Casino M8trix has filed a lawsuit against San Jose and others, claiming that it took too long to open the gambling center near the airport and that one key reason for the delay was because of an alleged conflict of interest.
The federal and state lawsuit were filed Friday naming San Jose, its Division of Gaming, and Richard Teng, administrator of the police department's division of gaming control as defendants.
The suit claims Teng "used his position of power and authority to carry out a campaign of harassment" against them. Casino M8trix owners argue that Teng also has a substantial conflict of interest because he works as a consultant for other casinos and racetracks. In deposition, Teng said that his own CPA company also consults for casinos throughout the country. The plaintiffs in the lawsuit fear that Teng has the ability to share proprietary information among his wide spread of clients.
"I do some work for tribal casinos," Teng admitted according to the court documents reviewed by NBC Bay Area.
But Teng fired back. He told NBC Bay Area on Tuesday that he hasn't consulted for a casino since 1985.
"There is absolutely no conflict," he said. "All my work as an independent contractor has been approved by my supervisor. I don't do any work that would conflict with San Jose cardrooms."
This is the casino's third lawsuit against San Jose.
The M8trix owners said they had initially been led to believe they could open April 3. The casino opened Aug. 8.
The federal lawsuit also claims the city has had a "long history of unreasonable, harassing and malicious conduct" that delayed the card club's ability to do business in its new digs - a modern, lit-up, eight-story structure on Airport Parkway, renamed to Matrix Boulevard.
In January, Former Police Chief Chris Moore denied Casino M8trix's plans for gambling. His decision came after Teng outlined a series of the potential problems to effectively monitoring gambling, which also drew opposition from nearby one-story rival Bay 101 Casino.
The lawsuit claims Teng and police gave Bay 101 preferential treatment and that Bay 101 hired Dennis Faz, the former administrator, within months of his retirement in June 2011, "thereby courting and carrying the good favor of the division by rewarding one of its departing employees with a secure and comfortable post-retirement position."
The casino owners argue that San Jose police are targeting M8trix customers by responding to 80 calls for service for parking violations and expired registrations. During the same time period at Bay 101, police responded to two such calls, according to the lawsuit.
"The unfortunate circumstance of the months of delay in opening the Casino M8trix, is that the victim has not just been the casino and its employees - some of whom had to find jobs elsewhere because of the delay, but also the city of San Jose and the taxpayers," according to a statement put out by the casino. "If the delay in opening was related to the conflict of interest then not only did the casino lose millions in revenue but the dity and the taxpayers lost hundreds of thousands of dollars that was rightfully their fair share of that revenue. All this at a time when that money is needed to put more police officers on the streets."