By Jacob Nakamura, Johnnie Rosario, Eric Rosario, and Troy Torres
(Tumon, Guam) A series of land transactions occurred between 2015 and 2019 that benefitted four people and one trust - all tied to the Liberty machine industry on island.
The transactions involve Liberty machine gameroom operators and owners Gil and Connie Jo Shinohara, John and Sheila Torres, and the trust of the late Pedro "Dongo" Pangelinan. These gambling lords are or have been principals in Guam Music, Inc., which held the licenses for some 1,200 poker-style machines that were legalized in 2013 by a law authored by former Sen. Chris Duenas.
Interestingly, the person with the controlling interest in Guam Music, Inc., Lauren Bromley, does not appear to have participated in this series of land transactions.
The machines were relicensed by the Department of Revenue and Taxation in 2013, and began taking tens of millions of dollars per year from the poorest and most at-risk residents since. The business is 100 percent cash-based; gameroom owners collect cash from the machines on a daily schedule, leaving only enough for change and for predicted payouts.
The cash nature of the business has been a point of contention, even for lawmakers back in 2013, when senators were debating whether to legalize the licenses to these Liberty machines. DRT officials then told senators that it would be difficult to regulate and monitor whether the money going into the 1,200 machines would be reported as revenue, especially since the source of that money was drug proceeds to begin with.
The monitoring of cash also would be difficult for an owner, who did not live on Guam, even if she had controlling interest in the business. Such was the quandary for Ms. Bromley, who does not live on island.
In 2016, however, Ms. Bromley paid her Guam company a visit, following the opening of an investigation into the sudden deposit of $1 million into the company's Bank of Guam account. Mr. Pangelinan tried to deposit cash proceeds from the company, which flagged banking regulators and set off a federal investigation into Guam Music, Inc. Ms. Bromley also wondered where this money came from, and why it did not appear in the books she was seeing.
So she dug.
Then she found the land purchases.
From 2015 forward, a series of purchases throughout Guam's villages ensued, most of which were purchased and sold by Mr. Pangelinan, Mr. Torres, and Ms. Torres. Mr. and Ms. Shinohara have some holdings, and have conducted some land transactions through this period, but not nearly as many as the others.
Mr. Shinohara spoke with Kandit by phone today, and he confirmed that proceeds from the gambling business were used to purchase properties.
The question is, did all of these gameroom owners purchase properties using gambling proceeds that were reported as income, or not?
Land it an asset that generally does not lose value, and is taxed at a much lower rate than other investments on Guam. Purchase and sale amounts also are non-disclosable outside the parties of the transactions. Income reported from supposed rentals or use of the properties also are difficult to track, especially with multiple tracts of land involved that change hands from year to year.
Such is the case with property that has changed hands between the Torres's and the company doing business as Guam Shipyard. About 10 lots in Santa Rita along Cross Island Road were purchased by Ms. Torres, then subdivided into over a score of lots that were then transferred to Guam Shipyard.
What would a seaside dock operator need with acres of land in the middle of rolling hills in the dead-center of Guam? More importantly, where is all the money from these gamerooms that has gone unreported and untaxed?
Kandit's coverage of the corruption involved in legalizing these gambling machines despite four resounding rebukes of gambling by Guam voters has led to the introduction of a bill by staunch anti-gambling Sen. Telena Cruz Nelson, who is the vice speaker of the Guam Legislature. Ms. Nelson has been most vocal in defending the will of the people. She was highly critical of a law passed earlier this year that allowed gambling at the Liberation Carnival.
A recent audit by Public Auditor Benjamin Cruz revealed that, despite high volumes of patrons at the casino during the carnival, the casino operator paid hardly anything in fees and taxes, claiming that the business did not make money. The casino, just as the Liberty gamerooms, was a cash-run operation prone to non-compliance and underreporting of revenue.
Ms. Nelson's anti-gambling legislation, Bill No. 226 (introduced Monday morning), will make Liberty machines, pachinko, and carnival casinos illegal 120 days after becoming law.
Her measure is receiving mixed support from two of her colleagues. Senator Regine Biscoe Lee, who heads the Legislature's powerful Rules Committee, said "While I am still reviewing Bill 226-35, I support the measure in concept."
Senator Jose "Pedo" Terlaje has a different take. "I oppose any measure that would make the Liberation carnival and parade a tax payer burden," Mr. Terlaje said. "I also would oppose legislation that tells reasonable adults how to spend the money they earn. If people don’t like gambling, no law obligated them to do so."
Three more senators have weighed in on the effect these Liberty machines have had on Guam society, telling Kandit News they believe these gaming machines have had negative effects on society. These senators include James Moylan, who said he would support a measure that would make the devices illegal, Tina Muna Barnes, and Clynt Ridgell. Mr. Ridgell supports the prospect of a gambling industry that is regulated, but does not support the way the current gameroom operators and owners operate their monopoly, which has led to grave social ills.
Ms. Lee is expected to refer Ms. Nelson's bill to the committee with subject matter jurisdiction tomorrow. From there, that committee's chairman will determine if and when a public hearing will be scheduled for that bill. The outcome of public hearings normally determine whether the committee with jurisdiction of the bill will kill the legislation in the committee, mark up the bill with changes, substitute the bill, or report it to the floor of the Legislature as is for full debate and consideration.
The bill needs at least eight votes in favor (if all 15 senators are present for the vote on the bill on that day) to pass and be sent to Gov. Lou Leon Guerrero for her consideration.
Ms. Leon Guerrero has stated she is against gambling, though her actions since running for governor have told a different story. She has taken thousands of gambling dollars to fund her campaign to office. Her family's bank, to which she recently was its chief executive officer, hosts the bank accounts for the gambling operations. Ms. Leon Guerrero also appointed one of the principals of the gambling business - Connie Jo Brennan Shinohara - to be the deputy seaport manager.
Ms. Shinohara recently submitted her resignation to the governor amid the growing scandal. When news of the resignation letter leaked to the media, Ms. Shinohara retracted her letter, despite Guam law prohibiting such action; and the governor's office denied access to a copy of the letter under the Freedom of Information Act.