(A) It shall be unlawful for any interest-holder, having any interest whatever, or at all, in the ownership of a card room, whether legal or equitable, or as trustor or trustee, or of whatever kind or character, to transfer or sell any interests in a card room to any person who is or by reason of such transaction would become an interest-holder, without the prior consent and permission of the Council.
(B) No licensee or interest-holder shall knowingly permit any individual, partnerships or other entity to make any investment whatever in, or in any manner whatever, participate in the profits of any licensed card room or any portion thereof, except in accordance with these requirements; provided, however, that the purchase or other acquisition of stock in a publicly-traded corporation shall not be deemed to be such an investment or participation unless by an interest-holder. Except as otherwise provided in division (D) of this section, a permittee which is a publicly-traded corporation shall not have responsibility with respect to any transfers, sales or assignments of shares of its common stock or other securities.
(C) No licensee or interest-holder shall knowingly permit any investment in any licensed card room operation or any portion thereof nor participation in the profits thereof by any person acting as agent, trustee, or in any other representative capacity whatsoever for or on behalf of another person without first having fully disclosed all facts pertaining to such representation to the Council. Except as otherwise provided in division (D) of this section, a licensee which is a publicly-traded corporation shall not have responsibility with respect to any transfers, sales or assignments of shares of its common stock or other securities. No person acting in any such representative capacity shall hold or acquire any such interest or participate without first having fully disclosed all facts pertaining to such representation to the Council and obtained written permission of the Council to so act.
(D) No transfer, sale or hypothecation of an interest, or new investment in an existing licensed card room shall be permitted until the Council has received, reviewed, and approved an application for transfer of an interest, and until each new interest-holder has been granted an interest-holder's permit authorizing the holding of such interest; provided, however, that no such approval shall be required for sales of stock of a publicly-traded corporation other than to an interest-holder. No money or other thing of value constituting any part of the consideration for the transfer or acquisition of any interest in a licensed card room operation shall be paid over, received or used prior to complete compliance with all prerequisites set forth in state law and this chapter; notwithstanding the foregoing, such funds may be placed in escrow pending completion of the transaction. Any loan, pledge or other transaction in an attempt to evade the requirements of this regulation may be deemed a violation and, as such, would constitute grounds for disapproval of the interest transfer.
(E) Any party desiring to buy, sell, accept, transfer, assign or otherwise hypothecate any interest of an interest-holder (other than stock of a publicly-traded corporation to a person other than interest-holder) in a licensed card room shall file with the Finance Director, on forms approved by the City Attorney, and furnished by the Finance Director, a written application for permission to allow transfer of such interest. Each such application shall contain and clearly and truthfully set forth, under oath and/or affirmation, in addition to such other information as the Finance Director may require, the following:
(1) The date of the application;
(2) The true name of the applicant and personal history;
(3) The status of the applicant as being an individual, partnership, corporation or other entity;
(4) The residence and business address of the applicant;
(5) If the applicant is other than an individual, the name, residence and business address of each co-partner, co-partnership, shareholder or other interest-holders;
(6) The name of the licensed card room and the names of the existing interest-holders from which a transfer of interest is sought;
(7) The number of interests and/or nature of interest sought to be sold, transferred, assigned or otherwise hypothecated;
(8) The source of funds to be used by the applicant in acquiring such interest;
(9) A statement that the applicant(s) understands that the application will be considered by the Council only after a full investigation and report have been made and the report of investigation forwarded to the Council;
(10) A balance sheet and income statement representing the financial condition of the applicant prepared in accordance with generally accepted accounting principles and submitted under penalty of perjury (but which need not be audited but must be dated no later than the end of the most recent fiscal year of applicant);
(11) The statements required by this division (E) shall be confidential, and the documents containing such information shall be deemed to be confidential documents, and shall not be open to public inspection, but shall be available only to those city officials having direct jurisdiction where any matter relating thereto may be actually pending, except that the names and cities and states of residence and business of such interest-holders shall be open to public inspection.
(F) Whenever an application pursuant to the provisions of this section has been filed with the Finance Director, the Finance Director shall immediately refer such application, or a true copy thereof, to the Police Chief, who shall promptly and diligently cause an investigation to be made as follows:
(1) A full and complete investigation of the applicant and each interest-holder whose names and addresses are shown upon the application;
(2) Concurrently with the filing of an application, each applicant shall be fingerprinted by the Madera Police Department and shall authorize the city to obtain any available criminal offender record information relating to applicant and shall further authorize the updating of that information at any time reasonably necessary, if the application is approved.
(3) It shall be the responsibility and duty of the City Administrator to supervise and direct the Police Chief to establish the necessary procedures to administer the provisions of this division (F); and
(4) The information received by the Police Chief pursuant to the provisions herein shall be treated as confidential.
(G) For the purposes of clarification, the application and assignment fees set forth in this section are for regulation, revenue purposes and reimbursement to the city for the costs of investigating and processing the applications, as provided for in this chapter, pursuant to the authority set forth in Article XI Section 5 of the Constitution of the State. Each such application for transfer of interest of an interest-holder to an applicant permittee shall be accompanied by a fee, payable to the city as follows:
(1) An application fee in the amount specified in the Master Fee Schedule designated in the Master Fee Resolution as amended by the Council from time to time, for each interest-holder permit applicant, which fee shall be retained by the city for the payment of the costs of the investigation of the applicant. This fee shall be the property of, and be retained by, the city, whether the permit and permission to transfer interest in the permit is granted or denied.
(2) An assignment fee in the amount of 5% of the gross sales price of the interest assigned, sold or transferred. In the event that multiple interests are assigned, sold or transferred, the allocation of the gross sales price for the purposes of this section, shall be agreed upon by the city and the permittee prior to completion of the transaction. A statement of gross income from the assignments sale, or transfer shall be audited by a Certified Public Accountant, and presented to the city along with the assignment fee.
(H) Granting or Denial of Applications. Whenever an application for a permit as required under the provisions of this section is presented to the Council and provided that the fees required by this section in connection therewith have been paid to the city the Council may consider such application on the basis of the following without being limited thereto:
(1) The financial stability of the applicant;
(2) Conviction of criminal offenses as denoted in § 6-3.06(N)(1);
(3) Investigational report by Chief of Police; and
(4) Any other information deemed by the Council to be matters of necessary inquiry.
(I) The Council may in its discretion, either grant conditionally grant or deny the interest-holders permit applied for under this § 6-3.11.
(Ord. 684 C.S., passed 6-3-98)