After a two-year investigation, federal and state officials say they have broken up a massive illegal gambling operation that used 500 video slot machines throughout Northern California smoke shops, bars and stores to generate hundreds of thousands of dollars a year.
The allegations against four Israeli citizens who operate out of the Bay Area are contained in a 44-page affidavit filed in federal court in Sacramento and unsealed on Friday.
According to the affidavit from a state Department of Justice special agent, the probe uncovered the gambling scheme that it says was run by what authorities call “the Gohar Organization,” which allegedly placed machines generating more than $2,000 a day in storefronts from San Jose to Sacramento.
“This organization controls a large number of illegal video slot machines placed in small Northern California retail stores such as markets, gas stations, liquor stores and smoke shops,” the affidavit states, adding that proceeds from the operation may have been laundered by sending the money to Israel through a Los Angeles rabbi and later by purchasing homes and commercial buildings in the Bay Area.
A criminal complaint filed Tuesday and unsealed on Friday charges four suspects – Yaniv Gohar; his brother, Orel Gohar; May Levy; and Eran Buhbut – with conducting an illegal gambling business.
The four defendants made an initial appearance Friday in Sacramento federal court, with U.S. Magistrate Judge Carolyn K. Delaney ordering the release of Orel Gohar, Levy and Buhbut.
The three were required to sign $50,000 unsecured bonds, surrender their passports and not enter any gambling establishments or gamble.
Yaniv Gohar was ordered detained pending a hearing Monday after Delaney was told he had threatened to break the legs of potential witnesses in the case. Gohar told his attorney in court that he had made the statement simply because he was angry at being arrested, but Delaney declined to release him before the Monday hearing.
The investigation began in September 2015 and followed a similar probe of a suspect known as “Dino the Casino,” an Israeli national named Nive Hagay who pleaded guilty last May to a count of illegal gambling and one count of cocaine distribution. He was sentenced to two years in prison and ordered to forfeit about $320,000 in cash, vehicles and other assets.
The Gohar probe began with a tip to authorities from an informant who spotted a video slot machine inside a Stockton Boulevard smoke shop and evolved through the use of a paid “confidential human source” and undercover video surveillance, according to the affidavit.
The investigation determined that the organization split the proceeds from the video slot machines with the store or bar owners where they were installed, and that the scheme was particularly lucrative for some participants, court records state.
“Orel claimed to have a customer (two brothers) on Turk Street in San Francisco,” the affidavit said. “He further claimed that these brothers had one of Orel’s slot machines installed in their store and make $12,000 to $13,000 per week.
“Orel said they made half a million dollars from him last year, and he suggested they buy a building with all of the money.”
The organization set up machines in stores in Stockton, Davis, Fairfield, Modesto, San Jose and elsewhere, and told the undercover source that they “are between legal and illegal, that they are everywhere and that they can easily be removed if necessary,” the affidavit states.
“Orel also stated the following: that he has worked in the gambling business for six years, and no one has ever gotten in trouble or arrested; that the worst outcome was a $500 fine; and that the (confidential human source) should play stupid about the machines.”
Federal officials had a different perspective; the charge each defendant faces carries a penalty of up to five years in prison and a fine of up to $250,000.