The Garden City Casino Skimming scandal was a six-year-long investigation initially conducted by the Santa Clara County grand jury and the San Jose Police Department and tried in the Santa Clara County superior court between 1981 and 1987 into the skimming perpetrated by twelve Garden City Casino owners and employees. Prosecutors in the Santa Clara County District Attorney's Office unsealed an indictment totaling of 60 felony counts accusing fourteen individuals of criminal conspiracy that included: committing a crime, defraud, violating campaign disclosure laws, filing false tax returns, and perjury. Of those fourteen individuals, twelve pleaded guilty. This scandal was regarded by The Mercury News as "one of the longest-running criminal cases" in Santa Clara County's history.
On May 6, 1987, fourteen employees of Garden City Casino were indicted, by the Santa Clara County grand jury, with sixty total felony counts of Criminal conspiracy, Conspiracy to commit a crime, Conspiracy to defraud, Conspiracy to violate campaign disclosure laws, filing false individual state tax returns, filing fraudulent corporate state tax returns, and perjury. Three of those criminal counts indicted against former president Nicholas J. Dalis, included two counts of attempted grand theft and one count of grand theft. Prosecutors and the San Jose Police Department alleged that the casino skimmed $3.8 million in the last eight years and that the casino owners "reimbursed employees for giving campaign contributions -- a violation of state law". Hours before the arraignment, the California Franchise Tax Board raided the casino and "seized about $200,000 to recover unpaid taxes."
Twelve employees pleaded or were found guilty, and the ownership was barred from renewing their gaming licenses as a result of their criminal convictions. The casino was ordered to, both, pay a $5 million fine and for the convicted owners to sell all their shares by October 1993. Seven out of the twelve employees were sentenced to house arrest and nine out of the twelve defendants were sentenced to community service. All twelve were ordered to pay a total, in fines and restitution and with interest, of $2,171,882. Former president Nicholas J. Dalis was sentenced to three years in state prison and ordered to pay $100,000 in fines and $200,000 in restitution
On July 16, 1988, the same fourteen employees were sued by Ernesto Pestana: the casino's landlord. The lawsuit included charges of "breach of contract, negligent misrepresentation, violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act and unjust enrichment". Pestana also claimed that the fourteen indicted individuals had "to participate in the conduct of Garden City's affairs through a pattern of racketeering activity." and that it caused his "stock in the club to depreciate by at least $10 million. The case ended in a settlement totaling $11 million on June 28, 1992.
In 1993, the two convicted and former cardroom managers Gary Craig Rovai and Henry Anthony Schiro, sued the casino for "fir[ing] them without warning... and reng[ing] on promises to provide financial help with their legal troubles." While indicted, the casino, under [the Dalis family's ownership], promised to pay "attorney fees and whatever tax liabilities... that might accrue from their criminal cases in exchange for them... taking a plea bargain... in hopes of saving the club's license." On August 23, 1997, after a trial that lasted for 12 days, both Rovai and Schiro won a combined total of $1,926,327 in punitive and compensatory damages from the casino
By the time the casino was sold to new ownership, Rovai and Schiro were both fired by the casino's new owner: Eli Reinhard