Freeway, has been closed for 18 months.

Bell last month finalized plans with Los Angeles-based California Bell Casino, a two-man partnership, to reopen it sometime next year. Werrlein’s company, Western Gaming Associates, was hired to oversee the millions of dollars in cash that city officials expect will flow through the club each year.

Under the agreement, Werrlein, who owns a Western Auto store in Bell, will be paid 15% of the city’s revenues the first year and 10% in subsequent years. Werrlein will have three employees who will be paid from that share, according to his contract.

California law prohibits convicted felons only from owning or operating card clubs. But Murray said state officials could require Werrlein to apply for a license, as well, in his capacity as a consultant.

“If he has any management responsibility, he would have to apply for a gaming permit,” the state investigator said. “And, based on his record, he would not be (approved).”

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City officials and the club’s new owners insisted that Werrlein will have no say in how the operation is run. Werrlein said he is the best choice for the job because the poker parlor was at its most lucrative when he was running it in the early 1980s.

“The controls were in place and there was no mishandling of funds,” he said. “When I was in the club, when I controlled and ran it, the city got more than $10 million (in three years) and it got every penny and never got cheated.”

Before he managed the casino, Werrlein had been a city official for 16 years, serving three times as mayor. He lost his council seat in 1980, however, after disclosures that he had participated in sex parties in nearby Cudahy where teen-age prostitutes were supplied by Kenneth Bianchi, who was later convicted in the Hillside Strangler murders.

Werrlein and five others were indicted in 1983 on racketeering and other charges after federal agents alleged that he and ex-City Manager John D. Pitts had accepted bribes while in office--in the form of a combined 51% hidden ownership of the card club--to pave the way for legalized poker in the blue-collar community in southeast Los Angeles County.

Key evidence in the investigation was a tape recording by one of the club’s owners in which Werrlein bragged about his hidden interest. In addition, Pitts testified in federal court that he and Werrlein had conceived the idea for a Bell poker club in 1976 solely to make money for themselves.

Werrlein, who pleaded guilty to mail fraud and owning an illegal gambling business, was ordered to forfeit $400,000 in profits from the operation in addition to serving the prison term.

After the scandal, the club went downhill. In 1989, its managers failed to pay the city $1.6 million in tax revenue and the club was ordered closed by a federal bankruptcy judge. It reopened in 1990, but closed again in July, 1992, after a new owner defaulted on payments.

“The city has been put through hell because of what happened and because of my stupidity and allowing myself to get involved with people I shouldn’t have gotten involved with,” Werrlein said. “I’ll push like hell to make sure the city gets everything they’ve got coming and that they get put back on the map financially, because they are not in good shape.”

The partnership planning to reopen the club as the California Bell Casino is made up of two stockbrokers, Russell Armstrong, 29, and Randy Haag, 34. They have paid $500,000 of the $1.35 million in back rent, taxes and licensing fees that the city demanded.

Armstrong said the remainder of the club’s start-up funding--estimated to be about $5 million--will come from Thomas C. K. Yuen, the founder of Irvine-based AST Research Inc., one of the largest manufacturers of personal computers in the country.

Armstrong and Haag said they were unaware of Werrlein’s criminal background when they negotiated to reopen the club, but they were not concerned about it.

Times correspondent Mary Helen Berg contributed to this story.