By Jacob Nakamura, Johnnie Rosario, Eric Rosario, and Troy Torres
(Tumon, Guam) The taxes Guam Music, Inc. has paid into the Limited Gaming Fund and the Guam Memorial Hospital Trust Fund has been different every year since the Liberty poker-style gaming machines were licensed, according to the audited financials of the government.
The problem with that? The taxes that are supposed to be paid into each fund should be identical.
Public Law 32-60 by former Sen. Chris Duenas, which legalized the gambling machines, created the LG Fund and the GMH Trust Fund and levied a four percent tax on the gross earnings of the machines. That is four percent for each fund, not including the assessment of business privilege taxes.
Here is an excerpt from the audit, which shows the payment of taxes on different gaming devices from Fiscal Year 2014 through Fiscal Year 2017:
If, for example, the levy of four percent on the gross earnings of Liberty machines amounted to $1,113,950 in Limited Gaming Taxes paid in FY 2014, that means that in FY 2014, the owners of the Liberty machines grossed $27,848,750.
Peruse through the slides below to view the amount in GMH Trust Fund Fees assessed and paid on these same machines:
The taxes paid into the Limited Gaming Fund and the fees paid into the GMH Trust Fund for the comparable years, Fiscal Years 2015 through 2017, show different amounts paid into each fund. See the chart below for the comparisons:
The chart above also shows the revenue from which those taxes were paid. Information on how much money was paid into the Limited Gaming Fund for Fiscal Year 2018, and into the GMH Trust Fund for Fiscal Year 2014 are unavailable.
However, for the most complete set of data, revenue reported shows Guam Music, Inc. made $107,884,275 between Fiscal Years 2015 through 2018. This does not include the money earned in Fiscal Years 2014 and 2019, which just ended September 30.
And this is considering that Guam Music, Inc. has actually reported its full earnings. Kandit reached out to the Director of Revenue and Taxation today to review the inspection reports the department is supposed to be filing monthly on these 1,200 machines. We have not yet received a response.
Of note is the breakdown of revenue into real dollar payments residents make daily into these machines. Based on the Fiscal Year 2018 total revenue of nearly $50 million, on average every day 1,200 residents pay nearly $100 into each of those Liberty machines.
Who profits? Well, there are the operators of the gamerooms, restaurants, and children's amusement parks, who receive a portion of the proceeds from the machines stationed at each location. Then there are the owners of Guam Music, Inc. and its affiliated companies that hold the licenses for these machines.
All of them are closely connected to the Guam Legislature and to the administration.
One of them is Connie Jo Shinohara, deputy manager of the seaport, where illegal shipments of replacement machines have been imported. Ms. Shinohara also is the campaign manager of the Leon Guerrero-Tenorio gubernatorial campaign.
Her husband, convicted federal felon Gil Shinohara, also is an owner of gamerooms. Mr. Shinohara is former Gov. Carl Gutierrez's chief of staff and was convicted in federal court in San Francisco of various crimes.
The estate of the late Pedro "Dongo" Pangelinan also has ownership in the company. Mr. Pangelinan was a prolific donor to several political campaigns and a financial patron of the Catholic Church, which has looked the other way for nearly the past decade about the operation of these family-destroying devices.
Johnny "Cool" Torres also is an owner of gamerooms, and has been a staple among the political elite, providing hundreds of thousands in monetary and in-kind contributions for years. Mr. Torres also was the treasurer of Senator Amanda Shelton's campaign. Ms. Shelton is the niece of Mr. Shinohara.