Search of local law office most recent development
By Gregg Wendorf
Advance News Journal
With the federal search warrant executed last Thursday at the Edinburg law office of Ricardo (Rick) Palacios, it’s probably a safe bet to say that the feds aren’t finished investigating the once-lucrative gambling trade in Hidalgo County.
At least it was lucrative until the Hidalgo County Sheriff’s Department started busting up the 8-liner casinos last year with the help of the feds (FBI, Homeland Security, IRS, etc.). Mainly centered in the Edcouch-Elsa area, the so-called casinos have branched out into other areas as well.
Catholic Complaints
Eleven years ago, Cameron County was the local gambling hub, where the 8-liner deal had operators making money hand over fist before county, state, and federal law enforcement agencies started shutting down the so-called gambling dens, following an 18-month criminal investigation.
Known as Operation Bishop, the criminal investigation shut down 8-liner establishments near La Feria, Harlingen and Brownsville, which culminated in the seizure of approximately 450 machines. At the time, it was estimated by law enforcement officials that approximately 200 8-liner joints were operating in Cameron County. Numerous arrests were made, including that of former Brownsville Mayor Pat Ahumada.
The 8-liner presence in Cameron County, by the way, became a heated issue in the 2012 DA’s race, which resulted in a new attorney, Luis Saenz, winning election.
After the new DA assumed office in January 2013, he said publicly that he named his anti-gambling crusade Operation Bishop because Daniel Flores, the bishop of the Catholic Brownsville Diocese, had come to him complaining that the 8-liners were cutting into the diocese’s parish bingo hall income and was having an adverse effect on his church collection plates.
After all, there’s only so much money to go around?
Local Gambling Dens
Switching over to Hidalgo County nine years ago, where new 8-liner locales began to spring up, the new county DA at the time, Ricardo Rodriguez, said: “I can’t control who wants to own an 8-liner. You and I can own a crowbar. But if you use that crowbar to beat up on somebody or break into a home, then it’s against the law. So, if there are 8-liners being used here for gambling purposes, it’s against the law. And I’ve said it from day one, we’re not going to allow it.”
Rodriguez said that if probable cause could show that 8-liner establishments were paying out cold hard cash, as opposed to relatively cheap trinkets, which served as a front, so to speak, (no gambling to see here, move along), then his office would close them down.
“We worked on that one that got hit in La Joya. My chief investigator worked on that case, and we picked up 100 (8-liner) machines there.”
Along with approximately $25,000 in cash.
“Our investigation was done undercover, and there was sufficient probable cause to show that they were paying out money.”
Now, after Rodriguez stepped down as DA, and his uncle, “Toribio “Terry” Palacios, replaced him, the 8-liner busts are still in full swing. Or were, until most of the ones in the mid-Valley area were raided by the Sheriff's Office and the feds last year.
In an odd sort of way, though, “Rick” Palacios, the seasoned, busy attorney whose Edinburg office was recently searched last Thursday by federal law enforcement, has entered the mix, seemingly on the side of some of the alleged gambling guys.
What makes it odd, if you will, is the fact that “Rick” Palacios is nephew to the current Hidalgo County DA and cousin to the former.
According to a story written by investigative reporter Dave Hendricks and published at ValleyCentral.com last Thursday, the federal search warrant executed at the Palacios law office (Palacios, Garza & Thompson, P.C.) may involve local businessman and gambling advocate Mitchell Killion, who is the registered agent of the “Greater Texas Gaming Coalition” and a law client of Palacios.
In the ValleyCentral.com story, Hendricks quoted Edcouch City Manager De La Cruz, who said that “Rick” Palacios was the attorney working with Mitchell Killion in an effort last year to get Edcouch to open up shop to gaming establishments.
Speaking about Palacios, De La Cruz said he was the lawyer who wrote rules and regulations for the so-called game rooms.
“He created the ordinance,” De La Cruz said. “And a lot of the verbiage and everything that’s used there was Rick.” (Source: ValleyCentral.com.)
In fact, last summer, the city of Donna had an interesting line item on its June 8 city commission agenda that suggested some business interests wanted access to that city as well: “Review and Discussion of the Game Room Ordinance Presentation by the Texas Game Room Owners Association and Greater Texas Gaming Coalition Inc.”
The deal in Donna fell flat, but that wasn’t the case in Edcouch and Elsa.
Indeed, the coalition that Killion represents partnered with the cities of Edcouch and Elsa last year to rake in big money. Instead, they caught the attention of local and fed law enforcement, and most of the places got shut down.
Bad publicity — Edcouch and Elsa city halls raided, Homeland Security and the FBI looking into allegations of money laundering, that sort of thing. And before you could say, “I just lost all my money,” the cities were repealing city ordinances related to the so-called “legal casinos.”
In fact, Edcouch City Attorney Roel Gutierrez made it clear in a two-page letter following the unexpected raids by law enforcement that the city was going to repeal its gambling ordinance: “It has become apparent that the operation of these game rooms does not align with the legal assurances previously provided to the City Council by the representatives of the Greater Texas Gaming Coalition…. Moreover, the execution of a federal search warrant at City Hall for evidence of money laundering indicates a severe breach of trust on behalf of the administrator and the operators of the game rooms and signals potential legal ramifications under federal statutes.” (Source: PlayTexas.com.)
Edcouch City Manager Victor Hugo de la Cruz also explained that ignorance is not a valid excuse: “The attorney kind of explained that … the money laundering act and explained to them (the city council) that not knowing is not an excuse. It kind of places the city in a pretty bad spot if there is, in fact, something going on or something illegal going on. Not knowing is not a proper defense.”
Meanwhile, Mitchell Killion has at least four civil/contractual disputes filed against him, on file at the Hidalgo County District Clerk’s Office, tied to another business with which he’s associated — Forged Technology Solutions LLC.
Three were filed in 2023, and one was filed this year. On at least two, “Rick” Palacios is listed as his attorney of record.
Why It’s a Problem
Some Texans, libertarians, maintain that gambling should be an individual right. If people want to gamble, what business is it of the government (state or federal) to stand in their way?
In fact, during last year’s legislative session, another attempt was made to get pari-mutuel betting (horses) placed on the November ballot. As in years past, it failed to garner enough votes.
So why is gambling a problem if you don’t include the state lottery?
As recounted in a story published in The Advance last fall: When the 8-liner slot machines, or “skilled video games,” call them what you like, started springing up last year, this year, in and around small to mid-size cities stretched across Hidalgo County, like Edcouch, Elsa, Weslaco, Sullivan City, the owners and city officials thought they had the law on their side. After all, they had passed an ordinance making these establishments legal inside city limits, and they had placed hefty fees to open.
In Elsa, for example, all applicants for a game-room license had to pay a one-time, non-transferable fee of $50,000, which was non-refundable if the applicant was denied a permit to open. (Source: PlayTexas.com.)
Small fry need not apply. At the same time, a year ago (2022), the Elsa city attorney told PlayTexas.com: “We’re not interested in smallscale operations with five or 10 machines. These licenses will be for big 50- to 100-machine rooms.”
Then came the Hidalgo County Sheriff’s Office, ruining all the fun, raiding the so-called gambling dens. Clearly, some people weren’t happy, aren’t happy.
What’s unique about these raids is that they are inside city limits, except for the one just outside Weslaco, where gaming ordinances have been established, presumably under the jurisdiction of city police, not the sheriff’s office.
That’s where their thinking is wrong, said Hidalgo County Sheriff Eddie Guerra, who said that by statute, the sheriff’s office has jurisdiction over the entire county, including land inside city limits. Which is why you’re seeing these so-called casinos being raided by sheriff’s deputies as opposed to city cops.
In the cities where the 8-liner places are being raided, said Guerra, the local PDs are under the management of city governments, and the cities are allowing them (the so-called gaming establishments) to open, so their hands are tied.
“We’re the ones getting the complaints, the Crime Stopper tips,” said Guerra, “and we can’t forward them to the cities, so we’re just taking it on our own (to work the cases).”
Guerra said that the complaints coming recently from inside the cities where raids have occurred — Edcouch, Elsa, Sullivan City — have started growing in number.
What sort of complaints?
“We get calls from people who say, ‘My elderly parents are addicted to gambling.’ They are on fixed incomes, and they go to these places and spend all their money, so they don’t have the money for electricity, food, rent.’
A big problem for seniors living month to month on Social Security, for example, said Guerra.
“It’s a big problem for a lot of people. I’ve got some staff members (at the SO) who say that their elderly parents are going to these places.”
What about the fact that some of the cities have passed ordinances that allow these so-called casinos to open up shop?
“The ordinances and permits are one thing. I have no control over that,” said Guerra. “In some of these cities, they give a (business) permit to these places. It’s like a permit to sell liquor. But no city can pass an ordinance that violates state law (which still cites gambling as illegal).”
Guerra said the fact that these socalled casinos, AKA, “viable game rooms,” handle large sums of money isn’t in dispute.
“The undercover agents are going in there, and they are winning substantial money, and the (casinos) are paying out, and that’s against the law.”
Problem is, at least for those who plunk down money on a regular basis, the house is always going to make money, said Guerra.